U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB (Amended)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER
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 0-13870
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
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(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 1,683,108
- ------------------------------ -------------------
(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
1998 1998
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $1,691,797 $1,667,363
Short-term investments - 49,048
Accounts receivable (less allowance for doubtful
accounts: Nov. 30 - $12,000; Aug. 31 - $12,000) 557,159 666,933
Inventories 1,342,895 1,357,461
Income tax refunds receivable 21,200 66,540
Deferred taxes 41,000 41,000
Other current assets 21,643 16,432
--------- ---------
TOTAL CURRENT ASSETS 3,675,694 3,864,777
--------- ---------
PROPERTY AND EQUIPMENT
Furniture and equipment 530,655 524,035
Leasehold improvements 23,060 23,060
--------- ---------
553,715 547,095
Less accumulated depreciation 442,220 430,524
--------- ---------
111,495 116,571
--------- ---------
OTHER ASSETS
Investments 1,915,162 1,955,678
Deferred taxes 163,500 265,000
--------- ---------
2,078,662 2,220,678
--------- ---------
TOTAL ASSETS $5,865,851 $6,202,026
========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable 35,011 87,418
Accrued payroll and payroll taxes 161,498 464,816
Payable to investment company - 77,750
Accrued liabilities - other 12,812 217,950
--------- ---------
TOTAL CURRENT LIABILITIES 209,321 847,934
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value (authorized -
5,000,000 shares; issued and outstanding -
Nov. 30, 1,646,733, Aug. 31, 1,646,733 shares) 16,468 16,468
Paid-in capital 3,450,732 3,450,732
Other - loans (171,158) (172,072)
Unrealized loss on available-for-sale securities (312,008) (491,238)
Retained earnings 2,672,496 2,550,202
--------- ---------
5,656,530 5,354,092
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,865,851 $6,202,026
========= =========
</TABLE>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
November 30,
1998 1997
--------- ---------
<S> <C> <C>
REVENUES $1,009,750 $1,323,597
COST OF GOODS SOLD 386,662 540,247
--------- ---------
GROSS PROFIT 623,088 783,350
--------- ---------
OPERATING EXPENSES
General and administrative 167,931 149,699
Research and development 188,201 176,894
Selling 161,329 202,889
--------- ---------
TOTAL OPERATING EXPENSES 517,461 529,482
--------- ---------
INCOME FROM OPERATIONS 105,627 253,868
OTHER INCOME 62,367 59,540
--------- ---------
INCOME BEFORE INCOME TAXES 167,994 313,408
PROVISION FOR INCOME TAXES 45,700 104,000
--------- ---------
NET INCOME $ 122,294 $ 209,408
========= =========
BASIC EARNINGS PER SHARE $0.07 $0.13
==== ====
DILUTED EARNINGS PER SHARE $0.07 $0.12
==== ====
</TABLE>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
November 30,
1998 1997
-------- --------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 122,294 $ 209,408
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 11,696 9,333
Deferred taxes - 9,700
Gain on sale of fixed asset - (500)
Gain on sale of investments (21,642) (33,211)
Changes in operating assets and liabilities:
Accounts receivable 109,774 179,977
Inventories 14,566 27,762
Other current assets 40,129 186
Accounts payable (52,407) (27,605)
Accrued income taxes - 55,110
Accrued liabilities (508,456) (70,527)
--------- --------
NET CASH PROVIDED(USED) BY OPERATING ACTIVITIES (284,046) 359,633
--------- --------
INVESTING ACTIVITIES
Proceeds from sale of equipment - 500
Purchase of property and equipment (6,620) (35,336)
Proceeds from sales and maturities of investments 314,185 382,133
Purchase of investments - (671,612)
Payments on loans for stock purchases 915 -
--------- --------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 308,480 (324,315)
--------- --------
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 24,434 47,412
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD 1,667,363 284,261
--------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $1,691,797 $ 331,673
========= ========
</TABLE>
See notes to condensed financial statements.
