<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
Or
[ ] 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 0-10558
NQL INC.
(Exact name of registrant as specified in its charter)
(Formerly incorporated as Alpha Microsystems)
DELAWARE 33-0887356
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2722 S. FAIRVIEW STREET, SANTA ANA, CA 92704
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 641-6500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of November 7, 2000, there were 14,168,909 shares of the registrant's Common
Stock outstanding.
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NQL INC.
(FORMERLY ALPHA MICROSYSTEMS)
TABLE OF CONTENTS
PAGE NUMBER
-----------
PART I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30,
2000 (Unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Operations
(Unaudited) for the Three and Nine Months Ended
September 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Nine Months Ended September 30,
2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
EXHIBIT INDEX
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NQL INC.
(FORMERLY ALPHA MICROSYSTEMS)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited) (Note 1)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,969 $ 1,160
Accounts receivable, net of allowance for doubtful
accounts of $62 and $40 at September 30, 2000 and
December 31, 1999, respectively 2,617 3,391
Prepaid expenses and other current assets 1,647 221
Accounts receivable from R.E. Mahmarian Enterprises
(Net assets held for sale at December 31, 1999) 230 500
-------- --------
Total current assets 12,463 5,272
Property and equipment, net of accumulated depreciation
of $975 and $385 at September 30, 2000 and December 31,
1999, respectively 2,849 2,025
Intangibles, net of accumulated amortization of $1,008
and $612 at September 30, 2000 and December 31, 1999,
respectively 8,412 8,543
Other assets 515 469
-------- --------
Total assets $ 24,239 $ 16,309
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ -- $ 688
Accounts payable 3,235 1,615
Accrued compensation 540 444
Other accrued liabilities 658 1,189
Deferred revenue 827 1,013
-------- --------
Total current liabilities 5,260 4,949
Other long-term liabilities 279 274
Deferred gain on sale of Businesses to R.E. Mahmarian Enterprises 821 2,726
Commitments and contingencies
Redeemable preferred stock, no par value; 2,501 shares issued
and outstanding at September 30, 2000 and December 31, 1999;
liquidation value $2,500 at September 30, 2000 2,300 2,190
Other shareholders' equity:
Exchangeable redeemable preferred stock, no par value;
5,000,000 shares authorized; 18,451 and 17,891 issued and
outstanding at September 30, 2000 and December 31, 1999,
respectively; liquidation value $18,451 at September 30, 2000 16,777 15,395
Common stock, no par value; 40,000,000 shares authorized;
14,168,909 and 11,678,025 shares issued and outstanding at
September 30, 2000 and December 31, 1999, respectively 46,826 32,914
Warrants 2,655 2,655
Accumulated deficit (50,692) (44,832)
Accumulated other comprehensive income 13 38
-------- --------
Total other shareholders' equity 15,579 6,170
-------- --------
Total liabilities and shareholders' equity $ 24,239 $ 16,309
======== ========
</TABLE>
See accompanying notes
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NQL INC.
(FORMERLY ALPHA MICROSYSTEMS)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales:
IT Services $ 3,106 $ 7,892 $ 10,297 $ 24,050
Product 227 1,073 612 3,578
-------- -------- -------- --------
Total net sales 3,333 8,965 10,909 27,628
-------- -------- -------- --------
Cost of sales:
IT Services 2,450 5,791 8,184 17,936
Product 87 848 384 2,632
-------- -------- -------- --------
Total cost of sales 2,537 6,639 8,568 20,568
-------- -------- -------- --------
Gross margin 796 2,326 2,341 7,060
Operating expenses:
Selling, general and administrative 3,282 2,485 7,332 8,414
Engineering, research and development 199 325 573 949
-------- -------- -------- --------
Total operating expenses 3,481 2,810 7,905 9,363
-------- -------- -------- --------
Loss from operations (2,685) (484) (5,564) (2,303)
Other (income) expense:
Interest income (141) (10) (310) (60)
Interest expense 3 82 24 133
Gain on dispositions of businesses (343) (3) (1,670) (229)
Other (income) expense, net (8) 21 (26) 33
-------- -------- -------- --------
Total other (income) expense (489) 90 (1,982) (123)
-------- -------- -------- --------
Loss before taxes (2,196) (574) (3,582) (2,180)
Income tax expense 7 50 22 50
-------- -------- -------- --------
Net loss (2,203) (624) (3,604) (2,230)
Accretion on redeemable preferred stock (114) (10) (346) (65)
Dividends on redeemable preferred stock (637) (338) (1,912) (1,013)
-------- -------- -------- --------
Net loss attributable to common shares $ (2,954) $ (972) $ (5,862) $ (3,308)
======== ======== ======== ========
Basic and diluted net loss per common share $ (0.21) $ (0.08) $ (0.44) $ (0.29)
======== ======== ======== ========
Weighted average number of shares used in
computing basic and diluted per share amounts 14,163 11,630 13,366 11,594
======== ======== ======== ========
</TABLE>
See accompanying notes.
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NQL INC.
(FORMERLY ALPHA MICROSYSTEMS)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
September 30, September 30,
2000 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,604) $(2,230)
Adjustments to reconcile net loss to net cash
used in operating activities:
Gain on sale of businesses, net (1,670) (229)
Depreciation and amortization 1,045 1,212
Provision for losses on accounts receivable 25 (35)
Other changes in operating assets and liabilities,
net of effects of acquisitions and disposals:
Accounts receivable 636 (1,929)
Prepaid expenses and other current assets (1,368) (129)
Accounts payable and accrued liabilities 1,226 (485)
Accrued compensation 97 (484)
Deferred revenue (186) 875
Other, net (94) (79)
-------- -------
Net cash used in operating activities (3,893) (3,513)
-------- -------
Cash flows from investing activities:
Purchases of equipment (1,443) (2,342)
Sale of Businesses 270 --
Capitalization of software development costs (307) (221)
Acquisition of IT Services assets -- (198)
Other, net (23) (118)
-------- -------
Net cash used in investing activities (1,503) (2,879)
-------- -------
Cash flows from financing activities:
Issuance of common stock, net 13,882 1,193
Principal repayments on debt (740) (239)
Line of credit, net -- 2,000
Payment of preferred stock dividends (919) (981)
Other, net (18) 3
-------- -------
Net cash provided by financing activities 12,205 1,976
Effect of exchange rate changes on cash and cash equivalents -- 3
-------- -------
Increase (decrease) in cash and cash equivalents 6,809 (4,413)
Cash and cash equivalents at beginning of period 1,160 4,930
-------- -------
Cash and cash equivalents at end of period $ 7,969 $ 517
======== =======
</TABLE>
See accompanying notes.
