<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 1995
Commission File No. 0-11336
___________________________
CIPRICO INC
(Exact name of Small Business Issuer as specified in its charter)
DELAWARE 41-1749708
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 Campus Drive
Plymouth, Minnesota 55441
(Address of principal executive offices)
Issuer's telephone number, including area code: (612) 551-4000
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 12 months (or for such
shorter period that the Issuer was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. Yes X No__
Shares of Common Stock outstanding at August 7, 1995, 2,217,591 shares.
Transitional Small Business Disclosure Format (check one):
Yes__ No X
<PAGE> 2
PART I
Item 1. Financial Statements
CIPRICO INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30 September 30
1995 1994
<S> <C> <C>
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $2,392,578 $2,176,125
Marketable securities 1,222,049 1,300,412
Receivables - net 2,426,599 2,456,919
Inventories (Note 2) 1,212,136 1,143,644
Other current assets 76,136 161,990
--------- ---------
Total current assets 7,329,498 7,239,090
Furniture and equipment - net 1,208,829 1,342,295
Other assets 6,773 1,835
--------- ---------
Total assets $8,545,100 $8,583,220
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Current installments of obligations
under capital leases $ 21,118 $ 20,880
Accounts payable 923,523 1,480,645
Accrued expenses 321,581 364,576
Income taxes payable 63,593 72,991
Deferred revenue 86,747 56,202
--------- ---------
Total current liabilities 1,416,562 1,995,294
Long-term installments of obligations
under capital lease 32,852 48,140
Deferred rent 57,683 66,264
--------- ---------
Total liabilities 1,507,097 2,109,698
Stockholders' equity (Note 3):
Capital stock 22,175 20,666
Additional paid-in capital 6,430,740 5,867,971
Retained earnings 609,435 601,432
Accumulated translation adjustments (24,347) (16,547)
--------- ---------
Total stockholders' equity 7,038,003 6,473,522
--------- ---------
Total liabilities &
stockholders equity $8,545,100 $8,583,220
========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-2-
<PAGE> 3
CIPRICO INC AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30 Nine Months Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $3,876,952 $3,406,868 $10,652,787 $9,622,482
Cost of sales 1,974,144 1,844,366 5,641,493 5,075,209
---------- ---------- ---------- ----------
Gross Profit 1,902,808 1,562,502 5,011,294 4,547,273
Marketing expenses 1,094,920 901,917 2,901,535 2,642,151
General and administrative 396,248 358,645 1,052,779 996,856
Research & development expense 448,725 470,678 1,257,819 1,276,035
--------- --------- ---------- -----------
Loss from operations (37,085) (168,738) (200,839) (367,769)
Other income (expense) 77,719 (68,171) 223,842 15,084
--------- --------- ---------- -----------
Earnings (loss) before
income taxes 40,634 (236,909) 23,003 (352,685)
Income tax expense 6,000 5,000 15,000 14,000
--------- --------- ---------- -----------
Net income (loss) $ 34,634 $ (241,909) $ 8,003 $ (366,685)
Earnings (loss) per common
share $ .01 $ (.12) $ .00 $ (.18)
Weighted average common
shares outstanding (Note 3) 2,311,179 2,065,188 2,228,856 2,061,352
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-3-
<PAGE> 4
CIPRICO INC AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994
<S> <C> <C>
Net income (loss) $ 8,003 $ (366,685)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
Operating Activities:
Depreciation 542,052 553,248
Gain on retirement of fixed assets (33,814) (4,849)
Gain on sales of marketable securities (4,093) --
Excess of fair value over option price
for stock options exercised 59,466 --
Security valuation adjustment
to market value -- 235,000
Changes in operating assets & liabilities
Inventory (68,492) 362,036
Accounts receivable 30,320 (1,121,141)
Other current assets 85,854 (10,509)
Accounts payable (557,122) 447,028
Accrued expenses (42,995) (9,655)
Income taxes payable (9,398) (8,436)
Deferred revenue 30,545 --
Other, net (16,381) (13,479)
------- --------
NET CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES 23,945 62,558
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment purchases (500,230) (385,459)
Proceeds from sale of equipment 125,458 58,935
Decrease in restricted cash -- 450,000
Other assets, net (4,938) 924
