SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------------- ---------------
Commission file number: 0-12541
-------
SATELLITE INFORMATION SYSTEMS COMPANY
-------------------------------------
(Exact Name of small business issuer as Specified in its Charter)
Colorado 84-0899779
- - --------------------------------- ---------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7464 Arapahoe Avenue, Suite B-17, Boulder, Colorado 80303
- - --------------------------------------------------- -----------------------
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 449-0442
--------------
---------------------------------------------------------------
(Former name, former address and dormer 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. [ X ] Yes
[ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 of 15 (d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of December 31, 1996, Registrant had 5,067,687 shares of common stock
outstanding.
Transitional Small Business Disclosure Format (Check One): [ ] Yes [ ] No
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1996
(unaudited) and June 30, 1996
Consolidated Statement of Operations for the Three Months
and Six Months Ended December 31, 1996 and December 31,
1995 (unaudited)
Consolidated Statement of Cash Flows for the Three Months
Ended December 31, 1996 and December 31, 1995 (unaudited)
Notes to Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
ITEM 2. Changes in Securities
ITEM 3. Defaults Upon Senior Securities
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page 4-5 Consolidated Balance Sheets at December 31, 1996
(unaudited) and June 30, 1996
Page 6-7 Consolidated Statement of Operations for the Three
Months and Six Months Ended December 31, 1996 and
December 31, 1995 (unaudited)
Page 8 Consolidated Statement of Cash Flows for the Six
Months Ended December 31, 1996 and December 31, 1995
(unaudited)
Page 9-10 Notes to Financial Statements
<PAGE>
<TABLE>
SATELLITE INFORMATION SYSTEMS COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
------
<CAPTION>
December 31, June 30,
1996 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 721,400 $ 89,000
Receivables:
Trade, less allowance for doubtful
accounts of $10,000 126,700 32,000
Other - 1,900
Inventory 106,600 21,900
Prepaid expenses and other 5,100 3,100
----------- -----------
Total current assets 959,800 147,900
PROPERTY AND EQUIPMENT
Computer equipment 501,300 439,400
Office furniture and equipment 48,400 44,300
Less accumulated depreciation (384,800) (358,500)
----------- -----------
Net property and equipment 164,900 125,200
SOFTWARE DEVELOPMENT COSTS
(net of accumulated amortization
of $2,122,715 and $2,032,900) 298,000 297,300
OTHER ASSETS 9,700 3,500
----------- -----------
TOTAL ASSETS $1,432,400 $ 573,900
=========== ===========
</TABLE>
<PAGE>
<TABLE>
SATELLITE INFORMATION SYSTEMS COMPANY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
December 31, June 30,
1996 1996
------------ ----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 56,200 $ 174,700
Accrued liabilities and other 73,700 179,900
Unearned revenue 222,300 193,500
----------- -----------
Total current liabilities 352,200 548,100
----------- -----------
MINORITY INTEREST 4,100 4,700
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value;
100,000,000 shares authorized;
issued 4,000,000 shares;
liquidation preference $1,000,000 1,000,000 -
Common stock, no par value;
100,000,000 shares authorized;
5,067,687 shares issued and outstanding
at June 30, 1996 and December 31, 1996 1,931,400 1,931,400
Accumulated deficit (1,855,300) (1,910,300)
----------- -----------
Total stockholders' equity 1,076,100 21,100
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,432,400 $ 573,900
=========== ===========
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SATELLITE INFORMATION SYSTEMS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Three Months
Ended December 31,
--------------------------
1996 1995
------------- -----------
<S> <C> <C>
NET REVENUES:
Software and related services $ 222,600 $ 240,200
Hardware 75,800 109,400
----------- -----------
298,400 349,600
COSTS AND EXPENSES:
Costs of sales 140,300 198,900
Operating, general and administrative 121,100 119,000
Depreciation and amortization 14,500 12,300
Other expense (income) (10,000) (6,500)
Minority interest - 3,300
----------- -----------
265,900 327,000
----------- -----------
NET INCOME (LOSS) $ 32,500 $ 22,600
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE $ 0.01 *$ 0.01
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,067,687 4,370,000
=========== ===========
* Less than $.01 per share.
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SATELLITE INFORMATION SYSTEMS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Six Months
Ended December 31,
--------------------------
1996 1995
------------- -----------
<S> <C> <C>
NET REVENUES:
Software and related services $ 402,800 $ 459,900
Hardware 112,800 189,600
----------- -----------
515,600 649,500
COSTS AND EXPENSES:
Costs of sales 250,800 409,500
Operating, general and administrative 222,100 247,400
Depreciation and amortization 26,400 22,500
Other expense (income) (38,000) (6,500)
Minority interest (700) 5,600
----------- -----------
460,600 678,500
----------- -----------
NET INCOME (LOSS) $ 55,000 $ (29,000)
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE $ 0.01 * $ (0.01)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,067,687 4,370,000
=========== ===========
* Less than $.01 per share.
