SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 1998
[ ] 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: 0-23279
-------
Celerity Systems, Inc.
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 52-2050585
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1400 Centerpoint Boulevard
Knoxville, Tennessee 37932
----------------------------------------
(Address of principal executive offices)
(423) 539-5300
-------------------------------
(Registrant's telephone number)
(Former Name, Former Address and Former Fiscal Year, if changed since last
Report)
Check whether the registrant (1) has 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 May 12, 1998, 4,131,169 shares of the issuer's common stock were
outstanding.
Transitional Small Business Disclosure Format (check one): Yes |__| No |X|
<PAGE>
CELERITY SYSTEMS, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements..................................................3
Balance Sheets as of March 31, 1998 (unaudited) and December 31, 1997....3
Statements of Operations (unaudited) for the three months ended
March 31, 1998 and 1997..................................................4
Statement of Stockholders' Equity as of March 31, 1998 (unaudited)
and January 1, 1998......................................................5
Statements of Cash Flows (unaudited) for the three months ended
March 31, 1998 and 1997..................................................6
Notes to Unaudited Financial Statements..................................7
Item 2. Management's Discussion and Analysis or Plan of Operation.............9
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds............................13
Item 6. Exhibits and Reports on Form 8-K.....................................14
Signatures..............................................................15
2
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
CELERITY SYSTEMS, INC.
Balance Sheets
December 31, March 31,
------------ ---------
1997 1998
(unaudited)
ASSETS
Cash and cash equivalents $ 4,592,975 $ 1,961,705
Short-term investments 1,229,788 1,239,181
Accounts receivable, less allowance for
doubtful accounts of $567,024 in
1997 and 1998 1,022,283 716,774
Interest receivable 4,954 --
Inventory 1,161,356 1,813,627
Prepaid expenses 103,340 212,199
Costs in excess of billings on
uncompleted contracts 20,963 --
------------ ------------
Total current assets 8,135,659 5,943,486
Property and equipment, net 999,245 1,225,061
------------ ------------
Total assets $ 9,134,904 $ 7,168,547
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 806,305 $ 376,914
Accrued liabilities 389,060 678,050
Warranty reserve 235,000 235,000
------------ ------------
Total current liabilities 1,430,365 1,289,964
Common stock, $0.001 par value,
15,000,000 shares authorized,
4,442,134 issued and 4,104,769
outstanding, and 4,467,734
issued and 4,130,369 outstanding
at December 31, 1997 and March
31, 1998, respectively 4,442 4,468
Additional paid-in capital 22,399,692 22,402,226
Treasury stock, at cost (227,500) (227,500)
Accumulated deficit (14,472,095) (16,300,611)
------------ ------------
Total liabilities and
stockholders' equity $ 9,134,904 $ 7,168,547
============ ============
The accompanying notes are an integral part of these unaudited financial
statements.
3
<PAGE>
CELERITY SYSTEMS, INC.
Statements of Operations
Three months ended
March 31,
----------------------------
1997 1998
(unaudited)
Revenues $ 243,609 $ 722,786
Cost of revenues 475,037 705,155
----------- -----------
Gross margin (231,428) 17,631
Operating expenses 721,562 1,656,936
----------- -----------
Loss from operations (952,990) (1,639,305)
Interest expense (76,845) (13)
Interest income 16,689 42,521
----------- -----------
Net loss from continuing operations (1,013,146) (1,596,797)
Discontinued operations (Note 5):
Loss from operations of discontinued
CD-ROM segment (268,410) (231,719)
----------- -----------
Net loss (1,281,556) (1,828,516)
Accretion of premiums on preferred stocks 69,543 --
----------- -----------
Net loss applicable to common stock $(1,351,099) $(1,828,516)
=========== ===========
Basic and diluted loss per common share
(Note 4):
Loss from continuing operations $ (.59) $ (.38)
Discontinued operations (.15) (.06)
----------- -----------
Loss per common share $ (.74) $ (.44)
=========== ===========
The accompanying notes are an integral part of these unaudited financial
statements.
