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, 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 May 7, 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
March 31, 1998 (Unaudited)
Statements of Operations
Three months ended
March 31, 1998 and 1997 (Unaudited)
Statements of Cash Flows
Three months ended
March 31, 1998 and 1997 (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, 1998
(unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $ 825,088
Accounts receivable, less
allowance for doubtful accounts 564,796
Inventory 1,398,221
Prepaid expenses 71,080
Deferred income taxes 80,000
--------------------
TOTAL CURRENT ASSETS 2,939,185
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization 1,109,949
OTHER ASSETS 164,207
--------------------
$ 4,213,341
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 329,154
Accrued expenses 184,740
Current maturities of long-term debt 52,654
--------------------
TOTAL CURRENT LIABILITIES 566,548
LONG-TERM DEBT, less current maturities 915,046
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share
1,655,816 issued and 1,501,016 outstanding 16,558
Capital in excess of par value 2,758,868
Accumulated earnings 57,414
Less treasury stock, at cost, (154,800 shares) (101,093)
--------------------
2,731,747
--------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,213,341
====================
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months
Ended March 31,
1998 1997
----------------- --------------------
NET SALES $1,220,816 $ 1,031,083
COST OF SALES 562,306 464,970
----------------- --------------------
GROSS PROFIT 658,510 566,113
----------------- --------------------
OPERATING EXPENSES
Research and development 95,852 59,428
Selling, G&A 399,651 593,546
----------------- --------------------
495,503 652,974
----------------- --------------------
Operating Income (Loss) 163,007 (86,861)
----------------- --------------------
OTHER INCOME (EXPENSE)
Rental Income 12,049 12,049
Interest Income 6,470 3,342
Interest Expense (28,506) (27,125)
----------------- --------------------
Earnings (Loss) before income taxes 153,020 (98,595)
Provision for income taxes 2,000 0
----------------- --------------------
NET EARNINGS (LOSS) $ 151,020 $ (98,595)
================= ====================
Earnings (Loss) per common share:
Basic $0.10 ($0.07)
================= ====================
Diluted $0.10 ($0.07)
================= ====================
Shares used in computing earnings per common share:
Basic 1,492,616 1,481,766
================= ====================
Diluted 1,543,516 1,481,766
================= ====================
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,
1998 1997
--------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 151,020 $ (98,595)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 26,283 20,883
Decrease (increase) in assets:
Accounts receivable 188,045 (112,251)
Inventories (176,453) (55,939)
Prepaid expenses and other (27,151) (63,620)
Increase (decrease) in liabilities:
Accounts payable (40,340) 161,651
Accrued expenses (7,463) 17,973
-------------- ----------------
Net cash provided by
(used in) operating activities 113,941 (129,898)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was received from:
Proceeds from exercise of stock options 7,072 -
Cash was used for:
Property and equipment 15,797 15,448
-------------- ----------------
Net cash used in investing activities (8,725) (15,448)
-------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was used for:
Principal payments of L/T debt 10,412 20,010
-------------- ----------------
Net cash used in financing activities (10,412) (20,010)
-------------- ----------------
Net increase (decrease) in cash
and cash equivalents 94,804 (165,356)
Cash and cash equivalents at
beginning of period 730,284 583,721
-------------- ----------------
Cash and cash equivalents at
end of period $ 825,088 $ 418,365
============== ================
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, 1998, 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, 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
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, 1997. The results of operations for the period ended March 31, 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.)
RESULTS OF OPERATIONS
Sales during the first quarter ended March 31, 1998 increased 18.4% to
$1,220,816 compared to sales of $1,031,083 for the same period in 1997. The
increased sales can be primarily attributed to the success in responding to new
opportunities for the Company's products. These opportunities have arisen as a
result of the increased marketing efforts of the Company begun in 1997. In
addition, the Company's increased emphasis on international business is also
ahead of the similar period of 1997. Simultaneously the Company's engineering
efforts have produced new products, which are finding enthusiastic acceptance in
the Company's expanding market.
Cost of sales for the first quarter of $562,306 or 46.1% of sales increased
compared to the $464,970 or 45.1% of sales during the same period in 1997. The
decreased profit margin during the first quarter of 1998 is due primarily to
product mix.
Selling, general and administrative costs of $399,651 decreased as compared to
$593,546 during the first quarter of 1997. The decrease of $193,895 during the
first quarter was due primarily to the delayed printing of the Company's
catalog. The catalog is normally printed during the first quarter of the year.
During the first quarter the Company continued its program of visiting
significant existing and potential customers in order to uncover sales
opportunities and validate market awareness.
Research and development expenses of $95,852 increased 61.3%, compared to
$59,428 during the same quarter in 1997. During the first quarter, the Company
continued its development of several advanced data communications products,
including the Company's first LONWORKS product for the HVAC and factory
automation market. Also under development during the first quarter was a
Multi-Rate DSL modem which is targeted at the emerging high speed Internet
market. The Company expects to introduce this product during the second half of
1998. Potential customers for this product include Internet Service Providers
(ISP's) and Competitive Local Exchange Carriers (CLEC's). The Company has also
spent considerable effort in improving its wireline simulator product line so as
to firm and increase its dominating position for manufacturing test equipment
with XDSL modem manufacturers.
Interest income increased to $6,470 during the first quarter of 1998 compared to
$3,342 for the same period in 1997. The increase in interest income was due
primarily to higher levels of cash on deposit at Merrill Lynch. During the first
quarter of 1998 the Company had rental income of $12,049 which was in line with
the comparable quarter of 1997.
The net income of $151,020 or $.10 per share for the first quarter of 1998
increased compared to the net loss of $98,595 or $.07 per share in the same
quarter in 1997. The increase in profitability is due primarily to the decreased
selling expenditures as discussed above and the increased level of sales.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $113,941 for the first quarter of
1998 compared to $129,898 net cash in the same period of 1997. This change is
due primarily to higher net income and the decrease in accounts receivable.
Working capital increased to $2,372,637 at March 31, 1998, an increase of
$162,437 from December 31, 1997. The current ratio at March 31, 1998 increased
to 5.2:1 compared to 4.6:1 at December 31, 1997. The Company has a revolving
line of credit of $1,000,000 with Merrill Lynch that expires June 30, 1999. 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 7, 1998
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 825,088
<SECURITIES> 0
<RECEIVABLES> 579,796
<ALLOWANCES> 15,000
<INVENTORY> 1,398,221
<CURRENT-ASSETS> 2,939,185
<PP&E> 1,892,602
<DEPRECIATION> 782,653
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<CURRENT-LIABILITIES> 566,548
<BONDS> 0
0
0
<COMMON> 16,558
<OTHER-SE> 2,758,868
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<SALES> 1,220,816
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<CGS> 562,306
<TOTAL-COSTS> 562,306
<OTHER-EXPENSES> 495,503
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,506
<INCOME-PRETAX> 153,020
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 151,020
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 151,020
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