<PAGE>
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 March 31, 1997
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
-------
SISCOM, INC.
-------------------------------------
(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
--------------
SATELLITE INFORMATION SYSTEMS COMPANY
---------------------------------------------------------------
(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. [ 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 May 19, 1997, Registrant had 5,067,687 shares of common stock
outstanding.
Transitional Small Business Disclosure Format (Check One):[ ] Yes [ X ] No
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet at March 31, 1997 (unaudited) and
June 30, 1996 (audited)
Consolidated Statement of Operations for the Three Months and
Nine Months Ended March 31, 1997 (unaudited) and March 31, 1996
(unaudited)
Consolidated Statement of Cash Flows for the Nine Months Ended
March 31, 1997 (unaudited) and March 31, 1996 (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>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The interim unaudited financial statements have been prepared by SISCOM,
Inc. ("SISCOM" or the "Company") and, in the opinion of management, reflect all
material adjustments which are necessary to a fair presentation of the
financial position, results of operations and cash flows for the interim
periods presented. Except as otherwise noted, such adjustments consisted only
of normal recurring items. Certain information and footnote disclosure made in
the Company's last annual report on Form 10-KSB have been condensed or omitted
for the interim statements. These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Form 10-KSB for the year ended December 31, 1996. The results of the interim
periods are not necessarily indicative of results which may be expected for any
other interim period or for the full year.
<PAGE>
<PAGE>
<TABLE>
SISCOM, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
------
<CAPTION>
March 31, June 30,
1997 1996
(unaudited) (audited)
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 339,100 $ 89,000
Receivables:
Trade, less allowance for doubtful
accounts of $10,000 204,000 32,000
Other - 1,900
Inventory 121,400 21,900
Prepaid expenses and other 21,100 3,100
------------ ------------
Total current assets 685,600 147,900
PROPERTY AND EQUIPMENT
Computer equipment 538,600 439,400
Office equipment, furniture and other 117,900 44,300
Less accumulated depreciation (404,000) (358,500)
------------ ------------
Net property and equipment 252,500 125,200
SOFTWARE DEVELOPMENT COSTS
(net of accumulated amortization
of $2,172,900 and $2,032,900) 330,500 297,300
OTHER ASSETS 9,700 3,500
------------ ------------
TOTAL ASSETS $ 1,278,300 $ 573,900
============ ============
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SISCOM, INC.
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
March 31, June 30,
1997 1996
(unaudited) (audited)
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 45,700 $ 174,700
Accrued liabilities and other 52,300 179,900
Unearned revenue 164,900 193,500
------------ ------------
Total current liabilities 262,900 548,100
------------ ------------
MINORITY INTEREST 3,900 4,700
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value;
100,000,000 shares authorized;
4,000,000 shares issued;
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 March 31, 1997 and June 30, 1996 1,931,400 1,931,400
------------ ------------
Accumulated deficit (1,919,900) (1,910,300)
------------ ------------
Total stockholders' equity 1,011,500 21,100
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,278,300 $ 573,900
============ ============
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SISCOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
------------- -------------
<S> <C> <C>
NET REVENUES:
Software and related services $ 234,700 $ 150,800
Hardware 300 17,000
------------ ------------
235,000 167,800
COSTS AND EXPENSES:
Costs of sales 89,600 119,900
Operating, general and administrative 196,800 104,500
Depreciation 18,900 12,300
Other expense (income) (5,600) 23,600
Minority interest (100) (100)
------------ ------------
299,600 260,200
------------ ------------
NET INCOME (LOSS) $ (64,600) $ (92,400)
============ ============
NET INCOME (LOSS) PER COMMON SHARE $(0.01) $(0.02)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,067,687 5,001,750
============ ============
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SISCOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
For the Nine Months
Ended March 31,
1997 1996
------------- -------------
<S> <C> <C>
NET REVENUES:
Software and related services $ 637,500 $ 610,700
Hardware 113,100 206,600
------------ ------------
750,600 817,300
COSTS AND EXPENSES:
Costs of sales 340,400 532,800
Operating, general and administrative 418,900 351,900
Depreciation 45,300 31,400
Other expense (income) (43,600) 17,100
Minority interest (800) 5,500
------------ ------------
760,200 938,700
------------ ------------
NET INCOME (LOSS) $ (9,600) $ (121,400)
============ ============
NET INCOME (LOSS) PER COMMON SHARE $ * $(0.02)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,067,687 4,995,684
============ ============
* Less than $.01 per share.
