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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[ X ] Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended April 30, 2000
OR
[ ] Transition Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number 1-9115
COMPUTRAC, INC.
(Exact name of small business issuer 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. (972) 234-4241
________________
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 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 May 31, 2000 there were 6,325,811 shares of the registrant's $.01 par
value common stock outstanding.
Transitional Small Business Disclosure Format (Check One): Yes ___ No X
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<PAGE>
CompuTrac, Inc.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Balance Sheets (unaudited) -
April 30, 2000 and January 31, 2000 3
Statements of Operations
(unaudited) - Three-month periods
ended April 30, 2000 and 1999 4
Statements of Cash Flows
(unaudited) - Three-month periods
ended April 30, 2000 and 1999 5
Notes to Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
Item 3. Exhibit I - Annual Report to Shareholders
for the fiscal year ended January 31, 2000
PART II. OTHER INFORMATION
Item 6(a) Exhibits 9
Item 6(b) Reports on Form 8-K 9
Signatures 10
______
Note: Items 1 through 5 of Part II are omitted because they are not
applicable.
<PAGE>
<TABLE>
CompuTrac, Inc.
BALANCE SHEETS (unaudited)
<CAPTION>
April 30, January 31,
2000 2000
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 321,842 $ 352,970
Short-term investments 1,700,000 2,200,000
Accounts receivable, net of allowance for
doubtful accounts of $150,000 and
$119,000, respectively 592,707 610,510
Other current assets 271,482 376,953
---------- ----------
Total current assets 2,886,031 3,540,433
Property, furniture and equipment, net of
accumulated depreciation of $8,443,554
and $8,387,463, respectively 1,149,462 1,181,846
Land held for resale 254,122 254,122
Capitalized software, net of accumulated
amortization of $3,616,977 and $3,524,211
respectively 2,165,581 2,140,252
Other assets 568,724 551,274
---------- ----------
Total assets $ 7,023,920 $ 7,667,927
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 118,238 $ 142,573
Accrued expenses 183,508 144,716
Stock purchase payable 212,000 434,625
Deferred systems revenues 192,484 190,750
Short-term portion of mortgage note payable - 23,193
---------- ----------
Total liabilities 706,230 935,857
---------- ----------
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, 6,988,706 shares issued 69,887 69,887
Additional paid-in capital 8,407,982 8,478,866
Retained earnings (762,464) (332,242)
---------- ----------
7,715,405 8,216,511
Less: treasury shares, at cost, 664,880 and
720,391 shares, respectively (1,397,715) (1,484,441)
---------- ----------
Total shareholders' equity 6,317,690 6,732,070
---------- ----------
Total liabilities and shareholders' equity $ 7,023,920 $ 7,667,927
========== ==========
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.
STATEMENTS OF OPERATIONS (unaudited)
Three-month period
ended April 30,
2000 1999
---------- -----------
<S> <C> <C>
Revenues:
Systems sales $ 85,569 $ 312,272
Services and support 820,193 1,141,264
---------- -----------
905,762 1,453,536
Costs and expenses:
Cost of system sales 25,528 38,432
Cost of services and support 56,965 58,944
Amortization of capitalized software 92,766 92,766
Operating expenses 291,341 322,306
Selling, general and administrative expenses 757,590 720,755
Software research and development costs 144,850 131,730
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1,369,040 1,364,933
(Loss) income from operations (463,278) 88,603
Interest income, net 33,056 30,499
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Net (loss) income $ (430,222) $ 119,102
========== ===========
(Loss) income per share - basic and diluted ($0.07) $0.02
========== ===========
Weighted average number of common shares -
basic 6,302,595 6,434,485
========== ===========
diluted 6,302,595 6,596,908
========== ===========
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.
STATEMENTS OF CASH FLOWS (unaudited)
Three-month period
ended April 30,
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (430,222) $ 119,102
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation of property, furniture
and equipment 56,091 58,093
Amortization of capitalized software costs 92,766 92,766
Changes in operating assets and liabilities:
Accounts receivable 17,803 (190,730)
Other current assets 105,471 (37,892)
Other assets (17,450) (30,849)
Accounts payable and accrued expenses 53,249 (13,610)
Deferred systems revenues 1,734 (31,882)
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Net cash used in operating activities (120,558) (35,002)
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Cash flows from investing activities:
Additions to property, furniture and equipment (23,707) (35,532)
Additions to capitalized software (118,095) (118,094)
Sale (purchase) of certificates of deposit 500,000 (800,000)
Sale of U.S. Treasury Bills - 626,421
---------- ----------
Net cash provided by (used in)
investing activities 358,198 (327,205)
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Cash flows from financing activities:
Issuance of treasury shares 54,293 18,042
Principal payments of mortgage note payable (23,192) (22,276)
Purchase of treasury shares (299,869) (106,985)
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Net cash used in financing activities (268,768) (111,219)
---------- ----------
Net decrease in cash and cash equivalents (31,128) (473,426)
Cash and cash equivalents at beginning of year 352,970 1,000,959
---------- ----------
Cash and cash equivalents at end of year $ 321,842 $ 527,533
========== ==========
Supplemental disclosures of cash
flow information:
Interest paid $ 329 $ 2,716
========== ==========
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 FINANCIAL STATEMENTS
(Unaudited)
(1) The unaudited 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-QSB should be read in conjunction with the
Company's financial statements and notes thereto included on pages 9
through 20 of the Company's Annual Report on Form 10-KSB for the
fiscal year ended January 31, 2000. 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 on Form 10-KSB for the fiscal
year ended January 31, 2000 has been omitted. The results of
operations for the three-month period ended April 30, 2000 are not
necessarily indicative of results for the entire year ending January
31, 2001.
