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
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1996.
X
- ------
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)
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 August
31, 1996 was 10,533,572.
<PAGE>
ORYX TECHNOLOGY CORP.
FORM 10-QSB
Table of Contents
PART I. FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements and Notes to Condensed
Consolidated Financial Statements........................................ 3
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................ 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holder.....................10
Item 5. Other Information....................................................10
Item 6. Exhibits and Reports on Form 8-K.....................................10
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
August 31, Feb. 29,
1996 1996
------------------ ---------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................................................... $ 1,060,000 $ 3,939,000
Accounts receivable, less allowance for doubtful
accounts of $212,000 and $139,000 .............................................. 3,225,000 2,690,000
Inventories ..................................................................... 4,414,000 3,880,000
Other current assets ............................................................ 130,000 256,000
----------- ------------
Total current assets ..................................................... 8,829,000 10,765,000
Property and equipment, net ....................................................... 2,027,000 1,298,000
Investments ....................................................................... 27,000 20,000
Intangible assets, net ............................................................ 36,000 49,000
Other assets ...................................................................... 311,000 208,000
- ----------------------------------------------------------------------------------- ----------- -----------
$11,230,000 $ 12,340,000
=========== ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Bank line of credit ..................................................................$ -- $352,000
Notes payable to stockholders ........................................................ -- 400,000
Promissory note payable and current portion
of capital lease .................................................................... 155,000 1,044,000
Accounts payable ..................................................................... 1,524,000 3,186,000
Accrued liabilities .................................................................. 1,697,000 1,085,000
----------
Total current liabilities ..................................................... 3,376,000 6,067,000
Capital lease obligations, less current portion ........................................ -- 34,000
- ---------------------------------------------------------------------------------------- ---------- ----------
Total liabilities ............................................................ 3,376,000 6,101,000
---------- ----------
Stockholders' equity:
Series A 2% Convertible Cumulative Preferred
Stock .................................................................... 179,000 832,000
Common Stock, 10,533,572 and 9,228,668
issued and outstanding ................................................... 11,000 9,000
Additional paid in capital .................................................... 15,356,000 13,629,000
Accumulated deficit ........................................................... (7,692,000) (8,231,000)
- ------------------------------------------------------------------------------- ------------ ------------
Total stockholders' equity ........................................... 7,854,000 6,239,000
- ------------------------------------------------------------------------------- ------------ ------------
$ 11,230,000 $ 12,340,000
============ ============
</TABLE>
See the accompanying notes to these condensed consolidated financial
statements.
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
--------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue ............................................................ $ 6,973,000 $ 3,414,000 $ 13,778,000 $ 6,804,000
Cost of sales ...................................................... 4,639,000 2,752,000 9,059,000 4,968,000
------------ ------------ ------------ ------------
Gross profit ....................................................... 2,334,000 662,000 4,719,000 1,836,000
------------ ------------ ------------ ------------
Operating expenses:
Marketing and selling ............................................. 433,000 354,000 877,000 677,000
General and administrative ........................................ 1,058,000 636,000 1,865,000 1,180,000
Research and development .......................................... 471,000 525,000 1,311,000 1,137,000
------------ ------------ ------------ ------------
Total operating expenses ........................................ 1,962,000 1,515,000 4,053,000 2,994,000
------------ ------------ ------------ ------------
Income (loss) from operations ...................................... 372,000 (853,000) 666,000 (1,158,000)
Interest (income) expense, net ..................................... (8,000) 13,000 8,000 38,000
Equity in losses of investee ....................................... -- 35,000 20,000 103,000
------------ ------------ ------------ ------------
Income (loss) before income taxes .................................. 380,000 (901,000) 638,000 (1,299,000)
Provision for income taxes ......................................... 70,000 -- 92,000 --
------------ ------------ ------------ ------------
Net income (loss) .................................................. 310,000 (901,000) 546,000 (1,299,000)
Preferred stock dividend ........................................... (2,000) (6,000) (7,000) (6,000)
------------ ------------ ------------ ------------
Net income (loss) attributable to
common shares ..................................................... $ 308,000 ($ 907,000) $ 539,000 ($ 1,305,000)
============ ============ ============ ============
Net income (loss) per common share:
Primary ......................................................... $ 0.02 ($ 0.15) $ 0.04 ($ 0.23)
============ ============ ============ ============
Fully Diluted ................................................... $ 0.02 $ 0.04
============ ============
Weighted average common shares and equivalents outstanding:
Primary ......................................................... 14,707,079 5,886,710 14,205,941 5,635,526
============ ============ ============ ============
Fully diluted ................................................... 14,707,079 14,707,079
============ ============
</TABLE>
See the accompanying notes to these condensed
consolidated financial statements.
