<PAGE> 1
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 QUARTER ENDED APRIL 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-16231
XETA Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 73-1130045
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4500 S. Garnett, Suite 1000, Tulsa, Oklahoma 74146
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
918-664-8200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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
--- ---
Number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at May 1, 1995
- -------------------------------- --------------------------
<S> <C>
Common Stock, $.10 par value 1,809,873
</TABLE>
Page 1 of 14 consecutive pages
Exhibit Index appears on Page 14.
<PAGE> 2
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS Page No.
-------
<S> <C>
Consolidated Balance Sheets - April 30, 1995 3
and October 31, 1994
Consolidated Statements of Operations - For the 4
Three and Six Months Ended April 30, 1995 and
1994
Consolidated Statements of Shareholders' Equity - 5
November 1, 1994 through April 30, 1995
Consolidated Statements of Cash Flows - For the 6
Six Months Ended April 30, 1995 and 1994
Notes to Consolidated Financial Statements 7
</TABLE>
2
<PAGE> 3
XETA CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
April 30, 1995 October 31, 1994
-------------- ----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $1,969,448 $1,630,531
Current portion of net investment in
sales-type leases 1,291,611 904,725
Other receivables, net 1,832,704 962,536
Inventories, net (Note 3) 581,039 710,407
Prepaid income taxes -- 188,714
Current deferred tax asset, net (Note 6) 421,504 302,143
Prepaid expenses and other assets 104,999 45,041
---------- ----------
Total current assets 6,201,305 4,744,097
---------- ----------
Noncurrent Assets:
Net investment in sales-type leases,
less current portion above 2,341,170 1,736,122
Property, plant, & equipment, net (Note 4) 322,849 354,219
Capitalized software production costs, net of
accumulated amortization of $289,856 at April
30, 1995 and $262,400 at Oct. 31, 1994 123,336 115,556
Other assets 161,025 113,761
---------- ----------
Total noncurrent assets 2,948,380 2,319,658
---------- ----------
Total assets $9,149,685 $7,063,755
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 401,024 $ 241,745
Unearned revenue (Note 5) 1,932,348 1,759,293
Accrued liabilities 481,277 372,163
Accrued federal and state income taxes 593,139 89,466
---------- ----------
Total current liabilities 3,407,788 2,462,667
---------- ----------
Unearned service revenue (Note 5) 1,565,344 1,202,029
---------- ----------
Noncurrent deferred tax liability, net (Note 6) 81,217 174,933
---------- ----------
Commitments (Note 10)
Shareholders' equity:
Common stock; $.10 par value; 10,000,000
shares authorized, 1,999,620 and 1,964,620
issued and outstanding at April 30, 1995
and October 31, 1994, respectively 199,962 196,462
Paid-in capital 4,050,498 4,011,185
Retained earnings (deficit) 104,616 (723,781)
---------- ----------
4,355,076 3,483,866
Less treasury stock, at cost (259,740) (259,740)
---------- ----------
Total shareholders' equity 4,095,336 3,224,126
---------- ----------
Total liabilities & shareholders' equity $9,149,685 $7,063,755
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
XETA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ending April 30, Ending April 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales of systems $1,782,481 $ 959,358 $3,622,407 $1,490,062
Installation and service revenues 1,261,247 851,512 2,482,250 1,556,945
---------- ---------- ---------- ----------
Net sales and service revenues 3,043,728 1,810,870 6,104,657 3,047,007
---------- ---------- ---------- ----------
Cost of sales 1,075,973 485,816 1,929,773 698,302
Installation and service cost 796,589 539,602 1,553,537 1,063,881
---------- ---------- ---------- ----------
Total cost of sales and service 1,872,562 1,025,418 3,483,310 1,762,183
---------- ---------- ---------- ----------
Gross profit 1,171,166 785,452 2,621,347 1,284,824
---------- ---------- ---------- ----------
Operating expense:
Selling, general and administrative 635,703 498,134 1,300,211 912,199
Engineering, research and
development, and amortization of
capitalized software production
