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Previous: BULL & BEAR FUNDS II INC, N-30D, 1998-09-04 |
Next: CANNELL PETER B & CO INC, SC 13G/A, 1998-09-04 |
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report Under Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934
For the Quarter Ended: July 4, 1998 Commission File No: 0-6933
CAMBEX CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-244-2959
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
360 Second Avenue, Waltham, Massachusetts
(Address of principal executive offices)
02451
(Zip Code)
Registrant's telephone number, including area code: (781) 890-6000
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
<PAGE>
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 4, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
JULY 4, DECEMBER 31,
1998 1997
------------- -------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 454,623 $ 476,246
ACCOUNTS RECEIVABLE, LESS RESERVES OF
$131,000 ON JULY 4, 1998 AND
$131,000 ON DECEMBER 31, 1997 803,677 1,200,343
CURRENT PORTION OF INVESTMENT IN SALES-TYPE LEASES,
NET OF UNEARNED INTEREST INCOME OF $2,000 ON
JULY 4, 1998 AND $4,000 ON DECEMBER 31, 1997 55,932 59,299
INVENTORIES 1,013,472 1,412,925
PREPAID TAXES - -
PREPAID EXPENSES 133,849 121,183
-------------- --------------
TOTAL CURRENT ASSETS $ 2,461,553 $ 3,269,996
-------------- --------------
LONG-TERM INVESTMENT IN SALES-TYPE LEASES, NET
OF UNEARNED INTEREST INCOME OF $1,000 ON
ON DECEMBER 31, 1997 $ - $ 25,820
LEASED EQUIPMENT, AT COST, NET OF ACCUMULATED
DEPRECIATION OF $217,000 ON JULY 4, 1998
AND $183,000 ON DECEMBER 31, 1997 $ 3,836 $ 37,886
PROPERTY AND EQUIPMENT, AT COST:
MACHINERY AND EQUIPMENT $ 3,040,449 $ 3,036,699
FURNITURE AND FIXTURES 247,173 247,173
LEASEHOLD IMPROVEMENTS 602,092 620,949
-------------- --------------
$ 3,889,714 $ 3,904,821
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION 3,453,618 3,347,941
-------------- --------------
NET PROPERTY AND EQUIPMENT $ 436,096 $ 556,880
OTHER ASSETS
TECHNOLOGY LICENSE/MARKETING AGREEMENT,
NET OF ACCUMULATED AMORTIZATION OF $8,500,000
ON JULY 4, 1998 AND ON DECEMBER 31, 1997 $ - $ -
OTHER 37,830 37,830
-------------- --------------
TOTAL ASSETS $ 2,939,315 $ 3,928,412
============== ==============
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
CONSOLIDATED BALANCE SHEETS
JULY 4, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
JULY 4, DECEMBER 31,
1998 1997
------------- --------------
LIABILITIES NOT SUBJECT TO COMPROMISE:
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 189,679 $ 296,419
OBLIGATIONS FOR TRADE-IN MEMORY - -
ACCRUED EXPENSES 272,184 461,725
------------- --------------
TOTAL CURRENT LIABILITIES $ 461,863 $ 758,144
------------- --------------
NOTES PAYABLE $ 1,063,730 -
DEFERRED REVENUE 15,478 15,478
LIABILITIES SUBJECT TO COMPROMISE:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 6,040,646 $ 6,325,273
STOCKHOLDERS' INVESTMENT:
PREFERRED STOCK, $1.00 PAR VALUE PER SHARE
AUTHORIZED - 3,000,000 SHARES
ISSUED - NONE -- --
COMMON STOCK, $.10 PAR VALUE PER SHARE -
AUTHORIZED - 25,000,000 SHARES
ISSUED - 10,872,265 SHARES ON JULY 4, 1998 AND
10,636,108 SHARES ON DECEMBER 31, 1997 $ 1,087,227 $ 1,063,611
CAPITAL IN EXCESS OF PAR VALUE 15,886,499 15,814,783
CUMULATIVE TRANSLATION ADJUSTMENT 120,441 60,756
RETAINED EARNINGS (DEFICIT) (20,881,803) (19,254,867)
LESS - COST OF SHARES HELD IN TREASURY -
1,534,356 ON JULY 4, 1998 AND
ON DECEMBER 31, 1997 (854,766) (854,766)
------------- --------------
TOTAL STOCKHOLDERS' INVESTMENT $ (4,642,402) $ (3,170,483)
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 2,939,315 $ 3,928,412
============= ==============
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C>
CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
