SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
( X ) Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 1995 ( ) 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 0-11883
Telebyte Technology, Inc.
(Exact name of registrant as specified in its charter)
Nevada 11-2510138
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
270 Pulaski Road, Greenlawn, New York 11740
(Address of principal executive) (Zip Code)
Registrant's telephone number, including area code (516) 423-3232
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $0.01 per share
(Title of class)
Check whether the registrant (1) filed all reports to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the past 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.
__X__ Yes _____ No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ( X )
The registrant's revenues for its most recent fiscal year were $3,758,953.
The aggregrate market value of the voting stock held by non-affiliates of the
registrant at March 14, 1996 was $771,482.
The number of shares of common stock outstanding at March 14, 1996 was
1,501,566.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format (check one): Yes _____; No __X__
<PAGE>
PART 1
Item 1. BUSINESS
Telebyte Technology, Inc. (herein either the "Company" or "Telebyte ") designs,
manufactures, and markets electronic data communications products. The
Company's operations are in a single business segment and, except for sales to
foreign distributors, the Company does not conduct any foreign operations.
The Company was formed as a New York corporation in 1983 and re-incorporated
in Nevada in 1987.
INTRODUCTION
The Company's electronic data communications equipment is used principally to
provide connectivity solutions and maintain data communications networks.
Telebyte's products effectively link computers to other computers as well as to
their components in a manner that enables them to operate as a complete system.
An example of growing areas are process control systems, computerized time
clocks, scales, and bar code reading equipment. The Company's five principal
data communications product categories are short haul modems, interface
converters, multiplexers, surge/lightning protectors, and data communications
test equipment. The Company also manufactures and sells a variety of data
communications switching equipment and accessories.
In the large data communication marketplace, Telebyte focuses on the area of
"premises communication" or local networks. Telebyte addresses the needs of
customers that have computer systems with data communications applications
including distances whose range is from a few feet to a few miles. Accordingly,
Telebyte's products would be used in data communication networks in facilities
such as industrial plants, factories, high rise office buildings, or campus like
environments. The transmission media used in this environment are "twisted pair"
copper wire and/or fiber optic cable. Fiber optic based products represents a
growing segment of the Company's product line.
The Company's more than 140 products cover nearly all of the devices necessary
to establish a premises data communications network. The Company endeavors to
maintain a broad product line by developing both improved versions of current
products and new products such as fiber optic short haul modems, advanced
interface converters and multiplexers.
The Company's product line grew by twelve new products during 1995. Several
older products were discontinued during the year.
BUSINESS DEVELOPMENTS FOR 1993, 1994 AND 1995
In 1993, Telebyte delivered a large quantity of short haul modems to AT & T and
Quotron and interface converters to the Department of Defense. The introduction
of the Model 904 PC Notebook Comscope continued the growth of the Company's test
equipment with a full featured protocol analyzer for all PC's, but especially
the growing segment of notebook PC's. Also during 1993, under contract from
Accurate Automation, a Chattanooga, Tennessee firm, Telebyte began development
of a neural network processor that can reside in a PC. The neural network
processor dramatically increases the power of the PC when applied to certain
problems which involve pattern recognition or learning an envrionment in order
to make intelligent decisions, much the same as the human brain learns. Accurate
Automation and Telebyte will share the market with Telebyte having the rights to
the PC market.
<PAGE>
During 1994 the Company expanded its product line through an OEM relationship
with a Florida based company to resell, under the Telebyte name, a group of
switching products. The Company's product catalog was mailed in November of
1994. Neural network processor development was completed and initial orders for
the Company's Model 1000 Neuro Engine neurocomputer and neural network modules,
Model 1001, were received in the third quarter with initial deliveries beginning
in late December of 1994. New product development in 1994 resulted in eleven new
product introductions. In addition, several custom products were developed for
customers such as Trane Corp., VONS Supermarkets and Telegenix.
In 1995 Telebyte devoted efforts to redesign a significant number of its core
short haul modems and interface converters to include a new display feature.
This display, incorporating liquid crystal technology and called DataSpy(R),
provides a window onto the data link thereby simplifying installation and
maintenance of the network. DataSpy(R) is a registered trademark of Telebyte. In
addition, Telebyte has submitted a patent application to cover this feature. It
is expected that this feature will act as a significant product differentiator
between Telebyte and its competitors.
1995 saw large numbers of interface converters shipped to Intel and AT & T. A
system integrator, working for the U.S. government, took delivery of several
thousand modem abort timers. Also during 1995 the Company decided to exit the
video market which had become flooded with commodity products from Asia. As a
result of this competition margins eroded quickly and therefore the products did
not meet Telebyte's criteria for gross margin.
Many other companies availed themselves of Telebyte's ability to design special
products or modify existing products. This product "design-in" is expected to
produce additional volume sales as production begins for the programs which
include these special Telebyte products.
PRODUCTS
Telebyte's products compete in five different application areas of data
communications networks. These are: Short Haul Modems, Interface Converters,
Multiplexers, Test Equipment, and Lightning Protection.
Short haul modems differ from those modems which most people are familiar with,
those that operate over the dial-up telephone network. Short haul modem devices
provide the link over dedicated wires or optical fibers among computers and
accessory equipment such as terminals, printers, badge readers, scales, bar code
readers, and other computer controlled machines. Short haul modems are also used
in establishing communications between micro or personal computers and mini or
main frame computers. Thus, the role of the short haul modem has been expanded
from coupling terminals to a central processing unit to creating extensive
computer to computer networks. The Company's short haul modem devices are
designed to provide data communications links ranging from relatively short
distances to several miles. The Company manufactures and sells a variety of
short haul modems designed for particular applications and the electrical
environment of the user. For example, Telebyte has three types of short haul
modems, with transmission capabilities that are suited for (i)factories or heavy
manufacturing operations, (ii)light manufacturing, and (iii)industrial office
areas or general office locations. Due to technological changes and innovations,
the Company has to develop new short haul modem products on a continual basis to
meet its customers' technical requirements and to remain competitive in this
market. Short haul modems represented 30% of Telebyte's net sales in 1995.