Net change in temporary cash investments 82,456 (182,515)
-------- ---------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (297,254) (58,115)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease (15,050) (6,164)
Proceeds from issuance of common stock 504,812 34,739
------- ------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 489,762 28,575
NET INCREASE IN CASH AND
CASH EQUIVALENTS 216,453 33,018
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,176,125 1,825,875
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 2,392,578 $ 1,858,893
========= =========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE> 5
CIPRICO INC AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
June 30, 1995
(Unaudited)
Note 1 Unaudited Statements
The accompanying unaudited condensed financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and
Exchange Commission. Pursuant to such rules and regulations, certain financial
information and footnote disclosures normally included in the financial
statements have been condensed or omitted. In the opinion of management, the
accompanying unaudited condensed, consolidated financial statements contain all
necessary adjustments, consisting only of a recurring nature, and disclosures
to present fairly the financial position as of June 30, 1995 and the results of
operations and cash flows for the three and nine month periods ended June 30,
1995 and June 30, 1994. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's Annual Report to Shareholders for
fiscal 1994.
Note 2 Inventories
Inventories were comprised of the following:
<TABLE>
<CAPTION>
June 30, 1995 September 30, 1994
<S> <C> <C>
Raw Materials $ 535,626 $ 489,962
Work-in Process 256,127 261,097
Finished Goods 420,383 392,585
--------- ---------
$ 1,212,136 $ 1,143,644
========= =========
</TABLE>
Note 3 Earnings (Loss) Per Share
Earnings per common and common stock equivalent share are computed by
dividing net earnings by the weighted average number of common and common stock
equivalent shares outstanding during the respective periods. Common stock
equivalent shares included in the computation represent shares issuable upon
assumed exercise of stock options which would have had a dilutive effect.
Loss per common share was determined using the weighted average number
of common shares outstanding. Stock options were excluded due to their
antidilutive effect.
-5-
<PAGE> 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
(June 30, 1995 vs. September 30, 1994)
The level of cash and cash equivalents increased by $216,453 during
the period. Cash flows from operating activities provided cash of $23,945
during the nine month period ended June 30, 1995. A decrease in accounts
payable used $557,122 and an increase in inventory used $68,492 of cash. These
uses of cash were largely offset by cash generated from operating earnings,
adjusted for the non-cash expense of depreciation totaling $542,052. Investing
activities used $297,254 of cash, mainly for equipment purchases totaling
$500,230 for the 1995 nine month period. Financing activities generated cash
of $489,762, primarily from the issuance of common stock to employees under
stock option plans.
Management feels there is adequate liquidity to meet the on-going
operating needs of the company.
RESULTS OF OPERATIONS
(Three and nine months ended June 30, 1995
compared to three and nine months ended June 30, 1994)
Sales in the third quarter of fiscal 1995 increased by 13.8% to
$3,876,952 when compared to sales of $3,406,868 for the same periods last year.
Sales for the nine month period of fiscal 1995 were up 10.7% to $10,652,787
when compared to $9,622,482 for the same period last year. Though sales for
the current period exceeded sales for the same period last year, sales were
less than anticipated, because of a delay in receiving components from
suppliers to build disk arrays, causing a shift of some expected third quarter
shipments into the following period. The Company expects continued improved
sales over last year.
Gross profit margins for the most recent three and nine month periods
were 49.1% and 47.0% respectively compared to 45.9% and 47.3% respectively for
the same periods last year. The increase for the current period is attributed
to a mix of higher margin products and lower costs of disk drives. With
continued cost control for disk array products, gross margins are anticipated
to be at the current level for the remainder of the year.
