<PAGE> 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended OCTOBER 31, 1997
[ ] 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 0-21053
PROCOM TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
California 33-0268063
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2181 Dupont Drive, Irvine, CA 92612
(Address of principal executive office) (Zip Code)
(714) 852-1000
(Registrant's telephone number, including area code)
(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 in 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
The number of shares of Common Stock, $.01 par value, outstanding on
November 30, 1997, was 11,066,048.
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements.
PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
OCTOBER 31, JULY 31,
1997 1997
----------- -----------
(UNAUDITED) (AUDITED)
Current assets:
<S> <C> <C>
Cash ............................................................... $ 518,000 $ 227,000
Marketable securities .............................................. 19,404,000 18,550,000
Accounts receivable, less allowance
for doubtful accounts and sales
returns of $1,300,000 and
$992,000, respectively ........................................... 14,956,000 12,545,000
Inventories, net ................................................... 10,628,000 9,063,000
Deferred income taxes .............................................. 1,405,000 1,405,000
Prepaid expenses ................................................... 491,000 588,000
Other current assets ............................................... 16,000 49,000
----------- -----------
Total current assets ....................................... 47,418,000 42,427,000
Property and equipment, net .......................................... 937,000 816,000
Other assets ......................................................... 33,000 31,000
----------- -----------
Total assets ............................................... $48,388,000 $43,274,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................... $12,400,000 $10,518,000
Accrued expenses and other current liabilities ..................... 877,000 764,000
Accrued compensation ............................................... 1,222,000 1,462,000
Capital lease obligations .......................................... 29,000 29,000
Income taxes payable ............................................... 1,216,000 434,000
----------- -----------
Total current liabilities .................................. 15,744,000 13,207,000
----------- -----------
Total liabilities .......................................... 15,744,000 13,207,000
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value;
10,000,000 shares authorized, no
shares issued and outstanding .................................... -- --
Common stock, $.01 par value;
65,000,000 shares authorized,
11,066,048 and 11,024,562 shares
issued and outstanding,
respectively ..................................................... 111,000 110,000
Additional paid in capital ......................................... 16,570,000 16,467,000
Retained earnings .................................................. 15,963,000 13,490,000
----------- -----------
Total shareholders' equity ................................. 32,644,000 30,067,000
----------- -----------
Total liabilities and shareholders' equity ................... $48,388,000 $43,274,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
2
<PAGE> 3
PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------
OCTOBER 31, OCTOBER 25,
1997 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales ........................... $ 31,291,000 $ 24,915,000
Cost of sales ....................... 20,607,000 16,490,000
------------ ------------
Gross profit ................... 10,684,000 8,425,000
Selling, general and
administrative
expenses .......................... 5,663,000 4,367,000
Research and development
expenses .......................... 1,280,000 688,000
------------ ------------
Operating income ............... 3,741,000 3,370,000
Other (income) expense
Interest income .................... 287,000 --
Interest (expense) ................. -- (60,000)
------------ ------------
Income before income taxes .......... 4,028,000 3,310,000
Provision for income taxes .......... 1,555,000 1,295,000
------------ ------------
Net income ..................... $ 2,473,000 $ 2,015,000
============ ============
Net income per share ................ $ 0.22 $ 0.22
============ ============
Weighted average number of
shares ............................ 11,210,000 9,172,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------------- PAID IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at July 29, 1994 9,000,000 $ 3,000 $ -- $ 1,561,000 $ 1,564,000
Net income ............ -- -- 723,000 723,000
---------- -------- ---------- ----------- -----------
Balance at July 28, 1995 9,000,000 3,000 -- 2,284,000 2,287,000
Net income ............ -- -- -- 2,849,000 2,849,000
