_______________________________________________________________________________
_______________________________________________________________________________
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 September 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 Identification
of incorporation or organization) No.)
18245 S. E. Federal Hwy.
Tequesta, FL 33469
(Address of principal executive offices)
Telephone No. (561) 743-5625
_______________________
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 November 4, 1996 there were 5,522,057 shares of the registrant's $0.01
par value common stock outstanding.
Transitional Small Business Disclosure Format: Yes __ No X
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Saf T Lok Incorporated
& Subsidiaries
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets - September 30, 1996
(unaudited) and December 31, 1995 3
Consolidated Statement of Income - Three-months and
Nine-month period ended September 30, 1996(unaudited)
and 1995 4
Consolidated Statement of Cash Flows - Nine-month period
ended September 30, 1996(unaudited) and 1995 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7-8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 4. Submission of matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10-11
Signatures 12
__________
Note: Items 2 and 3 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
ASSETS
Sept. 30 December 31,
1996 1995
(unaudited)
CURRENT ASSETS
Cash $ 50,558 $ 119,638
Marketable Securities -0-- 1,861,579
Securities, available for sale -0-- 518,362
Accounts receivable 29,283 7,331
Inventories 799,560 282,471
Loans receivable - employees 5,499 8,516
----- -----
Total current assets 884,900 2,797,897
Property and equipment, net of
accumulated depreciation 1,254,089 408,827
Loan receivable 388,217 213,976
Loans receivable - officers -0-- 18,100
Other assets 38,478 2,070
------ -----
$ 2,565,684 $3,440,870
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 569,763 $ 153,810
Current maturities of long-term debt 11,258 ---
Current maturities of capital lease
obligations 4,879 14,515
Notes payable -- --
Total current liabilities 585,900 168,325
------- -------
Long-term debt, net of current maturities 90,000 ---
------ -------
Capital lease obligations, net of current
maturities --- ---
TOTAL LIABILITIES $ 675,900 $ 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 (6,726,025) (4,816,725)
----------- -----------
Total Shareholders Equity 1,889,784 3,272,545
--------- ---------
Total Liability & Shareholders' Equity $2,565,684 $3,440,870
========== ==========
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)
Three-month period Nine-month period
ended September 30, ended September 30,
--------------------- --------------------
1996 1995 1996 1995
Sales $ 57,667 $ 90,711 $198,658 $ 290,426
Cost of Sales 141,871 21,436 (287,897) 92,675
------- ------ --------- --------
Gross profit $(84,204) $ 69,275 $(89,239) $ 197,751
Operating Expense:
Research and development. 82,063 5,960 141,260 14,840
Selling expenses 490,093 109,352 1,114,321 418,081
General and
administrative 230,814 194,011 687,834 427,919
Depreciation 52,941 61,162 144,881 142,558
------- ------- ------- -------
Total operating expenses $855,911 $370,485 2,088,296 $1,003,398
Income(loss)from Operations. (940,115) (301,210) (2,177,535) (805,647)
Non-operating income(loss).. 206,568 11,903 268,235 48,941
- ---------------------
Net income (loss) $(733,547) $(289,307) $(1,909,300) $(756,673)
========== ========== ============ ===========
Primary and fully diluted
net income per common share $(.13) $(.09) $(.37) $(.23)
Weighted average shares
outstanding ..... 5,522,057 3,268,032 5,137,711 3,268,032
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)
Nine month period
ended Sept.30,
1996 1995
----- -----
Cash flow from operating activities: ......
Net Income (Loss)...................... $(1,909,300) $(756,673)
Depreciation ....................... 135,830 142,558
Loss on Sale of equipment........... (29,252) (28,449)
Amortization ....................... 9,051 27,600
(Increase) Decrease in notes receivable (174,241) 106,738
(Increase) Decrease in accounts
receivable ........................... (21,952) (7,420)
(Increase) Decrease in inventories .... (501,211) 12,897
(Increase) Decrease in other current
assets................................ (30,558) ---
Increase (Decrease) in other assets.... (725) ---
Increase (Decrease) in accounts payable 196,768 25,430
-------- -------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES $(2,325,590) $(477,319)
Cash Flows from Investing Activities:
Purchase of Property & Equipment....... $(360,248) $ ---
Proceeds from sale of Prop & Equip..... 12,392 283,727
Redemption of S/T Investments.......... 518,362 300,120
Purchase of S/T Investments............ --- (18,520)
Proceeds from loan rec officer......... 18,100 ---
Decrease in loans receivable - employee 3,017 ---
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES $ 191,623 $565,327
Cash Flows From Financing Activities:
Payment on Long Term Debt.............. $(18,742) $(18,745)
Increase in Loan Payable - Shareholder.. 120,000 (1,666)
Payment on Capital Lease................ (9,636) ---
Equity changes due to acquisition....... 111,686 ---
--------- -----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 203,308 (20,411)
INCREASE (DECREASE) IN CASH (1,930,659) 67,597
CASH, AT BEGINNING OF PERIOD............... 1,981,217 122,498
--------- --------
CASH, AT END OF PERIOD..................... $ 50,558 $190,095
========= =========
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 SEPTEMBER 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 nine month
period ended September 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 copyright infringement and misappropriation 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 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
approved 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.
(4) Pursuant to a Settlement Agreement in July, 1996, Opal Technology Pty, Ltd,
and individuals agreed to pay the Company $248,000 over a five year period
with the payments beginning in July, 1996. 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 $54,859 as of July,
1996 resulting in a note receivable net of discount of $193,141.
