<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22514
PHOTONICS CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation or organization)
77-0102343
(I.R.S. Employer Identification Number)
1515 CENTRE POINTE DRIVE
MILPITAS, CA 95035
(Address of principal executive offices)
Registrant's telephone number, including area code:
(408) 942-4000
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [_]
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
COMMON STOCK, $0.001 PAR VALUE
(Class)
4,484,758
(Outstanding at April 10, 1998)
<PAGE>
PHOTONICS CORPORATION
Form 10-QSB
PHOTONICS CORPORATION
dba
DTC DATA TECHNOLOGY
FOR THE QUARTER ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
INTRODUCTION PHOTONICS CORPORATION
Introduction 2
The Market 2
The Competition 3
The Strategy 3
Products 4
Intellectual Property 4
Employees 4
Sales, Distribution and Customer Service 4
Research & Development 5
Manufacturing 5
Current Developments 5
PART I FINANCIAL INFORMATION 6
ITEM I Interim Financial Statements
Consolidated Balance Sheet as of March 31, 1998 and
December 31, 1997 7
Consolidated Statements of Operation for the Three months
ended March 31, 1998 and March 31, 1997 8
Consolidated Statement of Cash Flows 9
Notes to Consolidated Financial Statements 10
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings 13
ITEM 2 Changes in Securities 13
ITEM 3 Defaults Upon Senior Securities 13
ITEM 4 Submission of Matters of a Vote of Security Holders 13
ITEM 5 Other Information 13
ITEM 6 Exhibits and Reports on Form 8-K 13
</TABLE>
1
<PAGE>
INTRODUCTION
This report contains forward-looking statements and the Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of numerous factors, including those set forth below and
elsewhere in this report. The industry in which the Company competes is
characterized by extreme rapid changes in technology and frequent new product
introductions. The company believes that its long-term growth will depend
largely on its ability to continue to enhance existing products and to introduce
new products and features that meet the continually changing requirements of
customers. While the Company has invested in new products and processes and
feels confident that it can keep abreast of current technology trends, there can
be no assurance that it can continue to introduce new products and features on a
timely basis or that certain of its products and processes will not be rendered
noncompetitive or obsolete by its competitors.
GENERAL
Photonics was incorporated in 1985 to design, develop and market wireless
infrared local area network products (IR-LAN) based on diffuse infrared
technology.
DTC Data Technology ("DTC") was founded in 1979 to design, develop and market
intelligent storage controllers and chip sets used primarily in connection with
IBM compatible personal computers. On March 5, 1996 Photonics acquired assets
and liabilities in exchange for the issuance to DTC of shares and rights to
shares of common stock representing 77.5% of Photonics outstanding Common Stock.
As DTC has the name recognition, and established sales channels, it is the
intent of the Company to eventually rename the Company DTC Data Technology
Corporation. As the Company caused a fictitious name statement to be recorded
with the State of California on June 11, 1996 and as the reported history
belongs to DTC Data Technology the legal entity is known as Photonics
Corporation dba DTC Data Technology. For brevity sake, the company is herein
after referred to as DTC or the Company.
THE MARKET
DTC dominated the Integrated Device Electronics ("IDE") and Enhanced IDE
("EIDE") controller card market in 1994-1995. During that period DTC developed
comprehensive distribution channels with established name and trademark
recognition. Starting in 1995, the IDE controller market started to decline as
Intel entered into the motherboard business and incorporated the IDE controller
function into its motherboard chipset. Today, the transition from add-on IDE
cards to on-board built-in IDE function is complete. Now, the IDE controller
cards are used by Original Equipment Manufacturers ("OEM") for inclusion with
IDE CD-ROM, Tape and other IDE peripheral devices. System Integrators and Value
Added Resellers ("VAR") use IDE Input/Output "(I/O") controller cards for
maintaining and upgrading existing systems to EIDE disk interface, high speed
serial port, Enhanced Parallel Port ("EEP") and Enhanced Capability Parallel
Port ("ECP") for high performance modems, printers and other new peripherals.
