<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________________________________
Commission File Number 0-11704
-------
COMPUTER IDENTICS CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2443539
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Shawmut Road, Canton, Massachusetts 0202l
-------------------------------------------
(Address of principal executive offices)
(Zip Code)
(617) 821-0830
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
- ---------------------------- ----------------------------
Common Stock, $.l0 par value 10,872,293
<PAGE> 2
COMPUTER IDENTICS CORPORATION
TABLE OF CONTENTS
-----------------
Page
PART 1. FINANCIAL INFORMATION
- -------------------------------
ITEM 1. FINANCIAL STATEMENTS.................................... 1
Condensed Consolidated Balance Sheets --
June 30, 1996, and December 31, 1995.................... 1
Condensed Consolidated Statements of Operations --
Three and Six Months ended June 30, 1996, and
June 30, 1995........................................... 2
Condensed Consolidated Statements of Cash Flows --
Six Months ended June 30, 1996, and
June 30, 1995........................................... 3
Notes to Condensed Consolidated Financial Statements ... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS .......... 5
PART II. OTHER INFORMATION
- ---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..... 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 9
<PAGE> 3
COMPUTER IDENTICS CORPORATION AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
<CAPTION>
JUNE 30, December 31,
(IN THOUSANDS, EXCEPT SHARE AMOUNTS) 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,668 $ 1,752
Accounts receivable (less allowance for doubtful accounts of
$270 in 1996 and $225 in 1995) 5,730 6,062
Inventory 4,001 3,625
Other 476 380
- -------------------------------------------------------------------------------------------
Total current assets 11,875 11,819
- -------------------------------------------------------------------------------------------
Property and equipment:
Equipment 3,518 3,674
Furniture and fixtures 318 324
Leasehold improvements 46 64
- -------------------------------------------------------------------------------------------
Total property and equipment 3,882 4,062
Less accumulated depreciation and amortization (2,726) (3,133)
- -------------------------------------------------------------------------------------------
Net property and equipment 1,156 929
- -------------------------------------------------------------------------------------------
Total assets $13,031 $12,748
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank 813 1,002
Obligation under capital lease 17 15
Accounts payable 2,775 2,402
Accrued compensation and related benefits 972 1,063
Accrued income taxes 16 29
Other current liabilities 562 684
Deferred revenue 627 289
- -------------------------------------------------------------------------------------------
Total current liabilities 5,782 5,484
- -------------------------------------------------------------------------------------------
Long-term capital lease obligation 49 57
- -------------------------------------------------------------------------------------------
Stockholders' equity :
Common stock, $.10 par value - authorized 25,000,000 shares at
June 30, 1996 and 14,000,000 shares at December 31, 1995,
issued and outstanding 10,872,293 shares at June 30,1996 and
10,856,793 shares at December 31,1995 1,087 1,086
Additional paid-in capital 24,017 24,005
Deferred compensation (47) (60)
Accumulated deficit (17,882) (17,889)
Cumulative translation adjustments 25 65
- -------------------------------------------------------------------------------------------
Total stockholders' equity 7,200 7,207
- -------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $13,031 $12,748
===========================================================================================
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
COMPUTER IDENTICS CORPORATION AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(IN THOUSANDS. EXCEPT PER SHARE AMOUNTS) JUNE 30, JUNE 30,
- ---------------------------------------------------------------------- ---------------------
1996 1995 1996 1995
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Net product sales $5,400 $5,945 $11,536 $11,914
Customer support services 1,084 815 2,214 1,626
- ---------------------------------------------------------------------- --------------------
Total revenues 6,484 6,760 13,750 13,540
- ---------------------------------------------------------------------- --------------------
Cost and expenses:
Cost of products sold 2,948 2,788 6,441 5,789
Cost of customer support services 418 351 867 660
Selling, general and administrative 2,684 2,681 5,262 5,154
Research and development 524 673 1,153 1,388
- ---------------------------------------------------------------------- --------------------
Total costs and expenses 6,574 6,493 13,723 12,991
- ---------------------------------------------------------------------- --------------------
Income (loss) from operations (90) 267 27 549
Interest income 18 6 34 14
Interest expense 17 6 39 9
- ---------------------------------------------------------------------- --------------------