---------- -------- ---------- ----------- -----------
Balance at July 26, 1996 9,000,000 3,000 -- 5,133,000 5,136,000
Change in par value to --
$.01 per share ...... -- 87,000 3,000 (90,000) --
Public offering of .... 2,000,000 20,000 16,166,000 -- 16,186,000
2,000,000 shares
Compensatory .......... -- -- 35,000 -- 35,000
stock options
Exercise of employee
stock options ....... 24,562 -- 62,000 -- 62,000
Tax benefit from exer- -- -- 201,000 -- 201,000
cise of stock options
Net income ............ -- -- -- 8,447,000 8,447,000
---------- -------- ----------- ------------ -----------
Balance at July 31, 1997 11,024,562 110,000 16,467,000 13,490,000 30,067,000
Exercise of employee
stock options and
related tax benefit . 41,486 1,000 103,000 -- 104,000
Net income ............ -- -- -- 2,473,000 2,473,000
---------- -------- ----------- ------------ -----------
Balance at October 31,
1997 (unaudited) ...... 11,066,048 $111,000 $16,570,000 $ 15,963,000 $32,644,000
========== ======== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
OCTOBER 31, OCTOBER 25,
1997 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,473,000 $ 2,015,000
Adjustments to reconcile net
income to net cash
provided by
operating activities:
Depreciation and amortization 104,000 64,000
Changes in assets and
liabilities:
Accounts receivable (2,411,000) (1,849,000)
Inventories (1,565,000) (2,799,000)
Deferred income taxes -- (185,000)
Prepaid expenses 97,000 (35,000)
Other current assets 33,000 (2,000)
Other assets (2,000) (1,000)
Accounts payable 1,882,000 3,329,000
Accrued expenses 113,000 121,000
Accrued compensation (240,000) (1,638,000)
Income taxes payable 782,000 913,000
------------ ------------
Net cash provided by
operating activities 1,266,000 (67,000)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (225,000) (141,000)
------------ ------------
Cash flows from financing activities:
Principal payments for capital
lease obligations -- (2,000)
Exercise of stock options 104,000 --
Borrowings on line of credit -- 22,575,000
Payments made on line of credit -- (23,100,000)
Net cash provided by
(used in) financing
activities 104,000 (527,000)
------------ ------------
Increase (decrease) in cash 1,145,000 (735,000)
Cash and marketable commercial paper
at beginning of period 18,777,000 793,000
------------ ------------
Cash and marketable commercial paper
at end of period $ 19,922,000 $ 58,000
============ ============
Supplemental disclosures of cash
flow information:
Cash paid during the periods for:
Interest $ -- $ 106,000
Income taxes $ 775,000 $ 500,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
OCTOBER 31, 1997 AND OCTOBER 25, 1996
NOTE 1. GENERAL
The accompanying financial information is unaudited, but in the opinion of
management, reflects all adjustments (which include only normally recurring
adjustments) necessary to present fairly the financial position of Procom
Technology, Inc. and its consolidated subsidiary (the "Company") as of the dates
indicated and the results of operations for the periods then ended. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. While the Company believes that the disclosures are
adequate to make the information presented not misleading, the financial
information should be read in conjunction with the audited financial statements,
and notes thereto for the three years ended July 31, 1997 included in the
Company's Report on Form 10-K for fiscal 1997. Results for the interim period
are not necessarily indicative of the results for the entire year.
NOTE 2. EARNINGS PER SHARE.
Net income (loss) per share has been computed using the weighted average number
of shares outstanding during the periods presented. Following the principles of
APB 25, the Company has included the dilutive value of stock options outstanding
in the calculation of weighted average shares outstanding. Fully diluted
earnings per share are not presented because the difference between primary and
fully diluted earnings per share is not material. Primary and fully diluted
earnings per share amounts are based upon the weighted average number of shares
and dilutive common stock equivalents for each period presented.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128).
This statement is effective for both interim and annual periods ending after
December 15, 1997, and replaces the presentation of "primary" earnings per share
with "basic" earnings per share and the presentation of "fully diluted" earnings
per share with "diluted" earnings per share. Earlier application is not
permitted. When adopted, all previously reported earnings per common share
amounts must be restated based on the provisions of the new standard. Pro forma
basic and diluted earnings per share calculated in accordance with SFAS No. 128
is provided below. "Diluted" earnings per share are not presented because the
difference between "basic" and "diluted" earnings per share, as defined by SFAS
No. 128, is not material.