Interface converters transform the characteristics of the electrical interface
of one device to enable it to become compatible with the electrical interface of
another. As a result, a data communications network
<PAGE>
can be established or expanded among data processing and other computer
equipment which otherwise would be unable to transmit or receive data. Interface
converters represent 40% of Telebyte's revenue in 1995, and because the industry
continues to develop new interface standards, the Company anticipates that the
market will require greater varieties of interface converters, thereby expanding
the available market for existing products and creating opportunities for new
products. Telebyte's line of interface converters are available in most of the
configurations now required by the market and includes programmable devices.
Where the appropriate opportunity presents itself, the Company will manufacture
custom interface converters to meet a particular customer's requirements.
No other product areas had sales that exceeded 10% of net sales in 1995.
The Company's multiplexers allow data from a number of different devices to be
communicated simultaneously on the same circuit or channel. Thus, Telebyte's
local area multiplexers perform a task similar to its short haul modems, except
that a single communications link can support many users. Telebyte's multiplexer
products allow simultaneous data transfers over distances of up to 8,000 feet
for wire or 6,600 feet over fiber.
Data communications test equipment typically is used by maintenance personnel to
analyze and test the integrity of data communications networks. Telebyte's test
equipment product line includes "plug-in" printed circuit boards for use with
IBM personal computers and compatible clones. These items are supplied with the
software necessary to enable the personal computer user to monitor or emulate
the data line with other devices in the data communications network. This test
equipment product assists in maintenance because it can rapidly identify open
leads, missing signals and other errors, and intermittent problems can be
tracked and stored in memory for later analysis. A similar product has been
developed for the notebook and portable computer.
Another product group in the test equipment segment is an Integrated Services
Digital Network ("ISDN") wireline simulator for basic rate ISDN and T1 (high
speed data services offered by telephone companies) rates. This product is
applicable to engineering product development and evaluation efforts to
determine the character and limitations of certain data communications and
transmission devices. ISDN is a growing service being offered by telephone
companies around the world to dramatically increase the rate at which data can
be transmitted over the dial-up telephone network. The product can simlulate the
operating characteristics of a telephone cable circuit, such as frequency
response and propagation delay, at various frequencies over various distances.
The product thus permits the user to simulate a local telephone loop under a
variety of conditions. In addition to the normal single piece buyer, the Company
has a major user of these devices that continues to buy them, in quantity, as
their sales of HDSL modem products increase.
Telebyte manufactures and sells a number of lightning and surge protectors which
prevent damage to data communications equipment that can be caused by high
voltage surges and transients, ground currents, and other lightning induced
electrical disturbances encountered on data communication circuits.
The Company generally manufactures and maintains an inventory of products based
upon historical levels of demand. Most of its products are standard or catalog
items. On occasion, the Company produces custom products manufactured to a
customer's specifications or for a specific application.
The Company has not experienced a shortage of manufacturing materials or
components, and it purchases raw materials and supplies from domestic and
foreign sources. The Company does not depend upon any particular source of
supply, and not more than 10% of the purchases were from a single supplier. Raw
material and supplies are readily available from various sources.
<PAGE>
The research and new product development budget for 1996 is $325,000 compared to
approximately $282,000 and $249,000 spent in 1995 and 1994, respectively. The
cost of research and development is not borne directly by the Company's
customers.
Federal, state, and local environmental laws and regulations have no material
impact on Telebyte or its business.
SALES AND MARKETING
The Company markets its data communications products by promotional activities
such as telephone sales, paid advertising, press releases, post card decks,
direct mail campaigns, and participating in trade shows. Telebyte currently
conducts its sales and marketing efforts through an in-house sales staff and a
network of distributors. Domestically, the Company uses 17 distributors and
there are 34 international distributors. Some products are marketed through
other catalog distributors. Foreign sales represented approximately 11.8% in
1995, 12.6% in 1994 and 11.6% in 1993 of net sales.
The Company sells to four market groups, consisting of end-users, domestic
dealers and distributors, foreign dealers and distributors, and original
equipment manufacturers. End users are serviced by direct in-house telephone
support. All distributors purchase at a discount from the established list
price. Domestic distributors do not have an exclusive territory whereas foreign
distributors are assigned specific territories, usually their country, on an
exclusive basis. Internal sales representatives service exclusive customers and
are paid commissions on all sales from those customers. During 1995 the internal
sales representatives sales plan was changed from exclusive territory to
exclusive customer. This allows greater flexibility in recruiting new sales
representatives.
The Company does not depend upon sales to a single customer or a limited group
of customers and there were no sales to a single customer during the last three
years exceeding 10% of net sales. Sales of products to the U.S. government are
not subject to renegotiation of profits or termination of contracts at the U.S.
government's election. The Company's sales are not materially affected by
seasonal factors.
COMPETITION
There are a significant number of companies engaged in manufacturing and selling
data communications equipment in the same markets as the Company. Since
Telebyte's product line is diverse, it is difficult to define and enumerate its
competition. As a general matter, there are competitors which are larger and
better established than Telebyte, many with technical and capital resources
which the Company does not possess and more well-developed sales and marketing
capabilities.
The Company's principal competitors are RAD Data Communications, Ltd. (which is
based in Israel with local offices in New Jersey), Black Box (with headquarters
based in Pennsylvania), and Patton Electronics (based in Maryland), and a number
of small companies. Telebyte competes with these companies on the basis of
quality, price, breadth of product line, sales and marketing capability and
technological support, and innovation. The Company relies principally upon the
price/performance ratio of its converter, multiplexer, and surge protection
products. Telebyte also attracts market share by its ability to fill orders
quickly and provide technical support to its customers. The Company does not
have a significant market presence with its test equipment and data
communications accessories.