4
<PAGE>
CELERITY SYSTEMS, INC.
Statement of Stockholders' Equity
Unaudited
<TABLE>
<CAPTION>
Additional
Common Paid-In Treasury Accumulated
Stock Capital Stock Deficit
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balances, January 1, 1998 $ 4,442 $ 22,399,692 $ (227,500) $(14,472,095)
Exercise of employee stock options 26 2,534 -- --
Net loss -- -- -- (1,828,516)
------------ ------------ ------------ ------------
Balances, March 31, 1998 $ 4,468 $ 22,402,226 $ (227,500) $(16,300,611)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
5
<PAGE>
CELERITY SYSTEMS, INC.
Statements of Cash Flows
Three months ended
March 31,
--------------------------
1997 1998
(unaudited)
Cash flows from operating activities:
Net loss $(1,281,556) $(1,828,516)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 103,819 96,812
Loss on disposal of fixed assets -- 29,622
Provision for doubtful accounts receivable 15,000 --
Changes in current assets and liabilities:
Accounts receivable 252,673 305,509
Interest receivable -- 4,954
Prepaid expenses (56,088) (108,859)
Inventory (259,177) (652,271)
Costs in excess of billings on
uncompleted contracts (37,591) 20,963
Accounts payable 259,744 (429,391)
Accrued expenses 77,447 288,990
Deferred revenue (180,000) --
----------- -----------
Net cash used in operating activities (1,105,729) (2,272,187)
Cash flows from investing activities:
Purchases of property and equipment (137,162) (352,249)
Investments in short-term instruments -- (9,394)
----------- -----------
Net cash used in investing activities (137,162) (361,643)
Cash flows from financing activities:
Principal payments on capital leases (2,413) --
Net proceeds from issuance of common stock -- 2,560
-----------
Net cash provided (used) in
financing activities (2,413) 2,560
Net decrease in cash and cash equivalents (1,245,304) (2,631,270)
Cash and cash equivalents, beginning of quarter 2,344,666 4,592,975
----------- -----------
Cash and cash equivalents, end of quarter $ 1,099,362 $ 1,961,705
=========== ===========
The accompanying notes are an integral part of these unaudited financial
statements.
6
<PAGE>
CELERITY SYSTEMS, INC.
Notes to Unaudited Financial Statements
1. Presentation of Unaudited Interim Financial Statements
Information in the accompanying interim financial statements and notes to
the financial statements for the interim periods as of and for the three
months ended March 31, 1997 and 1998, is unaudited. The accompanying
interim unaudited financial statements have been prepared by the Company
in accordance with generally accepted accounting principles and Regulation
S-B. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month
period ended March 31, 1998, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998. The condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the audited financial statements
of the Company as of and for the period ended December 31, 1997.
2. Impact of SFAS 132
In February 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 132, Employers'
Disclosures About Pensions and Other Postretirement Benefits, which will
be effective for fiscal years beginning after December 31, 1997. This
Standard will have no material impact on the Company.
3. Contracts
The Company received final customer acceptance on its Korean long-term
project in the first quarter of 1998.
The Company recognized approximately $710,000 of revenues during the first
quarter of 1998, upon the completion of one of its short-term China
projects. The Company recognized $594,000 in costs of goods sold related
to this project, which were capitalized over the life of the project.
4. Loss Per Share
Effective December 31, 1997, the Company adopted SFAS 128, Earnings Per
Share. Under SFAS 128, basic and diluted loss per share was $(.74) and
$(.44) for the quarters ended March 31, 1997 and 1998, respectively. Basic
loss per share was computed by dividing net loss applicable to common
stock by the weighted average common shares outstanding during each
period. Potential common shares are not included in the computation of per
share amounts in the periods because the Company reported a loss and
inclusion of equivalents would be anti-dilutive.
