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 APRIL 30, 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; 6,930,957 shares outstanding
as of May 25, 2000 (inclusive of Treasury Stock).
Conolog Corporation
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 2000
ASSETS (Unaudited)
Current Assets:
Cash $ 1,875,516
Accounts Receivable, less
allowance of $6,000 1,164,062
Inventories 3,278,681
Other Current Assets 279,029
Prepaid Consulting 77,496
------------
Total Current Assets $ 6,674,784
Property, Plant and Equipment 150,903
less accumulated depreciation
of $1,632,539
Goodwill 131,147
Other Assets 85,708
Prepaid Consulting 278,714
------------
Total Assets $ 7,321,256
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 30,873
Accrued Payroll 14,563
Other Accrued Expenses 140,836
Deferred gain on sale of assets 51,425
-----------
Total Current Liabilities $ 237,697
-----------
Deferred gain on sale of assets 34,283
-----------
Total Liabilities $ 271,980
-----------
CONOLOG CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 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 6,930,857 shares, including
8,776 shares held in Treasury 69,309
Contributed Capital 16,645,843
Retained Earnings (Deficit) ( 9,612,239)
Treasury Shares at Cost (131,734)
------------
Total Stockholders' Equity $ 7,049,276
------------
Total Liabilities and
Stockholders' Equity $ 7,321,256
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
April 30, April 30,
2000 1999 2000 1999
--------- -------- -------- -------
REVENUES $1,774,106 $924,476 $4,094,057 $1,833,153
COSTS OF GOODS SOLD 1,304,263 627,086 3,341,843 1,503,518
--------- --------- ----------- -----------
GROSS MARGIN 469,843 297,390 752,214 329,635
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 343,957 205,891 906,325 878,796
--------- --------- ---------- -----------
OPERATING INCOME/(LOSS) 125,886 91,499 (154,111) (549,161)
OTHER INCOME
- GAIN ON SALE OF BLDG. 0 0 0 413,789
- NJ STATE NOL 0 0 210,887 0
- GAIN ON SALE OF MKT SEC
84,496 0 84,496 0
--------- --------- ---------- -----------
INCOME/(LOSS) BEFORE
TAXES 210,382 91,499 141,272 (135,372)
PROVISION FOR TAXES 1,310 0 3,550 2,960
--------- --------- --------- ----------
NET INCOME/(LOSS) $ 209,072 $ 91,499 $137,722 $(138,332)
========== ========== ========= ==========
AVERAGE EARNINGS/(LOSS)
PER SHARE $ .034 $ .02 $.022 $ (.03)
========= ========== ========= ==========
Average Number of Shares
Outstanding for Quarter
Ending April 30, 2000
6,121,473 4,357,773 6,121,473 4,357,773
Number of Shares of
Common Stock Outstanding
As of April 30,2000
6,930,857 4,357,773 6,930,857 4,357,773
=========== =========== ========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS
ENDED APRIL 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided/(Used) in Operating
Activities 76,701 (1,218,012)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided/(Used) in Investing 42,411 563,249
Activities -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Cash Provided/(Used) by Financing
Activities 613,831 435,187
----------- ----------
NET INCREASE/(DECREASE) IN CASH $ 732,943 $(219,576)
CASH AT BEGINNING OF YEAR 1,142,573 1,108,581
----------- ----------
CASH AT END OF PERIOD $1,875,516 889,005
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - CONVERTIBLE DEBENTURES
During the period the remaining debentures were converted to 1,400,000 shares
of common stock.
NOTE 2 - STOCK OPTIONS
During the period, employees exercised stock options for 70,000 shares at
$.625 per share.
NOTE 3 - OTHER MATTERS
In March the Company contracted with European Investor Relations when the
Company's stock was listed on the Frankford and London Stock exchanges.
Also during the period, the Company contracted with the public relations firm
National Financial Communications to further promote the Company's products.
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 nine months
ended April 30, ended April 30,
2000 1999 2000 1999
---------- ----------- ----------- ---------
Sales Revenues $1,774,106 $ 924,476 $4,094,057 $1,833,153
Costs and Expenses (1,649,530) ( 832,977) (4,251,718) (2,385,274)
Other Income 84,496 0 295,383 413,789
---------- --------- ------------ -----------
Net Income/(Loss)
after Taxes, $ 209,072 $ 91,499 $ 137,722 $(138,332)
including other income =========== =========== ============ ===========
QUARTER ENDED APRIL 30, 2000
Revenues for the quarter ended April 30, 2000 totaled $1,774,106
representing an increase of 192% or $849,630 from $924,476 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 and military products.
Gross margin for the quarter totaled $469,843 representing 27% of
revenues as compared to $297,390 or 33% of revenues for the quarter ended
January 31, 1999. The decrease 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 increased from $205,891 to
$343,957 for the quarter, representing an increase of $138,066 as compared
to 1999. This increase is attributable to the hiring of the public relations
firms during the quarter ended April 30, 2000.
As a result of the foregoing, the Company reported net income of $209,072,
or $.034 per share for the quarter compared to net income of $91,499 or
$0.02 per share.
NINE MONTHS ENDED APRIL 30, 2000
Revenues for the nine months ended January 31, 2000 totaled $4,094,057
representing an increase of 224% or $2,260,904 from $1,833,153 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 and military products .
Gross margin for the nine months totaled $752,214 representing 19% of
revenues as compared to $329,635 or 18% of revenues for the nine months ended
April 30, 1999.
Selling, general and administrative expenses increased from $878,796 to
$906,325 for the nine months, representing an increase of $27,529 as compared
to 1999. This increase is attributable to the hiring of the public relations
firms during the quarter as compared to 1999.
As a result of the foregoing, the Company reported net income of $137,722,
or $.022 per share for the nine months compared to net loss of $138,332 or
$0.03 per share.
LIQUIDITY AND FINANCIAL CONDITION
Inventories increased $84,966 from July 31, 1999 attributable to the
purchase of parts for the PTR-1500 Series product releases as well as a
special configuration for the Bonneville Power Administration.
Accounts Receivable increased $723,181 to $1,164,062 reflecting higher
sales for the period.
Working Capital at April 30, 2000 was $6,437,087 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 April 30, 2000 the Registrant's backlog of orders stands at
$4.6 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 April 30, 2000 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
In accordance with the requirements of the Exchange Act, the Registrants
Caused this report to be signed on its behalf by the undersigned, thereunto and
Duly authorized.
CONOLOG CORPORATION
DATE: May 25, 2000
By /s/ Robert S. Benou
Robert S Benou
President and Chief
Executive Officer
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