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NQL INC.
(FORMERLY ALPHA MICROSYSTEMS)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM ACCOUNTING POLICY
In the opinion of management of NQL Inc. (the "Company"), the accompanying
unaudited condensed consolidated financial statements contain all adjustments
necessary to fairly present the consolidated financial position of the Company
at September 30, 2000, and the consolidated results of its operations for the
three- and nine-month periods ended September 30, 2000 and 1999, and its cash
flows for the nine-month periods ended September 30, 2000 and 1999. These
condensed consolidated financial statements do not include all disclosures
normally presented annually under generally accepted accounting principles and,
therefore, they should be read in conjunction with the Company's Annual Report
on Form 10-K for the year ended December 31, 1999. Certain prior period amounts
have been reclassified to conform to the current period presentation. The
results of operations for the period ended September 30, 2000 are not
necessarily indicative of the results to be expected for any future period.
The balance sheet at December 31, 1999 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
REVENUE RECOGNITION
The Company recognizes revenue on its information technology service sales and
post contract customer support on a straight-line basis over the contract
period, recognizes revenue on its product sales on shipment, and recognizes
software license revenue in accordance with Statement of Position 97-2, Software
Revenue Recognition ("SOP 97-2"). Under the terms of SOP 97-2, where an
arrangement to deliver software does not require significant production,
modification or customization, the Company recognizes license revenue when all
of the following criteria are met: persuasive evidence of an arrangement exists;
delivery has occurred; the fee is fixed or determinable; and collection is
probable. The Company's product revenues for the three-month period ended
September 30, 2000 relate to its Internet software business. Product revenues
for the nine-month period ended September 30, 2000 and the comparable three- and
nine-month periods in 1999 also include revenues derived from the computer
hardware manufacturing division which was sold to R.E. Mahmarian Enterprises,
LLC ("R.E. Mahmarian Enterprises") on January 31, 2000.
ADVERTISING COSTS
The Company expenses the production costs of advertising the first time the
advertising takes place in accordance with Statement of Position 93-7, Reporting
on Advertising Costs. At September 30, 2000 the Company reported $1,167,000 of
advertising as prepaid expenses and $1,238,000 as accounts payable. Advertising
expense was $458,000 for the nine months ended September 30, 2000.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income requires foreign currency translation adjustments to be included in other
comprehensive income. For the nine months ended September 30, 2000 and 1999,
total comprehensive loss amounted to $3,629,000 and $2,209,000, respectively.
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LINE OF CREDIT
As of December 31, 1999, the Company had a loan facility with a bank under which
a $4 million accounts receivable line of revolving credit was designated for
working capital and $1 million was designated to finance acquisitions. The loan
facility was secured by substantially all of the Company's assets. On March 28,
2000, the Company terminated the revolving line of credit and on March 31, 2000,
the Company repaid in full the loan designated for acquisitions. The Company is
currently evaluating various alternatives for funding its ongoing working
capital requirements, which may include obtaining a new revolving line of
credit. There is no assurance that the Company will obtain a new revolving line
of credit.
PENDING ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS No. 133"). SFAS No. 133 establishes new standards
for recording derivatives in interim and annual financial reports requiring that
all derivative instruments be recorded as assets or liabilities, measured at
fair value. SFAS No. 133 is effective for fiscal years beginning after June 15,
2000, and therefore we will adopt the new requirements effective with the filing
of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. We do
not anticipate that the adoption of SFAS No. 133 will have a significant impact
on our results of operations, financial position or cash flows.
2. DIVESTITURES
On January 31, 2000, the Company completed the sale of substantially all of its
assets associated with its Alpha Micro Services Division ("AMSO") and its Alpha
Micro Operating System ("AMOS") computer hardware manufacturing division
(collectively the "Businesses") to R.E. Mahmarian Enterprises for consideration
of approximately $3.2 million, consisting primarily of liabilities of the
Businesses that were assumed by R.E. Mahmarian Enterprises. The Company also
received a ten percent contingent interest in gross cash and non-cash proceeds
that may be received by R.E. Mahmarian Enterprises upon the occurrence of
certain liquidity events, as defined in the asset purchase agreement, following
R.E. Mahmarian Enterprises' acquisition of the Businesses. R.E. Mahmarian
Enterprises is owned by Richard E. Mahmarian, who was a member of the Company's
Board of Directors until October 2000.
Assets of the Businesses initially sold to R.E. Mahmarian Enterprises include
certain accounts receivable, prepaid expenses, other current and non-current
assets, inventories, fixed assets, information technology service contracts and
capitalized software development costs. The Company has (i) granted R.E.
Mahmarian Enterprises the right to use the name "Alpha Microsystems" and
associated logos, marks and trade dress, (ii) transferred the rights to the
trade names, logos and trademarks associated with the Businesses that were sold,
and (iii) entered into a five year license agreement providing R.E. Mahmarian
Enterprises the right to use the Company's NQL Solutions technology for R.E.
Mahmarian Enterprises' internal use in continuing operations of the Businesses.
Additionally, the Company has agreed to sublease to R.E. Mahmarian Enterprises
the portion of the Santa Ana, California facility presently occupied by the
Businesses at amounts equal to cost.
This sale indicates the assets sold to R.E. Mahmarian Enterprises were impaired
and, accordingly, as of December 31, 1999, the Company recognized a loss on the
sale of $6,728,000 and reclassified $2,726,000, representing deferred revenue at
December 31, 1999 related to contractual service obligations assumed by R.E.
