<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
For the Quarterly Period Ended July 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to
--------- ---------
Commission file number 2-86360
-----------
INFORMEDICS, INC.
(Exact name of small business issuer
as specified in its charter)
Oregon 93-0750571
(State of incorporation) (I.R.S. Employer
Identification No.)
4000 Kruse Way Place
Bldg. 3, Suite 210
Lake Oswego, Oregon 97035
(Address of principal executive offices)
(503) 697-3000
(Issuer's telephone number)
Check whether the issuer (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 issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes /X/ No / /
Number of shares of Informedics, Inc. $.01 par value common stock
outstanding as of August 31, 1995: 2,642,207
-----------<PAGE>
INFORMEDICS, INC.
FORM 10-QSB
JULY 31, 1995
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations ........................... 4
Balance Sheets ..................................... 5
Statements of Cash Flows ........................... 7
Note to Financial Statements ....................... 8
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of Operations ... 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................... 14
SIGNATURES ................................................. 15
EXHIBIT INDEX .............................................. 16
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INFORMEDICS, INC.
PART I - FINANCIAL INFORMATION
The information included herein is unaudited. However, such
information reflects all adjustments (consisting solely of
normal, recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results of
operations for the interim periods. The interim financial
information and notes thereto should be read in conjunction with
the Company's latest annual report on Form 10-KSB. The results
of operations for the nine months ended July 31, 1995 are not
necessarily indicative of results to be expected for the entire
year.
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<PAGE>
INFORMEDICS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
------------------------------------------------
1995 1994 1995 1994
-----------------------------------------
<S> <C> <C> <C> <C>
REVENUE:
Product Sales $ 385,782$ 618,005$1,583,547$1,852,514
Customer Service and Support 837,256 753,499 2,453,021 2,158,232
----------------------------------------
Total Revenue 1,223,038 1,371,504 4,036,568 4,010,746
----------------------------------------
COSTS AND EXPENSES:
Cost of Products Sold 247,464 251,060 650,000 614,603
Cost of Customer Service and Support 717,372 438,290 1,962,392 1,392,444
Selling & Administrative Expenses 513,124 397,844 1,517,771 1,399,382
Depreciation & Amortization 333,494 159,075 1,481,012 480,159
----------------------------------------
Total Costs and Expenses 1,811,454 1,246,269 5,611,175 3,886,588
----------------------------------------
Operating Income (Loss) (588,416) 125,235(1,574,607) 124,158
----------------------------------------
OTHER INCOME (EXPENSE):
Interest Expense (427) -- (901) --
Interest Income 13,678 4,075 39,345 8,066
Other Income (Expense) (10,098) 777 (8,692) 10,003
----------------------------------------
Total Other Income 3,153 4,852 29,752 18,069
----------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (585,263) 130,087(1,544,855) 142,227
INCOME TAX PROVISION (BENEFIT) (228,186) 55,959 (614,230) 61,643
----------------------------------------
NET INCOME (LOSS) $ (357,077)$ 74,128$ (930,625)$ 80,584
========================================
Weighted Average Number of Common
Shares Outstanding and Common Stock
Equivalents Outstanding 2,785,786 2,645,149 2,822,303 2,636,500
========================================
EARNINGS (LOSS) PER SHARE $ (0.13)$ 0.03$ (0.33)$ 0.03
========================================
</TABLE>
See Note to Financial Statements.
