-----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, CAOQvwNw58q2i8R8twP2trEnqtRZjUBntmEuZ2FFATLxKvnFJzJIT0/RW4R3Q4Ww vBa23FXaeR9RH+THAzB5Vw== 0000912057-95-003849.txt : 19950518 0000912057-95-003849.hdr.sgml : 19950518 ACCESSION NUMBER: 0000912057-95-003849 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRIFFIN TECHNOLOGY INC CENTRAL INDEX KEY: 0000082295 STANDARD INDUSTRIAL CLASSIFICATION: 3570 IRS NUMBER: 160864416 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-03321 FILM NUMBER: 95539535 BUSINESS ADDRESS: STREET 1: 1133 CORPORATE DR CITY: FARMINGTON STATE: NY ZIP: 14425 BUSINESS PHONE: 7169247121 MAIL ADDRESS: STREET 1: 1133 CORPORATE DRIVE STREET 2: 1133 CORPORATE DRIVE CITY: FARMINGTON STATE: NY ZIP: 14425 FORMER COMPANY: FORMER CONFORMED NAME: RD PRODUCTS INC DATE OF NAME CHANGE: 19820913 10QSB 1 10QSB Page 1 of 7 FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (X) QUARTERLY REPORT PURSUANT TO 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 SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to ________ Commission File Number 0-3321 GRIFFIN TECHNOLOGY INCORPORATED (Exact name of small business issuer as specified in its charter) New York 16-0864416 ------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1133 Corporate Drive Farmington, New York 14425 -------------------------------- ---------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (716) 924-7121 -------------- 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 --- --- As of April 29, 1995, the Issuer had outstanding 2,380,247 shares of Common Stock. Transitional Small Business Disclosure Format (check one): Yes No X --- --- Page 2 of 7 GRIFFIN TECHNOLOGY INCORPORATED BALANCE SHEET (UNAUDITED)
March 31, June 30, ---------------------- ---------- 1995 1994 1994 ------- ------- ---------- ASSETS Current assets: Cash $ 133,100 $ 238,400 $ 60,500 Accounts receivable 3,875,100 2,733,000 3,391,200 Inventory of electronic equipment for resale 425,000 Inventories of film and supplies, at LIFO cost 153,400 196,500 170,600 Prepaid expenses and other current assets 258,000 219,800 139,500 Refundable income taxes 76,600 76,600 Deferred income tax charges 388,500 137,500 388,500 Electronic control systems, at cost 17,452,800 17,927,400 17,538,700 Less - Accumulated amortization (13,944,500) (14,838,500) (13,923,100) ----------- ---------- ----------- Net electronic control systems 3,508,300 3,088,900 3,615,600 ----------- ---------- ----------- Total current assets 8,818,000 6,614,100 7,842,500 ----------- ---------- ----------- Long-term electronic control systems, at cost 16,489,000 15,146,100 15,626,100 Less - Accumulated amortization (10,654,900) (8,554,300) (9,089,700) ----------- ---------- ----------- Net electronic control systems 5,834,100 6,591,800 6,536,400 ----------- ---------- ----------- Property, plant and equipment, at cost 5,699,800 5,481,500 5,540,700 Less - Accumulated depreciation and amortization (4,131,500) (3,817,700) (3,899,300) ----------- ---------- ----------- Net property, plant and equipment 1,568,300 1,663,800 1,641,400 ----------- ---------- ----------- Deferred software costs, net 1,048,100 1,136,800 1,135,800 ----------- ----------- ----------- Other assets 346,100 112,700 108,500 ----------- ----------- ----------- Total assets 17,614,600 $16,119,200 $17,264,600 ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 600,000 $ 629,500 $ 600,000 Accounts payable 704,200 703,800 1,038,000 Accrued payroll and related taxes 528,300 564,500 561,500 Other accrued liabilities and expenses 205,800 163,300 204,000 Income taxes payable 71,800 251,200 50,600 Unearned service fees 3,503,900 3,893,700 2,400,800 ----------- ---------- ---------- Total current liabilities 5,614,000 6,206,000 4,854,900 Long-term debt 4,950,000 3,750,000 5,500,000 Employee stock purchase plan 10,900 22,800 19,800 Deferred income tax credits 532,100 532,100 ----------- ---------- ---------- Total liabilities 11,107,000 9,978,800 10,906,800 ----------- ---------- ---------- Shareholders' equity: Common stock, par value $.05 per share Authorized - 6,000,000 shares Issued and outstanding - 2,380,247, 2,362,364, and 2,362,364 shares, respectively 119,000 118,100 118,100 Capital in excess of par value 3,479,300 3,318,200 3,403,600 Retained earnings 2,909,300 2,704,100 2,836,100 ----------- ---------- ----------- Total shareholders' equity 6,507,600 6,140,400 6,357,800 ----------- ---------- ----------- Total liabilities and shareholders' equity $17,614,600 $16,119,200 $17,264,600 ----------- ----------- ----------- ----------- ----------- -----------
SEE NOTES TO FINANCIAL STATEMENTS Page 3 of 7 GRIFFIN TECHNOLOGY INCORPORATED STATEMENT OF INCOME (LOSS) (UNAUDITED)
