SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
-------------
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1995
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ___________ to
___________
Commission file number: 0-11254
COPYTELE, INC.
- ---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2622630
- -------------------------------- --------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
900 Walt Whitman Road
Huntington Station, NY 11746
(516) 549-5900
- ---------------------------------------------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrant's Principal Executive Offices)
N/A
- ---------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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 [_]
On June 2, 1995, the registrant had outstanding 25,231,403 shares of Common
Stock, par value $.01 per share.
TABLE OF CONTENTS
-----------------
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheets (Unaudited) as of April 30,
1995 and October 31, 1994
Condensed Statements of Operations (Unaudited)
for the six-months ended April 30, 1995 and April 30,
1994, and for the period from November 5, 1982
(Inception) through April 30, 1995
Condensed Statements of Operations (Unaudited) for
the three-months ended April 30, 1995 and
April 30, 1994
Condensed Statement of Shareholders' Equity (Unaudited)
for the period from November 5, 1982 (Inception)
through April 30, 1995
Condensed Statements of Cash Flows (Unaudited)
for the six-months ended April 30, 1995 and April 30,
1994, and for the period from November 5, 1982
(Inception) through April 30, 1995
Condensed Statements of Cash Flows (Unaudited)
for the three-months ended April 30, 1995
and April 30, 1994
Notes to Condensed Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Signatures.
Part I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
---------------------
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
----------------------------------------------
April 30, October 31,
1995 1994
----------- -------------
ASSETS
------
CURRENT ASSETS:
Cash (including cash equivalents and interest bearing
account of $6,848,924 and $6,163,435, respectively) $ 6,875,618 $ 6,244,801
Accrued interest receivable 17,273 17,041
Prepaid expenses 36,038 45,994
-------------- --------------
6,928,929 6,307,836
PROPERTY AND EQUIPMENT (net of accumulated depreciation
and amortization of $658,030 and $628,668, respectively) 198,500 207,778
OTHER ASSETS 103,691 98,718
DEFERRED TAX BENEFITS (net of valuation allowance of
$14,253,507 and $13,458,155, respectively) - -
-------------- --------------
$ 7,231,120 $ 6,614,332
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 274,539 $ 163,402
Accrued liabilites 33,825 35,697
------------ -----------
308,364 199,099
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $100 per share; authorized
500,000 shares; no shares outstanding - -
Common stock, par value $.01 per share; authorized
120,000,000 shares; outstanding 25,168,403 and
24,837,403 shares, respectively 251,684 248,374
Additional paid-in capital 28,322,730 26,487,930
Accumulated (deficit) during development stage (21,651,658) (20,321,071)
------------ ------------
6,922,756 6,415,233
------------ ------------
$ 7,231,120 $ 6,614,332
============ ============
The accompanying notes to condensed financial statements are an
integral part of these balance sheets.
NYFS11...:\95\38995\0001\2579\TBL6085N.330
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
----------------------------------------------
For the six
months ended For the Period from
April 30, November 5, 1982
-------------------------------- (inception) through
1995 1994 April 30, 1995
-------------- ------------ -------------------
SALES $ - $ - $ -
-------------- -------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES,
including research and development expenses
of approximately $960,000, $1,540,000 and
$15,492,000, respectively 1,479,329 2,038,156 24,109,646
-------------- -------------- --------------
INTEREST INCOME 148,742 99,880 2,457,988
-------------- -------------- --------------
NET (LOSS) ($ 1,330,587) ($ 1,938,276) ($ 21,651,658)
============== =============== ==============
NET (LOSS) PER SHARE OF COMMON STOCK ($0.05) ($0.08) ($0.98)
============== =============== ==============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 24,916,707 24,582,144 22,015,251
============== =============== ==============
The accompanying notes to condensed financial statements are an
integral part of these statements.
