TBTI is now at 1 1/2. Anyone following it here? It's
getting coverage from the Microcap Research Report now.
Calypso and all,
The MicroCapitalist Research Report(MCRR)issued the following
Profile for it's subscribers in December. Price today is
1.875 x 2.125 and hit 2.19 last week.
--Madeleine Harrison ("Madly")
Board Administrator, MCRR
mcrr.com
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Company : Telebyte Technology
Rating: A-
Symbol: TBTI (OTC BB)
Current bid/ask: 1.63/2.00
High/Low 12 mos: 2.09/.44
Address: 270 Pulaski Road, Greenlawn, NY 11740
Phone: 516 423 3232
Fax: 516 385 8184
WWW: www.telebyteusa.com
Email address: sales@telebyteusa.com
Company contact: Michael Breneisen (ext 426)
Shares Outstanding: 1.48m
Fully Diluted: 1.63m
Float: approx 900k
Options: 66k, no wts
Preferred: none
Long Term Debt: $939k as of 9-30-97
Shareholder's equity: $2.25m as of 9-30-97
Employees: 35 as of 12-31-96
Backlog: $928k as of 9-30-97
Legal issues/contingencies: none
Patents: U.S. Patent # 4,281,409: "method and apparatus for multiplex binary data
communications."
Tax loss carryforward: $950k as of 12-31-96 + $71k in tax credits
Reporting: yes
Auditor's opinion: Grant & Thorton OK 12-31-97
Financials: For 1995 revenue was $3.75m and net income was$101,592 or 7 cents per share. Last
year the Company increased revenue to $4.136m and net income was $30,455 or 2 cents per
share. It should be noted that last year TBTI devoted increased resources to an expanded catalog
campaign which increased SGA by $190k over the prior year. We believe those increased costs
are paying off this year as the company has posted record revenues for each of the first three
quarters this FY. 1st qtr rev ended 3-31-97 was $1.03m, 2nd qtr rev ended 6-30-97 was $1.22m
and 3rd qtr rev ended 9-30-97 was $1.48m, an all time high for the Company. Due to the fact that
the Company spends a considerable amount of resources in the 1st qtr in mailing out their product
catalogs the first qtr bottom line usually takes a hit, and this resulted in a $98k loss for the 1st qtr
this year. But the benefits of that mailing program, along with increasing custom and standard
product orders, were reflected in profits for the 2nd and 3rd qtrs of $90k and $156k respectively,
adding 6 cents per share and 11 cents per share to the bottom line. The 9 month numbers ending
9-30-97 were revenue of $3.73m vs $3.16m and net income of 10 cents vs 10 cents. What we
expect for the 4th qtr this year should change that flat net income figure to the upside. Last year's
4th qtr reflected a loss of $121k due to the ramp up costs of the expanded catalog program, and
that loss resulted in TBTI showing a modest profit of $30k last year. This year the 4th qtr should
push the Company to over $5m in revenue for the year (that would be an all time record for TBTI)
and given the strong backlog and record 3rd qtr orders we expect the Company to flip to a profit
for the 4th qtr instead of a loss. On a comparative basis the numbers could be quite impressive. As
the Company continues to grow they should be better able to spread out their increasing marketing
and development costs over a wider revenue base, and that should result in less swing and sway on
the bottom line. But we still expect higher promotional and development expenses in some quarters
as opposed to others and those costs may affect that quarters' results, although those costs should
produce even better numbers going forward.
Business: Telebyte Technology , in business since 1983, designs, manufactures, and markets
electronic data communication s products that operate over copper and fiber cables. The
Company's data communications equipment is used principally to provide connectivity solutions and
maintain data communications networks. Present areas of growth include data acquisition systems,
process control systems, and fiber optic equipment. The Companies six principal data
communications product categories are interface converters, short haul modems, data
communications test equipment, Local Area Network (LAN) products, surge/ lightning protectors
and multiplexers. TBTI also sells a variety of switching equipment and accessories. In the data
communications marketplace, TBTI focuses on areas of 'premises communications', local networks
and industrial datacommunications and internet access products. The Company addresses
requirements of customers that have computer systems with data communications applications
having distances whose range is from a few feet to a few miles. Examples of facilities where
Telebyte products are used include industrial plants, factories, high rise office buildings, and campus
like environments where buildings and communications equipment may be spread over a wide area.
Transmission media utilized in these environments are 'twisted pair' copper wire and/or fiber optic
cable. Fiber optic products represent a growing area for Telebyte and future product development
will continue to emphasize this area. Telebyte is also actively pursuing development of products in
the Digital Subscriber Line (DSL) area for internet access.
