UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1999
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________.
Commission File Number 0-22735
-------
------------
ROBOCOM SYSTEMS INTERNATIONAL INC.
-------------------------------------------------
(Name of small business issuer as specified in its charter)
New York 11-2617048
- ---------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
511 Ocean Avenue, Massapequa, New York 11758
-------------------------------------------------
(Address of principal executive offices)
516-795-5100
---------------------------------------------
(Issuer's telephone number)
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 January 14, 2000, 4,415,984 shares the issuer's common stock were
outstanding.
Transitional Small Business Disclosure Format (check one); Yes |_| No |X|
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
FORM 10-QSB
INDEX
PART I. Financial Information
Item 1. Financial Statements: Page no.
Balance Sheets - November 30, 1999 and May 31, 1999 ........ 3
Statements of Operations - Three months ended November 30,
1999 and 1998 ............................................. 4
Statements of Operations - Six months ended November 30,
1999 and 1998 ............................................. 5
Statements of Cash Flows - Six months ended November 30,
1999 and 1998 .............................................. 6
Notes to Financial Statements .............................. 7
Item 2. Management's Discussion and Analysis or Plan of Operation .. 8
PART II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders ........ 11
Item 5. Other Information .......................................... 11
Item 6. Exhibits and Reports on Form 8-K ........................... 12
Signatures ............................................................ 12
2
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, 1999 May 31, 1999
----------------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................... $ 1,098,860 $ 101,148
Short-term investments ...................................... 213,928 1,144,136
Accounts receivable, net .................................... 1,379,483 1,694,241
Unbilled revenue ............................................ 181,752 272,733
Deferred taxes .............................................. 152,511 177,305
Other current assets ........................................ 226,323 242,580
------------ ------------
Total current assets ............................................... 3,252,857 3,632,143
Property and equipment, net ........................................ 283,118 314,872
Software development costs, net .................................... 4,548,481 4,632,208
Other assets ....................................................... 15,463 15,991
------------ ------------
Total assets ....................................................... $ 8,099,919 $ 8,595,214
============ ============
Liabilities and Shareholders' Equity Current liabilities:
Accounts payable ............................................ $ 292,404 $ 294,579
Accrued expenses ............................................ 720,848 946,981
Deferred revenue ............................................ 851,684 509,494
------------ ------------
Total current liabilities .......................................... 1,864,936 1,751,054
Deferred tax liabilities ........................................... 196,649 221,444
------------ ------------
Total liabilities .................................................. 2,061,585 1,972,498
------------ ------------
Shareholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized;
none issued .............................................. -- --
Common stock, $.01 par value; 10,000,000 shares authorized;
4,415,984 and 3,467,984 shares issued and outstanding at
November 30, 1999 and at May 31, 1999, respectively ....... 44,160 34,680
Additional paid-in capital .................................. 11,744,402 10,571,882
Accumulated deficit ......................................... (5,703,591) (3,899,259)
Deferred compensation ....................................... (46,637) (84,587)
------------ ------------
Total shareholders' equity ......................................... 6,038,334 6,622,716
------------ ------------
Total liabilities and shareholders' equity ......................... $ 8,099,919 $ 8,595,214
============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended November 30,
------------------------------
1999 1998
------------- -----------
Revenues:
Software license fees .................. $ 264,634 $ 103,115
Services ............................... 346,240 826,708
Hardware ............................... 383,538 672,800
Maintenance ............................ 342,475 333,477
----------- -----------
Total revenues ......................... 1,336,887 1,936,100
----------- -----------
Cost of revenues:
Cost of license fees ................... 31,281 29,030
Cost of services ....................... 313,803 336,734
Cost of hardware ....................... 274,418 538,653
Cost of maintenance .................... 251,870 277,542
----------- -----------
Total cost of revenues ................. 871,372 1,181,959
Amortization of software development costs ... 352,482 263,829
----------- -----------
1,223,854 1,445,788
----------- -----------
Gross margin ................................. 113,033 490,312
Selling, general and administrative expenses . 926,505 1,121,990
----------- -----------
(813,472) (631,678)
Interest income and other, net ............... 7,233 26,784
----------- -----------
Loss before benefit for income taxes ......... (806,239) (604,894)
Benefit for income taxes ..................... -- (241,958)
----------- -----------
Net loss ..................................... $ (806,239) $ (362,936)
=========== ===========
Net loss per basic and diluted share ......... $ (0.23) $ (0.10)
=========== ===========
Weighted average shares outstanding .......... 3,478,402 3,467,984
=========== ===========
See accompanying notes.