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
----------------------------------------------
For the three
months ended
April 30,
--------------------------------
1995 1994
------------- -------------
SALES $ - $ -
-------------- -------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES,
including research and development expenses
of approximately $481,000, and $675,000,
respectively 738,778 848,933
-------------- -------------
INTEREST INCOME 79,477 48,551
-------------- -------------
NET (LOSS) ($ 659,301) ($ 800,382)
============== =============
NET (LOSS) PER SHARE OF COMMON STOCK ($0.03) ($0.03)
============== =============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 24,998,685 24,621,135
============== =============
The accompanying notes to condensed financial statements are an
integral part of these statements.
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
-------------------------------------------
FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION)
------------------------------------------------
THROUGH APRIL 30, 1995 (UNAUDITED)
----------------------------------
Accumulated
(Deficit)
Common Stock Additional During
---------------------------- Paid-in Development
Shares Par Value Capital Stage
------------ ------------ ------------- -------------
BALANCE, November 5, 1982 (inception) - $ - $ - $ -
Sale of common stock, at par, to incorporators on
November 8, 1982 1,470,000 14,700 - -
Sale of common stock, at $10 per share, primarily to
officers and employees from November 9, 1982 to
November 30, 1982 390,000 3,900 35,100 -
Sale of common stock, at $2 per share, in private
offering from January 24, 1983 to March 28, 1983 250,000 2,500 497,500 -
Sale of common stock, at $10 per share, in public
offering on October 6, 1983, net of underwriting
discounts of $1 per share 690,000 6,900 6,203,100 -
Sale of 60,000 warrants to representative of
underwriters, at $.001 each, in conjunction with
public offering - - 60 -
Costs incurred in conjunction with private
and public offerings - - (362,030) -
Common stock issued, at $12 per share, upon exercise
of 57,200 warrants from February 5, 1985 to
October 16, 1985, net of registration costs 57,200 572 630,845 -
Proceeds from sales of common stock by individuals
from January 29, 1985 to October 4, 1985 under
agreements with the Company, net of costs incurred
by the Company - - 298,745 -
Restatement as of October 31, 1985 for three-for-one
stock split 5,714,400 57,144 (57,144) -
Common stock issued, at $4 per share, upon exercise
of 2,800 warrants in December 1985 8,400 84 33,516 -
Sale of common stock, at market, to officers on
January 9, 1987 and April 22, 1987 and to members
of their immediate families on July 28, 1987 67,350 674 861,726 -
Restatement as of July 31, 1987 for five-for-four
stock split 2,161,735 21,617 (21,617) -
Fractional share payments in conjunction with
five-for-four stock split - - (1,345) -
Sale of common stock, at market, to members of
officers' immediate families from September 10,
1987 to December 4, 1990 and to officers on
October 29, 1987 and February 26, 1989 628,040 6,280 6,124,031 -
Sale of common stock, at market, to senior level
personnel on February 26, 1989 29,850 299 499,689 -
Continued
NYFS11...:\95\38995\0001\2579\TBL6085E.440
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
-------------------------------------------
FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION)
------------------------------------------------
THROUGH APRIL 30, 1995 (UNAUDITED)
----------------------------------
Continued
---------
Accumulated
(Deficit)
Common Stock Additional During
---------------------------- Paid-in Development
Shares Par Value Capital Stage
------------ ------------ ------------- -------------
Sale of common stock, at market, to unrelated party
on February 26, 1989 amended on March 10, 1989 35,820 358 599,627 -
Restatement as of January 31, 1991 for two-for-one
stock split 11,502,795 115,028 (115,028) -
Sale of common stock, at market, to members of
officers' immediate families from April 26, 1991 to
October 27, 1992 261,453 2,614 2,788,311 -
Common stock issued upon exercise of warrants by
members of officers' immediate families in
September 1993, July 1994 and February 1995 358,220 3,582 1,698,598 -
Common stock issued upon exercise of stock options
from December 16, 1992 to April 27, 1995 under
stock option plans, net of registration costs 1,543,140 15,432 8,609,046 -
Accumulated (deficit) during development stage - - - (21,651,658)
----------- ----------- ------------ ------------
BALANCE, April 30, 1995 25,168,403 $ 251,684 $ 28,322,730 ($ 21,651,658)
=========== =========== ============ ============
The accompanying notes to condensed financial statements are
an integral part of this statement.
