__________________________________________________________________________
__________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-QSB/A
[ X] Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number 1-11968
SAF T LOK INCORPORATED
(Exact name of small business issuer
as specified in its charter)
FLORIDA 65-0142837
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
18245 S. E. Federal Hwy.
Tequesta, FL 33469
(Address of principal executive offices)
Telephone No. (407) 844-3348
_______________________
RGB COMPUTER & VIDEO INC.
(Former name, former address and former fiscal year,
if changed since last report.)
_________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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 [_]
As of June 30, 1996 there were 5,522,057 shares of the registrant's no
par value common stock outstanding.
Transitional Small Business Disclosure Format: Yes [_] No [X]
_______________________________________________________________________
_______________________________________________________________________
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Saf T Lok Incorated
& Subsidiaries
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1996 (unaudited)
and December 31, 1995.................................... 3
Consolidated Statement of Income - Six-month period
ended June 30,1996(unaudited) and 1995 ............. 4
Consolidated Statement of Cash Flows - Six-month period
ended June 30, 1996 (unaudited) and 1995................. 5
Notes to Consolidated Financial Statements (unaudited)... 6-7
Item 2. Management's Discussion and Analysis or Plan of
Operation................................................ 8-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................ 10
Item 6. Exhibits and Reports on Form 8-K....................... 11-12
Signatures............................................. 13
__________
Note: Items 2 through 5 of Part II are omitted because they are not
applicable.
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Item 1. Financial Statements
Saf T Lok Incorporated
& Subsidiaries
Consolidated Balance Sheets
<TABLE>
ASSETS
<CAPTION>
June 30, 1996 December 31, 1995
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 34,607 $ 119,638
Marketable Securities 122,483 1,861,579
Securities, available for sale 839,997 518,362
Accounts receivable 19,880 7,331
Inventories 557,962 282,471
Loans receivable - employees 5,629 8,516
Total current assets 1,580,558 2,797,897
Property and equipment, net of
accumulated depreciation 1,142,982 408,827
Loan receivable 207,070 213,976
Loans receivable - officers 25,803 18,100
Other assets 37,066 2,070
$ 2,993,479 $3,440,870
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 291,078 $ 153,810
Current maturities of long-term debt 20,550 ---
Current maturities of capital lease
obligations 6,926 14,515
Notes payable -- --
Total current liabilities 318,554 168,325
Long-term debt, net of current maturities 90,000 ---
Capital lease obligations, net of current
maturities --- ---
TOTAL LIABILITIES $ 408,554 $ 168,325
Commitments
Shareholders' Equity
Common stock, no par value, authorized
10,000,000 shares; 5,522,057 and 3,268,032
issued and outstanding June 30, 1996 and
December 31, 1995 respectively
8,615,809 8,089,270
Accumulated deficit (6,030,884) (4,816,725)
Total Shareholders Equity 2,584,925 3,272,545
Total Liability &
Shareholders' Equity $ 2,993,479 $ 3,440,870
</TABLE>
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis or Plan of Operation.
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Saf T Lok Incorporated
& Subsidiary
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
Three-month period Six-month period
ended June 30, ended June 30,
<CAPTION>
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Sales....................... $ 60,343 $101,922 $140,991 $ 199,715
Cost of Sales............... 78,359 27,008 145,931 71,239
Gross profit.............. $ (18,016) $ 74,914 $ (4,940) $ 128,476
Operating Expense:
Research and development. 57,022 4,440 59,197 8,880
Selling expenses......... 257,240 138,470 491,600 303,557
General and.............. 294,520 104,019 589,649 239,080
administrative...........
Depreciation............. 75,453 45,310 99,776 81,396
Total operating expenses.... $684,235 $292,239 1,240,222 $ 632,913
Income(loss)from Operations. (702,251) (217,325) (1,245,162) (504,437)
Non-operating income(loss).. 18,561 58,882 31,003 37,071
Income (loss) before
provision (benefit)for
income taxes................ (683,690) (158,443) (1,214,159) (467,366)
Provision (benefit) for
income taxes .... -- -- -- --
Net income (loss).......... $(683,690) $(158,443) $(1,214,159) $(467,366)
Primary and fully diluted
net income per common share $(.12) $(.05) $(.23) $(.14)
Weighted average shares
outstanding ..... 5,740,388 3,268,032 5,177,516 3,268,032
</TABLE>
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis or Plan of Operation.