4
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
STATEMENTS OF OPERATIONS
(unaudited)
Six Months Ended November 30,
----------------------------
1999 1998
----------- -----------
Revenues:
Software license fees .................. $ 457,491 $ 380,732
Services ............................... 626,768 1,458,089
Hardware ............................... 600,703 1,267,961
Maintenance ............................ 692,920 633,009
----------- -----------
Total revenues ......................... 2,377,882 3,739,791
----------- -----------
Cost of revenues:
Cost of license fees ................... 80,806 95,157
Cost of services ....................... 621,389 735,051
Cost of hardware ....................... 457,453 1,032,237
Cost of maintenance .................... 532,790 628,486
----------- -----------
Total cost of revenues ................. 1,692,438 2,490,931
Amortization of software development costs ... 704,964 527,658
----------- -----------
2,397,402 3,018,589
----------- -----------
Gross margin ................................. (19,520) 721,202
Selling, general and administrative expenses . 1,807,308 2,039,904
----------- -----------
(1,826,828) (1,318,702)
Interest income and other, net ............... 22,496 53,010
----------- -----------
Loss before benefit for income taxes ......... (1,804,332) (1,265,692)
Benefit for income taxes ..................... -- (506,276)
----------- -----------
Net loss ..................................... $(1,804,332) $ (759,416)
=========== ===========
Net loss per basic and diluted share ......... $ (0.52) $ (0.22)
=========== ===========
Weighted average shares outstanding .......... 3,473,164 3,467,984
=========== ===========
See accompanying notes.
5
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended November 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Operating activities
Net loss .......................................... $(1,804,332) $ (759,416)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation ................................ 57,850 54,292
Benefit for deferred income taxes ........... -- (506,276)
Amortization of software development costs .. 704,964 527,658
Amortization of deferred compensation ....... 37,950 37,950
Changes in operating assets and liabilities:
Accounts receivable ...................... 270,147 263,243
Unbilled revenue ......................... 90,981 744,503
Other current assets and other ........... 16,784 (2,317)
Accounts payable ......................... (2,175) 13,163
Accrued expenses ......................... (226,133) 57,793
Deferred revenue ......................... 386,800 (44,617)
----------- -----------
Net cash (used in) provided by operating activities (467,164) 385,976
----------- -----------
Investing activities
Software development costs ........................ (621,237) (533,818)
Purchase of short-term investments ................ (1,983,012) (7,568,831)
Redemption of short-term investments .............. 2,913,221 7,772,214
Capital expenditures .............................. (26,096) (16,241)
----------- -----------
Net cash provided by (used in) investing activities 282,876 (346,676)
----------- -----------
Financing activities
Net proceeds from private placement ............... 1,182,000 --
----------- -----------
Net cash provided by financing activities ......... 1,182,000 --
----------- -----------
Increase in cash and cash equivalents ............. 997,712 39,300
Cash and cash equivalents at beginning of period . 101,148 384,034
----------- -----------
Cash and cash equivalents at end of period ........ $ 1,098,860 $ 423,334
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for income taxes ........................ $ 8,956 $ 14,785
=========== ===========
</TABLE>
See accompanying notes.
6
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
(unaudited)
1. Background and Basis of Financial Statement Presentation
The accompanying unaudited financial statements of Robocom Systems
International Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial reporting and
with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
Company's operations consist of the development and marketing of automated
warehouse management systems and related software which is used by various
commercial enterprises primarily located in the United States, Australia and
Europe. The Company licenses and installs its proprietary software product
RIMS.2001, which is an "off-the-shelf" inventory management system. The Company
also provides related services, including modification, project management,
training, implementation support, maintenance and the sale of hardware and third
party software.
Operating results for the six month period ended November 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
May 31, 2000. For further information, refer to the financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-KSB for the
year ended May 31, 1999.
2. Private Placement Offering
On November 30, 1999, the Company raised net proceeds of $1,182,000 in a
private placement offering of its common stock with a group of the Company's
founders and executive management team. In exchange for $1,182,000, 948,000
shares of common stock were issued together with five year warrants to purchase
up to 355,500 shares of common stock at exercise prices ranging from $1.50 to
$4.00. Subsequent to this financing, the Company has 4,415,984 shares
outstanding, of which the Company's directors and executive officers own in the
aggregate, approximately 59%.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain statements in this Report constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Factors
that might cause such a difference include, among others, uncertainties relating
to general economic and business conditions; industry trends; changes in demand
for the Company's product; uncertainties relating to customer plans and
commitments and the timing of orders received from customers; announcements or
changes in pricing policies by the Company or its competitors; unanticipated
delays in the development, market acceptance or installation of the Company's
products; availability of management and other key personnel; availability,
terms and deployment of capital; relationships with third-party equipment
suppliers; governmental export and import policies; global trade policies; and
worldwide political stability and economic growth. The words "believe",
"expect", "anticipate", "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statement
was made.
