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, 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 Identification No.)
incorporation or organization)
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 1,615,170
----------------------------- --------------------
(Title of Class) (Shares Outstanding)
Part I - Financial Information
Item 1: Financial Statements
TECHNOLOGY 80 INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS November 30, August 31,
1997 1997
---------- ----------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 331,673 $ 284,261
Short-term investments 5,000 64,402
Accounts receivable (less allowance for doubtful
accounts: Nov. 30 - $12,000; Aug. 31 - $12,000) 702,247 882,224
Inventories 1,149,690 1,177,452
Deferred taxes 44,000 44,000
Other current assets 24,197 24,383
---------- ----------
TOTAL CURRENT ASSETS 2,256,807 2,476,722
---------- ----------
PROPERTY AND EQUIPMENT
Furniture and equipment 501,171 473,934
Leasehold improvements 23,060 23,060
---------- ----------
524,231 496,994
Less accumulated depreciation 397,065 395,830
---------- ----------
127,166 101,164
---------- ----------
OTHER ASSETS
Investments 3,394,598 3,284,214
Deferred taxes 261,800 147,000
---------- ----------
3,656,398 3,431,214
---------- ----------
TOTAL ASSETS $6,040,371 $6,009,100
========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 67,512 $ 95,117
Accrued payroll and payroll taxes 156,130 464,659
Accrued income taxes 92,100 36,990
Payable to investment company 693,814 285,392
Accrued liabilities - other 11,634 182,054
---------- ----------
TOTAL CURRENT LIABILITIES 1,021,190 1,064,212
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value (authorized -
5,000,000 shares; issued and outstanding -
Nov. 30, 1,615,170, Aug. 31, 1,605,045 shares) 16,152 16,051
Paid-in capital 3,420,152 3,408,160
Other - loans (162,263) (162,263)
Unrealized loss on available-for-sale securities (413,141) (265,933)
Retained earnings 2,158,281 1,948,873
---------- ----------
5,019,181 4,944,888
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,040,371 $6,009,100
========== ==========
</TABLE>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
November 30,
1997 1996
---------- --------
<S> <C> <C>
REVENUES $1,323,597 $993,880
COST OF GOODS SOLD 540,247 387,535
---------- --------
GROSS PROFIT 783,350 606,345
---------- --------
OPERATING EXPENSES
General and administrative 149,699 128,701
Research and development 176,894 153,984
Selling 202,889 152,236
---------- --------
TOTAL OPERATING EXPENSES 529,482 434,921
---------- --------
INCOME FROM OPERATIONS 253,868 171,424
OTHER INCOME 59,540 117,393
---------- --------
INCOME BEFORE INCOME TAXES 313,408 288,817
PROVISION FOR INCOME TAXES 104,000 93,000
---------- --------
NET INCOME $ 209,408 $195,817
========== ========
EARNINGS PER SHARE $0.12 $0.11
===== =====
</TABLE>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
November 30,
1997 1996
-------- --------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $209,408 $195,817
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 9,333 7,679
Deferred taxes 9,700 8,375
Gain on sale of fixed asset (500) -
Gain on sale of investments (33,211) (80,619)
Changes in operating assets and liabilities:
Accounts receivable 179,977 (39,625)
Inventories 27,762 (29,842)
Other current assets 186 3,951
Accounts payable (27,605) 15,169
Accrued income taxes 55,110 (122,137)
Accrued liabilities (70,527) (154,965)
-------- --------
NET CASH PROVIDED(USED) BY OPERATING
ACTIVITIES 359,633 (196,197)
-------- --------
INVESTING ACTIVITIES
Proceeds from sale of equipment 500 -
Purchase of property and equipment (35,336) (13,269)
Proceeds from sales and maturities of investments 382,133 742,727
Purchase of investments (671,612) (347,340)
-------- --------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (324,315) 382,118
-------- --------
FINANCING ACTIVITIES
Proceeds from exercise of stock options 12,094 -
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,094 -
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 47,412 185,921
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 284,261 419,136
-------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $331,673 $605,057
======== ========
</TABLE>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
November 30, 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, 1997 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 1997 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 and common equivalent shares outstanding
of 1,743,717 for the quarter ended November 30, 1997 and
1,718,898 for the quarter ended November 30, 1996. Common
stock equivalents include the dilutive effect of the
incremental shares issuable upon the exercise of stock
options.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS No. 128"). SFAS No. 128 differs
from current accounting guidance in that earnings per share is
classified as basic earnings per share and diluted earnings
per share, compared with primary earnings per share and fully
diluted earnings per share. Basic earnings per share differs
from primary earnings per share in that it includes only the
weighted average common shares outstanding and does not
include any dilutive securities in the calculation. Diluted
earnings per share under SFAS 128 differs in certain
calculations from fully diluted earnings per share under the
existing standards. Adoption of SFAS No. 128 is required for
interim and annual periods ending after December 15, 1997.