Mahmarian Enterprises for
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<PAGE> 8
which performance continues to be guaranteed by the Company, to deferred gain on
sale of Businesses to R.E. Mahmarian Enterprises. As of September 30, 2000, the
deferred gain had been reduced to $821,000 due to the operations of R.E.
Mahmarian Enterprises and a corresponding reduction in the Company's contingent
guarantee.
On March 15, 2000, the Company entered into another agreement whereby R.E.
Mahmarian Enterprises, in exchange for $500,000 cash (recorded as net assets
held for sale to R.E. Mahmarian Enterprises as of December 31, 1999) and the
assumption of the remaining outstanding accounts payable of the Businesses,
purchased the remaining net accounts receivable of the Businesses it acquired in
the sale completed on January 31, 2000. On August 1, 2000, the terms of the
agreement were amended such that payment of the remaining balance of $230,000
was extended to be due in full by June 30, 2001, and that interest on the
outstanding balance will be paid monthly at an annualized rate of 10 percent.
R.E. Mahmarian Enterprises may prepay all or a portion of the remaining balance
prior to June 30, 2001 without penalty.
The results from operations during the nine months ended September 30, 2000,
include a net loss of $307,000 or $0.02 per share on $1,563,000 of revenue
related to the Businesses. The results from operations during the nine months
ended September 30, 1999 include a net loss of $1,346,000 or $0.12 per share on
$15,773,000 of revenue related to the Businesses.
Effective April 1, 1999, the Company sold its telephone installation business
for $650,000. The results from operations during the nine months ended September
30, 1999, include a net loss of $158,000 or $0.01 per share on $563,000 of
revenue related to the telephone installation business.
3. PRIVATE PLACEMENT OF COMMON STOCK
On March 30, 2000, the Company completed a private placement of 2,342,000 shares
of common stock which were sold at $6.25 per share, generating gross proceeds to
the Company of $14,637,500 with net proceeds of approximately $13,600,000.
Hampshire Equity Partners II, L.P., the Company's preferred stockholder,
purchased 995,400 of the shares of the Company's common stock issued in the
private placement. The Company intends to use the net proceeds from this
offering for marketing and further product enhancement in its NQL Solutions
technology division and for general corporate purposes.
4. CONTINGENCIES
The Company is currently involved in certain claims and litigation. The Company
does not consider any of these claims or litigation to be material. Management
has made provisions in the Company's financial statements for the settlement of
lawsuits for which unfavorable outcomes are both probable and estimable. In the
opinion of management, results of known existing claims and litigation will not
have a material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.
5. INDUSTRY SEGMENT INFORMATION
The Company currently operates in two business segments: (i) Internet software
based on the Company's Network Query Language; and (ii) IT professional services
consisting of management and consulting services, as well as network design,
installation and maintenance. A third segment reflects the results of operations
of businesses which have been sold. The accounting policies of the reportable
segments are the same as those described in the summary
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of significant accounting policies in the annual consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, except that certain expenses, such as interest,
amortization of certain intangibles, special charges and general corporate
expenses are not allocated to the segments. In addition, certain assets
including cash and cash equivalents, deferred taxes and certain intangible
assets are held at corporate. The effect of capitalizing software costs is
included in the Internet software segment.
Prior to January 31, 2000, the Company evaluated its business according to the
following two segments: (i) the servicing of computer systems, networks and
related products; and (ii) the manufacture and sale of computer systems,
software and related products. The operations of the telephone installation
business and the managed service business, including the computer hardware
manufacturing division, which were sold on April 1, 1999 and January 31, 2000,
respectively, have been reclassified as the "businesses sold" segment. Prior
periods have been reclassified to reflect this realignment.
Selected financial information for the Company's reportable segments for the
three- and nine-months ended September 30, 2000 and 1999 follows:
<TABLE>
<CAPTION>
IT
Internet Professional Corporate Businesses
(In thousands) Software Services Expenses Sold Consolidated
-------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED SEPTEMBER 30, 2000
Revenues from external customers $ 227 $ 3,106 $ -- $ -- (1) $ 3,333
Segment income (loss) (1,301) (291) (611)(2) -- (1) (2,203)
NINE MONTHS ENDED SEPTEMBER 30, 2000
Revenues from external customers $ 417 $ 8,929 $ -- $ 1,563 (1) $ 10,909
Segment income (loss) (2,003) (818) (476)(2) (307)(1) (3,604)
THREE MONTHS ENDED SEPTEMBER 30, 1999
Revenues from external customers $ 64 $ 3,693 $ -- $ 5,208 $ 8,965
Segment income (loss) (119) 564 (695) (374) (624)
NINE MONTHS ENDED SEPTEMBER 30, 1999
Revenues from external customers $ 186 $ 11,106 $ -- $ 16,336 $ 27,628
Segment income (loss) (313) 1,371 (1,784) (1,504) (2,230)
</TABLE>
----------------
(1) In January 2000, the Company closed the sale of a significant portion of the
Company's operations to R.E. Mahmarian Enterprises.