<PAGE>
The Company does not rely upon patents, registered trademarks or licenses to
give it a competitive advantage.
EMPLOYEES
As of December 31, 1995, the Company had 35 full time employees. Of these
employees, two are executives, six are in sales, four in research and
engineering, four in administration, and the balance in manufacturing, shipping,
and related activities. The Company uses subcontractors and part-time help to
support its current operations. None of the employees are represented by a labor
union, and the Company considers its employee relations to be good.
BACKLOG
At December 31, 1995, the Company's backlog was $270,533 all of which the
Company expects to fill in fiscal 1996. Comparable backlog at December 31, 1994
was $331,847.
Item 2. PROPERTIES
Telebyte's executive office, plant, and manufacturing facility are located in a
20,000 square foot building on 3.2 acres, at 270 Pulaski Road, Greenlawn, New
York 11740. The land and building were purchased by the Company in September
1985. The Company refinanced the existing mortgage in May 1988 and the property
now secures a mortgage loan payable on a fully self-amortizing basis over 20
years. Interest under the mortgage is based on 2.75% over the bank's prime rate,
however, such rate cannot be less than 10% and will be recalculated June 1,
1997. The oustanding principle balance of the mortgage loan, as of December 31,
1995, was $1,067,501. Managment believes that all of its properties, plant, and
equipment are well maintained and adequate for its requirements.
Of the 20,000 square feet the Company has leased 5,000 square feet to a tenant.
Management believes that Telebyte's existing manufacturing facilities are
sufficient to support its present needs and anticipated growth, and the Company
does not plan any siginificant capital expansion of its plant in Greenlawn.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a party
or by which its properties are subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE>
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Until September 2, 1992, the Company's common stock was listed on the National
Association of Securties Dealers Automated Quotation System ("NASDAQ") under the
symbol "TBTI." After that date the stock was moved to the Over The Counter
Bulletin Board since it no longer met the requirements of NASDAQ's minimum bid
price. The Bulletin Board is a market maker driven exchange.
The following table sets forth the high and low bid prices for the common stock
for each fiscal quarter during 1995 and 1994 as reported by the National
Association of Securities Dealers, NASD. The bid and ask prices for the common
stock on March 14, 1996 were $3/4 and $7/8 respectively.
1995 1994
---- ----
High Low High Low
First Quarter 7/8 5/8 $1 1/4 1/2
Second Quarter 2 1/4 1 1/8 7/8 1/2
Third Quarter 2 1/8 1 1/8 3/4 1/2
Fourth Quarter 1 1/4 5/8 3/4 1/2
The above quotations reflect inter-dealer prices, and may not include retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions.
At March 14, 1996, there were approximately 339 holders of record of the
Company's common stock. Most of the shares of the common stock are held in
street name for a larger number of beneficial owners.
To date, Telebyte has not paid a cash dividend. The payment and amount of any
future dividends will necessarily depend upon conditions then existing,
including the Company's earnings, financial condition, working capital
requirements, and other factors. The Company does not anticipate paying any
dividends in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
In 1995, the Company invested $112,161 in property and equipment, which was
financed through internally generated funds and $26,257 of long term debt. The
statements of cash flows indicates that the Company generated $320,050 in 1995
compared to $25,049 in 1994 in cash from operations. The increased cash flows
from operations resulted from reduced inventory levels and utilization of
prepaid expenses.
<PAGE>
The Company has made capital expenditures in 1995 totaling $112,161 of which
aproximately $32,000 to replace its aging phone system and install a new sales
tracking system, $57,294 for computer equipment and related software, $20,407
for manufacturing equipment and $1,955 for engineering equipment.
Working capital increased as of December 31, 1995 by $14,330 to $1,891,834,
compared with $1,877,504 at December 31, 1994. The current ratio decreased to
7.0 to 1 at December 31, 1995, compared with 8.5 to 1 at December 31, 1994.
The Company has renewed its line of credit which expires in July 1996, based
upon eligible accounts receivable, raw materials, and finished goods
inventories, for a maximum of $1,000,000 from Merrill Lynch. The line of credit
is available for general working capital purposes and to finance business
growth. As of December 31, 1995, there was no outstanding balance due under the
line of credit. During the past three years the Company's operations have
generated sufficient working capital to sustain its current levels of operations
and the Company believes that cash generated by the Company's operations,
current cash and cash equivalents, and the line of credit should supply the cash
resources to meet its cash needs for the next twelve months. The Company has no
committments for any major capital expenditures in 1996.
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED TO FISCAL 1994
Sales for the year ended December 31, 1995 decreased by 0.8% to $3,758,953. The
sales decrease was primarily a result of the withdrawal from the video product
area. Sales in the video product area decreased by aproximately $23,000 in 1995
from 1994.
An analysis of the gross margin for 1995 reveals that it was 55% as compared to
54% for 1994. This was primarily a function of product mix. Cost of sales
decreased by $60,196 reflecting the decrease in sales generally and not the cost
of components or other costs.
Selling, general, and administrative costs increased by $ 137,462. The increase
resulted primarily from increased promotional expenses of $103,000 and an
increase in legal expense of $29,000.
Research and development increased in 1995 to $282,172, or 7.5% of sales, from
$248,993, or 6.5% of sales in 1994. The increase reflects the Companies
continued commitment to product development.
Interest expenses of $115,081 in 1995 decreased to 3.1% of sales as compared to
$133,283, or 3.5% in 1994.
