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: October 2, 1999 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
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 2, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
ASSETS
OCTOBER 2, DECEMBER 31,
1999 1998
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 104,076 $ 211,452
ACCOUNTS RECEIVABLE, LESS RESERVES OF
$100,000 ON OCTOBER 2, 1999 AND
$100,000 ON DECEMBER 31, 1998 259,059 514,335
CURRENT PORTION OF INVESTMENT IN SALES TYPE LEASES - 25,820
INVENTORIES 639,099 303,720
PREPAID TAXES - -
PREPAID EXPENSES 54,394 72,852
TOTAL CURRENT ASSETS $1,056,628 $1,128,179
LEASED EQUIPMENT,AT COST, NET OF ACCUMULATED
DEPRECIATION OF $208,000 ON OCTOBER 2, 1999
AND $208,000 ON DECEMBER 31, 1998 $ - $ -
PROPERTY AND EQUIPMENT, AT COST:
MACHINERY AND EQUIPMENT $3,052,887 $3,044,199
FURNITURE AND FIXTURES 247,173 247,173
LEASEHOLD IMPROVEMENTS 602,092 602,092
$3,902,152 $3,893,464
LESS-ACCUMULATED DEPRECIATION AND AMORTIZATION 3,684,117 3,585,441
NET PROPERTY AND EQUIPMENT $ 218,035 $ 308,023
OTHER ASSETS
TECHNOLOGY LICENSE/MARKETING AGREEMENT,
NET OF ACCUMULATED AMORTIZATION OF $8,500,000
ON OCTOBER 2, 1999 and DECEMBER 31, 1998 $ - $ -
OTHER 37,830 37,830
TOTAL ASSETS $1,312,493 $1,474,032
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 2, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
OCTOBER 2, DECEMBER 31,
1999 1998
CURRENT LIABILITIES:
REVOLVING LINE OF CREDIT $ 552,696 $ 393,424
ACCOUNTS PAYABLE 374,579 408,841
OBLIGATIONS FOR TRADE-IN MEMORY 360,250 360,250
OTHER LIABILITIES-SHORT TERM 637,820 1,146,168
ACCRUED EXPENSES 529,681 394,039
TOTAL CURRENT LIABILITIES 2,455,026 2,702,722
LONG TERM NOTES 1,273,730 1,063,730
OTHER LIABILITIES-LONG TERM 2,720,709 3,173,007
DEFERRED REVENUE 101,366 255,366
STOCKHOLDERS' INVESTMENT:
PREFERRED STOCK, $1.00 PAR VALUE PER SHARE
AUTHORIZED-3,000,000 SHARES
ISSUED-NONE
COMMON STOCK, $0.10 PAR VALUE PER SHARE-
AUTHORIZED-25,000,000 SHARES
ISSUED-11,074,832 SHARES ON OCTOBER 2, 1999 AND
11,072,582 SHARES ON DECEMBER 31, 1998 $1,107,483 $ 1,107,258
CAPITAL IN EXCESS OF PAR VALUE 15,967,670 15,966,625
ACCUMULATED OTHER COMPREHENSIVE INCOME 88,134 88,134
RETAINED EARNINGS (DEFICIT) (21,546,859) (22,028,044)
LESS-COST OF SHARES HELD IN TREASURY-
1,534,356 ON OCTOBER 2, 1999 AND
ON DECEMBER 31, 1998 (854,766) (854,766)
TOTAL STOCKHOLDERS' INVESTMENT $(5,238,338) $(5,720,793)
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 1,312,493 $ 1,474,032
</TABLE>
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED
OCTOBER 2, 1999 AND OCTOBER 3, 1998
(UNAUDITED)
FOR THE QUARTER ENDED FOR THE NINE MONTHS ENDED
OCTOBER 2, OCTOBER 3, OCTOBER 2, OCTOBER 3,
1999 1998 1999 1998
REVENUES $ 867,492 $ 739,609 $ 2,870,416 $ 2,578,744
COST OF SALES 314,282 726,469 1,183,655 2,346,726
GROSS PROFIT 553,210 13,140 1,686,761 232,018
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT $ 201,556 $ 451,362 837,016 1,116,704
SELLING 216,238 251,130 586,052 812,632
GENERAL AND ADMINISTRATIVE 132,315 182,415 433,024 603,030
$ 550,109 $ 884,907 $ 1,856,092 $ 2,532,366
OPERATING INCOME (LOSS) $ 3,101 $ (871,767) $ (169,331) $(2,300,348)
OTHER INCOME(EXPENSE):
INTEREST EXPENSE (45,618) $ (35,000) $ (118,648) $ (35,000)
INTEREST INCOME - 797 405 3,079
OTHER INCOME(EXPENSE) 255,411 (34,999) 768,759 (235,636)
INCOME(LOSS) BEFORE INCOME TAXES $ 212,894 $ (940,969) $ 481,185 $(2,567,905)
CREDIT (PROVISION) FOR INCOME TAXES - - - -
NET INCOME (LOSS) $ 212,894 $ (940,969) $ 481,185 $(2,567,905)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS - 3,546 - 63,231