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SATELLITE INFORMATION SYSTEMS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months
Ended December 31,
--------------------------
1996 1995
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 55,000 $ (29,000)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 114,500 87,500
Settlement of Judgment (26,700) ---
Sales Allowance 6,600
Equipment for Services 27,100 ---
Other Income (6,500)
Minority interest 600 5,600
Changes in operating assets and liabilities:
Receivables (92,800) 26,100
Inventories (84,700) ---
Prepaid expenses and other (8,200) 21,300
Accounts payable (118,500) 38,800
Accrued liabilities and other (106,200) (48,000)
Unearned revenue 28,800 29,000
----------- -----------
Net cash provided by operating activities (211,100) 131,400
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (66,000) (58,300)
Capitalized software development costs (90,500) (114,100)
----------- -----------
Net cash (used in) provided by
investing activities (156,500) (172,400)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock 1,000,000 -
----------- -----------
Net cash provided by financing activities 1,000,000 -
Net increase (decrease) in cash 632,400 (41,000)
----------- -----------
CASH AND CASH EQUIVALENTS,
at beginning of period 89,000 58,900
----------- -----------
CASH AND CASH EQUIVALENTS,
at end of period $ 721,400 $ 17,900
=========== ===========
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
SATELLITE INFORMATION SYSTEMS COMPANY
NOTES TO FINANCIAL STATEMENTS
(Information for the Period Subsequent to June 30, 1996 is Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES:
-----------------------------------------
General -
-------
Satellite Information Systems Company (SISCOM) was incorporated in the
State of Colorado on September 29, 1982. SISCOM currently operates as a
software development company that provides computer based products and
services to the electronic media and sports industry. On February 8,
1995, in the State of Colorado, Satellite Information Systems Company
formed a new subsidiary, without predecessor operations, called Event
Marketing Systems International, Inc. ( EMSI, Inc. ). SISCOM holds 80%
of the outstanding stock of this new venture, with four other
individuals including, Michael J. Ellis, President of SISCOM, holding
5% each. EMSI, Inc. markets and supports software solutions to the
sports industry. The consolidated financial statements include the
accounts of SISCOM and its 80% owned subsidiary EMSI, Inc. All
significant intercompany accounts and transactions have been eliminated
in consolidation.
Unaudited Information -
---------------------
The balance sheet as of December 31, 1996 and the statements of
operations for the three and six months ended December 31, 1996 and
1995 were taken from the Company's books and records without audit.
However, in the opinion of management, such information includes all
adjustments (consisting only of normal recurring accruals) which are
necessary to properly reflect the financial position of the Company as
of December 31, 1996 and the results of operations for the three and
six months ended December 31, 1996 and 1995. The results of operations
for the period ended December 31, 1996 will not necessarily be
indicative of the operating results for the full year.
Unearned Revenue -
----------------
Unearned revenue primarily consists of the deferred balance of payments
received on maintenance contracts. These amounts are amortized into
revenue on a monthly basis over the life of the contract.
Reclassification -
----------------
Certain reclassifications have been made to 1995 balances to conform to
1996 presentations. Such reclassifications had no effect on net income
or loss.
Incorporation by Reference -
--------------------------
The Company has elected to incorporate by reference the financial
statement disclosures as included in its previously filed Form10-KSB.
Reference should be made in reviewing this 10-QSB to the disclosures
contained in the Form 10-KSB for the fiscal year ended June 30, 1996.
Certain disclosures related to the current period financial information
are included below.
2. STOCKHOLDERS' EQUITY:
--------------------
Preferred Stock -
---------------
On September 12, 1996 the Company finalized an agreement to sell
4,000,000 shares of newly issued convertible preferred stock
("Series A") to an investor for $1,000,000. These shares carry a 7%
non-cumulative dividend and are convertible into the Company s common
stock on a for-one basis commencing the earlier of one year from the
date of issuance or the effective date of a registration statement
registering for sale of the shares of common stock issuable upon
conversion of the Series A preferred and ending three years from the
date of issuance. No dividends will be paid on the existing common
stock, no distributions will be made on the common stock, and no
shares of common stock will be redeemed, retired, or otherwise acquired
for valuable consideration until all declared dividends on the Series A
have been paid or the Company has set aside a sufficient amount to pay
them. The holders of the Series A will have voting rights that are
identical to the voting rights of holders of common stock. As part of
the sale of these shares, the purchaser has the right to appoint two
representatives to the Company's Board of Directors.
