SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ 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 1-7636
DYNACORE HOLDINGS CORPORATION
(Debtor-in-Possession)
(formerly Datapoint Corporation)
(Exact name of registrant as specified in its charter)
Delaware 74-1605174
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8410 Datapoint Drive
San Antonio, Texas 78229-8500
(Address of principal executive office and zip code)
(210) 593-7000
(Registrant's telephone number, including area code)
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 September 30, 2000, 18,429,671 shares of Dynacore Holdings
Corporation Common Stock were outstanding, exclusive of 2,561,546 shares held in
Treasury.
<PAGE>
DYNACORE HOLDINGS CORPORATION AND SUBSIDIARIES
(Debtor-in-Possession)
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets -
September 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations -
Quarter and Nine Months Ended September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II. Other Information
Item 1. Legal Proceedings 17
Item 3. Default Upon Senior Securities 17
Item 6. Exhibits and Reports on Form 8-K 17
Signature 18
---------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
Dynacore Holdings Corporation and Subsidiaries (Debtor-in-Possession)
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share data)
------------------------------------------------------------------------------------------------------------
Sep. 30, 2000 Dec. 31, 1999
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $-- $2,089
Restricted cash and cash equivalents 44,645 298
Accounts receivable, net of allowance for doubtful
accounts of $78 and $773, respectively 469 29,780
Inventories -- 1,563
Prepaid expenses and other current assets 243 2,363
----------------------------------------------------------------------------------------------------------
Total current assets 45,357 36,093
Fixed assets, net 329 5,872
Other assets, net 529 2,089
----------------------------------------------------------------------------------------------------------
$46,215 $44,054
==========================================================================================================
Liabilities and Stockholders' Deficit
Current liabilities:
Liabilities not subject to compromise:
Payables to banks $17 $8,288
Current maturities of long-term debt -- 4,960
Accounts payable 34 13,479
Accrued expenses 6,990 23,867
Deferred revenue 341 8,125
Income tax payable 23 1,725
Liabilities subject to compromise 61,479 --
---------------------------------------------------------------------------------------------------------
Total current liabilities 68,884 60,444
Long-term debt, exclusive of current maturities -- 50,000
Other liabilities 4,773 10,166
Stockholders' deficit:
Preferred stock of $1.00 par value. Shares authorized 10,000,000; shares issued
and outstanding of 641,446 and 661,967 for the period ended September 30,
2000 and December 31, 1999, respectively, (aggregate liquidation preference,
including dividend in arrears, $16,678 for the period ended
September 30, 2000 and $16,715 for the period ended December 31, 1999). 642 662
Common stock of $0.25 par value. Shares authorized 40,000,000;
shares issued 20,991,217, including treasury shares of
2,561,546 for the period ended September 30, 2000 and 2,636,167
for the period ended December 31, 1999. 5,248 5,248
Paid in capital 212,733 212,733
Accumulated other comprehensive income 299 (436)
Retained deficit (245,018) (292,817)
Treasury stock, at cost (1,346) (1,946)
-----------------------------------------------------------------------------------------------------------
Total stockholders' deficit (27,442) (76,556)
-----------------------------------------------------------------------------------------------------------
$46,215 $44,054
==========================================================================================================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Dynacore Holdings Corporation and Subsidiaries (Debtor-in-Possession)
(Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except share data)
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sep. 30, 2000 Sep. 30, 1999 Sep. 30, 2000 Sep. 30, 1999
------------- ------------- ------------- -------------
Revenue:
Sales $22 $18,057 $37,821 $56,619
Service and other -- 14,407 25,126 44,050
-----------------------------------------------------------------------------------------------------------------------------------
Total revenue 22 32,464 62,947 100,669
Operating costs and expenses:
Cost of sales -- 13,486 28,817 43,433
Cost of service and other -- 9,843 19,502 30,942
Research and development -- 413 491 1,294
Selling, general and administrative 1,126 11,307 16,701 26,897
Reorganization/restructuring costs -- -- -- 813
-----------------------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 1,126 35,049 65,511 103,379
-----------------------------------------------------------------------------------------------------------------------------------
Operating loss (1,104) (2,585) (2,564) (2,710)
Non-operating income (expense):
Interest expense -- (1,258) (1,993) (3,942)
Other, net 723 (689) 933 334
-----------------------------------------------------------------------------------------------------------------------------------
Loss before income taxes,
extraordinary credit and reorganization items (381) (4,532) (3,624) (6,318)
Income tax expense (benefit) 9 341 (1,703) 760
-----------------------------------------------------------------------------------------------------------------------------------
Loss before reorganization items and extraordinary credit (390) (4,873) (1,921) (7,078)
----------------------------------------------------------------------------------------------------------------------------------
Reorganization items:
Gain on sale of European Operations 1,691 -- 50,855 --
----------------------------------------------------------------------------------------------------------------------------------
Extraordinary credit -- debt extinguishment -- -- -- 423
Net income (loss) $1,301 $(4,873) $48,934 $(6,655)
==================================================================================================================================
Net income (loss), adjusted for preferred stock dividends paid or accumulated
plus gain on exchange and retirement of
preferred stock - Net income (loss) applicable to common $1,141 $(5,038) $48,553 $(6,948)
============================================================================================================================
Basic Earnings (Loss) Per Common Share:
Income (loss) before extraordinary credit $.06 $(.27) $2.63 $(.41)
Gain on exchange of preferred stock -- -- .01 .01
Extraordinary credit -- -- -- .02
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share $.06 $(.27) $2.64 $(.38)
Diluted Earnings (Loss) Per Common Share:
Income (loss) before extraordinary credit $.05 $(.27) $2.23 $(.41)
