United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarter ended September 30, 1998
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
ct of 1934
For the transition period from to
Commission File Number: 0-11883
TELEBYTE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Nevada 11-2510138
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
270 Pulaski Road, Greenlawn, New York 11740
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (516) 423-3232
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
As of October 30, 1998 there were outstanding 1,505,016 shares of Common Stock,
$.01 par value.
Transitional Small Business Disclosure Format (check one);
Yes No X
TELEBYTE TECHNOLOGY, INC.
INDEX
Part I Financial Information
Item 1. Financial Statements
Balance Sheet
September 30, 1998 (Unaudited)
Statements of Earnings
Three and nine months ended
September 30, 1998 and 1997 (Unaudited)
Statements of Cash Flows
Nine months ended
September 30, 1998 and 1997 (Unaudited)
Notes to Condensed Financial
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation.
Part II Other Information
Part I Financial Information
Item 1. Financial Statements
TELEBYTE TECHNOLOGY, INC.
BALANCE SHEET
SEPTEMBER 30,1998
(Unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $ 757,280
Accounts receivable, less
allowance for doubtful accounts 762,923
Inventory 1,364,542
Prepaid expenses 38,935
Deferred income taxes 80,000
-------------------
TOTAL CURRENT ASSETS 3,003,680
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization 1,080,028
OTHER ASSETS 153,356
-------------------
$ 4,237,064
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 243,164
Accrued expenses 186,623
Current maturities of long-term debt 52,412
-------------------
TOTAL CURRENT LIABILITIES 482,199
LONG-TERM DEBT, less current maturities 891,368
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share
1,659,816 issued and 1,505,016 outstanding 16,598
Capital in excess of par value 2,760,078
Accumulated Earnings 187,914
Less treasury stock, at cost, (154,800 shares) (101,093)
-------------------
2,863,497
-------------------
TOTAL LIABILITIES AND SHAREHOLDER'S' EQUITY $ 4,237,064
===================
The accompanying notes are an integral part of these financial statement.
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF EARNINGS
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------------- -------------------------
1998 1997 1998 1997
------------ ----------- ------------ -----------
NET SALES $ 1,551,228 $ 1,480,196 $ 4,178,147 $3,739,257
COST OF SALES 731,736 683,967 1,967,492 1,713,642
------------ ----------- ------------ ----------
GROSS PROFIT 819,492 796,229 2,210,655 2,025,615
------------ ----------- ------------ ----------
OPERATING EXPENSES
R & D 131,849 90,433 360,281 234,464
Selling, G&A 519,301 532,028 1,541,389 1,601,610
------------ ----------- ------------ ----------
651,150 622,461 1,901,670 1,836,074
------------ ----------- ------------ ----------
Operating Income 168,342 173,768 308,985 189,541
------------ ----------- ------------ ----------
OTHER INCOME (EXPENSE)
Rental Income 12,048 12,048 36,146 36,146
Interest Income 5,663 2,924 17,542 9,119
Interest Expense (23,537) (29,911) (76,653) (84,523)
------------- ------------ ------------- -----------
Income before income taxes 162,516 158,829 286,020 150,283
Provision for income taxes 2,500 2,500 4,500 2,500
------------- ------------ ------------- -----------
NET INCOME $ 160,016 $ 156,329 $ 281,520 $ 147,783
============== ============ ============= ===========
Earnings per common share:
Basic $ 0.11 $ 0.11 $ 0.19 $ 0.10
============== ============ ============= ===========
Diluted $ 0.10 $ 0.10 $ 0.18 $ 0.10
============== ============ ============= ===========
Shares used in computing earnings per common share:
Basic 1,505,016 1,481,766 1,500,673 1,481,766
============== ============ ============= ===========
Diluted 1,543,316 1,513,516 1,552,216 1,492,349
============== ============ ============= ===========
The accompanying notes are an integral part of this financial statement
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended September 30,
---------------------------------------
1998 1997
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 281,520 $ 147,783
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 78,848 67,450
Decrease (increase) in assets:
Accounts receivable (10,082) (352,489)
Inventories (142,774) (79,015)
Prepaid expenses and other 15,845 (166,128)
Increase (decrease)
in liabilities:
Accounts payable (126,330) 186,820
Accrued expenses (5,580) 25,924
--------------- --------------------
Net cash provided by (used in)
operating activities 91,447 (169,655)
--------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was received from:
proceeds from exercise
of stock options 8,322 0
Cash was paid for:
Property and equipment (38,441) (27,049)
--------------- --------------------
Net cash used in investing activities (30,119) (27,049)
--------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was used for:
Principal payments of
long-term debt (34,332) (49,789)
---------------- --------------------
Net cash used in financing activities (34,332) (49,789)
---------------- --------------------
Net increase (decrease) in cash
and cash equivalents 26,996 (246,493)
Cash and cash equivalents at
beginning of period 730,284 583,721
----------------- --------------------
Cash and cash equivalents at
end of period $ 757,280 $ 337,228
================= ===================
The accompanying notes are an integral part of these financial statement.
