-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JVLSAR6m6kUyEWJ8aIx7V0MGqgcxcCsahL8Uu4oDZg5kbLRnntklxMmMyxxIUMF1 g7rUDiXoA9fZZbar5wtVnw== 0000950144-95-001415.txt : 19950530 0000950144-95-001415.hdr.sgml : 19950530 ACCESSION NUMBER: 0000950144-95-001415 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELTRONICS INC CENTRAL INDEX KEY: 0000097052 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 592937938 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-17893 FILM NUMBER: 95539915 BUSINESS ADDRESS: STREET 1: 2150 WHITEFIELD INDUSTRIAL WAY CITY: SARASOTA STATE: FL ZIP: 34243 BUSINESS PHONE: 8137535000 MAIL ADDRESS: STREET 1: 2150 WHITFIELD INDUSTRIAL WAY CITY: SARASOTA STATE: FL ZIP: 34243 10QSB 1 TELTRONICS, 10QSB, 03-31-95 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 ------------------------------------------- or ( ) TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT For the transition period from to ------------- --------------- Commission file number 0-17893 -------------------------------------------------------- TELTRONICS, INC. (Exact name of small business issuer as specified in its charter) Delaware 59-2937938 - - - - ---------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2150 Whitfield Industrial Way, Sarasota, FL 34243-4046 - - - - -------------------------------------------------------------------------------- (Address or principal executive offices) Issuer's telephone number (813) 753-5000 ------------------------------------------------------- Not Applicable - - - - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last year) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 2,484,668 ------------- Exhibit index appears on page 11. Total pages 12. 2 PART I - FINANCIAL INFORMATION TELTRONICS, INC. BALANCE SHEET ASSETS
March 31, 1995 December 31, 1994 -------------- ----------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 19,904 $ 19,824 Accounts receivable, net of allowance for doubtful accounts of $150,607 at March 31, 1995 and $135,607 at December 31, 1994 2,630,149 2,355,047 Inventories 1,806,929 1,753,848 Income taxes receivable 680,272 668,780 Prepaid expenses and other current assets 277,230 288,410 ---------- ---------- Total current assets 5,414,484 5,085,909 ---------- ---------- PROPERTY AND EQUIPMENT, NET 1,138,852 1,207,196 ---------- ---------- OTHER ASSETS: Prepaid lease guarantee, net 291,681 298,680 Software development costs, net 134,322 156,822 Software licensing rights, net 886,755 886,755 Other 62,699 62,999 ---------- ---------- Total other assets 1,375,457 1,405,256 ---------- ---------- TOTAL ASSETS $7,928,793 $7,698,361 ========== ==========
See accompanying notes 2 3 TELTRONICS, INC. BALANCE SHEET (Continued) LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 1995 December 31, 1994 -------------- ----------------- (Unaudited) CURRENT LIABILITIES: Current portion of long-term debt $3,003,278 $ 2,491,679 Current portion of capital lease obligations 184,027 185,480 Accounts payable 909,699 960,421 Accrued expenses 601,809 763,959 Deferred income 146,982 146,982 Other current liabilities 64,932 65,195 ---------- ----------- Total current liabilities 4,910,727 4,613,716 ---------- ----------- LONG-TERM LIABILITIES: Capital lease obligations, less current portion 223,169 271,898 Long-term debt, less current portion 1,214,901 1,267,454 ---------- ----------- Total long-term liabilities 1,438,070 1,539,352 ---------- ----------- SHAREHOLDERS' EQUITY: Common stock, $.001 par, 50,000,000 shares authorized, 982,440 issued and outstanding 983 983 Additional paid-in capital 10,293,223 10,293,223 Accumulated deficit (8,714,210) (8,748,913) ---------- ----------- Total shareholders' equity 1,579,996 1,545,293 ---------- ----------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $7,928,793 $ 7,698,361 ========== ===========
See accompanying notes 3 4 TELTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
3 MONTHS ENDED ---------------------------------------- March 31, 1995 March 31, 1994 -------------- -------------- SALES $5,670,705 $3,985,368 COST OF GOODS SOLD 3,857,402 2,044,650 ---------- ---------- GROSS PROFIT 1,813,303 1,940,718 ---------- ---------- OPERATING EXPENSES General and administrative 375,589 578,293 Research and development 418,904 354,878 Selling and marketing expenses 899,487 845,332 ---------- ---------- 1,693,980 1,778,503 ---------- ---------- OPERATING INCOME 119,323 162,215 OTHER INCOME (EXPENSES) Interest (87,213) (32,882) Gain on sale of investment 0 0 Miscellaneous 2,593 2,899 ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES 34,703 132,232 PROVISION FOR INCOME TAXES 0 0 ---------- ---------- NET PROFIT (LOSS) $ 34,703 $ 132,232 ========== ========== NET PROFIT (LOSS) PER SHARE $ 0.04 $ 0.23 ========== ========== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 982,440 573,760 ========== ==========
See accompanying notes 4 5 TELTRONICS, INC. STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
Retained COMMON STOCK Additional Earnings --------------------------- Paid-In (Accumulated Shares Amount Capital Deficit) Total ----------- -------- ---------- ------------ ---------- BALANCE AT, December 31, 1994 982,440 $983 $10,293,223 $(8,748,913) $1,545,293 Net Profit 0 0 0 34,703 34,703 ------- ---- ----------- ----------- ---------- BALANCE AT, March 31, 1995 982,440 $983 $10,293,223 $(8,714,210) $1,579,996
