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 June 30, 1998
[ ] 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 August 14, 1998 there were outstanding 1,505,016 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
June 30, 1998 (Unaudited)
Statements of Earnings
Three and six months ended
June 30, 1998 and 1997 (Unaudited)
Statements of Cash Flows
Six months ended
June 30, 1998 and 1997 (Unaudited)
Condensed Notes to Financial
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation.
Part II Other Information
<PAGE>
Part I
Financial Information
Item 1. Financial Statements
TELEBYTE TECHNOLOGY, INC.
BALANCE SHEETS
JUNE 30,1998
(unaudited)
ASSETS
Cash & cash equivalents $ 624,562
Accounts receivable, less
allowances for doubtful accounts 646,051
Inventory 1,485,149
Prepaid expenses 113,736
Deferred income taxes 80,000
-------------------
TOTAL CURRENT ASSETS 2,949,498
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization 1,093,716
OTHER ASSETS 158,781
-------------------
$ 4,201,995
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 351,373
Accrued expenses 193,715
Current maturities of long-term debt 52,325
-------------------
TOTAL CURRENT LIABILITIES 597,413
LONG-TERM DEBT, less current maturities 901,102
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share
1,659,816 issued and 1,505,016 outstanding 16,598
Capital in excess of par value 2,760,078
Accumulated earnings 27,897
Less treasury stock, at cost,
(145,000 shares) (101,093)
-------------------
2,703,480
-------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,201,995
===================
The accompanying notes are an integral part of this financial
statement.
<PAGE>
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF EARNINGS
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
------------------- --------------------
1998 1997 1998 1997
------------ ----------- ----------- -----------
NET SALES $ 1,406,103 $ 1,227,978 $ 2,626,919 $ 2,259,061
COST OF SALES 673,450 564,705 1,235,756 1,029,675
------------ ------------ ------------ -----------
GROSS PROFIT 732,653 663,273 1,391,163 1,229,386
------------ ------------ ------------ -----------
OPERATING EXPENSES
R&D 132,580 84,603 228,432 144,031
Selling, G&A 622,437 476,036 1,022,088 1,069,582
------------ ------------ ----------- -----------
755,017 560,639 1,250,520 1,213,613
------------ ------------ ----------- -----------
OPERATING INCOME (LOSS)(22,364) 102,634 140,643 15,773
------------ ------------ ----------- -----------
OTHER INCOME (EXPENSE)
Rental Income 12,049 12,049 24,098 24,098
Interest Income 5,409 2,853 11,879 6,195
Interest Expense (24,610) (27,487) (53,116) (54,612)
------------- ------------ ---------- ------------
Income(Loss)
before income taxes (29,516) 90,049 123,504 (8,546)
Provision for taxes 0 0 2,000 0
------------- ------------ ---------- --------------
NET INCOME (LOSS) $ (29,516) $ 90,049 $ 121,504 $ (8,546)
============= ============ ========== ==============
Earnings (Loss) per common share:
Basic $ (0.02) $ 0.06 $ 0.08 -
============ =========== ========== ==============
Diluted $ (0.02) $ 0.06 $ 0.08 -
============ =========== ========== ==============
Shares used in computing earnings per common share:
Basic 1,504,438 1,481,766 1,498,333 1,481,766
=========== =========== ========== ==============
Diluted 1,504,438 1,511,266 1,549,983 1,481,766
=========== =========== ========== ==============
The accompanying notes are an integral part of this financial statement
<PAGE>
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months
Ended June 30,
----------- --------------
1998 1997
--------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 121,504 $ (8,546)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 52,565 44,165
Decrease (increase) in assets:
Accounts receivable 106,790 (162,628)
Inventories (263,381) (32,207)
Prepaid expenses and other (64,381) (121,115)
Increase (decrease) in liabilities:
Accounts payable (18,121) 186,069
Accrued expenses 1,512 12,673
----------- -----------
Net cash used in operating activities (63,512) (81,589)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was received from:
proceeds from exercise of stock options 8,322 0
Cash was paid for:
Property and equipment 25,846 23,554
----------- -----------
Net cash used in investing activities (17,524) (23,554)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was used for:
Principal payments of long-term debt 24,686 36,365
----------- ----------
Net cash used in financing activities (24,686) (35,755)
----------- ----------
Net decrease in cash and cash equivalents (105,722) (141,505)
Cash and cash equivalents at
beginning of period 730,284 583,721
----------- ----------
Cash and cash equivalents at
end of period $ 624,562 $ 442,213
============= ==========
The accompanying notes are an integral part of this financial
statement.