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended August 31,
----------------------------------------
----------------- ------------------
1996 1995
----------------- ------------------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) .............................................................. $ 539,000 ($1,299,000)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Equity in losses of investee .................................................. 20,000 103,000
Depreciation and amortization ................................................. 236,000 183,000
Changes in assets and liabilities:
Accounts receivable, net .................................................... (535,000) 708,000
Inventories ................................................................. (534,000) (339,000)
Other current assets ........................................................ 126,000 (69,000)
Other assets ................................................................ (103,000) (41,000)
Accounts payable ............................................................ (1,662,000) (91,000)
Accrued liabilities ......................................................... 612,000 (77,000)
----------- -----------
Net cash provided by (used in) operating activities .......................... (1,301,000) (922,000)
----------- -----------
Cash flows from investing activities:
Capital expenditures ............................................................ (952,000) (461,000)
Investment in DAS Devices, Inc. ................................................. (27,000) (49,000)
----------- -----------
Net cash used in investing activities ........................................ (979,000) (510,000)
----------- -----------
Cash flows from financing activities:
Borrowings/(repayment) of bank line of credit ................................... (352,000) --
Payment of capital lease obligations ............................................ -- (33,000)
Proceeds from (repayment of) notes payable
to stockholders .............................................................. (400,000) --
Proceeds from issuance of Common Stock/Warrants, net ............................ 1,076,000 1,164,000
Payment of Preferred Stock dividend ............................................. -- (6,000)
Repayment of long-term debt ..................................................... (923,000) (48,000)
----------- -----------
Net cash provided by/(used in) financing activities ........................... (599,000) 1,077,000
----------- -----------
Net increase/(decrease) in cash ................................................. (2,879,000) (355,000)
Cash at beginning of period ...................................................... 3,939,000 1,376,000
=========== ===========
Cash at end of period ............................................................ $ 1,060,000 $ 1,021,000
=========== ===========
</TABLE>
See the accompanying notes to these condensed
consolidated financial statements.
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 would appear 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 February 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 August 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 August 31, 1996, and the results of its operations
and its cash flows for the three and six month periods ended August 31, 1996 and
1995.
NOTE 2 - STOCKHOLDERS' EQUITY
In 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.
During the second quarter of 1996, 27,375 shares of Convertible Cumulative
Preferred Stock were converted into 319,375 shares of Common Stock. Also, during
the second quarter, the Company issued 193,529 shares of common stock and
received proceeds of $177,000 associated with the exercise of stock options and
warrants.
NOTE 3 - INVENTORIES
The components of inventory were as follows:
<TABLE>
<CAPTION>
August 31, February 29,
1996 1996
---------- ----------
<S> <C> <C>
Raw Materials ................................................................. $2,260,000 $2,453,000
Work-in-process ............................................................... 338,000 136,000
Finished goods ................................................................ 1,816,000 1,291,00
========== ==========
$4,414,000 $3,880,000
========== ==========
</TABLE>
NOTE 4 - NET INCOME (LOSS) PER SHARE
Primary net loss per share for the three and six month periods ended August 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 and six month
periods ended August 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 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 after 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 and six month periods ended
August 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 and six month periods ended August 31, 1996
includes an adjustment to reflect the earnings attributable to holders of
dilutive securities in subsidiaries of Oryx.
<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 problems which the Company might face. 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 August 31, 1996, revenues increased by $3,559,000 or 104%
from $3,414,000 for the quarter ended August 31, 1995, to $6,973,000 for the
quarter ended August 31, 1996. The growth in revenues between the quarter to
quarter periods was attributable to sales of a new power supply to an existing
OEM customer of the Power Products subsidiary and the initial shipment of TTS
process monitoring spectrometer systems by the Instruments and Materials
subsidiary. Revenues for the six months ended August 31, 1996 increased
$6,974,000 or 103% from $6,804,000 for the six months ended August 31, 1995 to
$13,778,000 for the six months ended August 31, 1996. The growth in revenues
from period to period was primarily related to sales of the new power supply and
the shipments of theTTS systems.