Income (loss) before provision for income taxes (89) 267 22 554
Provision for income taxes 8 23 14 53
- ---------------------------------------------------------------------- --------------------
Net income (loss) $ (97) $ 244 $ 8 $ 501
====================================================================== ====================
Net income (loss) per share $(0.01) $ 0.02 $ 0.00 $ 0.05
====================================================================== ====================
Weighted average number of common and
common equivalent shares outstanding 10,870 10,983 10,971 10,845
====================================================================== ====================
</TABLE>
2
<PAGE> 5
COMPUTER IDENTICS CORPORATION AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
(IN THOUSANDS) JUNE 30,
- -----------------------------------------------------------------------------------
1996 1995
------ ------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 8 $ 501
Adjustments to reconcile net income
to net cash provided by (used for) operating activities:
Depreciation and amortization 270 205
Non-cash compensation 13 37
Increase (decrease) in cash from:
Accounts receivable 301 658
Inventory (448) (846)
Other current assets (103) (71)
Accounts payable 401 243
Accrued compensation and related benefits (66) (170)
Accrued income taxes (13) 67
Other current liabilities (74) (384)
Deferred revenue 337 134
- -----------------------------------------------------------------------------------
Total adjustments 618 (127)
- -----------------------------------------------------------------------------------
Cash provided by operating activities 626 374
- -----------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Acquisition of property and equipment (503) (361)
Decrease in other assets - 3
- -----------------------------------------------------------------------------------
Net cash used for investing activities (503) (358)
- -----------------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable to bank (134) -
Principal payments under capital lease obligations (7) (23)
Proceeds from exercise of stock options 13 226
- -----------------------------------------------------------------------------------
Net cash provided by financing activities (128) 203
- -----------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (79) 35
- -----------------------------------------------------------------------------------
Net increase in cash and cash equivalents (84) 254
- -----------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 1,752 755
- -----------------------------------------------------------------------------------
Cash and cash equivalents, end of period $1,668 $1,009
===================================================================================
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 39 $ 9
- -----------------------------------------------------------------------------------
Cash paid for income taxes $ 27 $ 6
===================================================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
COMPUTER IDENTICS CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Notes to the Condensed Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
contain information pertinent to the accompanying financial statements. There
has been no material change in the information contained in such notes except as
set forth below. The Balance Sheet at June 30, 1996, the Statements of
Operations for the three and six months ended June 30, 1996 and 1995 and the
Statements of Cash Flows for the six months ended June 30, 1996 and 1995, are
unaudited. However, in the opinion of management, all adjustments (consisting
only of normal recurring accrual entries) necessary for a fair presentation of
such financial results have been included.
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Computer
Identics Corporation (the Company) and its wholly-owned subsidiaries,
Computer Identics N.V./S.A. (CINV), Computer Identics Ltd., Computer
Identics GmbH, Computer Identics S.A., and Computer Identics, Inc.
2. RECLASSIFICATION
Certain amounts in the prior year have been reclassified to conform to the
1996 presentation.
3. NET INCOME (LOSS) PER SHARE
Net income (loss) per common share is computed based on the weighted
average number of common and the dilutive effect of common equivalent
shares outstanding for the period.
4. INVENTORY
Inventory is recorded at the lower of cost (first in, first out method) or
market.
<TABLE>
At June 30, 1996 and December 31, 1995, inventory consisted of the
following:
<CAPTION>
(In thousands) June 30, 1996 December 31, 1995
------------- ------------- -----------------
<S> <C> <C>
Raw Materials $2,034 $1,821
Work-In-Process 271 336
Finished Goods 1,696 1,468
------ ------
Total $4,001 $3,625
------ ------
</TABLE>
4
<PAGE> 7
5. INCOME TAXES
The provisions for income taxes for the second quarter were $8 in 1996 versus a
provision of $23 in 1995. The provisions for income taxes for the six months
ended June 30 were $14 in 1996 versus a provision of $53 in 1995. Due to the
Company's ability to use its U.S. net operating loss carryforwards, the
provision for income taxes is comprised primarily of state and foreign income
taxes for which net operating loss carryforwards are not available.