Gain on exchange of preferred stock -- -- -- .01
Extraordinary credit -- -- -- .02
------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share $.05 $(.27) $2.23 $(.38)
=========================================================================================================================
Average Common Shares Outstanding:
Basic 18,429,849 18,338,726 18,405,812 18,303,812
Diluted 21,465,345 18,338,726 22,724,200 18,303,812
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dynacore Holdings Corporation and Subsidiaries (Debtor-in-Possession)
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
------------------------------------------------------------------------------------------------------------
Nine Months Ended
----------------------------
Sep. 30, 2000 Sep. 30, 1999
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $48,934 $(6,655)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 793 2,031
Provisions for accounts receivable 35 (68)
Gain on debt extinguishment -- (423)
Deferred income taxes -- 2,806
Gain on sale of European Operations (50,855) --
Changes in assets and liabilities, excluding effects of sale of European
Operations:
(Increase) decrease in receivables (4,425) (692)
(Increase) decrease in inventory (53) 2,455
Increase (decrease) in accounts payable and accrued expenses 13,763 203
Increase (decrease) in other liabilities and deferred credits (2,308) (46)
Other, net (1,950) (140)
-----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 3,934 (529)
Cash flows from investing activities:
Payments for fixed assets (1,513) (2,480)
Proceeds from the sale of European Operations 45,125 --
Other, net 219 736
-------------------------------------------------------------------------------------------------------
Net cash provided (used) from investing activities 43,831 (1,744)
Cash flows from financing activities:
Proceeds from borrowings 46,902 73,539
Payments on borrowings (50,450) (74,504)
Restricted cash for letters of credit 298 (74)
-----------------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,250) (1,039)
Cash held pending confirmation of proposed plan of Reorganization (44,645) --
----------------------------------------------------------------------------------------------------------
Cash retained by European subsidiaries (1,819) --
----------------------------------------------------------------------------------------------------------
Effect of foreign currency translation on cash (140) (391)
-----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (2,089) (3,703)
Cash and cash equivalents at beginning of period 2,089 5,960
----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $0 $2,257
== ======
Cash payments for:
Interest $341 $4,147
Income taxes (refunds), net $267 $(223)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DYNACORE HOLDINGS CORPORATION AND SUBSIDIARIES
(Debtor-in-Possession)
Notes to Consolidated Financial Statements
(In thousands, except per share data)
(Unaudited)
1. Basis of Presentation and Sale of European Operations
On June 27, 2000, Dynacore Holdings Corporation (the "Company") (formerly
Datapoint Corporation), elected to change its fiscal year from a July year end
to a calendar year end, effective January 1, 2000.
It is recommended that these statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended July 31, 1999.
The accompanying unaudited consolidated financial statements have been prepared
by Dynacore Holdings Corporation in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the information furnished reflects all adjustments which are
necessary for a fair statement of the results of the interim periods presented.
All adjustments made in the interim statements are of a normal recurring nature.
The Company has not sought to retain an independent auditor, which will require
court approval, subsequent to the filing of Petition for Reorganization under
Chapter 11 of the United States Bankruptcy Code, as discussed below, and
therefore, this Form 10-Q has been prepared without independent auditor
involvement or review.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
Consistent with the determination of its Board of Directors to shift the focus
of the Company towards acquiring, developing and marketing products with
internet and e-commerce applications, the Company and several of its
subsidiaries entered into that certain Stock Purchase Agreement, dated as of
July 31, 1999 (the "Reboot Agreement"), with Reboot Systems, Inc. ("Reboot") an
investor group lead by Blake Thomas, the former President of the Company, to
sell the European subsidiaries of the Company which comprise substantially all
of the Company's operations (the "European Operations"). Subsequent to the
termination of the Reboot Agreement, as a result of the lack of performance by
Reboot, the Company entered into a Letter of Intent, dated January 26, 2000,
with the European based CallCentric Ltd. ("CallCentric") to sell the European
Operations. Pursuant to an agreement dated as of April 19, 2000 (the "Sale
Agreement"), on June 30, 2000, after receipt of approval from the Bankruptcy
Court, the Company sold (the "Sale") its European Operations to Datapoint Newco
I Limited ("Newco"), a United Kingdom corporation affiliated with CallCentric,
for $49,500 in cash, less certain adjustments in the event that the aggregate
shareholder's deficit of the European Operations exceeded $10,000. The Sale
Agreement contemplated, among other things, that the Company would file for
reorganization pursuant to Chapter 11 of the United States Bankruptcy Code,
which was filed on May 3, 2000 and that the sale of the European Operations to
Newco would be subject to higher and better offers, if any, and the approval of
the Bankruptcy Court. The Bankruptcy Court approved the sale on June 15, 2000
and the sale was consummated on June 30, 2000.
The accompanying unaudited financial statements include a gain of $50.9 million
resulting from the sale described above. Based upon the allocation of the
purchase price among the assets to be transferred in the Sale, the Company
believes that it has sufficient tax basis in excess of book basis of assets sold
and net operating loss carryovers to avoid income taxes on the Sale.
While the Company has physical control of the cash received from the sale of the
European Operations and subsequent earnings, all of the Company's cash and cash
equivalents have been classified as restricted cash pending the confirmation of
the proposed Plan of Reorganization and the related final cash distribution to
the Company's creditors.
2. Bankruptcy
On May 3, 2000, the Company filed for reorganization pursuant to Chapter 11 of
the United States Bankruptcy Code for the District of Delaware. (Case No.
00-1853(PJW)). None of the Company's European subsidiaries were part of the
Chapter 11 filing. Under Chapter 11, certain debts of the Company prior to the
filing are stayed while the Company continues business as Debtor-in-Possession.
