SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
X EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 1996.
- ------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______.
- ------
Commission file number: 1-12680
ORYX TECHNOLOGY CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2115841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
47341 Bayside Parkway
Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 249-1144
Check whether the issuer (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
---- ----
The number of shares outstanding of the issuer's Common Stock as of May 31, 1996
was 10,020,668.
<PAGE>
ORYX TECHNOLOGY CORP.
FORM 10-Q
Table of Contents
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements............................................. 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................. 11
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
May 31, Feb. 29,
1996 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,404,000 $ 3,939,000
Accounts receivable, less allowance for doubtful
accounts of $173,000 and $139,000 2,764,000 2,690,000
Inventories 4,733,000 3,880,000
Other current assets 127,000 256,000
------------ ------------
Total current assets 9,028,000 10,765,000
Property and equipment, net 1,474,000 1,298,000
Investments 25,000 20,000
Intangible assets, net 42,000 49,000
Other assets 286,000 208,000
------------ ------------
$ 10,855,000 $ 12,340,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit $ -- $ 352,000
Notes Payable to shareholders -- 400,000
Promissory note payable and current portion
of capital lease 596,000 1,044,000
Accounts payable 1,637,000 3,186,000
Accrued liabilities 1,253,000 1,085,000
------------ ------------
Total current liabilities 3,486,000 6,067,000
Capital lease obligations, less current portion -- 34,000
------------ ------------
Total liabilities 3,486,000 6,101,000
------------ ------------
Stockholders' equity:
Series A 2% Convertible Cumulative Preferred
Stock 832,000 832,000
Common Stock, 10,020,668 and 9,228,668
issued and outstanding 10,000 9,000
Additional paid in capital 14,527,000 13,629,000
Accumulated deficit (8,000,000) (8,231,000)
------------ ------------
Total stockholders' equity 7,369,000 6,239,000
------------ ------------
$ 10,855,000 $ 12,340,000
============ ============
See the accompanying notes to these condensed consolidated financial statements
</TABLE>
3
<PAGE>
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
May 31,
----------------------------
1996 1995
------------ ------------
Revenue $ 6,805,000 $ 3,390,000
Cost of sales 4,420,000 2,216,000
------------ ------------
Gross profit 2,385,000 1,174,000
------------ ------------
Operating expenses:
Marketing and selling 444,000 323,000
General and administrative 807,000 544,000
Research and development 840,000 611,000
Total operating expenses 2,091,000 1,478,000
------------ ------------
Income (loss) from operations 294,000 (304,000)
Interest expense, net 16,000 25,000
Equity in losses of investee 20,000 68,000
------------ ------------
Income (loss) before income taxes 258,000 (397,000)
Provision for income taxes 22,000 --
------------ ------------
Net Income (loss) 236,000 (397,000)
Preferred stock dividend (5,000) --
------------ ------------
Net Income (loss) attributable to common shares $ 231,000 ($ 397,000)
============ ============
Net Income (loss) per common share:
Primary $ 0.02 ($ 0.07)
============ ============
Fully diluted $ 0.01
============
Weighted average common share
and equivalents outstanding:
Primary 13,814,000 5,384,342
============ ============
Fully diluted 14,809,663
============
See the accompanying notes to these condensed consolidated financial statements.
4
<PAGE>
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended May 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 236,000 ($ 397,000)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Equity in losses of investee 20,000 68,000
Depreciation and amortization 109,000 83,000
Changes in assets and liabilities:
Accounts receivable, net (74,000) 657,000
Inventories (853,000) 207,000
Other current assets 129,000 (50,000)
Other assets (77,000) --
Accounts payable (1,549,000) (141,000)
Accrued liabilities 134,000 (193,000)
----------- -----------
Net cash provided by (used in) operating activities (1,925,000) 234,000
----------- -----------
Cash flows from investing activities:
Capital expenditures (284,000) (259,000)
Investment in DAS Devices, Inc. (25,000) --
----------- -----------
Net cash used in investing activities (309,000) (259,000)
----------- -----------
Cash flows from financing activities:
Borrowings/(repayment) of bank line of credit (352,000) --
Proceeds from (repayment of) notes payable
to stockholders (400,000) --
Proceeds from issuance of Common Stock, net 899,000 1,072,000
Repayment of long-term debt (448,000) (19,000)
----------- -----------
Net cash provided by/(used in) financing activities (301,000) 1,053,000
----------- -----------
Net increase/(decrease) in cash (2,535,000) 1,028,000
Cash at beginning of period 3,939,000 1,376,000
=========== ===========
Cash at end of period $ 1,404,000 $ 2,404,000
=========== ===========
See the accompanying notes to these condensed consolidated financial statements
</TABLE>
5
<PAGE>
ORYX TECHNOLOGY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The information contained in the following Notes to Condensed Consolidated
Financial Statements is condensed from that which appears in the annual
consolidated financial statements; accordingly, the financial statements
contained herein should be reviewed in conjunction with the Company's Form
10-KSB for the year ended Feb. 29, 1996.
