<PAGE>
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Annual Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission File no. 0-8995
----------------- --------
COMPUTER DEVICES, INC.
-----------------------
(Name of small business issuer in its charter)
Maryland 04-2446436
- ------------------------ ---------------------
(State of incorporation) (I.R.S. Employer Identification Number)
34 Linnell Circle, Nutting Lake, Massachusetts 01865
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (508) 663-4980
--------------------
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Exchange on which registered
None
---------- ----------------------------
Securities registered under Section 12(g) of the Exchange Act:
Preference Stock, $.01 Par Value (liquidation preference, convertible)
- --------------------------------------------------------------------------------
(Title of class)
Class A Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of class)
Class B Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of class)
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 ninety days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filer in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Issuer's revenues for fiscal year ended December 31, 1995 are $1,204,000.
Based on average bid and asked prices quoted by registrant's market makers, the
aggregate market value of voting stock held by non-affiliates of the registrant
was approximately $121,147 as of February 9, 1996.
The number of shares outstanding of each of the registrant's classes of common
stock as of February 9, 1996 was 1,368,167 shares of Class A Common Stock and
2,210,976 shares of Class B Common Stock.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM TITLE PAGE
- ---- ----- ----
<S> <C> <C>
1 DESCRIPTION OF BUSINESS 3
2 DESCRIPTION OF PROPERTY 3
3 LEGAL PROCEEDINGS 3
4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 3
5 MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 4
6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION 5
7 FINANCIAL STATEMENTS 6
8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 17
9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT 17
10 EXECUTIVE COMPENSATION 18
11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 19
12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 20
13 EXHIBITS AND REPORTS ON FORM 8-K 21
SIGNATURES 22
INDEX TO EXHIBITS 23
</TABLE>
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
- --------------------
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.
In 1989, the Company acquired Neuro-Therapeutics, Inc. ("NTI"), a development
stage company whose objective is to commercialize a novel rehabilitative therapy
for stroke victims.
Business of Issuer
- ------------------
The Company's primary peripheral products consist of printers manufactured by
the Company and computer peripherals provided by other manufacturers. The
printer product line includes the Series 2000 terminal/printer, several video
printers and various related supplies and services. The computer peripheral
products consist mainly of optical storage equipment.
The Company competes with larger and better known firms who offer the same or
similar products. All of the Company's product lines are sold both directly to
end users and to value-added systems integrators/resellers. In 1995 the
principal suppliers for optical storage equipment products were Hewlett Packard,
Panasonic and Sierra. Although the Company's customer base is broad, less than
twenty companies account for the bulk of new orders.
During 1995 and 1994, the Company expended approximately $3,000 and $43,000
respectively, on engineering, research and development efforts. Expenditures
for 1995 and 1994 include $1,000 and $43,000 respectively associated with Neuro-
Therapeutics, Inc.
As of February 9, 1996, the Company employed seven people of which six were full
time.
ITEM 2. DESCRIPTION OF PROPERTY
The Company conducts its basic operations from an 11,550 square foot leased
facility in Nutting Lake (Billerica), Massachusetts. The facility is under
lease on a month to month basis.
ITEM 3. LEGAL PROCEEDINGS
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of 1995.
3
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is quoted in the "NQB Non-NASDAQ Price Report"
published by the National Quotation Bureau. The following table sets forth the
range of high and low bid prices per share of Class B Common Stock for each
quarter within the last two fiscal years. The prices reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not represent
actual transactions:
<TABLE>
<CAPTION>
High Bid Low Bid
-------- -------
<S> <C> <C>
1994 First Quarter $ .06 $ .04
1994 Second Quarter .13 .04
1994 Third Quarter .16 .06
1994 Fourth Quarter .15 .08
1995 First Quarter $ .15 $ .10
1995 Second Quarter .15 .06
1995 Third Quarter .09 .06
1995 Fourth Quarter .09 .03
</TABLE>
In general, Class A Common Stock automatically converts to Class B Common Stock
upon sale. The approximate number of holders of record of the Company's common
stock as of February 9, 1996 was 1,800. The Company has no intention of paying
cash dividends on its common stock for the foreseeable future.
4
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management's Discussion and Analysis of Financial Condition and Results of
- --------------------------------------------------------------------------
Operations.