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
----------------------------------------------
For the six
months ended For the Period from
April 30, November 5, 1982
-------------------------------- (inception) through
1995 1994 April 30, 1995
-------------- ------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments to suppliers, employees and
consultants ($ 1,340,607) ($ 2,016,817) ($ 23,284,602)
Interest received 148,510 ( 100,332) 2,440,715
------------ ------------- -------------
Net cash (used in) operating activities ( 1,192,097) ( 1,916,485) ( 20,843,887)
------------ ------------- -------------
CASH FLOWS FOR INVESTING ACTIVITIES:
Payments for purchases of property and
equipment ( 15,196) ( 36,794) ( 854,909)
Disbursements to acquire certificates of
deposit and corporate notes and bonds - - ( 12,075,191)
Proceeds from maturities of investments - - 12,075,191
------------ ------------- -------------
Net cash (used in) investing activities ( 15,196) ( 36,794) ( 854,909)
------------ ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock and
warrants, net of underwriting discounts of
$690,000 related to initial public offering
in October 1983 - - 17,647,369
Proceeds from exercise of stock options and
warrants, net of registration disbursements 1,838,110 466,419 10,991,675
Proceeds from sales of common stock by
individuals under agreements with the
Company, net of disbursements made by the
Company - - 298,745
Disbursements made in conjunction with
sales of stock - - ( 362,030)
Fractional share payments in conjunction
with stock split - - ( 1,345)
------------ ------------- -------------
Net cash provided by financing activities 1,838,110 466,419 28,574,414
------------ ------------- -------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS 630,817 ( 1,486,860) 6,875,618
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 6,244,801 8,317,010 -
------------ ------------- -------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 6,875,618 $ 6,830,150 $ 6,875,618
============ ============= =============
Continued
NYFS11...:\95\38995\0001\2579\TBL6085K.470
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
----------------------------------------------
Continued
---------
For the six
months ended For the Period from
April 30, November 5, 1982
-------------------------------- (inception) through
1995 1994 April 30, 1995
-------------- ------------- -------------------
RECONCILIATION OF NET (LOSS) TO NET CASH
(USED IN) OPERATING ACTIVITIES:
Net (loss) ($ 1,330,587) ($ 1,938,276) ($ 21,651,658)
Depreciation and amortization 30,128 26,929 662,671
(Increase) Decrease in accrued interest
receivable ( 232) 452 ( 17,273)
(Increase) Decrease in prepaid expenses 9,956 19,985 ( 36,038)
Decrease (Increase) in other assets ( 4,973) 780 ( 103,691)
Increase (Decrease) in accounts payable and
accrued liabilities related to operating
activities 103,611 ( 26,355) 302,102
------------ ------------ -------------
Net cash (used in) operating activities ( $ 1,192,097) ( $ 1,916,485) ( $ 20,843,887)
============ ============ =============
The accompanying notes to condensed financial statements are an
integral part of these statements
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
----------------------------------------------
For the three
months ended
April 30,
----------------------------------
1995 1994
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments to suppliers, employees and consultants ($ 713,014) ($ 1,010,066)
Interest received 84,388 ( 48,124)
------------ ------------
Net cash (used in) operating activities ( 628,626) ( 961,942)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property and equipment ( 3,117) ( 22,955)
------------ ------------
Net cash (used in) investing activities ( 3,117) ( 22,955)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants, net of
registration disbursements 1,838,110 447,500
------------ ------------
Net cash provided by financing activities 1,838,110 447,500
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,206,367 ( 537,397)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,669,251 7,367,547
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,875,618 $ 6,830,150
============ ============
RECONCILIATION OF NET (LOSS) TO NET CASH (USED IN)
OPERATING ACTIVITIES:
Net (loss) ($ 659,301) ($ 800,382)
Depreciation and amortization 15,407 13,950
(Increase) Decrease in accrued interest receivable 4,911 ( 427)
(Increase) Decrease in prepaid expenses ( 2,421) 5,121
Decrease (Increase) in other assets 482 -
Increase (Decrease) in accounts payable and accrued
liabilities related to operating activities 12,296 ( 180,204)
----------- ------------
Net cash (used in) operating activities ($ 628,626) ($ 961,942)
=========== ============
The accompanying notes to condensed financial statements are an
integral part of these statements.
