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: April 1, 2000 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
APRIL 1, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
ASSETS
APRIL 1, DECEMBER 31,
2000 1999
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 1,008,108 $ 366,743
ACCOUNTS RECEIVABLE, LESS RESERVES OF
$100,000 ON APRIL 1, 2000 AND
$100,000 ON DECEMBER 31, 1999 245,187 202,466
INVENTORIES 562,223 622,430
PREPAID TAXES - -
PREPAID EXPENSES 66,180 65,995
TOTAL CURRENT ASSETS $ 1,881,698 $ 1,257,634
PROPERTY AND EQUIPMENT, AT COST:
MACHINERY AND EQUIPMENT $ 3,052,887 $ 3,052,887
FURNITURE AND FIXTURES 162,625 162,625
LEASEHOLD IMPROVEMENTS 602,092 602,092
$ 3,817,604 $ 3,817,604
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION 3,659,769 3,639,196
NET PROPERTY AND EQUIPMENT $ 157,835 $ 178,408
OTHER ASSETS
OTHER $ 37,830 $ 37,830
TOTAL ASSETS $ 2,077,363 $ 1,473,872
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CONSOLIDATED BALANCE SHEETS
APRIL 1, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
APRIL 1, DECEMBER 31,
2000 1999
CURRENT LIABILITIES:
LOAN AGREEMENT $ - $ 601,029
NOTES PAYABLE 2,287,940 550,000
ACCOUNTS PAYABLE 482,953 463,675
OBLIGATIONS FOR TRADE-IN MEMORY 240,000 286,250
OTHER LIABILITIES-SHORT TERM PORTION 1,177,421 967,558
ACCRUED EXPENSES 544,607 513,849
TOTAL CURRENT LIABILITIES $ 4,732,921 $ 3,382,361
LONG TERM DEBT $ 1,273,730 $ 1,273,730
OTHER LIABILITIES-LONG TERM PORTION 1,935,188 2,324,540
DEFERRED REVENUE 100,116 100,116
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 - 11,169,615 SHARES ON APRIL 1, 2000 AND
11,076,232 SHARES ON DECEMBER 31, 1999 $ 1,116,962 $ 1,107,623
CAPITAL IN EXCESS OF PAR VALUE 15,972,066 15,970,199
ACCUMULATED OTHER COMPREHENSIVE INCOME 101,989 101,989
RETAINED EARNINGS (DEFICIT) (22,300,843)(21,931,920)
LESS - COST OF SHARES HELD IN TREASURY -
1,534,356 ON APRIL 1, 2000 AND
ON DECEMBER 31, 1999 (854,766) (854,766)
TOTAL STOCKHOLDERS' INVESTMENT $ (5,964,592) $(5,606,875)
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 2,077,363 $ 1,473,872
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
APRIL 1, 2000 AND APRIL 3, 1999
(UNAUDITED)
FOR THE THREE MONTHS ENDED
APRIL 1, APRIL 3,
2000 1999
REVENUES $ 655,028 $ 1,390,148
COST OF SALES 361,494 624,917
GROSS PROFIT $ 293,534 $ 765,231
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT $ 351,786 $ 311,728
SELLING 201,750 182,370
GENERAL AND ADMINISTRATIVE 123,248 148,782
$ 676,784 $ 642,880
OPERATING INCOME (LOSS) $ (383,250) $ 122,351
OTHER INCOME (EXPENSE):
INTEREST EXPENSE $ (88,079) $ (35,000)
INTEREST INCOME - 323
OTHER INCOME (EXPENSE) - 13,810
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $ (471,329) $ 101,484
PROVISION FOR INCOME TAXES - -
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS $ (471,329) $ 101,484
EXTRAORDINARY ITEMS 102,406 -
NET INCOME (LOSS) $ (368,923) $ 101,484
OTHER COMPREHENSIVE INCOME, NET OF TAX:
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS - -
TOTAL COMPREHENSIVE INCOME (LOSS) $ (368,923) $ 101,484
TOTAL COMPREHENSIVE INCOME (LOSS)
PER COMMON SHARE $ (0.04) $ 0.01
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 9,600,000 9,500,000
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 10,390,000 9,500,000
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CAMBEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
APRIL 1, 2000 AND APRIL 3, 1999
FOR THE THREE MONTHS ENDED
APRIL 1, APRIL 3,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (368,923) $ 101,484
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization $ 20,573 $ 32,892
Amortization of prepaid expenses 7,210 8,422
Common stock issued in lieu of cash 10,246 -
Change in assets and liabilities:
Decrease (increase) in accounts receivable (42,721) (76,900)
Decrease (increase) in inventory 60,207 (205,961)
Decrease in investment in sales-type leases - 15,411
Decrease in prepaid taxes - -
Decrease (increase) in prepaid expenses (7,395) 4,430
Decrease in other assets - -
Increase (decrease) in accounts payable 19,278 56,505
Increase (decrease) in obligations for trade-in memory(46,250) -
Increase (decrease) in accrued expenses 30,758 1,009
Increase (decrease) in deferred revenue - -
Increase (decrease) in other liabilities (179,489) (37,781)
Total adjustments $ (127,583) $ (201,973)
Net cash provided by (used in) operating activities$(496,506) $ (100,489)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of Equipment - (3,395)
Net cash provided by (used in) investing activities $ - $ (3,395)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings(payments) under loan agreement $ (601,029) $ 65,445
Increase(decrease) in notes payable 1,737,940 -
Proceeds from sale of common stock 960 -
Net cash provided by (used in) financing activities $1,137,871 $ 65,445
Effect of exchange rate changes on cash - -
Net increase (decrease) in cash and cash equivalents $ 641,365 $ (38,439)