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED
-------------------------
OCT. 31, OCT. 25,
1997 1996
------- -------
<S> <C> <C>
Basic earnings per share ................... $ .22 $ .22
======= =======
</TABLE>
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
OVERVIEW
This Report on Form 10-Q contains 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. Such forward-looking statements include, but
are not limited to, comments regarding the Company's revenue, revenue mix,
product pricing, gross margins, increased promotional, advertising, research and
development spending, and the expanded marketing efforts of the Company. Actual
results could differ materially from those projected in the forward-looking
statements as a result of important factors including, without limitation,
competitive product introductions, price competition, any failure or delay in
the Company's ability to develop and introduce new products, the failure of any
significant customer, adverse economic conditions generally and other factors
set forth in the Company's filings with the Securities and Exchange Commission.
The Company was formed in 1987. The Company began producing aftermarket
disk drive upgrade products for computer products sold by other manufacturers,
and such upgrade products continue to be an important area of focus of the
Company's business. In fiscal 1994, the Company introduced its CD server and
array product line while continuing to provide a broad line of disk drive
upgrade products. In addition, during fiscal 1994, the Company began utilizing
computer resellers and VARs as its primary sales channel instead of mass
merchants and national distributors and commenced shipment of its first RAID
arrays and fault tolerant, high performance storage servers.
The Company generally records sales upon product shipment. The Company
presently maintains agreements with many of its computer resellers, VARs and
distributors that allow limited returns (including stock balancing) and price
protection privileges. The Company has in the past experienced high return
rates. The Company maintains reserves for anticipated returns (including stock
balancing) and price protection privileges. These reserves are adjusted at each
financial reporting date to state fairly the anticipated returns (including
stock balancing) and price protection claims relating to each reporting period.
Generally, the reserves will increase as sales and corresponding returns
increase. In addition, under a product evaluation program established by the
Company, computer resellers, VARs, distributors and end users generally are able
to purchase products on a trial basis and return the products within a specified
period if they are not satisfied. Evaluation units are not recorded as sales
until the customer has paid for such units.
All of the Company's sales are denominated in U.S. dollars, and
accordingly, the Company does not believe that fluctuations in foreign exchange
rates have had or will have a material adverse effect on the Company's results
of operations or financial condition, except to the extent that such
fluctuations could cause the Company's products to become relatively more
expensive to end users in a particular country, leading to a reduction of sales
in that country.
Historically, the Company's gross margins have experienced significant
volatility. The Company's gross margins vary significantly by product line, and,
therefore, the Company's overall gross margin varies with the mix of products
sold by the Company. The Company's markets are also characterized by intense
competition and declining average unit selling prices as products mature over
the course of the relatively short life cycle of individual products, which have
often ranged from six to twelve months. In addition, the Company's gross margins
may be adversely affected by availability and price increases associated with
key products and components from the Company's suppliers, some of which have
been in short supply, and inventory obsolescence resulting from older generation
products or the unexpected discontinuance of third party components. Finally,
the Company's margins vary with the mix of its distribution channels and with
general economic conditions.
7
<PAGE> 8
RESULTS OF OPERATIONS
The following table sets forth the Company's statement of operations data
as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
OCTOBER 31, OCTOBER 25,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales ................................... 100.0% 100.0%
Cost of sales ............................... 65.9 66.2
------- -------
Gross profit .............................. 34.1 33.8
Selling, general and
administrative
expenses .................................. 18.1 17.5
Research and development
expenses .................................... 4.0 2.8
------- -------
Operating income (loss) ................... 12.0 13.5
Interest income and (expense), net .......... 0.9 (0.2)
------- -------
Income (loss) before income
taxes ................................... 12.9 13.3
Provision (benefit) for income
taxes ..................................... 5.0 5.2
------- -------
Net income (loss) ......................... 7.9% 8.1%
======= =======
</TABLE>
QUARTER ENDED OCTOBER 31, 1997 COMPARED TO QUARTER ENDED OCTOBER 25, 1996
Net Sales
Net sales increased 25.7% from $24.9 million for the quarter ended October
25, 1996 to $31.3 million for the quarter ended October 31, 1997. This increase
was primarily due to increases in sales of CD servers and arrays and sales of
disk drive upgrade subsystems for desktop and notebook computers and, to a
lesser extent, increases in net sales of RAID high capacity storage devices. For
the quarter ended October 31, 1997, sales of the Company's "Intelligent Network
Storage Products", which comprise CD servers and arrays and RAID storage
systems, comprised approximately 50%, with sales of disk drive storage upgrade
products also comprising approximately 50% of net sales. International sales
decreased from $2.2 million, or approximately 9.0% of net sales, in the quarter
ended October 25, 1996 to $1.7 million, or approximately 5.4% of net sales, in
the quarter ended October 31, 1997. The Company's fiscal second quarter sales
have historically remained relatively flat due primarily to heavy reseller
participation in trade shows that detract from reseller selling efforts, end
user budget constraints that restrict end user purchases and a higher than
average number of holidays during the fiscal second quarter which reduce the
number of selling days during the quarter by nine.