3. OTHER INCOME:
------------
At June 30, 1996 the company had included in accounts payable a
liability to a vendor which the Company was obligated to pay pursuant
to an order of judgment by default entered in 1993. During the quarter
the company successfully negotiated a settlement on the remaining
balance for a lump sum payment resulting in other income of $26,700.
4. SUBSEQUENT EVENTS:
-----------------
On January 13, 1997, at the annual meeting of shareholders, an
amendment to the Company's articles of incorporation was approved and
adopted to formally change the Company's name to SISCOM, Inc.
Additionally, two nominees of the purchaser of the Preferred Series A
Stock (see Note 2, Stockholder's Equity, above) were elected to the
Company's Board of Directors.
<PAGE>
PART I.
--------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- - --------------------------------------------------------------------
The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto appearing elsewhere in this report.
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE
THREE MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
During the quarter ended December 31, 1996, SISCOM generated revenue of
$298,400 with resulting net income of $32,500 as compared to revenue of
$349,600 and net income of $22,600 during the same quarter of fiscal 1995.
Revenue
- - -------
The following table outlines the Company s revenue mix for the quarters ended
December 31, 1996 and 1995 respectively.
<TABLE>
<CAPTION>
Quarter Ended December 31,
---------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C> <C> <C>
Product Sales
Software sales $ 115,000 39% $ 133,400 38%
Hardware sales 75,800 25 110,600 32
Software Services 107,600 36 105,600 30
--------- ----- --------- -----
Total Revenue $ 298,400 100% $ 349,600 100%
========= ===== ========= =====
</TABLE>
Product Sales include the sale of proprietary software and computer
hardware to the broadcast and cable media markets and the sports industry.
The Company's principal product offerings include NewsPro(-Registered
Mark-), an electronic newsroom management system, and CDSS, a statistical
analysis system for professional basketball. In addition to CDSS, Video
Logging and Retrieval, NonLinear Video Editing, and MPEG Video are
available for professional sports industry.
Software revenue for the quarter ended December 31, 1996 decreased $18,400
when compared with the quarter ended December 31, 1995. As with the first
quarter, this decrease is a result of the discontinuation of Stadium Click
Effects software sales. However, the decrease was mitigated somewhat by the
sales of Logging(-TM-) and Basketball Retrieval software to the NBA.
SISCOM s hardware sales decreased from $110,600 during the quarter ended
December 31, 1995 to $75,800 for the quarter ended December 31, 1996. The
quarter ended December 31, 1995 hardware revenue included amounts earned
from sales of Stadium Click Effects products through it s subsidiary EMSI.
The company has curtailed sales along these line since last spring when
it s re-sale agreement for Stadium Click Effects between EMSI and a third
party software developer was terminated. The company continues to direct
its resources toward developing and selling higher margin video related
software products to its customers.
The Company continues to focus on providing quality software and services.
Gross margin on hardware has traditionally been significantly less than the
gross margin on software and services. Management believes that future
hardware provider relationships and sales will offer the Company both access
to leading technology and leverage to expand the sale of the Company s
software products and services.
Management believes that SISCOM has consciously served a niche market of
specialized customers. Historically, the Company has had to rely on revenues
from a few substantial installations to large customers such as the NBA. This
reliance has resulted from the Company s limited working capital rather than
any limitations in the scope of the potential markets and customers for the
Company s products. However, with the addition of a sales executive in
December of 1996, there is increased focus on strategic marketing and
planning. As the Company continues to identify, develop and market new
solutions for existing and new opportunities, management believes that the
Company's dependence on revenues from a few large customers will continue to
decrease.
The absolute dollar amount of maintenance revenue remained relatively
consistent in comparison with the same quarter of the prior year. However,
at 36% of total revenue for the quarter, NewsPro(-Registered Mark-)
maintenance revenue still remains an important component of software services.
Costs and Expenses
- - ------------------
The following table outlines the cost of sales components for the second
quarter of fiscal 1996 and 1995.
<TABLE>
<CAPTION>
Quarters Ended December 31,
---------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C> <C> <C>
Hardware cost of sales $ 50,700 36% $ 70,600 35%
Direct labor and materials 36,300 26 46,800 24
Software Royalties - - 40,800 21
Other 53,300 38 40,700 20
--------- ----- --------- -----
Total Cost of Sales $140,300 100% $198,900 100%
======== ===== ========= =====
</TABLE>
Cost of sales and services includes components for hardware sales, direct
labor and materials used in the manufacture of software, royalties due to
the developer of third party software products under a distributor
agreement, and other expenses incurred in the generation of revenue.