-6-
<PAGE> 7
Marketing expenses, as a percent of sales, were 28.2% for the third
quarter and 27.2% for the nine month period of fiscal year 1995, compared to
26.5% and 27.4% respectively for the same periods last year. Actual dollar
spending increased $193,003 for the three month period, and $259,384 for the
nine month period of fiscal year 1995. These increases are largely attributed
to the commission expense associated with the higher level of sales and
expenses associated with an increase in the number of sales people. Marketing
expenses for the remainder of the fiscal year should be lower, as a percent of
sales, when compared to last year.
General and administrative expenses were 10.2% for the third quarter
and 9.9% for the nine month period of fiscal year 1995 compared to 10.5% and
10.4% respectively for the same periods last year. The percentage decrease is
largely due to the higher sales volume in fiscal 1995 when compared to the
previous periods. Actual dollars of spending increased mainly due to
recognition of compensation expense related to the exercise of stock options.
General and administrative expenses for the remainder of the fiscal year are
expected to be approximately 10% of sales.
Research and development spending was $448,725 for the third quarter
and $1,257,819 for the nine month period of fiscal year 1995 compared to
$470,678 and $1,276,035 respectively for the same periods of last year. The
1995 third quarter and nine month period spending, as a percent of sales, was
11.6% and 11.8% respectively compared to 13.8% and 13.3% respectively for the
same periods last year. The decrease in spending, as a percentage of sales,
was due to increased sales activity in fiscal year 1995. Research and
development spending for the remainder of the year is expected to be in line
with management's objective of 10 to 14 percent of sales.
Other income (expense) reflects interest and royalty income generated
during the periods, from investment of excess cash balances and technology
agreements with customers. The third quarter and nine month periods of fiscal
1994 also reflect a $125,000 and $235,000 charge, respectively, for unrealized
loss on the adjustment to market valuation for marketable securities. There
was no such adjustment recorded during the current year periods.
-7-
<PAGE> 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See exhibit index following signature page
(b) Reports on Form 8-K
No report on Form 8-K was filed during the
three-month period ended June 30, 1995.
-8-
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Issuer has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
CIPRICO INC
(the "Issuer")
Date: August 7, 1995
/s/ Robert H. Kill
-----------------------------------
Robert H. Kill, President
(Principal Executive Officer)
/s/ Cory J. Miller
-----------------------------------
Cory J. Miller, Vice President of
Finance/Chief Financial Officer
(Principal Financial and Accounting Officer)
-9-
<PAGE> 10
EXHIBIT INDEX
CIPRICO INC
FORM 10-QSB
For Quarter Ended June 30, 1995
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
10.1 Restricted Stock Agreement, dated
December 30, 1994, between Registrant
and Robert H. Kill
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit #10.1
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made effective as of this _____ day of ___________,
1994, by and between Ciprico, Inc., a Delaware corporation (the "Company"), and
Robert H. Kill ("Employee").
W I T N E S S E T H:
WHEREAS, the Employee on the date hereof is the President and Chief
Executive Officer of the Company; and
WHEREAS, the Company wishes to provide Employee the opportunity to
obtain a greater equity interest in the Company by permitting Employee to elect
to receive certain performance-based cash bonuses in the form of restricted
stock; and
WHEREAS, the Company's Board of Directors has authorized the grant of
restricted stock awards to Employee from time to time as elected by Employee
pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. RESTRICTED STOCK AWARDS.
a. Prior to the end of each fiscal quarter of the
Company, Employee may elect to convert all of the quarterly bonus that may
become payable to Employee into an award of restricted stock. The number of
shares of the Company's Common Stock subject to such restricted stock award
shall be determined by dividing Employee's quarterly cash bonus by SIXTY
PERCENT (60%) of the fair market value of such Common Stock on the last day of
the relevant fiscal quarter on which Nasdaq is open for trading (the "relevant
date").
b. Prior to the END of the Company's fiscal year,
Employee may elect by providing written notice to the Chief Financial Officer
of the Company to convert all or any portion of the annual bonus that may
become payable to Employee into an award of restricted stock. The number of
shares of the Company's Common Stock subject to such restricted stock award
shall be determined by dividing the portion of Employee's annual bonus subject
to such election by SIXTY PERCENT (60%) of the fair market value of such Common
Stock on the last day of the relevant fiscal year on which Nasdaq is open for
trading (the "relevant date").