<PAGE>
These liabilities are reflected in the September 30, 2000 balance sheet as
liabilities subject to compromise and consist of the following:
8 7/8% Convertible subordinated debentures $54,960
Accrued interest on 8 7/8% Convertible subordinated debentures 4,503
Accounts payable, net of subsidiary debt 1,598
Priority claims 418
--------
$61,479
Since December 1, 1999 the Company has been in default of its interest payment
obligation on its Debentures. As such, interest of $4.5 million has been accrued
for the period June 2, 1999 through the time of Chapter 11 filing on May 3,
2000. Interest for the period May 3, 2000 through September 30, 2000 is
approximately $2.0 million and has not been accrued.
On June 27, 2000, the Company announced its intention to file a Plan of
Reorganization pursuant to Chapter 11 of the Bankruptcy Code in substantial
conformity with an agreement in principle reached with the Official Unsecured
Creditors' Committee appointed in the corporation's Chapter 11 case pending in
the United States Bankruptcy Court for the District of Delaware. (Case No.
00-1853(PJW)). The Company thereafter filed an Amended Plan of Reorganization
("the Plan") and a Second Amended Disclosure Statement (the "Disclosure
Statement"). By order dated October 17, 2000 the Bankruptcy Court approved the
Disclosure Statement and the Company is currently soliciting acceptances of the
Plan. The Bankruptcy Court has scheduled a hearing on the confirmation of the
Plan for December 5, 2000.
The agreement in principle, which is subject to among other things, approval by
creditors and equity security holders and approval by the Bankruptcy Court of
the Plan, provides for the distribution of approximately $34.8 million in cash
to holders of the outstanding 8 7/8% Convertible Subordinated Debentures due
2006 (the "Debentures") and other unsecured creditors from the proceeds of the
sale to Newco. Such cash distribution is expected to result in holders of
Debentures receiving a distribution equal to approximately 60% of the face value
of the outstanding Debentures, excluding accrued interest. At the time of
confirmation of the proposed Plan of Reorganization, Dynacore is expected to
have remaining working capital of approximately $6.0 million after fees,
expenses and certain escrow items required in the Sale pursuant to the Sale
Agreement.
The filed Plan also proposes that when the reorganized Dynacore emerges from
Chapter 11: (i) Debenture holders and other unsecured creditors will receive 25%
of the equity of the reorganized corporation, 3 out of 7 seats on the Board of
Directors, and 40% of a trust (the "Patent Litigation Trust"), to be formed to
pursue the patent litigations of Dynacore more fully described below in Item 2,
(ii) holders of the preferred stock, par value $1.00 per share, will receive
23.5% of the equity of the reorganized corporation, and 3.5% of the Patent
Litigation Trust, (iii) holders of the common stock, par value $.25 per share,
will receive 41.5% of the equity of the reorganized corporation, (iv) current
officer management will receive 10% of the equity of the reorganized corporation
as part of a settlement of certain officer administrative claims that include
employment contract cancellation and other contractual entitlements and (v) the
remaining 56.5% interest in the Patent Litigation Trust shall be retained by the
reorganized Dynacore. Under the Plan, all options to purchase shares of common
stock of the Company will be cancelled.
The Plan contemplates that the beneficial interests in the Patent Litigation
Trust will be transferable and tradeable. In addition, pursuant to the proposed
Plan, Dynacore will distribute to its then shareholders 75% of the first $100
million of net proceeds, if any, received on account of its beneficial interest
in the Patent Litigation Trust after adjustment for corporate tax and payment of
all patent litigation expenses.
The accompanying unaudited financial statements as of September 30, 2000 do not
give effect of any adjustments that may result from the bankruptcy proceedings.
<PAGE>
Excluding the European Operations and the Company's domestic video conferencing
operation (MINX) which was discontinued on October 8, 1999, the Company's
revenue and operating loss were $22 thousand and $1.1 million, respectively, and
$22 thousand and $4.8 million, respectively, for the quarter and nine months
ended September 30, 2000. Excluding the European Operations and the Company's
MINX operations, the Company's consolidated revenue and operating loss were $0
and $1.1 million, respectively, and $0 and $3.8 million, respectively, for the
quarter and nine months ended September 30 1999.
3. Inventories
On June 30, 2000, the Company included all of its remaining inventory as part of
the Sale. The inventory at December 31, 1999, consisted of :
Dec. 31, 1999
Raw materials $115
Work in process 138
Finished and purchased products 1,310
-----
$1,563
4. Commitments and Contingencies
From time to time, the Company is a defendant in lawsuits generally incidental
to its business. The Company is not currently aware of any such suit which, if
decided adversely to the Company, would result in a material liability.
5. Net Income (Loss) to Common Share
Net income (loss) applicable to common share is as follows:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
------------- -----------------
09/30/00 09/30/99 09/30/00 09/30/99
-------- -------- -------- --------
Income Shares EPS Income Shares EPS Income Shares EPS Income Shares EPS
------------------------------------------------ --------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <S> <C> <C> <C> <C>
Income (loss) before
extraordinary credit $1,301 $(4,873) $48,934 $(7,078)
Preferred stock dividends
accumulated (160) (165) (481) (496)
Gain on the exchange and
retirement of preferred stock -- -- 100 203
Extraordinary credit -- -- -- 423
------------------------------------------------------------------------------------------------------------------------------------
Basic EPS $1,141 18,430 $.06 $(5,038) 18,339 $(.27) $48,553 18,406 $2.64 $(6,948) 18,304 $(.38)
------------------------------------------------- ------------------------------------------------- ------------------------------
Dilutives:
Convertible preferred stock -- -- -- -- -- 481 1,283 (.15) -- -- --
Convertible debentures -- 3,035 (.01) -- -- 1,644 3,035 (.26) -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Diluted EPS $1,141 21,465 $.05 $(5,038) 18,339 $(.27) $50,678 22,724 $2.23 $(6,948) 18,304 $(.38)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The EPS computations for the quarter and nine months ended September 30, 2000
and 1999, respectively, exclude the following shares for stock options,
convertible preferred stock and convertible debentures because their effect
would have been antidilutive:
Quarter Ended Nine Months Ended
------------- -----------------
09/30/00 09/30/99 09/30/00 09/30/99
-------- -------- -------- --------
Stock options 3,537 3,537 3,537 3,537
Convertible preferred stock 641 661 -- 661
Convertible debentures -- 3,035 -- 3,035
The above does not reflect the changes in equity ownership discussed in Note 2,
which will have a dilutive effect on current equity interests.