- -----------
Revenues were consistent in 1995 with those in the previous year. Below is a
table listing revenues related to the following product lines:
<TABLE>
<CAPTION>
Year Ended
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Printers $ 204,000 $ 380,000
Other computer peripherals 1,000,000 819,000
--------------- --------------
Total $ 1,204,000 $ 1,199,000
=============== ==============
</TABLE>
Revenues related to printers declined in 1995 by 46% when compared with 1994.
Evidence of this is shown by fewer units sold, declining number of service
calls, and an eroding rental base. The Company expects this trend to continue
in 1996.
Revenues related to computer peripherals increased in 1995 by 22% when compared
to the previous year. This increase can be primarily attributed to additional
products made available to the customer base. The Company competes vigorously
with other larger and better known distributors to maintain market share.
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.
Total gross profit declined by 43% due to declining margins on sales. Total
operating expenses in 1995 decreased by 10% in comparison with the previous year
due to overhead reductions.
Expenses related to engineering, research and development projects were $3,000
in 1995. The amount is attributed to development expenses associated with its
stroke rehabilitation system. In 1989 the Company acquired Neuro-Therapeutics,
Inc., with the intent of commercializing its novel rehabilitative therapy for
stroke victims. In addition to completing the development of the system, the
Company must complete tests to validate the efficacy of the therapy and achieve
technological acceptance in the medical community. It is not clear how many
years these tasks will take, whether sufficient funding will be available, or
whether the results will be successful.
The Company has no intentions of paying cash dividends on Class A or Class B
common stock for the foreseeable future.
During 1995, cash from the beginning of the year was responsible for the
Company's liquidity. In the future, however, financing may be necessary to
support internal and/or external growth.
5
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Report of independent public accountants 7
Consolidated financial statements of Computer
Devices, Inc. and Subsidiary:
Consolidated statements of operations for the years
ended
December 31, 1995 and December 31, 1994. 8
Consolidated balance sheet at December 31, 1995 9
Consolidated statements of stockholders' equity for
the years ended
December 31, 1995 and December 31, 1994. 11
Consolidated statements of cash flows for the years
ended
December 31, 1995 and December 31, 1994 12
Notes to consolidated financial statements 13
6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Computer Devices, Inc.:
We have audited the accompanying consolidated balance sheet of Computer Devices,
Inc. (a Maryland corporation) and subsidiary as of December 31, 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the two years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Computer Devices, Inc. and
subsidiary as of December 31, 1995, and the results of their operations and
their cash flows for each of the two years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 9, 1996
7
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1995 1994
-------------------
<S> <C> <C>
REVENUES $ 1,204 $1,199
COST OF REVENUES 978 805
-------------------
Gross profit 226 394
-------------------
OPERATING EXPENSES:
Engineering, research and development 3 43
Selling, general and administrative 618 648
-------------------
Total operating expenses 621 691
-------------------
Operating loss (395) (297)
Interest income 51 54
Other income, net 1 8
Loss on marketable securities -- (50)
-------------------
Net loss $ (343) $ (285)
===================
Net loss per common share (Note 9) $(.10) $(.08)
===================
Weighted average number of common
shares outstanding (Note 9) 3,490 3,356
====== =====
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
8
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(In thousands except share amounts)
<TABLE>
<CAPTION>
December 31, 1995
------------------
ASSETS
- ------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 268
Marketable securities 470
Accounts receivable, less reserve of $17 112
Inventories 46
Prepaid expenses 16
-------
Total current assets 912
-------
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 286
Accumulated depreciation (253)
-------
33
-------
TOTAL ASSETS $ 945
=======
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
9
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (continued)
(In thousands except share amounts)
<TABLE>
<CAPTION>
December 31, 1995
-----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
<S> <C>
Accounts payable $ 31
Deferred revenue 1
Accrued expenses 79
-------
Total current liabilities 111
-------
COMMITMENTS AND CONTINGENCIES
(Notes 6 and 7)
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 - 1,368,167 shares 14
Class B common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 2,210,976 shares 22
Capital in excess of par value 2,001
Retained earnings (accumulated deficit) (1,203)
-------
Total stockholders' equity 834
-------
</TABLE>
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 945
=======
The accompanying notes are an integral part of
these consolidated financial statements.