RESULTS OF OPERATIONS
Comparison of Three Months Ended November 30, 1999 and November 30, 1998
Revenues. Total revenues decreased by approximately 31% to $1,336,887 in
the three months ended November 30, 1999 as compared to $1,936,100 in the three
months ended November 30, 1998. Software license fees increased by approximately
157% during the 1999 period as compared to the 1998 period primarily due to
domestic sales of RIMS.2001 software licenses with a high number of users in the
three months ended November 30, 1999, as compared to the three months ended
November 30, 1998. Service revenues decreased by approximately 58% for the 1999
period as compared to the 1998 period, primarily due to lower revenues from
services provided for installations of RIMS software and a lower number of
installations of computer systems networks and office software in the 1999
period. Hardware revenues decreased by approximately 43% during the 1999 period
as compared to the 1998 period, primarily due to fewer deliveries of computer
systems network and office hardware in the 1999 period. Maintenance revenues
remained relatively consistent for the 1999 period as compared to the 1998
period.
Cost of Revenues. Total cost of revenues decreased by approximately 26% to
$871,372 in the three months ended November 30, 1999 as compared to $1,181,959
in the three months ended November 30, 1998. As a percentage of revenues, total
cost of revenues increased to approximately 65% in the 1999 period as compared
to approximately 61% in the 1998 period. As a percentage of license fee
revenues, cost of license fees decreased primarily due to higher license
revenues with no associated third party or distributor fees in the 1999 period
as compared to the 1998 period. As a percentage of service revenues, the cost of
services was significantly higher in the 1999 period as compared to the 1998
period primarily due to lower billable support services in the 1999 period. As a
percentage of hardware revenues, the cost of hardware decreased due to the type
of hardware installed. As a percentage of maintenance revenues, the cost of
maintenance was lower in the 1999 period as compared to the 1998 period due to a
larger number of maintenance contracts in operation in the 1999 period and lower
costs associated with maintaining older versions.
Amortization of Software Development Costs. Amortization of software
development costs increased by approximately 34% to $352,482 in the three months
ended November 30, 1999 as compared to $263,829 in the three months ended
November 30, 1998. The increase was due to the commencement of amortization of
capitalized software development costs for RIMS.2001 Version 4.0 in the fourth
quarter of fiscal 1999, during which time such versions were first available for
sale. As a percentage of revenue, the amortization of software development costs
was approximately 26% in the 1999 period and 14% in the 1998 period.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately 17% to $926,505 in the three
months ended November 30, 1999 as compared to $1,121,990 in the three months
ended November 30, 1998. The decrease is primarily due to lower advertising
costs and lower costs to support the two international offices. As a percentage
of revenue, selling, general and administrative expenses increased to
approximately 69% in the 1999 period as compared to approximately 58% in the
1998 period. The increase in selling, general and administrative expense as a
percentage of revenues is due to lower revenues in the 1999 period as selling,
general and administrative expenses do not result in attendant increases in
revenues.
Interest Income and Other, net. Interest income decreased by $19,551 to
$7,233 in the three months ended November 30, 1999 as compared to the three
months ended November 30, 1998. The decrease is primarily due to the reduction
of the remaining net proceeds from the Company's June 1997 initial public
offering, which were utilized for software development and working capital
requirements.
Benefit for Income Taxes. Since the Company is operating at a loss, no
provision or benefit is reflected in the 1999 period. No deferred tax expense
has been recorded in the 1999 period as the Company continues to record a
valuation allowance to reserve for the net deferred tax assets. The benefit for
income taxes for the three month period ended November 30, 1998 consisted of a
tax benefit reflected at 40% of the loss before the benefit for income taxes.
Comparison of Six Months Ended November 30, 1999 and November 30, 1998
Revenues. Total revenues decreased by approximately 36% to $2,377,882 in
the six months ended November 30, 1999 as compared to $3,739,791 in the six
months ended November 30, 1998. The Company believes the results for the six
months ended November 30, 1999 were significantly affected by the year 2000
slowdown in sales of software. Software license fees increased by approximately
20% during the 1999 period as compared to the 1998 period primarily due the
increased domestic sales of RIMS.2001 software licenses in the six months ended
November 30, 1999, as compared to the six months ended November 30, 1998.