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SISCOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Nine Months
Ended March 31,
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (9,600) $ (121,400)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 185,400 140,800
Settlement of Judgment (26,700) -
Sales Allowance - 6,600
Equipment for Services 25,900 -
Other Income - (6,500)
Minority interest (800) 5,500
Changes in operating assets and
liabilities:
Receivables (172,000) 94,100
Inventories (99,500) (21,900)
Prepaid expenses and other (22,300) 21,900
Accounts payable (129,000) 29,900
Accrued liabilities and other (127,600) 19,800
Unearned revenue (28,600) (22,800)
------------ ------------
Net cash used (provided) by operating
activities (404,800) 146,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (172,800) (25,900)
Capitalized software development costs (172,300) (174,400)
------------ ------------
Net cash used (provided) by
investing activities (345,100) (200,300)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock 1,000,000 -
Proceeds from issuance of common stock - 5,000
------------ ------------
Net cash provided by financing activities 1,000,000 5,000
Net increase (decrease) in cash 250,100 (49,300)
------------ ------------
CASH AND CASH EQUIVALENTS,
at beginning of period 89,000 58,900
------------ ------------
CASH AND CASH EQUIVALENTS,
at end of period $ 339,100 $ 9,600
============ ============
See accompanying notes to these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
SISCOM, INC.
NOTES TO FINANCIAL STATEMENTS
(Information for the Period Subsequent to June 30, 1996 is Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES:
-----------------------------------------
General -
-------
SISCOM, Inc., f/k/a 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 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 March 31, 1997 and the statements of operations
for the three months and nine months ended March 31, 1997 and 1996 were
taken from the Company's books and records without audit. However, in the
opinion of management, such information includes all adjustments
(consisting primarily of normal accruals) which are necessary to properly
reflect the financial position of the Company as of March 31, 1997 and the
results of operations for the three months and nine months ended March 31,
1997 and 1996. The results of operations for the period ended March 31,
1997 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 1996 balances to conform to
1997 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 Company's 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 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 one-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 acquired the right to
appoint two representatives on the Company's Board of Directors.
Stockholder's Equity -
--------------------
On January 13, 1997, at the annual meeting of shareholder's, an amendment
to the Company's articles of incorporation was approved and adopted to
formally change the Company's name to SISCOM, Inc. Additionally, the
purchaser of the Preferred Series A Stock had its two nominees approved
and elected 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 into in 1993. During the quarter the company
successfully negotiated a settlement on the remaining balance for a lump
sum payment resulting in $26,700 of other income.
<PAGE>
<PAGE>
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 MARCH 31, 1997 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
During the quarter ended March 31, 1997, SISCOM generated revenue of $235,000
with a resulting net loss of $(64,600) as compared to revenue of $167,800 and
net loss of $(92,400) during the same quarter of fiscal 1996.
Revenue
- -------
The following table outlines the Company's revenue mix for the three (3) months
ended March 31, 1997 and 1996 respectively.
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C> <C> <C>
Product Sales
Software sales $ 125,200 53% $ 51,600 31%
Hardware sales 300 1 17,000 10
Software Services 109,500 46 99,200 59
--------- --- --------- ---
Total Revenue $ 235,000 100% $ 167,800 100%
========= === ========= ===
</TABLE>
Product sales include the sale of proprietary software and hardware to the
broadcast, cable and sports industries. 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(-TM-) ("Logging(-TM-)") and Video Retrieval,
NonLinear Video Editing, and MPEG Video are available for the professional
sports industry.
