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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended January 31, 1996
Commission File Number 0-3825
Computer Transceiver Systems, Inc.
(Exact name of registrant as specified in its charter)
New York 22-1842747
(State of Incorporation) (I.R.S. Employer Identification Number)
Registrant's Telephone Number: (201) 473-4700
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
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by court.
Yes X No
The number of shares outstanding of the registrant's Common Stock, par value
of $.001 per share, as of March 13, 1996 was 2,716,603.
<PAGE>
COMPUTER TRANSCEIVER SYSTEMS, INC.
FORM 10 - Q
January 31, 1996
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets - January 31, 1996
and July 31, 1995 3
Statements of Discontinued Operations-
Three Months ended January 31, 1996
and January 31, 1995 4
Statements of Cash Flows-
Three Months ended January 31, 1996
and January 31, 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
II. Other Information
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
<PAGE>
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
COMPUTER TRANSCEIVER SYSTEMS, INC.
Balance Sheets
<CAPTION>
January 31, 1996 July 31, 1995
(unaudited) (audited)
(note 2)
----------------- -----------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Marketable Securities -
Vertex Industries $ 3,052 $ 3,052
--------------- --------------
Total Assets $ 3,052 $ 3,052
=============== ==============
Liabilities and Stockholders' Equity
- ------------------------------------
(Deficit)
- ---------
Current Liabilities:
- --------------------
Accrued expenses $ --- $ 43,000
--------------- ---------------
Total Current Liabilities --- $ 43,000
--------------- ---------------
Commitments and Contingencies
Stockholders' Equity (Deficit)
- ------------------------------
Common stock, par value $.001 per share
authorized 15,000,000 shares; issued and
outstanding 2,716,603 shares at January 31,
1996 and at July 31, 1995, respectively 2,716 2,716
Capital in excess of par value 2,452,840 2,409,840
Retained earnings (deficit) (2,450,156) (2,450,156)
Net unrealized loss on Marketable Securities (2,348) (2,348)
--------------- ---------------
Total Stockholders' Equity (Deficit) 3,052 (39,948)
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 3,052 $ 3,052
=============== ==================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
COMPUTER TRANSCEIVER SYSTEMS, INC.
Statement of Discontinued Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
January 31 January 31,
1996 1995 1996 1995
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Gain on Disposal of Assets and
Liabilities net of operating loss of
$88,881 and income taxes of
$591,400: $ --- $ --- $ --- $ 707,274
-------------- -------------- -------------- -------------
Net Income --- --- --- 707,274
Retained (Deficit) at beginning of
period (2,450,156) (2,450,156) (2,450,156) (3,157,430)
-------------- -------------- -------------- -------------
Retained (Deficit) at end of period (2,450,156) (2,450,156) (2,450,156) (2,450,156)
============== =============== ============== =============
Earnings Per Share of Common Stock:
Net gain on Disposal of Assets
Liabilities $ --- $ --- $ --- $ .24
-------------- -------------- -------------- ------------
Net Income per share $ --- $ --- $ --- $ .24
- -------------------- ============== ============== ============== ============
Weighted Average Number of
- --------------------------
Shares Outstanding 2,716,603 3,165,276 2,716,603 3,462,764
- ------------------ ============== ============== ============= ============
Dividends per share $ 0.00 $ 0.00 $ 0.00 $ 0.00
============== ============== ============= ============
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
-4-
<PAGE>
<TABLE>
COMPUTER TRANSCEIVER SYSTEMS, INC.
Statements of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended
January 31, 1996 January 31, 1995
---------------- ----------------
<S> <C> <C>
Cash Flows from Discontinued
- ----------------------------
Operating Activities:
- ---------------------
Net Income $ --- $ 707,274
Net Adjustments to Reconcile
Net Income to net cash used for
operating activities:
Gain on sale of net assets --- (1,387,554)
Unrealized loss on marketable securities --- (2,248)
Increased in Deferred Taxes --- 548,400
(Increase) or Decrease in Assets:
Marketable Securities-
Vertex Industries, Inc. --- (3,052)
Net assets of discontinued operations --- (4,940)
Increase (decrease) in liabilities:
Accrued expenses (43,000) 43,000
Net adjustments to reconcile net income
to net cash used for discontinued
operating activities (43,000) (806,494)
---------------- ----------------
Net Cash used for discontinued (43,000) (99,220)
operating activities ---------------- ----------------
Cash Flows From Financing Activities:
Proceeds from additional capital
contribution 43,000 64,971
---------------- ----------------
Net Cash Provided by Financing
Activities 43,000 64,971
---------------- ----------------
Net (Decrease) in Cash --- (34,249)
Cash at Beginning of Year --- 34,249
---------------- ----------------
Cash at End of Period $ --- $ ---
---------------- ----------------
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
-5-
<PAGE>
COMPUTER TRANSCEIVER SYSTEMS, INC.