<PAGE>
6. Comprehensive Income
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 130, Reporting Comprehensive Income. Statement No. 130 established new rules
for the reporting and display of comprehensive income and its components.
Comprehensive income is net income, plus certain other items that are recorded
directly to stockholders' equity. The only such items currently applicable to
the Company are foreign currency translation and minimum pension liability
adjustments. The Company adopted this Statement in August 1998. On this basis,
these nonowner (increases) decreases to stockholders' deficit, including net
income or loss, for the quarter and nine months ended September 30, 2000, and
1999, totaled $1.3 million and $49.7 million, respectively and $(4.6) million
and $(8.0) million, respectively.
7. Other Non-operating Income (Expense)
Quarter Ended Nine Months Ended
(In thousands) 09/30/00 09/30/99 09/30/00 09/30/99
-------- -------- -------- --------
Interest earned $723 $16 $933 $124
Foreign currency gains (losses) -- (196) 120 114
Other -- (509) (120) 96
-- ----- ----- --
$723 $(689) $933 $334
==== ====== ==== ====
8. Operating Segments
In 1999, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
Through the time of the consummation of the Sale, Dynacore was principally
engaged in the development, acquisition, marketing, servicing, and system
integration of computer and communication products - both hardware and software.
These products and services are for integrated computer and telecommunication
network systems. The Company's Chief Operating Decision Maker (CODM) assesses
performance and allocates resources based on a geographic reporting structure.
Through the time of the consummation of the Sale, substantially all of the
Company's operations consisted of ten European subsidiaries and to a lesser
extent, domestic operations. Reportable operating segments under SFAS No. 131
include the Company's subsidiaries residing in Sweden, the United Kingdom,
France, and Belgium. Each of these subsidiaries functioned as value-added
resellers.
Included in "Corporate and Other" are general corporate activities and related
expenses and activities from other foreign subsidiaries. Assets are those that
are used or generated exclusively by each operating segment. The eliminations
required to determine the consolidated amounts shown below consist principally
of the elimination of intercompany receivables for loans provided by the
operating segments to the parent entity.
The following table presents certain information regarding the Company's
reportable operating segments for the quarter and nine months period ended
September 30, 2000 and 1999:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
------------- -----------------
09/30/00 09/30/99 09/30/00 09/30/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue
-------------------------------------------------------------------------------------------------
Sweden $-- $9,441 $20,204 $30,292
United Kingdom -- 9,181 14,075 25,678
France -- 4,222 6,906 13,145
Belgium -- 3,165 3,114 11,682
Corporate and Other 22 6,469 18,764 19,896
Eliminations -- (14) (116) (24)
------------------------------------------------------------------------------------------------------
Total $22 $32,464 $62,947 $100,669
=======================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
-------------- -----------------
09/30/00 09/30/99 09/30/00 09/30/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Segment Profit (Loss)
----------------------------------------------------------------------------------------------------------
Sweden $-- $512 $1,396 $1,783
United Kingdom -- (1,367) 1,240 491
France -- 421 (571) 1,115
Belgium -- 59 25 689
Corporate and Other (1,104) (2,210) (4,654) (6,788)
------------------------------------------------------------------------------------------------------
Operating Income (Loss) (1,104) (2,585) (2,564) (2,710)
Interest Expense -- (1,258) (1,993) (3,942)
Non-Operating Income, net 723 (689) 933 334
-----------------------------------------------------------------------------------------------------
Loss Before Income Taxes and
Extraordinary Credit $(381) $(4,532) $(3,624) $(6,318)
==========================================================
</TABLE>
Assets: Sep. 30, 2000 December 31, 1999
--------------------------------------------------------------------------------
Sweden $-- $14,408
United Kingdom -- 22,669
France -- 10,971
Belgium -- 13,028
Corporate and Other 46,215 39,723
Eliminations -- (56,745)
--------------------------------------------------------------------------------
Total $46,215 $44,054
======================================
9. Acquisitions
On July 27, 1999, the Company, through its newly formed subsidiary, Corebyte
Inc., conditionally acquired (the "Corebyte Acquisition") the Corebyte
communication and networking software product family (the "Corebyte Products").
The acquisition was accomplished pursuant to an Asset Purchase Agreement, by and
among the Company, SF Digital, LLC and John Engstrom ("Engstrom"), dated July
27, 1999. Consideration provided for the Corebyte assets comprised the
following: (i) options to purchase up to one million shares of common stock of
the Company at an exercise price of $1.00 per share, (ii) options to purchase an
additional one million shares of common stock of the Company at an exercise
price equal to 80% of the closing price per share of common stock of the Company
on July 27, 2000, the first anniversary of the acquisition, provided that Mr.
Engstrom is still employed by the Company on such date; (iii) up to twenty-five
percent of the common stock in Corebyte, Inc.; and (iv) $75,000 in cash as
reimbursement for certain research and development expenses. All such
consideration is being held by the Company pending final resolution of Engstrom
v. Futureshare.com, LLC, a litigation. Under the agreement in principle with the
Official Unsecured Creditors' Committee, all options to purchase shares of
common stock of the Company will be cancelled.
