SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 0-20777
XIONICS DOCUMENT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3186685
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
70 BLANCHARD ROAD, 01803
BURLINGTON, MA (Zip Code)
(Address of principal
executive offices)
(617) 229-7000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (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 No. X
At October 31, 1996, there were 10,643,986 shares of the Company's $0.01
per value common stock issued, with 10,435,795 shares outstanding.
===============================================================================
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
ITEM PAGE
NUMBER NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
Balance Sheets--Pro Forma September 30, 1996, September 30,
1996 and June 30, 1996.................................... 3
Statements of Operations --Three Months Ended September 30,
1996 and 1995............................................. 4
Statements of Cash Flows--Three Months Ended September 30,
1996 and 1995............................................. 5
Notes to Condensed Consolidated Financial Statements........ 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings........................................... 11
ITEM 2. Changes in Securities....................................... 11
ITEM 3. Defaults Upon Senior Securities............................. 11
ITEM 4. Submission of Matters to a Vote of Security Holders......... 11
ITEM 5. Other Information........................................... 11
ITEM 6. Exhibits and Reports on Form 8-K............................ 12
Signatures................................................. 13
<PAGE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
PART I--FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
September 30, September 30, June 30,
1996 1996 1996
------------- ------------- ----------
(Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $26,757,92 $1,342,287 $2,115,859
Short-term investments --- --- 644,613
Accounts receivable, less reserves of approximately $150,000 and 3,015,759 3,015,759 2,398,033
$140,000 at September 30, 1996 and June 30, 1996, respectively
Contract receivable 1,979,838 1,979,838 ---
Inventories 1,431,764 1,431,764 1,020,035
Other current assets 1,096,308 796,308 398,264
---------- ---------- ----------
Total Current Assets 34,281,591 8,565,956 6,576,804
Property and Equipment, net 2,292,320 2,292,320 2,169,091
Acquired intangibles, net of accumulated amortization of approximately $700,000 163,333 163,333 194,167
and $659,000 at September 30, 1996 and June 30, 1996, respectively
Deferred offering costs --- (,400,000 926,439
Other assets 70,092 70,092 38,000
---------- ---------- ----------
$36,807,336 $12,491,701 $9,904,501
============ ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $2,236,424 $2,236,424 $1,988,470
Term loans, current portion 370,667 370,667 322,667
Deferred revenue 1,549,611 1,549,611 1,368,833
----------- ----------- -----------
Accrued expenses 3,076,588 3,166,953 1,904,909
Total Current Liabilities 7,233,290 7,323,655 5,584,879
Term loans, net of current portion 575,500 575,500 564,166
Secured promissory notes payable to a stockholder --- 2,094,000 2,094,000
Redeemable preferred stock:
Class C Redeemable Convertible Preferred Stock, $.01 par value--
Authorized--2,779,615 shares
Issued and outstanding--2,698,938 shares, stated at liquidation value,
at June 30, 1996 and September 30, 1996 --- 8,349,077 8,231,410
Stockholders' equity (deficit):
Preferred Stock, $.01 par value--
Authorized--10,000,000 shares
Issued and outstanding--none --- --- ---
Class A Convertible Preferred Stock, $.01 par value--
Authorized--3,603,305 shares
Issued and outstanding--3,125,051 at June 30, 1996 and September 30, 1996 --- 3,606,658 3,606,658
Common Stock, Class A, $.01 par value--
Authorized--20,000,000 shares
Issued and Outstanding-1,386,066 shares at June 30, 1996 and September 30, 1996 --- 13,861 13,861
Common Stock, Class B, $.01 par value--
Authorized--10,000,000 shares
Issued and outstanding--558,931 shares at June 30, 1996 and September 30, 1996 --- 5,589 5,589
Common Stock
Authorized--40,000,000 shares
Issued and outstanding--10,268,986 pro forma shares at
September 30, 1996 102,690 --- ---
Additional paid-in capital 39,567,092 1,194,597 1,312,381
Treasury stock, at cost--224,063 shares of Common Stock pro forma and at
September 30, 1996, and 224,311 shares of Class A Common Stock at
