___________________________________________________________________
___________________________________________________________________
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 October 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 November 30, 1995 there were 6,196,060 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 -
October 31, 1995 (unaudited) and
January 31, 1995 3-4
Consolidated Statements of Operations -
Three-month and nine-month periods ended
October 31, 1995 and 1994 (unaudited) 5
Consolidated Statements of Cash Flows -
Nine-month period ended October 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 6(a.) Exhibits 11
Item 6(b.) Reports on Form 8-K 11
Signatures 12
______
Note: Items 1 through 5 of Part II are omitted because they are not
applicable.
<PAGE>
<TABLE>
CompuTrac, Inc.
CONSOLIDATED BALANCE SHEETS
ASSETS<PAGE>
<CAPTION>
October 31, January 31,
1995 1995
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,575,360 $ 1,499,733
Short-term investments 3,990,704 2,881,030
Accounts receivable, net of allowance of
$19,000 and $286,000 at October 31, and
January 31, 1995, respectively 779,868 1,160,516
Unbilled revenue 341,438 966,102
Other current assets 350,746 482,608
Total current assets 7,038,116 6,989,989
Property, furniture and equipment, and
capitalized software, at cost, net of
accumulated depreciation and amortization
of $8,768,174 and $8,129,094 at October 31,
and January 31, 1995, respectively 3,251,171 3,248,916
Other assets 380,396 338,120
Total assets $ 10,669,683 $ 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
<CAPTION>
October 31, January 31,
1995 1995
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 266,842$ 398,485
Accrued expenses 370,882 268,366
Accrued contract completion costs 214,100 388,155
Accrued contract settlement liabilities 312,571
Deferred systems revenues 78,379 130,998
Short-term portion of mortgage note payable 68,076 63,412
Total current liabilities 998,279 1,561,987
Long-term portion of mortgage note payable 292,081 343,737
Total liabilities 1,290,360 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, 6,534,317 and
6,910,692 shares issued, respectively 65,343 69,107
Additional paid-in capital 8,408,556 9,947,369
Retained earnings 2,067,211 1,507,343
10,541,110 11,523,819
Less:
Treasury stock, 342,106 and 839,256 shares,
at cost, respectively 1,161,787 2,852,518
Total shareholders' equity 9,379,323 8,671,301
Total liabilities and shareholders' equity $ 10,669,683$ 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)
<CAPTION>
Three-month period Nine-month period
ended October 31, ended October 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating revenues:
System sales $ 131,078 $ 248,148 $ 555,745 $1,124,418
Services and support 1,137,533 1,266,809 3,442,212 4,145,738
1,268,611 1,514,957 3,997,957 5,270,156
Costs and expenses:
Cost of systems 81,245 149,594 355,351 610,783
hardware
Operating expenses 482,932 322,939 1,576,783 1,362,919
Selling, general and
administrative
expenses 489,756 748,508 1,548,124 2,220,498
Software development
costs 48,200 192,000 151,400 507,000
1,102,133 1,413,041 3,631,658 4,701,200
Operating income from
continuing operations 166,478 101,916 366,299 568,956
Other income 57,506 4,211 193,569 15,010
Income from continuing
operations before taxes 223,984 106,127 559,868 583,966
Provision for income
taxes 0 0 0 0
Income from continuing
operations $ 223,984 $ 106,127 $ 559,868 $ 583,966
Discontinued operations,
net of related income
taxes:
Loss from discontinued
operations of
MediaMagic $ 0 $ 0 $ 0 $ (236,214)
Loss on disposal of
MediaMagic 0 0 0 (259,365)
Income (loss) from
discontinued
operations 0 0 0 (495,579)
Net income $ 223,984 $ 106,127 $ 559,868 $ 88,387
Income from continuing
operations per common
share $ .04 $ .02 $ .09 $ .09
Income (loss) from
discontinued
operations per common
share .00 .00 .00 (.08)
------- -------- ------- -------
Net income .04 .02 .09 .01
==== ===== ==== ====
Weighted average shares
outstanding: 6,323,371 6,051,369 6,270,140 6,045,157
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)
<CAPTION>
Nine-month period
ended October 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 559,868 $ 88,387
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 665,888 728,946
Write-off of fixed assets from
discontinued operations 123,790
Cost, net of depreciation, of computer
equipment included in cost of sales 37,922
Changes in current assets and liabilities:
Accounts receivable 380,648 185,954
Unbilled revenues 624,664 1,714,781
Partial shipments 53,386
Current deferred taxes 388,524
Other current assets 131,862 993,951
Accounts payable (131,643) (657,823)
Accrued expenses (384,110) (1,108,352)
Deferred systems revenue (52,619) (493,529)
Net cash provided by operating activities 1,832,480 2,018,015
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)
<CAPTION>
Nine-month period
ended October 31,
1995 1994
<S> <C> <C>
Cash flows from investing activities:
Additions to property, furniture and
equipment and capitalized software costs $ (706,064) $ (322,544)
(Purchase) of short-term investment (1,109,674) (1,917,954)
(Increase) in other assets (42,276) (326,259)
Net cash used in investing activities (1,858,014) (2,566,757)
Cash flows from financing activities:
Issuance of common stock 154,923 33,289
Additions to treasury shares (6,770)
Payments of mortgage note payable (46,992) (615,808)
Net cash provided by (used in) financing
activities 101,161 (582,519)
Net increase (decrease) in cash 75,627 (1,131,261)
Cash and cash equivalents at beginning of
period 1,499,733 2,668,076
Cash and cash equivalents at end of period $ 1,575,360 $ 1,536,815
Supplemental disclosures of cash flow
information:
Interest expense paid $ 19,827 $ 108,160
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 nine-month
periods ended October 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 revenues from continuing operations decreased $246,346 or
16% from $1,514,957 at October 31, 1994 to $1,268,611 at October 31, 1995.