(2) Includes a gain of $343 and $1,670 for the three and nine months ended
September 30, 2000, respectively, from the sale of Businesses to
R.E. Mahmarian Enterprises.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains certain forward-looking statements
which involve risks and uncertainties, and our actual results may differ from
our expectations. These forward looking statements include (i) the Company's
ability to use the net proceeds from the private placement offering for
marketing, for further product enhancement and for general corporate purposes;
(ii) the Company's ability to increase revenue and gross margin in the last
three months of 2000; (iii) the market acceptance of the Company's products,
including, but not limited to, its Network Query Language based Internet and
intranet technology, and its information technology services; (iv) the Company's
ability to obtain a new revolving line of credit; (v) the continued development
of the Company's technical, manufacturing, sales, marketing and management
capabilities; (vi) the Company's ability to achieve future positive cash flows
from its information technology professional services division; (vii) the
discussion of the Company's efforts, and management's expectations, relating to
Year 2000 compliance; and (viii) any future performance, achievements, or
industry results expressed or implied by such forward-looking statements.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. The forward-looking statements are dependent on a
number of factors, including (i) the economic and competitive environment of the
Internet software, computer maintenance and information technology ("IT")
support services industry in general, and in the Company's specific market
areas, (ii) the Company's ability to identify acquisition candidates, (iii) the
Company's ability to successfully integrate acquired operations with its
existing operations, (iv) the Company's ability to develop, produce, and market
products and services that incorporate new technology, that are priced
competitively, and achieve significant market acceptance, (v) whether the
Company's Internet software products and IT Services will be commercially
successful or sufficiently technically advanced due to the rapid improvements in
computer technology and resulting product obsolescence, (vi) changes in the cost
of IT Services, (vii) the Company's ability to deliver commercial quantities of
new products in a timely manner, (viii) changes in the Company's operating
strategy and capital expenditure plans, (ix) the Company's ability to manage its
expenses commensurate to its revenues, (x) the ability of the Company to obtain
future credit facilities to the extent necessary, and (xi) other factors. In
addition, the business and operations of the Company are subject to substantial
risks that increase the uncertainty inherent in the forward-looking information
included herein. The inclusion of such information should not be regarded as a
representation by the Company, or any other person that the objectives or plans
of the Company will be achieved.
GENERAL
After the sale of our historical principal business lines as described below, we
now focus exclusively on our two remaining operating divisions - our NQL
Solutions technology division, which focuses on Internet infrastructure platform
technology and applications based on our Network Query Language, and our
information technology professional services division, which was acquired on
September 1, 1998 and provides management and consulting services, as well as
network design, installation and maintenance.
NQL Solutions Technology Division
The NQL Solutions technology division serves the growing needs of e-commerce
businesses and other commercial Internet users for improved bot and intelligent
agent technologies which are designed to deliver rapid go-to-market platforms
such as shoppers, comparison engines, conversion services, web-enabled
applications and content
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<PAGE> 11
engineering tools for the enterprise. This division created and developed
Network Query Language(TM) (NQL(TM)), a proprietary scripting programming
language that streamlines the development of intelligent agents, bots and Web
applications. Currently, we believe NQL is the only programming language
designed exclusively for the development of bots and intelligent agent
technology. NQL provides an efficient rapid development environment for bots,
intelligent agents and Web applications in much the same way as Structured Query
Language ("SQL") provided a common development environment for database
applications. As a result, the NQL technology delivers substantial added value
to information management, one of the most critical and growing needs on the
Internet.
We license the NQL technology to businesses so they can quickly create and use
their own bots and intelligent agents in real time. The current target market
for NQL based bot and intelligent agent technology platforms includes Internet
integrators/solution providers, information technology departments of Fortune
1000 and other large companies, Internet communities and marketplaces (portals
and vortals), and independent software vendors. These businesses use NQL
technology to quickly create their own intelligent agents to search the Web for
specific information and then gather and organize that information for internal
or external use. In addition, they may choose to license pre-packaged NQL
designed "bolt on" applications and platforms to leverage the power of their
enterprises for more efficient means.
Information Technology Professional Services Division
Our information technology professional services division provides Internet and
intranet consulting, networking design and implementation, circuit procurement,
help desk services, premise wiring services, network administration, on-site
technical management and consulting, installation and maintenance, and also
cross-markets NQL based products and services to our customers. Additionally,
this division provides a wide array of computer systems, data communications and
LAN/WAN information technology services and products to a customer base
encompassing many industries. Specifically, this division serves large financial
institutions, major accounting firms, pharmaceutical companies, hospitals and
universities. Most customers are located in the Northeast, but our customer base
also reaches as far as Florida and the West Coast.
Sale of Our Historic Principal Lines of Business
On January 31, 2000, we completed the sale of substantially all of our assets
associated with our Alpha Micro Services Division ("AMSO") and our Alpha Micro
Operating System ("AMOS") computer hardware manufacturing division (collectively
the "Businesses") to R.E. Mahmarian Enterprises, LLC ("R.E. Mahmarian
Enterprises") for consideration of approximately $3.2 million, consisting
primarily of liabilities of the Businesses that were assumed by R.E. Mahmarian
Enterprises. We also received a ten percent contingent interest in gross cash
and non-cash proceeds that may be received by R.E. Mahmarian Enterprises upon
the occurrence of certain liquidity events, as defined in the asset purchase
agreement, following R.E. Mahmarian Enterprises' acquisition of the Businesses.
R.E. Mahmarian Enterprises is owned by Richard E. Mahmarian, who was a member of
the Company's Board of Directors until October 2000.
On March 15, 2000, we entered into another agreement whereby R.E. Mahmarian
Enterprises, in exchange for $500,000 cash (recorded as net assets held for sale
to R.E. Mahmarian Enterprises as of December 31, 1999) and the assumption of the
remaining outstanding accounts payable of the Businesses, purchased the
remaining net accounts receivable of the Businesses it acquired in the sale
completed on January 31, 2000. The results from operations during the nine
months ended September 30, 2000, include a net loss of $307,000 or $0.02 per
share on $1,563,000 of revenue related to the Businesses. The results from
operations during the nine months ended September 30, 1999 include a net loss of
$1,346,000 or $0.12 per share on $15,773,000 of revenue related to the
Businesses.
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<PAGE> 12
EBITDA
We had negative earnings before interest, taxes, depreciation and amortization
("EBITDA") of $2,823,000 and $1,965,000 for the nine- and three-month periods
ended September 30, 2000 (including negative EBITDA of $273,000 and $0 from the
managed services division and gain on sale of Businesses of $1,670,000 and
$343,000, respectively) compared to negative EBITDA of $895,000 and $90,000
(including negative EBITDA of $1,123,000 and $328,000 from the managed services
division and the telephone installation business) during the same periods of the
prior year.
