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 JANUARY 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; 5,475,772 shares outstanding
as of February 8, 2000 (inclusive of Treasury Stock).
Conolog Corporation
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, 2000
ASSETS (Unaudited)
Current Assets:
Cash $ 940,970
Accounts Receivable, less
allowance of $6,000 631,326
Inventories 3,239,286
Other Current Assets 139,179
Prepaid Consulting 77,496
------------
Total Current Assets $ 5,028,257
Property, Plant and Equipment 142,418
less accumulated depreciation
of $1,623,225
Goodwill 132,042
Other Assets 100,833
Prepaid Consulting 297,797
------------
Total Assets $ 5,701,347
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 69,404
Accrued Payroll 11,405
Other Accrued Expenses 134,889
Deferred gain on sale of assets 51,425
-----------
Total Current Liabilities $ 267,123
-----------
Deferred gain on sale of assets 49,408
-----------
Total Liabilities $ 316,531
-----------
CONOLOG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
January 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 5,460,907 shares, including
22,776 shares held in Treasury 54,609
Contributed Capital 15,215,748
Retained Earnings (Deficit) ( 9,820,266)
Treasury Shares at Cost (143,372)
------------
Total Stockholders' Equity $ 5,384,816
------------
Total Liabilities and
Stockholders' Equity $ 5,701,347
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
January 31, January 31,
2000 1999 2000 1999
--------- -------- -------- -------
REVENUES $1,556,937 $589,328 $2,319,951 $908,677
COSTS OF GOODS SOLD 1,195,286 594,284 2,037,580 876,432
--------- --------- ----------- ---------
GROSS MARGIN 361,651 ( 4,956) 282,371 32,245
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 242,675 503,742 562,368 672,905
--------- --------- ---------- ---------
OPERATING INCOME/(LOSS) 118,976 (508,698) (279,997) (640,660)
OTHER INCOME
-GAIN ON SALE OF BLDG. 0 0 0 413,789
- NJ STATE NOL 210,887 0 210,887 0
--------- --------- ---------- ---------
INCOME/(LOSS) BEFORE
TAXES 329,863 (508,698) (69,110) (226,871)
PROVISION FOR TAXES 1,120 1,640 2,240 2,960
--------- --------- --------- --------
NET INCOME/(LOSS) $ 328,743 $(510,338) $(71,350) $(229,831)
========== ========== ========= ==========
EARNINGS/(LOSS) PER SHARE $ .06 $ (.12) $ (.02) $ (.05)
========= ========== ========= ========
Number of Shares of
Common Stock Outstanding
5,460,907 4,257,773 5,460,907 4,257,773
=========== =========== ========= ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS
ENDED JANUARY 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided/(Used) in Operating
Activities 597,374 (1,071,708)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided/(Used) in Investing (36,249) 565,874
Activities -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Cash Provided/(Used) by Financing
Activities (767,727) 366,438
----------- ----------
NET INCREASE/(DECREASE) IN CASH $(201,602) $(139,396)
CASH AT BEGINNING OF YEAR 1,142,573 1,108,581
----------- ----------
CASH AT END OF PERIOD $ 940,970 969,185
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Taxes
The Company entered into a program with the New Jersey Economic
Development Authority to sell its State net operating loss carry-forwards.
The Company received $210,887 from the sale of such carry-forwards during
the quarter. This amount is included in total revenues. The remaining
balance of $58,024 is carried forward to the State's Fiscal year 2001
subject to all existing laws of the State of New Jersey. This relates to
the Company's NOL and Development Tax Credits for the fiscal years ended
July 31, 1994 through July 31, 1998.
The Company intends to apply under the same Program for a Certificate
resulting from its fiscal July 31, 1999 filing. In the event the application
is approved the Company would expect to net approximately $100,000 in the
latter part of this calendar year.
NOTE 2 - Consulting Agreement Amendment
The Company received a fee reduction of its NYBOR consulting agreement by
757,143 shares which were returned to the Company during the quarter. This
reduced the number of shares issued and outstanding by 12.2%
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 For the six months
ended January 31, ended January 31
2000 1999 2000 1999
---------- ----------- ----------- --------
Sales Revenues $1,556,937 $ 589,328 $2,319,951 $908,677
Costs and Expenses (1,439,081) (1,099,666) (2,602,188) (1,552,297)
Other Income 210,887 0 210,887 413,789
---------- --------- ------------ -----------
Net Income/(Loss)
after Taxes, $ 328,743 $ (510,338) $ (71,350) $(229,831)
including other income =========== =========== ============ ===========
QUARTER ENDED JANUARY 31, 2000
Revenues for the quarter ended January 31, 2000 totaled $1,556,937
representing an increase of 264% or $967,609 from $589,328 reported for the
same quarter a year ago. Revenues increased largely due to the rapid growth
of Atlas Design, our human resource company, as well as releases for the
Company's INIVEN products.