June 30, 1996 (151,246) (151,246) (151,413)
Accumulated deficit (10,519,990) (10,519,990) (11,357,030)
------------ ------------ ------------
Total stockholders' equity (deficit) 28,998,546 (5,850,531) 6,569,954
------------ ------------ ------------
$36,807,336 $12,491,701 $9,904,501
============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
----------------------
September 30, September 30,
1996 1995
------------- -------------
Net revenue $8,440,926 $3,998,499
Cost of revenue 1,559,066 1,163,611
------------- -------------
Gross profit 6,881,860 2,834,888
Operating expenses:
Research and development 3,518,326 1,960,164
Selling, general and administrative 2,259,844 2,355,636
------------- -------------
Income (loss) from operations 1,103,690 (1,480,912)
Other income (expense):
Interest expense (65,577) (92,856)
Interest income 11,222 4,366
Other expense (3,035) (36,457)
------------- -------------
Income (loss) before provision for 1,046,300 (1,605,859)
income taxes
Provision for income taxes 209,260 ---
============= =============
Net income (loss) $837,040 $(1,605,859)
============= =============
Net income (loss) per common and common $0.09 $(0.23)
equivalent share
============= =============
Weighted average number of common and 9,056,546 7,019,664
============= =============
common equivalent shares outstanding
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
----------------------
September 30, September 30,
1996 1995
------------- -------------
Cash flows from operating activities:
Net Income (loss) $837,040 $(1,605,859)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 249,956 195,122
Changes in assets and liabilities--
Accounts receivable (617,726) 360,122
Contract receivable (1,979,838) ---
Inventories (411,729) (253,714)
Other current assets (398,044) 182,365
Accounts payable 247,954 (9,890)
Accrued expenses 1,262,043 322,880
Deferred revenue 180,778 (238,686)
------------ ------------
Net cash used in operating activities (629,566) (1,047,660)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (198,350) (161,010)
Increase in other assets (32,092) ---
Decrease in short-term investments 644,613 ---
------------ ------------
Net cash provided by (used in) investing
activities 414,171 (161,010)
------------ ------------
Cash flows from financing activities:
Repayment of term loans (84,666) ---
Proceeds from exercise of stock options 50 12,621
Stock repurchase --- (250,000)
Issuance of Class C Redeemable Convertible
Preferred Stock, net of issuance cost --- 3,274,349
Deferred offering costs (473,561) ---
------------- ------------
Net cash (used in) provided by
financing activities (558,177 3,036,970
------------- ------------
Net (decrease) increase in cash and cash (773,572) 1,828,300
equivalents
Cash and cash equivalents, beginning of period 2,115,859 1,226,364
------------- ------------
Cash and cash equivalents, end of period $1,342,287 $3,054,664
============= ============
Supplemental disclosure of cash flow
information:
Cash paid for interest 23,783 168,496
============= ============
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Xionics Document
Technologies, Inc. and subsidiaries (the Company) presented herein have been
prepared pursuant to the rules of the Securities and Exchange Commission for
quarterly reports on Form 10-Q and do not include all of the information and
note disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended June 30, 1996,
included in the Company's Registration Statement on Form S-1 (333-4613),
declared effective by the Securities and Exchange Commission on September 26,
1996.
The condensed consolidated financial statements and notes herein are
unaudited, but in the opinion of management, include all the adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
the consolidated financial position, results of operations and cash flows of
the Company and its subsidiaries.
The results of operations for the interim periods shown herein are not
necessarily indicative of the results to be expected for any future interim
period or for the entire year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements reflect the
application of certain accounting policies described in this and other notes to
these condensed consolidated financial statements.
(a) Principles of Consolidation
The accompanying condensed consolidated financial statements reflect the
accounts of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in consolidation.