RESULTS OF OPERATIONS
Net Sales
Our total net sales decreased $16,719,000, or 60.5 percent, to $10,909,000 for
the nine-month period ended September 30, 2000 from $27,628,000 for the
respective prior year period. Net sales decreased $5,632,000, or 62.8 percent,
to $3,333,000 for the three-month period ended September 30, 2000 from
$8,965,000 for the three-month period ended September 30, 1999. The decrease in
total net sales is primarily due to the January 31, 2000 sale of our managed
services and computer hardware manufacturing divisions, the April 1, 1999 sale
of our telephone installation business, and delays in technology services and
projects at Delta CompuTec Inc. ("DCi"), our information technology services
division, of which the majority were related back to customer concerns over Y2K
problems.
Information Technology Services Revenue
Our information technology service revenue decreased $13,753,000, or 57.2
percent, to $10,297,000 during the most recent nine-month period over the
respective prior period and decreased $4,786,000, or 60.6 percent, to $3,106,000
during the most recent three-month period over the respective prior period. The
nine- and three-month revenue decreases include $11,576,000 and $4,199,000,
respectively; attributable to the sales of our managed services division on
January 31, 2000 and our telephone installation business on April 1, 1999. The
balance of the revenue decrease during the nine- and three-month periods of
$2,177,000 and $587,000 occurred at DCi, our information technology services
division, due to delays in technology services and projects of which the
majority were related back to customer concerns over Y2K problems. Information
technology services revenue increased $272,000, or 9.6 percent, to $3,106,000
for the three-month period ended September 30, 2000 from $2,834,000 for the
three-month period ended June 30, 2000. We expect that information technology
services revenue for the last three months of 2000 will again increase on a
sequential quarter basis.
Product Sales
Our total product revenues during the comparable nine-month period decreased
$2,966,000, or 82.9 percent, to $612,000 from $3,578,000. Our total product
revenues during the comparable three-month periods decreased $846,000, or 78.8
percent, to $227,000 from $1,073,000. The decline is due to the January 31, 2000
sale of our computer hardware manufacturing division. Sales of our Internet
software segment increased $104,000, or 84.5 percent, to
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<PAGE> 13
$227,000 for the three-month period ended September 30, 2000 from $123,000 for
the three-month period ended June 30, 2000. No assurances can be made as to
future product sales as our NQL Solutions products and services are all in early
stages of commercialization and, as a result, it is difficult to predict the
level of market acceptance that our NQL based products and services will attain.
Gross Margin
Our total gross margin for the first nine and three months of 2000 decreased to
21.5 percent and 23.9 percent, respectively, compared to 25.6 percent and 25.9
percent, respectively, during the same periods last year. As discussed below,
the current periods were negatively affected by the decrease in professional
on-site services revenues at DCi due to delays in technology services and
projects of which the majority were related back to customer concerns over Y2K
problems.
Information Technology Services Gross Margin
Our information technology services gross margin decreased to 20.5 percent for
the nine-month period ended September 30, 2000 from 25.4 percent during the same
period in the prior year. The gross margin decreased to 21.1 percent from 26.6
percent for the comparable three-month periods. The current periods were
negatively affected by the decrease in professional on-site services revenues at
DCi due to delays in technology services and projects of which the majority were
related back to customer concerns over Y2K problems. Partially off-setting this
decrease in gross margin, the current period was positively affected by the sale
of the telephone installation business, which had a negative gross margin in the
three months ended March 31, 1999. Based on our expectation that information
technology services revenue will increase in the last three months of 2000, we
expect that the related gross margin will also increase in the last three months
of 2000.
Product Gross Margin
Our product gross margin increased to 37.3 percent for the nine-month period
ended September 30, 2000 from 26.4 percent for the comparable prior year period
and increased to 61.7 percent from 21.0 percent for the comparable three-month
period. The nine and three month gross margin increase is due to the January
31, 2000 sale of our comparatively lower gross margin computer hardware
manufacturing division, and increased sales from the operations of our NQL
Solutions division.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses decreased $1,082,000 to
$7,332,000 for the nine-month period ended September 30, 2000 compared to
$8,414,000 for the nine-month period ended September 30, 1999, and increased
$797,000 to $3,282,000 for the three-month period compared to $2,485,000 for the
prior comparable period. The decrease in selling, general and administrative
expenses for the nine-month period ending September 30, 2000 is due to the
January 31, 2000 sale of our managed services and computer hardware
manufacturing divisions, the April 1, 1999 sale of our telephone installation
business, and reductions in selling expenses at DCi, offset by increased
expenses associated with the launch of our NQL technology, the beginning of our
advertising campaign, corporate name change and reincorporation in Delaware.
The increase in selling, general and administrative expenses for the three-month
period ending September 30, 2000 is due to increased expenses in connection with
the launch of our NQL technology, the beginning of our advertising campaign,
corporate name change and re-incorporation in Delaware. We expect to continue
incurring significant advertising and marketing expenses through at least the
last three months of 2000.
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<PAGE> 14
Research and Development Expenses
Our research and development expenses (which include engineering support and
services) incurred for the nine-month period ended September 30, 2000 decreased
by $376,000 to $573,000 from $949,000 during the same period in the prior year,
and decreased by $126,000 to $199,000 from $325,000 for the comparable
three-month period. The decrease is due to the sale of our computer hardware
manufacturing division. Research and development expenses are expected to
increase in the future as we develop and introduce our new NQL products.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 2000, our working capital increased
$6,880,000 from $323,000 at December 31, 1999 to $7,203,000 at September 30,
2000. This increase was primarily the result of the completion of a private
placement of 2,342,000 shares of common stock sold at $6.25 per share generating
net proceeds of approximately $13,600,000 offset by $3,893,000 net cash used in
operating activities, purchases of equipment of $1,443,000, payment of preferred
stock dividends of $919,000 and repayments of indebtedness of $740,000.
The private placement was completed on March 30, 2000 and generated gross
proceeds to us of $14,637,500 with net proceeds of approximately $13,600,000.
Hampshire Equity Partners II, L.P., our preferred stockholder, purchased 995,400
of the shares of our common stock issued in the private placement.