Had the company applied SFAS No. 128 as of November 30 1997,
and 1996, basic and diluted earnings per share would have been
as follows:
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Basic $0.13 $0.12
Diluted $0.12 $0.11
</TABLE>
Item 2: Management's Discussion and Analysis
Results of Operations
- ---------------------
Revenues for the first quarter ended November 30, 1997 increased
33% over the same period the preceding year. The revenue increase
was due to an increase in sales volume.
Gross profit percentages for the three months ended November 30,
1997 was 59% compared to 61% for the three months ended November
30, 1996.
Operating expenses as a percentage of sales was 40% and 44% for
the three months ended November 30, 1997 and 1996, respectively.
Other income decreased $57,853 for the quarter ended November 30,
1997 from the same period the preceding year. The decrease was
due to less investment sales compared to the same period the
prior year.
Net income was $209,408 and $195,817 for the quarter ended
November 30, 1997 and November 30, 1996 respectively. This
represents a 7% increase.
Liquidity and Capital Resources
- -------------------------------
Registrant's balance sheet shows a strong capital position.
Operations provided $359,633 in cash. Cash and cash equivalents
increased $47,412 since August 31, 1997. Investing activity used
$324,315 in cash. Proceeds from the exercise of stock options
provided for $12,094 in cash. Registrant expects that there will
be sufficient capital to fund its operations during fiscal year
1998.
Registrant has no long-term 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 (following signature page)
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 14, 1998 /s/ Duane Markus, President, CEO
- ------------------------------- --------------------------------
(Date) Duane Markus, President, CEO
Exhibit 11 -- Statement Re: Computation of Per-Share Earnings
<TABLE>
<CAPTION>
Three months ended
November 30,
1997 1996
--------- ---------
Primary
<S> <C> <C>
Average shares outstanding 1,606,283 1,571,170
Net effect of dilutive stock options -
based on the treasury stock method
using average market price 137,434 147,728
--------- ---------
Total 1,743,717 1,718,898
========= =========
Net income $209,408 $195,817
========= =========
Per-share amount $0.12 $0.11
===== =====
Fully Diluted
Average shares outstanding 1,606,283 1,571,170
Net effect of dilutive stock options -
based on the treasury stock method
using the quarter end market price, if
Higher than average market price 137,434 147,728
--------- ---------
Total 1,743,717 1,718,898
========= =========
Net income $209,408 $195,817
========= =========
Per-share amount $0.12 $0.11
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 331673
<SECURITIES> 5000
<RECEIVABLES> 714247
<ALLOWANCES> 12000
<INVENTORY> 1149690
<CURRENT-ASSETS> 2256807
<PP&E> 524231
<DEPRECIATION> 397065
<TOTAL-ASSETS> 6040371
<CURRENT-LIABILITIES> 1021190
<BONDS> 0
0
0
<COMMON> 16152
<OTHER-SE> 5003029
<TOTAL-LIABILITY-AND-EQUITY> 6040371
<SALES> 1323597
<TOTAL-REVENUES> 1323597
<CGS> 540247
<TOTAL-COSTS> 540247
<OTHER-EXPENSES> 529482
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7364
<INCOME-PRETAX> 313408
<INCOME-TAX> 104000
<INCOME-CONTINUING> 209408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209408
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