costs 131,547 114,968 252,237 227,764
---------- ---------- ---------- ----------
Total operating expenses 767,250 613,102 1,552,448 1,139,963
---------- ---------- ---------- ----------
Income from operations 403,916 172,350 1,068,899 144,861
Interest and other income 95,539 36,779 173,888 464,500
Interest and other expense -- (429) -- (1,030)
---------- ---------- ---------- ----------
Income before provision for income
taxes 499,455 208,700 1,242,787 608,331
Provision for income taxes 208,941 22,500 414,390 22,500
---------- ---------- ---------- ----------
Net income $ 290,514 $ 186,200 $ 828,397 $ 585,831
========== ========== ========== ==========
Income per common and common
equivalent share - primary and
fully diluted $ .12 $ .08 $ .36 $ .26
========== ========== ========== ==========
Weighted avg. shares outstanding 1,799,120 1,919,694 1,787,857 1,942,157
========== ========== ========== ==========
Weighted avg. share equivalents 2,370,951 2,225,755 2,308,780 2,248,218
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
XETA CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
NOVEMBER 1, 1994 THROUGH APRIL 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------------- -----------------------
Number of Retained
Shares Issued Paid-in Earnings
& Outstanding Par Value Shares Amount Capital (Deficit)
------------- --------- ------ ------ ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance -
October 31, 1994 1,964,620 $196,462 (189,747) $(259,740) $4,011,185 $(723,781)
Stock options
exercised 10,000 1,000 9,000
Stock warrants
exercised 25,000 2,500 30,313
Net income 828,397
--------- -------- -------- --------- ---------- ---------
Balance -
April 30, 1995 1,999,620 $199,962 (189,747) $(259,740) $4,050,498 $ 104,616
========= ======== ======== ========= ========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
XETA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The Six Months Ending
-------------------------
April 30, 1995 April 30, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 828,397 $ 585,831
---------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 79,552 120,826
Amortization of capitalized software
production costs 27,456 48,786
Gain on sale of subsidiary stock -- (400,000)
Gain on sale of assets (23,061) (93)
Provision for doubtful accounts receivable 30,000 30,000
Provision for excess and obsolete inventory 15,330 28,453
Change in assets and liabilities:
(Increase) decrease in net investment in
sales-type leases (991,934) (143,183)
(Increase) decrease in other receivables (900,168) 175,527
(Increase) decrease in inventories 114,038 (232,807)
(Increase) decrease in prepaid income taxes 188,714 168,950
Increase in deferred tax asset (119,361) (73,714)
(Increase) decrease in prepaid expenses and
other assets (107,222) (35,464)
Increase (decrease) in accounts payable 159,279 (76,564)
Increase (decrease) in unearned revenue 536,371 52,774
Increase (decrease) in accrued liabilities 519,071 78,762
---------- ----------
Total adjustments (471,935) (257,747)
---------- ----------
Net cash provided by (used in)
operating activities 356,462 328,084
---------- ----------
Cash flows from investing activities:
Proceeds from sale of XRS stock (Note 5) -- 400,000
Additions to property, plant & equipment (59,380) (107,406)
Additions to capitalized software production
costs (35,237) --
Proceeds from sale of assets 34,259 --
---------- ----------
Net cash provided by (used in)
investing activities (60,358) 292,594
---------- ----------
Cash flows from financing activities:
Purchase of treasury stock -- (194,537)
Exercise of stock options and warrants 42,813 --
---------- ----------
Net cash used in financing activities 42,813 (194,537)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 338,917 426,141
Cash and cash equivalents, beginning of period 1,630,531 997,755
---------- ----------
Cash and cash equivalents, end of period $1,969,448 $1,423,896
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ 739
Cash paid during the period for income taxes $ 40,649 $ 55,000
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
XETA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1995
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements included herein include the
accounts of XETA Corporation and its wholly-owned subsidiary, Xetacom, Inc.