<PAGE> 2
c. Immediately upon determining the number of shares of
the Company's Common Stock subject to such restricted stock awards, the Company
shall cause to be issued a stock certificate representing such shares of Common
Stock in Employee's name, and the Company shall hold such shares until such
time as the risks of forfeiture described in Section 2 have lapsed. Until such
risks of forfeiture have lapsed or the shares subject to such restricted stock
award have been forfeited pursuant to Section 2 below, Employee shall be
entitled to vote the shares represented by such stock certificates and shall
receive all dividends attributable to such shares, but Employee shall not have
any other rights as a shareholder with respect to such shares.
d. For purposes of this Agreement, the "fair market
value" of the Company's Common Stock shall mean the last sale price of such
stock as reported by Nasdaq on the relevant date or, if no sale of such stock
shall have occurred on that date, on the next preceding day on which there was
a sale of such stock.
2. VESTING OF RESTRICTED STOCK.
a. The shares of Common Stock subject to each
restricted stock award shall remain forfeitable until the second anniversary of
the date of the award (the "vesting date"). If Employee's employment with the
Company is terminated for any reason, including Employee's voluntary
resignation or retirement but excluding termination by the Company without
"cause," at any time prior to the vesting date for the restricted stock award,
Employee shall immediately forfeit all shares of Common Stock subject to such
award. If Employee's employment is terminated by the Company without "cause"
prior to the vesting date for the restricted stock award, all risks of
forfeiture on the shares of Common Stock subject to such award shall
immediately lapse.
b. At such time as the risks of forfeiture on such
restricted stock awards lapse, the certificates representing the shares of
Common Stock shall be distributed to Employee. If the shares are forfeited,
the certificates representing such shares shall be cancelled.
c. For purposes of Section 2(a), the Employee shall be
terminated for "cause" if the termination results from any of the following
events:
(i) Employee's conviction of a felony under
federal or state law, any act of dishonesty
or disloyalty (including, but not limited to,
the willful misappropriation of the Company's
funds), or the commission of any act
involving moral turpitude;
(ii) Employee's willful and material breach of the
Company's policies or Employee's willful and
material failure, neglect or refusal to
perform any of the duties that may be
assigned to him from time to time by mutual
agreement of the parties; or
<PAGE> 3
(iii) Employee's willful misconduct that: (A)
materially and adversely effects the
reputation of the Company's business, (B) is
contrary to the best interests of the
Company, or (C) conflicts with or is
competitive with the business activities of
the Company;
provided, however, that an act or failure to act by Employee shall not be
"willful" unless it is done, or omitted to be done, in bad faith and without
any reasonable belief that Employee's action or omission was in the best
interests of the Company. With respect to the events listed in clause (ii) or
(iii), Employee's employment shall not be deemed to have been terminated for
cause unless and until the Company provides Employee with a written notice that
describes in detail the conduct supporting such termination for cause and that
grants Employee a period of at least TEN (10) days from the date of such notice
to take whatever steps are necessary to discontinue the conduct described
therein or to correct the effects of Employee's prior conduct to the
satisfaction of the Company. If Employee fails to discontinue such conduct
described in such written notice or cannot correct the effects of such prior
conduct within such TEN-DAY period, Employee's employment shall immediately
terminate upon the expiration of such TEN-DAY period, and such termination
shall be deemed to be for cause.