TOTAL COMPREHENSIVE INCOME (LOSS) $ 212,894 $ (937,423) $ 481,185 $(2,504,674)
TOTAL COMPREHENSIVE INCOME (LOSS)
PER COMMON SHARE $ 0.02 $ (0.10) $ 0.05 $ (0.27)
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 9,540,000 9,375,000 9,540,000 9,250,000
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
OCTOBER 2, 1999 AND OCTOBER 3, 1998
OCTOBER 2, OCTOBER 3,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 481,185 $(2,567,905)
Adjustments to reconcile net income(loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization $ 98,676 $ 215,017
Amortization of prepaid expenses 7,822 24,892
Common stock issued in lieu of cash - 125,907
Changes in assets and liabilities:
Decrease(increase) in accounts receivable 255,276 952,382
Decrease(increase) in inventory (335,379) 842,161
Decrease in investment in sales-type leases 25,820 44,126
Decrease in prepaid taxes - -
Decrease(increase) in prepaid expenses 11,636 (22,891)
Decrease in other assets - -
Increase(decrease) in accounts payable (34,262) (58,091)
Increase in obligations for trade-in memory - -
Increase(decrease) in accrued expenses 135,642 (106,096)
Increase(decrease) in deferred revenue (154,000) -
Increase(decrease) in liabilities subject to compromise - (909,724)
Increase(decrease) in other liabilities (960,646) -
Total adjustments $ (949,415) $ 1,107,683
Net cash used in operating activities $ (468,230) $(1,460,222)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of Equipment (8,688) 3,500
Net cash provided by (used in) investing activities $ (8,688) $ 3,500
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings(payments)under revolving line of credit$ 159,272 -
Proceeds from sale of common stock 270 7,184
Proceeds from notes payable 210,000 1,063,730
Net cash provided by (used in) financing activities $ 369,542 $ 1,070,914
Effect of exchange rate changes on cash $ - $ 63,231
Net increase (decrease) in cash and cash equivalents $(107,376) $ (322,577)
Cash and cash equivalents at beginning of period $ 211,452 $ 476,246
Cash and cash equivalents at end of period $ 104,076 $ 153,669
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 10,648 $ -
Income Taxes - -
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: October 2, 1999 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:
October 2, December 31,
1999 1998
Raw materials $ 377,463 $ 228,524
Work-in-process 43,897 51,215
Finished goods 217,739 23,981
$ 639,099 $ 303,720
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: October 2, 1999 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.
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Revenues for the third quarter ended October 2, 1999 increased
18% from the comparable three months of the prior year due
to increased sales of the Company's Fibre Channel connectivity
products.
The gross profit of 64% for the third quarter of 1999 was higher
than the 2% achieved in 1998 due to product mix and decreased
fixed costs.
Operating expenses for the three months ended October 2, 1999
decreased 38% from the comparable three months of the prior year
due principally to the cost savings achieved from putting in place
additional expense controls.
Other income for the three months ended October 2, 1999 was
primarily retirement of debt at a discount from face value.
Other expense for the three months ended October 3, 1998 was
primarily legal and professional fees.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: October 2, 1999 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: November 12, 1999
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