FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ___________.
Commission file number 0-21853
CADAPULT GRAPHIC SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0475073
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
110 Commerce Drive, Allendale, New Jersey 07401
(Address of principal executive offices)
(201) 236-1100
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 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: As of February 9, 1999,
the issuer had 2,997,218 shares of common stock, par value $.001 per share,
outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
<PAGE>
CADAPULT GRAPHIC SYSTEMS, INC.
AND SUBSIDIARIES
FORM 10-QSB FOR THE QUARTER ENDED DECEMBER 31, 1998
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets as of December 31, 3
1998 and June 30, 1998 (unaudited)
Consolidated Statements of Operations 4
For the Three Months and Six Months Ended
December 31, 1998 and 1997 (unaudited)
Consolidated Statement of Changes in Shareholder's 5
Equity For the Six Months Ended December 31, 1998
(unaudited)
Consolidated Statements of Cash Flows 6
For the Six Months Ended December 31, 1998 and
1997 (unaudited)
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 15
Item 6. Exhibits and Reports on Form 8-K 15
Exhibits Exhibit 27: Financial Data Schedule 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
ASSETS December 31, June 30,
1998 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 32,112 $ 22,820
Accounts Receivable, less allowance for 1,462,082 1,653,624
doubtful accounts of $22,500
Attorney Escrow Account 700,000 320,000
Inventories 865,791 1,057,084
Prepaid and refundable income taxes - 46,295
Prepaid expenses and other current assets 63,674 38,591
------------ -----------
Total Current Assets $ 3,123,659 3,138,414
PROPERTY AND EQUIPMENT, NET 243,576 232,024
OTHER ASSETS:
Goodwill and other intangible assets, Net 413,275 410,195
Deferred Income Taxes 39,000 -
Security Deposits 31,343 31,343
------------ ------------
483,618 441,538
TOTAL ASSETS $ 3,850,853 $ 3,811,976
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to Bank $ 800,000 $ 695,000
Current maturities of long-term debt 89,478 89,220
Accounts Payable 1,793,591 1,936,974
Accrued Expenses and other current liabilities 58,941 131,510
Due to officer - 20,000
Deferred Revenue 222,369 144,600
------------ ------------
2,964,379 3,017,304
OTHER LIABILITIES:
Long-term debt, less current maturities 112,187 156,990
Note payable to related party 20,832 20,832
------------ ------------
133,019 177,822
COMMITMENTS
SHAREHOLDERS' EQUITY
Common Stock, .001 par value,
Authorized 50,000,000 shares, issued 2,811,518
in December and 2,583,518 in June 2,812 2,583
Additional paid-in capital 685,981 423,167
Retained Earnings 64,662 191,100
---------- -----------
Total Shareholders' equity 753,455 616,850
Total Liabilities and Shareholders' Equity $ 3,850,853 $ 3,811,976
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 2,532,474 $ 2,024,222 $ 4,475,635 $ 3,693,531
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales 1,835,314 1,443,417 3,234,814 2,659,342
Selling, general and administrative expenses 632,886 498,003 1,349,057 980,188
----------- ----------- ------------ -----------
INCOME (LOSS) FROM OPERATIONS 64,275 82,808 (108,236) 54,001
INTEREST EXPENSE, NET 31,401 22,312 57,202 41,330
----------- ----------- ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES (CREDITS) 32,874 60,489 (165,438) 12,671
INCOME TAXES (CREDITS):
Current - 4,000 - 4,000
Deferred - 19,000 (39,000) -
----------- ----------- ------------ -----------
- 23,000 (39,000) 4,000
NET INCOME (LOSS) $ 32,874 $ 37,489 $ (126,438) $ 8,671
=========== =========== ============ ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 2,811,518 1,630,000 2,757,650 1,630,000
=========== =========== ============ ===========
DILUTED 2,903,897 1,630,000 - 1,630,000
=========== =========== ============ ===========
NET INCOME (LOSS) PER COMMON SHARE:
BASIC $ 0.01 $ 0.02 $ (0.05) $ 0.01
=========== =========== ============ ===========
DILUTED $ 0.01 $ 0.02 $ - $ 0.01
=========== =========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity
Six Months Ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Shareholders'
Shares Amount Capital Earnings Equity
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, JUNE 30, 1998 2,583,518 $ 2,583 $ 423,167 $ 191,100 616,850
Sale of Common Stock issued through
Private Placement 228,000 229 $ 249,771 - 250,000
Issuance of Warrants for services - - 13,043 - 13,043
Net loss - - - (126,438) (126,438)
---------- ---------- ---------- ----------- -------------
BALANCES, DECEMBER 31, 1998 2,811,518 $ 2,812 $ 685,981 $ 64,662 $ 753,455
========== ========== ========== =========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $ (126,438) $ 8,671
Adjustments to reconcile net Income (loss) to net cash