7
<PAGE>
Notes to Unaudited Financial Statements, Continued
4. Loss Per Share, continued
Following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share:
March 31,
--------------------------
1997 1998
(unaudited)
Loss
Basic and diluted:
Loss applicable to common stockholders $(1,351,099) $(1,828,516)
=========== ===========
Shares
Basic and diluted:
Weighted average common shares
outstanding 1,819,113 4,116,711
=========== ===========
5. Discontinued Operations
In February 1998, the Company decided to scale back its CD-ROM segment to
a maintenance mode of operations. The Company developed a formal plan of
disposal which became effective in May 1998. The Company anticipates
selling the segment within the next eight months. The Company believes the
most valuable assets for sale are the segment's customer list and product
source code which have no recorded value. Inventory on hand is available
for sale; however, the Company continues to sell the inventory as existing
customers request such merchandise. Thus, management cannot determine
which assets will be remaining at the time of the disposal. There was
approximately $87,000 of CD-ROM inventory on hand as of March 31, 1998.
The Company anticipates that it will have a gain on disposal of the
segment which is not reflected in the accompanying financial statements;
however, there can be no assurance that the Company will realize any
proceeds from the disposition of the segment.
8
<PAGE>
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD LOOKING STATEMENTS THAT
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD LOOKING STATEMENTS.
Item 2. Management's Discussion and Analysis or Plan of Operations
The following discussion should be read in conjunction with the financial
statements and notes thereto and other financial information appearing elsewhere
in this Form 10-QSB. Statements in this Management's Discussion and Analysis or
Plan of Operations and elsewhere in this Form 10-QSB that are not statements of
historical or current fact constitute "forward-looking statements." Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors including those set forth herein and in the Company's Annual
Report on Form 10-KSB under the caption "Risk Factors" that could cause the
actual results of the Company to be materially different from the historical
results or from any future results expressed or implied by such forward-looking
statements. Such risks include, without limitation, the Company's history of
losses and accumulated deficit, and need for additional financing; risks
applicable to foreign sales, the lack of assurance of the Company's
technological success, competition and others. In addition to statements which
explicitly describe such risks and uncertainties, prospective investors are
urged to consider statements labeled with the terms "believes," "belief,"
"expects," "intends," "anticipates," or "plans" to be uncertain and
forward-looking.
Overview
The Company focused most of its efforts during the first three months of
1998 on completing current interactive video segment projects and seeking new
projects. The Company received final acceptance on its Korea Telecom project
during the first quarter of 1998. The Company also completed its second China
project with the Beijing Telecom Authority ("BTA"); the completion of the BTA
project resulted in the recognition of approximately $710,000 in revenue. The
value of the BTA contract represented essentially all of the Company's
interactive video revenues during the first quarter of 1998. The Company had
capitalized approximately $594,000 in costs associated with the BTA project,
which were recognized as costs of revenues upon the project's completion.
The Company also spent significant time and effort during the first
quarter preparing to occupy its new facility, which provides the additional
space to support the anticipated growth of its business. The new facility has
research and development laboratories, a training center, demonstration
facilities, and a large, well-equipped production environment. The Company moved
into the facility on March 27, 1998.
In February 1998, following the unsuccessful conclusion of the Company's
efforts to retain a qualified general manager for its CD-ROM segment, the
Company decided to scale back the segment to a maintenance mode of operations.
The decision was also based on the continued decline in the segment's revenues,
and the Company's need to focus its efforts and resources on the interactive
video segment. The Company has developed a formal plan of disposal which became
effective in May 1998; therefore, the Company has begun to account for the
CD-ROM segment as a discontinued
9
<PAGE>
operation. The segment generated a net loss of approximately $232,000 and
$268,000 for the three months ended March 31, 1998 and 1997, respectively. The
CD-ROM segment had one customer that represented 51% of its revenues during the
first quarter of 1997, and another which represented the same percentage of
revenues during the first quarter of 1998. The Company is currently taking steps
to find a qualified buyer of the segment, although there can be no assurance
that the Company will realize any proceeds from the disposition of the segment.
See Note 5 to the "Notes to Unaudited Financial Statements." Sales of
interactive video products accounted for 94% and 64% of revenues for the three
months ended March 31, 1998 and 1997, respectively. Due to the discontinued
status of the segment, the remainder of management's discussion of the Company's
financial results does not include the CD-ROM segment.