Xetacom's operations have been insignificant to date. All significant
intercompany accounts and transactions have been eliminated.
The consolidated financial statements have been prepared by the
Company, without an audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Company believes that the
disclosures made in these financial statements are adequate to make the
information presented not misleading when read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's latest financial statements filed as part of the Company's Annual
Report on Form 10-KSB, Commission File No. 0-16231. Management believes that
the financial statements contain all adjustments necessary for a fair statement
of the results for the interim periods presented. All adjustments made were of
a normal recurring nature.
(2) REVOLVING CREDIT AGREEMENT
On March 7, 1995, the Company renewed and increased its $350,000
revolving line of credit at substantially the same terms and covenants as the
previous agreement. The Company is in compliance with all of the provisions of
the credit agreement. No advances have been made under either the previous or
the extended credit agreement.
In conjunction with a distributorship agreement with one of the
Company's major vendors, the Company has provided a $75,000 letter of credit
agreement to the vendor. Under the current credit agreement, the letter of
credit reduces the Company's available borrowing line for other uses to
$275,000.
(3) INVENTORIES
The following are the components of inventories:
<TABLE>
<CAPTION>
April 31, October 31,
1995 1994
---------- ----------
(Unaudited)
<S> <C> <C>
Raw materials $ 136,718 $ 134,423
Finished goods 874,623 856,932
Work-in-process 18,729 18,435
---------- ----------
1,030,070 1,009,790
Less reserve for excess
and obsolete inventory 449,031 299,383
---------- ----------
$ 581,039 $ 710,407
========== ==========
</TABLE>
7
<PAGE> 8
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1995 1994
--------- ----------
(Unaudited)
<S> <C> <C>
Computer field equipment $ 635,100 $619,896
Office furniture 107,343 98,212
Other 106,277 104,157
---------- --------
848,720 822,265
Less accumulated depreciation 525,871 468,046
---------- --------
$ 322,849 $354,219
========== ========
</TABLE>
(5) UNEARNED INCOME
Unearned income consists of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1995 1994
---------- ----------
(Unaudited)
<S> <C> <C>
Service contracts $ 788,181 $ 665,870
Warranty service 665,040 462,279
Systems shipped, but not installed 74,207 119,495
Customer deposits 346,563 451,896
Other deferred revenues 58,357 59,753
---------- ----------
Total current deferred revenue 1,932,348 1,759,293
Noncurrent unearned service revenues 1,565,344 1,202,029
---------- ----------
$3,497,692 $2,961,322
========== ==========
</TABLE>
(6) INCOME TAXES
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
April 30, 1995 Oct. 31, 1994
-------------- -------------
(Unaudited)
---------
<S> <C> <C>
Deferred tax assets:
Prepaid service contracts $ 223,024 $ 211,557
Nondeductible reserves 396,323 277,877
Book depreciation in excess of tax -- 23,142
Other 50,280 70,201
--------- ---------
Total deferred tax asset 669,627 582,777
--------- ---------
Deferred tax liabilities:
Unamortized capitalized software
development costs (41,935) (39,289)
Tax income to be recognized on
sales-type lease contracts (287,405) (308,660)
--------- ---------
Total deferred tax liability (329,340) (347,949)
--------- ---------
Net deferred tax asset 340,287 234,828
Less valuation allowance -- (107,618)
--------- ---------
Net deferred tax asset $ 340,287 $ 127,210
========= =========
</TABLE>
8
<PAGE> 9
In accordance with FAS 109, the Company recorded a valuation allowance
against the net deferred tax asset at October 31, 1994 as the realization of
the future benefits associated with the reversal of the temporary differences
above was not assured. During the period ending April 30, 1995, the Company
recognized the remaining previously reserved tax asset to reduce its federal
tax provision.
(7) INTEREST AND OTHER INCOME
Interest and other income for the quarter and six months ending April
30, 1995, consists primarily of interest income earned from sales-type leases
and cash investments.