flows from operating activities:
Depreciation and amortization 60,446 37,613
Deferred income taxes (39,000) (19,177)
Issuance of Warrants for services 13,042 -
Changes in operating assets and liabilities:
Accounts receivable 191,542 (387,602)
Inventories 191,293 (137,603)
Prepaid and refundable income taxes 46,295 -
Prepaid expenses and other current assets (25,083) (41,547)
Security deposits - 1,490
Accounts payable (143,383) 518,792
Accrued expenses and other current liabilities (72,569) (2,908)
Deferred revenue 77,769 (57,052)
------------ ------------
Net cash flows from operating activities 173,914 (79,322)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs related to acquisition (19,885) -
Purchases of property and equipment (55,191) (69,412)
------------ ------------
Net cash flows from investing activities (75,076) (69,412)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable to bank 105,000 25,000
Payments on long term debt (44,545) (3,786)
Due to officer (20,000) (15,000)
Attorney Escrow Account (380,000) -
Sale of common stock, Net 250,000 -
------------ ------------
Net cash flows from financing activities (89,545) 6,214
------------ ------------
NET CHANGE IN CASH 9,292 (142,521)
CASH, BEGINNING OF PERIOD 22,820 317,796
------------ ------------
CASH, END OF PERIOD $ 32,112 $ 175,275
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION :
Interest paid $ 57,202 $ 41,330
============ ============
Income taxes paid - -
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CADAPULT GRAPHIC SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated balance sheet as of June 30, 1998 has been derived from
the unaudited balance sheet that was included in the Company's transition report
filed on Form 10-QSB/A for the two month transition period ended June 30, 1998
and is presented for comparative purposes. All other financial statements are
unaudited. All material intercompany accounts and transactions have been
eliminated. In the opinion of management, all adjustments, which include only
normal recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows for all periods presented, have been made.
The results of operations for interim periods are not necessarily indicative of
the operating results for the full year.
Footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's form
8K/A.
NOTE 2 - ORGANIZATION AND NATURE OF BUSINESS
Pursuant to an Agreement and Plan of Reorganization dated June 5, 1998
(the "Plan"), between the Registrant; Cadapult Graphic Systems, Inc., a New
Jersey corporation ("Cadapult"); all of the stockholders of Cadapult (the
"Cadapult Stockholders"); Jenson Services, Inc., a Utah corporation ("Jenson
Services"); and Duane S. Jenson and Jeffrey D. Jenson (collectively, the
"Jensons"), the Cadapult Stockholders became the controlling stockholders of the
Registrant in a transaction viewed as a reverse acquisition, and Cadapult became
a wholly-owned subsidiary of the Registrant. The Plan was treated as a
recapitalization of Cadapult for accounting purposes, and the closing date of
the Plan was June 18, 1998. The historical financial statements of Seafoods
Plus Ltd. prior to the merger will no longer be reported, as Cadapult's
financial statements are now considered the financial statements of the ongoing
reporting entity.
On August 10, 1998 the stockholders approved an amendment to the
Certificate of Incorporation of the Company to change the Company's name from
Seafoods Plus Ltd. to Cadapult Graphic Systems, Inc. The stockholders also
approved the reincorporation of the Company as a Delaware corporation and a
related Agreement and Plan of Merger pursuant to which the Company will be
merged into a wholly-owned Delaware subsidiary. The Board of Directors of the
Company and its New Jersey Subsidiary have authorized a Parent/Subsidiary merger
of the two companies.
On June 24, 1998 the Company elected to change its fiscal year from a
December 31 year end to a June 30 year end.
7
<PAGE>
The Company is engaged in the business of providing computer graphics
systems, peripherals, supplies, training and service to graphics professionals.
The Company is a value-added dealer of computer graphics equipment and supplies,
including animation and design software and workstations, publishing software
and workstations, file servers, networks, color scanners and color printers and
copiers. The Company's markets include advertising and marketing companies,
printers, quick print shops, services bureaus, animators and industrial
designers, as well as the broad market for color printers.
NOTE 3 - PRIVATE PLACEMENT
In August 1998, the Company completed a private placement through the sale
of 524,000 shares of its Common stock for $655,000. Expenses associated with
the private placement are estimated at $35,000, providing the Company with net
proceeds of $620,000.
