<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO _____________
Commission File Number 1-12909
INTERNATIONAL COMPUTEX, INC.
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-1938206
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5500 INTERSTATE NORTH PARKWAY, SUITE 507
ATLANTA, GA 30328
(Address of principal executive offices)
(770) 953-1464
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [_]
As of November 10, 1997, there were 3,250,000 shares of common stock, $0.001 par
value, outstanding.
Transitional Small Business Disclosure Format
(Check one):
Yes [_] No [x]
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INTERNATIONAL COMPUTEX, INC.
INDEX
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets
December 31, 1996 and September 30, 1997
Statements of Income
Three Months and Nine Months Ended September 30, 1996 and
September 30, 1997
Statements of Cash Flows
Nine Months Ended September 30, 1996 and September 30, 1997
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INTERNATIONAL COMPUTEX, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 September 30
1996 1997
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 119,750 $ 7,586,280
Accounts receivable, net 1,020,319 1,739,579
Prepaid expenses 13,738 83,428
----------- -----------
Total current assets 1,153,807 9,409,287
Property and equipment, net 168,178 530,282
Other assets
Software development costs, net 276,372 494,987
Miscellaneous assets 22,654 22,844
----------- -----------
$ 1,621,011 $10,457,400
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 45,260 $ 46,549
Deferred revenue 17,188
S Corporation distribution payable 252,641
Income taxes payable 181,213
Current portion of long-term debt 4,189 4,504
----------- -----------
Total current liabilities 49,449 502,095
Long-term debt, net of current portion 18,935 15,628
----------- -----------
Total liabilities 68,384 517,723
----------- -----------
Stockholders' equity
Common stock, $.001 par value,
20,000,000 shares authorized;
3,250,000 shares issued and outstanding 2,125 3,250
Additional paid in capital 9,583,009
Retained earnings 1,550,502 353,418
----------- -----------
Total stockholders' equity 1,552,627 9,939,677
----------- -----------
$ 1,621,011 $10,457,400
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
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INTERNATIONAL COMPUTEX, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months ended September 30, Nine Months ended September 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenues
Services and other $ 950,433 $1,309,454 $2,612,789 $3,965,645
Software 223,000
---------- ---------- ---------- -----------
Total revenues 950,433 1,309,454 2,612,789 4,179,645
---------- ---------- ---------- -----------
Operating expenses
Direct costs 310,316 365,720 977,433 1,049,078
Selling and marketing 87,067 152,600 281,496 393,424
General and administrative 93,179 266,346 291,098 597,274
Depreciation and amortization 7,836 61,100 22,950 120,800
Product development 172,673 3,365 172,673
Non-cash charge for compensation 442,382
---------- ---------- ---------- ----------
Total operating expenses 498,398 1,018,439 1,576,342 2,775,631
---------- ---------- ---------- ----------
Income from operations 452,035 291,015 1,036,447 1,404,014
---------- ---------- ---------- ----------
Other income/(expenses)
Interest income 1,105 89,229 1,922 157,588
Interest expense ( 935) (473,260)
---------- ---------- ---------- ----------
Total other income/(expenses) 1,105 88,294 1,922 (315,672)
---------- ---------- ---------- ----------
Net income before taxes 453,140 379,309 1,038,369 1,088,342
Provision for income taxes [Note 2] 136,213 181,213
---------- ---------- ---------- ----------
Net income 453,140 243,096 1,038,369 907,129
Pro forma provision for income taxes [Note 2] 170,834 391,157 222,306
---------- ---------- ---------- ----------
Pro forma net income [Note 2] $ 282,306 $ 243,096 $ 647,212 $ 684,823
========== ========== ========== ==========
Pro forma earnings per share [Note 2] $ 0.12 $ 0.07 $ 0.27 $ 0.23
========== ========== ========== ==========
Weighted average common and common equivalent
shares outstanding 2,355,245 3,480,245 2,355,245 2,980,245
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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INTERNATIONAL COMPUTEX, INC.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1997
<S> <C> <C>
Cash flows from operating activities
Net Income $1,038,369 $ 907,129
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 22,950 120,800