As of December 31, 1999, we had a loan facility with a bank under which a $4
million accounts receivable line of revolving credit was designated for working
capital and $1 million was designated to finance acquisitions. The loan facility
was secured by substantially all of our assets. On March 28, 2000, we terminated
the revolving line of credit and, on March 31, 2000, we repaid in full the loan
designated for acquisitions. We are currently evaluating various alternatives
for funding our working capital requirements, which may include obtaining a new
revolving line of credit. There is no assurance that we will obtain a new
revolving line of credit.
Our NQL Solutions based products and services are all in early stages of
commercialization and, as a result, it is difficult to predict the level of
market acceptance that our NQL based products and services will attain. We
expect to continue to incur significant costs developing and introducing
enhancements to our NQL Solutions based products and technologies, and expanding
our sales and marketing activities. We expect this strategy to result in losses
for our NQL Solutions technology division and the Company on a consolidated
basis at least through the next three to five quarters.
We believe that our current cash and cash equivalents balance combined with cash
expected to be generated by our information technology professional services
division and continued revenue growth in our NQL Solutions technology division
will provide sufficient resources to finance our working capital requirements
through the Company's next four quarters. After that date, we may need to obtain
additional capital, and we cannot be certain that we will be able to obtain
additional financing on favorable terms, if at all. If we cannot raise
additional capital on acceptable terms, we may not be able to develop or enhance
our products and services, take advantage of future opportunities or respond
favorably to competitive pressures or unanticipated events.
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<PAGE> 15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market rate risk for changes in interest rates relates primarily
to the interest income generated by excess cash invested in short term money
market accounts and certificates of deposit. We have not used derivative
financial instruments in our investment portfolio. Interest earning instruments
carry a degree of interest rate risk. We have not been exposed nor do we
anticipate being exposed to material risks due to changes in interest rates.
However, our future interest income may fall short of expectations due to
changes in interest rates.
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<PAGE> 16
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Alpha Microsystems was held on August 9,
2000. At the Annual Meeting, all of management's nominees for directors listed
in the Proxy Statement were elected and there was no solicitation in opposition
to such nominees. Voting was as follows:
<TABLE>
<CAPTION>
WITHHOLD
DIRECTORS FOR AUTHORITY ABSTAIN
--------- ---------- --------- -------
<S> <C> <C> <C>
Benjamin P. Giess 21,264,166 537,190 N/A
Rockell N. Hankin 21,266,966 534,390 N/A
Richard E. Mahmarian 21,258,796 542,560 N/A
Clarke E. Reynolds 21,265,996 535,360 N/A
Tracey L. Rudd 21,260,791 540,565 N/A
Douglas J. Tullio 21,229,179 572,177 N/A
Sam Yau 21,273,466 527,890 N/A
</TABLE>
The proposal to approve the Company's name change from "Alpha Microsystems" to
"NQL Inc." was approved, receiving 16,350,936 votes for approval and 108,415
against approval, with 16,326 abstentions and 5,325,679 broker non-votes. The
proposal to approve the Company's reincorporation in Delaware as AlphaServ.com,
through the merger of Alpha Microsystems, a California corporation, with and
into a wholly-owned Delaware subsidiary of Alpha Microsystems was approved,
receiving, for holders of common stock, 7,088,217 votes for approval and 542,579
votes against approval, with 28,435 abstentions and 5,325,679 broker non-votes,
and for holders of Cumulative, Redeemable and Exchangeable Preferred Stock,
unanimous approval consisting of 2,500 votes by Class A1 holders, 5,500 votes by
Class A2 holders, 7,000 votes by Class B1 holders, 5,000 votes by Class C1
holders, and 391 votes by Class E holders. The proposal to approve an amendment
to the Company's 1998 Stock Option and Award Plan to increase the number of
shares of Common Stock authorized for issuance under such plan by 700,000 shares
to an aggregate of 3,200,000 shares was approved, receiving 20,543,868 votes for
approval and 1,170,800 votes against approval, with 86,688 abstentions and zero
broker non-votes. The proposal to ratify the appointment of Ernst & Young LLP,
as independent auditors of the Company and its subsidiaries for the year ending
December 31, 2000 was approved, receiving 21,718,992 votes for approval and
55,037 votes against approval, with 27,327 abstentions and zero broker
non-votes.
Item 5. Other Information.
On September 1, 2000, Alpha Microsystems, a California corporation, which had
been doing business as AlphaServ.com, merged with and into its wholly owned
subsidiary, NQL Inc., a Delaware corporation for the purposes of reincorporating
in Delaware and changing its name to NQL Inc. The reincorporation merger was
accomplished pursuant to the Agreement and Plan of Merger dated August 18, 2000
and incorporated hereto as Exhibit 2.1. NQL Inc. did not assume the name "Alpha
Microsystems", but instead continued to use "NQL Inc." The reincorporation
merger is more fully described in Registrant's report on Form 8-K filed on
September 1, 2000.
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<PAGE> 17
Item 6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index.
(b) A Current Report on Form 8-K was filed by the Company on
September 1, 2000 regarding the Company's name change and
reincorporation in Delaware.
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<PAGE> 18
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.
NQL INC.
