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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 March 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Commission file number 1-11968
RGB COMPUTER & VIDEO, INC.
(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. (407) 844-3348
_______________________
(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 March 31, 1996 there were 5,502,057 shares of the registrant's no
par value common stock outstanding.
Transitional Small Business Disclosure Format: Yes __ No X
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RGB Computer & Video, Inc.
& Subsidiaries
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets - March 31, 1996
(unaudited) and December 31, 1995.................... 3
Consolidated Statement of Income - Three-month period
ended March 31, 1996 (unaudited) and 1995........ 4
Consolidated Statement of Cash Flows - Three-month
period ended March 31, 1996 (unaudited) and 1995..... 5-6
Notes to Consolidated Financial Statements (unaudited) 7-8
Item 2. Management's Discussion and Analysis or Plan of
Operation............................................. 9-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................... 11-12
Item 6. Exhibits and Reports on Form 8-K....................... 13-14
Signatures..................................................... 15
__________
Note: Items 2 through 5 of Part II are omitted because they are not
applicable.
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Item 1. Financial Statements
RGB Computer & Video, Inc.
& Subsidiaries
Consolidated Balance Sheets
ASSETS
March 31, December 31,
1996 1995
(unaudited)
CURRENT ASSETS
Cash $ 30,149 $ 119,638
Marketable Securities 1,217,502 1,861,579
Securities, available for sale 518,362 518,362
Accounts receivable 28,337 7,331
Inventories 397,779 282,471
Loans receivable - employees 10,736 8,516
Total current assets 2,202,865 2,797,897
Property and equipment, net of
accumulated depreciation 1,058,690 408,827
Loan receivable 212,869 213,976
Loans receivable - officers 23,803 18,100
Other assets 54,949 2,070
$ 3,553,176 $3,440,870
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 158,981 $ 153,810
Current maturities of long-term debt 30,000 ---
Current maturities of capital lease
obligations 10,401 14,515
Notes payable -- --
Total current liabilities 199,382 168,325
Long-term debt, net of current maturities 90,000 ---
Capital lease obligations, net of current
maturities --- ---
TOTAL LIABILITIES $ 289,382 $ 168,325
Commitments
Shareholders' Equity
Common stock, no par value, authorized
10,000,000 shares; 5,502,057 and 3,268,032
issued and outstanding March 31, 1996 and
December 31, 1995 respectively
8,615,809 8,089,270
Accumulated deficit (5,352,015) (4,816,725)
Total Shareholders Equity 3,263,794 3,272,545
Total Liability &
Shareholders' Equity $3,553,176 $3,440,870
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis or Plan of Operation.
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RGB Computer & Video, Inc.
& Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three-month period
ended March 31,
1996 1995
Sales ................................... $ 80,648 $ 97,793
Cost of Sales ........................... 67,572 102,477
Gross profit ......................... 13,076 (4,684)
Operating Expense:
Research and development ............. -0- 4,440
Selling expenses ..................... 190,506 165,086
General and administrative ........... 341,157 135,061
Depreciation ......................... 29,145 36,086
Total operating expenses ................ 560,808 340,673
Income (loss) from operations ........... (547,732) (345,357)
Non-operating income (loss) ............. 12,442 36,435
Income (loss) before provision (benefit)
for income taxes ........................ (535,290) (308,922)
Provision (benefit) for income taxes .... -- --
Net income (loss) ....................... $(535,290) (308,922)
Primary and fully diluted net income per
common share ............................ $(.12) $(.09)
Weighted average shares outstanding ..... 4,614,444 3,268,032
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis or Plan of Operations.
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RGB Computer & Video, Inc.
& Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three month period
ended March 31,
1996 1995
Cash flow from operating activities: ......
Net Income (Loss)...................... ($535,290) $(308,922)
Adjustment to reconcile net income
(loss) to net cash provided (used) by ---- ----
operating ............................
Depreciation ....................... 29,145 36,086
Loss on Sale of equipment........... (1,847) 27,798
Amortization of software development -- 9,648
costs and royalties.................