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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 third 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 third quarter of 1996 decreased $33,044 to $ 57,667 from $ 90,711
in the prior year's comparable period. Gross margins decreased to a negative
146 percent in the current quarter compared to positive 76 percent in the
quarter ended September 30, 1995. The Company reported a net loss of $733,547
or $.13 per share which is an increase from a net loss of $289,307 or $.09 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 5,522,057 as compared to
3,268,032 for the comparable period in 1995.
Saf T Loks were 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. In addition, Saf T Lok exhibited
at the ALOA (Association of Locksmiths of America) show in New Orleans in July
with a sign-up of over 250 locksmith dealers and an NRA Training Show in
Alexandria, Va. in August. The Company expanded its advertising campaign to
include consumer gun magazines.
Total operating expenses, including non-recurring costs, increased to $855,911
from $370,485 in the current quarter compared to the similar period last year.
The selling expense component increased to $490,093 from $109,352 due to an
increase in sales and marketing efforts through trade show attendance,
collateral material such as brochures and increased advertising in magazines.
The general and administrative expenses for the third quarter of 1996 increased
to $230,814 from $194,011 from the prior year's comparable period primarily due
to professional fees associated with the Annual Meeting of Shareholders,
accounting fees due to the audit of Saf T Lok and research and development for
new models.
The net of non-operating income and expense for the third quarter of 1996
totaled $206,568 compared to the net of non-operating income and expense for
the third quarter of 1995 of $11,903. As a result, the net loss for the quarter
ended September 30, 1996 was $733,547 compared to a net loss of $289,307 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 September 30, 1996 which
would affect liquidity.
Net cash used in operating activities was $2,325,590 for the nine months ended
September 30, 1996 compared with $477,319 used by operating activities during
the nine months ended September 30, 1995. For the nine months ended September
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 an increase in
notes receivable. In the similar period ended September 30, 1995, the principal
sources of cash from operating activities were from adjustments for
depreciation and amortization, and increases in accounts payable. The principal
uses of cash from operating activities were a net loss for the period, as
adjusted, for decrease in trade receivable, prepaid expenses and inventory. For
the nine month period ended September 30, 1996, net cash provided by investing
activities was $191,623 mainly from redemption of short term investments as
compared to $565,327 provided by investing activities for the first nine months
of 1995 which was mainly from proceeds from short term investment and sale of
property and equipment. Net cash provided by financing activities was $203,308
for equity changes due to cash acquired as a result of the merger compared to
net cash used by financing activities of $20,411 for payment on long term debt
for the nine months ended September 30, 1995.
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Saf T Lok Incorporated
& Subsidiaries
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
On July 23, 1996 the Company was sued by Engineering Analysis and Solutions,
Inc., an engineering firm formerly performing engineering design services for
the Company. EAS Inc. claims that the Company owes EAS money pursuant to a
written purchase order for engineering services. The Company answered EAS'
complaint denying the material allegations of the complaint asserting a number
of viable affirmative defenses and a counterclaim against EAS for damages the
Company has suffered as a result of EAS' failure to provide the engineering
services requisitioned by the Company.
The Company is not party in any other ongoing or pending legal proceedings, nor
are any of the Company's properties the subject of litigation, and the Company
is not aware of any pending or contemplated proceeding against it by
governmental authorities concerning environmental matters. The Company knows of
no legal proceedings, pending or threatened, or judgments entered against any
director or officer of the Company in his capacity as such.
ITEM 4. Submission of Matters to a vote of Security Holders.
The annual meeting of the shareholders of RGB Computer & Video, Inc. was held
on Thursday, July 18, 1996. There were four proposals approved by the
shareholders: a) the number of authorized shares of Common Stock was increased
to 20,000,000 shares, $0.01 per share, b) the name of the Corporation was
changed to Saf T Lok Incorporated, c) the staggered terms for directors was
eliminated, and d) supermajority vote requirements for removal of directors and
amendments to the Articles of Incorporation was eliminated. The symbol on the
NASDAQ Small Cap Market changed from EDIT to LOCK.
ITEM 5. Other Information
On July 15, 1996 a Form S-3 was filed by the Company to register 200,000 shares
of stock owned by Frank Brooks, Chairman of the Company and 120,000 shares
underlying warrants, owned by Barington Capital Ltd., former underwriter for
the Company. This registration went effective on October 25, 1996.
On October 2, 1996 Robert L. and Cynthia T. Gilbert, officers and directors,
loaned the Company $200,000.00 for operating capital. This loan is payable on
or before April 1, 1997 with an option to convert to stock at $6.375 per share.
In addition, as an equity kicker, the Gilberts were granted a warrant to
purchase 1831 shares of stock at an exercise price of $7.65 per share.
On October 30, 1996 Robert L. and Cynthia T. Gilbert, officers and directors,
loaned the Company $200,000.00 for operating capital. This loan is payable on
or before April 30, 1997 with an option to convert to stock at $6.25 per share.
In addition, as an equity kicker, the Gilberts were granted a warrant to
purchase 1867 shares of stock at an exercise price of $7.50 per share.
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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
(1) 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. In addition pro forma financial information was included
reflecting the merger with Saf T Lok Corporation on February 13, 1996.
(2) On September 10, 1996 a Form 8-K/A was filed in response to the
Commission's comments on the registration statement on Form S-3 originally
filed by the Corporation on July 15, 1996.
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EXHIBIT 11
Saf T Lok Incorporated
& Subsidiaries
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
1996 1995
======= =======
Three-month period ended:
=========================
March 31,
Shares at beginning of period 3,263,100 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
September 30,
Shares at beginning of period 5,740,388 3,268,032
Weighted average number of shares outstanding 5,522,057 3,268,032
Nine-month period ended:
=========================
September 30,
Shares at beginning of period 3,263,100 3,268,032
Weighted average number of shares outstanding 5,137,711 3,268,032
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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)
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