(b) Contract Receivable
The Company had an outstanding contract receivable of $1,979,838 at
September 30, 1996 from a significant customer. The contract receivable
represents an agreement entered into by the Company and the customer whereby
the Company licensed certain of its page description technology, including its
version of the PostScript page description language, to the customer. This
contract requires that the Company perform customer support in configuring its
technology to the customer specifications. The Company follows contract
accounting in recognizing revenue on this contract using the percentage of
completion accounting. There was no outstanding contract receivable due to the
Company as of June 30, 1996.
(c) Inventories
Inventories, which include material, labor and manufacturing overhead,
are stated at the lower of cost (first-in, first-out) or market and consist of
the following:
SEPTEMBER 30, 1996 JUNE 30, 1996
Raw materials $747,605 $493,660
Finished Goods 684,159 526,375
$1,431,764 $1,020,035
========== ==========
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(d) Property and Equipment
The Company records property and equipment at cost and provides for
depreciation and amortization on a straight-line basis over the estimated
useful lives of the assets, as follows:
ESTIMATED
USEFUL LIFE SEPTEMBER 30, 1996 JUNE 30, 1996
Asset Classification
Computer equipment 3-5 Years $2,752,590 $2,525,394
Furniture and fixtures 3-7 Years 664,884 564,865
Machinery and equipment 3-5 Years 90,747 75,612
3,508,221 3,165,871
Less-Accumulated depreciation 1,215,901 996,780
and amortization --------- ---------
$2,292,320 $2,169,091
========== ==========
(e) Deferred Offering Costs
As of September 30, 1996, the Company had incurred approximately
$1,400,000 in costs related to the Company's initial public offering. These
costs have been capitalized as deferred offering costs in the accompanying
consolidated balance sheet.
(f) Stockholder's Equity
On October 1, 1996, the Company converted all of the outstanding shares
of Class C Redeemable Convertible Preferred Stock, Class A Convertible
Preferred Stock, Class B Common Stock and Class A Common Stock into a new
designation of Common Stock simultaneously with the closing of the Company's
initial public offering.
(g) Noncash Investing and Financing Activities
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
Supplemental disclosure of noncash
transactions
Accretion of Preferred Stock Dividends $117,677 $34,769
======== =======
Conversion of Class A Convertible
Preferred Stock to --- $1,229,113
Class B Common Stock ==========
Acquisition of Property and Equipment
under Term Loans $144,000 $225,000
======== ========
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(g) Noncash Investing and Financing
Activities (cont.) SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
Converted to Class C Redeemable
Convertible Preferred Stock --- $2,310,596
Class B Redeemable Preferred Stock --- $1,900,000
Secured promissory notes payable
to a stockholder --- $ 228,355
Senior subordinated promissory
notes payable to stockholders
3. PRO FORMA ADJUSTMENTS
On September 24, 1996, The Company's Registration Statements on Form S-1
and 8-A were simultaneously declared effective by the Securities and Exchange
Commission. On October 1, 1996, the Company completed an initial public
offering of 3,000,000 shares of its common stock at $12.00 per share. Of the
3,000,000 shares sold, 2,500,000 were sold by the Company and 500,000 were sold
by the selling stockholder, Phoenix Technologies Ltd. The Company received net
proceeds of approximately $27,900,000 after deducting the underwriters'
discounts and commissions. The Company has presented the pro forma balance
sheet as of September 30, 1996, which reflects certain adjustments for events
which occurred subsequent to September 30, 1996. Upon the closing of the
initial public offering, the Company paid the outstanding principal and accrued
interest of approximately $2,094,000 and $90,365 respectively, on the secured
promissory note to Phoenix Technologies Ltd. The Company also made a $300,000
prepayment on a royalty agreement with Unisys Corporation and reduced
additional-paid-in capital by $1,400,000 for the amount of the offering
expenses.
4. SUBSEQUENT EVENT
On October 10, 1996, the underwriters of the Company's initial public
offering exercised their over-allotment option granted pursuant to the terms of
the underwriting agreement by and between the Company and the underwriters and
purchased an additional 450,000 shares of common stock at $12.00 per share. Of
the 450,000 shares sold, 375,000 were sold by the Company and 75,000 were sold
by the selling stockholder. Net proceeds to the Company as a result of this
transaction amounted to approximately $4,200,000 and will be reflected in the
Company's consolidated financial statements for the period ended December 31,
1996.