Software license fees from one customer accounted for approximately 12% of total
revenues for the six months ended November 30, 1999. Service revenues decreased
by approximately 57% for the 1999 period as compared to the 1998 period,
primarily due to lower revenues from services provided for installations of
RIMS.2001 software for significantly higher user licenses and a lower number of
installations of computer systems networks and office software in the 1999
period. Hardware revenues decreased by approximately 53% during the 1999 period
as compared to the 1998 period, primarily due to fewer deliveries of computer
systems network and office hardware in the 1999 period. Maintenance revenues
increased slightly to 9% for the 1999 period as compared to the 1998 period.
Cost of Revenues. Total cost of revenues decreased by approximately 32% to
$1,692,438 in the six months ended November 30, 1999 as compared to $2,490,931
in the six months ended November 30, 1998. As a percentage of revenues, total
cost of revenues increased to approximately 71% in the 1999 period as compared
to approximately 67% in the 1998 period. As a percentage of license fee
revenues, cost of license fees decreased primarily due to higher license
revenues with no associated third party or distributor fees in the 1999 period
as compared to the 1998 period. As a percentage of service revenues, the cost of
services was significantly higher in the 1999 period as compared to the 1998
period primarily due to lower billable support services in the 1999 period. As a
percentage of hardware revenues, the cost of hardware decreased due to the type
of hardware installed. As a percentage of maintenance revenues, the cost of
maintenance was lower in the 1999 period as compared to the 1998 period due to a
larger number of maintenance contracts in operation in the 1999 period. In the
1998 period, several RIMS versions and language translations had been released
and therefore, required higher initial maintenance.
Amortization of Software Development Costs. Amortization of software
development costs increased by approximately 34% to $704,964 in the six months
ended November 30, 1999 as compared to $527,658 in the six months ended November
30, 1998. The increase was due to the commencement of amortization of
capitalized software development costs for RIMS.2001 Version 4.0 in the fourth
quarter of fiscal 1999, during which time such versions were first available for
sale. As a percentage of revenue, the amortization of software development costs
was approximately 30% in the 1999 period and 14% in the 1998 period.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by approximately 11% to $1,807,308 in the six
months ended November 30, 1999 as compared to $2,039,904 in the six months ended
November 30, 1998. As a percentage of revenue, selling, general and
administrative expenses increased to approximately 76% in the 1999 period as
compared to approximately 55% in the 1998 period. The increase in selling,
general and administrative expense as a percentage of revenues is due to lower
revenues in the 1999 period as selling, general and administrative expenses do
not result in attendant increases in revenues.
Interest Income and Other, net. Interest income decreased by $30,514 to
$22,496 in the six months ended November 30, 1999 as compared to the six months
ended November 30, 1998. The decrease is primarily due to the reduction of the
remaining net proceeds from the Company's June 1997 initial public offering,
which were utilized for software development and working capital requirements.
Benefit for Income Taxes. Since the Company is operating at a loss, no
provision or benefit is reflected in the 1999 period. No deferred tax expense
has been recorded in the 1999 period as the Company continues to record a
valuation allowance to reserve for the net deferred tax assets. The benefit for
income taxes for the six month period ended November 30, 1998 consisted of a tax
benefit reflected at 40% of the loss before the benefit for income.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a bank line of credit (the "Line of Credit"), which
expires on September 30, 2000 and provides for borrowings of up to $2,000,000.
Amounts outstanding under the Line of Credit are payable on demand and are
collateralized by the assets of the Company. Borrowings bear interest at the
prime rate (8.50% at January 14, 2000). The Company had no borrowings under the
Line of Credit at November 30, 1999. In the future, however, the Company may
borrow against this or a subsequent line of credit. The amount available under
the Line of Credit is reduced by a $50,000 standby letter of credit with the
same bank, which is being utilized as collateral for a vendor and which expires
on December 31, 2000.
Net cash used by operating activities was $467,164 in the six months ended
November 30, 1999 and net cash provided by operating activities was $385,976 in
the six months ended November 30, 1998. Cash flows from operations decreased in
the 1999 period primarily due to a higher loss from operations and lower
unbilled revenues.
The Company capitalized $621,237 and $533,818 in the six months ended
November 30, 1999 and 1998, respectively, for software development costs. The
capitalized software development costs in process in the 1999 period included
costs of adding, among other things, functionality to provide additional
internet and intranet-based capability to the standard RIMS.2001 product. The
Company expended $26,096 and $16,241 in the six months ended November 30, 1999
and 1998, respectively, for purchases of equipment.