The Company also has expended considerable efforts toward filling its open
sales and marketing positions. The Company hired a Vice President of Sales and
Marketing in January and has also filled two of its seven regional sales manager
positions. The Company also has begun to implement its comprehensive
international and domestic sales and marketing plan. Accordingly, the
period-to-period comparison set forth below may not be meaningful and may not
necessarily be indicative of the results that may be expected for future
periods.
There are inherent risks associated with foreign sales, including the
difficulty of enforcing agreements against foreign-based customers, political
and economic instability, shipping delays, foreign taxes, and export
restrictions. The Company believes that one planned interactive video project
was withdrawn by a potential customer of the Company in the first quarter of
1998 as a result of the current Asian currency and economic crisis. The Company
has significant experience in international business and sees this as a
continuing market for the Company. The Company also intends to focus sales and
marketing efforts in domestic markets.
The Company continued its efforts to develop, produce and sell new
interactive video products. The Company continued development efforts related to
its T 6000 digital set top box, which it expects to have in production by the
end of the third quarter of 1998. The CTL 8500 digital baseband server, aimed at
the analog hospitality and cable markets, is expected to be in production by the
end of 1998.
The Company furthered its plan to achieve strategic partnerships by
signing agreements with Strategic Group of Bridgewater, New Jersey, and Speer
Communications of Nashville, Tennessee. The Strategic Group has agreed to author
a digital shopping application, and may author other digital applications to run
on the Company's servers. The Speer transaction potentially provides digital
content and applications authoring, encoding, content storage and distribution
and joint marketing.
Results of Operations -- Interactive Video Segment
Three Months Ended March 31, 1998, Compared to Three Months Ended March 31,1997
Revenues. Revenues for the three months ended March 31, 1998 were
approximately $723,000 as compared to approximately $244,000 for the same period
in 1997. The increase reflects approximately $710,000 of revenue recognized in
1998 upon the completion of the BTA project. The majority of revenues for the
three months ended March 31, 1997 was recognized under the Company's 1996
agreement with En K ("En K").
10
<PAGE>
Costs of Revenues. Costs of revenues for the three months ended March 31,
1998, were approximately $705,000, or 98% of revenues, as compared to
approximately $475,000 or 195% of revenues, for the same period in 1997. The
Company's gross margin was approximately $18,000 for the three months ended
March 31, 1998, as compared to a loss of approximately $231,000 for the same
period in 1997.
The increase in costs of revenues was due to the Company's completion of
its efforts on the BTA project. The Company recognized approximately $594,000 in
costs of revenues, which it had capitalized over the life of the project.
Materials costs during the first three months of 1998 were approximately
$465,000 as compared to approximately $12,000 for the same period in 1997. The
lower materials costs in the first three months of 1997 was due to the fact that
the Company's 1996 agreement with En K did not involve significant materials
costs. Labor costs for the first three months of 1997 were approximately
$381,000 as compared to approximately $103,000 for the same period in 1998. The
higher labor costs in the first three months of 1997 were due to the Company's
efforts to complete its long-term projects, as well as work being performed
under the Company's 1996 agreement with En K. Costs of revenues represented a
greater percentage of revenues for the first three months of 1997 because there
were no revenues remaining to be recognized under the Company's long-term
projects to offset the labor costs.
Operating Expenses. Operating expenses for the three months ended March
31, 1998, were approximately $1,657,000 as compared to approximately $722,000
for the same period in 1997.
Operating expenses were significantly greater in almost all categories in
the first three months of 1998 as compared to the same period in 1997, due to
the Company's efforts to achieve better performance and prepare for potential
growth. The increase in operating expenses in the first three months of 1998 as
compared to the same period in 1997 was primarily due to a $615,000 increase in
operating wage expenses in the first three months of 1998. In particular, the
Company filled a number of key positions, including CEO, and Vice Presidents of
Business Development, Sales and Marketing, Engineering, and Operations following
the first quarter of 1997. In addition, additional personnel were hired in
several key areas, including training and documentation, production, quality
assurance, sales, marketing, human resources, accounting, research and
architecture, engineering development, installation and maintenance, and
customer service. During the first three months of 1997, the Company utilized
contractors on a short-term basis due to the temporary nature of the projects
involved or the Company's inability to hire, on short notice, fully qualified
permanent staff, resulting in an increase of approximately $180,000 in expenses
related to the retention of contractors, consultants, and recruiters from the
three months ended March 31, 1997, as compared to the same period in 1998.