<PAGE>
XIONICS DOCUMENT TECHNOLOGIES, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, this quarterly
Report on Form 10-Q may contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Investors are cautioned that forward-looking statements
are inherently uncertain. Actual performance and results of operations may
differ materially from those projected or suggested in the forward-looking
statements due to certain risks and uncertainties, including, without
limitation, (i) the Company's relationship with Hewlett-Packard Company, to
whom the Company derives a significant portion of its revenue from the supply of
software and related technology and support, (ii) the Company's dependence for
revenue upon the ability of its customers to develop and sell their own
products, which incorporate the Company's technology, to end users, and (iii)
the timely introduction of new products, such as the Company's embedded
technology for multifunction peripheral devices, and the market acceptance of
those products, in an extremely competitive and rapidly changing market where
the market success of entities providing embedded software products for paper
handling devices has historically been largely determined by their success in
becoming one of the industry standards. Additional information concerning
certain risks and uncertainties that would cause actual results to differ
materially from those projected or suggested in the forward-looking statements
is contained in the Company's filings with the Securities and Exchange
Commission, including those risks and uncertainties discussed in the Company's
Final Prospectus, dated September 26, 1996, in the section entitled "Risk
Factors." The forward-looking statements contained herein represent the
Company's judgment as of the date of this release, and the Company cautions
readers not to place undue reliance on such statements.
OVERVIEW
Xionics Document Technologies, Inc. designs, develops and markets
advanced embedded systems technology for use in mainstream office devices such
as printers, copiers, scanners and multifunction devices. The Company derives
its revenue primarily from sales of its printer software products, which
include revenue from software licenses, royalties, engineering services and
maintenance, and from sales of its image acceleration products. Software
license revenue consists of the Company's charges for licensed source code,
which generally includes initial non-refundable fees which are recognized as
revenue upon the shipment of the source code, provided there are no significant
vendor obligations. Royalty revenue is generally earned as a percentage of net
revenue from unit sales by licensees of products that incorporate the Company's
software, and is generally recognized as earned in the Company's financial
statements in the quarter in which amounts due to the Company have been
determined using estimates based upon historical payments. Engineering services
revenue is derived from fees paid for porting of the Company's software to
customer-specific device controllers. Payments under maintenance contracts are
due at the beginning of the contract; however, revenue is recognized ratably
over the term of the contract which is typically twelve months.
RESULTS OF OPERATIONS
Net revenue for the first quarter of fiscal 1997, ended September 30,
1996, increased 111.1% to $8.4 million compared to $4.0 million for the first
quarter of fiscal 1996. The increase resulted primarily from growth in sales of
the Company's printer software products, including approximately $4.0 million
of revenue recognized under an amendment to its preexisting agreement with
Hewlett-Packard Company ("HP") which was entered into in March 1996 (the "HP
Agreement").
Gross profit for the first quarter of fiscal 1997 increased 142.8% to
$6.9 million from $2.8 million for the first quarter of fiscal 1996. Gross
margin increased to 81.5% for the first quarter of fiscal 1997 compared to
70.9% for the first quarter of fiscal 1996. These increases were attributable
primarily to increased sales of higher margin Intelligent Peripheral System
("IPS") products and related engineering services, primarily related to the HP
Agreement, partially offset by a reduction in gross margin attributable to the
Company's image acceleration products.
Research and development expenses increased by 79.5% to $3.5 million for
the first quarter of fiscal 1997 from $2.0 million in the first quarter of
<PAGE>
fiscal 1996. The higher expense level resulted primarily from increased
expenditures relating to the Company's multifunction peripheral technology,
which is currently in development, partially offset by a small reduction in
expenditures relating to the Company's image acceleration products. As a
percentage of revenue, research and development expenses decreased to 41.7% for
the first quarter of fiscal 1997 compared to 49.0% for the first quarter of
fiscal 1996. The decline in research and development expenses as a percentage
of revenue was principally the result of higher revenue.