<PAGE>
On June 30, 2000, the United States District Court for the Southern District of
New York dismissed, without prejudice, for lack of subject matter jurisdiction
John A. Engstrom v. Futureshare.com LLC (99 Civ. 3824), the pending litigation
concerning the ownership status of the intellectual property underlying the
Corebyte Networks(TM) product family of software licensed on an exclusive basis
to the Registrant in July 1999 from Engstrom. The Court cited the general
principle under the Federal Copyright Act that works are subject to copyright by
the mere act of creation, subject to the notable work for hire exception. The
work for hire doctrine provides that if an employee who creates a work within
the scope of his or her employment, such work is automatically owned by the
employer. The Court indicated that the parties did not dispute the chronology of
events in this action. The software was created in November 1997, one and
one-half years before futureshare.com LLC (the "LLC") was formed. Therefore, the
Court concluded that Engstrom could not have been an employee of the LLC at the
time of creation of the software and there is no good faith basis for the LLC to
allege that the software is within the scope of the work for hire doctrine.
Accordingly, the Court found that absent a transfer of rights, Engstrom is the
sole owner of the software. The Court further indicated that whether a transfer
of exclusive rights in the software and/or the extent of any transfer, otherwise
within Engstrom's right, has been contractually modified turns on the
interpretation of the language of the operating agreement of the LLC. As to this
question, the Court indicated that it is purely an issue of state law and does
not implicate the Federal Copyright Act. Accordingly, the Court dismissed this
action without prejudice to the right to file a state action.
Corebyte Inc. is led by John Engstrom, a pioneer of online and accomplished
enterprise groupware and e-mail service provider. Corebyte is an intelligent
browser-based enterprise-to-enterprise networking system. With a single
interface, and based upon beta testing of the system performed to date, the
end-user directly accesses every application necessary to manage their
enterprise from basic e-mail to advanced e-commerce. Users of Corebyte
seamlessly share and exchange valuable information, selectively and securely,
within their network community and across enterprises.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (For the Quarter and Nine Months Ended September 30, 2000
and 1999)
Overview
On June 30, 2000, the Company completed the sale of its European Operations to
Datapoint Newco I Limited ("Newco"), a United Kingdom corporation affiliated
with CallCentric, for $49,500 in cash, less certain adjustments, in the event
that the aggregate shareholder's deficit of the European Operations exceeded
$10,000 ("the Sale"). As a result of the Sale, the Company recorded a gain of
$50.9 million ($49.2 million was recorded in the quarter ended June 30, 2000 and
$1.7 million was recorded in the quarter ended September 30, 2000 and primarily
represented the partial refund of a $2.0 million deposit escrowed in the event
that the aggregate shareholder's deficit exceeded $10.0 million).
The Company had an operating loss of $1.1 million and net income of $1.3 million
for the quarter ended September 30, 2000 compared to an operating loss of $2.6
million and a net loss of $4.9 million for the same period of the prior year.
For the nine months ended September 30, 2000, the Company had an operating loss
of $2.6 million and net income of $48.9 million compared to an operating loss of
$2.7 million and a net loss of $6.7 million for the same period of the prior
year.
<PAGE>
Excluding the European Operations and the Company's domestic video conferencing
operation (MINX) which was discontinued on October 8, 1999, the Company's
revenue and operating loss were $22 thousand and $1.1 million, respectively, and
$22 thousand and $4.8 million, respectively, for the quarter and nine months
ended September 30, 2000. Excluding the European Operations and the Company's
MINX operations, the Company's consolidated revenue and operating loss were $0
and $1.1 million, respectively, and $0 and $3.8 million, respectively, for the
quarter and nine months ended September 30 1999.
During the quarter and nine months ended September 30, 2000, the Company did not
repurchase in the public market any of its 8 7/8% convertible subordinated
debentures. For the quarter ended September 30 1999, the Company also did not
repurchase any of its 8 7/8% convertible subordinated debentures. However, for
the nine months ended September 30, 1999, the Company repurchased approximately
$721 thousand face value of its 8 7/8% convertible subordinated debentures.
These purchases resulted in an extraordinary gain of approximately $423 thousand
for the nine months ended September 30, 1999.
Patents and Trademarks
Dynacore owns certain patents, copyrights, trademarks and trade secrets in
network technologies, which it considers valuable proprietary assets.
Video Conferencing Patents
Dynacore, along with John Frassanito and David A. Monroe, owns United States
Patent Nos. 4,710,917 and 4,847,829 related to video teleconferencing
technology. Dynacore had filed infringement actions against several companies.
All actions were dismissed after an adverse result at trial and on appeal.
<PAGE>
Multi-speed Networking Patents
Dynacore is also the owner of United States Patent Nos. 5,008,879 and 5,077,732
related to network technology. The Company believes these patents cover most
products introduced by various suppliers to the networking industry and
dominates certain types of dual-speed technology on networking recently
introduced by various industry leaders. Dynacore has asserted one or both of
these patents in the United States District Court for the Eastern District of
New York against a number of parties:
(1) Datapoint Corporation* v. Standard Micro-Systems, Inc. and Intel
Corporation, No. C.V.-96-1685;
(2) Datapoint Corporation* v. Cisco Systems, Plaintree Systems Corp.,
Accton Technologies Corp., Cabletron Systems, Inc., Bay
Networks, Inc., Crosscom Corp. and Assante Technologies, Inc. No. CV 96 4534;
(3) Datapoint Corporation* v. Dayna Communications, Inc., Sun Microsystems,
Inc., Adaptec, Inc. International Business Machines Corp., Lantronix,
SVEC America Computer Corporation, and Nbase
Communications, No.CV 96 6334; and
(4) Datapoint Corporation* v. Standard Microsystems Corp. and Intel Corp.,
individually, and as representatives of the class manufacturers, vendors and
users of Fast Ethernet-compliant, dual protocol local-area network
products, No. CV-96-03819.
