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, 2000
( ) 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; 8,519,327 shares outstanding
as of December 12, 2000 (inclusive of Treasury Stock).
Conolog Corporation
CONDENSED CONSOLIDATED BALANCE SHEET
October 31, 2000
ASSETS (Unaudited)
Current Assets:
Cash $ 856,846
Accounts Receivable, less
allowance of $6,000 1,173,875
Inventories (Note 2) 3,185,501
Other Current Assets 132,555
Prepaid Consulting 285,021
------------
Total Current Assets $ 5,633,798
Property, Plant and Equipment 174,241
less accumulated depreciation
of $1,659,169
Goodwill 668,290
Other Assets 199,151
Prepaid Consulting 90,446
------------
Total Assets $ 6,765,926
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 101,738
Accrued Payroll 62,239
Other Accrued Expenses 147,865
Deferred gain on sale of assets 55,458
-----------
Total Current Liabilities $ 367,300
-----------
CONOLOG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
October 31, 2000
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 8,518,857 shares, including
55,813 shares held in Treasury 85,189
Contributed Capital 17,934,299
Retained Earnings (Deficit) (11,513,019)
Treasury Shares at Cost (185,940)
------------
Total Stockholders' Equity $ 6,398,626
------------
Total Liabilities and
Stockholders' Equity $ 6,765,926
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
OCTOBER 31,
2000 1999
REVENUES
PRODUCT REVENUES $ 388,529 $152,356
SERVICE REVENUES 1,423,676 609,761
----------- --------
TOTAL REVENUES $1,812,205 $762,117
COSTS OF GOODS SOLD
PRODUCT COSTS 78,601 226,409
SERVICE COSTS 1,093,895 566,066
---------- ---------
TOTAL COSTS OF REVENUES 1,172,496 792,475
--------- ---------
GROSS PROFIT 639,709 ( 30,358)
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 458,023 369,512
--------- --------
INCOME (LOSS) FROM OPERATIONS 181,686 (399,870)
INTEREST INCOME 6,105 897
--------- ---------
INCOME/(LOSS) BEFORE
TAXES 187,791 (398,973)
PROVISION FOR TAXES 63,849 1,120
--------- ---------
NET INCOME/(LOSS) $ 123,942 $(400,093)
========= ==========
EARNINGS/(LOSS) PER SHARE $ .01 $(.07)
========= ==========
Average Number of Shares of
Common Stock Outstanding 8,518,857 6,218,049
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED OCTOBER 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided/(Used) in Operating
Activities (299,631) (289,088)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided/(Used) in Investing (286,352) ( 23,016)
Activities --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Cash Provided/(Used) by Financing
Activities 145,798 302,754
----------- ---------
NET INCREASE/(DECREASE) IN CASH $(440,185) $( 9,350)
CASH AT BEGINNING OF YEAR 1,297,031 1,142,573
----------- ----------
CASH AT END OF PERIOD $ 856,846 1,133,223
=========== ===========
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
has received $101,540 during the second quarter of fiscal 2001 from the sale
of such carry-forwards.
NOTE 2 - Inventories
Inventories are broken down as follows:
Finished Goods $ 974,502
Work in Process 1,017,582
Materials and Supplies 1,193,417
-------------
total $ 3,185,501
NOTE 3 - Other Business
The Company purchased substantially all the assets of Independent
Computer Maintenance Corporation (ICM) in August 2000 for $600,000.
ICM provides installation, maintenance, and troubleshooting of
commercial and corporate computer systems and networks. Under
the agreement, Conolog paid $400,000 cash and issued 100,000 shares
of common stock, with additional shares to be issued if the price per
share of the Company stock is less than $2.00 on the first anniversary
after the closing.
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,
2000 1999
Revenues $1,818,310 $ 763,014
Costs and Expenses (1,694,368) (1,163,107)
---------- ---------
Net Income/(Loss)
after Taxes $ 123,942 $ (400,093)
=========== ===========
QUARTER ENDED OCTOBER 31, 2000
Revenues for the quarter ended October 31, 2000 totaled $1,812,205
representing an increase of 137.8% or $1,050,088 from $762,117 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 the purchase of
Independent Computer Maintenance Corporation, a provider of installation,
maintenance and troubleshooting services for commercial and corporate
computer systems and networks.
Gross margin for the quarter totaled $639,709 representing 35.3% of
revenues as compared to $(30,358) or (4%) of revenues for the quarter ended
October 31, 1999. The increase in gross margin is mostly due to lower
commission expenses and higher margin sales during the quarter.
Selling, general and administrative expenses decreased from 48.5% of
revenues to 25.3% revenues for the quarter ended October 31, 2000. This
is due to increased revenues and consolidations.
As a result of the foregoing, the Company reported net income of $123,942,
or $.01 per share for the quarter compared to net loss of ($400,093) or
($0.07) per share.
LIQUIDITY AND FINANCIAL CONDITION
Inventories increased $268,916 from July 31, 2000 attributable to the
purchase of parts for the PTR-1500 Series product releases as well as the
purchase of Independent Computer Maintenance Corporation.
Accounts Receivable increased $311,423 to $1,173,875 reflecting higher
sales for the period, partially due to the purchase of Independent Computer
Maintenance Corporation.
Working Capital at October 31, 2000 was $5,266,498, compared to
$5,383,454 at July 31, 2000. The reduction in working capital is due
primarily to the purchase of Independent Computer Maintenance Corporation.
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 2001 versus fiscal 2000.
The Company also plans 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, 2000 the Registrant's backlog of orders stands at
$4.9 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, 2000 from the information
contained in the Registrant's annual report of Form 10-K for the fiscal year
ended July 31, 2000.
SUBSEQUENT EVENTS
The Company will be closing on the purchase of Hughes & Podesla Personnel
Associates, Inc. in late December 2000. Hughes & Podesla is an IT, engineering
and technology personnel agency servicing the metropolitan New York/New Jersey
area. The Company anticipates this purchase to add approximately $3 million in
revenues in the following 12 months. This acquisition will complement the
Company's Atlas Design division.
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
In accordance with the requirements of the Exchange Act, the Registrant's
caused this report to be signed on its behalf by the undersigned, thereunto
and duly authorized
CONOLOG CORPORATION
By /s/ Robert S. Benou
December 15, 2000 Robert S Benou
President and Chief
Executive Officer
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