For the nine month period, operating revenues from continuing operations
decreased $1,272,199 or 24%. Quarterly system sales revenues from
continuing operations decreased $117,070 or 47% from $248,148 to $131,078
at October 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 in its next fiscal year. Quarterly services and
support revenues from continuing operations decreased $129,276 or 10% from
$1,266,809 to $1,137,533 at October 31, 1995. For the nine month period,
service and support revenues decreased $703,526 or 17%.
Costs of systems hardware as a percentage of system sales was 62% for
the quarter ended October 31, 1995, a nominal 2% increase over the prior
comparable quarterly period. For the nine month period, costs of systems
hardware as a percentage of system sales was 64%, compared with 54% in the
prior comparable nine month period.
Combined quarterly operating, selling, general and administrative
expenses and software development costs from continued operations decreased
$242,559 or 19% from $1,263,447 at October 31, 1994 to $1,020,888 at
October 31, 1995. For the nine month period, expenses from continued
operations decreased $814,110 or 20% from $4,090,417 to $3,276,307.
Non-operating income increased $53,295 for the quarter and increased
$178,559 for the nine month period. Non-operating income is primarily
comprised of interest earnings from certificates of deposit and United
States treasury bills.
Losses from discontinued operations for the nine month period ended
October 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 October 31, 1995 which
would affect liquidity. Long term liabilities consist only of the
Company's mortgage note payable of $292,081 at October 31, 1995.
The Company's major capital expenditures have historically been for
computer equipment and capitalized software. For the quarter ended October
31, 1995, the Company made investments totaling approximately $235,000 in
equipment and capitalized software primarily to support the Company's
current software development efforts.
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 5 are 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 nine-month periods
ended October 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
October 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: December 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 - Finance and
Chief Financial Officer
<PAGE>
<TABLE>
EXHIBIT 11.1
CompuTrac, Inc.
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
<CAPTION>
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
October 31,
Shares issued at beginning of period 6,109,398 6,043,882
Issuance of common stock 63,031 2,796
Treasury share purchases (2,416)
Common stock equivalents 121,650 255
Primary weighted average number of
shares outstanding 6,291,663 6,046,933
Nine-month period ended:
October 31,
Primary weighted average number of
shares outstanding 6,306,959 6,041,658
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 11.2
CompuTrac, Inc.
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
<CAPTION>
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
October 31,
Shares issued at beginning of period 6,109,398 6,043,882
Issuance of common stock 63,031 2,796
Treasury share re-purchases (2,416)
Common stock equivalents 153,358 4,691
Fully diluted weighted average number
of shares outstanding 6,323,371 6,051,369
Nine-month period ended:
October 31,
Fully diluted weighted average number
of shares outstanding 6,270,140 6,045,157
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> OCT-31-1995
<CASH> 1575360
<SECURITIES> 3990704
<RECEIVABLES> 798868
<ALLOWANCES> 19000
<INVENTORY> 0
<CURRENT-ASSETS> 350746
<PP&E> 12019345
<DEPRECIATION> 8768174
<TOTAL-ASSETS> 10669683
<CURRENT-LIABILITIES> 998279
<BONDS> 0
<COMMON> 65343
0
0
<OTHER-SE> 10475767
<TOTAL-LIABILITY-AND-EQUITY> 10669683
<SALES> 131078
<TOTAL-REVENUES> 1268611
<CGS> 81245
<TOTAL-COSTS> 81245
<OTHER-EXPENSES> 1102133
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 223984
<INCOME-TAX> 0
<INCOME-CONTINUING> 223984
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223984
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
