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,
1997.
[ ] 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.
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(Exact name of small business issuer as specified in its charter)
Minnesota 41-1373380
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
658 Mendelssohn Avenue North, Minneapolis, Minnesota 55427
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(Address of principal executive offices) (Zip Code)
(612) 542-9545
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(Issuer's telephone number)
N/A
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(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 1,576,045
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(Title of Class) (Shares Outstanding)
Part I - Financial Information
Item 1: Financial Statements
TECHNOLOGY 80 INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
May 31, August 31,
1997 1996
ASSETS ----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 401,293 $ 419,136
Short-term investments 5,000 127,163
Accounts receivable (less allowance for doubtful
accounts: May 31 - $9,000; Aug. 31 - $9,000) 688,574 587,537
Inventories 985,167 956,744
Deferred taxes 41,200 38,600
Other current assets 32,565 29,069
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TOTAL CURRENT ASSETS 2,153,799 2,158,249
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PROPERTY AND EQUIPMENT
Furniture and equipment 462,756 424,670
Leasehold improvements 23,060 23,060
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485,816 447,730
Less accumulated depreciation 386,644 363,780
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99,172 83,950
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OTHER ASSETS
Investments 2,540,103 2,580,957
Deferred taxes 225,675 74,400
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2,765,778 2,655,357
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TOTAL ASSETS $5,018,749 $4,897,556
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 55,318 $ 49,413
Accrued payroll and payroll taxes 145,192 217,214
Accrued income taxes 72,000 206,137
Accrued liabilities - other 291 74,379
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TOTAL CURRENT LIABILITIES 272,801 547,143
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STOCKHOLDERS' EQUITY
Common stock, $0.01 par value (authorized -
5,000,000 shares; issued and outstanding -
May 31, 1,576,045, Aug. 31, 1,571,170 shares) 15,760 15,712
Paid-in capital 3,390,505 3,383,944
Other - loans (162,263) (162,263)
Unrealized loss on available-for-sale securities (364,176) (102,526)
Retained earnings 1,866,122 1,215,546
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4,745,948 4,350,413
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,018,749 $4,897,556
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See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended Nine months ended
May 31, May 31,
1997 1996 1997 1996
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REVENUES $1,235,805 $1,087,912 $3,390,514 $3,021,487
COST OF GOODS SOLD 468,739 437,920 1,270,184 1,227,400
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GROSS PROFIT 767,066 649,992 2,120,330 1,794,087
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OPERATING EXPENSES
General and administrative 119,724 121,304 365,851 360,818
Research and development 163,896 165,123 501,011 448,412
Selling 206,472 181,399 511,210 517,464
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TOTAL OPERATING EXPENSES 490,092 467,826 1,378,072 1,326,694
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INCOME FROM OPERATIONS 276,974 182,166 742,258 467,393
OTHER INCOME 52,450 78,507 243,319 167,111
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INCOME BEFORE INCOME TAXES 329,424 260,673 985,577 634,504
PROVISION FOR INCOME TAXES 112,000 97,000 335,000 224,000
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NET INCOME $ 217,424 $ 163,673 $ 650,577 $ 410,504
========== ========== ========== ==========
EARNINGS PER SHARE $0.13 $0.10 $0.38 $0.24
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See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
May 31,
1997 1996
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OPERATING ACTIVITIES
Net income $ 650,577 $ 410,504
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 25,691 20,916
Deferred taxes 30,125 45,000
Gain on sale of investments (134,843) (76,964)
Gain on sale of fixed asset (1,483) (62)
Changes in operating assets and liabilities:
Accounts receivable (101,037) (25,325)
Inventories (28,423) (104,700)
Other current assets (3,496) 377
Accounts payable 5,905 27,332
Accrued income taxes (134,137) 0
Accrued liabilities (146,110) 43,601
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NET CASH PROVIDED BY OPERATING ACTIVITIES 162,769 340,679
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INVESTING ACTIVITIES
Proceeds from sale of equipment 1,750 1,350
Purchase of equipment (41,180) (14,475)
Proceeds from sales and maturities of investments 1,409,738 1,967,764
Purchases of investments (1,557,529) (2,911,353)
Repayment of other - loans 0 1,442
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NET CASH USED IN INVESTING ACTIVITIES (187,221) (955,272)
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FINANCING ACTIVITIES
Proceeds from exercise of stock options 6,609 7,258
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NET CASH PROVIDED BY FINANCING ACTIVITIES 6,609 7,258
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NET DECREASE IN CASH AND CASH EQUIVALENTS (17,843) (607,335)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 419,136 926,163
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CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 401,293 $ 318,828
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See notes to condensed financial statements.
TECHNOLOGY 80 INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
May 31, 1997
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, 1996 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 1996 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 1,721,483 for the quarter ended May 31, 1997 and
1,718,574 for the quarter ended May 31, 1996.
Item 2: Management's Discussion and Analysis
Results of Operations
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Revenues for the third quarter ended May 31, 1997 increased 14% over the
same period the preceding year and increased 12% for the nine months ended
May 31, 1997. The revenue increase for the three and nine months ended May
31, 1997 was due to an increase in sales volume.
Gross profit percentages for the third quarter ended May 31, 1997 and 1996
was 62% and 60% respectively. Gross profit percentages for the nine months
ended May 31, 1997 was 63% compared to 59% for the nine months ended May
31, 1996. The increase is primarily due to increased cost cutting
measures.
Operating expenses as a percentage of sales was 40% for the three months
and 41% for the nine months ended May 31, 1997 compared to 43% and 44% for
the same periods the prior year, respectively.
Other income decreased $26,057 for the quarter ended May 31, 1997 and
increased $76,208 for the nine months ended May 31, 1997 from the same
periods the preceding year.
Net income was $217,424 and $163,673 for the quarter ended May 31, 1997 and
1996 respectively. This represents a 33% increase. For the nine months
ended May 31, 1997 and 1996, net income was $650,577 and $410,504
respectively. This represents a 58% increase.
Liquidity and Capital Resources
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Registrant's balance sheet shows a strong capital position. Operations
provided $162,769 in cash compared to providing $340,679 the same period
the prior year. Cash and cash equivalents decreased $17,843 since August
31, 1996. The company used $187,221 to purchase investments and equipment
since August 31, 1996. Registrant expects that there will be sufficient
capital to fund its operations during fiscal year 1997.
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.
Statements included in this Management's Discussion and Analysis or Plan of
Operation and elsewhere in this Form 10-QSB, in future filings by the
Registrant with the Securities and Exchange Commission and in the
Registrant's press releases and oral statements made with the approval of
authorized executive officers, if the statements are not historical or
current facts, should be considered "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected.
Registrant wishes to caution the reader not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.
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 (following signature page)
Exhibit 11 -- Statement Re: Computation of Per-Share Earnings
Exhibit 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.
Technology 80 Inc.
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(Registrant)
July 14, 1997 /s/ Duane Markus, President, CEO
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(Date) Duane Markus, President, CEO