Sales also have changed from mainly OEM to VARs and system integrators through
distribution and retailers. The IDE I/O market has settled and stabilized at a
much lower level of approximately $50 million dollars.
The Small Computer System Interface ("SCSI"), developed in the late 1970s, is a
standard by which computers and their peripherals could interface intelligently.
Having the image of high performance, higher connectivity, and the ability of
connecting external peripherals, SCSI
2
<PAGE>
controllers have become the controller of preference for high-end personal
computers, workstations, and file servers.
The SCSI host adapter (controller) market has been growing about 40% to 50% per
year for the past 5 years to over $1 billion in 1997. The SCSI controller market
is dominated by Adaptec with over 70% of the market, and many other small SCSI
vendors (less than $50 million in SCSI controller sales). All SCSI controllers,
though all conforming to an IEEE standard, are vendor unique and are not
compatible with one another and with the de facto standard of Adaptec. SCSI
represents approximately 80% of Adaptec revenues and Adaptec enjoys a 60% gross
margin.
The compatibility issue presents a significant disadvantage for small SCSI
controller vendors. Consequently other SCSI vendors (including DTC) have not
been able to obtain a meaningful market share even at significantly lower price
and margin.
THE COMPETITION
Due to the decline of the market, most of the IDE controller vendors have
dropped out of that business segment. Promise and SIIG remain in the upgrade
and I/O add-on markets that competes with the Company's Ultima, Ultima Pro,
Parallel Express and planned I/O family of products. The Company has broader
sales channels, stronger name recognition, and access to low cost manufacturing
compared with either of these companies.
In the SCSI market, the Company is offering a family of Adaptec compatible SCSI
products (as discussed above) that offers a superior alternative to Adaptec and
other competitors. The Company plans to expand this product family during 1998.
Besides DTC and Adaptec, the current other suppliers of SCSI products are:
Always, DPT, AdvanSys, CMD, Forex, Initio, LDP, Myles, Promise, Q Logic, SIIG,
and Symbios (Other Competitors). While Adaptec has been growing at 40% or more
per year, none of the other competitors are prospering financially. All of them
market purportedly technically superior but non-Adaptec compatible products at a
lower price than Adaptec without achieving significant success.
THE STRATEGY
The company's strategy is to develop a complete family of Adaptec compatible
SCSI controller cards with a superior value to the market's current offerings.
DTC has been in the SCSI market since 1990 and has, in the past, developed
several high performance (non-Adaptec compatible) SCSI products. These
products, as with the products of the Other Competitors, have not gained general
market acceptance. There can be no assurances that general market acceptance
can be attained with DTC's Adaptec compatible products, but the Company feels
strongly that there is a significant market segment for their cost-effective
compatible products and will introduce more products in its Adaptec compatible
SCSI line during the coming year.
The Company is broadening its product offering in the IDE I/O market segment and
has reversed the decline in sales and has restored the Company to profitability
for the last three quarters. During 1997 the Company introduced the ISA BUS
EIDE Ultima family of controller products and several new I/O products for the
upgrade market.
The Company is committed to continuous product improvement and innovation, which
the Company believes is necessary for greater market penetration and
profitability.
3
<PAGE>
PRODUCTS
The Company will continue to market its IDE and I/O product cards as long as
there is a market for these products. During the first quarter of 1997 the
Company started marketing their low end Adaptec compatible ISA-SCSI product
based on its proprietary DTC50C18 chip. This low-end product was, and continues
to be, marketed to Original Equipment Manufacturers ("OEM") and Value Added
Retailers ("VAR") who "bundle" this controller card with their SCSI peripherals
such as scanner or CD-ROMs. This low-end market, which represents 10% to 20% of
the overall SCSI market, commands low prices and is much more cost competitive
than the high-end market. The Company has proved it can be cost competitive and
generate a profit with these low end products.
