<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Quarter Ended: March 31, 1996 Commission File Number: 0-8995
COMPUTER DEVICES, INC.
-----------------------------------------------------
(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 March 31, 1996
------------ --------------------
<S> <C>
Class A 1,367,647
Class B 2,211,496
</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
months ended March 31,1996 and March 31,1995 3
Consolidated balance sheet at March 31, 1996 4
Consolidated statements of cash flows for the three
months ended March 31, 1996 and March 31,1995 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>
<TABLE>
<CAPTION>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(unaudited)
For the Three Months Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
REVENUES $ 236 $ 352
COST OF REVENUES 186 269
------ ------
Gross profit 50 83
OPERATING EXPENSES:
Engineering, research and development 1 0
Selling, general and administrative 140 171
------ ------
Total operating expenses 141 171
------ ------
Operating loss (91) (88)
Interest income 9 15
------ ------
Net loss $ (82) $ (73)
====== ======
Net loss per common share (Note 5) $ (.02) $ (.02)
====== ======
Weighted average number of common
shares outstanding (Note 5) 3,579 3,379
====== ======
</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>
March 31, 1996
---------------
ASSETS
- ------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 633
Accounts receivable, less reserve of $17 132
Inventories 36
Prepaid expenses 20
-----
Total current assets 821
-----
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 286
Accumulated depreciation (259)
-----
27
-----
TOTAL ASSETS $ 848
=====
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (continued)
(In thousands except share amounts)
(unaudited)
March 31, 1996
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C>
Accounts payable $ 46
Deferred revenue 4
Accrued expenses 46
------
Total current liabilities 96
------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY:
Preference stock, $.01 par value
Authorized - 64,000 shares
Issued and outstanding - 49,406 shares
Liquidation value - $4,941 --
Class A common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 1,367,647 shares 14
Class B common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 2,211,496 shares 22
Capital in excess of par value 2,001
Retained earnings (accumulated deficit) (1,285)
------
Total stockholders' equity 752
------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $848
======
</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 Three Months Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (82) $ (73)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 6 3
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (20) (155)
Decrease (increase) in inventory 10 (85)
Decrease (increase) in prepaid expenses (4) 4
Increase (decrease) in accounts payable 15 65
Increase (decrease) in deferred revenue 3 (2)
Increase (decrease) in accrued expenses (33) 5
----- -----
Net cash used in operating activities (105) (238)
Cash flows from investing activities:
Purchases of property and equipment -- (1)
Proceeds from sale of marketable securities 470 109
----- -----
Net cash provided by investing activities 470 108
Cash flows from financing activities: -- --
----- -----
Net cash provided by financing activities -- --
----- -----
Net increase (decrease) in cash and cash equivalents 365 (130)
Cash and cash equivalents at beginning of year 268 216
----- -----
Cash and cash equivalents at end of three months $ 633 $ 86
===== =====
</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
------------------------------------------
MARCH 31, 1996
--------------
(unaudited)
Note 1 - Operations
- -------------------
Incorporated as a Massachusetts corporation in 1968 and reincorporated in
Maryland in 1986, Computer Devices, Inc. (the "Company") is engaged in the
design, manufacture, sale and service of computer peripheral products. In
addition, the Company is a non-exclusive distributor of similar products for
several manufacturers.
Note 2 - 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, 1995
(a) Principles of Consolidation
- -------------------------------
The consolidated financial statements include the accounts of Computer Devices,
Inc., and its wholly-owned subsidiary, Neuro-Therapeutics, Inc. All material
intercompany accounts and transactions have been eliminated in consolidation.
(b) Use of Estimates in Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(c) 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 March 31, 1996 is approximately $614,000 of money market
funds.
The Company accounts for marketable securities under Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Marketable securities have maturities of greater than
three months and consist of U.S. Treasury securities. Investments that the
Company has the positive intent and ability to hold to maturity are reported at
amortized cost, which approximates fair market value, and are classified as
held-to-maturity.
(d) Inventories
- ---------------
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist primarily of purchased finished goods.
(e) Revenue Recognition
- -----------------------
The Company recognizes revenue upon the shipment of its product to a customer.
7
<PAGE>
COMPUTER DEVICES, INC AND SUBSIDIARY
------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
MARCH 31, 1996
--------------
(unaudited)
(continued)
(f) 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 3 - 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, 1995.
Note 4 - 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 financial condition or results of operations.
Note 5 - Net Loss Per Common Share
- ----------------------------------
For 1995 and 1996, 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 first quarter of 1996 totaled $236,000 compared to $352,000 for
the same period in the previous year. These figures represent a 33% reduction
in revenues. Below is a table listing revenues related to the following product
lines:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996 March 31, 1995
------------------ --------------
<S> <C> <C>
Printers $ 33,000 $ 62,000
Other computer peripherals 203,000 290,000
-------- --------
$236,000 $352,000
</TABLE>
The Company competes vigorously with other larger and better know distributors
to maintain market share. Indicative of a competitive market, the gross profit
margin declined from 24% to 21% when compared with the first quarter of 1995.
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 first quarter of 1996 decreased by 18% from those in
the first quarter of 1995.
During 1996, cash from beginning of year was 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: May 13, 1996 /S/EBERHARD W. RAU
------------ ------------------
Eberhard W. Rau
Treasurer
Principal Accounting Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 633
<SECURITIES> 0
<RECEIVABLES> 149
<ALLOWANCES> 17
<INVENTORY> 36
<CURRENT-ASSETS> 20
<PP&E> 286
<DEPRECIATION> 259
<TOTAL-ASSETS> 848
<CURRENT-LIABILITIES> 96
<BONDS> 0
0
0
<COMMON> 36
<OTHER-SE> 716
<TOTAL-LIABILITY-AND-EQUITY> 848
<SALES> 236
<TOTAL-REVENUES> 236
<CGS> 186
<TOTAL-COSTS> 186
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (82)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