6. SUBSEQUENT EVENTS
RVSI (Robotic Vision Systems, Inc.) and Computer Identics Corporation
jointly announced on July 24, 1996 that they have signed a definitive
merger agreement whereby RVSI would acquire all of Computer Identics'
outstanding stock. The transaction is intended to be completed as a tax
free reorganization and to be accounted for as a pooling of interests. To
effect the merger transaction RVSI would issue 0.1778052 shares of its
common stock for each Computer Identics share or approximately 1,927,000
shares of RVSI common stock in exchange for all Computer Identics'
outstanding shares. In addition, Computer Identics' outstanding stock
options and warrants would be exchanged for options on RVSI's common stock
in the same 0.1778052 to one ratio. The exchange ratio is subject to
limited adjustment based upon certain changes in the market price of RVSI
common stock. Consummation of the merger transaction is subject to
conditions customary for transactions of this nature, including approval
by stockholders of Computer Identics.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations For the Three Months Ended June 30, 1996 and 1995.
- -----------------------------------------------------------------------
Revenue for the second quarter of 1996 was 4% below the comparable 1995
period. The 1996 revenue decline was reflected in two geographic areas of the
Company, North America and Europe. North America and Europe declined by 13% and
9%, respectively for the second quarter 1996 compared to the same period in
1995. Sales in these two geographic areas reflected sales results that did not
meet the Company's expectations. Rest of World more than doubled for the same
comparable periods. Product sales for the second quarter 1996 compared to the
comparable period in 1995 declined by 9% while service revenue for the same
period increased by 33%. Product sales declined due to lower sales in North
America and Europe previously noted. The increase in service revenue reflects a
stronger emphasis on the Company's service business, increased pricing and
revenue from service contracts for newer products which are coming off their
warranty period. Second quarter bookings decreased 9% for 1996 compared to the
same quarter in the prior year. Backlog decreased from $3.5 million at December
31, 1995, to $3.0 million at June 30, 1996. The $3.0 million in backlog is lower
than the comparable second quarter 1995 total of $3.7 million.
Sales by the Company's four European subsidiaries and exports to Rest of
World were 60% of total revenue for the second quarter of 1996 compared to 56%
for 1995. Since over half the Company's revenue was derived from foreign
sources, its operating results can be sensitive to foreign currency
fluctuations. In the second quarter of 1996, these foreign currency fluctuations
had no impact while in the comparable 1995 period the foreign currency
fluctuations worked in the Company's favor. The Company does have available a
program
5
<PAGE> 8
to hedge its foreign denominated accounts receivable in an effort to minimize
foreign currency exposure. At June 30, 1996, the Company did not have any
hedging contracts outstanding. The Company may utilize limited hedging in the
future should the Company foresee the need.
Gross Margin from product and services was 48% compared to 54% for the
second quarters of 1996 and 1995, respectively. Product gross margin decreased
from 53% in 1995 to 45% in 1996 primarily reflecting higher manufacturing costs
from the implementation of a new cell manufacturing strategy and a new MIS/MRP
system, a higher percentage of lower margin sales from ROW, a change in
distribution strategy in North America from direct to lower margin indirect
channels, and the lack of a favorable foreign currency impact due to a stronger
dollar. This product gross margin percent will not improve unless the Company
can achieve material and labor cost reductions in manufacturing which more than
offset the effect of the larger mix of international revenues and the change in
distribution strategy in North America, both of which have lower margins.
Service gross margin increased in 1996 to 61% from 57% in 1995, reflecting two
factors: elimination from our service base of those older products we have
removed from our current product offerings, coupled with continued cost
reductions. Selling, General and Administrative expenses as a percentage of
revenue were 41% in the second quarter of 1996 versus 40% in the comparable 1995
period, reflecting a continued emphasis on controlling gross spending.
Research and Development expenses were 8% and 10% of revenues in the second
quarter of 1996 and 1995, respectively as the Company continued its planned
program to invest in its future by improving performance of existing products,
expanding its overall product line, and exploring new technology.
As a result of the foregoing, net income (loss) for the second quarter of
1996 and 1995 was ($97,000) and $244,000, respectively.
For the Six Months Ended June 30, 1996 and 1995
- -----------------------------------------------
Revenue for the first six months of 1996 was 2% above the comparable 1995
period for the reasons noted above. Revenue for North America and Europe
declined by 3% while Rest of World increased by over 50% for the first six
months of 1996 compared to the same period in 1995. Product sales for the first
six months of 1996 compared to the same period in 1995 declined by 3% while
service revenue for the same period increased by 36% for the reasons noted
above. First half bookings decreased 6% for 1996 compared to the prior year.