The Company is committed to continuous product improvement and innovation which
the Company believes is necessary for greater market penetration of its
products.
The Company plans to introduce several new products during the second and third
quarters of 1998.
INTELLECTUAL PROPERTY
The Company has registered the trademark/logo "DTC" in the United States and
several foreign countries and has protected the use of this name by others in
the market place.
The Company has studied the intellectual property issues (and performed patent
searches) related to the SCSI, IDE and I/O products which it intends to market
and is unaware of any patents or intellectual property owned by any other party
which would impede the development or sale of its current or proposed line of
Adaptec compatible SCSI products. However, there can be no absolute assurances
that such legal challenges will not happen.
Software is an important ingredient for success in the controller market. DTC
has a large library of copyrighted IDE and SCSI software drivers and utilities
for various operating systems including DOS, OS/2, UNIX, Novell, Windows 3.1,
and Windows 95. DTC, having designed several SCSI and IDE ASICs, acquired the
design right to the ASIC used in its low end DTC50C18 ISA-SCSI product, and is
in the process of designing a PCI-SCSI ASIC.
EMPLOYEES
As of March 31, 1998 DTC employed 29 individuals on a full time basis, 28 of
which were located in the United States and 1 in Hong Kong. Of such employees
8 were engaged in manufacturing and related operations, 4 in development and
engineering, 9 in sales and marketing, and 8 in general management and
administration. None of DTC's employees are represented by a labor union and
DTC considers its employee relations to be good.
SALES, DISTRIBUTION AND CUSTOMER SERVICE
The Company currently sells its products through domestic and international
independent distributors, computer retailers and OEMs. In the United States and
Canada, the Company sells to most of the top national distributors in the
computer industry including Ingram Micro, Merisel, Tech Data, Southern
Electronics Corporation and D & H Distributing who in turn distribute the
Company's products to retailers, OEMs and VARs. The Company has significantly
increased its presence in the retail market. The Company's current sales
strategy is to increase its sales to OEM's, VARs and resellers.
The Company's customer service and technical support organization is located in
Milpitas, California and provides customers with software driver updates,
upgrade programs and warranty service. The technical support personnel assist
end users and distributors via telephone, fax-back
4
<PAGE>
facsimile services, a 24-hour bulletin board service and an Internet Web site
(WWW.datatechnology.com).
As is common practice in the personal computer industry, the Company frequently
grants distributors limited rights to return unsold inventories of the Company's
products in exchange for new purchases, as well as price protection and
marketing development funds. While the Company reserves funds each month to
cover these programs, there can be no absolute assurances that the Company's
current allowances will be sufficient to not have a material adverse effect on
future operating results.
RESEARCH AND DEVELOPMENT
The Company believes that continued investment in research and development is
critical to successful new product introductions, which address market needs, on
a timely and cost effective basis. DTC's knowledge and expertise in SCSI
predates the founding of Adaptec and the Company has completed similar SCSI
projects in the past.
The Company has completed the development of its low end Adaptec compatible ISA-
SCSI line of products and successfully launched this product family in the
second quarter of 1997. For the high end PCI-SCSI product family, the Company
has contracted with an outside engineering firm for the design of the ASIC under
the supervision of the Company's engineers. This will allow the Company to
focus on its own SCSI expertise and leverage the ASIC knowledge of the
contracted design firm thereby reducing the cost and time to market.
MANUFACTURING
Over the years the Company has developed business relationships with various
contract board manufacturers in the Far East, which currently supply DTC with
highly cost competitive finished product. It is the Company's intention to
continue utilizing these sources of production. Not having to invest in capital
equipment and/or purchase sizable raw material inventories and being able to
take advantage of the lower cost of labor and overhead utilized by such contract
manufacturers, the Company believes that it will be able to conserve its cash
position, allow the Company greater operational flexibility and keep the Company
focused on its areas of expertise. There can, however, be no absolute assurance
that these manufacturing sources will remain available to DTC.