As of November 30, 1999, the Company had $1,098,860 in cash and cash
equivalents and working capital of $1,387,921.
On November 30, 1999, the Company issued 948,000 shares of common stock
and warrants to purchase up to 355,500 shares of common stock at exercise prices
ranging from $1.50 to $4.00. The Company raised net proceeds of $1,182,000 from
this private placement offering.
Management believes that cash flow from operations, existing cash and cash
equivalents and short-term investments and amounts available under the Line of
Credit will be sufficient to meet the Company's currently anticipated working
capital and software development requirements for the next twelve months. The
Company's working capital needs for the next twelve months include approximately
$1,200,000 for software development costs.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (continued)
Year 2000 Readiness Disclosure
The Company's primary software, RIMS.2001, is Year 2000 compliant, which
means that it is not adversely affected by the century change. RIMS.2001 will
function properly and as would be expected for all dates before and beyond the
year 2000. The RIMS application uses a modern fourth generation software
language (Progress) that supports Year 2000 and was designed with Year 2000 in
mind. For clients with customized systems or systems that pre-date the Company's
standard RIMS.2001 product line, the Company has made every effort to ensure
that the maintained application operates properly with regard to the century
transition. The Company has determined that there were no material issues
associated with Year 2000 compliance.
PART II. OTHER INFORMATION:
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of shareholders was held on October 29, 1999.
At the meeting, the only matter acted upon by the shareholders was the election
of seven directors to the Board of Directors. As of September 20, 1999, the
record date for the Annual Meeting, 3,467,984 shares of common stock were
outstanding and eligible to vote. Of the 2,541,639 shares of common stock voted
at the meeting, in person or by proxy, the number of votes in favor of and
against each director was as follows:
Director Votes cast in favor Votes cast against
-------- ------------------- ------------------
Irwin Balaban 2,521,189 20,450
Mark Berhman 2,527,589 14,050
David Dinin 2,528,589 13,050
Herbert Goldman 2,527,589 14,050
William J. Hancock 2,528,589 13,050
Lawrence B. Klein 2,527,589 14,050
Yacov Shamash 2,528,589 13,050
No other matters were brought before the meeting for a shareholder vote.
ITEM 5. OTHER INFORMATION
On November 30, 1999, the Company sold 11.85 units, each unit consisting
of (i) 80,000 shares of common stock, par value $.01 per share, (ii) a five-year
warrant to purchase up to 5,000 shares of common stock at exercise price of
$1.50 per share, (iii) a five-year warrant to purchase up to 10,000 shares of
common stock at exercise price of $2.50 per share, and (iv) a five-year warrant
to purchase up to 15,000 shares of common stock at exercise price of $4.00 per
share. The Company raised net proceeds of $1,182,000 from this private placement
offering which was sold primarily to a group of the Company's directors and
executive officers.
The offering and sale of the units was exempt from registration under the
Securities Act of 1933 by virtue of Section 4(2) thereof.
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
10.1 Consulting Agreement between the Company and William J.
Hancock dated November 23, 1999
10.2 Form of Warrant issued in November 1999
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the second quarter of fiscal
2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in Massapequa, New
York, on January 14, 2000.
ROBOCOM SYSTEMS INTERNATIONAL INC.
By: /s/David Dinin
-------------------------------------
David Dinin
President and Chief Executive Officer
By: /s/Elizabeth A. Burke
-------------------------------------
Elizabeth A. Burke
Vice President - Finance and Chief
Financial Officer
12
<PAGE>
Exhibit Index
Exhibit
Number Description
- ------ -----------
10.1 Consulting Agreement between the Company and William J. Hancock
dated November 23, 1999
10.2 Form of Warrants issued in November 1999
27 Financial Data Schedule
13
Robocom Systems International Inc. Exhibit 10.1
CONSULTING AGREEMENT
AGREEMENT made this 23rd day of November, 1999 by and between WILLIAM J.
HANCOCK (the "Consultant"), an individual residing at 5512 Ashleigh Road,
Fairfax, Virginia 22030, and ROBOCOM SYSTEMS INTERNATIONAL INC. (the "Company"),
a New York corporation with offices located at 511 Ocean Avenue, Massapequa, New
York 11758.