Sales by the Company's four European subsidiaries and exports to Rest of
World were 62% and 60% of the total revenue for the first six months of 1996 and
1995, respectively. Since over half the Company's revenue was derived from
foreign sources, its operating results can be sensitive to foreign currency
fluctuations. In the first half of 1996, these foreign currency fluctuations did
not work in the Company's favor, while the comparable period of 1995 reflected
favorable currency fluctuations.
Gross Margin from product and services was 47% compared to 52% for the
first six months of 1996 and 1995, respectively. Product gross margin decreased
to 44% in 1996 from 51% in 1995, primarily reflecting higher manufacturing costs
from the implementation of a new cell manufacturing strategy and a new MIS/MRP
system, a change in distribution strategy in North America from direct to lower
margin indirect channels, and the lack of a favorable foreign currency impact
due to a stronger dollar. Service gross margin increased in 1996 to 61% from 53%
in 1995 for the reasons noted above. Selling, General and Administrative
expenses as a percent of revenue were 38% in the first half of 1996 and 1995.
Overall, the Company has, through it ongoing cost containment program, minimized
increases in Selling, General and Administrative spending.
6
<PAGE> 9
Research and Development expenses were 8% and 10% of revenues in the first
half of 1996 and 1995, respectively as the Company continued its planned program
to invest in its future by improving performance of existing products, expanding
its overall product line, and exploring new technology.
For the first half of 1996, the Company reported net income of $8,000 as
compared with a 1995 six month income of $501,000. This decline is directly
related to a reduction in gross margin as a percent of revenue.
Liquidity and Capital Resources
- -------------------------------
Management believes that cash generated from operations and the current
level of working capital are sufficient to finance its needs through 1997. From
a capital expenditures viewpoint, in the first half of 1996 the Company
completed the acquisition of a new management information system which cost
approximately $200,000.
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------------------------
<S> <C> <C>
Working Capital $6,093,000 $6,335,000
Current Ratio 2.1 to 1 2.2 to 1
Total Liability to Net Worth Ratio .8 to 1 .8 to 1
</TABLE>
Each of the liquidity factors listed have remained relatively stable over
the two periods listed. Working capital has decreased by $242,000 during the
first six months of 1996 compared to December 31, 1995, primarily resulting from
increases in inventory of $376,000, accounts payable of $373,000, and a decrease
in accounts receivable of $332,000.
The Company currently has two bank lines of credit available. A small line
of credit is held with a Belgium bank for 5 million Belgium Francs
(approximately $170,000). The principal line of credit of $2 million is held
with a commercial bank. Computer Identics GmbH, a wholly owned German
subsidiary, has $800,000 in DM of this line of credit outstanding. Therefore the
Company still has available $1.2 million of this credit line.
7
<PAGE> 10
PART II
-------
OTHER INFORMATION
-----------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders was held on May 14, 1996. The following
are the results of the voting conducted at that meeting. As of the record date
for the Annual Meeting, 10,866,793 shares were outstanding and eligible to vote.
The following table details the results of the shareholder voting:
PROPOSAL # 1 - ELECTION OF DIRECTORS
All six directors were re-elected, namely, Richard Close, John Hill, Tomas
Kohn, Jan Smolders, Edward J. Stewart, III, and Richard Wilcox.
NOMINEE FOR AGAINST
------- --- -------
1. Close, Richard 9,125,461 551,500
2. Hill, John 9,125,561 551,400
3. Kohn, Tomas 9,125,561 551,400
4. Smolders, Jan 9,648,986 27,975
5. Stewart, Edward J, III 9,648,986 27,975
6. Wilcox, Richard 9,648,786 28,175
PROPOSAL # 2 - APPROVAL OF COMPUTER IDENTICS CORPORATION RESTATED ARTICLES OF
ORGANIZATION, AS AMENDED, TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF VOTING
COMMON STOCK FROM 14,000,000 TO 25,000,000
At the Annual Meeting of Stockholders, Proposal No. 2, to amend the
Company's Restated Articles of Organization, as amended, (the "Articles of
Organization") to increase the number of authorized shares of Voting Common
Stock, $.10 par value (the "Common Stock") from 14,000,000 to 25,000,000 was
approved by stockholders as follows:
SHARES
------
FOR 8,791,770
AGAINST 693,200
ABSTAIN 10,491
BROKER NON-VOTE 181,500
PROPOSAL # 3 - APPROVAL OF 1996 STOCK INCENTIVE PLAN:
At the Annual Meeting of Stockholders, Proposal No. 3 to approve the
Company's 1996 Stock Incentive Plan was approved by stockholders as follows:
8
<PAGE> 11
SHARES
------
FOR 9,239,692
AGAINST 240,669
ABSTAIN 13,600
BROKER NON-VOTE 183,000
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
3.1 Restated Articles of Organization effective December 21, 1984, and
Amendment thereto effective June 1, 1987, as further amended by Amendment
thereto effective June 12, 1996.