Interest income increased by $ 7,834. The increase in 1995 reflects the higher
levels of cash generated. from operating activities. In 1995 the Company had
rental income of $48,195, compared to $36,146 in 1994. For 1996 the Company
expects rental income of approximately $48,000.
The Company generated net income of $101,592 or $0.07 per share, 2.7% of sales,
compared to $281,971 or $.18 per share, 7.4% of sales, for 1994. This decrease
reflects the higher selling, general and administrative, promotional and
research and development costs incurred in 1995 and the fact that in 1995 the
Company did not have the $75,000 income tax benefit it had in 1994.
The Company believes that the market indications for the data communications
market and for the Company's products will increase for 1996; however there can
be no assurance that this will happen. The Company has reorganized its sales
force from an exclusive territorial concept to an exclusive customer concept.
With this change the Company has added two additional internal salespersons and
its
<PAGE>
first external salesperson based in Atlanta, GA. The Company has implemented
these changes in an effort to increase its sales.
EFFECT OF INFLATION
During the five year period ending December 31, 1995, the Company was able to
decrease its costs of sales of its products to compensate for the effect of
inflation on the cost of components. This was accomplished by changes in
manufacturing methodology and the purchase of capital equipment to increase
manufacturing efficiency.
Item 7. FINANCIAL STATEMENTS
See "Index to Financial Statements" beginning on page F-1 below.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS IN ACCOUNTING
AND FINANCIAL DISCLOSURES
Not applicable.
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth certain information concerning Company's officers
and directors. Telebyte's directors are elected to serve until the next annual
meeting of shareholders or until their successors are elected and qualified. The
executive officers are appointed annually by, and serve at the pleasure of, the
Board of Directors.
Name, age, and positions Business experience during past Director
held with the Company five years and principal occupation since
Joel A. Kramer, age 58, Mr. Kramer has served as 1983
President and Chairman of President of the Company
the Board of Directors since August 1983, and
Chairman of the Board since
February 1989.
Kenneth S. Schneider, Ph.D., Dr. Schneider has served as 1983
age 50, Vice President, Treasurer and Vice President,
Treasurer, Secretary, and of the Company since August
Director 1983; and he was elected
Secretary in March 1991. Dr.
Schneider is a senior member
of the Institute of Electrical
and Electronic Engineers.
Keith B. Wiley, age 40, Mr. Wiley started his own 1983
Director investment banking firm in
November 1989. From 1987 to
November 1989 he served as a
Vice President of Goldome
Strategic Investments, Inc.
From 1982 to 1987 Mr. Wiley
was a senior investment officer
and vice president of Rand
Capital Corporation, a venture
capital investment firm.
SECTION 16 COMPLIANCE
Based upon a review of copies of the forms required to be filed under Section
16(a) of the Securties Exchange Act of 1934 or written representations from
officers and directors, the Company believes all officers and directors, and
greater than ten percent owners of the Company's common stock have complied with
Section 16(a.)
<PAGE>
Item 10. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid or accrued during the
last three fiscal years to the executive officers of the Company whose cash
compensation exceeded $100,000. The table includes Company contributions on the
officer's behalf to the Company's 401(k) Plan.
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
Awards Payouts
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Annual Restricted Stock Long-Term All Other
Principal Year Salary Bonus Compensation Stock Awards Options/SARs Incentive Payout Compensation
Position
($) ($) ($) (No.) (No.) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel A. Kramer 1995 $105,497 $13,300 $11,367(1) 0 5,000 $9,281(2) $2,997
President, CEO 1994 $97,968 $11,500 $12,697(1) 0 5,000 $9,281(2) $2,948
& Director 1993 $95,934 $6,000 $10,768(1) 0 0 $9,281(2) 0
Kenneth S. 1995 $95,153 $9,000 $6,619(1) 0 5,000 $4,080(2) $2,668
Schneider
Sr. V.P. 1994 $90,394 $6,200 $6,678(1) 0 5,000 $4,080(2) $2,858
Sales, Sec.,
Treas. & 1993 $86,938 $4,400 $6,759(1) 0 0 $4,080(2) 0
Director
<FN>
(1) Commissions - Mr. Kramer received a 2.5% commission of net sales to
customers not located within the United States. Mr.Schneider received a 0.5%
commission of net sales to customers located within the United States. The
amounts paid are set forth above under the caption entitled "Other Annual
Compensation".
(2) Deferred Compensation - see Long-Term Incentive Plans Table below.
</FN>
</TABLE>
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts under Non-Stock Price-Based Plans
<CAPTION>
Number of Shares, Performance or Other
Units or Other Period Until Threshold Target Maximum
Maturation
Name Rights (#) or Payout ($ or #) ($ or #) ($ or #)
<S> <C> <C> <C> <C> <C>
Joel A. Kramer June 11, 2002 $26,667(1) $26,667(1) $26,667(1)
Pres.,CEO & Director
Kenneth S. Schneider April 16, 2010 $26,667(1) $26,667(1) $26,667(1)
Sr.V.P. Sales, Sec.,
Treas. & Director
<FN>
(1) In 1990 the Company entered into deferred compensation agreements with key
officers, pursuant to which the officers will receive a defined amount,
approximately 30% of their 1990 base salary, each year for a period 10 years
after reaching age 65. The deferred compensation plans are funded through life
insurance and are being provided for currently. The expense charged to
operations in 1995 for such future obligations was $13,361($9,281 and $4,080,
for Joel Kramer and Kenneth Schneider, respectively).
</FN>
</TABLE>
<TABLE>
Aggregate Option Grants in Last Fiscal Year
<CAPTION>
% of Total Options Exercise or
Number of Options Granted to Employees Base Price Expiration
Name Granted in Fiscal Year 1995 ($/Sh) Date
-
<S> <C> <C> <C> <C>
Joel A. Kramer 5,000(1) 33.3% $2.04(2) 6/24/2005
Kenneth S. Schneider 5,000(1) 33.3% $2.04(2) 6/24/2005
<PAGE>
<FN>
(1) All such options are currently exercisable.