NYFS11...:\95\38995\0001\2579\TBL6085M.180
COPYTELE, INC.
--------------
(Development Stage Enterprise)
------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
---------------------------------------
APRIL 30, 1995 (UNAUDITED)
--------------------------
(1) Summary of significant accounting policies and
----------------------------------------------
other disclosures:
------------------
Reference is made to the October 31, 1994 audited financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1994,
for more extensive disclosures than contained in these condensed
financial statements.
The information for the three and six month periods ended April
30, 1995 and 1994 and the period from November 5, 1982
(inception) through April 30, 1995 is unaudited, but in the
opinion of the Company, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair
presentation of the results of operations for such periods have
been included. The results of operations for interim periods may
not necessarily reflect the annual operations of the Company.
On March 28, 1995, the Company entered into a Joint Venture
Contract with Shanghai Electronic Components Corp. providing for
the formation of a joint venture in China having a 20 year
duration for the development, manufacture and marketing of multi-
functional telecommunication products utilizing the Company's
flat panel and associated technology. The Company owns a 55%
interest in Shanghai CopyTele Electronics Co., Ltd., the joint
venture company. The Company's initial capital contribution will
consist of both cash and certain technology that has been
licensed by the Company to the joint venture pursuant to a
Technology Licensing Agreement entered into on the same date as
the Joint Venture Contract. Reference is made to the Management's
Discussion and Analysis of Financial Condition and Results of
Operations section for further discussion involving this joint
venture arrangement.
The Company invests principally in short term highly liquid
financial instruments with original maturities of less than three
months, which have been classified as cash equivalents in the
accompanying condensed balance sheets. The cost of these
investments approximates market value.
The Company has adopted all recently issued accounting standards
which have a material impact on its condensed financial
statements.
(2) Stock option plans:
-------------------
Information regarding the Company's stock option plan, adopted by
the Board of Directors on April 1, 1987 (the "1987 Plan"), from
November 1, 1994 to April 30, 1995, after adjustments for
applicable stock splits, is as follows:
Range of Option
Shares Price Per Share
------ ---------------
Shares under option at
October 31, 1994 1,687,860 $ 3.88 - $13.88
Exercised (120,000) $ 3.88 - $ 5.50
Cancelled (122,800) $ 5.50 - $ 6.50
---------
Shares under option at
April 30, 1995 1,445,060 $ 3.88 - $13.88
========= ===============
The exercise price with respect to all of the options granted
under the 1987 Plan from its inception was at least equal to the
fair market value of the underlying common stock of the Company
(the "Common Stock") on the date of grant. As of April 30, 1995,
all of the options to purchase shares of Common Stock granted and
outstanding under the 1987 Plan were exercisable. Upon the
approval of the 1993 Stock Option Plan (the "1993 Plan") by the
Company's shareholders in July 1993, which had been adopted by
the Board of Directors on April 28, 1993, the 1987 Plan was
terminated with respect to the grant of future options.
During May 1995, the Company received proceeds aggregating
approximately $220,000 relating to the exercise of options to
purchase 40,000 shares of Common Stock pursuant to the 1987 Plan.
Information regarding the 1993 Plan from November 1, 1994 to
April 30, 1995 is as follows:
Range of Option
Shares Price Per Share
------ ---------------
Shares under option
at October 31, 1994 2,231,000 $ 4.88 - $17.00
Granted 825,000 $ 4.88 - $ 6.74
Exercised (157,000) $ 4.88 - $ 5.63
Cancelled (60,000) $ 5.63 - $11.50
---------
Shares under option
at April 30, 1995 2,839,000 $ 4.88 - $17.00
========= ===============
The exercise price with respect to all of the options granted
under the 1993 Plan from its inception was at least equal to the
fair market value of the underlying Common Stock on the grant
date. As of April 30, 1995, 2,039,000 of the options to purchase
shares of common stock granted and outstanding under the 1993
Plan were exercisable. At that date, 4,000 options were available
for future grants under the 1993 Plan.