WHEREAS, the Company desires to avail itself of and obtain the
Consultant's experience, skill, ability and knowledge with respect to certain
marketing strategy needs of the Company; and
WHEREAS, the Consultant is willing to be engaged by the Company for the
purposes hereinafter more fully set forth;
NOW, THEREFORE, in consideration of the covenants herein, the parties
agree as follows:
1. The Company hereby engages and retains the Consultant to render, and
the Consultant hereby agrees to utilize its best efforts in rendering to the
Company, the consulting services hereinafter described for a period of 12 months
commencing on the date hereof; provided, however, that this agreement (other
than the provisions of paragraph 8, which provisions shall survive the
termination of this agreement) may be terminated by either party upon 30 days
written notice.
2. The Consultant's services hereunder shall consist of consulting with
and rendering advice to the Company with respect to the Company's marketing
affairs as the Company may from time to time require during the term of this
Agreement. Specifically, the effort will be focused on establishing a senior
retired military advisory group to develop a strategic plan for the Company to
implement in the pursuit of business development with the Defense Department.
Initial efforts will focus on the potential for opportunities with Navy
customers and may include the additional services of other subject matter
experts as agreed by the Company.
3. The Company agrees that the Consultant shall not be prevented or barred
from rendering any services of similar or dissimilar nature for or on behalf of
any person, individual, firm or corporation other than the Company, including
business substantially similar to but not directly competitive with the business
of the Company.
4. In consideration of the Consultant's services hereunder, the Company
shall pay Consultant a retainer fee at the monthly rate of $3,000 for
approximately one and one half days' services per month to be rendered by
Consultant under this Agreement, payable monthly.
14
<PAGE>
5. The Consultant shall be entitled to reimbursement by the Company of any
and all expenses incurred by the Consultant in performing services requested by
the Company under this Agreement upon presentation of a statement outlining such
expenses. Such expenses may include airfare, lodging and other necessary
expenses.
6. All final decisions with respect to advice or services rendered by the
Consultant hereunder shall be those of the Company, and there shall be no
liability whatsoever on the part of the Consultant to the Company in connection
therewith.
7. This Agreement may not be transferred, assigned, delegated, sold or in
any manner hypothecated or pledged by any of the parties hereto without the
prior written consent of both parties.
8. The Consultant agrees to keep confidential all information obtained
from the Company. The Consultant agrees that neither he nor his employees,
agents or attorneys, if any, will disclose to any other person or entity, or use
for any purpose other than as specified herein, any information pertaining to
the Company or any affiliate thereof which is either non-public, confidential or
proprietary in nature ("Information") which he obtains or is given access to
during the performance of the services provided hereunder. The Consultant also
agrees that only those of his employees, agents and attorneys who have a
need-to-know to perform the services contracted herein and are under an
obligation to maintain the confidentiality of the Information will be given
access to the Information.
9. This Agreement contains the entire agreement of the parties hereto with
respect to the subject matter hereof, and there are no representations or
warranties other than as contained herein. No waiver or modification hereto
shall be valid unless in writing.
10. This Agreement shall be governed, construed and enforced in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first above written.
/s/ William J. Hancock
---------------------------------------
WILLIAM J. HANCOCK
ROBOCOM SYSTEMS INTERNATIONAL INC.
By: /s/ David Dinin
---------------------------------------
DAVID DININ, PRESIDENT
15
Robocom Systems International Inc. Exhibit 10.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IN ACCORDANCE WITH AN
EXEMPTION FROM REGISTRATION UNDER THAT ACT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
ROBOCOM SYSTEMS INTERNATIONAL INC.
This certifies that _______________, or any party to whom this Warrant is
assigned in accordance with the terms hereof, is entitled to subscribe for and
purchase _____ shares of the Common Stock, par value $.01 per share, of Robocom
Systems International Inc., a New York corporation, on the terms and conditions
of this Warrant.
1. Definitions. As used in this Warrant, the term:
1.1 "Business Day" means any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated to be closed by law or by executive order.
1.2 "Common Stock" means the Common Stock, par value $.01 per share,
of the Corporation.
1.3 "Corporation" means Robocom Systems International Inc., a New
York corporation, or its successor.
1.4 "Expiration Date" means November 30, 2004.
1.5 "Holder" means ____________ or any party to whom this Warrant is
assigned in accordance with the terms hereof.
1.6 "1933 Act" means the Securities Act of 1933, as amended.
1.7 "Warrant" means this Warrant and any warrants delivered in
substitution or exchange for this Warrant in accordance with the provisions of
this Warrant.
1.8 "Warrant Price" means [$1.50] [$2.50] [$4.00] per share of
Common Stock, as such amount may be adjusted pursuant to Section 4 hereof.