(UNAUDITED)
QUARTER ENDED SIX MONTHS ENDED
JULY 4, JUNE 28, JULY 4, JUNE 28,
1998 1997 1998 1997
------------ ------------ ----------- ----------
REVENUES $ 930,127 $ 4,375,902 $ 1,839,135 $ 7,402,635
COST OF SALES 757,747 2,850,962 1,620,257 6,498,508
------------- ------------- ------------ ------------
GROSS PROFIT $ 172,380 $ 1,524,940 $ 218,878 $ 2,704,127
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT $ 230,114 $ 747,516 $ 665,342 $ 1,512,404
SELLING 281,380 1,026,156 561,502 2,206,502
GENERAL AND ADMINISTRATIVE 212,881 314,383 420,615 712,493
------------ ------------- ------------ ------------
$ 724,375 $ 2,088,055 $ 1,647,459 $ 4,431,399
------------ ------------- ------------ ------------
OPERATING INCOME (LOSS) $( 551,995) $ ( 563,115) $ (1,428,581) $ (1,727,272)
OTHER INCOME (EXPENSE):
INTEREST EXPENSE $ - $ (9,876) $ - $ (43,454)
INTEREST INCOME 1,027 4,042 2,282 19,318
OTHER INCOME (EXPENSE) (86,250) (14,281) (200,637) (43,910)
------------ ------------- ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES $( 637,218) $ (583,230) $ (1,626,936) $ (1,795,318)
PROVISION FOR INCOME TAXES $ 0 $ 0 0 0
------------ ------------- ------------ ------------
NET INCOME (LOSS) $( 637,218) $ (583,230) $ (1,626,936) $ (1,795,318)
============ ============= ============ ============
NET INCOME (LOSS) PER COMMON SHARE $ (0.07) $ (0.06) $ (0.18) $ (0.20)
============ ============= ============= ============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 9,200,000 9,080,000 9,150,000 9,080,000
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C>
CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
FOR THE SIX MONTHS ENDED
JULY 4, JUNE 29,
1998 1997
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (1,626,936) $ (1,795,318)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization $ 147,584 $ 397,664
Amortization of prepaid expenses 24,892 28,990
Common stock issued in lieu of cash 88,148 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable 396,666 169,260
Decrease in inventory 399,453 800,923
Decrease in investment in sales-type leases 29,187 344,116
Decrease in prepaid taxes - 2,335,295
Decrease (increase) in prepaid expenses (37,558) (10,430)
Decrease in other assets - -
Increase (decrease) in accounts payable (106,740) 133,936
Decrease in obligations for trade-in memory - (134,463)
Increase (decrease) in accrued liabilities (189,541) 99,050
Increase (decrease) in deferred revenue - (530,758)
Increase (decrease) in liabilities subject to compromise (284,627) -
------------- ------------
Total adjustments $ 467,464 $ 3,633,583
------------- ------------
Net cash provided by (used in) operating activities $ (1,159,472) $ 1,838,265
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of Equipment $ 7,250 $ (13,339)
------------ ------------
Net cash provided by (used in) investing activities $ 7,250 $ (13,339)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock $ 7,184 $ 225
Proceeds from notes payable 1,063,730 -
Repayments under revolving credit agreement - (1,800,000)
------------- ------------
Net cash provided by (used in) financing activities $ 1,070,914 $ (1,799,775)
Effect of exchange rate changes on cash 59,685 (89,944)
------------ ------------
Net decrease in cash and cash equivalents $ (21,623) $ (64,793)
Cash and cash equivalents at beginning of period $ 476,246 $ 615,949
------------- ------------
Cash and cash equivalents at end of period $ 454,623 $ 551,156
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ 43,454
Income Taxes - -
</TABLE>
-5-
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: July 4, 1998 Commission File No: 0-6933
Notes & Comments:
(1)Significant Accounting Policies
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated in
consolidation.