(Registrant)
Date: November 9, 2000 By: /s/ Douglas J. Tullio
---------------------------
Chairman, CEO and President
Date: November 9, 2000 By: /s/ Robert O. Riiska
---------------------------
Vice President and
Chief Financial Officer
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<PAGE> 19
EXHIBIT INDEX
Number Description of Documents
------ ------------------------
*2.1 Agreement and Plan of Merger of NQL Inc., a Delaware corporation and
Alpha Microsystems, a California corporation dated August 18, 2000
(incorporated herein by reference to Exhibit 2.1 to the Form 8-K
filed by the Registrant on September 1, 2000)
*2.2 Merger Agreement by and between Alpha Microsystems, Alpha Micro
Merger Corp., Delta CompuTec Inc. and Joseph Lobozzo II and Joanne
Lobozzo dated July 2, 1998 (incorporated by reference to Exhibit 2
to the Form 8-K filed by Alpha Microsystems on September 16, 1998)
*3.1 Restated Certificate of Incorporation of NQL Inc., a Delaware
corporation (incorporated herein by reference to Exhibit 3.1 to the
Form 8-K filed by the Registrant on September 1, 2000)
*3.2 Amended and Restated Bylaws of NQL Inc., a Delaware corporation
(incorporated herein by reference to Exhibit 3.3 to the Form 8-K
filed by the Registrant on September 1, 2000)
*4.1 Certificate of Designations of Rights and Preferences of Class A1
Cumulative, Redeemable and Exchangeable Preferred Stock, Class B1
Cumulative Redeemable and Exchangeable Preferred Stock, Class C1
Cumulative Redeemable and Exchangeable Preferred Stock, Class D
Cumulative Redeemable and Exchangeable Preferred Stock, Class E
Cumulative Redeemable and Exchangeable Preferred Stock and Voting
Preferred Stock of NQL Inc., a Delaware corporation (incorporated
herein by reference to Exhibit 3.2 to the Form 8-K filed by the
Registrant on September 1, 2000)
*4.2 Warrant to Purchase Common Stock issued to Princeton Securities
dated October 20, 1998 (incorporated herein by reference to Exhibit
4.7 to the Quarterly Report on Form 10-Q of Alpha Microsystems for
the quarter ended November 22, 1998)
*4.3 Form of Warrant Certificate to Purchase Common Stock issued to ING
Equity Partners II, L.P. dated September 1, 1998 (incorporated
herein by reference to Exhibit 10.2 to the Form 8-K filed by Alpha
Microsystems on August 10, 1998)
*10.1 Alpha Microsystems Profit Sharing Trust Agreement between Registrant
and Bank of America NT & S.A. as Trustee dated May 24, 1985
(incorporated herein by reference to Exhibit 10.32 to the Annual
Report on Form 10-K of Alpha Microsystems for the year ended
February 23, 1986)
*10.2 Alpha Microsystems Profit Sharing Plan (as amended and restated)
dated May 15, 1986 (incorporated herein by reference to Exhibit
10.33 to the Annual Report on Form 10-K of Alpha Microsystems for
the year ended February 23, 1986)
<PAGE> 20
*10.3 Acceptance of Trust by Trustee dated September 30, 1986 pursuant to
Registrant's Profit Sharing Plan (incorporated herein by reference
to Exhibit 10.29 to the Annual Report on Form 10-K of Alpha
Microsystems for the year ended February 22, 1987)
*10.4 First Amendment dated March 1, 1987 to Registrant's Profit Sharing
Plan (incorporated herein by reference to Exhibit 10.30 to the
Annual Report on Form 10-K of Alpha Microsystems for the year ended
February 22, 1987)
*10.5 Indemnification Agreement dated October 23, 1987 by and between the
Registrant and Rockell N. Hankin (incorporated herein by reference
to Exhibit 10.36 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended November 22, 1987)
*10.6 Second Amendment to Alpha Microsystems Profit Sharing Plan dated
January 22, 1988 (incorporated herein by reference to Exhibit 10.31
to the Annual Report on Form 10-K of Alpha Microsystems for the year
ended February 28, 1988)
*10.7 Alpha Microsystems Profit Sharing Plan Amendments Under IRS Notice
88-131 dated May 24, 1989 (incorporated herein by reference to
Exhibit 10.38 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended May 28, 1989)
*10.8 Alpha Microsystems Profit Sharing Plan Amendment dated December 15,
1989 (incorporated herein by reference to Exhibit 10.45 to the
Quarterly Report on Form 10-Q of Alpha Microsystems for the quarter
ended November 26, 1989)
*10.9 Indemnification Agreement by and between the Registrant and Douglas
J. Tullio dated January 8, 1990 (incorporated herein by reference to
Exhibit 10.50 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended November 26, 1989)
*10.10 Indemnification Agreement by and between Registrant and Clarke E.
Reynolds dated June 16, 1989 (incorporated herein by reference to
Exhibit 10.67 to the Annual Report on Form 10-K of Alpha
Microsystems for the year ended February 23, 1992)
*10.11 Alpha Microsystems 1993 Employee Stock Option Plan (incorporated
herein by reference to Exhibit 10.109 to the Quarterly Report on
Form 10-Q filed by Alpha Microsystems for the quarter ended May 29,
1994)
*10.12 Industrial Lease between Fairview Investors Ltd. and Registrant
dated October 28, 1994 (incorporated herein by reference to Exhibit
10.113 to the Quarterly Report on Form 10-Q of Alpha Microsystems
for the quarter ended November 27, 1994)
*10.13 Second Amendment and Restatement of the Alpha Microsystems Profit
Sharing Plan dated July 1, 1992 (incorporated herein by reference to
Exhibit 10.72 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended May 31, 1992)
<PAGE> 21
*10.14 Memorandum to Lease by and between Registrant and Fairview
Investors, Ltd. dated January 24, 1995 (incorporated herein by
reference to Exhibit 10.136 to the Annual Report on Form 10-K of
Alpha Microsystems for the year ended February 26, 1995)
*10.15 First Amendment to Alpha Microsystems 1993 Employee Stock Option
Plan (incorporated herein by reference to Exhibit 4.6 to the Form
S-8 filed by Alpha Microsystems on January 31, 1997)
*10.16 Second Amendment to Alpha Microsystems 1993 Employee Stock Option
Plan (incorporated herein by reference to Exhibit 4.7 to the Form
S-8 filed by Alpha Microsystems on January 31, 1997)
*10.17 Alpha Microsystems Employee Stock Purchase Plan (incorporated herein
by reference to Exhibit 4.10 to the Form S-8 filed by Alpha
Microsystems on January 31, 1997)
*10.18 Indemnification Agreement by and between Registrant and Dennis E.