TELEBYTE TECHNOLOGY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The balance sheet as of September 30, 1998, the statement of earnings for the
three and nine months then ended and the statements of cash flows for the nine
month period then ended have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
accrual adjustments) necessary to present fairly the financial position, results
of operations and cash flows at September 30, 1998 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
are read in conjunction with the financial statements and notes thereto included
in the Company's annual report to shareholders for the fiscal year ended
December 31, 1997. The results of operations for the period ended September 30,
1998 are not necessarily indicative of the operating results for the full year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Statements in this Form 10-QSB that are not descriptions of historical fact are
forward-looking statements that are subject to risks and uncertainties. Actual
results could differ materially from those currently anticipated due to a number
of factors, including risks relating to competition; and other factors impacting
the data communications industry.
RESULTS OF OPERATIONS
Sales for the third quarter increased to $1,551,228, as compared to $1,480,196
for the comparable period of 1997. For the nine months ended September 30, 1998
sales increased to $4,178,147 as compared to $3,739,257 for the similar period
last year. This represents an increase of 11.6%. There were marginal changes in
each product sector except for Lightning Protection, which benefited from a 325%
increase in sales in the quarter. Sales of fiber optic products increased by
7.6%.
Cost of sales for the third quarter of $731,736 or 47.1% of sales increased
compared to $683,967 or 46.2% of sales during the same period in 1997. The
decrease in the Company's gross profit margin was primarily a function of
product mix.
Selling, general and administrative expenses of $519,301 for the third quarter
ended September 30, 1998 decreased slightly compared to $532,028 for the same
quarter in 1997. During the third quarter the Company initiated an advertising
campaign for its fiber optic product line by placing full-page advertisements in
major trade publications. These publications include Lightwave and Fiber Optic
Product News. In addition, the Company completed significant modifications and
additions of its website, www.telebyteusa.com, which will simplify the
dissemination of the information on the Company's products.
Research and development expenses increased to $131,849 in the third quarter of
1998, as compared to $90,433 for the third quarter of 1997. The increase in the
third quarter and nine months ended September 30, 1998 was due to additional
engineering personnel required to undertake the backlog of engineering efforts
that had accumulated. These efforts included expansion of the fiber product
line, the industrial product line, development of the Company's first LON Works
product, the development of the Company's first MDSL modem and the continuing
engineering required to expand the xDSL test equipment line. In addition, there
were several customer sponsored, custom product development efforts.
Interest income increased to $5,663 for the third quarter of 1998, compared to
$2,924 for the comparable period in 1997. The increase is due primarily to the
higher cash on deposit at Merrill Lynch during the quarter.
Net income of $160,016 for the third quarter of 1998 increased slightly compared
to $156,329 for the third quarter of 1997. Net income of $281,520 for the nine
months ended September 30, 1998, increased compared to $147,783 for the same
period in 1997. The increase can be primarily attributed to higher revenues
during the first nine months of 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities of $91,447 was due primarily to
increase in net income during the third quarter. Working capital increased to
$2,521,481 at September 30, 1998, an increase of $311,281 from December 31 1997.
The current ratio at September 30, 1998 increased to 6.2 to 1 compared to 4.6 to
1 at December 31, 1997. The Company renewed its $1,000,000 line of credit with
Merrill Lynch, effective July 1, 1997, for two years. The Company has no amounts
outstanding under the line of credit at this time. The Company considers its
working capital to be adequate to fund presently foreseeable working capital
requirements.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TELEBYTE TECHNOLOGY, INC.
By: __________\s\_________________
Joel A. Kramer, President and
Chairman of the Board
(Principal Executive Officer)
By: ___________\s\________________
Michael Breneisen, Vice President of Finance
(Principal Financial and Accounting Officer)
Date: October 30, 1998