United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarter ended March 31, 1997
[ ] Transition Report Under 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 (IRS Employer
incorporation or organization) Identification No.)
270 Pulaski Road, Greenlawn, New York 11740
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (516) 423-3232
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act 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.
Yes X No
As of May 8, 1997 there were outstanding 1,481,766 shares of Common Stock, $.01
par value.
Transitional Small Business Disclosure Format (check one);
Yes No X
<PAGE>
TELEBYTE TECHNOLOGY, INC.
INDEX
Part I Financial Information
Item 1. Financial Statements
Balance Sheets
March 31, 1997 (Unaudited)
Statements of Operations
Three months ended
March 31, 1997 and 1996 (Unaudited)
Statements of Cash Flows
Three months ended
March 31, 1997 and 1996 (Unaudited)
Condensed Notes to Financial
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Part II
Other Information
<PAGE>
Part I Financial Information
Item 1. Financial Statements
TELEBYTE TECHNOLOGY, INC.
BALANCE SHEET
MARCH 31, 1997
(unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $ 418,365
Accounts receivable, less
allowances for doubtful accounts 526,204
Inventory 1,134,050
Prepaid expenses 143,753
Deferred income taxes 80,000
--------------------
TOTAL CURRENT ASSETS 2,302,372
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization 1,164,600
OTHER ASSETS 42,302
--------------------
$ 3,509,274
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 359,674
Accrued expenses 112,716
Current maturities of long-term debt 66,023
--------------------
TOTAL CURRENT LIABILITIES 538,413
LONG-TERM DEBT, less current maturities 962,626
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share
1,636,566 issued and 1,481,766 outstanding 16,366
Capital in excess of par value 2,751,988
Accumulated deficit (659,026)
Less treasury stock, at cost,
(154,800 shares) (101,093)
--------------------
2,008,235
--------------------
TOTAL LIABILITIES AND SHAREHOLDER'S' EQUITY $ 3,509,274
====================
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months
Ended March 31,
----------------- --------------------
1997 1996
----------------- --------------------
NET SALES $1,031,083 $ 939,401
COST OF SALES 464,970 436,686
----------------- --------------------
GROSS PROFIT 566,113 502,715
----------------- --------------------
OPERATING EXPENSES
Research and development 59,428 59,403
Selling, general and administrative 593,546 455,088
----------------- --------------------
652,974 514,491
----------------- --------------------
Operating Loss (86,861) (11,776)
----------------- --------------------
OTHER INCOME (EXPENSE)
Rental Income 12,049 12,049
Interest Income 3,342 3,229
Interest Expense (27,125) (29,399)
----------------- --------------------
Income (Loss) before income taxes (98,595) (25,897)
Provision for income taxes 0 0
----------------- --------------------
NET LOSS $ (98,595) $ (25,897)
================= ====================
NET LOSS PER SHARE $ (0.07) $ (0.02)
================= ====================
Average number of shares 1,481,766 1,491,566
================= ====================
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
1997 1996
----------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (98,595) $ (25,897)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 20,883 21,825
Decrease (increase) in assets:
Accounts receivable (112,251) (95,009)
Inventories (55,939) (88,552)
Prepaid expenses and other (63,620) (43,936)
Increase in liabilities:
Accounts payable 161,651 119,905
Accrued expenses 17,973 (37,418)
----------------- --------------------
Net cash used in operating activities (129,898) (149,082)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was paid for:
Property and equipment 15,448 6,251
----------------- --------------------
Net cash used in investing activities (15,448) (6,251)
----------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was used for:
Puchase of treasury stock 0 8,288
Principal payments of long-term debt 20,010 13,991
----------------- --------------------
Net cash used in financing activities (20,010) (22,279)
----------------- --------------------
Net decrease in cash and cash equivalents (165,356) (177,612)
Cash and cash equivalents at
beginning of period 583,721 609,466
----------------- --------------------
Cash and cash equivalents at
end of period $ 418,365 $ 431,854
================= ====================
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TELEBYTE TECHNOLOGY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The balance sheet as of March 31, 1997, the statement of earnings for the three
months then ended and the statements of cash flows for the three month period
then ended have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at March 31, 1997 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's annual report to shareholders for the fiscal year ended
December 31, 1996. The results of operations for the period ended March 31, 1997
are not necessarily indicative of the operating results for the full year.
