<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Quarter Ended: September 30, 1995 Commission File Number: 0-8995
------------------ ------
COMPUTER DEVICES, INC.
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(Exact name of registrant as specified in its charter)
Maryland 04-2446436
- - ------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
34 Linnell Circle, Nutting Lake, MA 01865
------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (508) 663-4980
--------------
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past twelve 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___
---
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
<TABLE>
<CAPTION>
Shares Outstanding
Common Class as of September 30, 1995
------------ ------------------------
<S> <C>
Class A 1,367,192
Class B 2,211,951
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements (unaudited): 3
Consolidated statements of operations for the three
and nine months ended September 30, 1995 and
September 30, 1994 3
Consolidated balance sheet at September 30, 1995 4
Consolidated statements of cash flows for the nine
months ended September 30, 1995 and September 30, 1994 6
Notes to consolidated financial statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 9
PART II. OTHER INFORMATION 10
SIGNATURES 11
</TABLE>
2
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
<S> <C> <C> <C> <C>
1995 1994 1995 1994
------------------- -------------------
REVENUES $ 271 $ 340 $ 976 $ 1,016
COST OF REVENUES 222 255 789 658
------------------- -------------------
Gross profit 49 85 187 358
OPERATING EXPENSES:
Engineering, research and development 0 12 0 39
Selling, general and administrative 149 149 486 503
------------------- -------------------
Total operating expenses 149 161 486 542
------------------- -------------------
Operating loss (100) (76) (299) (184)
Interest income 13 13 40 41
Other income 0 0 1 8
Loss on marketable securities 0 0 0 (50)
------------------- -------------------
Net loss $ (87) $ (63) $ (258) $ (185)
------------------- -------------------
Net loss per common share (Note 4) $ (.02) $ (.02) $ (.07) $(.06)
------------------- -------------------
Weighted average number of common
shares outstanding (Note 4) 3,579 3,353 3,460 3,353
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(In thousands except share amounts)
(unaudited)
<TABLE>
<CAPTION>
September 30, 1995
------------------
<S> <C>
ASSETS
- - ------
CURRENT ASSETS:
Cash and cash equivalents $ 170
Marketable securities 584
Accounts receivable, less reserve of $24 115
Inventories 80
Prepaid expenses 18
-------
Total current assets 967
-------
PROPERTY AND EQUIPMENT:
Property and equipment at cost 286
Accumulated depreciation (248)
-------
38
-------
TOTAL ASSETS $ 1,005
=======
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(In thousands except share amounts)
(unaudited)
<TABLE>
<CAPTION>
September 30, 1995
------------------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 38
Deferred revenue 2
Accrued expenses 46
-------
Total current liabilities 86
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COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY (Notes 2 and 4):
Preference stock, $.01 par value
Authorized - 64,000 shares
Issued and outstanding - 49,406 shares
Liquidation value - $4941 --
Class A common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 1,367,192 4
Class B common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 2,211,951 22
Capital in excess of par value 2,001
Retained earnings (accumulated deficit) (1,118)
-------
Total stockholders' equity 919
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,005
=======
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (258) $ (185)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 11 5
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (59) 253
Decrease (increase) in inventory 1 (14)
Decrease (increase) in prepaid expenses 16 8
Increase (decrease) in accounts payable 37 (51)
Increase (decrease) in deferred revenue (7) --
Increase (decrease) in accrued expenses 10 (17)
-------------- --------------
Net cash provided by (used in) operating activities (249) (1)
Cash flows from investing activities:
Purchases of property and equipment (23) --
Disposal of property and equipment 2 --
Sale of marketable securities 213 --
-------------- --------------
Net cash provided by (used in) investing activities 192 --
Cash flows from financing activities:
Proceeds received from exercise of stock options 11 --
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Net cash provided by financing activities 11 --
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Net increase (decrease) in cash and cash equivalents (46) (1)
Cash and cash equivalents at beginning of year 216 1085
-------------- --------------
Cash and cash equivalents at end of nine months $ 170 $ 1084
============= ==============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
6
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1995
------------------
(unaudited)
Note 1 - Summary of Significant Accounting Policies
- - ---------------------------------------------------
The accompanying consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission, and reflect all adjustments which, in the opinion of
management, are necessary for a fair statement of the results of the interim
periods presented. These financial statements do not include all disclosures
associated with annual financial statements, and accordingly should be read in
conjunction with footnotes contained in the Company's Form 10-KSB report for the
year ended December 31, 1994.