(2) Based upon the fair market value of the Company's Common Stock on the date
of grant.
</FN>
</TABLE>
The following table sets forth information concerning each exercise of stock
options during fiscal 1995 by each of the named executive officers and fiscal
year-end value of unexercised options:
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Number of Shares Value Unexercised Options at In-the-Money Options
Name Acquired on Exercise Realized ($) December 31, 1995 at December 31, 1995
(1)
<S> <C> <C> <C> <C>
Joel A. Kramer 0 0 10,000 (2) 0 (3)
Kenneth S. Schneider 0 0 10,000 (2) 0 (3)
<FN>
(1) Calculation based upon the average of the high and low bid prices of the
Company's Common Stock from the National Quotation Bureau on December 30, 1995.
(2) All such options are currently exercisable.
(3) All such options have exercise prices greater than the value of the
Company's Common Stock on December 30, 1995.
</FN>
</TABLE>
COMPENSATION PLANS AND OTHER COMPENSATION
The Company adopted a Stock Option Plan (the "1993 Plan") under which options to
purchase 100,000 shares of the Company's common stock, par value $.01 per share
have been reserved. As of December 31, 1995, there were 70,000 shares available
for grants under the 1993 Plan. Pursuant to the 1993 Plan, the Company is
permitted to issue incentive stock options ("Incentive Stock Options") and
non-qualified stock options. Incentive Stock Options under the 1993 Plan are
intend to qualify for the tax treatment accorded under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code.")
All directors, officersor other key employees of the Company are eligible to
participate in the 1993 Plan. The 1993 Plan is administered by the Board of
Directors of the Company, which, to the extent it shall determine, may delegate
its power with respect to the administration of the 1993 Plan to a committee
consisting of not less than three directors.
Under the 1993 Plan, Incentive Stock Options to purchase shares of the Company's
common stock shall not be granted for less than 100 percent of the fair market
value of the common stock on the date the Incentive Stock Option is granted;
provided, however, that in the case of an Incentive Stock Option granted to any
person then owning 10 percent of the voting power of all classes of the
Company's stock, the purchase price per share subject to the Incentive Stock
Option may be not less than 110 percent of the fair market value of the stock on
the date of the grant of the option. Non-qualified stock options to purchase the
Company's common stock are granted at prices determined by the Company's Board
of Directors.
Options under the Plan may not have a term of more than 10 years; provided,
however, that an Incentive Stock Option granted to a person then owning more
than 10 percent of the voting power of all classes of the Company's stock may
not be exercisable more than 5 years after the date such option is granted. In
addition, the aggregate fair market value, determined at the time the option is
granted, of the stock with respect to which Incentive Stock Options are
exercisable for the first time by an employee in any calendar year under the
1993 Plan may not exceed $100,000.
Options were granted for 15,000 shares to executive officers and directors of
the Company during the year ended December 31, 1995 with an exercise price of
$2.04, which was 110% of the fair market value of the Company's stock on the
date of the grant. No other options were granted or exercised during 1995.
<PAGE>
The Company's 1983 Stock Option Plan terminated in 1994. No executive officers
or directors have any outstanding options under the 1983 Stock Option Plan.
The Company has an informal bonus plan in which officers and other key personnel
participate. The bonus award, if any, is fixed annually by the Board of
Directors. Bonuses were allocated and paid to executive officers under this plan
during fiscal 1995 and shown on the foregoing Summary Compensation Table.
The Company maintains a deferred compensation plan under Internal Revenue Code
Section 401(k.) All employees are eligible to participate; the Company
contributes 50% of the first 2% deferred by the employee. Each employee can
contribute between 2% and 15% of his annual salary. Contributions in calendar
year 1995 cannot exceed $9,240. Benefits are 100% vested and are payable upon
the employee's death, disability, retirement, termination, and under certain
financial circumstances. At December 31, 1995, $1,987 was contributed to the
plan for officers. All contributions are reflected in the salary column in the
Summary Compensation Table.
Except for life and medical insurance benefit programs which are available to
all employees, the Company has no other compensation plans.
Outside directors receive an annual fee of $2,500, in addition to reimbursement
of expenses for attending each meeting.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1995 information
concerning (i) the shares held by each person or group known to own beneficially
more than 5% of the outstanding shares of common stock, (ii) shares owned by
directors and (iii) the shares owned by all directors and officers as a group.
Name and Address of Number of Shares Percent of
Beneficial Owner Beneficially Owned Class
Kenneth S. Schneider 294,538 (1) (2) 19.5%
270 Pulaski Road
Greenlawn, NY 11740
Joel A. Kramer 262,996 (2) (3) 17.4%
270 Pulaski Road
Greenlawn, NY 11740
Keith B. Wiley 10,100 (2) (4)
270 Pulaski Road
Greenlawn, NY 11740
All officers and directors
as a group (3 in number) 567,634 38%
(1) Includes 1,500 shares owned by Dr. Schneider as custodian for his
minor children.
(2) Includes 10,000 shares issuable upon the exercise of stock options
granted under the Company's 1993 Stock Option Plan.
(3) Includes 2,361 shares
owned of record by Mr. Kramer's children.
(4) Less than 1%.
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3(a)The Company's Certificate of Incorporation under the State of Nevada was
filed as an Exhibit with the Proxy Statement filed in June 1987 and is
incorporated by reference herein.
3(b)The By-laws of the Company as a Nevada corporation were filed as an Exhibit
on Form 8-K in third quarter of 1987 and are incorporated by reference herein.
10(a)The Company's 1993 Stock Option Plan was filed as an Exhibit to the
Company's definitive 1994 proxy statement filed in May 1994, and is incorporated
by reference herein.