3.2 By-laws of the Company (filed as Exhibit 3.4 to Registration
Statement No. 2-85807, and incorporated herein by reference).
4.1 Copy of Common Stock Certificate (filed a Exhibit 4.1 to
Registration Statement No. 2-85807, and incorporated herein by reference).
11. Statement regarding computation of per share earnings. (See footnote
3 to Notes to Consolidated Financial Statements).
27. Financial Data Schedule.
(b) Reports on Form 8-K
None
9
<PAGE> 12
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.
COMPUTER IDENTICS CORPORATION
-----------------------------
Registrant
DATE: August 14, 1996
- ----------------------
/s/ Jeffrey A. Weber
--------------------------------------------
Jeffrey A. Weber
Duly Authorized Officer and Chief Financial Officer
(Senior Vice President, Operations and Finance and
Chief Financial Officer)
10
<PAGE> 1
Exhibit 3.1
THE COMMONWEALTH OF MASSACHUSETTS
FEDERAL IDENTIFICATION
MICHAEL JOSEPH CONNOLLY
NO. 04-2443539
Secretary of the Commonwealth
ONE ASHBURTON PLACE, BOSTON, MASS: 02108
RESTATED ARTICLES OF ORGANIZATION
General Laws, Chapter 155B, Section 74
This certificate must be submitted to the Secretary of the Commonwealth within
sixty days after the date of the vote of stockholders adopting the restated
articles of organization. The fee for filing this certificate is prescribed by
General Laws. Chapter 156B, Section 114. Make checks payable to the
Commonwealth of Massachusetts.
__________
We. David J. Collins ,President and
Rickart A. Connole ,Assistant Clerk of
COMPUTER IDENTICS CORPORATION
(Name of Corporation)
located at 5 Shavmut Road, Canton, MA 02021
do hereby certify that the following restatement of the articles of
organization of the corporation was duly adopted on November 13, 1984, by
unanimous consent of the Directors.
1. The name by which the corporation shall be known is:
Computer Identics Corporation
2. The purposes for which the corporation is formed are as follows:
To engage generally in the business of buying, selling,
servicing, renting, leasing, manufacturing, pledging, mortgaging and
otherwise dealing in and with all kinds and manner of devices,
machines, processes, inventions, patents and personal property used in
connection with the identification and control of moving objects,
and to carry on any business permitted by the laws of the Commonwealth
of Massachusetts to a corporation organized under Chapter 156B.
NOTE: Provisions for which the space provided under articles 2, 4, 5, and 6
is not sufficient should be set out on continuation sheets to be
numbered 2A, 2B, etc. Indicate under each article where the provision
is set out. Continuation sheets shall be on 8 1/2 wide by 11" high paper
and must have a left-hand margin 1 inch wide for binding. Only one side
should be used.
<PAGE> 2
3. The total number of shares and the par value, if any, of each
class of stock which the corporation is authorized to issue is
as follows:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
----------------- ------------------------------
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- -------------- ---------------- ---------------- ---------
<S> <C> <C> <C>
Preferred
Common 7,000,000 $.10
Non-voting Common 600,000 $.01
</TABLE>
*4. If more than one class is authorized, a description of each of
the different classes of stock with, if any, the preferences,
voting powers, qualifications, special or relative rights or
privileges as to each class thereof and any series now
established:
See attachment pages 4A through 4B
*5. The restrictions, if any, imposed by the articles of
organization upon the transfer of shares of stock of any class
are as follows:
None
*6. Other lawful provisions, if any, for the conduct and regulation
of the business and affairs of the corporation, for its
voluntary dissolution, or for limiting, defining, or regulating
the powers of the corporation, or of its directors or
stockholders, or of any class of stockholders:
The Directors may make, amend or repeal the By-Laws in
whole or in part, to the extent and in the manner therein provided,
except with respect to any provision thereof which by law or the By-Laws
requires action by the stockholders. Meetings of the stockholders of the
corporation may be held anywhere in the United States.
*If there are no such provisions, state "None".