Software revenue for the quarter ended March 31, 1997 increased $73,600 over
the quarter ended March 31, 1996. During the current quarter there have been
continued sales of Logging(-TM-) and Retrieval software to the NBA. The
current quarter software sales have more than compensated for the loss of sales
resulting from the discontinuation of Stadium Click Effects sales; which
occured in the third quarter of fiscal 1996.
SISCOM's hardware sales decreased from $17,000 in the quarter ended March 31,
1996 to $300 for the quarter ended March 31, 1997. The quarter ended March 31,
1996 included some hardware revenue earned from sales of Stadium Click Effects
products through its subsidiary EMSI, which is non-existent in the current
quarter. The company has curtailed sales along this line since last spring
when its re-sale agreement for Stadium Click Effects between EMSI and a third
party software developer was terminated. During the current quarter sales were
primarily related to software sales and software services only.
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. 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 will
continue to decrease.
Maintenance revenue has increased approximately 10% from $99,200 for the
quarter ended March 31, 1996 to $109,500 for the quarter ended March 31, 1997,
which increases are due, primarily, to a few additions of sports related
software support and some small inflationary increases. Nonetheless, NewsPro(-
Registered Mark-) maintenance revenue still remains the primary component of
software services.
Costs and Expenses
The following table outlines the cost of sales components for the three (3)
months ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C> <C> <C>
Hardware cost of sales $ 200 -% $ 10,200 8%
Direct labor and materials 31,500 35 39,400 33
Software Royalties - - 23,700 20
Other 57,900 65 46,600 39
-------- --- -------- ---
Total Cost of Sales $ 89,600 100% $ 119,900 100%
======== === ======== ===
</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 three months ended March 31, 1997, cost of sales and services was 38%
of total revenue compared with 71% for the same period in 1996. Gross margins
were 62% for the third quarter of fiscal 1997 and 29% for 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 $7,900 between the quarter ended
March 31, 1996 and March 31, 1997. The decrease in direct labor between the
quarters was primarily due to the prior year loss of one employee dedicated to
programming and one employee dedicated to NewsPro(-Registered Mark-) software
support. However, both employees were replaced approximately mid-way through
the current quarter.
The software royalties component of cost of sales items from that certain
distributor agreement executed in February, 1995, between a third party
developer and EMSI, Inc., which agreement relates to 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 a lack of expenditures for software royalties in the third quarter
of the current fiscal year, as compared with $23,700 for the same quarter of
the previous year.
Other expense consists primarily of amortization of capitalized software costs.
The treatment of this expense as a cost of sales represents a reclassification
of the 1996 balances to conform to the 1997 presentation. The 1997
presentation is consistent with the treatment of these costs in the Company's
1996 fiscal year end audit. As the Company continues to emphasize software
development management expects a corresponding increase in capitalized software
creation costs and the related amortization of those costs.
Operating general and administrative expenses for the three months ended March
31, 1997 increased by $92,500 from $104,500 to $196,800. This increase
experienced by the Company was primarily the result of newly hired personnel
and the related taxes and benefits. These individuals were hired to support
increased operations as part of the exploration of a proposed new business
relationship. Investigation of this proposed opportunity required increased
technical knowledge and support. However, prior to the end of the third
quarter, the Company determined that the proposed opportunity did not sit with
the Company's existing business plan and therefore elected not to move forward.
The company has subsequently downsized personnel.
There was an increase in additions to capitalized software costs of $22,800,
from $59,800 for the three months ended March 31, 1996 to $82,600 for the same
quarter in 1997.
RESULTS OF OPERATIONS -NINE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE NINE
MONTHS ENDED MARCH 31, 1996.(UNAUDITED)
During the nine months ended March 31, 1997, SISCOM generated revenue of
$750,600 with a resulting net loss of $(9,600) as compared to revenue of
$817,300 and a net operating loss of ($121,400) for the same period of fiscal
1996.
