U.S. 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 QUARTERLY PERIOD ENDED FEBRUARY
28, 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 0-13870
Technology 80 Inc.
- -----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1373380
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
658 Mendelssohn Avenue North, Minneapolis, Minnesota 55427
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(612) 542-9545
--------------------------
(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the 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 [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practible date.
Common Stock, $0.01 par value 1,573,295
----------------------------- -------------------
(Title of Class) (Shares Outstanding)
<TABLE>
Part I - Financial Information
Item 1: Financial Statements
TECHNOLOGY 80 INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
February 28, August 31,
1997 1996
ASSETS ------------ -----------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 212,593 $ 419,136
Short-term investments 5,000 127,163
Accounts receivable (less allowance for doubtful
accounts: Feb. 28 - $9,000; Aug. 31 - $9,000) 715,367 587,537
Inventories 994,952 956,744
Deferred taxes 21,450 38,600
Other current assets 38,028 29,069
---------- ----------
TOTAL CURRENT ASSETS 1,987,390 2,158,249
---------- ----------
PROPERTY AND EQUIPMENT
Furniture and equipment 458,469 424,670
Leasehold improvements 23,060 23,060
---------- ----------
481,529 447,730
Less accumulated depreciation 380,161 363,780
---------- ----------
101,368 83,950
---------- ----------
OTHER ASSETS
Investments 2,898,223 2,580,957
Deferred taxes 55,800 74,400
---------- ----------
2,954,023 2,655,357
---------- ----------
TOTAL ASSETS $5,042,781 $4,897,556
========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 55,918 $ 49,413
Accrued payroll and payroll taxes 112,930 217,214
Accrued income taxes 48,000 206,137
Accrued liabilities - other 1,062 74,379
---------- ----------
TOTAL CURRENT LIABILITIES 217,910 547,143
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value (authorized -
5,000,000 shares; issued and outstanding -
Feb. 28, 1,573,295, Aug. 31, 1,571,170 shares) 15,733 15,712
Paid-in capital 3,386,399 3,383,944
Other - loans (162,263) (162,263)
Unrealized loss on available-for-sale securities (63,697) (102,526)
Retained earnings 1,648,699 1,215,546
---------- ----------
4,824,871 4,350,413
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,042,781 $4,897,556
========== ==========
See notes to condensed financial statements.
</TABLE>
<TABLE>
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three months ended Six months ended
February 28, February 28,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES $1,160,828 $1,061,504 $2,154,708 $1,933,575
COST OF GOODS SOLD 413,908 440,014 801,443 789,480
---------- ---------- ---------- ----------
GROSS PROFIT 746,920 621,490 1,353,265 1,144,095
---------- ---------- ---------- ----------
OPERATING EXPENSES
General and administrative 117,426 113,594 246,127 239,514
Research and development 183,130 145,636 337,114 283,289
Selling 152,503 160,111 304,739 336,065
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 453,059 419,341 887,980 858,868
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 293,861 202,149 465,285 285,227
OTHER INCOME 73,475 46,080 190,868 88,604
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 367,336 248,229 656,153 373,831
PROVISION FOR INCOME TAXES 130,000 92,000 223,000 127,000
---------- ---------- ---------- ----------
NET INCOME $ 237,336 $ 156,229 $ 433,153 $ 246,831
========== ========== ========== ==========
EARNINGS PER SHARE $0.14 $0.09 $0.25 $0.14
===== ===== ===== =====
See notes to condensed financial statements
</TABLE>
<TABLE>
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six months ended
February 28,
1997 1996
----------- -----------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 433,153 $ 246,831
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 16,381 13,525
Deferred taxes 19,750 59,000
Gain on sale of investments (118,031) (28,576)
Gain on sale of fixed asset 0 (62)
Changes in operating assets and liabilities:
Accounts receivable (127,830) (36,359)
Inventories (38,208) (32,329)
Other current assets (8,959) 4,647
Accounts payable 6,505 138,339
Accrued income taxes (158,137) 0
Accrued liabilities (177,601) (57,513)
---------- ----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (152,977) 307,503
---------- ----------
INVESTING ACTIVITIES
Proceeds from sale of equipment 0 1,350
Purchase of equipment (33,799) (13,836)
Proceeds from sales and maturities of investments 1,090,672 1,108,811
Purchases of investments (1,112,915) (1,676,386)
Repayment of other - loans 0 1,442
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (56,042) (578,619)
---------- ----------
FINANCING ACTIVITIES
Proceeds from exercise of stock options 2,476 1,562
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,476 1,562
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS 2,476 309,065
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 419,136 926,163
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 212,593 $ 656,609
========== ==========
See notes to condensed financial statements.
</TABLE>
TECHNOLOGY 80 INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
February 28, 1997
NOTE A - FINANCIAL INFORMATION
The unaudited interim financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission;
accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The
condensed balance sheet at August 31, 1996 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. These interim financial
statements should be read in conjunction with the financial statements
and notes in the Company's 1996 Annual Report on Form 10-KSB filed with
the Securities and Exchange Commission.