Non-cash charge: options 442,382
Non-cash charge: warrants 319,241
Provision for bad debt 23,372
Changes in assets and liabilities
Decrease [Increase] in accounts receivable 93,420 (719,260)
Increase in prepaid expenses (69,690)
Increase in miscellaneous assets (189)
Increase [Decrease]in accounts payable (38,183) 182,502
Increase in deferred revenue 17,188
---------- -----------
Total adjustments 101,559 292,974
---------- -----------
Net cash provided by operating activities 1,139,928 1,200,103
---------- -----------
Cash flows from investing activities
Acquisition of property and equipment (68,859) (420,904)
Software development costs capitalized (179,803) (280,615)
---------- -----------
Net cash used by investing activities (248,662) (701,519)
---------- -----------
Cash flows from financing activities
Principal payments on long-term debt (2,993)
Stockholder distributions paid (415,217) (2,316,124)
Proceeds from notes payable 24,000
Initial public offering proceeds, net 9,287,063
---------- -----------
Net cash provided [used] by financing activities (391,217) 6,967,946
---------- -----------
Net increase in cash 500,049 7,466,530
Cash, Beginning of period 80,969 119,750
---------- -----------
Cash, end of period $ 581,018 $ 7,586,280
========== ===========
</TABLE>
See accompanying notes to financial statements.
5
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INTERNATIONAL COMPUTEX, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by
International CompuTex, Inc. (the "Company") in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 1996
included in the Company's Registration Statement on Form SB-2 (File No. 333-
21647), as amended (the "Registration Statement"). The financial information
included herein is unaudited; however, the information reflects all adjustments
that are, in the opinion of management, necessary to a fair presentation of the
financial position, results of operations, and cash flows for the interim
periods. Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
2. INCOME TAXES
The Company had elected to be treated as an S Corporation pursuant to the
Internal Revenue Code for federal and state income tax purposes, with income
taxable and distributable to the individual stockholders without any further tax
consequences. The stockholders revoked the S Corporation status on April 30,
1997, immediately prior to the closing of the Company's initial public offering
(see Note 4, Termination of S Corporation Status, and Note 5, Initial Public
Offering), and the Company became taxable as a C Corporation from that date
forward. A pro forma provision for income taxes has been presented that
represents income taxes which would have been provided had the Company operated
as a C Corporation throughout its history. The third quarter 1997 results are
actual.
3. SENIOR DEBENTURES
In January 1997, the Company received proceeds from the sale of Senior
Debentures in the amount of $1,115,000 at 6% interest per annum, payable semi-
annually, with the principal amount due in January 2000. Purchasers of the
Senior Debentures received Warrants from the stockholders of the Company to
purchase 117,368 shares of common stock held by these stockholders at 60% of the
initial public offering price. As a result of its initial public offering and
the terms of the Senior Debentures, the Company prepaid the Senior Debentures
principal with accrued interest of $19,795 in whole on May 5, 1997, and the
stockholders issued 117,368 Warrants at an exercise price of $5.70 per share, or
60% of the initial public offering price of $9.50 per share. The issuance of
the Warrants and prepayment of the Senior Debentures resulted in the Company
taking a non-cash non-recurring charge to interest expense of $319,241. The
prepayment of the Senior Debentures resulted in the Company recognizing interest
expense of $132,650 related to financing costs of the Senior Debentures,
primarily sales commissions.
4. TERMINATION OF S CORPORATION STATUS
On April 30, 1997, the Company's shareholders, in accordance with the
Company's S Corporation Termination, Tax Allocation and Indemnification
Agreement (the "Agreement") dated March 24, 1997, elected to terminate the
Company's status as an S corporation, and the Company became subject to federal
and state income taxes. Under the Agreement, $2,418,765 was distributed to the
S Corporation stockholders by an assignment of accounts receivable and cash
equaling the Company's Accumulated Adjusted Account as of April 30, 1997.