<PAGE> 3
Continuation Pages for Article 4
--------------------------------
(a) Liquidation: In the event of any liquidation, dissolution, or winding
up of this Corporation, whether voluntary or involuntary, the holders of
Common Stock and Non-voting Common Stock shall be entitled to receive,
ratably, all of the assets of the Corporation.
A consolidating or merger of the Corporation with or into any other
corporation or corporations shall not be deemed to be a liquidation,
dissolution, or winding up, within the meaning of this clause.
(b) Automatic Conversion of Non-voting Common Shares: Upon the sale,
transfer or other disposition by the First National Bank of Boston
("FNBB") or its nominee of any shares of Non-Voting Common Stock held by
it to any transferee (other than an affiliate of FNBB), such shares
shall, by virtue of such sale, transfer or other disposition and without
any further action on any party's part, be automatically converted into
an equal number of shares of Common Stock. Any such transferee shall be
entitled, upon presentation to the Corporation of a certificate or
certificates (duly endorsed or accompanied by stock powers duly endorsed
by FNBB or its nominee) representing the shares of Non-Voting Common
Stock so transferred, to receive a certificate or certificates
representing an equal amount of Common Stock. Registration on the
Corporation's books and records of such shares of Common Stock in the
name of the transferee prior to the record date fixed for a
stockholders' vote shall be a pre-condition of such transferee's
exercising the voting rights of such shares.
(c) Preemptive Rights: Except for the conversion of the Non-Voting Common
Stock into Common Stock as above provided, and except as set forth in
subsection (e), no holder of any class of stock of the Corporation shall
be entitled as of right to subscribe for, purchase, or receive any part
of any new or additional shares of any class, whether now or hereafter
authorized, or of bonds, debentures, or other evidences of indebtedness
convertible into or exchangeable for shares, but all such new or
additional shares of any class, or bonds, debentures, or other evidences
of indebtedness convertible into or exchangeable for shares, may be
issued and disposed of by the Board of Directors on such terms and for
such consideration, so far as may be permitted by law, and to such
person or persons as the Board of Directors in their absolute discretion
may deem advisable.
(d) Issuance: The Board of Directors is authorized and empowered to cause
the issuance at any time or from time to time for cash or any other
lawful consideration, and on such terms, conditions or prices consistent
with the provisions of law, the Articles of
-4A-
<PAGE> 4
Organization and the By-Laws of the Corporation as from time to time
amended, any of the shares of the Corporation's Non-Voting Common Stock,
par value $.01 per share, and shares of Common Stock, par value $.10 per
share, provided, however, that no shares of Non-Voting Common Stock
shall be issued by the Corporation from authorized shares of Non-Voting
Common Stock which become available for issuance by virtue of the
conversion of such shares into Common Stock.
(e) Miscellaneous: In addition to the rights and privileges set forth above
pertaining to the Common Stock, the holders of the Common Stock shall
have all the rights and privileges normally accorded to holders of
common stock in corporations organized pursuant to Chapter 156B of the
General Laws of the Commonwealth of Massachusetts except that a vote of
a majority of each class of stockholders outstanding and entitled to
vote shall be necessary to approve any merger, consolidation or sale of
substantially all the assets of the Corporation. The holders of shares
of Non-Voting Common Stock shall have all of the rights and privileges
accorded to holders of Common Stock, including without limiting the
generality of the foregoing, the right to share pro-rata with holders of
Common stock in any stock-split or stock or cash dividend and any
distributions of stock, cash or property or any recapitalization or
reclassification with respect to Common Stock, except that shares of
Non-Voting Common stock shall be (including any shares of Non-Voting
Common Stock issued by way of stock dividend or stock split) non-voting
in all respects except as expressly provided herein or under the
Massachusetts Business Corporation Law. So long as any Non-Voting Common
Stock is outstanding, in the event the Corporation desires to sell
shares of Common Stock at a price per share less than $1.50 (except (a)
upon conversion of Non-Voting Common Stock, or (b) in connection with
the grant of stock options to, or the exercise of stock options by,
officers and employees of the Corporation for the purchase of not more
than 150,000 shares of Common Stock), the Corporation shall give FNBB
prior written notice setting forth the number of Common Shares intended
to be sold and the price per share at which such shares are intended to
be sold, and FNBB shall have the right, upon written notice to the
Corporation not more than 20 days thereafter, to buy all or any part of
the Common Stock intended to be sold at the intended price. If FNBB does
not elect to purchase any shares of Common Stock, or if it elects to
purchase only a part of such shares intended for sale, the Corporation
may thereafter sell all such shares, or the remaining balance, as the
case may be, as the Corporation may see fit but not for a price per
share less than that specified in its written notice to FNBB as the
intended sale price.