Selling, general and administrative expenses decreased by 4.1% to $2.3
million for the first quarter of fiscal 1997 from $2.4 million in the first
quarter of fiscal 1996. The lower expense level resulted primarily from
decreases in advertising, trade show and travel expenses relating to the
Company's image acceleration products. As a percentage of revenue, selling,
general and administrative expenses decreased to 26.8% for the first quarter of
fiscal 1997 compared to 58.9% for the first quarter of fiscal 1996. In addition
to lower levels of expense for the comparable periods, the decline in selling,
general and administrative expenses as a percentage of revenue was also
principally the result of higher revenue.
Other expense, net decreased by 54.1% to $57,000 for the first quarter of
fiscal 1997 compared to $125,000 for the first quarter of fiscal 1996. This
decrease resulted primarily from a decrease in interest expense.
The Company did not provide for income taxes during the three months
ended September 30, 1995 due to the loss for the period and the expected loss
for fiscal 1996. The tax provision for the period ended September 30, 1996 was
calculated based on the Company's expected fiscal 1997 effective tax rate of 20
percent. The difference between the statutory rate and the effective rate
reflects the utilization of the Company's net operating loss carry forwards
which will be used to offset future taxes payable.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had cash and short-term investments of
$1.3 million compared to $2.8 million at June 30, 1996. On a pro forma basis,
at September 30, 1996, the Company had cash and short-term investments of $26.8
million. Pro forma balances at September 30, 1996 include the effect of net
proceeds relating to the Company's September 26, 1996 initial public offering
which closed on October 1, 1996 less approximately $2.1 million in principal
amount and $90,000 of accrued interest payable on the secured promissory note
payable to Phoenix Technologies Ltd. In addition, the pro forma balance
includes a deduction for a $300,000 prepaid license fee payment made by the
Company to a third party.
At present, the Company has available a $4.0 million working capital
revolving line of credit and a $2.0 million term loan facility with a bank,
both of which are secured by substantially all assets of the Company. The
working capital line of credit terminates on December 1, 1997, and no term loan
will be made after June 30, 1997. Each term loan under the term loan facility
is required to be repaid over 36 months from the date such term loan is funded.
Under the loan facilities, the Company is required to comply with certain
restrictive covenants, including debt to worth, capital base, quick ratio and
profitability. The interest rate for the working capital line of credit is the
bank's prime rate; the interest for the term loan facility is the bank's prime
rate plus 0.5%. As of September 30, 1996, the outstanding borrowings under the
working capital line of credit and term loan facility were $0 and $946,000,
respectively. Under the terms of the working capital and term loan facilities,
the Company is prohibited from declaring or paying dividends on its Common
Stock. The Company was in compliance with or had received a waiver of
non-compliance of all covenants of the working capital and term loan facilities
as of September 30, 1996. While the Company may in the future use private
placements of its securities as a source of liquidity, it has no present
intention to do so.
The Company believes that the net proceeds of the initial public
offering, together with its existing cash and cash equivalent balances, funds
generated from operations and available borrowings under its lines of credit
will be sufficient to finance the Company's operations for at least the next 12
months. In the event the Company acquires one or more businesses or products,
the Company's capital requirements could increase substantially, and there can
be no assurance that additional capital will be available on terms acceptable
to the Company, if at all.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in routine legal proceedings occurring in the
ordinary course of business. In the opinion of management, final disposition of
these lawsuits will not have a material adverse effect on the financial
condition or results of operations of the Company in the aggregate.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
By written consent dated July 12, 1996, the Company's Stockholders
approved by a vote of 6,790,225 for, 0 against and 637,719 abstaining, (i) an
amendment to the Company's Certificate of Incorporation increasing the number
of authorized shares of Common Stock, par value $.01 per share, from 30,000,000
to 40,000,000 shares and substituting a single class of Preferred Stock with
10,000,000 authorized shares for the Company's preexisting Class A, C and D
Preferred Stock with 7,482,920 total authorized shares; (ii) the amendment and
restatement of the Company's By-laws; (iii) the Company's issuance of up to
2,875,000 shares of Common Stock in an initial public offering; and (iv) the
adoption of the Company's 1996 Stock Option Plan, 1996 Employee Stock Purchase
Plan, and 1996 Directors' Stock Option Plan. By written consent dated August
15, 1996, the Company's Stockholders approved by a vote of 6,790,225 for, 0
against and 637,719 abstaining, the line of credit arrangements described above
in Management's Discussion and Analysis.