Bad Debt expense.................... 15 --
(Increase) Decrease in accounts
receivable ........................... (21,006) 66,575
(Increase) Decrease in inventories .... (110,783) (6,722)
(Increase) Decrease in other current (54,275)
assets................................ (3,847)
Increase (Decrease) in accounts payable 630 10,297
NET CASH PROVIDED (USED) BY OPERATING (693,411) (169,087)
ACTIVITIES ................................
Cash Flows from Investing Activities:
Purchase of Property & Equipment....... (473,019) ( 28,914)
Proceeds from sale of Prop & Equip..... 7,775 19,500
Redemption of S/T Investments.......... --- 99,799
Proceeds from repay of loan rec empl... --- 800
Decrease in loans receivable 1,107 ---
Increase in loans receivable - officers (7,203) ---
(Increase) decrease in other assets 676 ---
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES ................................ (470,664) 91,185
Cash Flows From Financing Activities:
Payment on Long Term Debt.............. (4,114) (24,469)
Proceeds from Notes Payable.......... --- 24,420
Equity changes due to acquisition 434,623 ---
NET CASH PROVIDED (USED) BY FINANCING 430,509 (49)
ACTIVITIES ................................
INCREASE (DECREASE) IN CASH................ (733,566) ( 77,951)
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CASH, AT BEGINNING OF PERIOD............... 2,499,579 122,498
CASH, AT END OF PERIOD..................... $1,766,013 $44,547
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis or Plan of Operations.
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RGB Computer & Video, Inc.
& Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PERIOD ENDED MARCH 31, 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 three month period ended March 31, 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 Saf T Lok Corporation., a subsidiary of the
Company. In addition, the Company pays an annual premium of
approximately $8000 for a $2,000,000 whole life insurance
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 employ
ment 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.
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(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 Saf T Lok Corporation was confirmed through
February 2001 at an initial annual base salary of $100,000.
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RGB Computer & Video, Inc.
& Subsidiaries
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Results of Operations
All sales and operating expenses for the first 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 first quarter of 1996 decreased $17,145 to $
80,648 from $ 97,793 in the prior year's comparable period.
Gross margins increased to 16 percent in the current quarter
compared to 0 percent in the quarter ended March 31, 1995. The
Company reported a net loss of $535,290 or $.12 per share, up
from a net loss of $308,922 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 4,614,444 as compared to
3,268,032 for the comparable period in 1995.
This decrease resulted primarily from Commodore
Electronics Ltd.'s, owner of the Commodore Amiga computer, May 2,
1994 insolvency claim and request that the Supreme Court of the
Commonwealth of the Bahamas supervise its "winding up." Commodore's
insolvency claim had a dramatically negative impact on the
marketability and sales of the Company's Amiga based products.
Additionally, the Company did not realize significant sales in
non-Amiga based products during the quarter.
Initial production and sales of the new Subsidiary'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 Lok also
exhibited at the NRA show in Dallas, Texas in April at which
interest and media attention were well received. Several
strategic contacts were made with "major" gun manufacturers to
develop interest in Saf T Lok. 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 $560,808 from $340,673 in the current quarter
compared to the similar period last year. The selling expense
component increased to $190,506 from $165,086 due to new product
development from the merger with Saf T Lok Corporation and
increase in sales and marketing efforts through trade show
attendance at three trade shows. The Shot Show in Dallas, Texas
which is the largest gun show in the United States, the IME show
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in Nuremberg, Germany and the Firearms Trade Expo in Atlantic,
City New Jersey. Additional expenses were incurred for the
national advertising campaign. The general and administrative
expenses for the first quarter of 1996 increased to $341,157 from
$135,061 from the prior year's comparable period primarily due to
legal fees associated with the merger of the Company's newly
created wholly owned subsidiary with and into Saf T Lok
Corporation and litigation as well as relocation fees to a new
office, new investor relations consultants to help address the
financial community, media and the additional Saf T Lok
Corporation personnel.