Revenue
The following table outlines the Company's revenue mix for the nine months
ended March 31, 1997 and 1996 respectively.
<TABLE>
<CAPTION>
Nine Months Ended March 31,
---------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C> <C> <C>
roduct Sales
Software sales $ 309,800 41% $ 295,000 36%
Hardware sales 113,100 15 206,600 25
Software Services 327,700 44 315,700 39
-------- --- -------- ---
Total Revenue $ 750,600 100% $ 817,300 100%
======== === ======== ===
</TABLE>
For the nine months ended March 31, 1997 software revenue increased $14,800
over the nine months ended March 31, 1996. This slight increase in software
revenue is primarily due to continued sales to the sports industry of CDSS
software, and Logging(-TM-) and Retrieval software to the NBA. Current
software sales have now offset the previous losses noted from the termination
of the Stadium Click Effects agreements in February, 1996.
SISCOM's hardware sales decreased $93,500 from $206,600, for the nine (9)
months ended March 31, 1996, to $113,100 for the nine months ended March 31,
1997. However, it should be noted that hardware sales for the nine months
ended March 31, 1996 included hardware revenue amounts earned from sales of
Stadium Click Effects products through the Company's subsidiary EMSI. As
noted, the Company has curtailed sales along this line as a result of the
termination of the re-sale agreement for Stadium Click Effects between EMSI and
a third party software developer. In addition, there were relatively no
hardware sales during the third quarter of the current fiscal year.
COSTS AND EXPENSES
The following table outlines the cost of sales components for the nine months
ended March 31, 1997 and March 31, 1996.
<TABLE>
<CAPTION>
Nine Months Ended March 31,
---------------------------------------
1997 1996
---------------- ----------------
<S> <C> <C> <C> <C>
Hardware cost of sales $ 80,900 24% $ 149,800 28%
Direct labor and materials 111,800 33 132,500 25
Software Royalties - - 127,500 24
Other 147,700 43 123,000 23
-------- --- -------- ---
Total Cost of Sales $ 340,400 100% $ 532,800 100%
======== === ======== ===
</TABLE>
For the nine (9) months ended March 31, 1997, cost of sales and services was
45% of total revenue compared with 65% for the same period in 1996.
Accordingly, gross margins were 55% for the nine months ended March 31, 1997
and 35% for the same nine month period of the prior fiscal year. The gross
margin increase for the current year is primarily the result of a lack of
royalty expense in the current year, and lack of hardware cost of sales in the
third quarter.
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 $20,700 or approximately 16% between the nine
(9) months ended March 31, 1997 and 1996. The decrease primarily results from
the loss of two employees, one dedicated to programming and one to NewsPro(-
Registered Mark-) support. As previously noted, both employees were replaced
mid-way through the current quarter.
The software royalties component of cost of sales relates to the February 1995
distributor agreement between a third party developer and EMSI, Inc., which
agreement relates to 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. As previously noted,
the termination of this third party agreement has resulted in the lack of
expenditure for software royalties in the current fiscal year as compared to
$127,500 for the nine month period of the previous year.
Other expense consists primarily of amortization of capitalized software costs.
The treatment of this expense as a cost of sales represents a reclassification
of the 1996 balances to conform to the 1997 presentation. The 1997
presentation is consistent with the treatment of these costs in the Company's
1996 fiscal year end audit.
Operating general and administrative expenses were up $67,000 for the nine
months ended March 31, 1997 over the same period in the prior year. As
discussed above, this increase was primarily the result of increased personnel
costs relating to the investigation of a new business opportunity which
incurred and were terminated in the third quarter.
Depreciation expense was $45,300 and $31,400 for the nine months ended March
31, 1997 and 1996, respectively. This increase between the periods is
attributable to sizeable additions in the first and second quarters of the
current fiscal year to property and equipment.