For the three months For the nine months ended March 31, March 31, ended ----------------------- ------------------------ 1995 1994 1995 1994 ----------- --------- ---------- ----------- Revenues: Service fees $3,078,200 $3,290,000 $ 9,535,100 $10,105,500 Net sales 972,800 570,800 3,445,800 2,440,200 ---------- ---------- ----------- ----------- Total revenues 4,051,000 3,860,800 12,980,900 12,545,700 ---------- ---------- ----------- ----------- Costs and expenses: Cost of sales 682,100 441,800 2,171,300 1,678,000 Service of electronic control systems 1,013,300 939,600 3,239,300 2,856,900 Amortization of electronic control systems 26,200 518,400 1,586,600 1,545,000 Amortization of software costs 85,400 77,400 240,200 231,300 Selling, general and administrative 1,123,100 1,156,500 3,320,500 3,346,400 Research and development 662,100 628,800 1,925,000 1,864,700 Interest 123,600 75,900 388,700 269,400 ---------- ---------- ---------- ---------- Total costs and expenses 4,215,800 3,838,400 12,871,600 11,791,700 ---------- ---------- ---------- ---------- Income (loss) before income taxes (164,800) 22,400 109,300 754,000 ---------- ---------- ---------- ---------- Income tax (expense) benefit 54,800 (6,700) (36,100) (226,200) ---------- ---------- ---------- ---------- Net income (loss) $ (110,000) $ 15,700 $ 73,200 $ 527,800 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Earnings (loss) per common and common equivalent share $(.05) $.01 $.03 $.22 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Dividends per share -0- -0- -0- -0- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of common and common equivalent shares outstanding 2,378,747 2,385,210 2,387,047 2,384,476 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
SEE NOTES TO FINANCIAL STATEMENTS Page 4 of 7 GRIFFIN TECHNOLOGY INCORPORATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the nine months ended March 31, ------------------- 1995 1994 ---------- ----------- Cash flows from operating activities: Net income for the period $ 73,200 $ 527,800 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 232,200 223,300 Amortization of electronic control systems 1,586,600 1,545,000 Amortization of software development costs 240,200 231,300 Increase in unearned service fees 1,103,100 1,455,700 Increase (decrease) in accounts receivable (483,900) 767,000 Increase (decrease) in inventories (407,800) 93,900 (Increase) in prepaid expenses (118,500) (36,200) (Increase) in deferred software costs (152,500) (170,900) (Decrease) in accounts payable and other liabilities excluding borrowings (344,000) (124,200) Other items, net (237,600) 8,900 ---------- ----------- Total adjustments 1,417,800 3,993,800 ---------- ----------- Net cash provided by operating activities 1,491,000 4,521,600 ---------- ----------- Cash flows from financing activities: Provided from employee stock option and stock purchase plans 67,700 64,000 Revolving credit and term loan agreement Borrowings 1,800,000 900,000 Repayments (2,350,000) (3,100,000) Principal payments under other long-term debt (35,200) ---------- ----------- Net cash used in financing activities (482,300) (2,171,200) ---------- ----------- Cash flows from investing activities: Additions to electronic control system equipment (777,000) (2,074,000) Additions to property, plant and equipment (159,100) (189,500) ---------- ----------- Cash used in investing activities (936,100) (2,263,500) ---------- ----------- Increase in cash 72,600 86,900 ---------- ----------- Cash at beginning of period 60,500 151,500 ---------- ----------- Cash at end of period $ 133,100 $ 238,400 ---------- ----------- ---------- ----------- Interest paid $ 382,100 $ 265,000 ---------- ----------- ---------- ----------- Income taxes paid $ 14,800 $ 7,300 ---------- ----------- ---------- -----------
SEE NOTES TO FINANCIAL STATEMENTS Page 5 of 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION FINANCIAL CONDITION AND LIQUIDITY: Griffin's current policy of selling its new card reading terminals and various other equipment with an optional service contract has had a material effect on the Statement of Cash Flows for the nine months ended March 31, 1995. Net cash provided by operating activities amounted to $1,491,000 in 1995 compared with $4,521,600 one year ago as a result of a decrease in net income and unearned service fees of $450,000 and $350,000, respectively. During the first nine months a comparison of activity between 1994 and 1995 reflects an increase in accounts receivable, inventory and other miscellaneous deferred costs of $1,990,000. The change in policy has also had a significant impact on working capital. As of March 31, 1995, working capital amounted to $3,204,000 compared to $408,100 at March 31, 1994. The increase in accounts receivable and inventories resulted in $1,200,000 additional monies being borrowed in 1995 under the Restated Revolving Credit and Term Loan Agreement. As of May 11, 1995, borrowings under the agreement amounted to $6,150,000 with $1,000,000 of additional monies available. Management believes these funds, and those projected from cash flow from operations, will be adequate to support future