On May 3, 1995, the Stock Option Committee granted options to
purchase an aggregate of 1,585,000 shares of Common Stock under
the 1993 Plan. The grants are subject to shareholder approval of
an amendment to the 1993 Plan to increase the number of shares of
Common Stock available for issuance pursuant to grants under the
1993 Plan from 3,000,000 to 7,000,000. If the amendments are not
approved, the grants will become null and void. The exercise
price, which was $6.625 per share, was at least equal to the fair
market value of the underlying Common Stock on the date of grant.
As of June 2, 1995, 2,039,000 of the options to purchase shares
of Common Stock granted and outstanding under the 1993 Plan were
exercisable. At that date, 4,000 options were available for
future grants under the 1993 Plan. If the Company's shareholders
approve the aforementioned amendment, 2,419,000 shares of Common
Stock will be available for issuance pursuant to grants under the
1993 Plan based upon the number of shares granted to date.
During May 1995, the Company received proceeds aggregating
approximately $129,375 relating to the exercise of options to
purchase 23,000 shares of common stock pursuant to the 1993 Plan.
(3) Warrants to purchase common stock:
----------------------------------
Information from November 1, 1994 to April 30, 1995 regarding
warrants previously issued by the Company, primarily to members
of the immediate families of its Chairman of the Board and its
President in conjunction with the sale of its common stock, after
adjustments for anti-dilutive provisions, is as follows:
Current Weighted
Average Exercise
Shares Price Per Share
------ -----------------
Shares covered by
warrants at
October 31, 1994 669,333 $7.15
Warrants exercised (54,000) $6.12
Warrants expired (87,150) $6.16
-------
Shares covered by
warrants at
April 30, 1995 528,183 $7.34
======= =====
The exercise price of all of the warrants was at least equal to
the fair market value of the underlying Common Stock on the date
of issuance of such warrants. As of April 30, 1995, all of the
warrants to purchase shares of Common Stock issued and
outstanding were exercisable.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
------------------------------------
The Company, which is a development stage enterprise, was
incorporated on November 5, 1982 and has had no revenues to
support its operations since its inception. The Company's
principal activities presently relate to a Joint Venture with
Shanghai Electronic Components Corp. ("S.E.C.C.") of Shanghai,
China. It is presently contemplated that the Joint Venture, in
conjunction with the Company and S.E.C.C., will develop,
manufacture and market products worldwide in the
telecommunications field. There is no assurance, and the Company
is not able to predict, if and when marketable telecommunications
products incorporating the Company's flat panel technology will
be developed or produced. Even if the Company were to produce
marketable products, directly or through the Joint Venture, there
is no assurance that the Company will generate revenues in the
future, will have sufficient revenues to generate profit or that
other products will not be produced by other companies that will
render the products of the Company or the Joint Venture obsolete.
In reviewing Management's Discussion and Analysis of Financial
Condition and Results of Operations, reference is made to the
Company's Condensed Financial Statements and the notes thereto.
Results of Operations
- ---------------------
Selling, general and administrative expenses for the six and
three month periods ended April 30, 1995 and 1994 and for the
period from November 5, 1982 (inception) through April 30, 1995
were approximately $1,479,000, $2,038,000, $739,000, $849,000 and
$24,110,000, respectively. These amounts include research,
development and tooling costs of approximately $960,000,
$1,540,000, $481,000, $675,000 and $15,492,000, respectively, as
well as normal operating expenses. The decrease in selling,
general and administrative expenses during the six and three
months ended April 30, 1995 as compared to the same periods ended
in 1994 resulted primarily from decreases in engineering supplies
expenditures necessitated by the present phase of the Company's
development program and related activities. Professional fees,
especially patent application preparation and filing fees,
decreased during the fiscal 1995 periods, offset by an increae in
legal fees, associated with the Joint Venture, during the three
months ended April 30, 1995.