* The Company expects to make a motion with the Court to reflect the name change
to Dynacore Holdings Corporation.
These actions were consolidated for discovery, and for purposes of claim
construction. On January 20, 1998, a hearing commenced in the United States
District Court that concluded on January 23, 1998 during which claim
construction was submitted to a Special Master. The Special Master's report was
issued April of 1998 adverse to Dynacore. The Company had filed two sets of
objections to certain portions of this report. The objections were overruled.
These objections will now have to be resolved at the Appellate Court level. The
briefing is completed. Both patents have been submitted to the Patent Office for
re-examination. An adverse action was rendered on one patent, which the Company
is contesting, and a favorable action was rendered on the other. The appeal has
been stayed pending the complete outcome of the re-examination proceedings.
The above actions represent the Company's continuing efforts to license and
enforce its multi-speed networking patents through negotiations and/or
litigation. The Company believes that these patents provide broad coverage in
multi-speed networking technology and present the opportunity for further
royalty bearing licenses. While such royalty bearing licenses and enforcement of
its patents may create long-term value for its shareholders, the ultimate
outcome of the above litigation, appeals with respect to the litigation, and /or
negotiations cannot be determined at this time.
Results of Operations
The Company had revenue of $22 thousand, an operating loss of $1.1 million and
net income of $1.3 million for the quarter ended September 30, 2000 compared to
revenue of $32.5 million, an operating loss of $2.6 million and a net loss of
$4.9 million for the same period of the prior year. For the nine months ended
September 30, 2000, the Company had revenue of $62.9 million, an operating loss
of $2.6 million, and net income of $48.9 million. For the nine months ended
September 30, 1999, the Company had revenue of $100.7 million, an operating loss
of $2.7 million, and a net loss of $6.7 million. Excluding the European
Operations and the Company's domestic video conferencing operations (MINX) which
were discontinued on October 8, 1999, the Company's revenue and operating loss
were $22 thousand and $1.1 million, respectively, and $22 thousand and $4.8
million, respectively, for the quarter and nine months ended September 30, 2000.
Excluding the European Operations and the Company's MINX operations, the
Company's consolidated revenue and operating loss were $0 and $1.1 million
respectively, and $0 and $3.8 million, respectively, for the quarter and nine
months ended September 30 1999.
<PAGE>
The following is a summary of the Company's sources of revenue (approximately 99
percent of Dynacore's international revenue was derived from customers in
Western Europe):
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
(In thousands) 09/30/00 09/30/99 09/30/00 09/30/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales:
U.S. $22 $366 $105 $2,235
Foreign -- 17,691 37,716 54,384
------ ------ ------
22 18,057 37,821 56,619
Service and other:
U.S. -- 281 $344 $780
Foreign -- 14,126 24,782 43,270
------ ------ ------
-- 14,407 25,126 44,050
------ ------ ------
Total revenue $22 $32,464 $62,947 $100,669
=== ======= ======= ========
</TABLE>
Operating expenses (excluding cost of revenue and restructuring) for the quarter
and nine months ended September 30, 2000, were $1.1 million and $17.2 million,
respectively, compared with $11.7 million and $28.2 million for the same periods
of the prior year. The Company did not incur any restructuring expenses for the
quarter and nine months ended September 30, 2000. For the quarter and nine
months ended September 30, 1999, the Company incurred restructuring expenses of
$0 and $813 thousand, respectively.
<PAGE>
Excluding the European Operations and the Company's MINX operation, the
Company's operating expenses (excluding cost of revenue and restructuring) were
$1.1 million and $4.8 million, respectively, for the quarter and nine months
ended September 30, 2000. Excluding the European Operations and the Company's
MINX operation, the Company's operating expenses were $1.1 million and $3.8
million, respectively, for the quarter and nine months ended September 30, 1999.
Non-operating expenses for the quarter ended September 30, 2000, consisted of
interest earned of $723 thousand. For the nine months ended September 30, 2000,
non-operating expenses consisted primarily of interest expense of $2.0 million,
and interest earned of $0.9 million. For the quarter and nine months ended
September 30, 2000, as a result of the Sale, the Company recorded a gain of $1.7
and $50.9 million, respectively. Non-operating income and expenses for the
quarter ended September 30, 1999 consisted primarily of interest expense $1.3
million and foreign currency losses of $196 thousand. For the nine months ended
September 30, 1999, non-operating income and expenses consisted primarily of
interest expense of $3.9 million and foreign currency gains of $114 thousand and
interest income of $124 thousand.
During the quarter and for the nine months ended September 30, 2000, the Company
did not repurchase in the public market any of its 8 7/8% convertible
subordinated debentures. For the quarter ended September 30, 1999, the Company
also did not repurchase any of its 8 7/8% convertible subordinated debentures.
However, for the nine months ended September 30, 1999, the Company repurchased
approximately $721 thousand face value of its 8 7/8% convertible subordinated
debentures. These purchases resulted in an extraordinary gain of approximately
$423 thousand for the nine months ended September 30, 1999.