Additionally, the Company has reclassified, as cost of sales, the
amortization expense of capitalized software creation costs. This
reclassification is consistent with the period reported in the Company's
annual report on Form 10-KSB for the fiscal year ended June 30, 1996.
For the quarter ended December 31, 1996, cost of sales and services was 47%
of total revenue compared with 57% for the same period in the prior year.
Gross margins were 53% in the first quarter of fiscal 1996 and 43% in the same
quarter of the prior fiscal year.
The cost of direct labor and materials includes employee hours spent contract
programming and installing, training, and supporting the Company s products,
as well as any materials and supplies directly used in the process. The total
cost of direct labor decreased approximately $10,500 or 22% between the
quarters ended December 31, 1995 and December 31, 1996. The decrease in
direct labor between the quarters was primarily due to the loss of one
employee dedicated to programming.
The software royalties component of cost of sales relates to the February 1995
distributor agreement between a third party developer and EMSI, Inc. for the
sale of Stadium Click Effects software. Under the terms of this agreement
EMSI, Inc., acting as the exclusive authorized distributor of Stadium Click
Effects, sublicenses the product directly to the customer and pays the
developer between 45% and 75% of the net licensing fee depending on the
specifics of each customer transaction. Therefore, as previously noted, the
termination of this third party agreement resulted in the lack of expenditure
for software royalties in the second quarter of the current fiscal year, as
compared to an expenditure of $40,800 during the same quarter the previous
year.
Operating general and administrative expenses for the quarter ended December
31, 1996 increased by $2,100 from the same quarter in 1995. The decrease
experienced by the Company in the first quarter was due to a net decrease in
salaries, payroll tax expense and employee benefits between the quarters.
This decrease in personnel costs was attributable to the loss of two full-
time employees. However, in the current quarter, these personnel costs have
been replaced with the addition of one employee very late in the first
quarter, and another employee in December of the second quarter. Nonetheless,
the net result of these changes was a slight increase in general and
administrative costs between the corresponding periods.
Costs incurred in researching, designing and planning for the development of
new software are charged to operations in the year incurred. Such amounts
approximated $0 and $ 1,100 for the quarter ended December 31, 1996 and 1995,
respectively. The Company continued to emphasize business development during
the quarter ended December 31, 1996 however, the support of existing contracts
and business relationships provided the greatest return on expenditures.
Therefore, no expenditure toward research and design of new software was made
during the second quarter of the current year.
There was a decrease in capitalizable costs of approximately $38,400 between
the quarters ended December 31, 1996 and December 31, 1995. The net decrease
of capitalized assets over the second quarter was the result of the loss of
a full time programmer dedicated to software development. In addition, there
was a temporary refocusing of another key software development employee, to
strategic marketing during the first part of the second quarter. However,
management anticipates a continued emphasis on software development as it
responds to the ongoing requests of existing and new customers across markets.
Generally, the Company amortizes software development costs straight line over
three (3) years.
RESULTS OF OPERATIONS - SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE SIX
MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
During the six months ended December 31, 1996, SISCOM generated revenue of
$515,600 with resulting net income of $55,500 as compared to revenue of
$649,500 and net operating loss of ($29,000) during the same period of fiscal
1995.
Revenue
- - -------
The following table outlines the Company s revenue mix for the six months
ended December 31, 1996 and 1995 respectively.
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended December 31,
---------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C> <C> <C>
Product Sales
Software sales $ 184,600 36% $ 243,400 38%
Hardware sales 112,800 22 189,600 29
Software Services 218,200 42 216,500 33
--------- ----- --------- -----
Total Revenue $ 515,600 100% $ 649,500 100%
========= ===== ========= =====
</TABLE>
For the six months ended December 31, 1996 software revenue decreased
$133,900 in comparison to the six months ended December 31, 1995. This
decrease in software revenue is primarily due to the discontinuation of
sales of Stadium Click Effects in February, 1996. This decrease was
mitigated somewhat by the sales of Logging(-TM-) and Basketball Retrieval
software to the NBA.
SISCOM s hardware sales decreased from $189,600 for the six months ended
December 31, 1995 to $112,800 for the six months ended December 31, 1996.
The six months ended December 31, 1995 hardware revenue included amounts
earned from sales of Stadium Click Effects products through its subsidiary
EMSI. As previously noted, the company has curtailed sales along these
lines since last spring when its re-sale agreement for Stadium Click
Effects between EMSI and a third party software developer was terminated.