NOTE 4 - COMMITTMENT
On September 4, 1998, the Company entered into a Lease Modification
Agreement for its New Jersey headquarters facility, to extend its current lease
to March 31, 2002. The Annual Base Rental will be reduced to $79,332 from
$91,232 effective March 31, 1999.
On January 6, 1999, the Company executed a letter of intent to secure a
$6 million revolving credit facility from a commercial lending institution.
This facility would replace the Company's current $1.2 million. The letter of
intent does not bind the lender to make the loan. A $5,000 deposit towards the
cost of due diligence was paid with the execution of the letter of intent.
NOTE 5 - EARNINGS PER SHARE
In 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earning Per Share." SFAS No.
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Basic earnings per share is computed
using the weighted average number of shares outstanding. Diluted earnings per
common share is computed using the weighted average number of shares outstanding
adjusted for the incremental share attributed to outstanding options and
warrants to purchase common stock. All earnings per share amount for all
periods have been presented in accordance with SFAS No. 128 requirements.
8
<PAGE>
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, 1998 1997 1998 1997
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $32,874 $37,489 $(126,438) $8,671
========== ========== =========== ==========
Denominator:
Denominator for basic earnings per share:
Weighted average shares 2,811,518 1,630,000 2,757,650 1,630,000
---------- ---------- ----------- ----------
Effect of dilutive securities
Employee stock options 92,379 - - -
---------- ---------- ----------- ----------
Denominator for diluted earnings per share 2,903,897 1,630,000 2,757,650 1,630,000
========== ========== =========== ==========
Earnings (loss) per share:
Basic $0.01 $0.02 $(0.05) $0.01
========== ========== =========== ==========
Diluted $0.01 $0.02 - $0.01
========== ========== =========== ==========
</TABLE>
The following warrants to purchase common stock were excluded from the
computation of diluted earnings per share for the three and six months ended
December 31, 1998 and 1997 because the warrants' exercise price was greater than
the average market price of the common stock:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, 1998 1997 1998 1997
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Anti-dilutive warrants 75,000 - 75,000 -
========== ========== =========== ==========
</TABLE>
9
<PAGE>
NOTE 6 - ACQUISITION
On January 7, 1999, the registrant completed the closing of the
acquisition of certain assets of Tartan Technical, Inc., a Massachusetts
corporation ("Tartan"), pursuant to an Asset Purchase Agreement dated December
17, 1998 (the "Purchase Agreement"). The registrant acquired certain assets of
Tartan, including, but not limited to, accounts receivable, less allowances;
inventory at lower of cost or fair market value; certain property and equipment;
corporate name; its customer lists and related files; sales, service and vendor
contracts and security deposits; telephone numbers; databases; rights to
www.tartantechnical.com URL; and, trade show deposits, health insurance premiums
and other prepaid commitments. The consideration given by the registrant
pursuant to the Purchase Agreement was the issuance of 185,700 shares of
unregistered and restricted common stock of registrant and the assumption of the
following liabilities of Tartan: certain trade payables as of the date of the
closing; certain customer deposits payable as of the date of the closing; and,
certain bank debt. The consideration given is subject to post- closing
adjustments, dependent on the difference of the dollar value of the liabilities
assumed in relation to assets acquired, as set forth in the Purchase Agreement.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with
the information set forth in the unaudited financial statements and notes
thereto, included elsewhere herein, and the audited financial statements and the
notes thereto, included in the Form 8K/A.
Results of Operations
For the Three Months and Six Months Ended December 31, 1998 and 1997
Sales. Consolidated sales for the three months ended December 31, 1998 compared
to the same period in 1997, increased approximately 25% to $2,532,474 from
$2,024,222. Consolidated sales for the six months ended December 31, 1998
compared to the same period in 1997, increased approximately 21% to $4,475,635
from $3,693,531. The revenue mix in 1998 between systems, supplies and services
has remained comparable to the same period in 1997. The increase in sales can
be primarily attributed to the acquisition of BBG Technologies in March 1998,
and the increase in sales personnel.
Cost of Sales. Cost of Sales for the three months ended December 31, 1998 were
$1,835,314, or approximately 72.5% of sales, as compared to $1,443,417 or
approximately 71.3% of sales for the comparable period in 1997. Cost of Sales
for the six months ended December 31, 1998 were $3,234,814, or approximately
72.3% of sales, as compared to $2,659,342 or approximately 72% of sales for the
comparable period in 1997. The Cost of Sales in 1998 have remained relatively
consistent from the same period in 1997, along with the revenue mix.