10(b)Commercial mortgage and consolidation agreement dated May 25, 1988 between
Home Federal Savings Bank and Telebyte Technology, Inc., filed as an Exhibit to
the Company's 1988 Annual Report on Form 10-K and is incorporated by reference
herein.
10(c)Deferred compensation agreements dated December 12, 1990 between Telebyte
Technology, Inc. and Joel A. Kramer and Kenneth S. Schneider, filed as an
Exhibit to the Company's 1990 Annual Report on Form 10-K and is incorporated by
reference herein.
10(e)$1,000,000 Revolving Line of Credit agreement dated June 23, 1994 between
Merrill Lynch and Telebyte Technology, Inc.and was filed as an exhibit on Form
10-KSB for the year ended December 31, 1994 and is incorporated by reference
herein. This Line of Credit was extended for an additional year ending June 30,
1996.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the fourth quarter for the fiscal
year ended December 31, 1995.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant had duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TELEBYTE TECHNOLOGY, INC.
By: __________\s\_________________
Joel A. Kramer, President and
Chairman of the Board
(Principal Executive Officer and Financial Officer)
Date: March 28, 1996
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant, and in the
capacities and on the dates indicated.
March 28, 1996 __________\s\_____________
Joel A. Kramer, Director
March 28, 1996 __________\s\_____________
Kenneth S. Schneider, Director
March 28, 1996 ___________\s\____________
Keith B. Wiley, Director
<PAGE>
Telebyte Technology, Inc.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 1995 and 1994 F-3
Statements of Earnings for the years ended
December 31, 1995 and 1994 F-5
Statement of Shareholders' Equity for the years
ended December 31, 1995 and 1994 F-6
Statements of Cash Flows for the years ended
December 31, 1995 and 1994 F-7
Notes to Financial Statements F-8
<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Telebyte Technology, Inc.
We have audited the accompanying balance sheets of Telebyte Technology, Inc. as
of December 31, 1995 and 1994, and the related statements of earnings,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Telebyte Technology, Inc. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Melville, New York
March 1, 1996
<PAGE>
Telebyte Technology, Inc.
BALANCE SHEETS
December 31,
ASSETS 1995 1994
-------- --------
CURRENT ASSETS
Cash and cash equivalents $ 609,466 $ 439,377
Accounts receivable, net of allowance of
$15,000 in 1995 and $20,000 in 1994 464,688 411,743
Inventories 963,904 1,052,057
Prepaid expenses and other 87,354 145,882
Deferred income taxes 80,000 80,000
---------- ----------
Total current assets 2,205,412 2,129,059
PROPERTY AND EQUIPMENT - AT COST,
less accumulated depreciation 1,198,462 1,158,294
OTHER ASSETS 47,552 51,752
---------- ----------
$3,451,426 $3,339,105
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
Telebyte Technology, Inc.
BALANCE SHEETS (continued)
December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
--------- --------
CURRENT LIABILITIES
Accounts payable $ 133,068 $ 141,217
Accrued expenses 119,890 63,212
Current maturities of long-term debt 60,620 47,126
--------- ---------
Total current liabilities 313,578 251,555
LONG-TERM DEBT, less current maturities 1,046,325 1,089,332
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock - $.01 par value; 9,000,000
shares authorized; 1,636,566 shares issued;
1,501,566 and 1,511,566 shares outstanding
in 1995 and 1994, respectively 16,366 16,366
Capital in excess of par value 2,751,988 2,751,988
Accumulated deficit (590,886) (692,478)
Treasury stock - 135,000 and 125,000 shares
at cost, in 1995 and 1994, respectively (85,945) (77,658)
---------- ----------
2,091,523 1,998,218
---------- ----------
$3,451,426 $3,339,105
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
Telebyte Technology, Inc.
STATEMENTS OF EARNINGS
Year ended December 31,
1995 1994
------------- -------------
Net sales $3,758,953 $3,789,972
Cost of sales 1,683,678 1,743,874
--------- ----------
Gross profit 2,075,275 2,046,098
--------- ---------
Operating expenses
Selling, general and administrative 1,642,977 1,505,515
Research and development 282,172 248,993
---------- ----------
1,925,149 1,754,508
--------- ---------
Operating profit 150,126 291,590
---------- ----------
Other income (expense)
Interest income 20,352 12,518
Rental income 48,195 36,146
Interest expense (115,081) (133,283)
--------- ---------
(46,534) (84,619)
---------- ----------
Earnings before income taxes 103,592 206,971
Income tax provision (benefit) 2,000 (75,000)
---------- ----------
NET EARNINGS $ 101,592 $ 281,971
========= =========
Earnings per common share $.07 $.18
=== ===
Weighted average number of common
shares outstanding 1,511,292 1,526,242
========= =========
The accompanying notes are an integral part of these statements.
<PAGE>
Telebyte Technology, Inc.
STATEMENT OF SHAREHOLDERS' EQUITY
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Number of Capital in
shares Common excess of Accumulated Treasury
issued stock par value deficit stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 $16,366 $(55,000)
1,636,566 $2,751,988 $ (974,449) $1,738,905
Purchase of treasury stock (22,658) (22,658)
Net earnings 281,971 281,971
----------- ----------- ---------- ---------- -------------- ----------
Balance at December 31, 1994 1,636,566 16,366 2,751,988 (692,478) (77,658) 1,998,218
Purchase of treasury stock (8,287) (8,287)
Net earnings 101,592 101,592
------------ --------- ----------- ---------- -------------- ----------
Balance at December 31, 1995 1,636,566 $16,366 $2,751,988 $(590,886) $(85,945) $2,091,523
========= ======= ========= ======== ======== =========
<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
Telebyte Technology, Inc.