2. NEW ACCOUNTING PRONOUNCEMENT
In February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128. Earnings per share, which is effective
for financial statements for both interim and annual periods ending after
December 15, 1997. Early adoption of the new standard is not permitted. The
standard eliminates primary and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with disclosure of
how the per share amounts were computed. The adoption of this new standard is
not expected to have a material impact on the disclosure of earnings per share
in the financial statements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of
Operation.
(Statements in this Form 10-QSB that are not descriptions of historical fact are
forward-looking statements that are subject to risks and uncertainties. Actual
results could differ materially from those currently anticipated due to a number
of factors, including risks relating to competition; and other factors impacting
the data communications industry.)
RESULTS OF OPERATIONS
Sales during the first quarter ended March 31, 1997 increased 9.8% to $1,031,083
compared to sales of $939,401 for the same period in 1996. The increased sales
can be primarily attributed to the increased promotional activities which began
during the first quarter of 1996 and has continued through the first quarter of
1997.
Cost of sales for the first quarter of $464,970 or 45.1% of sales increased in
terms of dollars, but decreased as a percentage, compared to the $436,686 or
46.5% of sales during the same period in 1996. The increased profit margin
during the first quarter of 1997 is due primarily to product mix.
Selling, general and administrative costs of $593,546 increased as compared to
$455,088 during the first quarter of 1996. The increase of $138,458 during the
first quarter reflects the Company's decision to continue expanding its
marketing efforts which began during the first quarter of 1996. During the first
quarter of 1997 the Company distributed over 200,000 product catalogs and
expects to mail an additional 200,000 by the end of 1997. In addition, the
Company initiated an aggressive sales program during the first quarter of 1997
which included several visits to major customers in the United States in an
attempt to increase OEM (original equipment manufacturer) business.
Research and development expenses of $59,428 increased slightly compared to
$59,403 during the same quarter in 1996. Engineering efforts during the first
quarter focused on the development of several new products in the area of opto
isolation. The first supports synchronous data between a personal computer and a
satellite receiver. Opto isolation places an optical barrier between interfaces
to prevent ground loops, high frequency interference and surges from damaging
sensitive equipment. Another Opto Isolator design does not require any external
power sources and provides 4000 VAC of isolation. This product was designed to
work in a medical environment where ground loops and surges can damage equipment
or harm patients. These designs were initiated due to anticipated large
potential demand for these products.
Interest income increased marginally to $3,342 during the first quarter of 1997
compared to $3,229 for the same period in 1996. During the first quarter of 1997
the Company had rental income of $12,049 which was in line with the comparable
quarter of 1996.
The net loss of $98,595 or $.07 per share for the first quarter of 1997 is
compared to the net loss of $25,897 or $.02 per share in the same quarter in
1996. The net loss is due primarily to the increased expenditures directed at
selling and marketing efforts as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities decreased to $129,898 for the first
quarter of 1997 from $149,082 for the same period of 1996. This change is due
primarily to higher levels of inventory and the increase in accounts receivable.
Working capital decreased to $1,763,959 at March 31, 1997, a decrease of
$112,591 from December 31, 1996. The current ratio at March 31, 1997 decreased
to 4.3:1 compared to 6.2:1 at December 31, 1996. The Company has a revolving
line of credit of $1,000,000 with Merrill Lynch that expires June 30, 1997. The
Company expects to renew the credit facility in July of 1997. The Company
considers it's working capital to be adequate to fund its presently foreseeable
working capital requirements.
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE>
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 duly
authorized.
TELEBYTE TECHNOLOGY, INC.
By: __________\s\_________________
Joel A. Kramer, President and
Chairman of the Board
(Principal Executive Officer)
By: ___________\s\________________
Michael Breneisen, Vice President of Finance
(Principal Financial and Accounting Officer)
Date: May 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 418,365
<SECURITIES> 0
<RECEIVABLES> 541,204
<ALLOWANCES> 15,000
<INVENTORY> 1,134,050
<CURRENT-ASSETS> 2,302,372
<PP&E> 1,164,600
<DEPRECIATION> 690,256
<TOTAL-ASSETS> 3,509,274
<CURRENT-LIABILITIES> 538,413
<BONDS> 0
0
0
<COMMON> 16,366
<OTHER-SE> 1,991,869
<TOTAL-LIABILITY-AND-EQUITY> 3,509,274
<SALES> 1,031,083
<TOTAL-REVENUES> 1,031,083
<CGS> 464,970
<TOTAL-COSTS> 464,970
<OTHER-EXPENSES> 652,974
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,125
<INCOME-PRETAX> (98,595)
<INCOME-TAX> 0
<INCOME-CONTINUING> (98,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (98,595)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
