<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 March 31, 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 May 2, 1995, 2,170,292 shares.
Transitional Small Business Disclosure Format (check one):
Yes ___ No X.
Total of Sequentially Numbered Pages: 9
No Exhibit Index
<PAGE> 2
PART I
Item 1. Financial Statements
CIPRICO INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31 September 30
-------- ------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $2,573,985 $2,176,125
Marketable securities 1,188,412 1,300,412
Receivables - net 1,478,216 2,456,919
Inventories (Note 2) 1,371,946 1,143,644
Other current assets 130,558 161,990
---------- ----------
Total current assets 6,743,117 7,239,090
Furniture and equipment - net 1,284,331 1,342,295
Other assets 2,275 1,835
---------- ----------
Total assets $8,029,723 $8,583,220
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Current installments of obligations
under capital leases $ 21,469 $ 20,880
Accounts payable 914,444 1,480,645
Accrued expenses 218,251 364,576
Income taxes payable 76,290 72,991
Deferred revenue 78,104 56,202
---------- ----------
Total current liabilities 1,308,558 1,995,294
Long-term installments of obligations
under capital lease 38,765 48,140
Deferred rent 60,543 66,264
---------- ----------
Total liabilities 1,407,866 2,109,698
Stockholders' equity (Note 3):
Capital stock 21,526 20,666
Additional paid-in capital 6,152,901 5,867,971
Retained earnings 574,801 601,432
Unrealized holding loss on
marketable securities (112,000) --
Accumulated translation
adjustments (15,371) (16,547)
---------- ----------
Total stockholders' equity 6,621,857 6,473,522
---------- ----------
Total liabilities &
stockholders' equity $8,029,723 $8,583,220
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE> 3
CIPRICO INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31 Six Months Ended March 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $3,107,308 $2,986,971 $6,775,835 $6,215,614
Cost of sales 1,650,356 1,492,556 3,667,349 3,230,843
---------- ---------- ---------- ----------
Gross Profit 1,456,952 1,494,415 3,108,486 2,984,771
Marketing expenses 889,518 872,800 1,806,615 1,740,234
General & administrative 333,101 334,263 656,531 638,211
Research and development 431,442 397,023 809,094 805,357
---------- ---------- ---------- ----------
Loss from operations (197,109) (109,671) (163,754) (199,031)
Other income (expense) 79,867 (25,283) 146,123 83,255
---------- ---------- ---------- ----------
Loss before income taxes (117,242) (134,954) (17,631) (115,776)
Income tax expense 4,000 5,000 9,000 9,000
---------- ---------- ---------- ----------
Net loss $ (121,242) $ (139,954) $ (26,631) $ (124,776)
========== ========== ========== ==========
Loss per common share $ (.06) $ (.07) $ (.01) $ (.06)
========== ========== ========== ==========
Weighted average common
shares outstanding (Note 3) 2,145,529 2,061,310 2,109,513 2,059,434
</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>
Six Months Ended March 31
-------------------------
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (26,631) $ (124,776)
Adjustments to reconcile net loss
to net cash provided by (used in)
Operating Activities:
Depreciation 361,089 367,510
Gain on retirement of fixed assets (217) (8,214)
Security valuation adjustment to market -- 110,000
Changes in operating assets & liabilities
Inventory (228,302) 160,953
Accounts receivable 978,703 (702,524)
Other current assets 31,432 (22,293)
Accounts payable (566,201) 104,851
Accrued expenses (146,325) (67,063)
Income taxes payable 3,299 3,988
Deferred revenue 21,902 --
Other, net (4,545) (13,889)
---------- ----------
NET CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES 424,204 (191,457)
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment purchases (344,779) (210,140)
Proceeds from sale of equipment 41,871 38,338
Other assets, net (440) 647
Net change in temporary cash investments -- (191,461)
---------- ----------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (303,348) (362,616)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital leases (8,786) (4,320)
Proceeds from issuance of common stock
to employees 285,790 31,542
---------- ----------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 277,004 27,222
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 397,860 (526,851)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,176,125 1,825,875
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $2,573,985 $1,299,024
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE> 5
CIPRICO INC AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
March 31, 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 March 31, 1995 and the results
of operations and cash flows for the three and six month periods ended March
31, 1995 and March 31, 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>
March 31, 1995 September 30, 1994
<S> <C> <C>
Raw Materials $ 705,635 $ 489,962
Work-in Process 186,051 261,097
Finished Goods 480,260 392,585
---------- ----------
$1,371,946 $1,143,644
========== ==========
</TABLE>
Note 3 Loss Per Share
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
(March 31, 1995 vs. September 30, 1994)
The level of cash and cash equivalents increased by $397,860 during the
period. Operating activities generated cash flows of $424,204 during the six
month period ended March 31, 1995. A decrease in accounts receivable by
$978,703 and depreciation expense of $361,089 were partially offset by
increased inventory of $228,302, a reduction in accounts payable of $566,201
and a reduction in accrued expenses of $146,325. Investing activities used
cash primarily for equipment purchases totaling $344,779 while, financing
activities generated cash flows of $285,790 primarily from the issuance of
common stock to employees.