-4-
<PAGE>
INFORMEDICS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, October 31,
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash $1,027,112 $1,055,378
Accounts Receivable, less allowance
for doubtful accounts of $75,221 in
1995 and $66,000 in 1994 851,837 1,127,173
Inventories 39,958 25,707
Prepaid Expenses and Other Current Assets 117,687 96,102
Income Taxes Receivable 86,651 60,577
Deferred Income Taxes 262,302 303,113
---------- ----------
Total Current Assets 2,385,547 2,668,050
---------- ----------
FIXED ASSETS:
Furniture and Fixtures 128,086 103,818
Machinery and Equipment 642,697 580,807
Automobiles 29,138 29,138
Leasehold Improvements 19,490 32,735
Other Fixed Assets 116,209 109,538
---------- ----------
935,620 856,036
Less accumulated depreciation and amortization 604,339 565,506
---------- ----------
Total Fixed Assets 331,281 290,530
---------- ----------
OTHER ASSETS:
Software Development Costs,
less accumulated amortization of $3,097,678 in
1995 and $2,014,711 in 1994 547,318 1,386,856
Purchased Software,
less accumulated amortization of $514,695 in 1995
and $320,675 in 1994 -- 194,020
Covenants Not to Compete,
less accumulated amortization of $390,958 in 1995
and $333,085 in 1994 103,087 160,960
Deferred Income Taxes 95,192 --
Other 21,756 53,570
---------- ----------
Total Other Assets 767,353 1,795,406
---------- ----------
TOTAL ASSETS $3,484,181 $4,753,986
========== ==========
</TABLE>
See Note to Financial Statements.
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<PAGE>
INFORMEDICS, INC.
BALANCE SHEETS
<TABLE>
<CATION>
July 31, October 31,
1995 1994
-------------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses:
Trade Accounts $ 170,445 $ 169,023
Customer Deposits 51,035 27,933
Accrued Wages, Payroll Taxes and Employee
Benefits 192,691 141,702
Other Accrued Liabilities 9,534 8,023
Income Taxes Payable -- 64,693
Deferred Revenue 1,271,542 1,200,980
Current Portion of Long-Term Obligations 13,033 7,420
---------- ----------
Total Current Liabilities 1,708,280 1,619,774
LONG-TERM OBLIGATIONS:
Deferred Rent 46,702 --
Deferred Income Taxes -- 490,166
---------- ----------
Total Current Liabilities and
Long-Term Obligations 1,754,982 2,109,940
---------- ----------
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value:
authorized 10,000,000 shares;
shares outstanding: 2,641,552 in 1995 and
2,626,519 in 1994 26,415 26,265
Capital in Excess of Par Value 1,901,745 1,886,117
Note Receivable from Stockholder (22,000) (22,000)
Retained Earnings (Accumulated Deficit) (176,961) 753,664
---------- ----------
Total Stockholders' Equity 1,729,199 2,644,046
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$3,484,181 $4,753,986
========== ==========
</TABLE>
See Note to Financial Statements.
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<PAGE>
INFORMEDICS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended July 31,
---------------------------------
1995 1994
---------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (930,625) $ 80,584
ADJUSTMENTS TO RECONCILE NET
INCOME (LOSS) TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and Amortization 1,481,012 480,159
Provision for Losses on Accounts Receivable 9,221 9,330
Deferred Income Taxes (544,547) (46,501)
Changes in Assets and Liabilities:
Accounts Receivable 266,115 132,956
Income Taxes Receivable (26,074) 124,856
Inventories (14,251) 22,719
Prepaid Expenses and Other Current Assets (21,585) (70,903)
Accounts Payable and Accrued Expenses 77,024 (172,905)
Income Taxes Payable (64,693) 105,408
Deferred Revenue 70,562 103,699
Deferred Rent 52,315 (23,187)
---------- ----------
Net Cash Provided by Operating Activities 354,474 746,215
---------- ----------
INVESTING ACTIVITIES:
Property Additions (186,903) (88,971)
Capitalized Software Development Costs (243,429) (244,731)
Other 31,814 (268)
---------- ----------
Net Cash Used for Investing Activities (398,518) (333,970)
---------- ----------
FINANCING ACTIVITIES:
Proceeds From Issuance of Common Stock 15,778 --
---------- ----------
NET INCREASE (DECREASE) IN CASH (28,266) 412,245
CASH AT BEGINNING OF PERIOD 1,055,378 444,603
---------- ----------
CASH AT END OF PERIOD $1,027,112 $ 856,848
========== ==========
Supplemental Disclosures of Cash Flow
Information
Cash Paid For:
Interest $ 901 $ --
Income Taxes 87,500 --
</TABLE>
See Note to Financial Statements.