5. INITIAL PUBLIC OFFERING
The Company completed its initial public offering of 1,125,000 shares of
Common Stock at $9.50 per share on May 5, 1997. Net proceeds to the Company
amounted to $9,287,063.
6. RECLASSIFICATION OF FINANCIAL STATEMENT PRESENTATION
Certain reclassifications have been made to the 1996 financial statements
to conform with the 1997 financial statement presentation. Such
reclassifications had no effect on net income as previously reported.
6
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion and analysis of financial condition and results of
operations should be read in conjunction with the unaudited financial
statements and the related disclosures included elsewhere herein and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included as part of the Company's Registration Statement on Form SB-2
(Registration No. 333-21647) (the "Registration Statement"), as declared
effective by the Securities and Exchange Commission on April 29, 1997.
FORWARD LOOKING STATEMENTS
The discussion in this Report contains forward looking statements which are
subject to substantial risks and uncertainties. The Company's actual results
could differ materially from those discussed herein. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in this section and elsewhere in this Report, and the risks discussed
in the "Risk Factors" section in the Registration Statement.
OVERVIEW
International CompuTex, Inc. ("ICI" or the "Company") is a software
technology company that develops, markets and supports enterprise-wide
client/server solutions. The Company provides consulting and implementation
services for the engineering and manufacturing industries in the areas of
Component and Supplier Management ("CSM") and Information Classification and
Management ("ICAM"). From the time of its incorporation in 1991 through mid-
1996, all Company revenues resulted from computer software-related services with
a primary focus in the area of Product Data Management ("PDM") software
applications. Among other applications, CSM and ICAM are a major part of a PDM
solution. PDM is a system of software applications, used principally by
manufacturing and design companies, which allow management and control of
product-related data from development and design stages through the
manufacturing and post-production marketing phases of a product.
Throughout its history, ICI has provided a wide variety of services to IBM,
including product development and, on a subcontract basis, customer
installation, implementation and customization services relating to IBM's PDM
product, ProductManager. ICI currently derives the great majority of its
revenues from consulting and implementation services rendered directly to IBM or
as a subcontractor to IBM customers.
The Company has recently developed ItemQuest, an object-oriented
classification and search solution for CSM and ICAM that allows users to search,
select and re-use product data design and manufacturing information based on
engineering and manufacturing attributes. ItemQuest, which has the flexibility
to be integrated into existing software or to operate as a stand-alone system,
provides economic and strategic benefits to discrete manufacturing companies by
improving design, productivity, rationalization of parts, and the implementation
of strategic supplier relationships. It enables manufacturers to reduce design
and development costs, increase procurement efficiencies, and shorten time to
market. Management believes that the basis for the Company's next stage of
growth will be the development, delivery, support and evolution of ItemQuest.
The Company intends to make the transition from a services oriented business to
a solutions oriented business combining products and services. While the
Company is experienced in software development as part of custom development
contracts, it has no previous experience in the distribution and maintenance of
its own product. To be successful with ItemQuest, the Company plans over the
next six to twelve months to invest approximately $3.5 million of the total $9.3
million proceeds of its initial public offering to develop and implement a
strategy for distribution, customer service, maintenance, pricing, marketing and
sales. Functions including training and defect support must be developed,
staffed and maintained.
ICI began development work on ItemQuest in April 1995. In the last
quarter of 1996, the Company began generating ItemQuest revenues from four
customers in a "controlled availability program". The product became generally
available in April 1997. Management anticipates that, beginning in 1998, there
will be a substantial increase in revenues generated by ItemQuest license fees
as well as customer implementation and customization services. There can be no
assurance, however, that the efforts to develop and market ItemQuest will be
successful or profitable. Furthermore, if the development and marketing of
ItemQuest is successful, there can be no assurance as to when, if ever,
ItemQuest results will represent a substantial portion of the Company's revenues
or net income.