See accompanying notes 5 6 TELTRONICS, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
3 MONTHS ENDED ----------------------------------------- March 31, 1995 March 31, 1994 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 34,703 $ 132,232 Adjustments to reconcile net income to net cash: Depreciation and amortization 133,266 135,410 Changes in assets and liabilities: Accounts receivable and other assets (263,922) (195,166) Inventories (53,081) (758,561) Income taxes receivable (11,492) 0 Decrease in other assets 300 0 Accounts payable and accrued liabilities (213,136) 346,889 ----------- ----------- Net cash flows from operating activities (373,362) (339,196) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (35,422) (18,314) Deferred charges and other noncurrent assets 0 24,998 ----------- ----------- Net cash flows from investing activities (35,422) 6,684 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit 5,779,000 4,181,800 Repayment on line of credit (5,191,537) (3,825,934) Repayment of notes payable and other long-term debt (178,599) (23,187) ----------- ----------- Net cash flows from financing activities 408,864 332,679 ----------- ----------- Net increase (decrease) in cash 80 167 Cash and cash equivalents, beginning of year 19,824 10,332 ----------- ----------- Cash and cash equivalents, end of year $ 19,904 $ 10,499 =========== ===========
See accompanying notes 6 7 TELTRONICS, INC. NOTES TO THE CONDENSED FINANCIAL STATEMENTS NOTE A - GENERAL The financial statements as of March 31, 1995 and for the three month period then ended are unaudited and, in the opinion of the Company, reflect all adjustments necessary for a fair presentation of such data and have been prepared on a basis consistent with the December 31, 1994 Audited Financial Statements. All such adjustments were of a normal recurring nature. The Company's significant accounting policies are described in the notes to the December 31, 1994 Audited Financial Statements and there have been no material changes in significant accounting policies from those described therein. The year-end condensed balance sheet data included in the condensed financial statements was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. 7 8 NOTE B - COMMITMENTS AND CONTINGENCIES The subject matter set forth on Page F-16 of the Company's Form 10-KSB for the year ended December 31, 1994, under Financial Note 8 is hereby incorporated by reference and there has been no signigicant change to such subject matter. NOTE C - RELATED PARTY TRANSACTIONS The subject matter set forth on Page F-22 of the Company's Form 10-KSB for the year ended December 31, 1994, under Financial Note 11 is hereby incorporated by reference and there has been no signigicant change to such subject matter. 8 9 NOTE D - SUBSEQUENT EVENTS On April 12, 1995 convertible promissory notes in the amount of $279,623 were cancelled by issuance of 102,228 restricted shares of the Company's common stock. In addition, these noteholders also received warrants entitling them to purchase an aggregate of 51,114 shares of the Company's common stock. The subject matter set forth on page F-15 of the Company's Form 10-KSB for the year ended December 31, 1994 under Financial Note 6 (a) is hereby incorporated by reference. On May 11, 1995, W&D Consultants, Inc., ("W&D") acquired 1,400,000 restricted shares of common stock from the Company upon exercise by W&D of a conditional right to convert a $140,000 advance made by W&D in order for the Company to close its $3,500,000 line of credit with The CIT Group/Credit Finance ("CIT") in October, 1994. The shares were issued to W&D after performance by W&D of certain conditions including: (a) cancellation of the $140,000 advance; (b) payment of $14,000 to the Company; (c) delivery of a termination by H&N of the management consulting and acquisition consulting agreements between the Company and H&N; (d) delivery by W&D of a guarantee of H&N's obligations under the H&N termination; and (e) other conditions necessary for conversion. The subject matter set forth on Page F-15 of the Company's Form 10-KSB for the year ended December 31, 1994 under Financial Note 6 (c) is hereby incorporated by reference. 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TELTRONICS, INC. GENERAL OVERVIEW In the first quarter of 1995, the Company's sales increased to $5,671,000 compared to sales of $3,985,000 for the corresponding quarter of 1994. Although the Company succeeded in increasing its sales substantially over last year, this increase was primarily the result of an aggressive marketing approach in one of the product lines which resulted in lower margins on the increased sales. Gross profit was $1,813,000 for the first quarter of 1995 compared to $1,941,000 for the same period last year. Overall operating expenses were reduced by approximately $85,000 as compared to the first quarter of last year. As a result of lower margins and increased interest expense the first quarter of 1995 reflected a net profit of $35,000 compared to $132,000 for the first quarter of 1994. RESULTS OF OPERATIONS Total sales for the first quarter of 1995 increased by approximately $1,685,000 over the same period of 1994. This increase was primarily the result of additional sales in the Long Distance Management ("LDM") product line. The aggressiveness of the