2. Exercise of Warrant. At any time before the Expiration Date, the Holder
may exercise the purchase rights represented by this Warrant, in whole or in
part, by surrendering this Warrant (with a duly executed subscription in the
form attached) at the Corporation's principal corporate office (located on the
date hereof in Massapequa, New York) and by paying the Corporation the aggregate
Warrant Price for the shares of Common Stock being purchased.
2.1 Delivery of Certificates. Within fifteen (15) days after each
exercise of the purchase rights represented by this Warrant, the Corporation
shall deliver a certificate for the shares of Common Stock so purchased to the
Holder and, unless this Warrant has been fully exercised or expired, a new
Warrant representing the balance of the shares of Common Stock subject to this
Warrant.
2.2 Effect of Exercise. The person entitled to receive the shares of
Common Stock issuable upon any exercise of the purchase rights represented by
this Warrant shall be treated for all purposes as the holder of such shares of
record as of the close of business on the date of exercise.
2.3 Issue Taxes. The Corporation shall pay all issue and other taxes
that may be payable in respect of any issue or delivery to the Holder of shares
of Common Stock upon exercise of this Warrant.
16
<PAGE>
3. Stock Fully Paid; Reservation of Shares. The Corporation covenants and
agrees that all securities that it may issue upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and nonassessable
and free from all taxes, liens and charges. The Corporation further covenants
and agrees that, during the period within which the Holder may exercise the
rights represented by this Warrant, the Corporation shall at all times have
authorized and reserved for issuance enough shares of its Common Stock or other
securities for the full exercise of the rights represented by this Warrant. The
Corporation shall not, by an amendment to its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant.
4. Adjustments. The Warrant Price and the number of shares of Common Stock
that the Corporation must issue upon exercise of this Warrant shall be subject
to adjustment in accordance with Sections 4.1 through 4.3.
4.1 Adjustment to Warrant Price for Combinations or Subdivisions of
Common Stock. If the Corporation at any time or from time to time after the date
hereof (1) declares or pays, without consideration, any dividend on the Common
Stock payable in shares of Common Stock; (2) creates any right to acquire Common
Stock for no consideration; (3) subdivides the outstanding shares of Common
Stock (by stock split, reclassification or otherwise); or (4) combines or
consolidates the outstanding shares of Common Stock, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Corporation shall
proportionately increase or decrease the Warrant Price, as appropriate.
4.2 Adjustments for Reclassification and Reorganization. If the
Common Stock issuable upon exercise of this Warrant changes into shares of any
other class or classes of security or into any other property for any reason
other than a subdivision or combination of shares provided for in Section 4.1,
including without limitation any reorganization, reclassification, merger or
consolidation, the Corporation shall take all steps necessary to give the Holder
the right, by exercising this Warrant, to purchase the kind and amount of
securities or other property receivable upon any such change by the owner of the
number of shares of Common Stock subject to this Warrant immediately before the
change.
4.3 Spin Offs. If the Corporation spins off any subsidiary by
distributing to the Corporation's shareholders as a dividend or otherwise any
stock or other securities of the subsidiary, the Corporation shall reserve until
the Expiration Date enough of such shares or other securities for delivery to
the Holders upon any exercise of the rights represented by this Warrant to the
same extent as if the Holders owned of record all Common Stock or other
securities subject to this Warrant on the record date for the distribution of
the subsidiary's shares or other securities.
4.4 Certificates as to Adjustments. Upon each adjustment or
readjustment required by this Section 4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with this
Section, cause independent public accountants selected by the Corporation to
verify such computation and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.
5. Fractional Shares. The Corporation shall not issue any fractional
shares in connection with any exercise of this Warrant.
6. Dissolution or Liquidation. If the Corporation dissolves, liquidates or
winds up its business before the exercise or expiration of this Warrant, the
Holder shall be entitled, upon exercising this Warrant, to receive in lieu of
the shares of Common Stock or any other securities receivable upon such
exercise, the same kind and amount of assets as would have been issued,
distributed or paid to it upon any such dissolution, liquidation or winding up
with respect to such shares of Common Stock or other securities, had the Holder
been the holder of record on the record date for the determination of those
entitled to receive any such liquidating distribution or, if no record is taken,
upon the date of such liquidating distribution. If any such dissolution,
liquidation or winding up results in a cash distribution or distribution of
property which the Corporation's Board of Directors determines in good faith to
have a cash value in excess of the Warrant Price provided by this Warrant, then
the Holder may, at its option, exercise this Warrant without paying the
aggregate Warrant Price and, in such case, the Corporation shall, in making
settlement to Holder, deduct from the amount payable to Holder an amount equal
to such aggregate Warrant Price.