3. CHANGE OF CONTROL. Notwithstanding anything in this Agreement
to the contrary, all risks of forfeiture applicable to Employee's restricted
stock awards shall immediately lapse upon a "change of control." For purposes
of this Section 3, a "change of control" shall mean any of the following
events:
(i) Any exchange, reorganization,
reclassification, extraordinary dividend,
divestiture (including a spin-off), merger,
consolidation or similar transaction
(collectively referred to as the
"transaction") to which the Company is a
party, whether or not such transaction is
approved by the Company's Board of Directors,
if the individuals and entities who were
shareholders of the Company immediately prior
to the effective date of such transaction
have, immediately following the effective
date of such transaction, beneficial
ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of less than
FIFTY PERCENT (50%) of the total combined
voting power (with respect to the election of
directors) of all classes of securities
issued by the surviving corporation;
<PAGE> 4
(ii) A change in the direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of
securities of the Company representing, in
the aggregate, TWENTY PERCENT (20%) or more
of the total combined voting power of all
classes of the Company's then issued and
outstanding securities by any person or
entity or by a group of associated persons or
entities acting in concert;
(iii) The sale of substantially all of the
properties and assets of the Company to any
person or entity which is not a wholly-owned
subsidiary of the Company;
(iv) The approval of any plan or proposal for the
liquidation of the Company by its
shareholders; or
(v) A change in the composition of the Board of
Directors at any time during any consecutive
TWENTY-FOUR (24) month period such that the
"Continuing Directors" cease for any reason
to constitute at least a SEVENTY PERCENT
(70%) majority of the Board. For purpose of
this event, "Continuing Directors" means
those members of the Board who either (1)
were directors at the beginning of such
consecutive TWENTY-FOUR (24) month period; or
(2) were elected by, or on the nomination or
recommendation of, at least a TWO-THIRDS
(2/3) majority of the then existing Board of
Directors.
4. GENERAL PROVISIONS.
a. Employment; Rights as Shareholder. This Agreement
shall not confer on Employee any right with respect to continuance of
employment by the Company, nor will it interfere in any way with the right of
the Company to terminate such employment.
b. Securities Law Compliance. Employee may be required
by the Company, as a condition of the effectiveness of any restricted stock
award, to agree in writing that all Common Stock subject to such awards shall
be held, until such time that such Common Stock is registered and freely
tradable under applicable state and federal securities laws, for Employee's own
account without a view to any further distribution thereof, that the
certificates for such shares shall bear an appropriate legend to that effect
and that such shares will be not transferred or disposed of except in
compliance with applicable state and federal securities laws.
<PAGE> 5
c. Mergers, Recapitalizations, Stock Splits, Etc. In
the event of an increase or decrease in the number of shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company, the
number of shares of Common Stock subject to each outstanding restricted stock
award shall be adjusted by the Board to reflect such change. Additional shares
which may be credited pursuant to such adjustment shall be subject to the same
restrictions as are applicable to the shares with respect to which the
adjustment relates.
d. Shares Reserved. The Company shall at all times
during the term of Employee's restricted stock awards reserve and keep
available such number of shares as will be sufficient to satisfy the
requirements of this Agreement.
e. Withholding Taxes. In order to provide the Company
with the opportunity to claim the benefit of any income tax deduction which may
be available to it as from the grant of restricted stock awards to Employee
under this Agreement and to permit the Company to comply with all applicable
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all applicable
federal or state payroll, income or other taxes are withheld from any amounts
payable by the Company to Employee. If the Company is unable to withhold such
federal and state taxes, for whatever reason, the Employee hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law prior to the transfer of any
certificates for the shares of Common Stock subject to such restricted stock
awards. THE EMPLOYEE MAY, SUBJECT TO THE DISCRETION OF THE BOARD OF DIRECTORS
OR SUCH OTHER ADMINISTRATIVE RULES IT MAY DEEM ADVISABLE, ELECT TO HAVE ALL OR
A PORTION OF SUCH TAX WITHHOLDING OBLIGATIONS SATISFIED BY DELIVERING SHARES OF
THE COMPANY'S COMMON STOCK HAVING A FAIR MARKET VALUE EQUAL TO SUCH
OBLIGATIONS.