10
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands except share amounts)
For the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Capital Total
Preference Stock Common Stock in Excess Accumulated Stockholders'
# Shares Par Value # Shares Par Value of Par Value Deficit Equity
---------- ---------- --------- --------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
At December 31, 1993 50,183 $ 1 3,352,579 $33 $1,992 $ (575) $1,451
Net loss -- -- -- -- -- (285) (285)
Stock conversion (777) (1) 26,564 1 -- -- --
-------------------------------------------------------------------------------------
At December 31, 1994 49,406 -- 3,379,143 34 1,992 (860) 1,166
Net loss -- -- -- -- -- (343) (343)
Exercise of stock option 200,000 2 9 -- 11
-------------------------------------------------------------------------------------
At December 31, 1995 49,406 $-- 3,579,143 $36 $2,001 $(1,203) $ 834
=====================================================================================
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
11
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1995 1994
-------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(343) $ (285)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 16 8
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (56) 375
Decrease (increase) in inventory 35 (17)
Decrease (increase) in prepaid expenses 18 10
Increase (decrease) in accounts payable 30 (82)
Increase (decrease) in deferred revenue (8) 4
Increase (decrease) in accrued expenses 43 (68)
------------------
Net cash used in operating activities: (265) (55)
------------------
Cash flows from investing activities:
Purchases of property and equipment (21) (17)
Proceeds from sale of marketable securities 327 --
Purchases of marketable securities -- (797)
------------------
Net cash provided by (used in) investing activities 306 (814)
------------------
Cash flows from financing activities:
Proceeds from exercise of stock option 11 --
------------------
Net cash provided by financing activities 11 --
------------------
Net increase (decrease) in cash and cash equivalents 52 (869)
Cash and cash equivalents at beginning of year 216 1,085
------------------
Cash and cash equivalents at end of year $ 268 $ 216
==================
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
12
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1995
-----------------
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 peripherals products. In
addition, the Company is a non-exclusive distributor of similar products for
several manufacturers.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
(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) 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 December 31, 1995 is approximately $197,000 of money market
funds.
The Company accounts for marketable securities under Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Marketable securities have maturities of greater than
three months and consist of U.S. Treasury securities. Investments that the
Company has the positive intent and ability to hold to maturity are reported at
amortized cost, which approximates fair market value, and are classified as
held-to-maturity.
(d) Inventories
- ---------------
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist primarily of purchased finished goods.
(e) Revenue Recognition
- -----------------------
The Company recognizes revenue upon the shipment of its product to a customer.
(f) Depreciation and Amortization
- ---------------------------------
Property and equipment are depreciated using the straight-line method for
financial reporting purposes over their estimated useful lives of three to five
years.
(g) Engineering, Research and Development Costs
- -----------------------------------------------
Engineering, research and development costs are charged to operations as
incurred.
13
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1995
-----------------
(continued)
Note 3 - Stockholders' Equity
- -----------------------------
(a) Class A Common Stock ($.01 par value)
- -----------------------------------------
Class A common stock has normal base equity characteristics except that (a) it
is convertible at the holder's option at any time into Class B common stock,
share for share, and (b) on transfer of a beneficial interest (other than by
gift or other transaction not at arm's length or as part of the transfer of a
business) it converts automatically into Class B common stock, share for share.
(b) Class B Common Stock ($.01 par value)
- -----------------------------------------
Class B common stock has the same characteristics as Class A common stock except
that (a) it has no reciprocal conversion feature, (b) it votes at a multiple of
10% of the Class A common stock rate, and (c) it pays 110% of any normal
dividend of Class A common stock.
