<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12807
PHOTOCOMM, INC.
Incorporated in the State of Arizona IRS No. 86-0411983
7681 East Gray Road
Scottsdale, Arizona 85260
(602)948-8003
Check whether the Registrant (1) has filed all documents and reports
required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or 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 ( )
Check whether the Registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of 12-31-95
Common Stock, $0.10 par value 13,540,709
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PHOTOCOMM, INC.
INDEX
PART I Financial Information Page Number
Item 1. Financial Statements
Balance Sheets - November 30, 1995 and 3
August 31, 1995
Statements of Operations - Three Months ended 4
November 30, 1995 and 1994
Statements of Stockholders' Equity, 5
November 30, 1995 and August 31, 1995
Statements of Cash Flows - Three Months 6
ended November 30, 1995 and 1994
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 7
of Financial Condition and Results of
Operations
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K 9
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHOTOCOMM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1995 and AUGUST 31, 1995
(UNAUDITED)
Assets 11/30/95 8/31/95
Current Assets:
Cash and cash equivalents $ 782,177 $ 520,269
Accounts receivable 2,658,494 2,352,548
Inventories 3,484,318 3,327,625
Other current assets 459,894 252,462
Total Current Assets 7,384,883 6,452,904
Property and equipment at cost less
accumulated depreciation and amortization 2,048,501 2,063,957
Other assets 997,135 308,325
Total Assets $10,430,519 $8,825,186
========== =========
Liabilities and Stockholders' Equity
Current Liabilities:
Current installments of long-term debt $ 177,077 $ 135,949
Line of Credit 0 200,000
Accounts payable 1,713,883 1,129,156
Other accrued expenses 282,923 242,778
Total Current Liabilities 2,173,883 1,707,883
Long-term debt, less current installments 887,732 720,163
Total Liabilities 3,061,615 2,428,046
Stockholders' Equity:
Preferred stock:$.001 par value,
5,000,000 shares authorized;
Series A 12% convertible preferred stock,
125,000 shares authorized; 109,972
shares issued and outstanding 110 110
Series AA 11% convertible preferred stock,
200,000 shares authorized; 65,165
69,365 shares issued and outstanding,
respectively 65 69
Common stock: $.10 par value, 25,000,000
shares authorized; 13,537,334 and
13,014,159 shares issued and outstanding,
respectively 1,353,733 1,301,416
Additional paid-in capital 11,069,093 10,369,422
Accumulated deficit (5,053,289) (5,273,069)
Less: Cost of 400 treasury shares (808) (808)
Total Stockholders' Equity 7,368,904 6,397,140
Total Liabilities and Stockholders'
Equity $10,430,519 $8,825,186
========== =========
See accompanying notes to consolidated financial statements.
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PHOTOCOMM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
November 30
1995 1994
Sales, net $ 5,281,273 $3,802,303
Cost of sales 3,947,599 2,789,197
Gross profit 1,333,673 1,013,106
Selling, general and 1,106,279 874,949
administrative
Income from operations 277,395 138,157
Other income (expense):
Interest expense (17,624) (17,576)
Other, net 10,010 16,339
Net income $ 219,780 $ 136,920
========= ========
Income per share $ 0.01 $ 0.01
========= ========
Weighted average number of
common shares outstanding 13,290,845 12,245,621
========== ==========
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
PHOTOCOMM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NOVEMBER 30, 1995 AND AUGUST 31, 1995
(UNAUDITED)
Convertible Preferred Stock
-------------------------------------------
Series A Series AA Common Stock Additional
------- ------ ------- ----- --------------------- Paid-In Accumulated Treasury
Shares Amount Shares Amount Shares Amount Capital Deficit Shares Total
------- ------ ------ ------ --------- -------- ----------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1995 109,972 $110 69,365 $69 13,014,159 $1,301,416 $10,369,421 ($5,273,069) ($808) $6,397,139
Common stock issued upon
exercise of stock options 231,375 23,137 215,121 238,258
Common stock issued as part
of Sunelco purchase agreement 225,000 22,500 427,500 450,000
Common stock issues upon
execution of warrants 50,000 5,000 85,000 90,000
Preferred stock converted
