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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/ A-1
( Mark One )
X Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended August 31, 1996
- Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ____________________ to ____________________
Commission file number 0-14843
DENSE-PAC MICROSYSTEMS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
CALIFORNIA 33-0033759
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
7321 LINCOLN WAY
GARDEN GROVE, CALIFORNIA, 92641
(Address of Principal Executive Offices)
(714) 898-0007
Issuer's Telephone Number, Including Area Code
Not Applicable
(Former Name, Former Address and Former Fiscal Year
if Changed Since Last Year)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock, no par value, outstanding as of
outstanding as of September 25, 1996 was 16,949,681.
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Item 1 - Financial Statements
This amendment is being made to reflect changes to the language of the
line Balance Sheet and Summary of Operations, which occurred due to
computer error.
DENSE-PAC MICROSYSTEMS, INC.
Balance Sheet
<TABLE>
<CAPTION>
August 31, February 29,
1996 1996
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,309,478 $ 4,579,840
Accounts receivable, net 2,443,343 3,574,822
Inventories 5,621,295 5,151,106
Deferred income tax 150,000 150,000
Other current assets 300,504 287,075
----------- -----------
Total current assets 12,824,620 13,742,843
Property, net 4,108,137 3,448,860
Technology & marketing rights, net 372,652 409,048
Other assets 73,948 67,262
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$17,379,357 $17,668,013
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt 390,897 413,851
Accounts payable 1,502,134 1,568,907
Accrued compensation 277,243 572,499
Other accrued liabilities 65,681 61,982
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Total current liabilities 2,235,955 2,617,239
----------- -----------
Note payable to related parties 1,900,000 1,900,000
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Other long-term debt 772,678 699,134
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Stockholders' equity
Common stock 16,041,064 15,795,004
Accumulated deficit (3,570,340) (3,343,364)
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Net stockholders' equity 12,470,724 12,451,640
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$17,379,357 $17,668,013
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</TABLE>
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DENSE-PAC MICROSYSTEMS, INC.
Summary of Operations
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Six months ended
August 31, August 31.
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $3,643,713 $4,439,858 $7,708,135 $8,670,171
Cost of Sales 2,894,223 2,972,861 5,841,843 6,125,573
----------- ----------- ----------- -----------
Gross Profit 749,490 1,466,997 1,866,292 2,544,598
----------- ----------- ----------- -----------
Operating Expenses:
Selling, general and administrative 789,459 820,159 1,608,006 1,457,587
Research and development 298,873 137,738 425,059 238,153
----------- ----------- ----------- -----------
Earnings (loss) from Operations (338,842) 509,100 (166,773) 848,858
Other expenses:
Interest expense, net 32,664 62,833 59,403 122,814
----------- ----------- ----------- -----------
Earnings (loss) before income
tax provision (371,506) 446,267 (226,176) 726,044
Provision for income taxes 800 800 800 800
----------- ----------- ----------- -----------
Net income (loss) ($372,306) $445,467 ($226,976) $725,244
=========== =========== =========== ===========
Net earnings (loss) per common share ($0.02) $0.03 ($0.01) $0.05
=========== =========== =========== ===========
Weighted average common and
common equivalent shares
outstanding 16,950,000 15,845,000 16,950,000 15,547,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
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DENSE-PAC MICROSYSTEMS, INC.
Statements of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
August 31, August 31,
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ($226,976) $725,244
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization 465,830 281,470
Changes in operating assets and liabilites:
Accounts receivable 1,131,479 (145,398)
Inventories (470,189) 117,735
Deferred income tax (13,429) (93,929)
Other assets (6,686)
Accounts payable (66,773) (240,334)
Accrued compensation (295,256)
Accrued liabilities 3,699 201,404
Deferred revenue (152,194)
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Net cash provided by operating activities: 521,699 693,998
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (1,088,711) (513,424)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on other long-term debt (105,935) (177,944)
Proceeds from issuance of of other long-term debt 156,525
Proceeds from issuance of common stock 246,060 130,704
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Net cash provided by (used in) financing activities 296,650 (47,240)
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NET INCREASE (DECREASE) IN CASH (270,362) 133,334
CASH AT BEGINNING OF YEAR 4,579,840 356,787
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CASH AT END OF QUARTER $4,309,478 $490,121
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $135,567 $125,899
========== ==========
Income taxes paid $800 $0
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</TABLE>
See accompanying notes to condensed financial statements.