Competition and Risks: -due to the number of shares outstanding trading could be thin, and at times
the stock carries a wide spread between the b/a. When volume does pick up the spread in turn
becomes more reasonable. -the Company competes in some markets with larger competitors who
possess more resources than Telebyte. Principal competitors include RAD Data Communications,
Black Box, and Patton Electronics
Recent Events: -November 19, 1997: TBTI introduces Office WEB, a low cost software solution
that provides Internet access for LAN users over a shared, dial-up connection. Previous solutions
required using expensive, complicated IP routers and re-configuring the network to support
TCP/IP. Office WEB instead provides transparent connectivity and installs on non-dedicated
workstations. -November 11, 1997: TBTI reports record revenues for 3rd qtr...$1,480,196 with
profits of $.11 per share....see Financials section. -October 23, 1997: TBTI introduces their Model
8003 DIN Rail Rack Adapter. DIN Rail products, such as line drivers, interface converters, PLC's
and wiring devices have not been used in standard 19" electronic equipment racks due to the
problems of mounting the DIN Rail in the tack. The 8003 Rack Adapter provides a solution for
these problems and accommodates both wired and fiber optic devices. -October 16, 1997:
Telebyte reports orders for the 3rd qtr ended September 30, 1997 were the highest in the
Company's history. New orders amounted to $2,029,000 as compared to $1,260,000 for the
similar period last year. Customers placing custom orders included Graybar, Intel, IBM, Hill-Rom,
Lucent and Acuson. Standard product orders were received from GTE Supply, Alcatel, PairGain,
So. California Edison, Sprint, US Robotics and others. -September 25, 1997: TBTI introduces
hostile environment short haul modem to support industrial/factory automation applications for local
data communications. Modem offers 38.4KBPS data rates over 6km of twisted pair over an
extended temperature range of -10C to +75C. This product is the result of a custom design
program for Foxboro Co. -September 22, 1997: TBTI receives order from Graybar Electric for
$288,000 to cover 191 custom lightning protection systems. While ordered by Graybar, these
systems are ultimately destined for the Air Force with an intended use for inclusion in field
deployable computer systems being assembled by Motorola, the prime contractor. The Air Force is
expected to order these systems from Motorola over a multi-year period. Management believes that
based upon discussions to date this order may be the first of many production orders over multiple
years, assuming continued use by the Air Force of these systems. Delivery is expected in this years'
4th qtr. -September 4, 1997: TBTI introduces opto isolation unit that meets new International
standards. Recent new regulations govern the usage of electronic equipment in medical
environments.. The Model 269 complies with the IEC requirement for medical electrical equipment
for withstanding 4000 Volts AC for one minute. -August 14, 1997: New York State awards TBTI
a contract under the State's Global Export Market Service.. Under this contract the Dept. of
Economic Development will provide funds to assist in strengthening the Company's sales in selected
countries in Europe. -June 12, 1997: TBTI introduces its first HDSL product, a high performance
T1/E1 modem for high speed transmission of synchronous data over twice the distance of normal
T1/E1 transmission.
Key Points: -As of Sept 30, 1997 backlog had increased to $928,408 compared to $148,888 for
the similar period last year. The Company believes that its strong backlog is a good indicator of
future results. -An example of TBTI's 'custom' capabilities that demonstrates both their technical
sophistication and their blue chip client list is TBTI's custom XDSL 'wireline simulator', a product
that very few other companies are producing....but TBTI is selling these simulators to RayChem,
Alcatel, PairGain, US Robotics, Aware etc. TBTI is building a reputation both for their custom and
standard products as well as a 'solution provider'...some of the largest companies in the world are
coming to TBTI to develop niche products that provide solutions to their technical needs. -as of July
22, 1997, officers and directors own 38.2% of the stock. -TBTI is planning to expand their
promotional mailings and other promotional activities this coming fical year beginning January 1,
1998. -TBTI has 65,000 customers/contacts in their database. Last year internal sales people
contacted about 9000 of those customers. This coming year each potential customer will be
contacted through a promotional program, most likely more than once. And TBTI plans to spend
additional time with their premier client list to ensure that TBTI will be present to fulfill those
companies requirements. -Telebyte's world wide web site, at www.telebyteusa.com, has become a
revenue generator, bringing in new customers and averaging 1700 unique hits and 19,000 page
views per week. As the promotional campaign expands and that 65,000 base of present and
potential customers becomes aware of the TBTI product line through their web site further revenue
enhancements could ensue. --no sales to a single customer exceeded 10% of sales in the past 3
years., and sales of products to the US Gov't are not subject to renegotiations of profits or
termination of contracts at the US Governments' election. For the most part such sales are covered
by the Company's GSA contract.
Impressions: It is our view that Telebyte is on an upward track that should enable them to continue
to produce increasing top line and bottom line numbers. Their client list encompasses some of the
largest industrial companies in the world and their product lines are keeping pace with the leading
and latest developments in the data communications marketplace. This year they should produce
record revenue and break the $5m mark. They are increasing their efforts to reach new customers
and are redoubling their commitment to present customers. We think this type of approach will
result in continued progress and higher numbers for the Company and feel that the present price
presents an attractive entry point for risk oriented investors who wish to take a position in a small
communications company dedicated to quality and growth.
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The material contained in this report is intended to be research material and is for informational
purposes only. The information provided is obtained from sources deemed to be reliable, but is not
guaranteed as to accuracy or completeness. The MCRR strongly urges readers to call the company,
request an investor's package, and do their own research. This is a micro cap stock and therefore is
a high risk investment. The MCRR reccomends that anyone trading or investing in micro cap stocks
do so with extreme caution and consult a professional broker/investor before investing in micro cap
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movement up or down. Micro cap stocks are not suitable for all investors and investors should
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liable for any losses or damages, monetary or otherwise, that result from the content of the MCRR.
If you invest in micro cap stocks they should constitute only a small percentage of a well-balanced
portfolio.
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