TECHNOLOGY 80 INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
November 30, 1998
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, 1998 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 1998 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 are calculated in accordance with the provisions of
Statement of Financial Accounting Standards No. 128 - "Earnings per
Share" (SFAS No. 128), effective for interim and annual periods ending
after December 15, 1997. SFAS No. 128 requires the Company to report
both basic earnings per share which is based on weighted-average number
of common shares outstanding and diluted earnings per share which is
based on the weighted-average number of common shares outstanding and
all dilutive potential common shares outstanding. All earnings per
share data in this report reflect basic earnings per share, unless
otherwise indicated. The details of the earnings per share calculations
for the quarter ending November 30, 1998 and 1997 follow:
<TABLE>
<CAPTION>
Per share
1998 Income Shares amount
---- ------ ------ ---------
<S> <C> <C> <C>
Earnings per share of common stock -
basic $122,294 1,646,733 $0.07
Stock options - 114,970 -
------- --------- ----
Earnings per share of common stock -
assuming dilution $122,294 1,761,703 $0.07
======= ========= ====
Per share
1997 Income Shares amount
---- ------ ------ ---------
Earnings per share of common stock -
basic $209,408 1,606,283 $0.13
Stock options - 137,434 -
------- --------- ----
Earnings per share of common stock -
assuming dilution $209,408 1,743,717 $0.12
======= ========= ====
</TABLE>
Item 2: Management's Discussion and Analysis
Results of Operations
- ---------------------
Revenues for the first quarter ended November 30, 1998 decreased 24% over
the same period the preceding year. The revenue decrease was mainly a
result of a slowdown in the semi-conductor industry.
Gross profit percentages for the three months ended November 30, 1998 was
62% compared to 59% for the three months ended November 30, 1997.
Operating expenses as a percentage of sales was 51% and 40% for the three
months ended November 30, 1998 and 1997, respectively. The increased
percentage was mainly due to lower sales. Operating expenses were down
$12,021 from the previous year.
Other income increased $2,827 for the quarter ended November 30, 1998 from
the same period the preceding year.
Net income was $122,294 and $209,408 for the quarter ended November 30,
1998 and November 30, 1997, respectively. This represents a 42% decrease.
Liquidity and Capital Resources
- -------------------------------
Registrant's balance sheet shows a strong capital position. Operations
used $284,046 in cash. Cash and cash equivalents increased $24,434 since
August 31, 1998. Investing activity provided $308,480 in cash. Registrant
expects that there will be sufficient capital to fund its operations during
fiscal year 1999.
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
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None.
Item 5: Other Information
-----------------
None.
Item 6: Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
--------
Exhibit 27 - Financial Data Schedule.
b. Reports on Form 8-K
-------------------
One report was filed on Form 8-K during the quarter.
On a report dated December 11, 1998, the company announced
that it has signed a letter of intent to sell the company to
ACS Electronics.
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, 1998 /s/ Duane Markus, President, CEO
- ---------------- --------------------------------
(Date) Duane Markus, President, CEO
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 1691797
<SECURITIES> 0
<RECEIVABLES> 569159
<ALLOWANCES> 12000
<INVENTORY> 1342895
<CURRENT-ASSETS> 3675694
<PP&E> 553715
<DEPRECIATION> 442220
<TOTAL-ASSETS> 5865851
<CURRENT-LIABILITIES> 209321
<BONDS> 0
0
0
<COMMON> 16468
<OTHER-SE> 5640062
<TOTAL-LIABILITY-AND-EQUITY> 5865851
<SALES> 1009750
<TOTAL-REVENUES> 1009750
<CGS> 386662
<TOTAL-COSTS> 386662
<OTHER-EXPENSES> 517461
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 167994
<INCOME-TAX> 45700
<INCOME-CONTINUING> 122294
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122294
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