Michael dated January 17, 1997 (incorporated herein by reference to
Exhibit 10.57 to the Annual Report on Form 10-K of Alpha
Microsystems for the year ended February 23, 1997)
*10.19 Securities Purchase Agreement by and between Registrant and ING
Equity Partners II, L.P. dated August 7, 1998 (incorporated herein
by reference to Exhibit 10.1 to the Form 8-K filed by Alpha
Microsystems on August 10, 1998)
*10.20 Employment Agreement by and between Registrant and John T. DeVito
dated September 1, 1998 (incorporated herein by reference to Exhibit
10.1 to the Form 8-K/A filed by Alpha Microsystems on October 5,
1998)
*10.21 Amended and Restated Employment Agreement by and between Registrant
and Douglas J. Tullio dated September 1, 1998 (incorporated herein
by reference to Exhibit 10.2 to the Form 8-K/A filed by Alpha
Microsystems on October 5, 1998)
*10.22 Alpha Microsystems 1998 Stock Option and Award Plan (incorporated
herein by reference to Exhibit 10.69 to the Quarterly Report on Form
10-Q of Alpha Microsystems for the quarter ended November 22, 1998)
*10.23 Form of Incentive Stock Option Agreement for use in connection with
1998 Stock Option and Award Plan (incorporated herein by reference
to Exhibit 10.70 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended November 22, 1998)
*10.24 Form of Non-employee Director Non-Qualified Stock Option Agreement
to be used in connection with 1998 Stock Option and Award Plan
(incorporated herein by reference to Exhibit 10.71 to the Quarterly
Report on Form 10-Q of Alpha Microsystems for the quarter ended
November 22, 1998)
*10.25 Form of Non-employee Director Non-Qualified Stock Option Agreement
in Lieu of Cash Compensation for Prior Services for use in
connection with 1998 Stock Option and Award Plan (incorporated
herein by reference to Exhibit 10.72 to the Quarterly Report on Form
10-Q of Alpha Microsystems for the quarter ended November 22, 1998)
<PAGE> 22
*10.26 Form of Non-Qualified Stock Option Agreement for use in connection
with 1998 Stock Option and Award Plan (incorporated herein by
reference to Exhibit 10.73 to the Quarterly Report on Form 10-Q of
Alpha Microsystems for the quarter ended November 22, 1998)
*10.27 Form of Non-Qualified Stock Option Agreement issued in connection
with the acquisition of Delta CompuTec, Inc. (incorporated herein by
reference to Exhibit 10.74 to the Quarterly Report on Form 10-Q of
Alpha Microsystems for the quarter ended November 22, 1998)
*10.28 Indemnification Agreement by and between Registrant and John T.
DeVito dated December 17, 1998 (incorporated herein by reference to
Exhibit 10.76 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended November 22, 1998)
*10.29 Indemnification Agreement by and between Registrant and Benjamin P.
Giess dated December 17, 1998 (incorporated herein by reference to
Exhibit 10.77 to the Quarterly Report on Form 10-Q of Alpha
Microsystems for the quarter ended November 22, 1998)
*10.30 Indemnification Agreement by and between Registrant and Sam Yau
dated December 17, 1998 (incorporated herein by reference to Exhibit
10.78 to the Quarterly Report on Form 10-Q of Alpha Microsystems for
the quarter ended November 22, 1998)
*10.31 Management Deferred Compensation Plan dated November 1, 1998
(incorporated herein by reference to Exhibit 4.9 to the Transition
Report on Form 10-K of Alpha Microsystems for the transition period
ended December 31, 1998)
*10.32 Amendment No. 1 to Securities Purchase Agreement by and between
Registrant and ING Equity Partners II, L.P. dated February 1999
(incorporated herein by reference to Exhibit 10.49 to the Quarterly
Report on Form 10-Q of Alpha Microsystems for the quarter ended June
30, 1999)
*10.33 Amendment No. 2 to Securities Purchase Agreement by and between
Registrant and Hampshire Equity Partners II, L.P. dated June 28,
1999 (incorporated herein by reference to Exhibit 10.50 to the
Quarterly Report on Form 10-Q of Alpha Microsystems for the quarter
ended June 30, 1999)
*10.34 Amendment No. 3 to Securities Purchase Agreement by and between
Registrant and Hampshire Equity Partners II, L.P. dated November 18,
1999 (incorporated herein by reference to Exhibit 10.52 to the
Quarterly Report on Form 10-Q of Alpha Microsystems for the quarter
ended September 30, 1999)
*10.35 Employment Agreement by and between Registrant and Robert O. Riiska
dated November 26, 1999 (incorporated herein by reference to Exhibit
10.53 to the Annual Report on Form 10-K of Alpha Microsystems for
the year ended December 31, 1999)
<PAGE> 23
*10.36 Indemnification Agreement by and between Registrant and Robert O.
Riiska dated November 26, 1999 (incorporated herein by reference to
Exhibit 10.54 to the Annual Report on Form 10-K of Alpha
Microsystems for the year ended December 31, 1999)
*10.37 Asset Purchase Agreement by and between Registrant and R.E.
Mahmarian Enterprises, LLC dated as of December 31, 1999
(incorporated herein by reference to Exhibit 10.1 to Form 8-K
Current Report of Alpha Microsystems dated January 14, 2000)
*10.38 Amendment No. 1 to Asset Purchase Agreement by and between
Registrant and R.E. Mahmarian Enterprises, LLC dated January 31,
2000 (incorporated herein by reference to Exhibit 10.2 of Form 8-K
Current Report of Alpha Microsystems dated January 31, 2000)
*10.39 Amendment No. 2 to Asset Purchase Agreement by and between
Registrant and R.E. Mahmarian Enterprises, LLC dated March 15, 2000
(incorporated herein by reference to Exhibit 10.57 to the Annual
Report on Form 10-K of Alpha Microsystems for the year ended
December 31, 1999)
*10.40 Amendment No. 3 to Asset Purchase Agreement by and between
Registrant and R.E. Mahmarian Enterprises, LLC dated August 1, 2000
(incorporated herein by reference to Exhibit 10.58 to the Quarterly
Report on Form 10-Q of Alpha Microsystems for the quarter ended June
30, 1999)
27 Financial Data Schedule
--------------
* Filed by incorporation.