The results of operations for the interim periods presented are not necessarily
indicative of the results expected for the entire year.
The financial information for the periods ended May 31, 1996 and 1995 included
herein is unaudited but includes all adjustments which, in the opinion of
management of the Company, are necessary to present fairly the financial
position of the Company at May 31, 1996 and the results of its operations and
its cash flows for the three period ended May 31, 1996 and 1995.
NOTE 2 - STOCKHOLDERS' EQUITY
During May 1996, the Company sold 792,000 shares of Common Stock of the Company
to a limited group of institutional non-US investment firms pursuant to
Regulation S of the Securities Act of 1933 resulting in net proceeds of
approximately $900,000.
NOTE 3 - INVENTORIES
The components of inventory were as follows:
May 31, February 29,
1996 1996
----------------- -------------------
Raw Materials $2,995,000 $ 2,453,000
Work-in-process 175,000 136,000
Finished goods 1,563,000 1,291,000
================= ===================
$4,733,000 $3,880,000
================= ===================
NOTE 4 - NET INCOME (LOSS) PER SHARE
Primary net loss per share for the three month period ended May 31, 1995 was
determined using the treasury stock method. Under the treasury stock method, net
income (loss) per common and common equivalent share is computed using the
weighted average number of shares outstanding during the respective periods,
including, if dilutive, common stock equivalents.
Primary and fully diluted net income per share for the three month period ended
May 31, 1996 were determined using the modified treasury stock method. Under the
modified treasury stock method, certain adjustments can occur with respect to
both weighted average shares and net income amounts utilized in the calculations
6
<PAGE>
of earnings per share. The modified treasury stock method can result in
different earnings per share than those calculated using the treasury stock
method. Under the modified treasury stock method, all weighted average common
equivalents are assumed exercised whether individually dilutive or not, and the
proceeds from assumed exercise are applied in steps. First, stock is assumed to
be repurchased up to a maximum of 20% of the actual outstanding shares. Net
income is then adjusted to reflect the net tax effect of using the remaining
proceeds to acquire U.S. Government Securities. Fully diluted earnings per share
is computed by adjusting the primary shares outstanding for the effect on the
common stock equivalents of using the quarter end close price of common stock,
if such price is higher than the weighted average price for the period, to
compute the equivalent buyback and the effect of using common stock and
equivalents at the end of the period rather than weighted amounts outstanding
during the period. Common equivalents for the three month period ended May 31,
1996 included shares issuable under stock options and warrants outstanding and
shares issuable upon conversion of preferred stock. Additionally, net income in
the calculation of primary and fully diluted earnings per share for the three
month period ended May 31, 1996 includes an adjustment to reflect the earnings
attributable to holders of dilutive securities in subsidiaries of Oryx.
7
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
This discussion and analysis is designed to be read in conjunction with the
Management's Discussion and Analysis set forth in the Company's Form 10-KSB for
the fiscal year ended February 29, 1996.
In addition to an analysis of recent and historical financial results, the Form
10-KSB includes an analysis of certain of the risks of the Company's business,
including risks relating to the competitive environment in which the Company
operates. Although the Company has sought to identify the most significant risks
to its business, the Company cannot predict whether or to what extent any of
such risks may be realized nor can there be any assurance that the Company has
identified all possible risks the Company might encounter. All investors should
carefully read the Form 10-KSB, together with this Form 10-QSB, and consider all
such risks before making an investment decision with respect to the Company's
stock.
Results of Operations
For the quarter ended May 31, 1996, revenues increased by $3,415,000 or 101%
from $3,390,000 for the quarter ended May 31, 1995 to $6,805,000 for the quarter
ended May 31, 1996. The growth in revenues between the quarter to quarter
periods was attributed to increased shipments of power supplies to the company's
largest OEM customer, acceptance of two of the Company's new Model 11000
integrated electrostatic discharge testers and increased shipments of ceramic
metallization bonded products. The Company currently anticipates continued
improvement in revenues from each of its subsidiaries throughout the year in
comparison to fiscal 1996 revenues, as the subsidiaries roll out new products,
complete licensing and development relationships, and continue to seek new
business for existing product lines.
The Company's gross profit increased from $1,174,000 for the quarter ended May
31, 1995 to $2,385,000 for the quarter ended May 31, 1996, representing a
increase of $1,211,000 or 103%. The increase in gross profit for the quarter
ended was primarily attributable to increased revenues from the Company's power
products subsidiary and cost containment programs at the subsidiary.
Marketing and selling expenses increased from $323,000 for the quarter ended May
31, 1995 to $444,000 for the quarter ended May 31, 1996 representing an increase
of $121,000 or 37.5%. The increase is primarily due to increased sales and
marketing expenses associated with the roll-out of our diagnostic equipment.