STATEMENTS OF CASH FLOWS
Year ended December 31,
1995 1994
----------- -----------
Cash flows from operating activities
Net earnings $101,592 $ 281,971
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 76,193 58,874
Deferred income taxes (80,000)
Provision for losses on accounts
receivable (1,633) 10,466
(Increase) decrease in operating assets
Accounts receivable (51,312) 56,819
Inventories 88,153 (181,663)
Prepaid expenses and other 58,528 (59,285)
Other assets 224
Increase (decrease) in operating liabilities
Accounts payable (8,149) (47,043)
Accrued expenses 56,678 (15,314)
--------- ---------
Net cash provided by operating activities 320,050 25,049
--------- ---------
Cash flows from investing activities
Additions to property and equipment (112,161) (84,880)
--------- ---------
Net cash used in investing activities (112,161) (84,880)
--------- ---------
Cash flows from financing activities
Principal payments of long-term debt (55,770) (44,460)
Purchase of treasury stock (8,287) (22,658)
Proceeds from long-term debt 26,257 20,818
---------- ---------
Net cash used in financing activities (37,800) (46,300)
---------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 170,089 (106,131)
Cash and cash equivalents at beginning of year 439,377 545,508
--------- --------
Cash and cash equivalents at end of year $ 609,466 $ 439,377
======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Telebyte Technology, Inc. (the "Company") designs, manufactures and markets
electronic data communications products. The Company's products are
primarily sold to end-users, domestic dealers and distributors, foreign
dealers and distributors and original equipment manufacturers. The Company
does not depend upon sales to a single customer or a limited group of
customers and there were no sales to a single customer during the last two
years exceeding 10% of net sales. The Company operates in a single business
segment and has no foreign operations. Export sales were $445,000 and
$478,000 in 1995 and 1994, respectively.
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
1. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market.
2. Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed on the straight-line basis over
the estimated useful lives of the assets, which are 35 years for
building and improvements and 5 years for equipment.
3. Income Taxes
Deferred income taxes are recognized for temporary differences between
financial statement and income tax bases of asset and liabilities and
loss carryforwards for which income tax benefits are expected to be
realized in future years. A valuation allowance has been established to
reduce the deferred tax assets as it is more likely than not that all,
or some portion, of such deferred tax assets will not be realized. The
effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date.
4. Earnings Per Share
Earnings per share of common stock are based on the weighted average
number of shares of common stock outstanding during the year. Common
stock equivalents are not material to the calculation of earnings per
share.
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE A (continued)
5. Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers
highly liquid cash investments with an original maturity of three
months or less to be cash equivalents. The Company paid interest of
$115,871 and $134,235 and income taxes of $2,208 and $11,552 in 1995
and 1994, respectively.
6. Revenue Recognition
Revenue is recognized from sales when a product is shipped. Service
fees are recognized upon the completion of the related service.
7. Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
8. ACCOUNTING PRONOUNCEMENT NOT YET ADOPTED
Statement of Financial Accounting Standards No. 123 ('SFAS 123'),
'Accounting for Stock-Based Compensation,' is required to be adopted in
1996 and allows for a choice of the method of accounting used for
stock-based compensation. Entities may use the 'intrinsic value' method
currently based on APB 25 or the new 'fair value' method contained in SFAS
123. The Company intends to adopt SFAS-123 in 1996 by continuing to account
for stock-based compensation under APR 25. As required by SFAS 123, the pro
forma effects on net income and earning per share will be determined as if
the fair value based method had been applied and disclosed in the notes to
the financial statements.
NOTE B - INVENTORIES
Inventories consist of the following at December 31:
1995 1994
------------- ------------
Purchased components and materials $521,082 $563,568
Work in process 171,230 180,156
Finished goods 271,592 308,333
------- ----------
$ 963,904 $1,052,057
======== =========
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
1995 1994
---------- ----------
Land $ 300,000 $ 300,000
Building and improvements 1,024,583 1,024,583
Equipment 454,754 342,593
--------- ----------
1,779,337 1,667,176
Less accumulated depreciation 580,875 508,882
--------- ----------
$1,198,462 $1,158,294
========= =========
NOTE D - DEBT
1. Line of Credit Facility
The Company has an agreement with a financial institution, expiring in
July 1996, which provides the Company with a line of credit facility of
up to $1,000,000 based on eligible accounts receivable and purchased
components and materials and finished goods inventories of the Company,
as defined in the agreement. Borrowings under the line of credit bear
interest at the bank's specified prime rate plus .75% (9.25% at
December 31, 1995). There was no outstanding balance against this line
at December 31, 1995.
2. Long-Term Debt
The Company's first mortgage note is collateralized by land and
building and the other notes payable are collateralized by equipment.
The remaining unpaid mortgage note balance at December 31, 1995 is
payable in equal monthly installments of $12,484 (inclusive of interest
at 10%) with a maturity date of June 2008. The interest rate is
computed based on a 2.75% increment over the bank's prime interest
rate, however, such rate cannot be less than 10% and is recalculated
every three years. Financing and other costs aggregating $85,122
incurred in connection with the acquisition of real property and the
refinancing of mortgage debt are stated at cost, net of accumulated
amortization of $39,847 and $35,647 at December 31, 1995 and 1994,
respectively, and are included in "Other assets" in the accompanying
balance sheets. Amortization is provided on a straight-line basis over
the life of the mortgage note of 20 years.