Cash and cash equivalents at beginning of period $ 366,743 $ 211,452
Cash and cash equivalents at end of period $1,008,108 $ 173,013
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,618 $ -
Income Taxes - -
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: April 1, 2000 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:
April 1, December 31,
2000 1999
Raw materials $ 358,653 $ 419,984
Work-in-process 98,085 78,572
Finished goods 105,485 123,874
$ 562,223 $ 622,430
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: April 1, 2000 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
The statements contained in "Management Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere
throughout this Report on Form 10-Q that are not
historical facts are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are subject to certain risks and
uncertainties which could cause actual results to differ
materially from those reflected in the forward-looking
statements. These forward-looking statements reflect
management's analysis, judgment, belief or expectation only as
of the date hereof. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date hereof or to
publicly release the results of any revisions to such
forward-looking statements that may be made to reflect
events or circumstances after the date hereof. In addition to
the disclosure contained herein, readers should carefully
review any disclosure of risks and uncertainties contained in
other documents the Company files or has filed from time
to time with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: April 1, 2000 Commission File: 0-6933
Notes & Comments (Continued):
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The Company develops, manufactures and markets leading-edge Fibre
Channel hardware and software solutions for building Storage
Area Networks (SANs). The Company offers high performance Fibre
Channel host bus adapters and hubs, high availability software,
Full-Fibre RAID arrays and management software for the
deployment of heterogeneous SAN solutions, providing companies
the competitive advantage of constant data access, storage
consolidation and centralized management. The Company also
supplies memory for IBM enterprise servers.
Revenues for the first quarter ended April 1, 2000 decreased
53% from the comparable three months of the prior year due to
decreased disk storage product and service revenue, which was
partially offset by continued growth in sales of the Company's
Fibre Channel connectivity products. The decrease in revenue
from the disk storage products was due to the Company
transitioning from the traditional SCSI based disks to
end to end full-fibre solutions and to the fact that building
its sales organization is still in an early stage.
The gross profit of 45% for the first quarter of 2000 was lower
than the 55% achieved in 1999 due to the relative amount of fixed
costs in relation to revenues.
Operating expenses for the three months ended April 1, 2000
increased 5% from the comparable three months of the prior year
due principally to increased research and development and sales
expenses. The Company continues to invest in the research and
development of new and existing Fibre Channel connectivity
products. The Company also invested in building its sales
organization and indirect distribution channels.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: April 1, 2000 Commission File: 0-6933
Notes & Comments (Continued):
(3) Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Extraordinary income for the three months ended April 1, 2000 was
primarily payment of other liabilities at a discount from
face value.
During the first quarter of 2000, the Company raised an additional
$2,000,000 in cash from the issuance of 8% Convertible Bridge
Notes which are due in August and September, 2000. The notes are
convertible at a weighted average share price of $4.08. The
Company may redeem the notes at any time during the term of the
notes. If the Company does not redeem the notes prior to maturity
and the Company's stock price falls below certain levels, the
holders are entitled to acquire additional shares. In addition
to the notes, warrants to purchase 300,000 shares of common stock
were issued at weighted average exercise prices of $4.54 per
share.
On March 1, 2000, the Company entered into a Sublease Agreement
with a third party pursuant to which the Company sublet
approximately 8,000 square feet in its Waltham, Massachusetts
facility (which is approximately 12% of the Company's total
leased space). The term of the sublease is coterminous with
the primary lease and expires on May 31, 2003.
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FORM 10-Q
CAMBEX CORPORATION AND SUBSIDIARIES
For The Quarter Ended: April 1, 2000 Commission File: O-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: May 12, 2000
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