At the present time approximately 70% of the Company's storage controller
requirements are provided by manufacturing facilities operated by Broadsino
Computer Development, Ltd. Of Hong Kong. Broadsino is the beneficial owner of
591,412 shares of the Company's common stock and 300,000 shares of the Company's
Preferred A stock.
CURRENT DEVELOPMENTS
The First Quarter of 1998 represents the Company's third consecutive profitable
quarter. The Company has been in negotiations with Coast Business Credit, a
division of Southern Pacific Bank, for a revolving accounts receivable line of
credit. The Company is pleased to announce that the line of credit is in place
for business commencing in the second quarter. This will enhance the Company's
working capital position going forward.
5
<PAGE>
PART 1 FINANCIAL INFORMATION
The condensed consolidated interim financial statements included herein have
been prepared by the Company, without 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, although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. It is suggested that the condensed consolidated interim financial
statements be read in conjunction with the consolidated financial statement and
the notes thereto included in the Company Annual Report on Form 10-KSB for the
year ended December 31, 1997.
The accompanying consolidated interim financial statements have been prepared,
in all material respects, in conformity with the standards of accounting
measurements set forth in Accounting Principles Board Opinion No. 28 and
reflect, in the opinion of management, all adjustments, which are of a normal
recurring nature, necessary to summarize fairly the financial position and
results of operations for such periods. The results of operations for such
interim periods are not necessarily indicative of the results to be expected for
the full year.
6
<PAGE>
PHOTONICS CORPORATION
Consolidated Balance Sheet
(amounts in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(unaudited) (audited)
----------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 67 $ 176
Accounts Receivable, net 1,142 939
Other Receivables 0 448
Inventories, net 1,062 920
Prepaid expenses and other current assets 294 58
-------- --------
Total current assets 2,565 2,541
Furniture and equipment, net 308 252
Other Assets 14 14
-------- --------
Total Assets $ 2,887 $ 2,807
-------- --------
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Due to Related Parties 1,655 1,582
Accounts payable 1,470 1,426
Accrued liabilities 364 487
-------- --------
Total current liabilities 3,489 3,495
Deferred Taxes 0 0
Total Liabilities 3,489 3,495
Minority interest in subsidiaries 125 125
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock 44,087 44,079
Treasury stock 0 0
Capital subscription 2,119 2,117
Accumulated deficit (47,087) (47,163)
Cumulative translation adjustment 154 154
-------- --------
Total shareholders' equity (deficiency) (727) (813)
-------- --------
Total liabilities and shareholders' equity $ 2,887 $ 2,807
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENT
7
<PAGE>
PHOTONICS CORPORATION
Consolidated Statements of Operations
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended March 31
-----------------------------
1998 1997
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
REVENUES:
Net Product Sales $1,733 $1,241
Cost of Revenues 909 947
------ ------
Gross Profit 824 294
OPERATING EXPENSES:
Research and development 100 186
Selling, general and administration 679 601
------ ------
Total operating expense 779 787
Income (loss) from operations 45 (493)
OTHER INCOME (EXPENSE):
Interest income 0 0
Interest expense (21) (21)
Other Income 53 40
Other expense (1) 0
Total other income (expense) 31 19
Provision for taxes 0 61
Net income (loss) $ 76 $ (535)
Net income (loss) per share 0.01 (0.08)
========= =========
Shares used in per share calculation 6,903,707 6,615,709
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
8
<PAGE>
PHOTONICS CORPORATION
Consolidated Statement of Cash Flows
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 76 $ (535)
Adjustments to reconcile net cash
used in operating activities:
Depreciation 4 53
Changes in operating assets and liabilities:
Accounts Receivable (339) 219
Inventories (169) 278
Deposits and prepaid expenses 353 (598)
Accounts payable 61 (172)
Due to Related Parties 43 (1,123)
Accrued Liabilities (42) (73)
Net Cash Provided by (used for) Operations $ (13) $ (1,951)
===== ========
Cash flows from Investing Activities:
Sale (Purchase) of Property and Equipment (60) (38)
Net Cash used in Investing Activities $ (60) $ (38)
===== ========
Cash Flows from Financing Activities:
Proceeds from Capital Stock Subscription 10 2,067
Proceeds resulting from the DTC acquisition 0 0
Net Borrowings (Repayments) under Bank Lines 0 (44)
Borrowing (repayments of other debt), net 0 (30)
Other Equity Transactions, net 0 33
Net Cash provided by (used for) Financing $ 10 $ 2,026
===== ========
Net increase (decr.) in Cash and Cash Equivalents (63) 37
Cash and Cash Equivalents Beginning of Period 130 104
Cash and Cash Equivalents at end of period $ 67 $ 141
===== ========
</TABLE>
9
<PAGE>
PHOTONICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries after elimination of
intercompany accounts and transactions. The minority interest represents
the minority stockholders' proportionate share of the subsidiaries, Qume
Taiwan and Data Technology Hong Kong Ltd., which was 0.6% and 1%,
respectively.