(c) Preference Stock ($.01 par value, $100 nominal value)
- ---------------------------------------------------------
Preference Stock (a) carries no dividend, (b) has a liquidation preference
senior to common stock, at nominal value ($4,940,600), (c) has no sinking fund
or mandatory redemption rights, (d) is callable at any time, at nominal value,
subject to conversion rights (i.e., a call can be defeated by conversion), (e)
is convertible at the holder's option at any time, at $2.925 per share, into
either (i) Class B common stock or (ii) Class A common stock until transfer of a
beneficial interest (other than by gift or other transaction not at arm's length
or as part of the transfer of a business), (f) is subject to the issuer's right
of repurchase for cash at the market price for the common stock equivalent
should the holder wish to convert, (g) has standard convertible antidilution
provisions (i.e., the conversion price will be adjusted appropriately in the
event - but only in such event - of a stock dividend, split or similar capital
change involving the common stock and not, for example, for new equity being
introduced below the conversion price), (h) votes only to protect its
preferential liquidation position (i.e., the Preference Stock does not carry
general voting rights), and (i) has the benefit of no protective covenants
(i.e., the issuer is free - within applicable legal limits - to operate and
dispose of the business without restriction).
Note 4 - Income Taxes
- ---------------------
The Company accounts for income taxes, as set forth in SFAS No. 109, Accounting
for Income Taxes. SFAS No. 109 requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax returns. Deferred
tax assets are recognized, net of any valuation allowance, for deductible
temporary differences and operating loss and credit carryforwards.
At December 31, 1995, the Company has estimated net operating loss carryforwards
of approximately $18,769,000 which expire in the years 1998 through 2010.
Certain substantial changes in the Company's ownership may result in an annual
limitation on the amount of net operating loss carryforwards that could be
utilized. In addition, the Company has tax credit carryforwards of $601,000
expiring from 1996 through 1999.
14
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1995
-----------------
(continued)
The components of the deferred tax amounts, carryforwards and the valuation
allowance as of December 31, 1995 are approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
Temporary differences $ 90,000
Net operating loss carryforwards 6,473,000
Tax credit carryforwards 601,000
----------
7,164,000
Valuation allowance (7,164,000)
-----------
$ --
===========
</TABLE>
A valuation allowance is provided as it is uncertain if the Company will realize
the deferred tax asset. In 1995, the valuation allowance decreased by $6,000 as
a result of expiring tax credits partially offset by current operating losses.
Note 5 - Stock Options
- ----------------------
Under the provisions of the Company's Stock Incentive Plan, Class A and Class B
common stock has been made available by option to Company employees. The number
of shares authorized under this plan is 2,051,282. Options on Class A common
stock have also been granted to non-employee directors of the Company. In all
cases, the option exercise price for the shares covered by options is 100% of
the market value on the date such options are granted. The term of each option
is five years. Information with respect to options is as follows:
<TABLE>
<CAPTION>
Shares Price Range
---------- ------------
<S> <C> <C>
Outstanding, December 31, 1993 653,500 .04 to .25
Granted 595,000 .055 to .15
Forfeited or cancelled (123,500) .04 to .25
---------
Outstanding, December 31, 1994 1,125,000 .04 to .15
Exercised 200,000 .05625
Forfeited or cancelled (125,000) .04 to .0625
---------
Outstanding at December 31, 1995 800,000 .04 to .15
=========
Exercisable at December 31, 1995 302,500 .04 to .15
=========
</TABLE>
15
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1995
-----------------
(continued)
Note 6 - Commitments
- --------------------
At December 31, 1995, the Company had no operating leases with terms of more
than one year. Rental expense was $25,000 in 1995 and 1994.
The Company has an employment agreement with an officer which provides for an
annual salary of not less than $133,000. The Company may terminate this
agreement with twelve months notice at any time after December 31, 1998.
Note 7 - 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 8 - Significant Customers
- ------------------------------
In 1995 and 1994, one customer accounted for 38% and 31% of revenues,
respectively.
Note 9 - Net Loss Per Common Share
- ----------------------------------
For 1995 and 1994, net loss per common share was computed based on the weighted
average number of outstanding common shares during the period. Common share
equivalents are not reflected in the computation due to their antidilutive
nature.
16
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No disclosure required by this item.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following information relates to the directors and executive officers of the
Company:
<TABLE>
<CAPTION>
Age
(at 1/1/96) Company Position and Business Experience
----------- ----------------------------------------
<S> <C> <C>
M.E. Goulder 74 Director of the Company since 1970. President
of M.E. Goulder Enterprises Inc., a technical
consulting and investment counseling firm,
since 1973. Member of board of directors of
Bank of New Hampshire.
R. J. Moore 67 Director, President, Chairman and Chief
Executive Officer of the Company since 1983.