The Company's gross profit increased from $662,000 for the quarter ended August
31, 1995, to $2,334,000 for the quarter ended August 31, 1996, representing an
increase of $1,672,000 or 253%. Gross profit increased by $2,883,000 or 157%
from $1,836,000 for the six months ended August 31, 1995 to $4,719,000 for the
six months ended August 31, 1996. The increase in gross profit for both periods
in 1996 as compared to 1995 was attributable to increased revenues and cost
containment programs from the Company's Power Products subsidiary and increased
revenues from the Instruments & Materials subsidiary.
Marketing and selling expenses increased from $354,000 for the quarter ended
August 31, 1995, to $433,000 for the quarter ended August 31, 1996, representing
an increase of $79,000 or 22.3%. Marketing and selling expenses increased by
$200,000 or 29.5% from $677,000 for the six months ended August 31, 1995 to
$877,000 for the six months ended August 31, 1996. The increase in both periods
was primarily due to increased sales and marketing expenses associated with the
roll-out of the Company's diagnostic equipment and increased sales costs
associated with higher revenue levels by Power Products.
General and administrative expenses increased from $636,000 for the quarter
ended August 31, 1995, to $1,058,000 for the quarter ended August 31, 1996,
representing an increase of $422,000 or 66.4%. General and administrative
expenses increased by $685,000 or 58.1% from $1,180,000 for the six months ended
August 31, 1995 to $1,865,000 for the six months ended August 31, 1996. The
increase in general and administrative expenses for both periods was primarily
due to increases in headcount and changes in cost allocations associated with
the Company's objective of developing an infrastructure to support each of the
subsidiaries.
Research and development expenses decreased from $525,000 in the quarter ended
August 31, 1995, to $471,000 for the quarter ended August 31, 1996, representing
a decrease of $54,000 or 10.3%. Research and development expenses increased
$174,000 or 15.3% from $1,137,000 for the six months ended August 31, 1995 to
$1,311,000 for the six months ended August 31, 1996. Research and development
expense for the three and six month periods reflects a reduction of $355,000
related to development funding associated with license agreements. Research and
development spending 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.
The equity in losses of investee of $20,000 for the six months ended August 31,
1996, represents the Company's share of losses of Das Devices, Inc. for the
periods.
The provision for income taxes of $70,000 for the three months ended August 31,
1996 and $92,000 for the six months ended August 31, 1996 is based upon the
annual estimated effective tax rate.
Liquidity and Capital Resources
The Company's working capital increased by $755,000 from a surplus of $4,698,000
at February 29, 1996 to a surplus of $5,453,000 at August 31, 1996, as a result
of funds provided by the Company's Regulation S equity offering of its
securities which was finalized in May 1996 and the exercise of miscellaneous
warrants and stock options during the second quarter. During the six months
ended August 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, improved financial results, and its
current revenue projections, the Company's need for additional financing has
somewhat diminished. However, the Company is currently negotiating with a number
of banks for a $2.5 million credit line and, in the near future, intends to
establish such a facility, on acceptable terms, to support anticipated
operations based upon anticipated 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 2.63:1 at August 31,
1996.
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its annual meeting of stockholders on
September 20, 1996 (the "Annual Meeting").
(b) See Item 4(c) below
(c) The following matters were voted upon at the Annual Meeting
and received the following votes:
1. Election of Directors as follows:
Andrew Intrater - 5,723,422 votes for; 226,783 votes
withheld
Arvind Patel - 5,724,422 votes for; 225,783
votes withheld
John Abeles - 5,724,422 votes for;
225,738 votes withheld
Jay Haft - 5,724,422 votes
for; 225,738 votes withheld
Nitin Mehta - 5,724,422
votes for; 225,738 votes withheld
Ted Morgan - 5,724,422 votes for; 225,738 votes
withheld
2. A proposal to ratify the selection of the Company's
independent auditors, Price Waterhouse LLP for the fiscal year ending February
28, 1997 - 5,917,125 votes for; 32,580 votes against, 500 abstentions.