7
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RESULTS OF OPERATIONS
REVENUES
Revenues increased 60% from $2,612,789 for the nine months ended September
30, 1996 to $4,179,645 for the same period in 1997, reflecting continued growth
in the Company's revenues from software services. This increase in operating
revenues was due primarily to the increase in demand for ICI's software
services, particularly related to product development efforts for IBM's
ProductManager, and the increase in billing volume generated by additional
personnel hired to provide those services. All of the Company's revenues in
the nine months ended September 30, 1996 were from software services. In the
nine months ended June 30, 1997, $223,000 of the total revenues came from
license fees paid by the customers in the ItemQuest controlled availability
program, and $3,965,645 of the total revenues came from services. The Company's
business continued to be heavily reliant on IBM, with 74% of revenues for the
nine months ended September 30, 1997, or $3,073,017, compared to 67% of revenues
from the nine months ended September 30, 1996, or $1,747,831, for services to
IBM or related to IBM's ProductManager software product.
Revenues increased 38% from $950,433 for the three months ended September
30, 1996 to $1,309,454 for the same period in 1997 as a result of the same
factors responsible for the nine month results. In the three months ended
September 30, 1997, none of the total revenues came from ItemQuest license fees.
Revenues from IBM for the three- month period ended September 30, 1997 were
$958,655, or 73% of total revenue, compared to revenues of $721,720, or 76% of
total revenues, for the three-month period ended September 30, 1996.
Management's objectives for the remainder of 1997 and future years are
twofold: 1) increase non-IBM revenues as a percentage of total revenues; and
2) increase ItemQuest revenues as a percentage of total revenues. The Company
currently intends to continue to invest the proceeds of its initial public
offering as represented in the Registration Statement in order to implement a
comprehensive marketing and development plan for ItemQuest. New technologies to
be developed include, among other areas, Internet and World Wide Web
capabilities and technological improvements that help to position ItemQuest in
market segments in addition to the PDM market. As ICI undergoes a significant
change in its business with the introduction of ItemQuest, there can be no
assurance that the Company will be able to sustain its historical revenue growth
rate or that the Company will remain profitable in the future.
DIRECT COSTS
Direct costs for services consisting of payroll-related expenses increased
7% from $977,433, or 37% of revenues, in the nine months ended September 30,
1996 to $1,049,078, or 25% of revenues in the nine months ended September 30,
1997. The increase in direct costs primarily reflects the increased volume of
business from 1996 to 1997 and increasing labor costs in the high technology
market. The decrease in direct costs as a percent of revenues is primarily due
to increased margins from fixed bid contracts in 1997.
Direct costs for services for the three months ended September 30, 1996
increased 18% from $310,316, or 33% of revenues, to $365,720, or 28% of
revenues, for the three months ended September 30, 1997. As was the case for
the nine-month period, the increase in direct costs primarily reflects increased
revenues compared to the previous year, and the decrease in direct costs as a
percent of revenues is primarily due to increased margins from fixed bid
contracts in 1997.
SELLING AND MARKETING
Selling and marketing expenses increased 40% from $281,496, or 11% of
revenues, in the nine months ended September 30, 1996 to $393,424, or 9% of
revenues, in the nine month period ended September 30, 1997. Payroll-related
selling and marketing expenses increased 105% from $97,725 in the nine months
ended September
8
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30, 1996 to $200,064 in the nine months ended September 30, 1997, primarily as a
result of increased sales personnel. Other selling and marketing expenses,
including travel, entertainment and trade shows, increased 5% from $183,771 for
the nine months ended September 30, 1996 to 193,360 for the nine months ended
September 30, 1997, primarily because of increased expenses for trade shows and
marketing brochures.