E.W. Rau 33 Treasurer of the Company since 1995.
R. L. Warren, Jr. 77 Director of the Company since 1972. Private
investor. Member board of directors of Radio
Frequency Company, Inc.
</TABLE>
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
No disclosure required by this item.
17
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for 1995 to the Company's
"named executive officers" as defined in Item 402 of SEC Regulation S-B.
<TABLE>
<CAPTION>
Annual Compensation ($)
--------------------------
Name and
Principal Other Annual All Other
Position Year Salary Bonus Compensation Compensation ($)
- ------------------ ------ ------- ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
R. J. Moore 1993 133,000 - - 6,660 (1)
CEO 1994 133,000 - - 6,660 (1)
1995 133,000 - - 8,470 (1)
</TABLE>
(1) Represent insurance premiums paid by the Company with respect to term life
insurance for the benefit of the named executive officer.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on option exercises during 1995 by the
named executive officers and the number and value of their unexercised options
at year end.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the Money
Options at Options at
Year End 1995 (#) Year End 1995 ($)
Shares
Acquired on Exercisable * Exercisable *
Name Exercise (#) Unexercisable ** Unexercisable **
- ------------------------------------------------------------------------
<S> <C> <C> <C>
R. J. Moore - 50,000 * 13,750 * (1)
150,000 ** 0 ** (1)
</TABLE>
(1) At fiscal year-end, the underlying market price was less than the option
price.
Employment Contracts
- --------------------
The Company and Mr. Moore are parties to an employment contract terminable by
the Company on twelve months' notice effective at any time after December 31,
1998 and by Mr. Moore on three months' notice. Under this contract, Mr. Moore
is to serve the Company as its president and CEO at an annual base rate of not
less than $133,000. Mr. Moore is also entitled to (a) participate in Company
benefit plans available to other employees, (b) the use of an automobile at
Company expense (with a bargain purchase option at termination of employment),
(c) $1,000,000 in term life insurance (including that available under non-
contributory employee benefit plans), and (d) an annual incentive cash bonus in
an amount predetermined by the board of directors as a function of base salary
and performance against
18
<PAGE>
predetermined goals set by the board. In the event of Mr. Moore's death or
disability his compensation terminates either on the last day of the month of
death or on the last day of the twelfth month after that in which the disability
occurs, as the case may be. In addition, the Company undertakes to indemnify Mr.
Moore, to the extent not prohibited by law, against cost or other exposure in
connection with any legal proceedings arising out of his service.
Compensation of Directors
- -------------------------
Non-employee directors of the Company receive $500 per board or board committee
meeting attended.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information relating to the ownership of
the Company's Class A Common Stock as of February 9, 1996 by (a) any person
known to the Company to be the beneficial owner of more than 5% of the class,
(b) each director of the Company, (c) each of the named executive officers as
defined in Item 402 of SEC Regulation S-B, and (d) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage of Outstanding
Name Owned Beneficially Shares so Owned
---- -------------------- -------------------------
<S> <C> <C> <C>
Morton E. Goulder 61,549 (1) 4.36%
Robert J. Moore 530,000 (2) 37.37
Robert L. Warren, Jr. 61,687 (1) 4.37
All directors and
executive officers
as a group (four
persons) 690,207 (3) 44.76
</TABLE>
(1) Includes 43,750 shares available within sixty days by exercise of option.
(2) Includes 150,000 shares held by Mr. Moore's wife and 50,000 shares available
within sixty days by exercise of option.
(3) Includes 173,750 shares available within sixty days by exercise of option
and 150,000 shares held by Mr. Moore's wife.
19
<PAGE>
The following table presents certain information relating to the ownership of
the Company's Class B Common Stock as of February 9, 1996 by (a) any person know
to the Company to be the beneficial owner of more than 5% of the class, (b) each
director of the Company, (c) each of the named executive officers as defined in
Item 402 of SEC Regulation S-B, and (d) all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage of Outstanding
Name Owned Beneficially Shares so Owned
---- ------------------ -------------------------
<S> <C> <C> <C>
Morton E. Goulder 95,549 (1) 4.20%
Harvey Houtkin 206,000 9.32
Walter P. Kroll 186,667 8.44
Robert J. Moore 530,000 (2) 19.34
Robert L. Warren, Jr. 61,687 (3) 2.71
Berkun group 259,000 (4) 11.71
All directors and executive
officers as a group
(four persons) 724,207 (5) 24.96
</TABLE>
(1) Includes 17,799 shares available within sixty days by conversion of shares
of Class A Common Stock and 43,750 shares available within sixty days by
exercise of option.