operations. RESULTS OF OPERATIONS: THREE MONTHS ENDED MARCH 31, 1995, AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1994 Griffin's net loss for the quarter ended March 31, 1995, amounted to $110,000, or $.05 per share compared to net income of $15,700, or $.01 per share, for the quarter ended March 31, 1994. Total revenues for the quarter were up 5%, which is the same percentage increase as the previous quarter. The sales pattern reported in the first and second quarters continued to affect the total revenue mix. Once again, the policy to sell various system equipment resulted in a 6% decrease in service fees and a 70% increase in net sales for the third quarter. The increase came entirely from vending and card reader terminal sales. Costs and expenses for the three months ended March 31, 1995, increased $377,400 over the quarter ended March 31, 1994. Approximately $250,000 is in cost of sales and related to equipment sales described above, and $75,000 is related to service costs associated with the new POS systems sold. Interest expense during the third quarter of Fiscal 1995 increased $47,700 due to a higher average balance of long-term debt outstanding of $835,000 and an increase of 2 1/2% in the average annual rate of interest paid as compared with the same period one year ago. Page 6 of 7 NINE MONTHS ENDED MARCH 31, 1995, AS COMPARED TO THE NINE MONTHS ENDED MARCH 31, 1994 Net earnings for the nine months ended March 31, 1995, amounted to $73,200, or $.03 per share, compared to $527,800, or $.22 per share, for the same period one year ago. Several factors caused service fee revenues to decrease by $570,400 during the first nine months of Fiscal 1995. These include competitive pressures and associated pricing and customers' taking advantage of Griffin's new policy of selling card reader terminals and systems rather than leasing them. The latter caused an increase in net sales for the 1995 period of $1,005,600, or 41%. Costs and expenses for the nine months ended March 31, 1995, increased $1,079,900 over the first nine months of Fiscal 1994. Approximately $500,000 is related to cost of sales associated with the net sales increase. Costs related to realignment of sales and marketing functions and housing information systems division amounting to $280,000 occurred during the first two quarters. The increase in service costs is related to management's realignment of certain of these functions and higher than expected costs for changing Griffin's method of selling its system equipment. Interest expense increased $119,300 over 1994. As a result of the additional monies required for borrowing, as described above, the average balance outstanding was up $700,000, and the annual rate of interest paid increased 2%. NOTES TO FINANCIAL STATEMENTS Results for the period ended March 31 are not necessarily indicative of results to be expected for the year because Griffin's sales generally reach a seasonal peak during the months of July through September and again during the months of April through June. The Company is involved in developing a plan for the environmental clean-up of a solvent formerly used in the manufacture of its photo identification cards. Although the level of future expenditures for environmental matters, including clean-up obligations, is impossible to determine with any degree of certainty, it is management's opinion that when the costs are finally determined, they will not have a material adverse effect on the financial position of the Company. Information furnished reflects all adjustments which are, in the opinion of management, necessary to a fair statement of results for interim periods presented. All such adjustments are of a normal recurring nature. Net income per share was computed on the basis of the weighted average number of common and common equivalent shares outstanding during each period. The common equivalent shares represent shares contingently issuable under Griffin's stock option plan. Common stock equivalents were not included in the computation of the per share loss amount for the quarter ended March 31, 1995, because the result would have been anti- dilutive. Page 7 of 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits None b. No reports on Form 8-K were filed for the quarter ended March 31, 1995. SIGNATURE Pursuant to the requirements 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 to sign on its behalf and as the registrant's principal financial and accounting officer. GRIFFIN TECHNOLOGY INCORPORATED By: s/Joseph A. Murrer --------------------- Joseph A. Murrer Vice President - Finance and Administration Treasurer and Secretary Date: May 11, 1995 EX-27 2 EXHIBIT 27
5 3-MOS JUN-30-1995 JUL-01-1995 MAR-31-1995 133100 0 3875100 0 578400 8818000 22188800 14786400 17614600 5614000 4950000 119000 0 0 3479300 17514600 972800 4051000 682100 4215800 0 0 123600 (164800) (54800) (110000) 0 0 0 (110000) (.05) (.05)
-----END PRIVACY-ENHANCED MESSAGE-----