There was a slight decrease in capitalizable costs of approximately $2,100
between the nine months ended March 31, 1996 and March 31, 1997. The net
decrease of capitalized assets over the quarters was the result of the loss of
a full time programmer dedicated to software development in the prior year.
However, as previously mentioned, this programmer was replaced half way through
the current quarter. Therefore, the decrease noted is minimal, and decreases
in capitalized software costs are not likely to continue beyond the current
quarter. Management places continued emphasis on software development as it
responds to the ongoing requests of existing and new customers across markets.
The Company amortizes software development costs straight line over three (3)
years.
Liquidity and Capital Resources - March 31, 1997 (unaudited) Compared to June
30, 1996
SISCOM's current working capital surplus, which represents current assets minus
current liabilities, increased during the nine months ended March 31, 1997 to
$422,700 from a deficit at year end of $(400,200). The increase is primarily
the result of closing on the sale of 4,000,000 shares of preferred stock for
$1,000,000. (see financial note 2) Trade receivables also increased
approximately $170,000 from the end of the prior fiscal year. Additionally,
the company generated net income of $55,000 during the first two quarters of
fiscal 1997.
During the nine months ended March 31, 1997 the Company used approximately
$400,000 in operating activities as compared with $146,000 being provided by
operating activities for the same period in the prior year. Uses of cash flows
include payment of accounts payable and accrued liabilities, and increases in
both inventory and accounts receivable. The Company's primary uses of cash
were in investing activities. Specifically, capital expenditures and
capitalization of software development costs totaled $345,100 for the nine
months ended March 31, 1997 as compared to $200,300 in the prior year.
Management believes that inflation has not had a material impact on its results
of operations.
<PAGE>
<PAGE>
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
On January 13, 1997, the Company held its Annual Meeting of
Shareholders (the "Meeting"). At the Meeting the following matters were voted
upon and approved:
1) The following persons were elected to serve as Directors of the
Company until the next regular Annual Meeting of Shareholders and until their
successors have been duly elected and qualified:
Director Votes For Votes Withheld
-------- --------- --------------
Michael J. Ellis 3,315,891 25,615
Robert D. S. Turner 3,335,911 5,515
Mark S. Boledovich 3,337,991 3,515
Marim C. W. Webb 3,337,991 3,515
John R. Hart 3,337,991 3,515
2) The Company increased the number of shares which may be issued
pursuant to the exercise of options granted under the Company's 1994 Stock
Incentive Plan by an additional 500,000 shares.
For 1,970,040 Against 41,365 Abstain 12,024
--------- ------ ------
3) The Company approved and adopted an amendment to the Company's
Articles of Incorporation changing its name to "SISCOM, Inc."
For 3,308,566 Against 25,110 Abstain 7,830
--------- ------ -----
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
<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.
SISCOM, INC.
Dated: May 20, 1997 By: /s/ Michael J. Ellis
----------------- -----------------------------------
Michael J. Ellis, President
Dated: May 20, 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 AND STATEMENT OF OPERATIONS FOUND ON PAGES 4 THROUGH
6 OF THE COMPANY'S FORM 10-QSB FOR THE NINE MONTHS ENDED MARCH 31, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1997
<CASH> 339,100
<SECURITIES> 0
<RECEIVABLES> 214,000
<ALLOWANCES> 10,000
<INVENTORY> 121,400
<CURRENT-ASSETS> 685,600
<PP&E> 656,500
<DEPRECIATION> 404,000
<TOTAL-ASSETS> 1,278,300
<CURRENT-LIABILITIES> 262,900
<BONDS> 0
1,000,000
0
<COMMON> 1,931,400
<OTHER-SE> (1,919,900)
<TOTAL-LIABILITY-AND-EQUITY> 1,278,300
<SALES> 750,600
<TOTAL-REVENUES> 750,600
<CGS> 340,400
<TOTAL-COSTS> 760,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,600)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