<PAGE>
TELEBYTE TECHNOLOGY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The balance sheet as of June 30, 1998, the statement of earnings for the three
and six months then ended and the statements of cash flows for the six month
period then ended have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
accrual adjustments) necessary to present fairly the financial position, results
of operations and cash flows at June 30, 1998 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
are 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, 1997. The results of operations for the period ended June 30, 1998
are not necessarily indicative of the operating results for the full year.
<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.)
Sales for the second quarter ended June 30, 1998 increased 15% to $1,406,103
compared to sales of $1,227,978 for the same period in 1997. Sales for the six
months ended June 30, 1998 increased 16% to $2,626,919 compared to $2,259,061
for the comparable period of 1997. The increased sales can be attributed the
success of increased promotional activities initiated during the past several
quarters.
Cost of sales for the second quarter of $673,450 or 48% of sales increased
compared to $464,705 or 46% of sales during the same period in 1997. The
decrease in the Company's gross profit margin was primarily a function of
product mix.
Selling, general and administrative expenses of $622,437 for the second quarter
ended June 30, 1998 increased compared to $476,036 for the same period in 1997.
During the second quarter, the Company continued its aggressive marketing
campaign including the distribution of approximately 200,000 catalogs in an
effort to stimulate sales.
Research and development expenses increased 57% to $132,580 compared to $84,603
for the second quarter of 1997. During the second quarter, the Company continued
its development of several advanced data communications products. Products under
development during the second quarter include a Multi-rate DSL (MDSL) modem
which transmits data at speeds up to 768Kbs utilizing two wires; enhancing the
Company's DSL test equipment product line and the introduction of several new
fiber optic products utilizing single mode optics.
Interest income increased to $5,409 during the second quarter of 1998 compared
to $2,853 for the same period of 1997. The increase is due primarily to the
higher cash on deposit and higher yields at Merrill Lynch.
During the second quarter of 1998, the Company had rental income of $12,049,
which was in line with the comparable quarter in 1997. Net income increased to
$121,504 for the six months ended June 30, 1998, compared to a net loss of
$8,546 for the same period in 1997. The net loss of $29,516 for the three months
ended June 30, 1998 contrasts with the net income of $90,049 during the same
period in 1997. The increase in net income for the six months ended June 30,
1997 is due primarily to the increase in revenues and the loss of during the
second quarter is a result of the increased promotional expenses mentioned
above.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the six months ended June 30, 1998 was
$65,512 compared to net cash used of $81,589 for the same period in 1997. The
decrease in cash used in operating activities is due primarily to improved
profitability and decrease in accounts receivable. Working capital increased to
$2,352,085 at June 30, 1998, an increase of $141,885 from December 31 1997. The
current ratio at June 30, 1998 increased to 4.6 to 1 compared to 4.6 to 1 at
December 31, 1997. The Company has a revolving line of credit of $1,000,000 with
Merrill Lynch that expires on June 30, 1999. The Company has no amounts
outstanding under the line of credit at this time. The Company considers its
working capital to be adequate to fund 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: August 14, 1998
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 624,562
<SECURITIES> 0
<RECEIVABLES> 661,051
<ALLOWANCES> 15,000
<INVENTORY> 1,485,149
<CURRENT-ASSETS> 2,949,498
<PP&E> 1,902,651
<DEPRECIATION> 808,935
<TOTAL-ASSETS> 4,201,995
<CURRENT-LIABILITIES> 597,413
<BONDS> 0
0
0
<COMMON> 16,598
<OTHER-SE> 2,686,882
<TOTAL-LIABILITY-AND-EQUITY> 4,201,995
<SALES> 1,406,103
<TOTAL-REVENUES> 1,406,103
<CGS> 673,450
<TOTAL-COSTS> 673,450
<OTHER-EXPENSES> 755,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,610
<INCOME-PRETAX> (29,516)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,516)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,516)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
