SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 3)
(MARK ONE)
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended APRIL 30, 1998
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________________ to ______________________
Commission file number 000-20688
DATATEC SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 94-2914253
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
20C Commerce Way, Totowa, New Jersey 07512-1154
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(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code: (973) 890-4800
Securities registered under Section 12(b) of the Exchange Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $.001 par value Boston Stock Exchange
Preference Share Purchase Rights Boston Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange Act: None.
Indicate by check mark whether the registrant: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
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. Yes /X/ No / /.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Registrant's Common Stock held by
non-affiliates at June 30, 1998 was approximately $101,735,000. For purposes of
computing such market value, the Registrant has deemed as affiliates only
executive officers, directors and their affiliates.
The total number of shares of the Registrant's Common Stock outstanding
at June 30, 1998 was 29,084,342. exclusive of treasury shares or shares held by
subsidiaries of the registrant.
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The information required by Part III is incorporated by reference to a
definitive proxy statement filed by the Registrant on August 28, 1998 pursuant
to Regulation 14A.
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EXPLANATORY NOTE
This Amendment No. 3 (this "Amendment") to the Registrant's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on July
29, 1998, as previously amended on September 1, 1998 and February 16, 1999, is
being filed in order to amend Item 6 of Part II and to revise the Independent
Auditor's Report. The purpose of this Amendment is to make certain additional
revisions to the language in the last sentence of the third paragraph of Item 6
and to delete the last paragraph of the previous Independent Auditor's Report.
Except as specifically identified above the disclosures set forth herein do not
differ from those in the prior filing, as previously amended.
PART II ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth the selected financial data of the
Company for, and at the end of (i) the year ended December 31,1993, (ii) the
four months ended April 30, 1993 and 1994 and (iii) the years ended April 30,
1995, 1996, 1997 and 1998.
The Company changed its fiscal year-end from December 31 to April 30
on May 2, 1994. The financial data presented below for, and at the end of, the
four-month period ended April 30, 1993, has been derived from the unaudited
consolidated financial statements of the Company. In the opinion of management,
the financial data includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such data.
During fiscal 1999, the Company received a letter from the staff of
the Securities and Exchange Commission ("the Staff") commenting on its recent
reviews of the Company's Form 10-K for the years ended April 30, 1998 and 1997
and the Form 10-Q for the quarter ended July 31, 1998. The Staff provided
comments on certain issues including the valuation of (1) convertible preferred
stock and convertible debt with warrants, both with beneficial conversion
features, issued in fiscal 1997 and (2) assets associated with a barter
transaction the Company executed in fiscal 1998. These items do not effect cash
or cash flow nor do they negatively affect the Company's current or future
operations. The comments related to the barter transaction involved assets
associated with the Company's discontinued operations and not those associated
with current operations. In addition, when the bartered assets are realized
under the Staff's position, they will benefit the Company's fiscal 1999 and
future operating results. Accordingly, and although the Company believes that
its original positions were appropriate at the date of the transactions,
management has amended its 1998 and 1997 reports (see Note 18 of Notes to
Consolidated Financial Statements).
The data presented below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's consolidated financial statements and the notes
thereto appearing elsewhere herein.
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<TABLE>
<CAPTION>
YEAR ENDED FOUR MONTHS ENDED YEAR ENDED
DECEMBER 31, APRIL 30, APRIL 30,
-------------- -------------------------- -------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS DATA: 1993 1993 1994 1995 1996 1997 1998
-------------- ------------- ---------- ------------ --------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 50,629 $ 13,795 $16,332 $ 55,876 $ 59,169 $ 59,481 $ 76,804
Operating income 13,244 2,299 1,191 3,204 (4,248) 1,538 517
Net income (loss) from
continuing 12,316 2,040 1,081 2,596 (5,149) 127 (1,218)
operations
Discontinued operations (6,491) (1,700) (2,600) (4,989) (8,046) (5,662) (2,768)
Extraordinary item -- -- -- -- (223)(a) -- --
Net income (loss) $ 5,825 $ 340 $ (1,519) $ (2,393) $(13,418) $ (5,535) (b) $ (3,986)
=========== ============= ========= ============ ======== ======== ==========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Income (loss) per share - Basic:
<S> <C> <C> <C> <C>
Income (loss) from continuing $ .16 $ (.28) $ (.09)(b) $ (.05)
operations
Discontinued operations (.31) (.44) (.27) (.10)
Extraordinary item -- (.01) -- --
============ ======== ============ =========
Net loss per share $ (.15) $ (.73) $ (.36)(b) $ (.15)
=============== ======== ============ ==========
Income (loss) per share - Diluted:
Income (loss) from continuing $ .14 $ (.28) $ (.09) $ (.05)
operations
Discontinued operations (.27) (.44) (.27) (.10)
Extraordinary item -- (.01) -- --
----------- --------- ------------ --------------
Net loss per share $ (.13) $ (.73) $ (.36) $ (.15)
=========== ========= ============ ==============
Average common and common equivalent
shares - Basic 16,181,000 18,354,000 21,151,000 26,451,000
=========== ========== ========== =============
Average common and common equivalent
shares - Diluted 17,981,000 18,354,000 21,151,000 26,451,000
========== ========== ========== =============
</TABLE>
(a) Write off of unamortized deferred financing fees as a result of the early
extinguishment of debt. (b) The net loss applicable to common shareholders has
been increased by $2,128,000, representing the non-cash accretion of the
discount on convertible preferred securities.
<TABLE>
<CAPTION>
DECEMBER 31, APRIL 30,
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1993 1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- -------- --------
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Working capital (deficiency) $ 5,447 $ 1,442 $ 444 $ (585) $ (7,664) $ (2,957) $ 1,022
Total assets 13,877 13,103 17,665 22,334 23,494 27,804 37,813
Long-term debt 1,057 2,170 2,509 3,642 2,338 4,751 2,415
Total shareholders'
Equity (deficit) 6,893 1,761 4,768 1,967 (3,706) (1,750) 10,468
</TABLE>
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PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
The list of Exhibits is hereby amended inserting the following as Exhibit
99.1:
* 99.1 -- Revised Independent Auditor's Report of Arthur Andersen LLP.
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* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: April 16, 1999
DATATEC SYSTEMS, INC.
By: /s/ James M. Caci
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Name: James M. Caci
Title: Chief Financial Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Datatec Systems, Inc.:
We have audited the accompanying consolidated balance sheets of Datatec Systems,
Inc. (a Delaware corporation) and subsidiaries (formerly Glasgal Communications,
Inc.) as of April 30, 1997 and 1998 and the related consolidated statements of
operations, changes in shareholders' equity (deficit) and cash flows for each of
the three years in the period ended April 30, 1998 (as revised - see Note 18).
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Datatec
Systems, Inc. and subsidiaries as of April 30, 1997 and 1998 and the results of
their operations and their cash flows for each of the three years in the period
ended April 30, 1998, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in the
index of consolidated financial statements is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
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Roseland, New Jersey ARTHUR ANDERSEN LLP
July 27, 1998 (except with respect to the matter
discussed in Note 18 as to which
the date is February 2, 1999)