The net of non-operating income and expense for the first
quarter of 1996 totaled $12,442 compared to the net of non-
operating income and expense for the first quarter of 1995 of
$36,435. As a result, the net loss for the quarter ended March
31, 1996 was $535,290 compared to a net loss of $308,922 for the
prior year's comparable period.
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 March 31, 1996 which would
affect liquidity.
Because the sales outlook for the Amiga and PC markets
appears to be so dismal, the Company actively sought to acquire
another line of business which, together with the Company's cash
resources, would offer better prospects to maximize shareholder
value. Accordingly, the Copany, through a newly-created wholly
owned subsidiary, merged with and into Saf T Lok Corporation.
As a result of the merger, the Company intends to focus on the
safety lock line of business and scale down operations of the
desktop video business.
Net cash used in operating activities was $693,411 for the
three months ended March 31, 1996 compared with $ 169,087 used by
operating activities during the three months ended March 31,
1995. For the three months ended March 31, 1996, the principal
uses of cash from operating activities were the net loss for the
period, as adjusted for increases in trade receivables, prepaid
expenses, and inventory. The principal sources of cash from
operating activities were from adjustments for depreciation and
amortization and an increase in accrued expenses. In the similar
period ended March 31, 1995, the principal sources of cash from
operating activities were from adjustments for depreciation and
amortization, decrease in accrued interest receivables 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, prepaid
expenses and decrease in accounts payable. For the three month
period ended March 31, 1996, net cash used by investing
activities was $470,664 mainly from purchase of property and
equipment as compared to $91,185 provided by investing activities
for the first three months of 1995 which was mainly derived from
short term investments. Net cash provided by financing activities
was $430,509 for equity changes due to acquisition as compared
to net cash used by financing activities of $49 for payment on
long term debt for the three months ended March 31, 1995.
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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 in
dividual 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. Although not clear from the manner in
which the original Complaint was pled, Barington apparently claim
ed mismanagement by the Gilberts as directors of the Company, for
which Barington requested money damages. In the same lawsuit Bar
ington claimed injunctive relief on the basis that the harm
allegedly done to the Company was not compensable by money
damages. In April, 1996 the lawsuit was settled with both
parties dismissing their claims with prejudice; Barington was
satisfied there was no merit to any claims they set forth and
still retains their warrants of 120,000 shares at @$11.20 per
share. Each party was responsible for its own attorney's fees.
The settlement included relinquishment on Barington's part of its
right to appoint a director to the Company's Board of Directors.
The Company is not a 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 con
templated proceeding against it by governmental authorities con
cerning environmental matters. The Company knows of no legal pro
ceedings, pending or threatened, or judgments entered against any
director or officer of the Company in his capacity as such.
Items 2 through 5 are not applicable.
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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 January 10, 1996 a Form 8K was filed to report
that the Company entered into an Agreement and
Plan of Merger with its wholly owned subsidiary and
Saf T Lok Corporation.
(2) On February 14, 1996 a Form 8K was filed to
report the consummation of the merger between the
Company, its wholly owned subsidiary and Saf T Lok
Corporation.
(3) On September 11, 1996 a Form 8-K/A was filed in response
to the Commission's Request.
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EXHIBIT 11
RGB Computer & Video, Inc.
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
1996 1995
Three-month period ended:
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
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RGB Computer & Video, Inc.
& Sudsidiaries
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.
RGB COMPUTER & VIDEO, INC.
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 May 13, 1996
//Frank W. Brooks// Chairman of the Board September 10, 1996
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Frank W. Brooks
Chief Executing Officer
//Robert L. Gilbert III. President and Director September 10, 1996
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Robert L. Gilbert, III
Vice President, Finance
Treasurer, Secretary and
//Cynthia T. Gilbert Director September 10, 1996
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Cynthia T. Gilbert
//William M. Schmidt Director September 10, 1996
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William M. Schmidt
//Jeffrey Brooks Director September 10, 1996
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Jeffrey Brooks
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