<PAGE>
CompuTrac, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Total revenues from operations decreased $547,774, or 38% from $1,453,536
for the quarter ended April 30, 1999 to $905,762 for the current quarter
ended April 30, 2000. Systems sales revenues decreased $226,703, or 73%
from $312,272 for the quarter ended April 30, 1999 to $85,569 for the
current quarter ended April 30, 2000. Services and support revenues
decreased $321,071, or 28%, from $1,141,264 for the quarter ended April 30,
1999, to $820,193 for the current quarter ended April 30, 2000. Both the
decreases in systems sales and service and support revenues are
attributable to an decrease in the number of new systems sales and related
installation services of the Company's LFMS for Windows software products
during the period. The Company attributes this decrease to a continuing
lag in the overall market attributable to Y2K activities and the Company's
recent release of LFMS 2000, a Microsoft SQL-Server based product for both
mid and large size law firms. It is the Company's experience that a major
product introduction, such as what is now under way, results in near-term
decreases in revenues.
Cost of systems sales as a percentage of system sales revenue was
30% for the quarter ended April 30, 2000 versus 12% for the quarter
ended April 30, 1999. Systems sales revenues in the current period had a
larger component of hardware sales, which have a significantly lower gross
margin than the Company's software products. Cost of services and support
as a percentage of services and support revenues increased from 5% to 7%
between periods. The percentage increase is attributable to the decreased
revenues between periods as the cost of services and support, primarily
third party costs associated with maintenance revenue, were relatively
fixed between periods.
Amortization of capitalized software was unchanged, totaling $92,766 for
each period, as software development costs capitalized between periods were
not yet subject to amortization.
Operating expenses decreased $30,965, or 10% from $322,306 for the
three-month period ended April 30, 1999, to $291,341 for the current
three-month period. The decrease is primarily attributable to a decrease
in operating personnel and related expenses between periods. Selling,
general and administrative expenses increased $36,835, or 5%, from $720,755
for the three-month period ended April 30, 1999, to $757,590 for the
current three-month period. The increase in selling, general and
administrative expenses in the current period was primarily due to the
reversal of certain foreign tax credits receivable generated in prior years
that expired during the period.
<PAGE>
Software research and development costs rose $13,120, or 10%, from
$131,730 for the three-month period ended April 30, 1999 to $144,850 for
the current three-month period. The increase in software research and
development costs primarily relates to research and development costs
associated with software products not qualifying for capitalization during
the quarter. The Company capitalizes those costs associated with continued
enhancements and improvements to the CompuTrac LFMS for Windows software
product line. Those software costs not qualifying for capitalization are
expensed when incurred.
Net interest income increased $2,557, or 8%, from $30,499 for the three-
month period ended April 30, 1999, to $33,056 for the current three-month
period. The increase in net interest earnings over the prior comparable
quarter was attributable to an increase in interest rates and the amount of
funds consistently invested and a decrease in net interest expense between
periods.
Fluctuations in Interim Period Operating Results
Management 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 period-to-period fluctuations in systems
sales, revenues and net income. Fluctuations in system sales revenues have
historically resulted from the revenues of the Company being generated
principally by the sale of a small number of relatively expensive systems,
as well as the policy of the Company of recognizing revenue upon delivery
of the hardware, delivery and acceptance of the software, the equipment
availability of hardware from the Company's hardware supplier, and the
desire of the customer to accelerate or delay the date of delivery. These
factors tend to distort the operating results of an interim period.
Additionally, sales have not occurred or been 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
Net cash used in operating activities was $120,558 for the three-
months ended April 30, 2000 compared to cash used of $35,002 in the prior
comparable period. The increase in cash used in operating activities
during the period was attributable to the recognition of a net loss during
the period versus net income. Net cash provided by investing activities
was $358,198 for the current period versus $327,205 used in the prior
comparable period. The increase in cash provided by investing activities
was due to the conversion of certificates of deposit to cash between
periods. Net cash used in financing activities was $268,768 compared to
$111,219 in the prior period. The increase in cash used in financing
activities was due to an increase in the amount of funds used to purchase
treasury shares during the period.
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 5 are not applicable.
Item 6(a): Exhibits
Exhibit 11 - Calculation of weighted average number of common shares
outstanding during the three-month periods ended April 30,
2000 and 1999.
Exhibit 27 - Financial Data Schedule
Item 6(b): Reports on Form 8-K
No reports on form 8-K have been filed during the quarter
ended April 30, 2000.
<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: June 12, 2000
/s/ CompuTrac, Inc.
____________________
(Registrant)
/s/ Harry W. Margolis
_____________________
Harry W. Margolis
Chief Executive Officer
(Principal Executive Officer)
/s/ D. Bruce Walter
_____________________
D. Bruce Walter
President
(Principal Operating Officer)
/s/ Shawn E. Anderson
______________________
Shawn E. Anderson
Controller
(Principal Accounting Officer)