General and administrative expenses increased from $544,000 for the quarter
ended May 31, 1995 to $807,000 for the quarter ended May 31, 1996 representing
an increase of $263,000 or 48.3% . The increase in general and administrative
expenses, which was primarily due to increases in headcount, is consistent with
the Company's objective of developing an infrastructure to support each of the
subsidiaries.
Research and development expenses increased from $611,000 for the quarter ended
May 31, 1995 to $840,000 for the quarter ended May 31, 1996 representing an
increase of $229,000 or 37.5%. Research and development expense increased as a
result of continued developmental efforts with respect to diagnostic equipment
and surge protection components being undertaken primarily in the form of
increased headcount.
8
<PAGE>
The equity in losses of investee of $20,000 for the three months ended May 31,
1996 represents the Company's share of losses of DAS Devices, Inc. for the
period.
Provision for income taxes of $22,000 for the three months ended May 31, 1996 is
based upon the estimated effective tax rate.
Liquidity and Capital Resources
The Company's working capital increased from a surplus $4,698,000 at February
29, 1996 to a surplus of $5,542,000 at May 31, 1996 as a result of funds
provided by the Company's Regulations equity offering of its securities which
was finalized in May 1996. During the quarter ended May 31, 1996, the Company
repaid notes payable to stockholders, paid off its bank line of credit and
reduced its accounts payable outstanding. Based upon the recently completed
offering and improved financial results, the Company's needs for additional
financing have diminished. However, the Company is still seeking approximately
$2-3 million in the form of bank financing or additional equity financing to
ensure that it can meet currently anticipated operations based upon projected
demand for its products for the next twelve months. There can be no assurance
that the Company will be able to obtain such financing on commercially
acceptable terms. The ratio of current assets to current liabilities was 1.77:1
at February 29, 1996 and 2.59:1 at May 31, 1996.
9
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit No. Description of Document
11.1 Schedule of Computation of Earnings Per Share
27.1 Financial Data Schedule (Electronic filing only)
SIGNATURES
Pursuant to the requirements of Section 13 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.
ORYX TECHNOLOGY CORP.
Dated: 7/15/96 By: /s/Arvind Patel
----------------------------------
Arvind Patel
Principal Executive Officer
/s/Andrew G. Wilson
----------------------------------
Andrew G. Wilson
Principal Financial and Accounting
Officer
ORYX TECHNOLOGY CORP.
EXHIBIT 11.1
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended
----------------------------
May 31, 1996 May 31, 1995
------------ ------------
<S> <C> <C>
PRIMARY:
Earnings:
Net Income (loss) $ 236,000 ($ 397,000)
Deduct earnings attributable to holders of dilutive
subsidiary stock options (43,000) --
Add interest income on reinvested option and warrant
exercise proceeds (as determined by the modified
treasury stock method), net of tax 55,000 --
------------ ------------
As adjusted 248,000 (397,000)
Shares:
Number of weighted average common shares outstanding 9,385,190 5,384,342
Add effect of dilutive convertible preferred stock,
options and warrants (as determined by the modified
treasury stock method) 4,429,051 --
------------ ------------
As adjusted 13,814,241 5,384,342
============ ============
Primary earnings (loss) per share $ 0.02 ($ 0.07)
============ ============
FULLY DILUTED:
Earnings
Net Income $ 236,000
Deduct earnings attributable to holders of dilutive
subsidiary stock options (43,000)
Add interest income on reinvested option and warrant
exercise prodeeds (as determined by the modified
treasury stock method), net of tax 29,000
------------
As adjusted 222,000
Shares:
Number of common shares outstanding 10,020,668
Add effect of dilutive convertible preferred stock,
options and warrants (as determined by the modified
treasury stock method) 4,788,995
------------
As adjusted 14,809,663
============
Fully diluted earnings per share $ 0.01
============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ORYX TECHNOLOGY CORP. FOR THE THREE MONTHS ENDED MAY 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
<CASH> 1,404
<SECURITIES> 0
<RECEIVABLES> 2,937
<ALLOWANCES> 173
<INVENTORY> 4,733
<CURRENT-ASSETS> 9,028
<PP&E> 2,468
<DEPRECIATION> 994
<TOTAL-ASSETS> 10,855
<CURRENT-LIABILITIES> 3,486
<BONDS> 832
<COMMON> 10
0
0
<OTHER-SE> 6,527
<TOTAL-LIABILITY-AND-EQUITY> 10,855
<SALES> 6,805
<TOTAL-REVENUES> 6,805
<CGS> 4,420
<TOTAL-COSTS> 6,511
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16
<INCOME-PRETAX> 258
<INCOME-TAX> 22
<INCOME-CONTINUING> 236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 236
<EPS-PRIMARY> .02
<EPS-DILUTED> .01
</TABLE>