Gross margin for the quarter totaled $361,651 representing 23% of
revenues as compared to $(4,956) or (1%) of revenues for the quarter ended
January 31, 1999. The increase in gross margin is mostly due to the lower
overhead costs associated with the human resource business as well as
reduced labor costs of producing the INIVEN product line.
Selling, general and administrative expenses decreased from $503,742 to
$242,675 for the quarter, representing a decrease of $261,067 as compared
to 1999. This decrease is attributable to lower consulting expenses incurred
during the quarter as compared to 1999.
Additional revenues of $210,887 were received for the sale of New Jersey
State losses for fiscal years ended July 31, 1994 through July 31, 1998.
As a result of the foregoing, the Company reported net income of $328,743,
or $.06 per share for the quarter compared to net loss of $510,338 or
$0.12 per share.
SIX MONTHS ENDED JANUARY 31, 2000
Revenues for the six months ended January 31, 2000 totaled $2,319,951
representing an increase of 256% or $1,411,274 from $908,677 reported
for the same period 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 six months totaled $282,371 representing 13% of
revenues as compared to $32,245 or 4% of revenues for the six months ended
January 31, 1999. The increase in gross margin is mostly due to the lower
overhead costs associated with the human resource business as well as reduced
labor costs of producing the INIVEN product line.
Selling, general and administrative expenses decreased from $672,905 to
$562,368 for the six months, representing a decrease of $110,537 as compared
to 1999. This decrease is attributable to lower consulting expenses incurred
during the quarter as compared to 1999.
Additional revenues of $210,887 were received for the sale of New Jersey
State losses for fiscal years ended July 31, 1994 through July 31, 1998.
As a result of the foregoing, the Company reported net loss of $71,350,
or $.02 per share for the six months compared to net loss of $229,831 or
$0.05 per share.
LIQUIDITY AND FINANCIAL CONDITION
Inventories increased $45,571 from July 31, 1999 attributable to the
purchase of parts for the PTR-1500 Series product releases.
Accounts Receivable increased $279,445 to $631,326 reflecting higher
sales for the period.
Working Capital at January 31, 2000 was $4,761,134 compared to $4,766,016
at July 31, 1999.
The Company plans to complete the PTR1500 and prepare for an anticipated
increase in business in the remainder of fiscal 2000. The Company anticipates
additional backlog releases from the Bonneville Power Administration and the
US Military as well as for 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 plans to continue to explore further 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 January 31, 2000 the Registrant's backlog of orders stands at
$2.2 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 January 31, 2000 from the infor-
mation 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
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
and duly authorized.
CONOLOG CORPORATION
DATE: February 10, 2000
By /s/ Robert S. Benou
Robert S Benou
President and Chief
Executive Officer
[ARTICLE] 5
<TABLE>
<S> <C> <C>
[PERIOD-TYPE] 3-MOS 6-MOS
[FISCAL-YEAR-END] JUL-31-2000 JUL-31-2000
[PERIOD-END] JAN-31-2000 JAN-31-2000
[CASH] 940,970 940,970
[SECURITIES] 0 0
[RECEIVABLES] 637,326 637,326
[ALLOWANCES] (6,000) (6,000)
[INVENTORY] 3,239,286 3,239,286
[CURRENT-ASSETS] 5,028,257 5,028,257
[PP&E] 1,765,643 1,765,643
[DEPRECIATION] (1,623,225) (1,623,225)
[TOTAL-ASSETS] 5,701,347 5,701,347
[CURRENT-LIABILITIES] 267,123 267,123
[BONDS] 0 0
[PREFERRED-MANDATORY] 77,500 77,500
[PREFERRED] 597 597
[COMMON] 54,609 54,609
[OTHER-SE] 5,252,110 5,252,110
[TOTAL-LIABILITY-AND-EQUITY] 5,701,347 5,701,347
[SALES] 1,556,937 2,319,951
[TOTAL-REVENUES] 1,767,824 2,530,838
[CGS] 1,195,286 2,037,580
[TOTAL-COSTS] 1,437,961 2,599,948
[OTHER-EXPENSES] 0 0
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] 0 0
[INCOME-PRETAX] 329,863 (69,110)
[INCOME-TAX] 1,120 2,240
[INCOME-CONTINUING] 328,743 (71,350)
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 328,743 (71,350)
[EPS-BASIC] .06 (0.02)
[EPS-DILUTED] .06 (0.02)
</TABLE>