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<PAGE>
INFORMEDICS, INC.
NOTE TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Industry Segment
----------------
The Company derives its revenue solely from the sales and
servicing of microcomputer software and related hardware to
the medical industry.
Inventories
-----------
Inventories are stated at the lower of cost or market.
Specific identification is used to determine the costs of
hardware and software inventory.
Fixed Assets
------------
Fixed assets are stated at cost, less accumulated
depreciation and amortization. The costs of fixed assets
are depreciated over the estimated useful lives (two to five
years) of the assets using the straight-line method.
Leasehold improvements are amortized over the term of the
lease (five years).
Customer Service and Support Revenue
------------------------------------
Customer service and support revenue represents revenue
earned from hardware and software maintenance contracts,
training, installation of new systems, and general software
support services and programming services provided to
customers. Under renewable maintenance contracts, the
Company provides, for a term of generally not more than one
year, essentially all maintenance and repairs resulting from
the normal and intended use of its products. Deferred
revenue on maintenance contracts is amortized by the
straight-line method over the life of the contracts.
Revenue Recognition
-------------------
Revenue from sales of software and hardware is generally
recorded when the product is shipped. Revenue from custom
software products, which are marketed to customers primarily
under perpetual license arrangements, is recorded at the
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<PAGE>
time the product is installed and accepted by the customer.
Revenue from services other than maintenance contracts is
recognized as performed.
Income Taxes
------------
Effective November 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." There was no cumulative effect on operations
as a result of the adoption of this standard.
Software Development Costs
--------------------------
Certain software development costs are being capitalized and
amortized over the estimated economic life of the software
on a straight-line method, commencing when each product or
enhancement is available for general release. Amortization
using the straight-line method for the nine-month periods
ended July 31, 1995 and 1994 was $776,270 and $236,965,
respectively.
In the second quarter of 1995, the Company reduced the
estimated economic life of certain software products to
coincide with the period remaining before the next major
release of each such software product. This shortening
of the estimated economic life of the software products
increased the amortization expense by $198,871 and
reduced net income by $121,334 or $0.04 per share in
third quarter 1995.
Purchased Software
------------------
Purchased software is stated at cost and was amortized on
the straight-line method over its estimated useful life.
Amortization for the nine-month periods ended July 31, 1995
and 1994 was $194,020 and $49,891, respectively.
Covenants Not to Compete
------------------------
Covenants not to compete are stated at the estimated value
of the consideration given for the covenants (including the
present value of any future payments to be made under each
agreement), less accumulated amortization. The costs of the
covenants are being amortized over four or seven years,
using the straight-line method. Amortization for each of
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<PAGE>
the nine-month periods ended July 31, 1995 and 1994 was
$57,873.
Earnings (Loss) Per Share
-------------------------
Primary and fully diluted earnings (loss) per share are
computed on the basis of the weighted average number of
shares outstanding plus common stock equivalents which would
arise from the exercise of outstanding stock options and
warrants.
Statements of Cash Flows
------------------------
For the purposes of the Statements of Cash Flows, the
Company considers cash on hand, deposits in bank and highly
liquid debt instruments purchased with original maturity
dates of three months or less, as cash.
Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform
to the current year presentation. These reclassifications
have no effect on net income.
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<PAGE>
INFORMEDICS, INC.
-----------------
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
HIGHLIGHTS
In second quarter 1995, the Company reduced the carrying value of
certain software products and shortened the estimated economic
life of other software products. As a result, depreciation and
amortization expense for the first nine months of 1995 was
$1,481,012 compared to $480,159 for the first nine months of
1994. The effect of shortening the estimated economic lives
increased amortization expense by $198,871 during third quarter
1995.