Selling and marketing expenses increased 77% from $87,067, or 9% of
revenues, to $152,600, or 12% of revenues, in the three months ended September
30, 1996 compared to the three months ended September 30, 1997. Payroll-related
selling and marketing expenses increased 111% from $33,090 in 1996 to $69,853 in
1997 due to increased sales personnel. Other selling and marketing expenses
increased 53% from $53,997 in the three months ended September 30, 1996 compared
to $82,747 in the three months ended September 30, 1997, as a result of
increased expenses for trade shows, brochures and marketing-related travel.
GENERAL AND ADMINISTRATIVE
General and administrative expenses were $597,274, or 14% of revenues, in
the nine months ended September 30, 1997 compared to $291,098, or 11% of
revenues, in the nine months ended September 30, 1996, an increase of 105%.
Payroll-related expenses increased 530% from $33,090 in the 1996 period to
$208,368 in the 1997 period as administrative personnel was added to accommodate
the increase in the Company's revenues and assets and the additional expenses
related to a public company. In addition, the Company moved to a larger office
in Charlotte in June 1997, and the Company expanded its Atlanta location in June
1997. As a result, rent increased 76% from $58,621 in the nine months ended
September 30, 1996 to $102,935 in the nine months ended September 30, 1997.
General and administrative expenses were $266,346, or 20% of revenues, in
the three months ended September 30, 1997 compared to $93,179, or 10% of
revenues, in the three months ended September 30, 1996, an increase of 186%.
Payroll-related expenses increased 634% from $11,030 in 1996 to $81,020 in 1997
and rent increased 155% from $20,874 to $53,262, reflecting the same factors
influencing the comparable nine month periods for 1996 and 1997.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 426% from $22,950, or 1% of
revenues, in the nine months ended September 30, 1996 to $120,800, or 3% of
revenues, in the nine months ended September 30, 1997. The contributing factors
for this increase were additional fixed assets and capitalized software in 1997
versus 1996.
Depreciation and amortization increased 680% to $61,100, or 5% of revenues,
for the three months ended September 30, 1997 compared to $7,836, or 1% of
revenues, for the three months ended September 30, 1996, again reflecting
increase fixed assets and capitalized software.
PRODUCT DEVELOPMENT
The Company expended $453,288, or 11% of total revenues, for product
development in the nine months ended September 30, 1997 compared to $183,168, or
7% of revenues, for the nine months ended September 30, 1996, an increase of
147%. This increase reflected the hiring of additional development personnel
for the Company's ItemQuest product. Of the amounts expended, $280,615 was
capitalized in 1997, and $179,803 was capitalized in 1996. The Company began
expensing product development expenditures in July 1997, and the Company's
management anticipates that future product development expenditures will be
expensed rather than capitalized.
The Company expended $172,673, or 13% of revenues, for product development
in the three months ended September 30, 1997 compared to expenditures of
$81,613, or 10% of revenues, for the three months ended September 30, 1996, an
increase of 112%. This increase reflected the hiring of additional development
personnel for ItemQuest. All of the product development expenditures in both
years were related to the development of the Company's ItemQuest product. The
1996 expenditures were capitalized and the 1997 expenditures were expensed.
9
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NON-CASH CHARGE FOR COMPENSATION
In the first quarter of 1997, the Company recognized a non-recurring non-
cash charge for compensation of $442,382 resulting from stock options granted to
employees in January 1997. This amount was 11% of total revenues for the nine
months ended September 30, 1997.
OTHER INCOME/(EXPENSES)
Other income/expenses (net) changed from $1,922 (interest income) in the
nine months ended September 30, 1996 to $315,672 expense (comprised of $157,588
of interest income and $473,260 of interest expense) in the nine months ended
September 30, 1997. Other income increased from $1,105 (interest income) in the
three months ended September 30, 1996 to $88,294 (comprised of $89,229 of
interest income and $935 of interest expense) in the three months ended
September 30, 1997. Included in the interest expense for the nine months ended
September 30, 1997 amount was a non-recurring non-cash charge of $319,241 that
was a result of warrants issued by the Company's original stockholders in
connection with the Company's Senior Debentures. The Company determined that
the warrants issued in connection with the Senior Debentures had a fair market
value of $2.72 per warrant or an aggregate of $319,241, based upon 117,368
warrants granted. An initial non-cash charge to interest was recognized in
first quarter 1997. As a result of the Company's initial public offering, the
Senior Debentures were prepaid in May 1997, and the balance of the non-cash
charge ($297,071) was recognized in second quarter 1997. This value ascribed to
the warrants was deemed to be a contribution to capital by the original
stockholders of the Company and treated as additional interest paid to the
holders of the Senior Debentures.