Costs and Expenses
- - ------------------
The following table outlines the cost of sales components for the six
months ended December 31, 1996 and December 31, 1995.
<TABLE>
<CAPTION>
Six Months Ended December 31,
---------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C> <C> <C>
Hardware cost of sales $ 80,700 32% $139,600 34%
Direct labor and materials 80,300 32 93,100 23
Software Royalties - - 103,800 25
Other 89,800 36 73,000 18
--------- ----- --------- -----
Total Cost of Sales $250,800 100% $409,500 100%
======== ===== ========= =====
</TABLE>
For the period ended December 31, 1996, cost of sales and services was 49%
of total revenue compared with 63% for the same period in the prior year.
Gross margins were 51% for the six months ended December 31, 1996 and 37%
for the same six month period of the prior fiscal year. This gross margin
increase for the current year is primarily the result of the lack of royalty
expense in the current year.
The cost of direct labor and materials includes employee hours spent contract
programming and installing, training, and supporting the Company s products,
as well as any materials and supplies directly used in the process. The total
cost of direct labor decreased $12,800 or approximately 14% between the
quarter ended December 31, 1995 and December 31, 1996. The decrease in direct
labor between the quarters was primarily due to the loss of one employee
dedicated to programming.
Operating general and administrative expenses were down $25,300 for the six
months ended December 31, 1996 from the same period in the prior year. The
decrease was due to a net decrease in salaries, payroll tax expense and
employee benefits.
Depreciation expense was $26,400 and $22,500 for the six months ended
December 31, 1996 and 1995, respectively, an increase of 17%. This increase
is attributable to increased additions to property and equipment during the
first and second quarters of fiscal 1997.
Costs incurred in researching, designing and planning for the development of
new software are charged to operations in the year incurred. Such amounts
approximated $0 and $13,000 for the six month ended December 31, 1996 and
1995, respectively.
There was a net decrease in capitalizable costs of approximately $24,000
between the six months ended December 31, 1996 and December 31, 1995. The
net decrease of capitalized assets over the period was the result of the loss
of one (1) full time programmer dedicated to software development. However,
management anticipates a continued emphasis on software development as it
responds to the ongoing requests of existing and new customers across markets.
Generally, the Company amortizes software development costs straight line over
three (3) years.
LIQUIDITY AND CAPITAL RESOURCES - DECEMBER 31, 1996 (UNAUDITED) COMPARED TO
JUNE 30, 1996
- - ----------------------------------------------------------------------------
SISCOM's current working capital surplus, which represents current assets
minus current liabilities, increased during the six months ended December 31,
1996 to $607,600 from a deficit at year end of $(400,200). The primary
increase results from the closing on the sale of 4,000,000 shares of preferred
stock for $1,000,000. (See Financial Note No. 2.) Unearned revenue also
increased approximately $30,000 from the same period of the prior fiscal year.
The increase is primarily attributable to the timing of annual renewals and
reserving for unearned income on progress billings. Additionally, the company
generated net income of $32,500 over the first quarter.
During the six months ended December 31, 1996 the Company used approximately
$211,000 in operating activities as compared with $130,000 being provided by
operating activities for the same period in the prior year. Uses of cash
included payment of accounts payable and accrued liabilities, and increases
in inventory and accounts receivable. The Company's uses of cash investing
activities were primarily capital expenditures and capitalization of software
development costs.
Management believes that inflation has not had a material impact on its
results of operations.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Company, nor any of its management in their capacities
as such, is the subject of any pending material legal proceedings.
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
None
<PAGE>
SIGNATURES
In accordance with 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.
SATELLITE INFORMATION SYSTEMS COMPANY
Dated: February 14, 1997 By: /s/ Michael J. Ellis
----------------- -----------------------------------
Michael J. Ellis, President
Dated: February 14, 1997 By: /s/ Dawn Martinez
----------------- -----------------------------------
Dawn Martinez, Principal Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1996 AND JUNE 30, 1996
(UNAUDITED) AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED) AND THE CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE
MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995 (UNAUDITED), AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 721,400
<SECURITIES> 0
<RECEIVABLES> 136,700
<ALLOWANCES> 10,000
<INVENTORY> 106,600
<CURRENT-ASSETS> 959,800
<PP&E> 549,700
<DEPRECIATION> (384,800)
<TOTAL-ASSETS> 1,432,400
<CURRENT-LIABILITIES> 352,200
<BONDS> 0
0
1,000,000
<COMMON> 1,931,400
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,432,400
<SALES> 515,600
<TOTAL-REVENUES> 515,600
<CGS> 250,800
<TOTAL-COSTS> 460,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 55,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 55,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,000
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