Foreign Currency Translation
----------------------------
Certain entities located outside the United States use the local currency as
their functional currency. Assets and liabilities are translated at exchange
rates in effect at the balance sheet date, while revenues and costs are
translated at monthly average exchange rates. Translation gains and losses
are accumulated as a separate component of stockholders' equity.
Cash Equivalents
-----------------
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.
2. EARNINGS (LOSS) PER SHARE
Net income (loss) per common share is computed using the weighted average
number of common and dilutive common equivalent shares outstanding for each
accounting period. Common equivalent shares, principally stock options, are
included in the per share calculation when the effect of their inclusion
would be dilutive. For the period ending March 31, 1997 and 1998 the
dilutive value of The Company's Series A Convertible Preferred Stock
("Preferred Stock was included in the loss per share calculation. The value
of the Preferred Stock is represented in the equity section under Capital
Subscription.
3. INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-out basis)
or market value (net realizable value), and include material, labor and
attributable overhead.
<TABLE>
<CAPTION>
Inventories consist of the following:
March 31, 1998 December 31, 1997
(unaudited) (audited)
-------------- ------------------
<S> <C> <C>
Raw Materials and Purchased Parts $ 217 $148
Work-in-process 209 190
Finished Goods 636 582
------ ----
$1,062 $920
====== ====
</TABLE>
10
<PAGE>
4. PROPERTY, PLANT, AND EQUIPMENT
Property and equipment are stated at cost and, other than leasehold
improvements, are depreciated on a straight-line basis over their useful lives.
Leasehold improvements are amortized on a straight-line basis over the lesser of
their useful life or remaining term of the related lease.
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
(unaudited) (audited)
--------------- ------------------
<S> <C> <C>
Machinery and Equipment $2,594 $2,534
Furniture and Fixtures 277 277
Leasehold Improvements 94 94
------ ------
$2,965 $2,905
Less Accumulated depreciation and amortization $2,657 $2,653
------ ------
$ 308 $ 252
</TABLE>
11
<PAGE>
ITEM 2 MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONIDTION AND RESULTS OF OPERATIONS
The statements made concerning expected company performance and product
commercialization are forward-looking statements and as such are made pursuant
to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. The Company's 1995 10-K and 1996 10-KSB contain detailed risk factors
that may contribute to the actual results in future periods which could
materially differ from forward-looking statements made by the Company.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Financial
Statements and the related notes thereto included in this report. The following
discussion contains forward-looking statements and the Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of numerous factors, including those set forth in the
following discussion and elsewhere in this report.
Net revenues for the current quarter total $1.733 million, an increase of 39%
from the $1,241 million reported during the first quarter of 1997. The increase
in revenues can be attributed to the introduction of new products and a growing
customer base.
The gross margin in the first quarter of fiscal 1998 was approximately 47%,
which was a significant change from the first quarter of fiscal 1997. The
increase reflects the success of the Company's efforts to obtain efficiency in
the manufacturing process and its efforts to better position itself in the
market place.