An additional non-recurring charge to interest expense of $132,650 was
recognized in the nine months ended September 30, 1997 related to financing
costs, primarily underwriting expenses, recognized when the Senior Debentures
were prepaid. The combined non-recurring interest charges were $451,891, or 11%
of revenues, for the nine months ended September, 1997. None of these charges
occurred in third quarter 1997.
PROVISION FOR INCOME TAXES
The Company had elected to be treated as an S Corporation pursuant to the
Internal Revenue Code for federal and state income tax purposes. The income of
an S Corporation is taxable to the individual stockholders and is distributable
to the stockholders without any further tax consequences. The stockholders
revoked the S Corporation status on April 30, 1997 immediately prior to the
closing of the Company's initial public offering, and the Company became taxable
as a C Corporation from that date forward. A pro forma provision for income
taxes has been presented which represents income taxes that would have been
provided had the Company operated as a C Corporation throughout its history. An
effective income tax rate of 37.7% has been used for financial statement
purposes both before and after the S Corporation termination. The third quarter
1997 results are actual because the Company was a C corporation during the
entire three month period.
NET INCOME AND EARNINGS PER SHARE
The Company realized a pro forma net income of $684,823, or $.23 per
share, for the nine months ended September 30, 1997 compared to a pro forma net
income of $647,212, or $.27 per share for the nine months ended September 30,
1996. Without the previously discussed non-recurring charges related to stock
options and the Company's Senior Debentures, the pro forma net income would have
been $1,221,357, or $.41 per share, for the nine months ended September 30,
1997.
The Company realized net income of $243,096, or $.07 per share, for the
quarter ended September 30, 1997 compared to pro forma net income of $282,306,
or $.12 per share, for the quarter ended September 30, 1996.
10
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LIQUIDITY AND CAPITAL RESOURCES
Prior to 1997, the primary source of the Company's cash was operations. In
January 1997, the Company issued an aggregate of $1,115,000 in Senior
Debentures. In May 1997, the company completed its initial public offering,
providing approximately $9,300,000 in cash proceeds to the Company. At the
closing of its initial public offering, the Company prepaid the Senior
Debentures principal and accrued interest in whole on May 5, 1997.
Consequently, the composition of the Company's cash flow changed
substantially for the nine months ended September 30, 1997 compared to the nine
months ended September 30, 1996. Net cash provided by operating activities
increased by $60,175, or 5%, for the nine months ended September 30, 1997
($1,200,103) compared to the nine months ended September 30, 1996 ($1,139,928).
Net cash used by investing activities increased from $248,662 in the nine months
ended September 30, 1996, to $701,519 in the nine months ended September 30,
1997, an increase of $452,857, or 182%. These investing activities included
acquisition of property and equipment and capitalization of software development
costs. Cash flows from financing activities changed from net cash used in the
nine months ended September 30,1996 of $391,217 versus net cash provided of
$6,967,946 in the nine months ended September 30 1997. Aside from the initial
public offering proceeds, the other major item in this category was S
Corporation distributions to stockholders, increasing from $415,217 in the nine
months period in 1996 to $2,316,124 in 1997. An additional $252,641 is owed to
the Company's original stockholders as part of the final distribution to
stockholders, reflecting undistributed earnings through the Company's S
Corporation termination date of April 30, 1997. As the remaining assigned
accounts receivable are collected by the Company, the proceeds will be paid to
the S Corporation stockholders.