(2) Consists of (a) 330,000 shares available within sixty days by conversion of
shares of Class A Common Stock, (b) 150,000 shares available within sixty
days by conversion of shares of Class A Common Stock held by Mr. Moore's
wife, and (c) 50,000 shares available within sixty days by exercise of
option.
(3) Includes 17,937 shares available within sixty days by conversion of shares
of Class A Common Stock and 43,750 shares available within sixty days by
exercise of option.
(4) The Berkun group consists of Joseph Christie, Estee Levine, Judy Levine,
Miriam Moncyzk, Benny Moncyzk, Wijac Co., Bill Vilner, Bruce George,
Michael Chesler, Dave Moskin, Spencer Lehman, Bill Krunchick, and Wen Inv.
Inc..
(5) Includes (a) 366,457 shares available within sixty days by conversion of
shares of Class A Common Stock, (b) 150,000 shares available within sixty
days by conversion of shares of Class A Common Stock held by Mr. Moore's
wife, and (c) 173,750 shares available within sixty days by exercise of
option.
No director or executive officer of the Company owned beneficially any shares of
the Company's Preference Stock as of February 9, 1996.
ITEM. 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No disclosure is required by this item.
20
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Documents Filed as Part of This Report
- --------------------------------------
The following documents are filed as part of this report:
- The following financial statement items included in Item 7:
Report of independent public accountants
Consolidated financial statements of Computer Devices, Inc. and
Subsidiary:
Consolidated statements of operations for the years ended
December 31, 1995, and December 31, 1994.
Consolidated balance sheet at December 31, 1995
Consolidated statements of stockholders' equity for the years ended
December 31, 1995 and December 31, 1994
Consolidated statements of cash flows for the years ended
December 31, 1995 and December 31, 1994
Notes to consolidated financial statements
- The exhibits listed in the accompanying Index to Exhibits.
Reports of Form 8-K
- -------------------
The Company did not file any reports on Form 8-K during the last quarter of the
fiscal year ended December 31, 1995.
21
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COMPUTER DEVICES, INC.
By: /S/ROBERT J. MOORE Date: MARCH 11, 1996
------------------------------------ --------------
Robert J. Moore, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of registrant and in the capacities and on the dates
indicated.
/S/ROBERT J. MOORE Date: MARCH 11, 1996
------------------------------------ --------------
Robert J. Moore, President
(Principal Executive Officer)
/S/EBERHARD W. RAU Date: MARCH 11, 1996
------------------------------------ --------------
Eberhard W. Rau, Treasurer
(Principal Financial and Accounting
Officer)
* * * * *
/S/MORTON E. GOULDER Date: MARCH 11, 1996
------------------------------------ --------------
Morton E. Goulder, Director
/S/ROBERT J. MOORE Date: MARCH 11, 1996
------------------------------------ --------------
Robert J. Moore, Director
/S/ROBERT L. WARREN, JR. Date: MARCH 11, 1996
------------------------------------ --------------
Robert L. Warren, Jr., Director
22
<PAGE>
INDEX TO EXHIBITS
Page
----
3 - Articles of incorporation and bylaws
3.01 - Charter, as amended, of the registrant (1)
3.01 - Bylaws of the registrant (1)
4 - Instruments defining the rights of security holders,
including indentures n.a.
9 - Voting trust agreement n.a.
10 - Material contracts
10.01 - Lease to the registrant's Nutting Lake
facilities dated as of February 22, 1988 (2)
10.02 - Amendment to item 10.01 dated October 1, 1992 (5)
10.03 - Stock Incentive Plan of the registrant as amended
November 10, 1992 (5)
10.04 - Form of stock option granted to Morton E. Goulder
and Robert L. Warren,Jr. as of November 10, 1992 (5)
10.05 Form of stock option granted to Morton E. Goulder
and Robert L. Warren, Jr. as of November 23,1994 (6)
10.06 - Employment agreement with Robert J. Moore dated
as of October 1, 1985 (4)
10.07 Extension of item 10.06 dated March 22, 1994 (6)
11 - Statement re computation of per share earnings 29
13 - Annual report to security holders, Form 10-Q or quarterly
report to security holders n.a.