marketing program which produced the increased sales resulted in a lower margin on those product sales. Gross profit for the quarter decreased to $1,813,000 from $1,941,000 for the same quarter of 1994. The decline in gross margin, 32% of sales for the first quarter of 1995 compared to 49% for the same period of 1994, was directly related to the LDM product line as well as reduced sales in other higher margin products of the Company. Total operating expense for the quarter ended March 31, 1995 were $1,694,000 as compared to $1,779,000 for the same period of last year. This $85,000 savings in total operating expense represents a 4.8% reduction in overall operating expenses as compared to 1994. Net profit for the quarter was $34,703, a decline of approximately $98,000 from the same period last year, primarily as a result of lower margin sales and increased interest expense. FINANCIAL CONDITION Total assets at March 31, 1995 were $7,928,793 compared to $7,698,361 at December 31, 1994. The Company's current ratio at March 31, 1995 was 1.10:1, compared to 1.10:1 at December 31, 1994. 10 11 LIQUIDITY AND CAPITAL RESOURCES Cash requirements were met with cash provided by borrowings from The CIT Group/Credit Finance ("CIT"). The CIT facility provides for borrowing up to $3.5 million. $296,700 of this was a term loan secured by fixed assets at an interest rate of 3% above the prime rate to be repaid monthly until fully paid on October 28, 1999. The remaining line facility is a revolving loan secured by inventory and receivables at an interest rate of prime plus 3%. The Company's working capital ratio at March 31, 1995 was 1.10:1. Net working capital was $503,757 at March 31, 1995. Short term requirements are expected to be met through cash flows from operations augmented by the credit line facility. However, the Company is investigating the possibility of other equity or debt financing. In the event that the Company was successful in securing additional funding, the Company should be in a position to grow its business more rapidly. CURRENT OUTLOOK In November of 1994 the Company secured a contract with Telsource, Inc., one of the major distributors and installers of Mitel (a Canadian manufacturer of telecommunication products) dialers in the U.S. marketplace. In order to secure this substantial contract, Teltronics agreed to provide its own dialer to Telsource at a competitive price to Mitel. The call off order which was signed was to provide approximately $12 million worth of dialers during 1995, $3 million worth of dialers have been shipped during the first quarter. Although the Company has achieved much higher sales during the first quarter, these have been of a lower margin due to the higher percentage of product being dialers which have traditionally a lower margin than other products of the Company. During the first quarter, the Telecommunication Information Systems product sales ("TIS") which is responsible for sales of the Telemanagement software and Remote Maintenance products had a slow start. The Company believes however that the contracts signed last year with major customers should result in increased sales of these product lines. The Company enjoys higher margins on these products and feels confident that these should contribute positively to the Company's profitability. The Company feels that it is well positioned in its current markets to continue to grow its sales during 1995. The Company continues to focus on ways to become more efficient in supplying its products to the market. 11 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Management of the Company currently is not aware of any material litigation against the Company, nor to the knowledge of management of the Company, is any material litigation threatened against the Company. ITEM 2. CHANGES IN SECURITIES - None ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None ITEM 5. OTHER INFORMATION - None ITEM 6A. EXHIBITS 10.127 Amended and Restated Employment Agreement between the Company and Ewen Cameron dated January 1, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) 10.128 Employment Agreement between the Company and Norman R. Dobiesz dated January 1, 1995 . . . . . . . . . . . . . . . . . . (a) 10.130 Specimen of Common Stock Purchase Warrant issuable as a part of the Units to be issued pursuant to the Conversion Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . (a) 10.137 Subscription Agreement between the Company and W&D Consultants, Inc., dated May 11, 1995 . . . . . . . . . . . . . . . . . (b) 27 Financial Data Schedule (for SEC purposes only)
ITEM 6B. REPORT ON FORM 8-K - None ________________________ (a) Filed as an Exhibit to Teltronics' Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994. (b) Filed as an Exhibit to this Report on Form 10-QSB. 12 13 In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELTRONICS, INC. May 12, 1995 s/Ewen Cameron ------------------------------------- President and Chief Executive Officer 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10QSB FOR THE PERIOD ENDED MARCH 31, 1995. 3-MOS DEC-31-1995 JAN-01-1995 MAR-01-1995 19,904 0 2,630,149 0 1,806,929 5,414,484 2,710,069 1,571,217 7,928,793 4,910,727 0 983 0 0 1,579,013 7,928,793 5,670,705 5,670,705 3,857,402 1,693,980 0 0 87,213 34,703 0 34,703 0 0 0 34,703 .04 .04
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