Gross Profit
The Company's gross margins increased from 33.8% of net sales for the
quarter ended October 25, 1996 to 34.1% of net sales for the quarter ended
October 31, 1997. These increases were primarily the result of higher margins on
increased sales of recently introduced CD servers and arrays. In addition, the
Company realized higher margins on increased sales of disk drive upgrade
products for notebook computers and RAID storage products, and such increases
more than offset the effect of competition and price erosion typical in the disk
drive upgrade industry.
8
<PAGE> 9
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $4,367,000 for
the quarter ended October 25, 1996 to $5,663,000 for the quarter ended October
31, 1997. These expenses represented 17.5% and 18.1% of net sales in the
quarters ended October 25, 1996 and October 31, 1997, respectively. The dollar
increase in selling, general and administrative expenses for the first quarter
of fiscal 1997 was primarily a result of increased marketing and promotional
costs and increased personnel and related costs necessary to support the
Company's growth in net sales. Bad debt expense for the three months of fiscal
1997 was approximately $87,000 or .28% of net sales, compared to approximately
$124,000, or .5% of net sales, for the first three months of fiscal 1996. The
Company anticipates that the dollar amount of its selling, general and
administrative expenses will increase as the Company continues to expand its
efforts to penetrate certain sales channels and regions and continues to
strengthen and upgrade its existing management information and
telecommunications systems.
Research and Development
Research and development expenses increased 86.1% from $688,000 for the
quarter ended October 25, 1996 to $1,280,000 for the quarter ended October 31,
1997. These expenses represented 2.8% and 4.0% of net sales for the each of the
quarters ended October 25, 1996 and October 31, 1997, respectively. These
increases were primarily due to continued increases in additional hardware
developers and software programmers, including the use of independent contract
programmers and increased related support costs to develop additional products
and enhance existing product features. The Company anticipates that the dollar
amount of its research and development expenses will continue to increase, and
also may increase as a percentage of net sales, with the expected addition of
dedicated engineering resources to develop new product categories, to increase
the likelihood that the Company's products will be compatible with a wide range
of hardware platforms and network topologies and to further develop CD-FORCE,
the Company's proprietary client/server management storage architecture. In
addition, the Company intends to continue to update software drivers to ensure
that the Company's CD servers and arrays function with a variety of hardware
platforms and network operating systems. To date, all of the Company's software
development costs have been expensed as incurred, as the impact of capitalizing
software costs under Financial Accounting Standard No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed" would have
been immaterial to the Company's financial statements.
Income Taxes
The Company's effective tax rates for the quarters ended October 31, 1997
and October 25, 1996 were approximately 38.6% and 39.1% of pretax income,
respectively, which approximate the federal and state statutory rates with
modest reductions for benefits resulting from the Company's use of its foreign
sales corporation ("FSC") and benefits accruing from the increases in research
and development activity, causing an increased research and development credit.
Interest Income and Expense
As a result of the initial public offering of 2,000,000 shares of the
Company's common stock completed in December 1996, the Company received net
proceeds, after underwriting discounts and offering costs, of approximately $
15.9 million. As a result of the offering net proceeds, the Company has, in late
December 1996, both reduced amounts outstanding under its line of credit,
thereby reducing interest expense, and invested the remaining proceeds in
short-term investment grade commercial paper, thereby earning interest income.
