______________________________________________________________________
______________________________________________________________________
______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended July 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number 1-9115
COMPUTRAC, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1540265
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
222 Municipal Drive
Richardson, Texas 75080
(Address of principal executive offices)
Telephone No. (214) 234-4241
________________
(Former name, former address and former fiscal year,
if changed since last report.)
________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 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 _____
As of August 10, 1995 there were 6,166,856 shares of the registrant's
$.01 par value common stock outstanding.
______________________________________________________________________
______________________________________________________________________
<PAGE>
CompuTrac, Inc.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets -
July 31, 1995 (unaudited) and
January 31, 1995 3-4
Consolidated Statements of Operations -
Three-month and six-month periods ended
July 31, 1995 and 1994 (unaudited) 5
Consolidated Statements of Cash Flows -
Six-month period ended July 31, 1995 and
1994 (unaudited) 6-7
Notes to Consolidated Financial Statements
(unaudited) 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-10
Item 3. Exhibit I - Annual Report to Shareholders
for the fiscal year ended January 31,
1995
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 6(a.) Exhibits 11
Item 6(b.) Reports on Form 8-K 11
Signatures 12
______
Note: Items 1 through 3 and Item 5 of Part II are omitted because
they are not applicable.
<PAGE>
<TABLE>
CompuTrac, Inc.
CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, January 31,
1995 1995
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,080,994 $ 1,499,733
Short-term investments 3,852,605 2,881,030
Accounts receivable, net of allowance of
$196,106 and $286,000 at July 31 and
January 31, 1995, respectively 1,028,118 1,160,516
Unbilled revenue 579,981 966,102
Other current assets 389,424 482,608
Total current assets 6,931,122 6,989,989
Property, furniture and equipment, and
capitalized software, at cost, net of
accumulated depreciation and amortization
of $8,568,073 and $8,129,094 at July 31,
and January 31, 1995, respectively 3,224,259 3,248,916
Other assets 365,192 338,120
Total assets $10,520,573 $10,577,025
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
</TABLE>
<PAGE>
<TABLE>
CompuTrac, Inc.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, January 31,
1995 1995
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 277,556 $ 398,485
Accrued expenses 331,774 268,366
Accrued contract completion costs 341,955 388,155
Accrued contract settlement
liabilities 42,506 312,571
Deferred systems revenues 101,904 130,998
Short-term portion of mortgage note
payable 66,485 63,412
Total current liabilities 1,162,180 1,561,987
Long-term portion of mortgage note
payable 309,708 343,737
Total liabilities 1,471,888 1,905,724
Shareholders' equity:
Preferred stock, $1.00 par value,
2,000,000 shares authorized, no
shares issued and outstanding
Common stock, $.01 par value,
13,000,000 shares authorized,
6,948,654 and 6,910,692 shares
issued, respectively 69,487 69,107
Additional paid-in capital 9,988,491 9,947,369
Retained earnings 1,843,225 1,507,343
11,901,203 11,523,819
Less:
Treasury stock, 839,256 shares, at
cost 2,852,518 2,852,518
Total shareholders' equity 9,048,685 8,671,301
Total liabilities and
shareholders' equity $ 10,520,573 $ 10,577,025
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
</TABLE>
<PAGE>
<TABLE>
CompuTrac, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three-month period Six-month period
ended July 31, ended July 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating revenues:
System sales $ 284,558 $ 376,150 $ 424,667 $ 876,270
Services and support 1,144,354 1,354,485 2,304,679 2,878,929
1,428,912 1,730,635 2,729,346 3,755,199
Costs and expenses:
Cost of systems
hardware 183,552 147,527 274,106 461,189
Operating expenses 538,732 515,425 1,093,852 1,039,980
Selling, general and
administrative
expenses 540,426 713,244 1,058,368 1,471,990
Software development
costs 55,100 161,000 103,200 315,000
1,317,810 1,537,196 2,529,526 3,288,159
Operating income from
continuing
operations 111,102 193,439 199,820 467,040
Other income 71,138 24,118 136,063 10,799
Income from continuing
operations before
income taxes 182,240 217,557 335,883 477,839
Provision for income
taxes 0 0 0 0
Income from continuing
operations $ 182,240 $ 217,557 $ 335,883 $ 477,839
Discontinued
operations, net of
related income
taxes:
Loss from
operations $ 0 $ (74,294) $ 0 $(236,214)
Loss on disposal 0 (259,365) 0 (259,365)
Loss from
discontinued
operations 0 (333,659) 0 (495,579)
Net income (loss) $ 182,240 $ (116,102) $ 335,883 $ (17,740)
Fully diluted:
Income from
continuing
operations $ .03 $ .04 $ .05 $ .08
Loss from
discontinued
operations .00 (.06) .00 (.08)
------- -------- ------- -------
Net income (loss) .03 (.02) .05 .00
==== ===== ==== ====
Weighted average
shares outstanding: 6,142,635 6,041,932 6,132,951 6,037,311
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
</TABLE>
<PAGE>
<TABLE>
CompuTrac, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six-month period
ended July 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 335,883 $ (17,740)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 462,177 502,336
Cost, net of depreciation, of
computer equipment included in
cost of systems hardware 32,411 0