Notes to Financial Statements - Unaudited
January 31, 1996
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission, and reflect all adjustments which, in the opinion of the
management, are necessary for a fair statement of the results of the interim
periods presented. These financial statements do not include all disclosures
associated with annual financial statements, and accordingly should be read in
conjunction with the notes to financial statements contained in the Company's
Form 10-K Annual Report for the fiscal year ended July 31, 1995.
Note 2 - SALE OF ASSETS TO VERTEX AND FUTURE PLANS
On August 31, 1994, pursuant to an "Asset Purchase Agreement" dated May 1,
1993 between the Company and Vertex Industries, Inc. ("Vertex"), the Company's
majority stockholder, and with the approval of the Company's directors and
shareholders, the Company sold all of its assets to Vertex and Vertex assumed
the Company's liabilities. The assets sold included inventory, equipment,
receivables, proprietary technology, goodwill and other intangibles. The
selling price of $1,699,580 was paid by Vertex through the offset and
cancellation of the Company's indebtedness to Vertex in the amount of
$1,257,001, with the balance of $442,579 being paid through the issuance of
236,042 shares of Vertex common stock to the Company. CTSI subsequently
distributed 233,170 shares of Vertex common stock in an exchange offer for
746,161 shares of CTSI's common stock. The Vertex shares reflected in the
balance sheet as marketable securities as of July 31, 1995 represents the
remaining shares of 2,872 which were not distributed to the CTSI shareholders.
After completion of the Exchange Offer, the number of issued and outstanding
shares of the Company was reduced from 3,462,764 to 2,716,603. As a result of
the transaction, Vertex's ownership of the Company is approximately 72.5%.
As a result of the sale of the Company's assets on August 31, 1994, there
were only 31 days of operations for the Company for the year ended July 31,
1995, in which the Company sustained an operating loss of $88,881. However,
the sale resulted in a net gain to the Company on the disposition of its
assets, which amounted to a net gain of $707,274, after provision for such loss
and taxes.
The Company's current business purpose is to seek out and obtain an
acquisition, and/or merger transaction, whereby its shareholders may benefit
by owning an interest in a viable enterprise. Since the Company has no
operations or significant assets as a result of the sale, its potential for
profits will come solely from operations it may undertake after any acquisition
or merger transaction. The Company has not received from, or made any specific
proposals to, any possible merger or acquisition candidate and there is no
guarantee that such transaction will occur. Vertex will be responsible for,
and shall be the source of, any funds necessary for the Company to continue
operating and to comply with any regulatory requirements, taxes, and fees.
It will fund any costs associated with pursuing merger or acquisition
candidates.
-6-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The Company ceased operations on August 31, 1994 and, therefore, has no
operating results for the six months ended January 31, 1996.
As a result of the sale of the Company's assets on August 31, 1994, there
were only 31 days of operations for the Company for the six months ended
January 31, 1996, on which the Company sustained an operating loss of $88,881.
However, the sale resulted in a net gain to CTSI on the disposition of its
assets, which amounted to a net gain of $707,274, after provision for such loss
and taxes.
-7-
<PAGE>
COMPUTER TRANSCEIVER SYSTEMS, INC.
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits: None
(b) There were no reports on Form 8K filed during the
quarter ended January 31, 1996
-8-
<PAGE>
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.
COMPUTER TRANSCEIVER SYSTEMS, INC.
(Registrant)
Date: March 13, 1996 By: S/ Thomas J. Tully
- ---------------------------------- -----------------------------
Thomas J. Tully
President
Date: March 13, 1996 By: S/ Ronald C. Byer
- ---------------------------------- -----------------------------
Ronald C. Byer
Treasurer
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 0
<SECURITIES> 3,052
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,052
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,052
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,716
<OTHER-SE> 336
<TOTAL-LIABILITY-AND-EQUITY> 3,052
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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