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE D (continued)
Long-term debt is summarized as follows at December 31:
1995 1994
----------- -----------
First mortgage note payable to bank in
equal monthly installments, including
interest, through June 2008 $1,067,501 $1,108,549
Notes payable to bank in equal monthly
installments, including interest at 9%
to 10%, through February 1998 39,444 27,909
--------- ----------
1,106,945 1,136,458
Less current maturities 60,620 47,126
--------- ----------
$ 1,046,325 $1,089,332
========== =========
Aggregate maturities of long-term debt as of December 31, 1995 are as follows:
1996 $60,620
1997 65,724
1998 63,752
1999 60,787
2000 67,152
Thereafter 189,641
---------
$1,107,676
---------
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE E - EMPLOYEE BENEFIT PLANS
The Company sponsors an employee investment savings 401(k) plan to which
both the Company and employees contribute. Employer contributions of
$ 7,172 and $8,317 were made to the plan in 1995 and 1994, respectively.
The Company maintains deferred compensation agreements with several key
officers, whereby the officers will receive a defined amount approximating
30% of their 1990 base salary for a period of 10 years after reaching age
65. The deferred compensation plans are funded through life insurance and
are being provided for currently. The expense charged to operations in 1995
and 1994 for such future obligations was approximately $ 13,400 for each
year.
NOTE F - INCOME TAXES
The provision (benefit) for income taxes is summarized as follows:
1995 1994
---------- ----------
Current
State $ 2,000 $ 5,000
Deferred (80,000)
-------- --------
$ 2,000 $(75,000)
========= ========
The actual income tax expense differs from the Federal statutory rate as follows
<TABLE>
<CAPTION>
1995 1994
--------------------------- ---------------------------
Amount % Amount %
<S> <C> <C> <C> <C>
Federal statutory rate $ 35,200 34.0% $70,400 34.0%
State income taxes, net of Federal
income tax benefit 1,300 1.2 3,300 1.6
Officers' life insurance 3,900 3.7 4,500 2.2
Other 900 .9 1,800 .8
Change in valuation allowance (80,000) (38.6)
Benefit of net operating loss
carryforward (39,300) (37.9) (75,000) (36.2)
--------- ------- ------ ----
$ 2,000 1.9% $(75,000) (36.2)%
========= ======== ====== ====
</TABLE>
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE F (continued)
At December 31, 1995, the Company has net operating loss carryforwards and
tax credits expiring from 2001 through 2006 of approximately $1,050,000 and
$79,000, respectively, available to reduce Federal income taxes resulting
from future operations.
The tax effects of temporary differences which give rise to deferred tax
assets (liabilities) at December 31, 1995 and 1994 are summarized as follows:
1995 1994
--------- ---------
Deferred tax assets
Net operating loss carryforwards $ 420,000 $ 452,000
Investment tax credit carryforwards 79,000 79,000
Inventory valuation 21,000 23,000
Allowance for doubtful accounts 6,000 8,000
--------- ----------
Gross deferred tax assets 526,000 562,000
Deferred tax liabilities
Excess tax over book depreciation (145,000) (137,000)
-------- --------
Net deferred tax assets before
valuation allowance 381,000 425,000
Valuation allowance (301,000) (345,000)
-------- -------
Net deferred tax assets $ 80,000 $ 80,000
========= =========
NOTE G - STOCK OPTION PLANS
In 1983, the Company adopted a plan which provided for the granting to
officers and key employees of the Company of incentive stock options, as
defined in the Internal Revenue Code, for the purchase of a maximum of
250,000 shares of the Company's common stock. Under the terms of the plan,
the options, which expire ten years after grant, are exercisable at a price
equal to the fair market value of the stock at the date of the grant. The
options become exercisable in four annual installments, the first
installment occurring within one year after the date of grant.
<PAGE>
Telebyte Technology, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE G (continued)
In 1994, the Company adopted the 1993 Stock Option Plan (the "1993 Plan"),
which provides for the granting to directors and key employees of the
Company of incentive stock options and nonqualified stock options for the
purchase of a maximum of 100,000 shares of the Company's common stock.
Under the terms of the 1993 Plan, the options, which expire ten years after
grant, are exercisable at a price equal to the fair market value of the
stock at the date of the grant for incentive stock options and at prices
determined by the Board of Directors for nonqualified stock options, and
become exercisable in accordance with terms established at the time of the
grant. At December 31, 1995, the Company had reserved 70,000 shares under
the 1993 Plan.
The following is a summary of activity with respect to stock options under
the plans:
Number Option price
of shares per share
Outstanding at January 1, 1994 55,250 $.3125 to $1.03
Granted 15,000 1.03
Expired (4,000) .3125
------
Outstanding at December 31, 1994 66,250 $.3125 to $1.03
Granted 15,000 2.04
Expired (4,500) $.3125 to $.75
-------
Outstanding at December 31, 1995 76,750 $.3125 to $2.04
======
Balance exercisable at December 31, 1995 61,750 $.3125 to $2.04
======
NOTE H - COMMITMENTS AND CONTINGENCIES
The Company leases certain equipment used in its operations pursuant to
noncancellable operating leases expiring through October 1998. Rental
expense for such equipment was $15,505 and $18,552 in 1995 and 1994,
respectively. The minimum rental commitments under these noncancellable
operating leases, at December 31, 1995, are summarized as follows:
1996 $ 17,015
1997 14,147
1998 9,391
-------
$ 40,553
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 609,466
<SECURITIES> 0
<RECEIVABLES> 479,688
<ALLOWANCES> 15,000
<INVENTORY> 963,904
<CURRENT-ASSETS> 2,205,412
<PP&E> 1,779,337
<DEPRECIATION> 580,875
<TOTAL-ASSETS> 3,451,426
<CURRENT-LIABILITIES> 313,578
<BONDS> 0
0
0
<COMMON> 16,366
<OTHER-SE> 2,075,157
<TOTAL-LIABILITY-AND-EQUITY> 3,451,426
<SALES> 3,758,953
<TOTAL-REVENUES> 3,758,953
<CGS> 1,683,678
<TOTAL-COSTS> 1,683,678
<OTHER-EXPENSES> 1,925,149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,081
<INCOME-PRETAX> 103,592
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 101,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,592
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