Financial Condition
Consistent with the determination of its Board of Directors to shift the focus
of the Company towards acquiring, developing and marketing products with
internet and e-commerce applications, the Company and several of its
subsidiaries entered into that certain Stock Purchase Agreement, dated as of
July 31, 1999 (the "Reboot Agreement"), with Reboot Systems, Inc. ("Reboot") an
investor group lead by Blake Thomas, the former President of the Company, to
sell the European subsidiaries of the Company which comprise substantially all
of the Company's operations (the "European Operations"). Subsequent to the
termination of the Reboot Agreement, as a result of the lack of performance by
Reboot, the Company entered into a Letter of Intent, dated January 26, 2000,
with the European based CallCentric Ltd. ("CallCentric") to sell the European
Operations. Pursuant to an agreement dated as of April 19, 2000 (the "Sale
Agreement"), on June 30, 2000, after receipt of approval from the Bankruptcy
Court, the Company sold (the "Sale") its European Operations to Datapoint Newco
I Limited ("Newco"), a United Kingdom corporation affiliated with CallCentric,
for $49,500 in cash, less certain adjustments in the event that the aggregate
shareholder's deficit of the European Operations exceeded $10,000. The Sale
Agreement contemplated, among other things, that the Company would file for
reorganization pursuant to Chapter 11 of the United States Bankruptcy Code,
which was filed on May 3, 2000 and that the sale of the European Operations to
Newco would be subject to higher and better offers, if any, and the approval of
the Bankruptcy Court. The Bankruptcy Court approved the sale on June 15, 2000
and the sale was consummated on June 30, 2000.
The Company recorded a gain of $50.9 million as a result of the Sale ($49.2
million was recorded in the quarter ended June 30, 2000 and $1.7 million was
recorded in the quarter ended September 30, 2000 and primarily represented the
partial refund of a $2.0 million deposit escrowed in the event that the
aggregate shareholder's deficit exceeded $10.0 million). Based upon the
allocation of the purchase price among the assets to be transferred in the Sale,
the Company believes that it has sufficient tax basis in excess of book basis of
assets sold and net operating loss carryovers to avoid income taxes on the Sale.
<PAGE>
On May 3, 2000, the Company filed for reorganization pursuant to Chapter 11 of
the United States Bankruptcy Code for the District of Delaware. (Case No.
00-1853(PJW)). None of the Company's European subsidiaries were part of the
Chapter 11 filing. Under Chapter 11, certain debts of the Company prior to the
filing are stayed while the Company continues business as Debtor-in-Possession.
These liabilities are reflected in the September 30, 2000 balance sheet as
liabilities subject to compromise and consist of the following:
8 7/8% Convertible subordinated debentures $54,960
Accrued interest on 8 7/8% Convertible subordinated debentures 4,503
Accounts payable, net of subsidiary debt 1,598
Priority claims 418
-------
$61,479
Since December 1, 1999 the Company has been in default of its interest payment
obligation on its Debentures. As such, interest of $4.5 million has been accrued
for the period June 2, 1999 through the time of Chapter 11 filing on May 3,
2000. Interest for the period May 3, 2000 through September 30, 2000 is
approximately $2.0 million and has not been accrued.
On June 27, 2000, the Company announced its intention to file a Plan of
Reorganization pursuant to Chapter 11 of the Bankruptcy Code in substantial
conformity with an agreement in principle reached with the Official Unsecured
Creditors' Committee appointed in the corporation's Chapter 11 case pending in
the United States Bankruptcy Court for the District of Delaware. (Case No.
00-1853(PJW)). The Company thereafter filed an Amended Plan of Reorganization
("the Plan") and a Second Amended Disclosure Statement (the "Disclosure
Statement"). By order dated October 17, 2000 the Bankruptcy Court approved the
Disclosure Statement and the Company is currently soliciting acceptances of the
Plan. The Bankruptcy Court has scheduled a hearing on the confirmation of the
Plan for December 5, 2000.
The agreement in principle, which is subject to among other things, approval by
creditors and equity security holders and approval by the Bankruptcy Court of
the Plan, provides for the distribution of approximately $34.8 million in cash
to holders of the outstanding 8 7/8% Convertible Subordinated Debentures due
2006 (the "Debentures") and other unsecured creditors from the proceeds of the
sale to Newco. Such cash distribution is expected to result in holders of
Debentures receiving a distribution equal to approximately 60% of the face value
of the outstanding Debentures, excluding accrued interest. At the time of
confirmation of the proposed Plan of Reorganization, Dynacore is expected to
have remaining working capital of approximately $6.0 million after fees,
expenses and certain escrow items required in the Sale pursuant to the Sale
Agreement.
<PAGE>
The filed Plan also proposes that when the reorganized Dynacore emerges from
Chapter 11: (i) Debenture holders and other unsecured creditors will receive 25%
of the equity of the reorganized corporation, 3 out of 7 seats on the Board of
Directors, and 40% of a trust (the "Patent Litigation Trust"), to be formed to
pursue the patent litigations of Dynacore more fully described below in Item 2,
(ii) holders of the preferred stock, par value $1.00 per share, will receive
23.5% of the equity of the reorganized corporation, and 3.5% of the Patent
Litigation Trust, (iii) holders of the common stock, par value $.25 per share,
will receive 41.5% of the equity of the reorganized corporation, (iv) current
officer management will receive 10% of the equity of the reorganized corporation
as part of a settlement of certain officer administrative claims that include
employment contract cancellation and other contractual entitlements and (v) the
remaining 56.5% interest in the Patent Litigation Trust shall be retained by the
reorganized Dynacore. Under the Plan, all options to purchase shares of common
stock of the Company will be cancelled.
The Plan contemplates that the beneficial interests in the Patent Litigation
Trust will be transferable and tradeable. In addition, pursuant to the proposed
Plan, Dynacore will distribute to its then shareholders 75% of the first $100
million of net proceeds, if any, received on account of its beneficial interest
in the Patent Litigation Trust after adjustment for corporate tax and payment of
all patent litigation expenses.
During the nine months ended September 30, 2000, the Company's cash and cash
equivalents decreased $2.1 million.