(a) Principles of Consolidation
- - -------------------------------
The consolidated financial statements include the accounts of Computer Devices,
Inc., and its wholly-owned subsidiary, Neuro-Therapeutics, Inc. (the Company).
All material intercompany accounts and transactions have been eliminated in
consolidation.
(b) Cash, Cash Equivalents and Investments
- - ------------------------------------------
The Company considers all highly liquid investments with maturities of three
months or less at the time of acquisition to be cash equivalents. Included in
cash equivalents at September 30, 1995 is approximately $97,000 of money market
funds. Marketable securities have maturities of greater than three months and
consist of securities issued by the U.S. Government.
(c) Inventories
- - ---------------
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist primarily of purchased finished goods.
(d) Revenue Recognition
- - -----------------------
The Company recognizes revenue upon shipment of its product to a customer.
(e) Depreciation and Amortization
- - ---------------------------------
Property and equipment are depreciated using the straight-line method for
financial reporting purposes over their estimated useful lives of three to five
years.
Note 2 - Stockholders' Equity
- - -----------------------------
For information regarding the terms of the Class A Common Stock, Class B Common
Stock and Preference Stock refer to the Company's Form 10-KSB report for the
year ended December 31, 1994.
7
<PAGE>
COMPUTER DEVICES, INC.AND SUBSIDIARY
------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1995
------------------
(continued)
(unaudited)
Note 3 - Contingencies
- - ----------------------
Federal and state authorities, together with other private parties, have sought
to hold the Company responsible, along with a number of other parties, for
various environmental cleanup costs and related penalties. In addition, from
time to time, the Company is involved in disputes and/or litigation encountered
in its normal course of business. The Company does not believe that the
ultimate impact of the resolution of any outstanding matters will have a
material effect on the Company's condition or results of operations.
Note 4 - Net Income (Loss) Per Common Share
- - -------------------------------------------
For the three and nine months periods ended September 30, 1994 and 1995, net
loss per common share was computed based upon the weighted average number of
outstanding common shares during the period. Common share equivalents are not
reflected in the computation due to their anti-dilutive nature.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Management's Discussion and Analysis of Financial Condition and Results of
- - --------------------------------------------------------------------------
Operations.
- - -----------
Revenues for the third quarter of 1995 totaled $271,000 compared to $340,000 for
the same period in the previous year. These figures represent a 20% decrease in
revenues. Below is a table listing revenues related to the following product
lines:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
<S> <C> <C> <C> <C>
1995 1994 1995 1994
------------------- -------------------
(000's omitted)
Printers $ 33 $ 82 $ 155 $ 333
Other computer peripherals 238 258 821 683
------------------- -------------------
$ 271 $ 340 $ 976 $1,016
</TABLE>
The Company competes vigorously with other larger and better known distributors
to maintain market share. Indicative of a competitive market, the gross profit
margin declined from 25% to 18% when compared with the third quarter of 1994.
Because, in most cases, price is the deciding factor in such sales, the Company
can give no assurances that it can maintain its current customer base in future
years.
Operating expenses in the third quarter of 1995 decreased by 7% from those in
the third quarter of 1994.
During 1995, cash from beginning of year were responsible for the Company's
liquidity. In the future, however, financing may be necessary to support
internal and/or external growth.
9
<PAGE>
PART II
OTHER INFORMATION
NONE
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COMPUTER DEVICES, INC.
---------------------------
(Registrant)
Date: NOVEMBER 3, 1995 S/WILLIAM F. CONNORS
---------------- ---------------------------
William F. Connors
Vice President
Principal Accounting Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JUL-01-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<CASH> 170 170
<SECURITIES> 584 584
<RECEIVABLES> 139 139
<ALLOWANCES> 24 24
<INVENTORY> 80 80
<CURRENT-ASSETS> 967 967
<PP&E> 286 286
<DEPRECIATION> 248 248
<TOTAL-ASSETS> 1,005 1,005
<CURRENT-LIABILITIES> 86 86
<BONDS> 0 0
<COMMON> 36 36
0 0
0 0
<OTHER-SE> 883 883
<TOTAL-LIABILITY-AND-EQUITY> 1,005 1,005
<SALES> 976 271
<TOTAL-REVENUES> 976 271
<CGS> 789 222
<TOTAL-COSTS> 789 222
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (258) (87)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (258) (87)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (258) (87)
<EPS-PRIMARY> .07 .02
<EPS-DILUTED> .07 .02
</TABLE>