-4B-
<PAGE> 5
"We further certify that the foregoing restated article of organization
effect no amendment to the articles of organization of the corporation as
heretofore amended, except amendments to the following articles:
None.
(If there are no such amendments, state "None".)
Briefly describe amendments in space below:
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this 13th day of November in the year 1984.
/s/ Donald J. Collins President
________________________________
/s/ Rickart A. Connole Assistant Clerk
________________________________
<PAGE> 6
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within restated articles of organization and, the
filing fee in the amount of $150.00 having been paid, said articles are deemed
to have been filed with me this 21st day of December, 1984.
/s/ MICHAEL JOSEPH CONNOLLY
-------------------------------
MICHAEL JOSEPH CONNOLLY
Secretary of the Commonwealth
State House, Boston, Mass.
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT
TO:
Lawrence J. Davidson Jr., Esquire
..........................................................
Sherburne, Powers & Needham
..........................................................
One Beacon Street, Boston, MA 02108
..........................................................
Telephone (617) 523-2700
................................................
Copy Mailed DEC 28 1984
<PAGE> 7
Form CD-72-30M-4/86-808851
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
JM FEDERAL IDENTIFICATION
- ------ MICHAEL JOSEPH CONNOLLY, Secretary
Examiner
ONE ASHBURTON PLACE, BOSTON, MASS. 02108 NO. 04-2443539
-------------------
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of
stockholders adopting the amendment. The fee for filing this certificate
is prescribed by General Laws, Chapter 156B, Section 114. Make check
payable to the Commonwealth of Massachusetts.
---------------
We, Frank J. Wezniak , President/xxxxx and
James Pollock , Clerk/xxxxxxxxx of
Computer Identics Corporation
------------------------------------------------------------------------
(Name of Corporation)
located at 5 Shawmut Road, Canton, MA 02021
--------------------------------------------------------------------
- -----------
Name do hereby certify that the following amendments to the articles of
Approved organization of the corporation were duly adopted at a meeting
held on May 28, 1987, by vote of
#1 3,836,646 shares of Common Stock out of 5,298,731 shares
--------- -------------- ---------
outstanding,
(Class of Stock)
#2 3,744,873 shares of Common Stock out of 5,298,731 shares
--------- -------------- ---------
outstanding and,
(Class of Stock)
shares of out of shares outstanding
--------- ------------- ---------
(Class of Stock)
Amendment #1 being at least a majority of each class outstanding
and entitled to vote thereon:-*
Cross Out Amendment #2, being two-thirds of each class
outstanding and entitled to vote thereon and
Inapplicable of each class or series of stock whose rights
are adversely affected
Clause thereby:-**
C / /
P / /
M / /
* For amendments adopted pursuant to Chapter 156B, Section 70
** For amendments adopted pursuant to Chapter 156B, Section 71
Note: If the space provided under any Amendment or item on
this form is insufficient, additions shall be set forth on separate
8 1/2 x 11 sheets of paper leaving a left hand margin of at least 1
4 inch for binding. Additions to more than one Amendment may be
- ----- continued on a single sheet so long as each Amendment requiring
P.C. each such addition is clearly indicated.
<PAGE> 8
Amendment #1
TO CHANGE the number of shares and the par value, if any, of each class of
stock within the corporation fill in the following:
The total presently authorized is:
<TABLE>
<CAPTION>
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
- ----------------- ---------------- ---------------- -----
<S> <C> <C> <C>
COMMON 7,000,000 .10
Non-Voting Common) 600,000 .01
PREFERRED)
</TABLE>
CHANGE the total to:
<TABLE>
<CAPTION>
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
- ----------------- ---------------- ---------------- -----
<S> <C> <C> <C>
COMMON 14,000,000 .10
Non-Voting Common) 600,000 .01
PREFERRED)
</TABLE>
<PAGE> 9
Amendment #2
------------
There shall be added to Article 6, the following:
No director shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
notwithstanding any provision of law imposing such liability, provided,
however, that, to the extent provided by applicable law, this provision shall
not eliminate the liability of a director (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 61 or 62 or successor provisions of the
Massachusetts Business Corporation Law or (iv) for any transaction from which
the director derived an improper personal benefit. This provision shall not
eliminate the liability of a director for any act or omission occurring prior
to the date upon which this provision becomes effective. No amendment to or
repeal of this provision shall apply to or have any effect on the liability or
alleged liability of any director for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal.