As of September 30, 2000, the Company had restricted cash of $44.6 million as
compared to $298 thousand as of December 31, 1999. For the period ended December
31, 1999, the balances were restricted primarily to cover various lines of
credits, reflected as payables to banks. For the period ended September 30,
2000, while the Company has physical control of the cash received from the sale
of European Operations and subsequent earnings, the balances have been
classified as restricted, pending the confirmation of the proposed Plan of
Reorganization and the related final cash distribution to the Company's
creditors.
During the nine months ended September 30, 2000, the Company's net cash used in
investing activities, excluding the sale of the European Operations, was
approximately $1.3 million which included fixed asset purchases (primarily test
equipment, spares, and internally-used equipment).
Net cash provided by financing activities was $3.3 million during the nine
months ended September 30, 2000, which primarily included borrowings of $46.9
million offset by payments of $50.5 million.
<PAGE>
Reorganization/Restructuring Costs
(In thousands)
During the quarter and nine months ended September 30, 2000, the Company did not
incur any restructuring costs for employee termination costs. During the quarter
and nine months months ended September 30, 1999, the Company incurred
restructuring costs of $0 and $813, respectively. These costs related to the
downsizing at the Company's San Antonio headquarters. At September 30, 2000,
accrued but unpaid restructuring costs were approximately $47. Such costs are
expected to be paid through the fourth quarter of calendar year 2000.
Restructuring charges are not recorded until specific employees are determined
(and notified of termination) by management in accordance with its overall
restructuring plan. Employee termination payments are generally paid out over a
period of time rather than as one lump sum.
Year 2000 Compliance
The Year 2000 Issue was the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that had date-sensitive software or embedded chips
may have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, generate invoices, or engage in similar normal business
activities. Based on the Company's assessments, the Company modified and/or
replaced significant portions of hardware and software so that those systems
would properly utilize dates beyond December 31, 1999.
The Company also assessed and modified and/or replaced its non Information
Technology ("IT") operating systems to insure compliance with Year 2000 which
included those primarily related to the office and facilities' environment
(telephone systems, security systems, etc.).
As a result of its efforts, Dynacore was prepared for the transition to the Year
2000 and did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000. Dynacore
is not currently aware of any year 2000 problems that have materially affected
its customers or suppliers. Based on operations since January 1, 2000, the
Company does not anticipate any material disruption in its operations as a
result of any continuing Year 2000 issues. However it is possible that latent
problems may arise in the future. The Company believes that any such problems
are likely to be minor and correctable. Dynacore's aggregate costs for its Year
2000 actions were approximately $1.2 million.
<PAGE>
New European Currency
In January 1999, certain European countries introduced a new currency unit
called the "euro". In conjunction with the preparation for the year 2000, the
Company also modified and/or adapted systems designed to properly handle the
euro. The costs required to be able to accommodate the euro were combined with
costs of becoming year 2000 compliant, and therefore not easily identifiable.
However, they are not considered to be so significant so as to have a material
effect on the Company's business.
Cautionary Statement Regarding Risks and Uncertainties That May Affect
Future Results
This Quarterly Report on Form 10-Q contains forward-looking statements about the
business, financial condition and prospects of the Company. The actual results
of the Company could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties,
including, without limitation, actions which may be taken by trade creditors of
the Company or holders of the Company's Debentures, changes in product demand,
the availability of products, changes in competition, economic conditions, new
product development, changes in tax and other governmental rules and regulations
applicable to the Company, and other risks indicated in the Company's filings
with the Securities and Exchange Commission. These risks and uncertainties are
beyond the ability of the Company to control, and in many cases, the Company
cannot predict the risks and uncertainties that could cause its actual results
to differ materially from those indicated by the forward-looking statements.
When used in this Quarterly Report on Form 10-Q, the words "believes,"
"estimates," "plans," "expects," and "anticipates" and similar expressions as
they relate to the Company or its management are intended to identify
forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information concerning market risk is contained on page 18 of the Registrant's
Annual Report on Form 10-K for the year ended July 31, 1999 and is incorporated
by reference to such annual report.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On May 3, 2000 the Company filed a petition pursuant to Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware. The case has been assigned docket number 00-1853 (PJW).
See Item 3 of Registrant's Report on Form 10-K for the fiscal year ended July
31, 1999, for a description of certain legal proceedings heretofore reported.
The Company is a Plaintiff in a number of actions related to its patents and
trademarks which are more fully described in the Management's Discussion and
Analysis overview section of this Form 10Q.
On February 17, 2000, Blake Thomas, the former President of the Company, who was
terminated effective December 30, 1999, filed an action for $119 thousand of
severance and vacation pay with the Texas Work Force Commission at the Texas
Workman's Compensation Court. Blake Thomas has also filed a general unsecured
claim for $1,878,637 with the United States Bankruptcy Court. The Company
expects to contest these claims. Final disposition of this matter will be
determined by the United States Bankruptcy Court.
Item 3. Defaults Upon Senior Securities
Since December 1, 1999 the Company has been in default of its interest payment
obligation on its Debentures which were issued pursuant to the Indenture (See
Part I, note 1 to Financial Statements). The Company has had informal meetings
with certain of the large holders of Debentures concerning such default. As of
September 30, 2000, the default and the total arrearages in interest total
approximately $4.5 million. In addition, as of September 30, 2000, the Company
has outstanding 641,446 shares of its preferred stock, par value $1.00 per
share. The aggregate liquidation preference and dividend arrearages on such
shares is approximately $16.7 million including dividend arrearages of $3.8
million.
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K:
For the three month period ended September 30, 2000, the Company did not file
any reports on Form 8-K.
<PAGE>
SIGNATURE
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.
DYNACORE HOLDINGS CORPORATION
(Debtor-in-Possession)
(Registrant)
DATE: November 14, 2000 /s/ Phillip P. Krumb
----------------------------------
Phillip P. Krumb
Acting Chief Financial Officer
(Acting Chief Accounting Officer)
