Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1999
( ) 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 ___________0-8174________
Conolog Corporation
(Exact name of registrant as specified in its charter)
Delaware 52-0853566
(State or other jurisdiction of (I. R. S. Employer
organization) Identification No.)
5 Columbia Road, Somerville, NJ 08876
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (908) 722-8081
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 report(s), and (2) has
been subject to such filing requirement for the past 90 days.
YES X NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PROCEEDING FIVE YEARS.
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 subsequently to the distribution of
securities under a plan confirmed by a court.
YES ______ NO ________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, par value $.01 per share; 6,229,409 shares outstanding
as of December 1, 1999 (inclusive of Treasury Stock).
Conolog Corporation
CONDENSED CONSOLIDATED BALANCE SHEET
October 31, 1999
ASSETS (Unaudited)
Current Assets:
Cash $ 1,133,223
Accounts Receivable, less
allowance of $6,000 358,891
Inventories 3,209,956
Other Current Assets 21,025
Prepaid Consulting 285,021
------------
Total Current Assets $ 5,008,116
Property, Plant and Equipment 150,136
less accumulated depreciation
of $1,613,911
Goodwill 132,937
Other Assets 115,958
Prepaid Consulting 1,140,986
------------
Total Assets $ 6,548,133
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 82,674
Accrued Payroll 50,884
Other Accrued Expenses 163,335
Deferred gain on sale of assets 51,425
-----------
Total Current Liabilities $ 348,318
-----------
Deferred gain on sale of assets 64,533
-----------
Total Liabilities $ 412,851
-----------
CONOLOG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
October 31, 1999
Stockholders' Equity
Preferred Stock, par value $.50;
Series A; 4% cumulative; 162,000
shares authorized;155,000 shares
issued and outstanding 77,500
Preferred Stock, par value $.50;
Series B; $.90 cumulative; 50,000
shares authorized issued and
outstanding 1,197 shares 597
Common Stock; par value $0.01;
20,000,000 shares authorized;
issued 6,218,049 shares, including
8,776 shares held in Treasury 62,180
Contributed Capital 16,274,703
Retained Earnings (Deficit) (10,147,965)
Treasury Shares at Cost (131,734)
------------
Total Stockholders' Equity $ 6,135,282
------------
Total Liabilities and
Stockholders' Equity $ 6,548,133
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
OCTOBER 31,
1999 1998
REVENUES $763,014 $319,349
COSTS OF GOODS SOLD 842,294 281,148
--------- ---------
GROSS MARGIN ( 79,280) 37,201
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 319,693 169,164
--------- ---------
OPERATING(LOSS) (398,973) (131,963)
OTHER INCOME-GAIN ON
SALE OF BLDG. 0 413,789
--------- ---------
INCOME/(LOSS) BEFORE
TAXES (398,973) 281,826
PROVISION FOR TAXES 1,120 1,320
--------- ---------
NET INCOME/(LOSS) $(400,093) $280,506
========= =========
EARNINGS/(LOSS) PER SHARE $(.07) $ .08
========= =========
Average Number of Shares of
Common Stock Outstanding
6,218,049 3,724,773
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED OCTOBER 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided/(Used) in Operating
Activities (289,088) (494,023)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided/(Used) in Investing (23,016) 617,821
Activities -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Cash Provided/(Used) by Financing
Activities 302,754 617,821
----------- ----------
NET INCREASE/(DECREASE) IN CASH $ (9,350) $ 123,798
CASH AT BEGINNING OF YEAR 1,142,573 1,108,581
----------- ----------
CASH AT END OF PERIOD $1,133,223 1,232,379
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Taxes
The Company has entered into a program with the New Jersey Economic
Development Authority to sell its State tax loss carry-forwards. The Company
is expected to receive approximatatly $300,000 during the later half of
fiscal 2000 from the sale of such carry-forwards.
NOTE 2 - Convertible Debentures
CLOG LLC has converted $300,000 of convertible debentures into shares
during the period.
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
A summary of income, costs and expenses for the current quarter and
corresponding quarter of the previous year follows:
For the three months
Ended October 31,
1999 1998
Revenues $ 763,014 $ 319,349
Costs and Expenses (1,163,107) (452,632)
Other Income 0 413,789
---------- ---------
Net Income/(Loss)
after Taxes, before $ (400,093) $ 280,506
extraordinary item =========== ===========
QUARTER ENDED OCTOBER 31, 1999
Revenues for the quarter ended October 31, 1999 totaled $763,014
representing an increase of 138.9% or $443,665 from $319,349 reported
for the same quarter a year ago. Revenues increased largely due to
the inclusion of Atlas Design, a human resource company of which the
assets were purchased in September 1998 as well as releases for the
Company's INIVEN products.