(8) FOOTNOTES INCORPORATED BY REFERENCE
Certain footnotes are applicable to the consolidated financial
statements, but would be substantially unchanged from those presented in the
Company's Annual Report on Form 10-KSB, Commission File No. 0-16231, filed with
the Securities and Exchange Commission on January 25, 1995. Accordingly,
reference should be made to those statements for the following:
<TABLE>
<CAPTION>
Note Description
---- -----------
<S> <C>
1 Business and summary of significant accounting policies
3 Cash and cash equivalents
4 Income taxes
5 Preferred stock in Xeta Reservation Systems, Inc.
7 Accrued liabilities
9 Stock options
10 Commitments
11 Major customers
13 Other receivables
14 Employment agreements
15 Contingency
16 Earnings per share
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During the second quarter of fiscal 1995, XETA Corporation ("the Company")
recorded a 68% increase in revenues compared to the second quarter of fiscal
1994. For the year to date, revenues have increased 100% over the previous
year. After tax net income increased 56% and 41% for the three and six month
periods ending April 30, 1995, respectively, compared to the same periods in
fiscal 1994. Management attributes these gains to the mandated changes in the
North American Numbering Plan ("NANP"), continued acceptance of its XL Series
call accounting systems and its PBX product and service offerings.
The changes in the NANP, which began taking effect in mid-1994, consist of
several changes in the dialing patterns of phone numbers used in most of North
America. With respect to hotel telecommunications equipment, the most
significant change was to begin issuing area codes with a middle digit other
than a zero or one. This change has enabled much needed new area codes to be
issued. Development of modifications to the Company's products to accommodate
this change were completed in mid-1994 and the Company has experienced a surge
in orders for upgrades of systems for the past three quarters. Many of these
orders have been for complete replacement of existing call accounting and
answer detection systems as customers have chosen to install the Company's XL
Series PC-based systems. The Company has also been active in the upgrade of
existing Hitachi PBX systems to comply with the NANP changes, although the
magnitude of these orders is significantly less than the revenues generated by
upgrades and replacements of the Company's call accounting and answer detection
systems. Subsequent to April 30, 1995, the Company received orders for an
additional 250 call accounting systems representing approximately $1.2 million
in system sales plus associated installation and service revenues.
Installations of these systems are expected to occur ratably over the next four
quarters. These orders represent the majority of the remainder of the upgrade
orders expected to be received as a result of the NANP.
Management continues to be pleased with the success of its entry into the PBX
product and service market. Revenues from sales of new PBX systems increased
nearly 50% during the second quarter as compared to the first quarter of fiscal
1995 and have increased well over 100% over fiscal 1994 levels. The Company
continues to expand this area of its business. It has recently opened a sales
office in Indianapolis to serve the midwestern United States, and has plans to
locate additional offices in the northeast and southeast in the near future.
The increase in the size of the sales force in conjunction with the continued
market acceptance of the Company's PBX product offering is expected to result
in continued growth in revenues and increasing market share related to PBX
activities, although no assurance can be given.
Financial Condition
During the first six months of fiscal 1995, the Company continued to strengthen
its financial condition. During this period, total assets of the Company grew
30% and net worth increased 27%. Management has utilized the Company's
financial strength and cash balances in the Company's marketing programs,
primarily through expanding its XETAPLAN program to customers needing to
upgrade their systems to comply with the NANP changes. The offering of
favorable payment terms was a key factor in many customers' decisions,
including some of the Company's major customers, to upgrade their systems with
new equipment.
10
<PAGE> 11
Management continues to evaluate alternatives for effective use of its cash
balances and overall financial strength. The expansion of the XETAPLAN program
discussed above and the stock repurchase program which occurred during fiscal
1994 are directly attributable to those evaluations. Alternatives which
management expects to consider as the opportunity arises include additional
financing programs similar to the XETAPLAN program and synergistic acquisitions
to further expand the Company's presence in the lodging market.