Write-off of fixed assets from
discontinued operations 0 123,790
Changes in current assets and
liabilities:
Accounts receivable 132,398 227,849
Unbilled revenues 386,121 887,882
Partial shipments 0 1,627
Current deferred taxes 0 (142,339)
Other current assets 93,184 817,362
Accounts payable (120,929) (514,602)
Accrued expenses (252,857) (651,919)
Deferred systems revenue (29,094) (352,701)
Net cash provided by operating
activities 1,039,294 881,545
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
</TABLE>
<PAGE>
<TABLE>
CompuTrac, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Six-month period
ended July 31,
1995 1994
<S> <C> <C>
Cash flows from investing activities:
Additions to property, furniture and
equipment and capitalized software
costs $ (469,932) $ (200,821)
(Purchase) of short-term investment (971,575) (328,000)
(Increase) in other assets (27,072) (99,822)
Net cash used in investing activities (1,468,579) (628,643)
Cash flows from financing activities:
Issuance of common stock 41,502 29,100
Payments of mortgage note payable (30,956) (404,350)
Net cash provided by (used in)
financing activities 10,546 (375,250)
Net (decrease) in cash (418,739) (122,348)
Cash and cash equivalents at
beginning of period 1,499,733 2,668,076
Cash and cash equivalents at end of
period $ 1,080,994 $ 2,545,728
Supplemental disclosures of cash flow
information:
Interest expense paid $ 9,775 $ 54,447
See accompanying Notes to Financial Statements (unaudited) and
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
</TABLE>
<PAGE>
CompuTrac, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The unaudited consolidated financial information furnished herein
reflects all adjustments which in the opinion of management are
necessary to fairly state the Company's financial position, the
changes in its financial position and the results of its
operations for the periods presented. This report on Form 10-Q
should be read in conjunction with the Company's financial
statements and notes thereto included on pages 8 through 23 of
the Company's Annual Report to Shareholders for the fiscal year
ended January 31, 1995. The Company presumes that users of the
interim financial information herein have read or have access to
the audited financial statements for the preceding fiscal year
and that the adequacy of additional disclosure needed for a fair
presentation may be determined in that context. Accordingly,
footnote disclosure which would substantially duplicate the
disclosure contained in the Company's Annual Report to
Shareholders for the fiscal year ended January 31, 1995 has been
omitted. The results of operations for the three and six-month
periods ended July 31, 1995 are not necessarily indicative of
results for the entire year ending January 31, 1996.
(2) The Company's tax return for the fiscal year ended January 31,
1993 is currently under examination by the Internal Revenue
Service. As of the date of this Form 10Q, the Company has not
been advised of any tax deficiencies by the Internal Revenue
Service, and does not believe any material deficiencies will be
noted during the review.
(3) The Company capitalizes the costs of developing and testing new
or significantly enhanced software products in accordance with
the provisions of Statement of Financial Accounting Standards No.
86, ``Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed.''
<PAGE>
CompuTrac, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Quarterly operating revenues from continuing operations decreased
$301,723 or 17% from $1,730,635 at July 31, 1994 to $1,428,912 at July
31, 1995. For the six month period ended July 31, 1995, operating
revenues from continuing operations decreased $1,025,853 or 27%.
Quarterly system sales revenues from continuing operations decreased
$91,592 or 24% from $376,150 in the comparable prior period, to
$284,558 at July 31, 1995. For the six month period ended July 31,
1995, system sales revenues from continuing operations decreased
$451,603 or 52% from $876,270 at July 31, 1994 to $424,667 at July 31,
1995. The Company's new system sales efforts have been, and will be,
minimal until the Company releases its next generation, Windows-based,
relational database. Quarterly services and support revenues from
continuing operations decreased $210,131 or 16% from $1,354,485 at
July 31, 1994 to $1,144,354 at July 31, 1995. For the six month
period, service and support revenues decreased $574,250 or 20%.
Costs of systems hardware as a percentage of system sales
increased 26% between quarterly periods. This increase is primarily
attributable to a significantly reduced amount of software sales
included in the quarter ended July 31, 1995, as compared with the
prior comparable quarter.
Combined quarterly operating, selling, general and administrative
expenses and software development costs from continued operations
decreased $255,411 or 18% from $1,389,669 at July 31, 1994 to
$1,134,258 at July 31, 1995. For the six month period, expenses from
continued operations decreased $571,550 or 20% from $2,826,970 to
$2,255,420 at July 31, 1995.
Non-operating income increased $47,020 for the quarter and
increased $125,264 for the six month period ended July 31, 1995.
Reduced mortgage interest expense, combined with increased short-term
investment income have contributed to the increase in non-operating
income.
Losses from discontinued operations for the three and six month
periods ended July 31, 1994, relate to the Company's investment in
MediaMagic. The Company discontinued the operations of MediaMagic in
the second quarter ended July 31, 1994. The Company does not
anticipate any further losses with respect to its discontinued
operations.