to common 4 to 1 (4,200) (4) 16,800 1,680 (1,676) (0)
Cash dividends on Series A
and Series AA preferred stock (26,273) (26,273)
Net Income 219,780 219,780
------- ---- ------- ------- ---------- ---------- ----------- ----------- ------ ----------
109,972 $110 65,165 $65 13,537,334 $1,353,733 $11,069,093 ($5,053,289) ($808) $7,368,904
======= ==== ======= ======= ========== ========== =========== =========== ====== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
PHOTOCOMM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED NOVEMBER 30, 1995 AND 1994
(UNAUDITED)
1995 1994
Cash flows from operating activities:
Net income $ 219,780 $ 136,920
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 83,425 80,764
Increase in allowances for doubtful
accounts and inventory obsolescence 9,809 2,716
Increase in accounts receivable (318,646) (458,496)
Increase in inventories (383,726) (267,389)
Increase in accounts payable and
accrued expenses 624,872 267,910
Decrease (increase) in other current
assets 22,492 (109,802)
Net cash provided by (used in)
operating activities 258,006 (347,377)
Cash flows from investing activities:
Purchase of property and equipment
and other assets (56,779) (81,518)
Net cash used in investing
activities (56,779) (81,518)
Cash flows from financing activities:
Repayments of long-term debt (41,304) (29,884)
Repayment of Credit Line (200,000) 0
Proceeds from issuance of common
stock 328,258 7,031
Proceeds from issuance of Series AA
preferred stock 0 50,000
Cash dividends on preferred stock (26,273) (31,873)
Purchase of treasury stock 0 (808)
Net cash provided by (used in)
financing activities 60,681 (5,534)
Net increase (decrease) in cash and cash
equivalents 261,908 (434,429)
Cash and cash equivalents at beginning of
year 520,269 458,224
Cash and cash equivalents at end of quarter $ 782,177 $ 23,795
========= =========
See accompanying notes to consolidated financial statements.
<PAGE> 7
PHOTOCOMM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995
A. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
presentation of interim financial information. They do not include all
information and presentation of footnotes required by generally accepted
accounting principles for presentation of complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included.
Certain reclassifications have been made in the fiscal year 1994
financial statements to conform to the classifications used in fiscal
1995.
B. Seasonal Nature of the Business
Revenues of the Company are generally greater in its third and fourth
quarters (March through August) due to seasonal factors.
C. Income Taxes
At November 30, 1995, the Company utilized net operating loss
carryforwards of approximately $220,000 to offset fiscal 1996 income for
federal income tax purposes.
D. Acquisition and Stockholders' Equity
Effective October 3, 1995, Photocomm acquired all of the assets and
assumed the related liabilities of Sunelco, Inc. ("Sunelco"), a
distributor of solar electric products located in Hamilton, Montana (the
"Acquisition").
The aggregate consideration paid by Photocomm in connection with the
Acquisition was approximately $850,000. The Company issued 225,000
shares of Photocomm's Common Stock, $0.10 par value, valued at $400,000
and assumed Sunelco liabilities of approximately $450,000.
The assets purchased principally consisted of certain inventories and
other assets valued by the parties at approximately $450,000; and
goodwill and intangible assets valued by the parties at $400,000.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
This discussion and analysis should be read in conjunction with the
consolidated financial statements and the related notes thereto included
elsewhere in this report.
Results of Operations
Three months ended November 30, 1995 vs. three months ended November 30,
1994.
Sales: Sales for the first quarter of fiscal 1996 were $5,281,273, a
39% increase over sales of $3,802,303 for the first quarter of fiscal
1995. First quarter revenue included $350,000 representing completion
of the Company's Naval Air Warfare Center project in China Lake,
California. The major sales revenue increase is attributed to increases
in system sales to wireless communications, and distribution sales
including international business. In general, sales revenue increases
are due to volume increases, with little or no effect related to price
changes.