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The General
Laws unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this 28th day of May, in the year 1987.
/s/ Frank J. Wezniak President
...........................................
/s/ James Pollock Clerk
...........................................
<PAGE> 10
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in the
amount of $3,575.00 having been paid, said articles are deemed to have been
filed with me this 1st day of June, 1987.
/s/ Michael J. Connolly
________________________
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: James Pollock
Sherburne, Powers & Needham
One Beacon Street
Boston, MA 02108
Telephone 523-2700
<PAGE> 11
FEDERAL IDENTIFICATION
NO. 04-2443539
------------------
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
We, Richard C. Close , *President,
--------------------------------------------
and Steven R. London , *Clerk,
-----------------------------------------------------------------
of Computer Identics Corporation ,
--------------------------------------------------------------------------
(Exact name of corporation)
located at: 5 Shawmut Road, Canton, MA 02021 ,
-----------------------------------------------------------------
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
3
- -----------------------------------------------------------------------------
(Number those articles 1, 2, 3, 4, 5, and/or 6 being amended)
of the Articles of Organization were duly adopted at a meeting held on May 14,
------
1996, by vote of:
--
8,791,770 shares of Voting Common of 10,866,793 shares
- --------- ------------------------------ ----------
(type, class & series, if any)
outstanding,
shares of of shares
- --------- ------------------------------ ----------
(type, class & series, if any)
outstanding, and
shares of of shares
- --------- ------------------------------ ----------
(type, class & series, if any)
outstanding.
**being at least a majority of each type, class or series outstanding and
entitled to vote thereon:
*Delete the inapplicable words. **Delete the inapplicable clause.
(1) For amendments adopted pursuant to Chapter 156B, Section 70.
(2) For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on one side only of separate 8 1/2 x
11 sheets of paper with a left margin of at least 1 inch. Additions to more
than one article may be made on a single sheet so long as each article
requiring each addition is clearly indicated.
<PAGE> 12
To change the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ------------------------------- -----------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
<S> <C> <C> <C> <C>
Common: Common: 14,000,000 $.10
(Non-voting Common) 600,000 $.01
Preferred: Preferred:
</TABLE>
Change the total authorized to:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ------------------------------- -----------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
<S> <C> <C> <C> <C>
Common: Common: 25,000,000 $.10
(Non-voting Common) 600,000 $.01
Preferred: Preferred:
</TABLE>
<PAGE> 13
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B. Section 6
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
Later effective date: __________________________
SIGNED UNDER THE PENALTIES OF PERJURY, this 12th day of June, 1996.
---- ---- ----
/s/ Richard C. Close * President
________________________________________________
/s/ Steven R. London * Clerk
________________________________________________
* Delete the inapplicable words.
<PAGE> 14
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within Articles of Amendment, and the filing fee in the
amount of $11,000 having been paid, said article is deemed to have been filed
-------
with me this 12th day of June, 1996.
---- ---- --
Effective date: ______________________________
/s/ William Francis Galvin
__________________________
WILLIAM FRANCES GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Steven R. London, Esq.
Brown, Rudnick, Freed & Gesner
One Financial Center
Boston, MA 02111
Tel: (617)856-8200
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,668,000
<SECURITIES> 0
<RECEIVABLES> 6,000,000
<ALLOWANCES> 270,000
<INVENTORY> 4,001,000
<CURRENT-ASSETS> 11,875,000
<PP&E> 3,882,000
<DEPRECIATION> 2,726,000
<TOTAL-ASSETS> 13,031,000
<CURRENT-LIABILITIES> 5,782,000
<BONDS> 0
<COMMON> 1,087,000
0
0
<OTHER-SE> 6,113,000
<TOTAL-LIABILITY-AND-EQUITY> 13,031,000
<SALES> 11,536,000
<TOTAL-REVENUES> 13,750,000
<CGS> 6,441,000
<TOTAL-COSTS> 13,723,000
<OTHER-EXPENSES> (34,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,000
<INCOME-PRETAX> 22,000
<INCOME-TAX> 14,000
<INCOME-CONTINUING> 8,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,000
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