<PAGE>
Fluctuations in Interim Period Operating Results
Management of the Company believes that historically, interim
results and period-to-period comparisons have been neither predictable
nor an accurate measure of the annual performance of the Company. The
Company has experienced and expects to continue to experience interim
period-to-period fluctuations in the number of systems sold, revenues
and net income. These fluctuations are primarily a result of the
revenues of the Company being generated principally by the sale of a
small number of relatively expensive systems, the policy of the
Company of recognizing revenue upon delivery of the hardware, delivery
and acceptance of the software, the equipment availability of the
Company's primary hardware supplier, and the desire of the customer to
accelerate or delay the date of delivery. Additionally, sales are not
made or recognized evenly throughout the fiscal year or any interim
period, thus making meaningful interim period comparisons difficult.
These fluctuations may also have a significant impact on profitability
in any interim period as a result of the relatively fixed nature of
operating costs and selling, general and administrative expenses.
Liquidity and Capital Resources
The Company's primary source of liquidity has been cash flow from
operations. Additional liquidity is provided by occasional sales of
the Company's common stock through various employee benefit plans.
Current assets consist almost entirely of cash, short-term
investments, accounts receivables and unbilled revenues from system
sales and services. The Company has no significant past due
receivables at July 31, 1995 which would affect liquidity. Long term
liabilities consist only of the Company's mortgage note payable of
$309,708 at July 31, 1995.
The Company's major capital expenditures have histori cally been
for computer equipment and capitalized software. For the quarter
ended July 31, 1995, the Company made investments totaling
approximately $224,000 in equipment and capitalized software primarily
to support the Company's current software development efforts.
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 3 are not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of CompuTrac, Inc. was held on
July 20, 1995. The record date for stockholders entitled to notice
of, and to vote at, the meeting was May 31, 1995. The purpose of the
meeting was to elect five directors for the ensuing year and to
transact such other business as might properly come before the meeting
or any adjournment thereof.
The nominees for directorship were elected in their entirety to
serve as directors of the Company until the next Annual Meeting of
Stockholders and until their successors have been elected and
qualified. The directors of the Company elected during the Annual
Meeting of Stockholders were as follows:
Harry W. Margolis Chairman of the Board and
Chief Executive Officer
CompuTrac, Inc.
Dana E. Margolis Secretary and Treasurer
CompuTrac, Inc.
Cesar L. Alvarez Director
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
Miami, Florida
Gerald D. Harris Owner
Harris Typesetting Services
Plano, Texas
Kenneth R. Nicholas Managing Director
Nicholas, Flanagan & Bard, P.C.
Dallas, Texas
There being no other matters presented for a vote, the meeting
was duly adjourned.
Item 5 is not applicable.
Item 6(a): Exhibits
Exhibit 11 (Page 13-14) - Calculation of weighted average number
of common shares outstanding during the three-month and six-month
periods ended July 31, 1995 and 1994.
Item 6(b): Reports on Form 8-K
No reports on form 8-K have been filed during the quarter ended
July 31, 1995.
<PAGE>
CompuTrac, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: September 13, 1995
/s/ CompuTrac, Inc.
(Registrant)
/s/ Harry W. Margolis
Harry W. Margolis
Chief Executive Officer
(Principal Executive Officer)
/s/ George P. McGraw
George P. McGraw
President - Legal Division
(Principal Operating Officer)
/s/ Cheri L. White
Cheri L. White
Vice President of Finance and
Chief Financial Officer
<PAGE>
<TABLE>
EXHIBIT 11.1
CompuTrac, Inc.
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
1995 1994
<S> <C> <C>
Primary
Calculation
Three-month period ended:
April 30,
Shares issued at beginning of
period 6,071,436 6,017,934
Issuance of common stock 11,233 14,532
Common stock equivalents 15,934
Primary weighted average number of
shares outstanding 6,098,603 6,032,466
July 31,
Shares issued at beginning of
period 6,092,986 6,037,702
Issuance of common stock 9,275 4,230
Common stock equivalents 21,473
Primary weighted average number of
shares outstanding 6,123,734 6,041,932
Six-month period ended:
July 31,
Primary weighted average number of
shares outstanding 6,112,977 6,037,311
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 11.2
CompuTrac, Inc.
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
1995 1994
<S> <C> <C>
Fully Dilutive Calculation
Three-month period ended:
April 30,
Shares issued at beginning of period 6,071,436 6,017,934
Issuance of common stock 11,233 14,532
Common stock equivalents 15,934
Fully diluted weighted average number
of shares outstanding 6,098,603 6,032,466
July 31,
Shares issued at beginning of period 6,092,986 6,037,702
Issuance of common stock 9,275 4,230
Common stock equivalents 40,374
Fully diluted weighted average number
of shares outstanding 6,142,635 6,041,932
Six-month period ended:
July 31,
Fully diluted weighted average number
of shares outstanding 6,132,951 6,037,311
</TABLE>
<TABLE> <S> <C>
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<CIK> 0000720507
<NAME> COMPUTRAC,INC.
<S> <C>
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