Selling, General and Administrative. For the three months ended December 31,
1998, Selling, General and Administrative expenses increased to $632,886 from
$498,003, which represents a increase to 25% of sales from 24.6% of sales. For
the six months ended December 31, 1998, Selling, General and Administrative
expenses increased to $1,349,057 from $980,188, which represents a increase to
30% of sales from 26.5% of sales. The increase in 1998 is due mainly to an
increase in legal, accounting and consulting fees associated with the merger
and being a publicly held company, to amortization of goodwill resulting from
the acquisition of BBG Technologies in March 1998, and to increased payroll
resulting from an increase in personnel to 30 employees from 23 employees. The
increase in personnel can be attributed to additions in sales, technical and
administrative staff in preparation for future acquisitions.
Interest Expense. For the three months ended December 31, 1998, Interest
expense increased to $31,401 from $22,312. For the six months ended December
31, 1998, Interest expense increased to $57,202 from $41,330. The increase in
1998 is due primarily to the increase in borrowing due to the acquisition of BBG
Technologies in March 1998.
11
<PAGE>
Income Taxes. For the three months ended December 31, 1998, the Company has
recorded no income tax expense. An otherwise required tax provision of
$12,400 has been offset by the reversal of a valuation allowance. For the
six months ended December 31, 1998, the Company has recorded a tax benefit
of a net operating loss carryforward of $39,000 net of a $26,600 valuation
allowance. For the three months ended December 1997, the Company recorded
a $23,000 income tax expense. For the six months ended December 1997, the
recorded a $4,000 income tax expense.
Net Loss. For the three month period ended December 31, 1998, the Company
earned a net profit of $32,874 or $0.01 per share basic and diluted as compared
to a net profit of $37,489 or $0.02 per share, basic and diluted, for the
corresponding three month period ended December 31, 1997. For the six month
period ended December 31, 1998, the Company incurred a net loss of $126,438 or
$0.05 per share as compared to a net profit of $8,671 or $0.01 per share for the
corresponding six month period ended December 31, 1997.
Liquidity and Capital Resources
The Company has an agreement with a bank under which it can borrow up to
$1,200,000 under a revolving line of credit, subject to availability of
collateral. Borrowings bear interest at 1% over the bank's base rate, are
payable on demand and are collateralized by all assets of the Company. As of
December 31, 1998 the Company had used $800,000 of this line. The Company has
entered into a letter of intent with a commercial lending institution for a
$6,000,000 revolving line of credit subject to availability of collateral,
bearing an interest rate of 2% over the bank's base rate. It is expected that
the Company will enter into an agreement with a commercial lending institution
for this facility during the month of February. The new facility will replace
the Company's current $1.2 million facility.
In August of 1998, the Company successfully completed a private offering for
$655,000 consisting of 524,000 shares of Common Stock at a purchase price of
$1.25. Expenses associated with the private placement are estimated at $35,000,
providing the Company with net proceeds of $620,000. The Company used
substantially all of the proceeds in the retirement of bank debt assumed in the
acquisition of Tartan Technical, Inc. in January 1999.
The Company had positive cash flow of $9,292 for the six months ended December
31, 1998. Cash used in operations resulted in positive cash flows of $173,914
which primarily consists of a decrease in accounts receivable of $191,542 and a
decrease in inventory of $191,293 and an increase in deferred revenue of
$77,769, offset by a increase in accounts payable and accrued liabilities of
$215,952.
Inflation
The Company has historically offset any inflation in operating costs by a
combination of increased productivity and price increases, where appropriate.
The Company does not expect inflation to have a significant impact on its
business in the future.
12
<PAGE>
Seasonality
It is anticipated that the Company's cash flow from operations will be
significantly greater in the fall and winter months than in the spring and
summer months due to the purchasing cycles associated with the Company's
products. In the event that the Company is unable to generate sufficient cash
flows from operations during the seasons of peak operations, the Company may be
required to utilize other cash reserves (if any) or seek additional equity/debt
financing to meet operating expenses, and there can be no assurance that there
will be any other cash reserves or that additional financing will be available
or, if available, on reasonable terms.
Year 2000 Discussion
Many computer programs were designed to perform data computations on the last
two digits of the numerical value of the year. When computations referencing
the year 2000 are performed, these program may interpret -00- as the year 1900
and could either corrupt the date-related computations or not process them at
all. As a result, many software and computer systems may need to be upgraded
or replaced in order comply with such year 2000 requirements.
