3
<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, 1997 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 March 31, 1997
------------ --------------------
Class A 1,353,582
Class B 2,225,561
<PAGE>
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements (unaudited): 3
Consolidated statements of operations for the three
months ended March 31, 1997 and March 31, 1996 3
Consolidated balance sheet at March 31, 1997 4
Consolidated statements of cash flows for the three
months ended March 31, 1997 and March 31, 1996 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
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(unaudited)
For the Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
REVENUES $ 218 $ 236
COST OF REVENUES 179 186
--------- ---------
Gross profit 39 50
OPERATING EXPENSES:
Engineering, research and development 5 1
Selling, general and administrative 152 140
--------- ---------
Total operating expenses 157 141
--------- ---------
Operating loss (118) (91)
Interest income 3 9
--------- ---------
Net loss $ (115) $ (82)
========= =========
Net loss per common share (Note 5) $ (.03) $ (.02)
========= =========
Weighted average number of common
shares outstanding (Note 5) 3,579 3,579
========= =========
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands except share amounts)
(unaudited)
March 31, 1997
--------------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 276
Accounts receivable, less reserve of $10 141
Inventories 16
Prepaid expenses 31
------
Total current assets 464
------
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 266
Accumulated depreciation (240)
------
26
------
TOTAL ASSETS $ 490
======
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (continued)
(In thousands except share amounts)
(unaudited)
March 31, 1997
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 95
Accrued expenses 174
-------
Total current liabilities 269
-------
LONG-TERM LIABILITIES:
Non-qualified retirement obligation 408
-------
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 - 1,353,582 shares 14
Class B common stock, $.01 par value
Authorized - 49,968,000 shares
Issued and outstanding - 2,225,561 shares 22
Capital in excess of par value 2,001
Accumulated deficit (2,224)
-------
Total stockholders' equity (187)
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 490
=======
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
Cash flows from operating activities:
Net loss $(115) $ (82)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 4 6
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (65) (20)
Decrease (increase) in inventory (4) 10
Decrease (increase) in prepaid expenses (7) (4)
Increase (decrease) in accounts payable (32) 18
Increase (decrease) in accrued expenses (15) (33)
------ ------
Net cash used in operating activities (234) (105)
Cash flows from investing activities:
Purchases of property and equipment (5) --
Proceeds from sale of marketable securities -- 470
------ ------
Net cash provided by investing activities (5) 470
Cash flows from financing activities: -- --
------ ------
Net cash provided by financing activities -- --
------ ------
Net increase (decrease) in cash and cash equivalents (239) 365
Cash and cash equivalents at beginning of year 515 268
------ ------
Cash and cash equivalents at end of three months $ 276 $ 633
====== ======
The accompanying notes are an integral part of
these consolidated financial statements.
6
<PAGE>
COMPUTER DEVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
Note 1 - Operations
- -------------------
Incorporated as a Massachusetts corporation in 1968 and reincorporated in
Maryland in 1986, Computer Devices, Inc. (the "Company") is primarily
engaged in the design, manufacture, sale and service of computer
peripheral products. Business is conducted primarily in the United States.
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, 1996
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Computer
Devices, Inc., and its wholly-owned subsidiaries, VoiSys International
Corporation and 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, 1997 is approximately $239,000
of money market funds.
(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 SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(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, 1996.
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 1996 and 1997, 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.
Note 6 - New Accounting Standard
- --------------------------------
In March 1997, the Financial Accounting Standards Board issued SFAS No.
128, Earnings Per Share. SFAS No. 128 establishes standards for
computing and presenting earnings per share and applies to entities
with publicly held common stock or potential common stock. This
statement is effective for fiscal years ending after December 15, 1997
and early adoption is not permitted. When adopted, the statement
will require restatement of prior years' earnings per share. The
Company will adopt this statement for its fiscal year ended December 31,
1997. The Company believes that the adoption of SFAS No. 128 will not
have a material effect on its financial statements.
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.
Item 2 contains forward-looking statements as that term is defined in
the Private Securities Litigation Reform Act of 1995. These
forwardlooking statements are subject to risks and uncertainties which
could cause actual results to differ materially from those anticipated.
Revenues for the first quarter of 1997 totaled $218,000 compared to
$236,000 for the same period in the previous year. These figures
represent an 8% reduction in revenues. Below is a table listing
revenues related to the following product lines:
Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
Printers $ 28,000 $ 33,000
Other computer peripherals 190,000 203,000
-------------- --------------
$218,000 $236,000
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 21% to 18% when
compared with the first quarter of 1996. 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 1997 increased by 11% from
those in the first quarter of 1996. The increase is attributed to
expenses associated with the Company's subsidiary, VoiSys
International Corporation. The company anticipates expenses will
continue to rise by at least 10% throughout 1997.
Although the Company began shipping the VoiSys product in the first
quarter of 1997, related revenues for this period were minimal.
During 1997, 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 8, 1997 S/EBERHARD W. RAU
- -------------------- -----------------
Eberhard W. Rau
Treasurer
Principal Accounting Officer
11
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 276
<SECURITIES> 0
<RECEIVABLES> 151
<ALLOWANCES> 10
<INVENTORY> 16
<CURRENT-ASSETS> 464
<PP&E> 266
<DEPRECIATION> 240
<TOTAL-ASSETS> 490
<CURRENT-LIABILITIES> 269
<BONDS> 0
0
0
<COMMON> 36
<OTHER-SE> (223)
<TOTAL-LIABILITY-AND-EQUITY> 490
<SALES> 218
<TOTAL-REVENUES> 218
<CGS> 179
<TOTAL-COSTS> 179
<OTHER-EXPENSES> 157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (115)
<INCOME-TAX> 0
<INCOME-CONTINUING> (115)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (115)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