ITEM 5. OTHER INFORMATION
On September 26, 1996, the Securities and Exchange Commission
simultaneously declared effective the Company's Registration Statement on Form
S-1, filed under the Securities Act of 1933, as amended, and its Registration
Statement on Form 8-A, filed under the Securities Exchange Act of 1934, as
amended. The Registration Statement on Form S-1 related to the initial public
offering of 3,000,000 shares of the Company's Common Stock. On September 26,
1996, the Company entered into an Underwriting Agreement with Adams, Harkness &
Hill, Inc. and SoundView Financial Group, Inc. (the "Underwriters"), pursuant
to which the Underwriters agreed to purchase 2,500,000 shares of the Company's
Common Stock from the Company and 500,000 shares of the Company's Common Stock
from a selling stockholder, Phoenix Technologies Ltd., at the public offering
price of $12.00 per share, less underwriting discounts and commissions of $.84
per share. On October 1, 1996, pursuant to the terms of Underwriting Agreement,
the initial public offering was closed and the Company received from the
Underwriters the net proceeds of the initial public offering in the amount of
$27,900,000. On October 7, 1996, the Underwriters notified the Company of their
exercise of their option, granted under the terms of the Underwriting
Agreement, to purchase 450,000 additional shares, including 375,000 shares from
the Company and 75,000 shares from Phoenix Technologies Ltd., solely to cover
overallotments, and on October 10, 1996, upon the closing of the sale of the
over-allotment shares, the Company received additional net proceeds of
$4,185,000 from the Underwriters.
<PAGE>
The Company has recently been advised that Robert Downs, its Chief
Operating Officer-Imaging, will resign from the Company on or about January 30,
1997. The Company expects to assign Gary R. Ambrosino, currently Vice
President-Sales and Marketing, to the position of Chief Operating
Officer-Imaging, and to assign Robert E. Gilkes, Chairman, President and Chief
Executive Officer, to the position of Acting Vice President-Sales and
Marketing, at that time.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 -- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1996.
<PAGE>
SIGNATURES
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.
XIONICS DOCUMENT TECHNOLOGIES, INC.
NAME TITLE DATE
/S/ ROBERT E. GILKES Chairman of the Board of Directors, November 14, 1996
ROBERT E. GILKES Chief Executive Officer, and
President
/S/ GERARD T. FEENEY Chief Financial Officer November 14, 1996
GERARD T. FEENEY
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,342,287
<SECURITIES> 0
<RECEIVABLES> 3,165,759
<ALLOWANCES> 150,000
<INVENTORY> 1,431,764
<CURRENT-ASSETS> 8,565,956
<PP&E> 3,508,221
<DEPRECIATION> 1,215,901
<TOTAL-ASSETS> 12,491,701
<CURRENT-LIABILITIES> 7,323,655
<BONDS> 3,040,167
2,698,938
0
<COMMON> 7,768,986
<OTHER-SE> (10,519,990)
<TOTAL-LIABILITY-AND-EQUITY> 12,491,701
<SALES> 1,483,310
<TOTAL-REVENUES> 8,440,926
<CGS> 546,146
<TOTAL-COSTS> 1,559,066
<OTHER-EXPENSES> 5,418,170
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 96,410
<INCOME-PRETAX> 1,046,300
<INCOME-TAX> 209,260
<INCOME-CONTINUING> 1,103,690
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 837,040
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