Management feels there is adequate liquidity to meet the on-going
operating needs of the Company.
RESULTS OF OPERATIONS
(Three and six months ended March 31, 1995
compared to three and six months ended March 31, 1994.)
Sales in the second quarter of fiscal 1995 increased by 4% to $3,107,308
when compared to sales of $2,986,971 for the same period last year. Sales for
the six month period of fiscal 1995 were up 9% to $6,775,835 when compared to
$6,215,614 for the same period last year. Revenue growth for the second
quarter was less than anticipated. A few significant customers did not take
product shipments in their expected volumes, due to varying business situations
of these customers. In spite of the lower than anticipated revenues in the
current quarter, the Company expects continued improved sales over last year.
Gross profit margins, as a percent of sales, for the most recent three and
six month periods were 46.9% and 45.9% respectively compared to 50.0% and 48.0%
respectively for the same periods last year. The decrease is attributed to
initial shipments of larger capacity disk array products and disk drive only
sales, which carry a lower margin. The Company continues to monitor product
costs and anticipates gross margins to be at their current levels for the
remainder of the year.
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<PAGE> 7
Marketing expenses, as a percent of sales, were 28.6% for the second
quarter and 26.7% for the six month period of fiscal year 1995, compared to
29.2% and 28.0% respectively for the same periods last year. Expenses, as a
percent of sales, for both periods of fiscal year 1995 decreased due to
increased sales volume when compared to the same periods last year. The actual
dollar spending for the current periods is higher than last year mainly due to
an increase in the number of sales people, and territories, to address the
growing product markets. Marketing expenses are expected to be higher than
last year's levels for the remainder of the fiscal year.
General and administrative expenses were 10.7% for the second quarter and
9.7% for the six month period of fiscal year 1995 compared to 11.2% and 10.3%
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 held relatively flat from period
to period for both the second quarter and six month periods. General and
administrative expenses for the remainder of the fiscal year are expected to be
approximately 8-10% of sales.
Research and development spending was $431,442 for the second quarter and
$809,094 for the six month period of fiscal year 1995, compared to $397,023 for
the second quarter and $805,357 for the six month period of last year. The
second quarter and six month period spending, as a percent of sales, was 13.9%
and 11.9% respectively compared to 13.3% and 13.0% respectively for the same
periods last year. Actual dollar spending for the quarter was higher due to
new product development expenses for the 6900 disk array recently announced,
and future generation array products. Research and Development spending for
the remainder of the year should 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 second quarter and six month periods from investment of excess cash
balances and technology agreements with customers. The second quarter and six
month periods of fiscal 1994 also reflect a $110,000 charge for an 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 Reference is made
to Item 4 of the Registrant's Form 10QSB for the quarter ended
December 31, 1994 which is incorporated herein by reference.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
No report on Form 8-K was filed during the three-month period
ended March 31, 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: May 4, 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-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 2,573,985
<SECURITIES> 1,188,412
<RECEIVABLES> 1,736,785
<ALLOWANCES> 258,569
<INVENTORY> 1,371,946
<CURRENT-ASSETS> 6,743,117
<PP&E> 4,859,820
<DEPRECIATION> 3,573,214
<TOTAL-ASSETS> 8,029,723
<CURRENT-LIABILITIES> 1,308,558
<BONDS> 0
<COMMON> 6,749,228
0
0
<OTHER-SE> (127,371)
<TOTAL-LIABILITY-AND-EQUITY> 8,029,723
<SALES> 6,775,835
<TOTAL-REVENUES> 6,775,835
<CGS> 3,667,349
<TOTAL-COSTS> 3,667,349
<OTHER-EXPENSES> 719,568
<LOSS-PROVISION> 4,000
<INTEREST-EXPENSE> 3,437
<INCOME-PRETAX> (17,631)
<INCOME-TAX> 9,000
<INCOME-CONTINUING> (26,631)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,631)
<EPS-PRIMARY> 0
<EPS-DILUTED> (.01)
</TABLE>