3. A proposal to amend the Company's 1993 Incentive and
Nonqualified Stock Option Plan to increase the number of shares authorized to be
issued under the Plan by 500,000 shares of Common Stock - 3,154,553 votes for;
169,617 votes against; 644,184 abstentions, 1,981,851 broker non-votes.
4. A proposal to ratify the Company's 1996 Directors Stock
Option Plan - 3,149,528 votes for; 167,042 votes against; 651,174 abstentions;
1,981,851 broker non-votes.
Item 5. Other Information
On October 11, 1996, Andrew G. Wilson resigned as Principal Financial
and Accounting Officer. The Principal Executive Officer, Arvind Patel, shall
serve as acting Principal Financial and Accounting Officer until his successor
is appointed.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Document
11.1 Schedule of Computation
of Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended August 31, 1996, the Company filed no
Current Reports on Form 8-K.
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: October 11, 1996 By:/S/Arvind Patel
Arvind Patel
Principal Executive Officer
Acting Prinicipal Financial
and Accounting Officer and
Authorized Signatory
<PAGE>
<TABLE>
<CAPTION>
ORYX TECHNOLOGY CORP.
EXHIBIT 11.1
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
Three months ended Six months ended
August 31, August 31, August 31, August 31,
1996 1995 1996 1995
-------------- -------------- --------------- ----------
<S> <C> <C> <C> <C>
Primary:
Earnings:
Net Income (loss) ............................................. $ 310,000 ($ 901,000) $ 546,000 ($1,299,000)
Deduct earnings attributable to holders of dilutive
subsidiary stock options .................................... (41,000) -- (83,000) --
Add interest income on reinvested option and warrant
exercise proceeds (as determined by the modified
treasury stock method), net of tax ........................... 47,000 -- 118,000 --
----------- ----------- ----------- -----------
As adjusted .................................................... $ 316,000 ($ 901,000) $ 581,000 ($1,299,000)
=========== =========== =========== ===========
Shares:
Number of weighted average common shares outstanding ........ 10,274,302 5,886,710 9,826,530 5,635,526
Add effect of dilutive convertible preferred stock,
options and warrants (as determined by the modified
treasury stock method) ..................................... 4,432,777 -- 4,379,411 --
---------- ---------- ---------- -----------
As adjusted .................................................. 14,707,079 5,886,710 14,205,941 5,635,526
========== ========== ========== ==========
Primary earnings (loss) per share ............................ $ 0.02 ($ 0.15) $ 0.04 ($ 0.23)
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fully diluted:
Earnings
Net Income .................................................. $ 310,000 $ 546,000
Deduct earnings attributable to holders of dilutive
subsidiary stock options ................................... (41,000) (83,000)
Add interest income on reinvested option and warran
exercise proceeds (as determined by the modified
treasury stock method), net of tax.......................... 46,000 96,000
--------- ---------
As adjusted ................................................. $ 315,000 $ 559,000
========= =========
Shares:
Number of common shares outstanding ........................ 10,533,572 10,533,572
Add effect of dilutive convertible preferred stock, options
and warrants (as determined by the modified treasury
stock method) ............................................ 4,173,507 4,173,507
---------- ---------
As adjusted ................................................ 14,707,079 14,707,079
========== ==========
Fully diluted earnings per share ........................... $ 0.02 $ 0.04
========== ==========
</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 August
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> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 1,060
<SECURITIES> 0
<RECEIVABLES> 3,437
<ALLOWANCES> 212
<INVENTORY> 4,414
<CURRENT-ASSETS> 8,829
<PP&E> 3,140
<DEPRECIATION> 1,113
<TOTAL-ASSETS> 11,230
<CURRENT-LIABILITIES> 3,376
<BONDS> 179
0
0
<COMMON> 11
<OTHER-SE> 7,664
<TOTAL-LIABILITY-AND-EQUITY> 11,230
<SALES> 6,973
<TOTAL-REVENUES> 6,973
<CGS> 4,639
<TOTAL-COSTS> 1,962
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8)
<INCOME-PRETAX> 380
<INCOME-TAX> 70
<INCOME-CONTINUING> 310
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 310
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