Gross Profit: (Sales less cost of sales) increased 32% from $1,013,106
in the first quarter of fiscal 1995 to $1,333,673 in the first quarter
of fiscal 1996. Gross profit margins declined slightly from 26.6% in
the first quarter of 1995 to 25.2% in the first quarter of 1996. The
increase in gross profit is primarily due to increased sales, with the
quarter's reduction attributable to product mix changes between the
quarters. The 25.2% margin in the first quarter of 1996 represents an
increase of 1% over the overall gross profit margin for the Company in
fiscal 1995.
Selling, General and Administrative Expenses (SG&A): SG&A expenses
increased 26% from $874,949 in the first quarter of fiscal 1995 to
$1,106,279 in the first quarter of fiscal 1996. The increase in SG&A
expenses is primarily attributed to increases in sales and marketing
expenses. The Company expects SG&A expenses to increase commensurately
with future sales growth.
Other Income (Expense): The Company's non-operating income and expense
is primarily comprised of interest expense and consulting income.
Interest expense has remained approximately the same in the first
quarter of fiscal 1996 versus 1995 due to similar outstanding
indebtedness for the two quarters. Other income was also comparable for
the first quarter of 1996 and 1995.
Net Income: The Company achieved a net income of $219,780 ($.014 per
common share) for the first quarter of 1996 versus $136,920 (.008 per
common share) for the first quarter of 1995. The net profit increase of
60% for the first quarter of 1996 is attributable to higher sales and
gross profits, with an offsetting increase in SG&A expenses.
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Liquidity and Capital Resources: The Company's working capital position
continues to be stable. Working capital increased to $5,211,000 at
November 30, 1995 from $4,745,021 at August 31, 1995. The current ratio
is 3.4 at November 30, 1995 versus 3.8 at August 31, 1995, and the debt
to equity ratio is .12 at November 30, 1995 versus .11 at August 31,
1995.
Net cash provided in operating activities for the first quarter of
fiscal 1996 was $258,006, primarily due to the net income of the company
generating $219,780 in cash plus $83,425 in depreciation and
amortization expenses, offset by accounts receivable and inventory
increases, and offsetting increases in accounts payable.
Cash used for purchases of property and equipment of $56,779 was
primarily for office and manufacturing equipment and building
improvements.
Cash used in financing activities of $60,681 was comprised of repayments
of $241,304 of the long-term debt and line of credit, offset by proceeds
of $328,258 from the issuance of common stock.
Although no assurances are possible, the Company believes that its
future operating cash flows, available bank lines of credit, and ability
to access additional equity such as the exercise of present stock
options, will provide adequate funding for current obligations,
projected operations and planned expansion for the next twelve months
and the foreseeable future.
PART II. OTHER INFORMATION
Item 6. Exhibits
(a) Exhibits
The following Exhibits are filed as part of this Report:
Page or
Exhibit No. Description Method of Filing
None
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: January 15, 1996
PHOTOCOMM, INC.
By: By:
/S/ Robert R. Kauffman /S/ Thomas C. Lavoy
Robert R. Kauffman Thomas C. LaVoy
Chief Executive Officer Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Consolidated Balance sheets at November 30, 1995 (Unaudited) and the
Consolidated Statement of Operations for the Three Months Ended
November 30, 1995 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> NOV-30-1995
<CASH> 782,177
<SECURITIES> 0
<RECEIVABLES> 2,696,194
<ALLOWANCES> 37,000
<INVENTORY> 3,506,427
<CURRENT-ASSETS> 7,384,883
<PP&E> 3,103,036
<DEPRECIATION> 1,054,535
<TOTAL-ASSETS> 10,430,519
<CURRENT-LIABILITIES> 2,173,883
<BONDS> 0
<COMMON> 1,353,733
0
175
<OTHER-SE> 5,095,545
<TOTAL-LIABILITY-AND-EQUITY> 10,340,519
<SALES> 5,281,273
<TOTAL-REVENUES> 5,281,273
<CGS> 3,947,599
<TOTAL-COSTS> 3,947,599
<OTHER-EXPENSES> 1,096,269
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,624
<INCOME-PRETAX> 219,780
<INCOME-TAX> 0
<INCOME-CONTINUING> 219,780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 219,780
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
