11
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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: September 30, 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.
Shares Outstanding
Common Class as of September 30, 1996
------------ -------------------------
Class A 1,352,057
Class B 2,227,086
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TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements (unaudited): 3
Consolidated statements of operations for the three and nine
months ended September 30, 1996 and September 30, 1995 3
Consolidated balance sheet at September 30 1996 4
Consolidated statements of cash flows for the nine months
ended September 30, 1996 and September 30, 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
2
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COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(unaudited)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
1996 1995 1996 1995
------------------ -----------------
REVENUES $ 248 $ 271 $ 683 $ 976
COST OF REVENUES 191 222 537 789
------ ------ ------ ------
Gross profit 57 49 146 187
OPERATING EXPENSES:
Engineering, research and development 7 0 20 0
Selling, general and administrative 130 149 461 486
------ ------ ------ ------
Total operating expenses 137 149 481 486
------ ------ ------ ------
Operating loss (80) (100) (335) (299)
Interest income 7 13 22 40
Other income 0 0 0 1
Net loss $(73) $(87) $(313) $(258)
====== ====== ====== ======
Net loss per common share (Note 5) $(.02) $(.02) $(.09) $(.07)
====== ====== ====== ======
Weighted average number of common
shares outstanding (Note 5) 3,579 3,579 3,579 3,460
The accompanying notes are an integral part of
these consolidated financial statements.
3
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COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(In thousands except share amounts)
(unaudited)
September 30, 1996
------------------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 540
Accounts receivable, less reserve of $12 125
Inventories 10
Prepaid expenses 16
------
Total current assets 691
------
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 257
Accumulated depreciation (232)
------
25
------
TOTAL ASSETS $ 716
======
The accompanying notes are an integral part of
these consolidated financial statements.
4
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COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (continued)
(In thousands except share amounts)
(unaudited)
September 30, 1996
------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 71
Deferred revenue 2
Accrued expenses 122
------
Total current liabilities 195
------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY
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 - 1,352,057 shares 14
Class B common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 2,227,086 shares 22
Capital in excess of par value 2,001
Retained earnings (accumulated deficit) (1,516)
-------
Total stockholders' equity 521
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 716
=======
The accompanying notes are an integral part of
these consolidated financial statements.
5
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COMPUTER DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Nine Months Ended
Sept. 30, 1996 Sept. 30, 1995
-------------- --------------
Cash flows from operating activities:
Net loss $(313) $(258)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 14 11
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (13) (59)
Decrease (increase) in inventory 36 1
Decrease (increase) in prepaid expenses 0 16
Increase (decrease) in accounts payable 40 37
Increase (decrease) in deferred revenue 1 (7)
Increase (decrease) in accrued expenses 43 10
------ ------
Net cash used in operating activities (192) (249)
Cash flows from investing activities:
Purchases of property and equipment (6) (23)
Disposal of property and equipment -- 2
Proceeds from sale of marketable securities 470 213
------ ------
Net cash provided by investing activities 464 192
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 272 (46)
Cash and cash equivalents at beginning of year 268 216
------ ------
Cash and cash equivalents at end of nine months $ 540 $ 170
====== ======
The accompanying notes are an integral part of
these consolidated financial statements.
6
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COMPUTER DEVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 September 30, 1996 is
approximately $468,000 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.
7
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COMPUTER DEVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(unaudited)
(continued)
(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.
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
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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 1996 totaled $248,000 compared to
$271,000 for the same period in the previous year. These figures
represent a 8% decrease in revenues. Below is a table listing
revenues related to the following product lines:
For the Three Months For the Nine Months
Ended September 30 Ended September 30
1996 1995 1996 1995
-------------- -------------
(000's omitted)
Printers $ 50 $ 33 $113 $155
Other computer peripherals $198 $238 $570 $821
----------------- ---------------
$248 $271 $683 $976
The Company competes vigorously with other larger and better know
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.
Operating expenses in the third quarter of 1996 decreased by 8% from
those in the third 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
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PART II
OTHER INFORMATION
NONE
10
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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 6, 1996 S/ EBERHARD W. RAU
------------------- ---------------------
Eberhard W. Rau
Treasurer
Principal Accounting Officer
11
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
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<SECURITIES> 0
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<ALLOWANCES> 12
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<PP&E> 257
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0
0
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<OTHER-SE> 485
<TOTAL-LIABILITY-AND-EQUITY> 716
<SALES> 683
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<CGS> 537
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<OTHER-EXPENSES> 481
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<INCOME-PRETAX> (313)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (313)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
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