Product development expenses were approximately $100 thousand or 5% of net
revenues during the current quarter compared to approximately $186 thousand or
14% of net revenues during the first quarter of 1997. The Company remains
firmly committed to new product development. The decrease in cost can be
attributed to increased efficiency and the Company's on going cost control
program.
Selling, general and administrative expenses were approximately $671 thousand or
38% of revenues during the first quarter of 1997 compared to $601 thousand
reported in the first quarter of 1997. Selling costs were generally higher, due
to new product promotion costs. The General and Administrative costs were
actually lower than the comparable quarter of 1997. The Company does not expect
to incur similar promotion costs for its next product releases.
The Company has now enjoyed three straight profitable quarters. While the
Company can not be sure every quarter of 1998 will be profitable, it feels it is
pursuing a sound course of action to bring the Company back to solvency.
LIQUIDITY AND CAPITAL RESOURCES
There were no letters of credit, financing arrangements, indentures or other
such credit agreements with restrictive covenants that effected the Company.
Inflation did not have any significant impact upon the results of operations of
the Company during the reporting period.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
There were no legal proceedings during the quarter ended March 31, 1998 and
there were none pending.
From time-to-time DTC could be involved in routine litigation as part of its
normal course of business. Management believes the Company carries adequate
product liability insurance and these matters can be resolved without material
adverse effect on DTC's overall financial position, results of operations and
cash flows.
ITEM 2 CHANGES IN SECURITIES
Not Applicable
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company intends to call a Shareholders Meeting to take place on May 22, 1998
at the Corporate Office located at 1515 Centre Pointe Drive, Milpitas,
California at 10:00 a.m. The Shareholders will be asked to vote on three
proposals and any other matters that may properly come before the meeting.
The Proposals are:
1. To reelect the members of the current Board of Directors to another term.
The nominees are: Robert P. Dilworth, John Miao, James T. Koo, David S. Lee
and K.C. Yeung
2. To approve a 20% increase in the shares of common stock for issuance under
the 1997 Stock Option Plan.
3. To ratify the selection of Meredith, Cardozo & Lanz LLP as the Company's
independent accountants for fiscal 1998.
ITEM 5 OTHER INFORMATION
Not applicable
ITEM 6 EXHIBITS AND REPORTS ON FORM 8K
Exhibit 27 Financial Data Schedule
13
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 3 or 15(d) 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
PHOTONICS CORPORATION DBA DTC DATA TECHNOLOGY
DATE: May 13, 1998 BY: /s/ JoAn E. Hughes
- --------------------- ----------------------------
JoAn E. Hughes
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 67,000 5,000
<SECURITIES> 0 171,000
<RECEIVABLES> 1,295,000 1,166,000
<ALLOWANCES> 153,000 227,000
<INVENTORY> 1,062,000 920,000
<CURRENT-ASSETS> 2,565,000 2,541,000
<PP&E> 2,965,000 2,905,000
<DEPRECIATION> 2,657,000 2,653,000
<TOTAL-ASSETS> 2,887,000 2,807,000
<CURRENT-LIABILITIES> 3,489,000 3,495,000
<BONDS> 0 0
2,119,000 2,117,000
0 0
<COMMON> 44,087,000 44,079,000
<OTHER-SE> 47,087,000 47,163,000
<TOTAL-LIABILITY-AND-EQUITY> 2,887,000 2,807,000
<SALES> 1,733,000 1,241,000
<TOTAL-REVENUES> 1,733,000 1,241,000
<CGS> 909,000 947,000
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 779,000 787,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 21,000 21,000
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 61,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 76,000 (535,000)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> .01 (.08)
<FN>
BALANCE SHEET DATA COMPARES TO YEAR END DEC. 31, 1997.
INCOME STATEMENT COMPARES TO MARCH 31, 1997.
</FN>
</TABLE>