The Company has reviewed all its computer systems, which are provided by
third-party manufacturers. The manufacturers have represented to the Company
that their systems are or will be year 2000 compliant. The Company at this time
does not anticipate incurring significant additional costs to address the year
2000 issue, although the effectiveness of the Company's present efforts to
address the issues cannot be assured. However, the Company could be adversely
impacted by year 2000 issues faced by significant customers, vendors, suppliers
and financial service organizations with whom the Company conducts business.
The Company still needs to determine the degree of its customers, vendors,
suppliers and financial service organizations preparedness and whether alternate
vendors, suppliers and financial service organizations will be needed or
available in the event of any disruption in the supply of goods or services to
the Company. The Company presently does not have a contingency plan related to
Year 2000 issues, and upon further assessment, the Company may create one.
Forward Looking Statements
The foregoing management discussion and analysis contains forward-looking
statements and information that are based on management's beliefs, as well as
assumptions made by, and information currently available to, management. These
forward-looking statements are based on many assumptions and factors, and are
subject to many conditions, including the Company's continuing ability to obtain
additional financing, dependence on contracts with suppliers, competitive
pricing for the Company's products, demand for the Company's products which
depends upon the condition of the computer industry, and the effects of
increased indebtedness as a result of the Company's business acquisitions.
13
<PAGE>
Except for the historical information contained in this new release, all
forward-looking information are estimates by the Company's management and are
subject to various risks, uncertainties and other factors that may be beyond the
Company's control and may cause results to differ from management's current
expectations, which may cause actual results, performance or achievements of the
Company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On January 7, 1999, the registrant acquired certain assets of Tartan
Technical, Inc., a Massachusetts corporation ("Tartan"), pursuant to an Asset
Purchase Agreement (the "Asset Purchase Agreement"), as reported on Form 8-K,
filed on or about January 19, 1999. The registrant issued 185,700 shares of
unregistered and restricted common stock, par value $.001 per share, to Tartan
as part of the consideration under the Asset Purchase Agreement, as well as
agreeing to assume the following liabilities of Tartan: certain trade payables
as of the date of the closing; certain customer deposits payable as of the date
of the closing; and, certain bank debt. The consideration given is subject
to certain post-closing adjustments, including the issuance of additional
shares, dependent on the difference of the dollar value of the liabilities
assumed in relation to the assets acquired, as set forth in the Asset Purchase
Agreement. The shares of common stock issued as described above are not
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States absent registration or an applicable exemption
from registration. Under the Asset Purchase Agreement, the registrant acquired
certain assets of Tartan, a seller and servicer of computer graphics and
imaging equipment and supplies, constituting equipment and other physical
property, and, in such activities, the registrant intends to continue the use
of the assets acquired.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed with this report:
Exhibit Number Description of Exhibit
Exhibit 11: Statement Concerning Computation of Per Share Earnings is
hereby incorporated by reference to "Financial Statements"
of Part I - Financial Information, Item 1 - Financial
Statements, contained in this Form 10-QSB.
Exhibit 27: Financial Data Schedule for the three months ended
December 31, 1998
(b) Reports on Form 8-K.
On January 19, 1999, the registrant filed a report on Form 8-K dated
January 15, 1999 reporting Items 2 and 5:
Item 2: Acquisition of assets relating to the acquisition of
certain assets and liabilities of Tartan
Item 5: Other information relating to employment agreements with
former employees of Tartan
15
<PAGE>
SIGNATURES
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.
CADAPULT GRAPHIC SYSTEMS, INC.
Date: February 10, 1999 /s/ Michael W. Levin
-------------------------------------
Michael W. Levin
President and Chief Executive Officer
Date: February 10, 1999 /s/ Frances Blanco
-------------------------------------
Frances Blanco
Vice President and Treasurer
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRCATED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED DECEMBER 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 732,112
<SECURITIES> 0
<RECEIVABLES> 1,484,582
<ALLOWANCES> 22,500
<INVENTORY> 865,791
<CURRENT-ASSETS> 3,123,659
<PP&E> 867,236
<DEPRECIATION> 623,660
<TOTAL-ASSETS> 3,850,853
<CURRENT-LIABILITIES> 2,964,379
<BONDS> 0
0
0
<COMMON> 2,812
<OTHER-SE> 750,643
<TOTAL-LIABILITY-AND-EQUITY> 3,850,853
<SALES> 2,532,474
<TOTAL-REVENUES> 2,532,474
<CGS> 1,835,314
<TOTAL-COSTS> 1,835,314
<OTHER-EXPENSES> 632,886
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,401
<INCOME-PRETAX> 32,874
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,874
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,874
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