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Saf T Lok Incorporated
& Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Six month period ended June 30,
<CAPTION>
1996 1995
<S> <C> <C>
Cash flow from operating activities: ......
Net Income (Loss)...................... $ (1,214,159) $ (467,366)
Adjustment to reconcile net income
(loss) to net cash provided (used) by ---- ----
operating ............................
Depreciation ....................... 95,551 81,396
Loss on Sale of equipment........... 1,412 (25,863)
Amortization ....................... 4,224 8,880
(Increase) Decrease in notes receivable 6,907 ---
(Increase) Decrease in accounts
receivable ........................... (12,549) 101,890
(Increase) Decrease in inventories .... (183,457) 588
(Increase) Decrease in other current
assets................................ (36,296) ---
Increase (Decrease) in other payables.. --- 1,609
Increase (Decrease) in accounts payable (44,933) 42,828
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES ................................ $(1,383,300) $(256,038)
Cash Flows from Investing Activities:
Purchase of Property & Equipment....... $(653,941) $ ---
Proceeds from sale of Prop & Equip..... 15,550 270,246
Redemption of S/T Investments.......... 518,362 ---
Purchase of S/T Investments............ --- (18,520)
Proceeds from loan rec officer......... 18,100 ---
(Decrease) in other assets.............. (699) (3,302)
Increase in loans receivable - employee (22,916) ---
Additions to Licensing Agreement....... --- 8,333
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES ................................ $(125,594) $256,757
Cash Flows From Financing Activities:
Payment on Long Term Debt.............. $(7,589) $(10,543)
Increase in Loan Payable - Shareholder.. 120,000 ---
Proceeds from Notes Payable............. (9,410) ---
Equity changes due to acquisition....... 421,713 ---
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES ................................ 524,714 (10,543)
INCREASE (DECREASE) IN CASH................ (984,130) ( 9,824)
CASH, AT BEGINNING OF PERIOD............... 1,981,217 122,498
CASH, AT END OF PERIOD..................... $ 997,087 $112,674
</TABLE>
See accompanying Notes to Financial Statements (unaudited) and Management's
Discussion and Analysis or Plan of Operations.
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Saf T Lok Incorporated
& Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PERIOD ENDED JUNE 30, 1996
(1) The unaudited financial information furnished herein reflects all
adjustments which in the opinion of management are necessary to fairly state
the Company's financial position, the changes in its financial position and
the results of its operations for the periods presented. This report on Form
10-QSB should be read in conjunction with the Company's financial statements
and notes thereto included on Form 10-KSB for the year ended December 31,
1995. The Company presumes that users of the interim financial information
herein have read or have access to the audited financial statements for the
preceding fiscal year and that the adequacy of additional disclosure needed
for a fair presentation may be determined in that context. Accordingly,
footnote disclosure which would substantially duplicate the disclosure
contained in the Company's financial statements for the year ended December
31, 1995 has been omitted. The results of operations for the six month
period ended June 30, 1996 are not necessarily indicative of results for the
entire year ending December 31, 1996.
(2) Pursuant to a Settlement Agreement dated September 27, 1995, Pride
Integrated Services, Inc. agreed to pay the Company $310,000 over a ten year
period with the payments beginning in October, 1995. The settlement resulted
from a suit filed by the Company against Pride Integrated Services, Inc. in
October, 1993, alleging coyright infringement and misapproriation of trade
secrets. The note receivable was discounted as required by Accounting
Principle Bulletin No. 21 using an 8% imputed interest rate. The discount on
the note equaled $93,024 as of December 31, 1995 resulting in a note
receivable net of discount of $213,976.
(3) On April 22, 1993, the Company entered into a five-year employment
agreement with Mr. Gilbert to serve as Chief Executive Officer of the
Company. The agreement provided for a base annual salary of $85,000, use of
an automobile and related expenses. As of February 1996, the Company has
increased Mr. Gilbert's annual salary as per cost of living increase for the
past three years to $92,500 and extended the term of the contract to be five
years from February, 1996 or February , 2001. Mr. Gilbert is employed in the
capacity of Chief Executive Officer and President of the Company as well as
STL Lock, Inc., a subsidiary of the Company. In addition, the Company pays
an annual premium of approximately $8000 for a $2,000,000 whole life in
surance policy on Mr. Gilbert, of which Mrs. Gilbert is the beneficiary. As
of April 1996, the Board of Directors elected to increase Mr Gilbert's salary
to $100,000 annually, effective April 1, 1996.