Gross margin for the quarter totaled $(79,280) representing (10%) of
revenues as compared to $37,201 or 11.65% of revenues for the quarter ended
October 31, 1998. The decrease in gross margin is mostly due to larger
commission expenses, payroll costs, and lower margin sales during the
quarter.
Selling, general and administrative expenses increased from $169,164 to
$319,693 for the quarter, representing an increase of $150,529 as compared
to 1998. This increase is attributable to higher consulting expenses incurred
during the quarter as compared to 1998.
As a result of the foregoing, the Company reported net loss of $400,093,
or $.07 per share for the quarter compared to net income of $280,506 or
$0.08 per share.
LIQUIDITY AND FINANCIAL CONDITION
Inventories increased $16,240 from July 31, 1999 attributable to the
Purchase of parts for the PTR-1500 Series product releases.
Accounts Receivable increased $7,010 to $358,891 reflecting higher
sales for the period.
Working Capital at October 31, 1999 was $4,659,798 compared to $4,766,016
at July 31, 1999. This is primarily attributable to increased payables and
payroll expenses and decreased cash and prepaid balances.
The Company plans to use the additional funds from the sale of the
building to complete the PTR1500 for the General Electric Co., to improve its
financial condition and prepare for an anticipated increase in business in
fiscal 2000. The Company anticipates additional backlog releases from the
Bonneville Power Administration and the US Government as well as other key
customers. This should generate additional sales and resulting cash flow to
support an expanded operating level in fiscal 2000 versus fiscal 1999.
The Company also plans to use the funds for future expansion through
mergers and acquisitions.
The Company presently meets its cash requirements through existing cash
balances and cash generated from operations.
MANAGEMENT REPRESENTATION
The information furnished reflects all adjustments which management
considers necessary for a fair statement of the results of the period.
As of October 31, 1999 the Registrant's backlog of orders stands at
$2.8 million, a mix of military and commercial telecommunication products.
The Company anticipates its commercial shipments to grow as a percentage
of total sales for the foreseeable future.
STATEMENT REGARDING PRESENT OPERATIONS
There was no material change in the nature of the operations of
Registrant during the three months ended October 31, 1999 from the information
contained in the Registrant's annual report of Form 10-K for the fiscal year
ended July 31, 1999.
FORWARD LOOKING STATEMENTS
This 10-QSB contains certain forward-looking statements. Due to the
uncertainties associated with doing business with governmental entities and
the release of backlog orders and competition in a business characterized by
rapid technologic changes and advances, actual results may differ materially
from any such forward looking statements.
Part II - Other Information
CONOLOG CORPORATION
1. Legal Proceedings - none
2. Changes in Securities - See Management Discussion
3. Defaults upon Senior Securities - None
4. Submission of Matters to a Vote of Security Holders - None
5. Other Materially Important Events - none
6. No reports or Exhibits on Form 8-K have been filed during the
quarter.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form 10-QSB and has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Somerville, State of New Jersey, on this 3rd
day of December, 1999.
CONOLOG CORPORATION
By /s/ Robert S. Benou
Robert S Benou
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this 10-QSB has been signed below by the following persons in the capacities
and on the dates indicated.
Date: December 3, 1999 /s/ Robert S. Benou
Robert S. Benou
President,
Chief Executive Officer
and Director
Date: December 3, 1999 /s/ Arpad J. Havasy
Arpad J. Havasy
Executive Vice President,
Secretary, Treasurer and
Director
Date: December 3, 1999 /s/ Marc R. Benou
Marc R. Benou
Vice President, Assistant
Secretary and Director
Date: December 3, 1999 /s/ Louis S. Massad
Louis S. Massad
Director
Date: December 3, 1999 /s/ Edward J. Rielly
Edward J. Rielly
Director
1
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[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] JUL-31-2000
[PERIOD-END] OCT-31-1999
[CASH] 1,133,223
[SECURITIES] 0
[RECEIVABLES] 364,891
[ALLOWANCES] (6,000)
[INVENTORY] 3,209,956
[CURRENT-ASSETS] 5,008,116
[PP&E] 1,764,047
[DEPRECIATION] (1,613,911)
[TOTAL-ASSETS] 6,548,133
[CURRENT-LIABILITIES] 348,318
[BONDS] 0
[PREFERRED-MANDATORY] 77,500
[PREFERRED] 597
[COMMON] 62,180
[OTHER-SE] 5,995,004
[TOTAL-LIABILITY-AND-EQUITY] 6,548,133
[SALES] 763,014
[TOTAL-REVENUES] 763,014
[CGS] 842,294
[TOTAL-COSTS] 1,161,987
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (398,973)
[INCOME-TAX] 1,120
[INCOME-CONTINUING] (400,093)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (400,093)
[EPS-BASIC] (0.07)
[EPS-DILUTED] (0.07)
</TABLE>