Results of Operations
Net sales and service revenues increased 68% and 100% for the three and six
month periods ending April 30, 1995, respectively, compared to those same
periods in 1994. Sales of new systems increased 86% and 143% for the three and
six month periods, respectively. This increase consisted of increases in sales
of call accounting/answer detection systems primarily related to the NANP
changes discussed above and increases in sales of PBX systems. Sales of new
PBX systems grew to 58% of total systems sales in the second quarter of fiscal
1995 compared to 50% in the second quarter of fiscal 1994. Installation and
service revenues increased 48% and 59% for the three and six month periods
ending April 30, 1995, respectively, compared to the same periods in fiscal
1994. These revenues have also been positively affected by the increased
installation activity related to the NANP changes and the Company's rapid
expansion into the PBX service market. While revenues from maintenance
contracts on call accounting and answer detection systems still represent the
majority of the Company's installation and service revenues, approximately
one-third of service revenues are now earned from PBX installation and service
activities.
Although much of the recent increase in revenues is the result of the changes
in the NANP, management believes that through the continued commitment of
resources to hire experienced sales and technical personnel for its PBX product
and service lines, further enhancements of existing products, and the
introduction of new products, it is possible the Company can sustain the
current sales levels in the future.
Gross margins earned on net sales and service revenues was 39% in the second
quarter of fiscal 1995 compared to 43% in the second quarter of fiscal 1994.
For the year to date period ending April 30, 1995, gross margins on all
revenues was 43% compared to 42% for the year earlier period. The gross
margins earned on systems sales has decreased during fiscal 1995 reflecting the
increased proportion of PBX products sold compared to call accounting products.
Margins on sales of PBX and voice mail systems, which the Company sells as an
authorized distributor for the manufacturers, are lower than the margins earned
on Company manufactured products such as the XL Series product line. Gross
margins earned on installation and service revenues were 37% for the second
quarters of both fiscal 1995 and fiscal 1994. Margins earned on installation
and service revenues increased from 32% for the first six months of fiscal 1994
to 37% for the first half of fiscal 1995, reflecting the fact that the revenues
from these activities has grown to a sufficient level to sustain the increases
in personnel and the additions of new service locations that have been
necessary to be successful in the PBX installation and service market.
Operating expenses increased 25% in the second quarter of fiscal 1995 compared
to the second quarter of fiscal 1994 and are up 36% for the first six months of
fiscal 1995 compared to the first half of fiscal 1994. Although overhead
expenses related to engineering, accounting and administration have increased
slightly as personnel has been added to
11
<PAGE> 12
handle the recent growth of the Company, most of the increases in operating
costs relate to commissions and executive bonuses which generally increase in
proportion to sales levels and profitability. In addition to these costs, the
Company continues to invest in research and development activities recognizing
that new product development and the service capabilities designed into its
products have been a key factor in the Company's success throughout its
history. During the quarter just ended, some of these projects reached the
technologically feasible stage and in accordance with generally accepted
accounting principles, approximately $35,000 of software production costs were
capitalized.
Interest and other income increased $59,000 or 160% in the quarter ending April
30, 1995 compared to the same quarter in fiscal 1994. For the year to date
periods, interest and other income was $174,000 in fiscal 1995 compared to
$464,000 in fiscal 1994. Other income in fiscal 1994 includes a $400,000 gain
from the sale of the Company's investment in XETA Reservations Systems, Inc.
and therefore was not a recurring event. Interest and other income recognized
during fiscal 1995 consists primarily of interest income earned on the
Company's investment in sales-type leases and cash investments. During fiscal
1995, the number of sales-type leases has increased dramatically as the Company
offered its XETAPLAN program at favorable lease rates to encourage its
customers to upgrade their existing systems with new Company systems. Interest
income has also increased as a result of a 20% increase in cash balances during
the first half of fiscal 1995 and overall higher interest rates earned on short
term investments in fiscal 1995 compared to fiscal 1994.