During the third quarter and the first nine months of 1995, the
Company expanded its activities in the development of new
software and the maintenance of existing software. As a result,
the Company incurred software development costs of $346,726 and
$878,956 for the third quarter of 1995 and the first nine months
of 1995, respectively, compared to $137,619 and $460,833 for the
same periods in 1994. Of the total costs incurred, the Company
capitalized $85,341 and $243,429 for the third quarter 1995 and
the first nine months of 1995, respectively, compared to $50,441
and $244,730 for the same periods in 1994.
Lower than expected product sales, increased investment in the
development and maintenance of software and higher amortization
expense resulted in a net loss of $357,077 or $0.13 per share and
$930,625 or $0.33 per share for third quarter and the first nine
months of 1995, respectively, compared to a net income of $74,128
or $0.03 per share and $80,584 or $0.03 per share for third
quarter and the first nine months of 1994, respectively.
RESULTS OF OPERATIONS - MATERIAL CHANGES
The decrease in product sales of $232,223 or 38% for third
quarter 1995, as compared to third quarter 1994, resulted from a
decrease in both laboratory and physician office product sales,
as fewer systems were sold. Despite an increase in LifeLine
sales of $50,048 or 6%, product sales for the first nine months
of 1995 decreased by $268,967 or 15% when compared to the first
nine months of 1994. Laboratory products continued to account
for a majority (57%) of product sales in the third quarter of
1995.
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<PAGE>
The increases of $83,757 or 11% and $294,789 or 14% in customer
service and support revenue for third quarter 1995 and the first
nine months of 1995, respectively, when compared to the same
periods in 1994, resulted from an increase in support prices and
the size of the customer base. Management anticipates that
customer service and support revenue will continue to increase as
more laboratory and physician office product systems are sold.
A decrease in third quarter 1995 hardware sales, primarily
relating to the physician office products, resulted in a decrease
in the cost of products sold. Although hardware sales for the
first nine months of 1995 decreased by $20,804 when compared to
the first nine months of 1994, a decline in the gross margin
realized on hardware sales resulted in an increase of $35,397 or
6% in the cost of products sold. As a percentage of hardware
sales, cost of products sold increased from 83% for the first
nine months of 1994 to 90% for the first nine months of 1995.
Cost of customer service and support increased by $279,082 or 64%
and $569,948 or 41% for the third quarter and the first nine
months of 1995, respectively, when compared to the same periods
in 1994. The increase resulted from increases in contract labor
costs, wages and software development costs that were expensed
rather than capitalized. The increase in contract labor costs
resulted from increased software activity by contract
programmers. The increase in wages resulted from a salary
increase implemented in December 1994 and an increase in the size
of the customer service and software development staff. The
increase in the amount of software development costs that were
expensed primarily relates to development of new software
products and the maintenance of existing software products.
Management anticipates that the cost of customer service and
support for the remainder of 1995 will be greater than 1994
amounts based upon the Company's increased commitment to develop
new software products and the increased costs of supporting a
growing customer base.
The increase in selling and administrative expenses of $115,280
or 29% for third quarter 1995 resulted from an increase in wages
and an increase in rent expense. The increase in wages resulted
from the salary increase implemented in December 1994 and the
hiring of additional sales staff. The increase in rent expense
resulted from the expansion of the Company's office space in
November 1994. Management anticipates that selling and
administrative expenses for the remainder of 1995 will be greater
than 1994 amounts based upon the Company's continued commitment
to market its products.
Depreciation and amortization increased by $174,419 for third
quarter 1995, when compared to third quarter 1994, as a result of
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<PAGE>
the reduction in economic lives of capitalized software
development costs, as stated earlier. For the first nine months
of 1995, depreciation and amortization increased by $1,000,853,
when compared to 1994 amounts, as a result of the reduction in
economic lives and the write-down of capitalized and purchased
software costs, as stated earlier. Management expects
depreciation and amortization to be greater in the fourth quarter
of 1995, when compared to 1994, due to the accelerated
amortization of capitalized software costs resulting from the
reduction in the economic lives of the Company's software
products.