Accordingly, net interest expense for the first three months of fiscal 1996 was
$106,000, while interest income generated in the first three months of fiscal
1997 was $287,000.
9
<PAGE> 10
General comments
The Company's results of operations have in the past varied significantly
and are likely in the future to vary significantly as a result of a number of
factors, including the mix of products sold, the volume and timing of orders
received during the period, the timing of new product introductions by the
Company and its competitors, product line maturation, the impact of price
competition on the Company's average selling prices, the availability and
pricing of components for the Company's products, changes in distribution
channel mix and product returns or price protection charges from customers. Many
of these factors are beyond the Company's control. Although the Company has
experienced growth in sales in recent periods, there can be no assurance that
the Company will experience growth in the future or be profitable on an
operating basis in any future period. In addition, due to the short product life
cycles that characterize the Company's markets, a significant percentage of the
Company's sales each quarter may result from new products or product
enhancements introduced in that quarter. Since the Company relies on new
products and product enhancements for a significant percentage of sales, failure
to continue to develop and introduce new products and product enhancements or
failure of these products or product enhancements to achieve market acceptance
could have a material adverse effect on the Company's business, financial
condition and results of operations. Historically, as the Company has planned
and implemented new products, it has experienced unexpected reductions in sales
and gross profit of older generation products as customers have anticipated new
products. These reductions have in the past given and could continue to give
rise to charges for obsolete or excess inventory, returns of older generation
products by computer resellers, VARs and distributors or substantial price
protection charges. From time to time, the Company has experienced and may in
the future experience inventory obsolescence resulting from the unexpected
discontinuance of third party components, such as disk drives, included in the
Company's products. To the extent the Company is unsuccessful in managing
product transitions, it may have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company also has historically capitalized on short-term market
opportunities for volume purchases of certain components at favorable prices.
For example, the Company has capitalized on several opportunities to sell a
significant volume of high capacity disk drive upgrade products purchased at
below market prices, which have resulted in price advantages to the Company that
enhanced the Company's sales and results of operations for the corresponding
fiscal quarter. There can be no assurance that the Company will be able to
capitalize on such opportunities in the future. In addition, the Company's
fiscal second quarter sales, compared to sales in the Company's fiscal first
quarter, have historically remained relatively flat due primarily to heavy
reseller participation in trade shows that detract from reseller selling
efforts, end user budget constraints that restrict end user purchases, and a
higher than average number of holidays during that quarter which reduce the
available selling and shipping days during the quarter.
LIQUIDITY AND CAPITAL RESOURCES
In November 1994, the Company instituted a revolving line of credit with
Finova Capital ("Finova"). The facility was amended in November 1996 to provide
the Company with up to $20.0 million in working capital loans, based upon the
Company's accounts receivable and inventory levels. The line of credit accrues
certain commitment fees, unused facility fees and interest on outstanding
amounts at the lender's prime rate (8.5% at October 31, 1997) plus 1.5%. Finova
also makes available to the Company various flooring commitments pursuant to
which the Company may finance the purchase of up to $13.0 million in inventory
(less any amounts outstanding in working capital loans) from certain of the
Company's vendors who have credit arrangements with Finova. As of October 31,
1997, there was no balance outstanding under the credit facility, and $ 3.8
million outstanding under the flooring arrangements. The agreement governing the
credit facility requires the Company to maintain certain financial covenants
(including the maintenance of working capital of at least $500,000), minimum
levels of tangible net worth and minimum levels of liquidity. As
10
<PAGE> 11
of October 31, 1997, the Company was in material compliance with the covenants
of the Finova line of credit. The initial term of the line of credit expires on
November 29, 1997, but automatically renews for successive one year periods
unless terminated by either party within a specified period in advance of the
automatic renewal date.