On April 22, 1993, the Company entered into a five-year employment agreement
with Mrs. Gilbert to serve as Vice President of Finance of the Company. The
agreement provides for a base annual salary of $60,000. As of February 1996,
the Company has increased Mrs. Gilbert's annual salary as per cost of living
increase for the past three years to $65,000 and extended the term of the
contract to be five years from February, 1996 or February , 2001. The
Company has established a bonus pool in which Mrs. Gilbert is eligible to
participate. As of December 31, 1995, no bonus has been paid or accrued. As
of April 1996, the Board of Directors increased Mrs. Gilbert's salary to
$85,000 annually, effective April 1, 1996.
(4) On February 13, 1996 the Company entered into an Employment Agreement with
Frank Brooks, the Chairman of the Company, pursuant to which Mr. Brooks'
employment as the Chief Officer of STL Lock Inc. was confirmed through
February 2001 at an initial annual base salary of $100,000.
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Saf T Lok Incorporated
& Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) Continued
(5) On July 18, 1996 the Company held its Annual Meeting of Shareholders at
which shareholders voted to change the name of the Company from RGB Computer
& Video, Inc. to Saf T Lok Incorporated. In addition, the shareholders
approval an increase in the number of authorized shares of Common Stock to
20,000,000 shares, $0.01 par value, eliminated staggered terms for directors
and eliminated supermajority vote requirements for removal of directors and
amendments to the Articles of Incorporation. The shareholders re-elected
the current directors and approved an increase in the number of shares
reserved for issuance under the Company's 1993 Stock Plan to 500,000 from
150,000 and approved the appointment of Michaelson & Co. P.A. as independent
accountants for the Company.
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Saf T Lok Incorporated
& Subsidiaries
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
Results of Operations
All sales and operating expenses for the second quarter of the year
reflect activity in the Subsidiaries. There were no sales or expenses for the
Parent except for attorney's fees and professional fees which related to the
public company and bank charges.
Sales for the second quarter of 1996 decreased $41,579 to $ 60,343 from
$101,922 in the prior year's comparable period. Gross margins decreased to
0 percent in the current quarter compared to 73 percent in the quarter ended
June 30, 1995. The Company reported a net loss of $683,690 or $.12 per share,
up from a net loss of $158,443 or $.05 a share in the similar period last
year. The per share loss in the current period was based on a weighted average
number of shares of 5,740,388 as compared to 3,268,032 for the comparable
period in 1995.
Initial production and sales of the Subsidiary, STL Locks, Inc.'s
product, the Saf T Lok, did not start until the end of the quarter.
Attendance at trade shows worldwide as well as increased marketing and
collateral material were introduced to generate interest in the product and to
establish dealer networks. In addition, press releases addressed the interest
of the public in the revolutionary product to help protect against accidental
shootings and the relationship of the Company with Nick Navarro, former head
of the Broward County Sheriff's Department who will represent Saf T Lok to the
law enforcement community. Saf T Loks were also exhibited at the NRA show in
Dallas, Texas in April, the Great Outdoors Show in Memphis, Tennessee in May
and the National Sheriff's Association Show in Portland, Oregon in June. At
these shows interest and media attention was overwhelming. On May 2, Cabot
Heritage made a recommendation to "buy a little" in its newsletter and
discussed the Saf T Lok product. As a result, the stock price increased from
$7.00 per share on May 2, 1996 to a high of $19.00 per share on May 6, 1996,
with a volume increase from 98,400 on May 2 to a high of 2,305,800 on May
3,1996.
.
Total operating expenses, including non-recurring costs, increased to
$684,235 from $292,239 in the current quarter compared to the similar period
last year. The selling expense component increased to $257,240 from $138,470
due to new product development and increase in sales and marketing efforts
through trade show attendance at trade shows and collateral material such as
brochures. Additional expenses were incurred for the national advertising
campaign. The general and administrative expenses for the second quarter of
1996 increased to $294,520 from $104,019 from the prior year's comparable
period primarily due to legal fees associated with the Annual Meeting of
Shareholders and research and development for new models.