The Company has deferred revenue associated with the sale of certain
products which have future performance obligations, relating
to reinstallation of IBM memory and maintenance.
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. The information furnished
includes all adjustments and accruals consisting only of normal
recurring accrual adjustments which are, in the opinion of management,
necessary for a fair presentation of results for the interim period. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included
in the Company's latest annual report on Form 10-K.
Inventories, which include raw materials, labor and manufacturing
overhead are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
July 4, December 31,
1998 1997
Raw materials $ 708,622 $ 987,920
Work-in-process 183,178 255,377
Finished goods 121,672 169,628
Trade-in memory - -
$1,013,472 $ 1,412,925
- 6 -
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: July 4, 1998 Commission File: 0-6933
Notes & Comments (Continued):
(2) Income and Dividends Per Share
Per share amounts are based on the weighted average number of
shares outstanding during each year plus applicable common stock
equivalents. There were no material differences for per share
amounts assuming full dilution in either year.
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Revenues for the second quarter ended July 4, 1998 decreased
79% from the comparable three months of the prior year due
to decreased sales of the Company's mainframe storage and
client/server storage products.
The gross profit of 19% for the second quarter of 1998 was lower
than the 35% achieved in 1997 due primarily to the
relative amount of fixed costs in relation to lower revenues.
Operating expenses for the three months ended July 4, 1998
decreased 65% from the comparable three months of the prior year
due principally to the cost savings achieved through a work force
reduction and other expense controls put in place.
- 7 -
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: July 4, 1998 Commission File: 0-6933
Notes & Comments (Continued):
On June 1, 1998, the Company raised approximately $1,060,000,
including approximatley $460,000 from Joseph F. Kruy, Chairman,
President and Chief Executive Officer of the Company, in cash
from the issuance of 10% Subordinated Convertible Promissory
Notes (the "Notes"). Under the terms of the Notes, which are
due on April 30, 2003, the holders may convert the notes into
shares of common stock at a conversion price of $0.22 per share.
In addition to the Note, each holder was issued a Stock Purchase
Warrant (the "Warrant"), the exercise of which will allow the
warrant holder to purchase one share of common stock, at $0.50
per share, for each dollar invested through issuance of the Notes.
- 8 -
<PAGE>
FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: July 4, 1998 Commission File: 0-6933
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.
CAMBEX CORPORATION
By: /s/ Joseph F. Kruy
Joseph F. Kruy
President
By: /s/ Peter J. Kruy
Peter J. Kruy
Chief Financial Officer
Dated: September 4, 1998
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUL-04-1998
<CASH> 455
<SECURITIES> 0
<RECEIVABLES> 935
<ALLOWANCES> 131
<INVENTORY> 1014
<CURRENT-ASSETS> 2462
<PP&E> 3890
<DEPRECIATION> 3454
<TOTAL-ASSETS> 2939
<CURRENT-LIABILITIES> 462
<BONDS> 0
0
0
<COMMON> 1087
<OTHER-SE> (5729)
<TOTAL-LIABILITY-AND-EQUITY> 2939
<SALES> 1839
<TOTAL-REVENUES> 1839
<CGS> 1620
<TOTAL-COSTS> 1620
<OTHER-EXPENSES> (199)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1627)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1627)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1627)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
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