16 - Letter on change in certifying accountant n.a.
18 - Letter on change in accounting principles n.a.
19 - Previously unfiled documents n.a.
22 - Subsidiaries of the registrant (3)
23 - Published report regarding matters submitted to vote
of security holders n.a.
24 - Consent of experts and counsel n.a.
23
<PAGE>
25 - Power of attorney n.a.
28 - Additional exhibits n.a.
29 - Information from reports furnished to State Insurance
authorities n.a.
- -----------------------------------------
(1) Previously filed as an exhibit under the indicated exhibit number to the
Form 8-B registration statement of the registrant dated September 30, 1986
and incorporated herein by this reference:
<TABLE>
<CAPTION>
Exhibit Number Corresponding
Above Exhibit Number
-------------- --------------
<S> <C>
3.01 3.1
3.02 3.2
</TABLE>
(2) Previously filed as an exhibit under the indicated exhibit number to the
Form 10-K report of the registrant filed April 14, 1988 and incorporated
herein by this reference:
<TABLE>
<CAPTION>
Exhibit Number Corresponding
Above Exhibit Number
-------------- --------------
<S> <C>
10.01 10.04
</TABLE>
(3) Previously filed as an exhibit under the indicated exhibit number to the
Form 10-K report of the registrant's predecessor filed April 14, 1989 and
incorporated herein by this reference:
<TABLE>
<CAPTION>
Exhibit Number Corresponding
Above Exhibit Number
-------------- --------------
<S> <C>
22 22
</TABLE>
(4) Previously filed as an exhibit under the indicated exhibit number to the
Form 10-K report of the registrant's predecessor filed April 11, 1986 and
incorporated herein by this reference:
<TABLE>
<CAPTION>
Exhibit Number Corresponding
Above Exhibit Number
-------------- --------------
<S> <C>
10.06 10.13
</TABLE>
24
<PAGE>
(5) Previously filed as an exhibit under the indicated exhibit number of Form
10-KSB report of the registrant's predecessor filed April 16, 1993 and
incorporated herein by this reference:
<TABLE>
<CAPTION>
Exhibit Number Corresponding
Above Exhibit Number
-------------- --------------
<S> <C>
10.02 10.04
10.03 10.06
10.04 10.07
</TABLE>
(6) Previously filed as an exhibit under the indicated exhibit number to the
Form 10-KSB report of the registrant's predecessor filed March 31, 1995 and
incorporated herein by this reference:
<TABLE>
<CAPTION>
Exhibit Number Corresponding
Above Exhibit Number
-------------- --------------
<S> <C>
10.05 10.05
10.07 10.08
</TABLE>
25
<PAGE>
EXHIBIT 11
----------
Statement Regarding Computation of Per Share Earnings
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Weighted
Average Net Loss Loss
Period Shares Per Share
- --------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter 3,379,143 $ (73,000) $(.02)
Second Quarter 3,420,901 (98,000) (.03)
Third Quarter 3,579,143 (87,000) (.02)
Fourth Quarter 3,579,143 (85,000) (.02)
---------
Fiscal 1995 3,490,376 $(343,000) (.10)
=========
</TABLE>
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 268
<SECURITIES> 470
<RECEIVABLES> 129
<ALLOWANCES> 17
<INVENTORY> 46
<CURRENT-ASSETS> 912
<PP&E> 286
<DEPRECIATION> 253
<TOTAL-ASSETS> 945
<CURRENT-LIABILITIES> 111
<BONDS> 0
0
0
<COMMON> 36
<OTHER-SE> 798
<TOTAL-LIABILITY-AND-EQUITY> 945
<SALES> 1,204
<TOTAL-REVENUES> 1,204
<CGS> 978
<TOTAL-COSTS> 978
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (343)
<INCOME-TAX> 0
<INCOME-CONTINUING> (343)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