Net Loss. As a result of the above factors, net loss for the three months
ended March 31, 1998 was approximately $1,828,000 as compared to a net loss of
approximately $1,282,000 for the same period in 1997.
11
<PAGE>
Liquidity and Capital Resources
The primary source of financing for the Company since its inception has
been through the issuance of common and preferred stock and debt to accredited
investors, some of which are customers or principals of the Company's customers.
One of the Company's founders funded the initial operations through equity
infusions totaling $155,000 in 1993. In 1994, that founder loaned the Company an
additional $75,000 which, together with $12,784 in accrued interest, was
converted to 17,915 shares of Common Stock on December 31, 1995. During 1995,
the Company received net proceeds in the aggregate amount of $3,252,619 through
the issuance for approximately $1,517,500 of 975,836 shares of Series A
Preferred Stock and warrants to purchase 408,479 shares of Series B Preferred
Stock (the "Series B Warrants"). During 1995, the Company also received
approximately $800,600 of net proceeds from the exercise of the Series B
Warrants and $934,500 of net proceeds from the sale of convertible notes and
warrants. During 1996, in connection with the 1996 Placement, the Company
received net proceeds of approximately $5,404,300 through the private placement
of units consisting of Common Stock, notes, and warrants consummated on June 30
and July 17, 1996. The net proceeds from the 1996 Placement were used to pay
overdue trade accounts payable, fund the Company's long-term projects, and fund
the Company's working capital needs. Also in 1996, the Company converted the
debt issued in 1995 into shares of Common Stock at a conversion rate of $4.90
per share. In August 1997, the Company received net proceeds of approximately
$1,700,000 from the Bridge Financing, consisting of a private placement of
$2,000,000 principal amount of the Bridge Notes and Bridge Warrants, which was
consummated on August 8, 1997. The effective interest rate of the Bridge Notes
was in excess of 300%, and the Company was required to recognize non-cash
interest expense and loss on early extinguishment of debt of approximately
$1,440,000 upon the anticipated repayment of the Bridge Notes upon consummation
of the Offering. In addition, the Company recognized non-cash expenses of
approximately $307,000 consisting of the write-off of previously capitalized
expenses incurred in connection with the Bridge Financing and the 1996
Placement. In connection with such private placement the Company repurchased
240,000 shares of Common Stock from a former officer and 80,000 shares of Common
Stock from a director of the Company for aggregate consideration of $160,000
($0.50 per share).
In November 1997, the Company consummated its initial public offering (the
"IPO"), in which 2,000,000 shares of Common Stock were sold at a purchase price
of $7.50 per share. The Company realized net proceeds of approximately
$12,386,800 from the IPO, of which approximately $5,446,000 was used to repay
the principal amount of the 1996 Notes and Bridge notes, together with accrued
interest thereon. The Company believes that the net proceeds of the IPO,
together with funds generated from operations, will be sufficient to satisfy its
operating and capital requirements for approximately the next nine months. Such
belief is based on certain assumptions, and there can be no assurance that such
resources will be sufficient to satisfy the Company's capital requirements.
There can be no assurance that the Company will be able to obtain any such
required additional capital on a timely basis, on favorable terms, or at all.
Since its inception in January 1993 and through March 31, 1998 the Company
had an accumulated deficit of approximately $16,301,000. The Company expects to
incur operating losses for the indefinite future as it continues to add staff
and other resources and to increase its sales efforts. The Company has not
received orders for any new interactive video projects since June 1997. There
can be no assurance as to the receipt or timing of revenues from operations,
including, in particular, revenues from products currently under development.