Liquidity - Capital Resources
-----------------------------
The Company's financial condition remains strong. The Company's
cash position and working capital on July 31, 1995 were
$1,027,112 and $677,267, respectively. The Company is virtually
debt free. The single largest liability on July 31, 1995 was the
deferred revenue liability of $1,271,542, which is a liability
for future services. The current ratio on July 31, 1995 was 1.4
to 1.0.
Net cash provided by operations during the first nine months of
1995 ($354,474) and the Company's cash position on October 31,
1994 ($1,055,378) was more than sufficient to cover the net cash
used to acquire additional assets and fund the development of the
Company's software in the first nine months of 1995.
Capital expenditures for property additions were $186,903 and
$88,971 for the first nine months of 1995 and 1994, respectively.
Capitalized software development costs amounted to $243,429 and
$244,731 for the first nine months of 1995 and 1994,
respectively. Management expects that expenditures for property
additions and capitalized software development costs will be
somewhat higher for the remainder of 1995 when compared to 1994
levels. All such expenditures are expected to be funded through
cash provided by operations and from the Company's current cash
position.
The Company has a $700,000 uncommitted revolving line of credit
with the Company's bank. All of the assets of the Company are
pledged as security for the line of credit. Terms of the
revolving line of credit require the Company to maintain certain
financial ratios. As of the date of this Quarterly Report, the
Company has not borrowed under the line of credit and has
maintained the required ratios. The line of credit expires
April 15, 1996.
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<PAGE>
INFORMEDICS, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
------------------------------------------
(a) Exhibits.
--------
4(a) Articles IV, VI and VII of the Restated Articles
of Incorporation, as amended(1)
4(b) Articles 1, 2, 5, 7, 8 and 9 of the Restated
Bylaws, as amended(2)
4(c) Form of Indemnification Agreement--Directorship
and Officership Agreement(3)
27 Financial Data Schedule
(b) Reports on Form 8-K.
-------------------
During the quarter ended July 31, 1995,
the Company filed no reports on Form 8-K.
--------------------
(1) Incorporated by reference to the Company's annual report on
Form 10-K for the year ended October 31, 1993.
(2) Incorporated by reference to the Company's annual report of
Form 10-Q for the quarter ended April 30, 1993.
(3) Incorporated by reference to the Company's definitive proxy
material filed with the Securities and Exchange Commission
on April 28, 1988.
-14-
<PAGE>
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.
INFORMEDICS, INC.
Dated: September 13, 1995 /s/ John Tortorici
-----------------------------
John Tortorici
President and Principal
Executive Officer
Dated: September 13, 1995 /s/ Dale E. Conner
-----------------------------
Dale E. Conner
Vice President and Chief
Financial Officer
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<PAGE>
FORM 10-QSB
Exhibit Index
Exhibit Page
------- ----
(27) Financial Data Schedule 17
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM INFORMEDICS, INC.'S CONSOLIDATED FINANCIAL STATEMENTS
CONTAINED IN ITS QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD
ENDED JULY 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> JUL-31-1995
<CASH> 1,027,112
<SECURITIES> 0
<RECEIVABLES> 927,058
<ALLOWANCES> 75,221
<INVENTORY> 39,958
<CURRENT-ASSETS> 2,385,547
<PP&E> 935,620
<DEPRECIATION> 604,339
<TOTAL-ASSETS> 3,484,181
<CURRENT-LIABILITIES> 1,708,280
<BONDS> 0
<COMMON> 26,415
0
0
<OTHER-SE> 1,702,784
<TOTAL-LIABILITY-AND-EQUITY> 3,484,181
<SALES> 1,583,547
<TOTAL-REVENUES> 4,036,568
<CGS> 650,000
<TOTAL-COSTS> 5,611,175
<OTHER-EXPENSES> 8,692
<LOSS-PROVISION> 9,221
<INTEREST-EXPENSE> 901
<INCOME-PRETAX> (1,544,855)
<INCOME-TAX> (614,230)
<INCOME-CONTINUING> (930,625)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (930,625)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