The Company's initial public offering provided approximately $9,300,000 in
cash proceeds to the Company in May 1997. After such proceeds are applied as
described in "Use of Proceeds" in the Registration Statement, the Company's
Management anticipates that it will have adequate cash to fund operations for at
least the next twenty-four months, although there can be no assurance that such
funds will be adequate to fully implement the Company's long-term expansion
plans.
11
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities and Use of Proceeds
Effective Date of Registration Statement: April 29, 1997
SEC File Number: 333-21647
Date Offering Commenced: April 30, 1997
Unsold Securities: Underwriter's option to purchase 168,750 shares for
over-allotment was not exercised
Managing Underwriter: H.J. Meyers & Co., Inc.
Title of Securities:
Common stock, par value $0.001 per share
Warrant to purchase common stock
Common stock issuable upon exercise of warrant
Securities sold:
Title: Common stock
Amount registered: 1,293,750
Aggeregrate price registered: $12,290,625
Amount sold: 1,125,000
Aggregrate sold: $10,687,500
Expenses:
Underwriting discounts and commissions: $ 961,875
Expenses paid to underwriters: 226,862
Other expenses: 211,700
Total expenses $ 1,400,437
Net Offering proceeds: $ 9,287,063
Use of proceeds to date:
Construction of facilities: $ 131,324
Purchase of equipment: 174,340
Repayment of indebtedness: 1,134,795
Marketing and sales 120,000
Temporary investments (C/D's) 3,100,000
Working capital 4,626,604
Net Offering proceeds $ 9,287,063
There were no direct or indirect payments to directors, officers,
general partners of the issuer or their associates; to persons owning
ten percent or more of any class of equity securities of the issuer;
or to affiliates of the issuer.
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Computation of Pro Forma Earnings Per Share
27.1 Financial Data Schedule
12
<PAGE>
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter
ended September 30, 1997.
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.
INTERNATIONAL COMPUTEX, INC.
By: /s/ Haim E. Dahan
-----------------
Haim E. Dahan
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Ralph E. Walter
--------------------
Ralph E. Walter
Chief Financial Officer
(Principal Financial Officer)
November 12, 1997
13
<PAGE>
EXHIBIT 11.1
INTERNATIONAL COMPUTEX, INC.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months ended Sept 30, Nine Months ended Sept 30,
1996 1997 1996 1997
--------- --------- ----------- --------------
<S> <C> <C> <C> <C>
Pro forma net income 282,306 243,096 647,212 684,823
Weighted average number
of common and common equivalent
shares are as follows:
Weighted average common
shares outstanding 2,125,000 3,250,000 2,125,000 2,750,000
Shares issued from assumed exercise
of common stock equivalents (1) 230,245 230,245 230,245 230,245
--------- --------- --------- -----------
Weighted average number
of common and common equivalent
shares outstanding 2,355,245 3,480,245 2,355,245 2,980,245
========= ========= ========= ===========
Per share data:
Net income $ .12 $ .07 $ .27 $ .23
========= ========= ========= ===========
</TABLE>
(1) Shares issued from assumed exercise of common stock equivalents include the
number of incremental shares which would result from applying the treasury
stock method.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,586,280
<SECURITIES> 0
<RECEIVABLES> 1,739,579
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,409,287
<PP&E> 647,655
<DEPRECIATION> 117,373
<TOTAL-ASSETS> 10,457,400
<CURRENT-LIABILITIES> 502,095
<BONDS> 0
0
0
<COMMON> 3,250
<OTHER-SE> 9,936,427
<TOTAL-LIABILITY-AND-EQUITY> 10,457,400
<SALES> 4,179,645
<TOTAL-REVENUES> 4,179,645
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,775,631
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 315,672
<INCOME-PRETAX> 1,088,342
<INCOME-TAX> 403,519
<INCOME-CONTINUING> 684,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 684,823
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