f. Amendment; Waiver. This Agreement may not be
modified, amended or waived in any manner except by an instrument in writing
signed by both parties hereto. The waiver by either party of compliance with
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
g. Supersedes Previous Agreements. This Agreement
supersedes all prior or contemporaneous negotiations, commitments, agreements
(written or oral) and writings between the Company and Employee with respect
to the subject matter hereof. All such other negotiations, commitments,
agreements and writings will have no further force or effect, and the parties
to any such other negotiation, commitment, agreement or writing will have no
further
<PAGE> 6
rights or obligations thereunder.
h. Governing Law. All matters affecting this
Agreement, including the validity thereof, are to be governed by, interpreted
and construed in accordance with the laws of the State of Minnesota.
i. Notices. Any notice hereunder by either party to
the other shall be given in writing by personal delivery, by telecopy (with
confirmation of transmission) or by certified mail, return receipt requested.
If addressed to Employee, the notice shall be delivered or mailed to Employee
at the address specified under Employee's signature hereto, or if addressed to
the Company, the notice shall be delivered or mailed to the Company at its
executive offices to the attention of its Vice President. A notice shall be
deemed given, if by personal delivery or by telecopy, on the date of such
delivery or, if by certified mail, on the date shown on the applicable return
receipt.
j. Headings. The headings of Sections and paragraphs
herein are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement.
k. Scope of Agreement. This Agreement shall bind and
inure to the benefit of the Company and its successors and assigns and of
Employee and his successors.
l. Arbitration. Any dispute arising out of or
relating to this Agreement or the alleged breach of it, or the making of this
Agreement, including claims of fraud in the inducement, shall be discussed
between the disputing parties in a good faith effort to arrive at a mutual
settlement of any such controversy. If, notwithstanding, such dispute cannot
be resolved, such dispute shall be settled by binding arbitration. Judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall be a retired state or federal judge
or an attorney who has practiced securities or business litigation for at least
10 years. If the parties cannot agree on an arbitrator within 20 days, any
party may request that the chief judge of the District Court for Hennepin
County, Minnesota, select an arbitrator. Arbitration will be conducted
pursuant to the provisions of this Agreement, and the commercial arbitration
rules of the American Arbitration Association, unless such rules are
inconsistent with the provisions of this Agreement. Limited civil discovery
shall be permitted for the production of documents and taking of depositions.
Unresolved discovery disputes may be brought to the attention of the arbitrator
who may dispose of such dispute. The arbitrator shall have the authority to
award any remedy or relief that a court of this state could order or grant;
provided, however, that punitive
<PAGE> 7
or exemplary damages shall not be awarded. The arbitrator may award to the
prevailing party, if any, as determined by the arbitrator, all of its costs
and fees, including the arbitrator's fees, administrative fees, travel expenses,
out-of-pocket expenses and reasonable attorneys' fees. Unless otherwise agreed
by the parties, the place of any arbitration proceedings shall be Hennepin
County, Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
CIPRICO, INC.
By:_____________________________________
Its:____________________________________
________________________________________
Robert H. Kill
________________________________________
________________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 2,392,578
<SECURITIES> 1,222,049
<RECEIVABLES> 2,698,145
<ALLOWANCES> 271,546
<INVENTORY> 1,212,136
<CURRENT-ASSETS> 7,329,498
<PP&E> 4,918,160
<DEPRECIATION> 3,709,331
<TOTAL-ASSETS> 8,545,100
<CURRENT-LIABILITIES> 1,416,562
<BONDS> 0
<COMMON> 7,062,350
0
0
<OTHER-SE> (24,347)
<TOTAL-LIABILITY-AND-EQUITY> 8,545,100
<SALES> 10,652,787
<TOTAL-REVENUES> 10,652,787
<CGS> 5,641,493
<TOTAL-COSTS> 5,641,493
<OTHER-EXPENSES> 1,123,530
<LOSS-PROVISION> 19,000
<INTEREST-EXPENSE> 5,283
<INCOME-PRETAX> 23,003
<INCOME-TAX> 15,000
<INCOME-CONTINUING> 8,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,003
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