12
<PAGE>
The Company's accounts receivable turnover ratio for the three months
ended March 31, 1998 was .51 as compared to .22 for the same period in 1997.
There has been little change between the periods in the amount of revenues
relative to the size of the receivables balance. However, revenues did increase
drastically on a percentage basis between the two periods. Because the accounts
receivable turnover ratio is so low, the change in the revenue amounts created
the increase in the turnover ratio. There was a slight increase in the average
receivables balance due principally to billings on its China projects that had
been outstanding at the end of 1997 and the end of the first quarter of 1998.
The receivables turnover continues to be adversely affected due to the Company's
long outstanding receivables related to its long-term projects in Korea and
Israel. The Korean receivable was written off in 1996.
The inventory turnover ratio for the three months ended March 31, 1998 was
.47 as compared to .33 for the same period in 1997. The average inventory
balance between the two periods remained consistent at approximately $1,400,000.
Costs of revenues increased slightly for the three months ended March 31, 1998
as compared to the same period in 1997, due to the completion of the BTA
project. The lack of revenues has adversely affected the inventory turnover
ratio.
At March 31, 1998, the Company had cash and cash equivalents totaling
approximately $1,962,000, liquid short-term investments approximating $1,239,000
and a net working capital of approximately $4,654,000. The Company had no
significant capital spending or purchase commitments at March 31, 1998, other
than certain facility leases and inventory component purchase commitments
required in the ordinary course of its business.
The Company has no existing lines of credit or other financing
arrangements with lending institutions.
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
From November 4, 1997, when the Company's Registration Statement on Form
SB-2 (the "Registration Statement") was declared effective, through March 31,
1998, approximately $5,450,000 of the net proceeds of the IPO was applied to
repay indebtedness, $40,000 was applied to payments under a termination
agreement with a former officer, $253,000 was applied to the payment to and cost
of recruiting and relocating additional engineering personnel, $187,000 was used
for the recruitment and relocation of sales and marketing personnel, and
approximately $69,000 was used for the addition of necessary administrative
personnel. The Company spent approximately $345,000 in connection with its move
into the new facility. Approximately $3,724,000 was applied to working capital
purposes since the close of the IPO, which is approximately $2,666,000 in excess
of the amount allocated to working capital in the Registration Statement.
Approximately $267,000 of the proceeds represented payroll for officers of the
Company. Approximately $1,961,700 of the net proceeds of the IPO were, at March
31, 1998, invested in a commercial bank investment account and in cash
equivalents and approximately $1,239,000 was invested in liquid low risk
short-term instruments. As disclosed in the Registration Statement, the Company
has reapportioned, and will continue to reapportion,
13
<PAGE>
the net proceeds of the IPO among the categories listed in the Registration
statement or to new categories in response to, among other things, changes in
its plans, employment needs, industry conditions and future revenues and
expenditures.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 11 Statement re: computation of per share earnings
(included in Note 4 of the "Notes to Unaudited Financial
Statements")
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K (None)
14
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 15, 1998
CELERITY SYSTEMS, INC.
(Registrant)
By: /s/ Kenneth D. Van Meter
-------------------------------------
Kenneth D. Van Meter
President and Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
By: /s/ Thomas E. Welch
-------------------------------------
Thomas E. Welch
Controller
(Principal Financial Officer)
15
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,962
<SECURITIES> 1,239
<RECEIVABLES> 1,284
<ALLOWANCES> 567
<INVENTORY> 1,814
<CURRENT-ASSETS> 5,943
<PP&E> 1,946
<DEPRECIATION> 721
<TOTAL-ASSETS> 7,169
<CURRENT-LIABILITIES> 1,290
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 5,874
<TOTAL-LIABILITY-AND-EQUITY> 7,169
<SALES> 723
<TOTAL-REVENUES> 723
<CGS> 705
<TOTAL-COSTS> 2,362
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> (1,597)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,597)
<DISCONTINUED> (232)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,829)
<EPS-PRIMARY> (0.44)
<EPS-DILUTED> (0.44)
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