Since November 1985, the Company's Chairman of the Board and its
President have waived salary and related pension benefits for an
undetermined period of time. Four other individuals, including a
former officer and senior level personnel, waived salary and
related pension benefits from January 1987 through December 1990.
Commencing in January 1991, these four individuals waived such
rights for an undetermined period of time and they did not
receive salary or related pension benefits through December 1992.
The Company's Chairman of the Board, its President and the three
senior level personnel (exclusive of the former officer)
continued to waive such rights commencing in January 1993 for an
undetermined period of time. One additional employee is also
currently waiving such salary and benefit rights for an
undetermined period of time.
The increase in interest income during both the six and three
months ended April 30, 1995 as compared to the same periods ended
in 1994 primarily resulted from an increase in interest rates
available for investment. Funds available for investment during
the six and three month periods ended April 30, 1995 and 1994, on
a monthly weighted average basis, were approximately $6,100,000,
$7,400,000, $6,300,000 and $7,100,000, respectively. The
investment instruments selected by the Company are principally
money market accounts, treasury bills and commercial paper.
The Company has adopted all recently issued accounting standards
which have a material impact on its condensed financial
statements.
Liquidity and Capital Resources
- -------------------------------
Since its inception, the Company has met its liquidity and
capital expenditure needs primarily from the proceeds of the
sales of Common Stock in the initial public offering, in private
placements, upon exercise of warrants issued in connection with
the private placements and public offering, and upon exercise of
stock options pursuant to the 1987 Plan and the 1993 Plan.
During May 1995, the Company received additional proceeds
aggregating approximately $220,000 relating to the exercise of
options to purchase 40,000 shares of Common Stock under the 1987
Plan. Also, during May 1995 the Company received additional
proceeds aggregating approximately $129,375 relating to the
exercise of options to purchase 23,000 shares of Common Stock
under the 1993 Plan.
The Company believes that even without sales it will have
sufficient funds into the first quarter of fiscal 1997 to
maintain its present level of development efforts, and to make
its initial capital contributions, in installments, to the Joint
Venture of approximately $1.2 million. The Company anticipates
that it may require additional funds in order to participate in
the Joint Venture following its initial capital contributions and
to continue its research and development activities. The
Company's estimated funding capacity indicated above assumes,
although there is no assurance, that the waiver of salary and
pension benefits by the Chairman of the Board, the President and
senior level personnel will continue.
The National Association of Securities Dealers, Inc. ("NASD")
requires that the Company maintain a minimum of $4 million of net
tangible assets to maintain its NASDAQ - NMS listing. The Company
anticipates that it will seek additional sources of funding, when
necessary, in order to satisfy the NASD requirements.
There can be no assurance that adequate funds will be available
to satisfy the Company's Joint Venture and NASD funding
requirements or that, if available, such funds will be available
on terms and conditions favorable to the Company.
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
The Company filed a Report on Form 8-K, dated March 28, 1995, which
included the following: a Joint Venture Contract, dated March 28,
1995, by and between Shanghai Electronic Components Corp. and
CopyTele, Inc.; a Technology License Agreement, dated March 28, 1995,
by and between Shanghai CopyTele Electronics Co., Ltd. and CopyTele,
Inc.; and a copy of a Press Release issued by the Company on the same
date.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
CopyTele, Inc.
/s/ Denis A. Krusos
------------------------------
Denis A. Krusos
Chairman of the Board,
Chief Executive Officer
and Director (Principal
June 8, 1995 Executive Officer)
/s/ Frank J. DiSanto
------------------------------
Frank J. DiSanto
June 8, 1995 President and Director
/s/ Gerald J. Bentivenga
------------------------------
Gerald J. Bentivegna
Vice President - Finance and
Chief Financial Officer
(Principal Financial and
June 8, 1995 Accounting Officer)
Exhibit Index
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Exhibit No. Description
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27 Financial Data Schedule