As of October 31, 1997, the Company had cash balances of $ 19.9 million and
$16.2 million of availability under its line of credit. The Company believes
that the cash proceeds from its December 1996 public offering, together with
existing cash balances and available credit under its existing line of credit,
will be sufficient to meet anticipated cash requirements for at least the next
twelve months. As of October 31, 1997, the Company had no material commitments
for capital expenditures. While the Company has no present plans, agreements or
commitments to make any acquisitions, the Company may acquire businesses,
products and technologies that are complementary to those of the Company. In the
event the Company's plans require more capital than is presently anticipated,
the Company's remaining cash balances may be consumed and additional sources of
liquidity such as debt or equity financings may be required to meet working
capital needs. There can be no assurance that additional capital beyond the
amounts currently forecasted by the Company will not be required nor that any
such required additional capital will be available on reasonable terms, if at
all, at such time or times as required by the Company.
11
<PAGE> 12
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index. No Statement re Computation of Per Share
Earnings is included, because the computation can be clearly
determined from material contained in this Report. See the
Consolidated Statements of Operations, and the Notes thereto.
(b) No reports on Form 8-K have been filed during the quarter for
which this Report on Form 10-Q is filed.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Irvine, County of
Orange, State of California, on the 12th day of November, 1997.
PROCOM TECHNOLOGY, INC.
By: /s/ Alex Razmjoo
----------------------------
Alex Razmjoo
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report on Form 10-Q has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Alex Razmjoo Chairman of the Board, President and November 12, 1997
- ------------------------------------- Chief Executive Officer (Principal
Alex Razmjoo Executive Officer)
/s/ Alex Aydin Executive Vice President, Finance and November 12, 1997
- ------------------------------------- Administration (Principal Financial
Alex Aydin Officer)
/s/ Frederick Judd Vice President, Finance and General November 12, 1997
- ------------------------------------- Counsel (Principal Accounting Officer)
Frederick Judd
</TABLE>
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBER
NUMBER DESCRIPTION PAGE
- -------- ----------- ------------
<S> <C> <C>
3.1+ Amended and Restated Articles of Incorporation of the Company..................................
3.2+ Amended and Restated Bylaws of the Company.....................................................
10.1+ Form of Indemnity Agreement between the Company and each
of its executive officers and directors........................................................
10.2+ Form of Amended and Restated Procom Technology, Inc. 1995 Stock Option Plan....................
10.3+ Amended and Restated Executive Employment Agreement, dated as of
October 28, 1996, between the Company and Alex Razmjoo.........................................
10.4+ Amended and Restated Executive Employment Agreement, dated as of
October 28, 1996, between the Company and Frank Alaghband......................................
10.5+ Amended and Restated Executive Employment Agreement, dated as of
October 28, 1996, between the Company and Alex Aydin...........................................
10.6+ Amended and Restated Executive Employment Agreement, dated as of
October 28, 1996, between the Company and Nick Shahrestany.....................................
10.7+ Form of Registration Rights Agreement..........................................................
10.8+ Lease, dated February 10, 1992, between 2181 Dupont Associates
and the Company, as amended....................................................................
10.9+ Loan and Security Agreement, dated November 18, 1994, by and
between the Company and FINOVA Capital Corporation, as amended.................................
11.1+ Statement re: Computation of Earnings Per Share................................................
21.1+ List of Subsidiaries...........................................................................
27.1 Financial Data Schedule........................................................................
</TABLE>
- ----------
+ Previously filed
14
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 518,000
<SECURITIES> 19,404,000
<RECEIVABLES> 14,956,000
<ALLOWANCES> 1,300,000
<INVENTORY> 10,628,000
<CURRENT-ASSETS> 47,418,000
<PP&E> 2,480,000
<DEPRECIATION> 1,543,000
<TOTAL-ASSETS> 48,388,000
<CURRENT-LIABILITIES> 15,744,000
<BONDS> 0
0
0
<COMMON> 111,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 48,388,000
<SALES> 31,291,000
<TOTAL-REVENUES> 31,291,000
<CGS> 20,607,000
<TOTAL-COSTS> 20,607,000
<OTHER-EXPENSES> 6,943,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (287,000)
<INCOME-PRETAX> 4,028,000
<INCOME-TAX> 1,555,000
<INCOME-CONTINUING> 2,473,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,473,000
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