7. Transfer and Exchange.
7.1 Transfer. Subject to Section 7.3, the Holder may transfer all or
part of this Warrant at
17
<PAGE>
any time on the books of the Corporation at its principal corporate office upon
surrender of this Warrant, properly endorsed. Upon such surrender, the
Corporation shall issue and deliver to the transferee a new Warrant or Warrants
representing the Warrants so transferred. Upon any partial transfer, the
Corporation shall issue and deliver to the Holder a new Warrant or Warrants with
respect to the Warrants not so transferred.
7.2 Exchange. The Holder may exchange this Warrant at any time at
the principal office of the Corporation for Warrants in such denominations as
the Holder may designate in writing. No such exchanges will increase the total
number of shares of Common Stock or other securities that are subject to this
Warrant.
7.3 Securities Act of 1933. By accepting this Warrant, the Holder
agrees that this Warrant and the shares of the Common Stock issuable upon
exercise of this Warrant may not be offered or sold except in compliance with
the 1933 Act, and then only with the recipient's agreement to comply with this
Section 7 with respect to any resale or other disposition of such securities.
The Corporation may make a notation on its records in order to implement such
restriction on transferability. The Corporation shall pay, or reimburse the
Holder for, the costs and expenses of any legal opinion that may be required or
requested by the Corporation in connection with the valid transfer of any
Warrant or the share of Common Stock issuable upon exercise of any Warrants or
in connection with the valid removal of any restrictive legend on any Warrant or
share of Common Stock issued upon the exercise of any Warrant.
8. Loss or Mutilation. Upon the Corporation's receipt of reasonably
satisfactory evidence of the ownership and the loss, theft, destruction or
mutilation of this Warrant and (in the case of loss, theft or destruction) of a
reasonably satisfactory indemnity or (in the case of mutilation) upon surrender
and cancellation of this Warrant, the Corporation shall execute and deliver a
new Warrant to the Holder.
9. Successors. All the covenants and provisions of this Warrant shall bind
and inure to the benefit of the Holder and the Corporation and their respective
successors and assigns.
10. Notices. All notices and other communications given pursuant to this
Warrant shall be in writing and shall be deemed to have been given when
personally delivered or when mailed by prepaid registered, certified or express
mail, return receipt requested. Notices should be addressed as follows:
(a) If to Holder, then to:
___________________________________
___________________________________
___________________________________
(b) If to the Corporation, then to:
Robocom Systems International Inc.
511 Ocean Avenue
Massapequa, New York 11758
Attention: Chief Financial Officer
With a copy (which shall not constitute notice) to:
Eric M. Hellige, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Such addresses for notices may be changed by any party by notice to the other
party pursuant to this Section 10.
11. Amendment. This Warrant may be amended only by an instrument in
writing signed by the Corporation and the Holder.
12. Construction of Warrant. This Warrant shall be construed as a whole
and in accordance with its fair meaning. A reference in this Warrant to any
section shall be deemed to include a reference to every section the number of
which begins with the number of the section to which reference is made. This
Warrant has been negotiated by both parties and its language shall not be
construed for or against any party.
18
<PAGE>
13. Law Governing. This Warrant shall be construed and enforced in
accordance with and governed by the law of the State of New York without regard
to any conflicts of law or choice of forum provisions.
Dated as of November 30, 1999
ROBOCOM SYSTEMS INTERNATIONAL INC.
By:___________________________________
David Dinin
Chief Executive Officer
Attest:
_____________________________
Secretary
19
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> NOV-30-1999
<CASH> 1,098,860
<SECURITIES> 213,928
<RECEIVABLES> 1,404,509
<ALLOWANCES> 25,026
<INVENTORY> 0
<CURRENT-ASSETS> 3,252,857
<PP&E> 706,743
<DEPRECIATION> 423,625
<TOTAL-ASSETS> 8,099,919
<CURRENT-LIABILITIES> 1,864,936
<BONDS> 0
0
0
<COMMON> 44,160
<OTHER-SE> 5,994,174
<TOTAL-LIABILITY-AND-EQUITY> 8,099,919
<SALES> 2,377,882
<TOTAL-REVENUES> 2,377,882
<CGS> 1,692,438
<TOTAL-COSTS> 4,204,710
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,804,332)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,804,332)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,804,332)
<EPS-BASIC> (.52)
<EPS-DILUTED> (.52)
</TABLE>