In the opinion of management, the financial statements reflect all
adjustments (which include only normal recurring adjustments) necessary
for a fair presentation of the interim periods.
NOTE B - EARNINGS PER SHARE
Earnings per share is based upon the number of weighted average common
shares outstanding of 1,718,331 for the quarter ended February 28, 1997
and 1,732,490 for the quarter ended February 29, 1996.
Item 2: Management's Discussion and Analysis
Results of Operations
- ---------------------
Revenues for the second quarter ended February 28, 1997 increased 9% over
the same period the preceding year and increased 11% for the six months
ended February 28, 1997. The revenue increase for the three and six months
ended February 28, 1997 was due to an increase in sales volume.
Gross profit percentages for the second quarter ended February 28, 1997 and
1996 was 64% and 59% respectively. Gross profit percentages for the six
months ended February 28, 1997 was 63% compared to 59% for the six months
ended February 29, 1996. The increase is primarily due to increased cost
cutting measures.
Operating expenses as a percentage of sales was 39% for the three months
and 41% for the six months ended February 28, 1997 compared to 40% and 44%
for the same periods the prior year, respectively.
Other income increased $27,395 for the quarter ended February 28, 1997 and
increased $102,264 for the six months ended February 28, 1997 from the same
periods the preceding year. The increase was primarily due to increased
investment income.
Net income was $237,336 and $156,229 for the quarter ended February 28,
1997 and 1996 respectively. This represents a 52% increase. For the six
months ended February 28, 1997 and 1996, net income was $433,153 and
$246,831 respectively. This represents a 75% increase.
Liquidity and Capital Resources
- -------------------------------
Registrant's balance sheet shows a strong capital position. Operations
used $152,977 in cash compared to providing $307,503 the same period the
prior year. Cash and cash equivalents decreased $206,543 since August 31,
1996. The company used $56,042 to purchase investments and equipment since
August 31, 1996. Registrant expects that there will be sufficient capital
to fund its operations during fiscal year 1997.
Registrant has no debt and does not anticipate, at this time, that it will
be necessary to seek any debt financing in the near future for ongoing
operations, but may consider some type of financing for other purposes.
Statements included in this Management's Discussion and Analysis or Plan of
Operation and elsewhere in this Form 10-QSB, in future filings by the
Registrant with the Securities and Exchange Commission and in the
Registrant's press releases and oral statements made with the approval of
authorized executive officers, if the statements are not historical or
current facts, should be considered "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected.
Registrant wishes to caution the reader not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.
Part II - Other Information
Item 1: Legal Proceedings
None.
Item 2: Changes in Securities
None.
Item 3: Defaults Upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Security Holders
None.
Item 5: Other Information
None.
Item 6: Exhibits and Reports on Form 8-K
a. Exhibits (following signature page)
Exhibit 11 -- Statement Re: Computation of Per-Share
Earnings
Exhibit 27 -- Financial Data Schedule
b. Reports on Form 8-K
None.
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.
Technology 80 Inc.
---------------------------------
(Registrant)
April 11, 1997 /s/ Duane Markus, President, CEO
- -------------------------- ---------------------------------
(Date) Duane Markus, President, CEO
<TABLE>
Exhibit 11 -- Statement Re: Computation of Per-Share Earnings
<CAPTION>
Three months ended Six months ended
February 28, February 28,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary
Average shares outstanding 1,572,894 1,563,420 1,567,659 1,562,922
Net effect of dilutive stock
options - based on the
treasury stock method using
average market price 145,437 169,070 150,956 166,404
--------- --------- --------- ---------
Total 1,718,331 1,732,490 1,718,615 1,729,326
========= ========= ========= =========
Net income $237,336 $156,229 $433,153 $246,831
======== ======== ======== ========
Per-share amount $0.14 $0.09 $0.25 $0.14
===== ===== ===== =====
Fully Diluted
Average shares outstanding 1,572,894 1,563,420 1,567,659 1,562,922
Net effect of dilutive stock
options - based on the
treasury stock method using
the quarter end market price,
if higher than average
market price 145,437 169,070 150,956 171,968
--------- --------- --------- ---------
Total 1,718,331 1,732,490 1,718,615 1,734,890
========= ========= ========= =========
Net income $237,336 $156,229 $433,153 $246,831
======== ======== ======== ========
Per-share amount $0.14 $0.09 $0.25 $0.14
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 212593
<SECURITIES> 5000
<RECEIVABLES> 724367
<ALLOWANCES> 9000
<INVENTORY> 994952
<CURRENT-ASSETS> 1987390
<PP&E> 481529
<DEPRECIATION> 380161
<TOTAL-ASSETS> 5042781
<CURRENT-LIABILITIES> 217910
<BONDS> 0
0
0
<COMMON> 15733
<OTHER-SE> 4809138
<TOTAL-LIABILITY-AND-EQUITY> 5042781
<SALES> 2154708
<TOTAL-REVENUES> 2154708
<CGS> 801443
<TOTAL-COSTS> 801443
<OTHER-EXPENSES> 887980
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 853
<INCOME-PRETAX> 656153
<INCOME-TAX> 223000
<INCOME-CONTINUING> 433153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 433153
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