The net of non-operating income and expense for the second quarter of 1996
totaled $2,999 compared to the net of non-operating income and expense for the
second quarter of 1995 of $58,882. As a result, the net loss for the quarter
ended June 30, 1996 was $683,690 compared to a net loss of $158,433 for the
prior year's comparable period.
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Saf T Lok Incorporated
& Subsidiaries
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION (Continued)
Liquidity and Capital Resources
The Company's liquidity results from its 1993 public offering proceeds.
Current assets consist almost entirely of cash, accounts receivables, and
inventories. The Company has no significant past due receivables at June 30,
1996 which would affect liquidity.
Net cash used in operating activities was $1,338,300 for the six months
ended June 30, 1996 compared with $256,038 used by operating activities
during the six months ended June 30, 1995. For the six months ended June 30,
1996, the principal uses of cash from operating activities were the net loss
for the period, as adjusted for increases in trade receivables, current assets,
and inventory. The principal sources of cash from operating activities were
from adjustments for depreciation and amortization and a decrease in notes
receivable. In the similar period ended June 30, 1995, the principal sources
of cash from operating activities were from adjustments for depreciation and
amortization, a gain on sale of assets and increases in accrued expenses. The
principal uses of cash from operating activities were a net loss for the
period, as adjusted, for decrease in trade receivable, notes receivable, and
prepaid expenses. For the six month period ended June 30, 1996, net cash used
by investing activities was $125,594 mainly from purchase of property and
equipment as compared to $256,757 provided by investing activities for the
first sixmonths of 1995 which was mainly from proceeds from sale of the house.
Net cash provided by financing activities was $524,714 for equity changes due
to acquisition as compared to net cash used by financing activities of $10,543
for payment on long term debt for the six months ended June 30, 1995.
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Saf T Lok Incorporated
& Subsidiaries
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
On April 3, 1996 the Company settled a lawsuit filed in October 1995 against
the Company and two of its directors and largest individual shareholders,
Robert and Cynthia Gilbert, by Barington Capital, L.P. ("Barington") by and
through its general partner, LNA Capital Corp. Barington was the Company's
underwriter in its initial public offering. The lawsuit was settled with both
parties dismissing their claims with prejudice; Barington still retains their
warrants to purchase 120,000 shares at @$11.20 per share. The settlement
included relinquishment on Barington's part of its right to appoint a director
to the Company's Board of Directors.
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PART II. OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits and Index of Exhibits
(11) Weighted Average Number of Common Shares
Outstanding
(b) Reports on Form 8-K
(2) On July 30, 1996 a Form 8K/A was filed to report
the approval by the Shareholders on July 18, 1996 to change the
name of the Corporation to Saf T Lok Incorporated from RGB
Computer & Video, Inc. and amend the Articles of Incorporation
and By-Laws. In addition Pro forma financial information was
included reflecting the merger with Saf T Lok Corporation on
February 13, 1996.
(3) On October 2nd, 1996 a Form 8-K/A was filed in response
to the Commission's Request.
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EXHIBIT 11
Saf T Lok Incorporated
& Subsidiaries
<TABLE>
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
<CAPTION>
Three-month period ended: 1996 1995
<S> <C> <C>
March 31,
Shares at beginning of period 3,268,032 3,268,032
Weighted average number of shares
outstanding 4,614,444 3,268,032
June 30,
Shares at beginning of period 4,614,444 3,268,032
Weighted average number of shares
outstanding 5,740,388 3,268,032
<CAPTION>
Six-month period ended: 1996 1995
<S> <C> <C>
June 30,
Shares at beginning of period 4,614,444 3,268,032
Weighted average number of shares
outstanding 5,177,516 3,268,032
</TABLE>
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Saf T Lok Incorporated
& Subsidiaries
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SAF T LOK, INCORPORATED
By //Robert L. Gilbert III.
______________________
Robert L. Gilbert, III
(Chief Executive Officer)
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature Date
//Frank W. Brooks
__________________ Chairman of the October 2, 1996
Frank W. Brooks Board
//Robert L. Gilbert Chief Executive Of
__________________ ficer, President and October 2, 1996
Robert L. Gilbert, Director
III
//Cynthia T Gilbert Vice President -
__________________ Finance, Treasurer, October 2, 1996
Cynthia T. Gilbert Secretary and Director
//William M. Schmidt
__________________ October 2, 1996
William M. Schmidt Director
//Jeffrey Brooks
__________________ October 2, 1996
Jeffrey Brooks Director
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