U.S. 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 QUARTERLY PERIOD ENDED MAY 31,
1996.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ____ TO ____.
Commission File Number 0-13870
Technology 80 Inc.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1373380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
658 Mendelssohn Avenue North, Minneapolis, Minnesota 55427
(Address of principal executive offices) (Zip Code)
(612) 542-9545
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the 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
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practible date.
Common Stock, $0.01 par value 1,567,795
(Title of Class) (Shares Outstanding)
Part I - Financial Information
Item 1: Financial Statements
TECHNOLOGY 80 INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS May 31, August 31,
1996 1995
CURRENT ASSETS ----------- -----------
Cash and cash equivalents $ 318,828 $ 926,163
Short-term investments 200,465 917,271
Accounts receivable (less allowance for doubtful
accounts: May 31 - $9,000; Aug. 31 - $9,000) 532,140 506,815
Inventories 902,494 797,794
Deferred taxes 0 43,000
Other current assets 41,568 41,945
---------- ----------
TOTAL CURRENT ASSETS 1,995,495 3,232,988
---------- ----------
PROPERTY AND EQUIPMENT
Furniture and equipment 415,682 402,752
Leasehold improvements 23,060 23,060
--------- ----------
438,742 425,812
Less accumulated depreciation 356,284 335,625
---------- ----------
82,458 90,187
---------- ----------
OTHER ASSETS
Investments 2,571,856 831,200
Deferred taxes 25,000 41,000
---------- ----------
2,596,856 872,200
---------- ----------
TOTAL ASSETS $4,674,809 $4,195,375
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 78,332 $ 51,000
Accrued payroll and payroll taxes 149,715 172,517
Accrued liabilities - other 108,419 42,016
---------- ----------
TOTAL CURRENT LIABILITIES 336,466 265,533
---------- ----------
DEFERRED INCOME TAXES 58,000 72,000
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value (authorized -
5,000,000 shares; issued and outstanding -
May 31, 1,567,795, Aug. 31, 1,561,670 shares) 15,678 15,617
Paid-in capital 3,379,845 3,372,648
Other - loans (162,263) (163,705)
Unrealized gain on available-for-sale securities 86,388 83,091
Retained earnings 960,695 550,191
---------- ----------
4,280,343 3,857,842
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,674,809 $4,195,375
========== ==========
<F01>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended Nine months ended
May 31, May 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
REVENUES $1,087,912 $968,026 $3,021,487 $2,584,679
COST OF GOODS SOLD 437,920 366,502 1,227,400 948,906
---------- ---------- ---------- ----------
GROSS PROFIT 649,992 601,524 1,794,087 1,635,773
---------- ---------- ---------- ----------
OPERATING EXPENSES
General and administrative 121,304 88,968 360,818 281,415
Research and development 165,123 117,197 448,412 330,625
Selling 181,399 163,455 517,464 476,479
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 467,826 369,620 1,326,694 1,088,519
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 182,166 231,904 467,393 547,254
OTHER INCOME 78,507 27,693 167,111 81,001
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 260,673 259,597 634,504 628,255
PROVISION FOR INCOME TAXES 97,000 91,893 224,000 216,643
---------- ---------- ---------- ----------
NET INCOME $ 163,673 $167,704 $ 410,504 $ 411,612
========== ========== ========== ==========
EARNINGS PER SHARE $0.10 $0.10 $0.24 $0.25
===== ===== ===== =====
<F02>
See notes to condensed financial statements
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
May 31,
1996 1995
----------- -----------
OPERATING ACTIVITIES
Net income $ 410,504 $ 411,612
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 20,916 19,075
Deferred taxes 45,000 211,000
Gain on sale of investments (76,964) 0
Gain on sale of fixed asset (62) 0
Changes in operating assets and liabilities:
Accounts receivable (25,325) 72,265
Inventories (104,700) (15,993)
Other current assets 377 (32,886)
Accounts payable 27,332 74,326
Due to related parties 0 (24,500)
Accrued liabilities 43,601 (82,635)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 340,679 632,264
---------- ----------
INVESTING ACTIVITIES
Proceeds from sale of equipment 1,350 0
Purchase of equipment (14,475) (47,860)
Proceeds from sales and maturities of investments 1,967,764 0
Purchases of investments (2,911,353) (935,887)
Repayment of other - loans 1,442 4,378
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (955,272) (979,369)
---------- ----------
FINANCING ACTIVITIES
Proceeds from exercise of stock options 7,258 8,203
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,258 8,203
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (607,335) (338,902)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 926,163 458,433
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 318,828 $ 119,531
========== ==========
<F03>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
May 31, 1996
NOTE A - FINANCIAL INFORMATION
The unaudited interim financial statements have been prepared
pursuant to the rules and regulations of the Securities and
Exchange Commission; accordingly, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The condensed
balance sheet at August 31, 1995 has been derived from the
audited financial statements at that date but does not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. These interim financial statements should be read
in conjunction with the financial statements and notes in the
Company's 1995 Annual Report on Form 10-KSB filed with the
Securities and Exchange Commission.
In the opinion of management, the financial statements reflect
all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the interim
periods.
NOTE B - EARNINGS PER SHARE
Earnings per share is based upon the number of weighted
average common shares outstanding of 1,718,574 for the quarter
ended May 31, 1996 and 1,659,450 for the quarter ended May 31,
1995.
Item 2: Management's Discussion and Analysis
Results of Operations
Revenues for the third quarter ended May 31, 1996 increased 12%
and increased 17% for the nine months ended May 31, 1996 over the
same periods the preceding year . The revenue increase for the
three and nine months ended May 31, 1996 was due to an increase
in sales volume. Registrant's backlog is up 67% since fiscal
year end August 31, 1995. The backlog is deliverable within the
next twelve months or less and is cancelable.
Gross profit percentages for the third quarter ended May 31, 1996
and May 31, 1995 was 60% and 62% respectively. Gross profit
percentages for the nine months ended May 31, 1996 was 59%
compared to 63% for the nine months ended May 31, 1995. The
decrease is primarily due to meeting the demands of a more
competitive market and cost increases.
Operating expenses as a percentage of sales was 43% for the three
months and 44% for the nine months ended May 31, 1996 compared to
38% and 42% for the same periods the prior year.
Other income increased $50,814 for the quarter ended May 31, 1996
and increased $86,110 for the nine months ended May 31, 1996 from
the same periods the preceding year. The increase was primarily
due to increased investment income.
Net income was $163,673 and $167,704 for the quarter ended May
31, 1996 and May 31, 1995 respectively. This represents a 2%
decrease. For the nine months ended May 31, 1996 and 1995, net
income was $410,504 and $411,612 respectively.
Liquidity and Capital Resources
Registrant's balance sheet shows a strong capital position.
Operations provided $340,679 in cash compared to $632,264 the
same period the prior year. Cash and cash equivalents decreased
$607,335 since August 31, 1995. The company used $955,272 in
investing activities since August 31, 1995. Registrant expects
that there will be sufficient capital to fund its operations
during fiscal year 1996.
Registrant has no debt and does not anticipate, at this time,
that it will be necessary to seek any debt financing in the near
future for ongoing operations, but may consider some type of
financing for other purposes.
Part II - Other Information
Item 1: Legal Proceedings
None.
Item 2: Changes in Securities
None.
Item 3: Defaults Upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Security Holders
None.
Item 5: Other Information
None.
Item 6: Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11 -- Statement Re: Computation of Per-
Share Earnings (following signature page)
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.
Technology 80 Inc.
(Registrant)
July 12, 1996 /s/ Duane Markus, President, CEO
(Date) Duane Markus, President, CEO