The provision for federal and state income taxes increased from
$23,000 during the second quarter of fiscal 1994 to $209,000 in the second
quarter of fiscal 1995 and increased from $23,000 for the first half of fiscal
1994 to $414,000 for the first half of fiscal 1995. At the beginning of fiscal
1994, the Company recorded a net tax asset in accordance with the adoption of
Financial Accounting Standards (SFAS) No. 109. SFAS 109 requires recognition
of deferred tax liabilities and assets for the expected future consequences of
events that have been included in a company's financial statements or tax
return. In accordance with SFAS 109, the Company recorded a valuation
allowance equal to the net tax asset as the realization of the future benefits
associated with the reversal of the temporary timing differences was not
assured. During fiscal 1994, the Company reduced the valuation allowance to
reflect the realization of $389,000 in tax benefits of reversing timing
differences. During the first quarter of fiscal 1995, the Company reduced the
valuation allowance to zero reflecting the realization of the remaining
$107,000 in tax benefits of reversing timing differences.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There has been no material change in the Company's position with
respect to the Phonometrics patent infringement litigation filed against
certain of the Company's customers and implicating the Company's call
accounting systems (along with other vendors' call accounting, voice mail, and
PBX systems), as discussed in more detail in the Company's Form 10-KSB for the
fiscal year ended October 31, 1994, filed with the SEC in January, 1995. As of
June 9, 1995, the Company has not been named as a party in any of these
lawsuits. The lawsuits pending against the Company's customers are still in
the early stages and the Company is not aware of any significant developments
or progress in any of these cases since its disclosure of this matter in its
10-QSB for the first quarter of fiscal 1995.
The Company continues to believe that its legal position in defense of
Phonometrics' allegations of patent infringement is strong.
Items 2 through 5 of Part II have been omitted because they are inapplicable or
the response thereto is negative.
Item 6.
(a) Exhibits - See the Exhibit Index at Page 14.
(b) Reports on Form 8-K - During the quarter for which this report
is filed, the Registrant did not file any reports with the Securities and
Exchange Commission on Form 8-K.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
XETA CORPORATION
(Registrant)
Dated: June 9, 1995 By: /s/ JACK R. INGRAM
------------------ ---------------------------
Jack R. Ingram
President
Dated: June 9, 1995 By: /s/ ROBERT B. WAGNER
------------------ ---------------------------
Robert B. Wagner
Vice President of Finance
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEC. NO. Description Page
- ------- ----------- ----
<S> <C> <C>
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession - None. -
(4) Instruments defining rights of security holders,
including indentures - previously filed as Exhibits 3.1,
3.2 and 3.3 to the Registrant's Registration Statement
on Form S-1, Registration No. 33-7841. -
(11) Statement re: computation of per share earnings - Inapplicable. -
(15) Letter re: unaudited interim financial information - Inapplicable. -
(18) Letter re: change in accounting principles - Inapplicable. -
(19) Previously unfiled documents - Indicated by
asterisk (*). -
(20) Report furnished to security holders - None. -
(23) Published report regarding matters submitted to a vote
of security holders - None. -
(24) Consents of experts and counsel - None. -
(25) Power of attorney - None. -
(27) Financial Data Schedule -
(28) Additional exhibits - None. -
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APRIL 30,
1995 BALANCE SHEET, YEAR-TO-DATE OPERATING AND CASH FLOW STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10 QSB.
</LEGEND>
<CIK> 0000742550
<NAME> XETA CORP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
<CASH> 1,969,448
<SECURITIES> 0
<RECEIVABLES> 1,832,704
<ALLOWANCES> 0
<INVENTORY> 581,039
<CURRENT-ASSETS> 6,201,305
<PP&E> 322,849
<DEPRECIATION> 79,552
<TOTAL-ASSETS> 9,149,685
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0
0
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<CGS> 3,483,310
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</TABLE>