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DENSE-PAC MICROSYSTEMS, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - Dense-Pac Microsystems, Inc. (the Company) is engaged in the design,
development, manufacture and marketing of a full line of high density,
miniaturized memory surface mount components and subsystems for a variety of
commercial, industrial and military applications.
NOTE 2 - As contemplated by the Securities and Exchange Commission under Item
310(b) of Regulation S-B, the accompanying financial statements and footnotes
have been condensed and therefore do not contain all disclosures required by
generally accepted accounting principles. This report on Form 10-QSB for the
period ended August 31, 1996 should be read in conjunction with the Company's
Annual Report to Shareholders for the previous year.
In the opinion of the Company, the accompanying unaudited condensed
financial statements contain all adjustments (none of which were other than
normal recurring accruals) necessary to present fairly its financial position
as of August 31, 1996, the results of operations and its cash flows for the
periods ended August 31, 1996 and 1995. Results for the interim period are not
necessarily indicative of those to be expected for the full year.
NOTE 3 - Inventories consisted of the following:
<TABLE>
<CAPTION>
August 31, 1996 February 29, 1996
<S> <C> <C>
Raw Materials $ 1,303,247 $ 1,338,472
Work-in-process 3,044,995 2,650,086
Finished Goods 1,273,053 1,162,548
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$ 5,621,295 $ 5,151,106
</TABLE>
NOTE 4 - Accounting for Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective March 1, 1993.
Deferred income taxes reflect the net tax effect of (a) temporary
differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating loss and tax credit carryforwards. The tax effects of significant
items comprising the Company's net deferred tax asset as of February 29, 1996
are as follows:
5.
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<TABLE>
<S> <C>
Deferred tax assets:
Operating loss carryforwards, general
business credits, etc. $ 1,807,810
Inventories 223,384
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Total gross deferred assets 2,031,194
Deferred tax liability
Depreciation & amortization (527,440)
Valuation allowance (1,353,754)
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Net deferred income taxes $ 150,000
===============
</TABLE>
There was no change in the valuation allowance as of August 31, 1996.
The Company is unable to determine whether it will be able to further
utilize the gross deferred tax assets in fiscal year 1997. Further evaluation
will be completed as part of the year end evaluation of the Company's income
tax situation for the year ending February 28, 1997.
As of February 29, 1996, the Company had net operating loss
carryforwards of $4,466,000 for regular income tax and $4,557,000 for
alternative minimum tax available to offset future Federal taxable income (a
portion is subject to limitations of approximately $270,600), expiring at
various dates through 2010. As of February 29, 1996, the Company had available
tax credit carryforwards of approximately $164,000 to offset future Federal
income taxes, which expire at various dates through 2006.
NOTE 5 - Net income (loss) per common and common equivalent share is
computed by dividing net income by the weighted average number of common and
common equivalent shares (if applicable) outstanding during the periods. For
the loss periods, common equivalent shares were anti-dilutive and were not
included in the E.P.S. calculation.
NOTE 6 - In October 1994, the Company borrowed $2,000,000 from a principal
shareholder and director evidenced by a five year, interest only, eight percent
note. The note is secured by all of the Company's assets. As consideration
for the loan, the Company issued 1,000,000 warrants exercisable for five years
at $2.00 per share for Company stock. The warrants were callable when the
Company's stock reached a trading price of $4.50 for twenty consecutive days.
On September 25, 2995, the Company called the warrants. On October 23, 1995,
the Company received $1,900,000 for the exercise of the warrants and
extinguished debt for $100,000.
The Company also re-negotiated the interest rate on the $1,800,000 note to a
rate of 5% per annum. In connection with the amended loan agreement, the
Company issued four-year warrants to purchase 375,000 shares of the Company
stock at $7.00 per share. At August 31, 1996, all of the warrants were
outstanding and exercisable.
NOTE 7 - In February 1996, the Company raised $4,297,000, net of offering
costs, from the sale of 900,000 shares of common stock at $5.00 per share to
private investors.
6.
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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.
DENSE-PAC MICROSYSTEMS, INC.
(Small Business Issuer)
November 4, 1996 James G. Turner
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Date James G. Turner, Chairman
of the Board
and Chief Executive Officer
November 4, 1996
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Date William M. Stowell, Chief
Financial Officer
7.
