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 NOVEMBER
30, 1996.
[ ] 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
(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 1,571,170
(Title of Class) (Shares Outstanding)
<TABLE>
Part I - Financial Information
Item 1: Financial Statements
TECHNOLOGY 80 INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
November 30, August 31,
1996 1996
ASSETS ------------ -----------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 605,057 $ 419,136
Short-term investments 5,000 127,163
Accounts receivable (less allowance for doubtful
accounts: Nov. 30 - $9,000; Aug. 31 - $9,000) 627,162 587,537
Inventories 986,586 956,744
Deferred taxes 32,825 38,600
Other current assets 25,118 29,069
---------- ----------
TOTAL CURRENT ASSETS 2,281,748 2,158,249
========== ==========
PROPERTY AND EQUIPMENT
Furniture and equipment 437,939 424,670
Leasehold improvements 23,060 23,060
---------- ----------
460,999 447,730
Less accumulated depreciation 371,459 363,780
---------- ----------
89,540 83,950
---------- ----------
OTHER ASSETS
Investments 2,298,788 2,580,957
Deferred taxes 113,800 74,400
---------- ----------
2,412,588 2,655,357
---------- ----------
TOTAL ASSETS $4,783,876 $4,897,556
========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 64,582 $ 49,413
Accrued payroll and payroll taxes 133,282 217,214
Accrued income taxes 84,000 206,137
Accrued liabilities - other 3,346 74,379
---------- ----------
TOTAL CURRENT LIABILITIES 285,210 547,143
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value (authorized -
5,000,000 shares;issued and outstanding -
Nov. 30, 1,571,170, Aug. 31, 1,571,170 shares) 15,712 15,712
Paid-in capital 3,383,944 3,383,944
Other - loans (162,263) (162,263)
Unrealized loss on available-for-sale securities (150,090) (102,526)
Retained earnings 1,411,363 1,215,546
---------- ----------
4,498,666 4,350,413
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,783,876 $4,897,556
========== ==========
See notes to condensed financial statements.
</TABLE>
<TABLE>
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three months ended
November 30,
1996 1995
-------- --------
<S> <C> <C>
REVENUES $993,880 $872,071
COST OF GOODS SOLD 387,535 349,466
-------- --------
GROSS PROFIT 606,345 522,605
-------- --------
OPERATING EXPENSES
General and administrative 128,701 125,919
Research and development 153,984 137,653
Selling 152,236 175,956
-------- --------
TOTAL OPERATING EXPENSES 434,921 439,528
-------- --------
INCOME FROM OPERATIONS 171,424 83,077
OTHER INCOME 117,393 42,525
-------- --------
INCOME BEFORE INCOME TAXES 288,817 125,602
PROVISION FOR INCOME TAXES 93,000 35,000
-------- --------
NET INCOME $195,817 $ 90,602
======== ========
EARNINGS PER SHARE $0.11 $0.05
===== =====
See notes to condensed financial statements.
</TABLE>
<TABLE>
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three months ended
November 30,
1996 1995
OPERATING ACTIVITIES ---------- ----------
<S> <C> <C>
Net income $195,817 $ 90,602
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation and amortization 7,679 6,688
Deferred taxes 8,375 (59,625)
Gain on sale of fixed asset - (62)
Gain on sale of investments (80,619) -
Changes in operating assets and liabilities:
Accounts receivable (39,625) 2,905
Inventories (29,842) (30,384)
Other current assets 3,951 15,753
Accounts payable 15,169 11,175
Accrued income taxes (122,137) -
Accrued liabilities (154,965) (69,721)
-------- --------
NET CASH USED BY OPERATING ACTIVITIES (196,197) (32,669)
-------- --------
INVESTING ACTIVITIES
Sale of equipment - 1,350
Purchase of property and equipment (13,269) (4,009)
Proceeds from sales and maturities of investments 742,727 -
Purchase of investments (347,340) (193,768)
Payments on loans for stock purchases - 1,442
-------- --------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 382,118 (194,985)
-------- --------
FINANCING ACTIVITIES
Proceeds from exercise of stock options - 1,562
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 1,562
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 185,921 (226,092)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 419,136 926,163
-------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $605,057 $700,071
======== ========
See notes to condensed financial statements.
</TABLE>
TECHNOLOGY 80 INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
November 30, 1996
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 1,718,898 for the quarter
ended November 30, 1996 and 1,726,161 for the quarter ended
November 30, 1995.
Item 2: Management's Discussion and Analysis
Results of Operations
Revenues for the first quarter ended November 30, 1996 increased
14% over the same period the preceding year. The revenue increase
was due to an increase in sales volume. Registrant's backlog is
up 16% since fiscal year end August 31, 1996. The backlog is
deliverable within the next twelve months or less and is
cancelable.
Gross profit percentages for the three months ended November 30,
1996 was 61% compared to 60% for the three months ended November
30, 1995.
Operating expenses decreased $4,607 for the three months ended
November 30, 1996 from the same period the prior year.
Other income increased $74,868 for the quarter ended November 30,
1996 from the same period the preceding year. The increase was
primarily due to increased investment income.
Net income was $195,817 and $90,602 for the quarter ended
November 30, 1996 and November 30, 1995 respectively. This
represents a 116% increase.
Liquidity and Capital Resources
Registrant's balance sheet shows a strong capital position.
Operations used $196,197 in cash. Cash and cash equivalents
increased $185,921 since August 31, 1996. Investing activity
provided for $382,118 in cash. Registrant expects that there
will be sufficient capital to fund its operations during fiscal
year 1996.
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
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)
January 13, 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
November 30,
1996 1995
--------- ---------
<S> <C> <C>
Primary
Average shares outstanding 1,571,170 1,562,423
Net effect of dilutive stock options -
based on the treasury stock method
using average market price 147,728 163,738
--------- ---------
Total 1,718,898 1,726,161
========= =========
Net income $195,817 $90,602
======== =======
Per-share amount $0.11 $0.05
===== =====
Fully Diluted
Average shares outstanding 1,571,170 1,562,423
Net effect of dilutive stock options -
based on the treasury stock method
using the quarter end market price, if
Higher than average market price 147,728 174,867
--------- ---------
Total 1,718,898 1,737,290
========= =========
Net income $195,817 $90,602
======== =======
Per-share amount $0.11 $0.05
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 605057
<SECURITIES> 5000
<RECEIVABLES> 636162
<ALLOWANCES> 9000
<INVENTORY> 986586
<CURRENT-ASSETS> 2281748
<PP&E> 460999
<DEPRECIATION> 371459
<TOTAL-ASSETS> 4783876
<CURRENT-LIABILITIES> 285210
<BONDS> 0
0
0
<COMMON> 15712
<OTHER-SE> 4482954
<TOTAL-LIABILITY-AND-EQUITY> 4783876
<SALES> 993880
<TOTAL-REVENUES> 993880
<CGS> 387535
<TOTAL-COSTS> 387535
<OTHER-EXPENSES> 434921
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226
<INCOME-PRETAX> 288817
<INCOME-TAX> 93000
<INCOME-CONTINUING> 195817
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 195817
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
