<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1995
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 : 0-16569
CAM DATA SYSTEMS, INC.
(Exact name of registrant as specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 95-3866450
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
17520 NEWHOPE STREET
SUITE 100
FOUNTAIN VALLEY, CALIFORNIA 92708
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (714) 241-9241
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock $.001 par value
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. Yes X No
----- -----
(cover page 1 of 2 pages)
<PAGE> 2
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 voting stock held by non-affiliates of
the Registrant as of December 12, 1995 was approximately $5,619,800. As of
December 12, 1995, there were outstanding 1,931,000 shares of Common Stock of
the Registrant, par value $.001 per share.
DOCUMENTS INCORPORATED BY REFERENCE.
<TABLE>
<S> <C>
Part II Annual Report to Stockholders for
fiscal year ended September 30, 1995
</TABLE>
(cover page 2 of 2 pages)
<PAGE> 3
PART I
ITEM 1. BUSINESS
General
THE COMPANY
Cam Data Systems, Inc. (the "Company") was organized under the laws of the
State of Delaware on April 29, 1987. On June 5, 1987, Cam Data Systems, Inc.,
a corporation organized on September 20, 1983 under the laws of the State of
California was merged with and into the Company. The Company's principal
business is to design, assemble, market, service, and support point of sale,
order entry, inventory control, and accounting systems for small to medium size
retailers. The Company earns revenues from the sale of its systems and monthly
service fees charged to its customers under service agreements. Sales and
service operations are located in California and Massachusetts while the
Company's customers are located throughout the United States.
THE SYSTEMS
The Company offers two Turn Key Systems:
1. THE CAM SYSTEM - designed for hardgoods retailers whose inventory is
reorderable in nature.
2. THE PROFIT$ SYSTEM - designed for Apparel and Shoe retailers whose
inventory is seasonal in nature and color and size oriented.
The Company's systems offer the ability to obtain: (i) automated
pricing of each item; (ii) billing for charge account customers; (iii) printing
of a customer invoice; (iv) tracking of inventory count on an item by item
basis; (v) computation of gross profit, dollars and/or percentage of each item;
and (vi) tracking of sales by clerk and department by hour, day and/or month.
In addition, the Company's systems provide full management reporting including
zero sales reports, inventory ranking, overstock and understock, sales
analysis, inventory valuation (cost, average cost and retail) and other
reports. The systems can also provide accounting functions including accounts
receivable, accounts payable, general ledger, and payroll functions.
The Company's systems integrate IBM compatible computers, electronic
and terminal style cash registers, hand held and table top bar code laser
scanning equipment, terminal work stations, printers, and the Company's circuit
boards and software. The Company is able to adapt its software to existing IBM
compatible computer hardware. Each system is configured to meet the customer's
particular needs and, as a result, the components included in each system,
including the personal computer, printer,
3
<PAGE> 4
cash register and the Company's circuit boards and software, depend on the
needs, the size and the industry type of the customer.
The Company's software is derived from software originally designed
and subsequently licensed to (or acquired by) the Company by Retail Solutions
Inc. for the CAM system, and by MicroStrategies Inc. for the Profit$ system. The
Company continues to make modifications and enhancements to the software.
The Company provides an entire system to each customer on a "turn key"
basis, in that the Company provides all of the hardware and the software as
well as the installation of a system in the customer's premises. The CAM
system is capable of linking up to 20 retail outlets per defined region and up
to 20 regions. The Profit$ system is capable of linking up to 99 stores. In a
multiple outlet system, the Company typically installs a single computer at
each outlet that, through a modem system, communicates with a central computer
at the customer's main accounting location. The central computer compiles all
information from the other locations for processing and reporting.
INVENTORY MANAGEMENT
The Company believes that inventory control is the most important and
time consuming task facing the management of retail outlets. The systems were
designed by the Company to address the retailer's need for simpler and yet more
accurate means of controlling a large and diverse inventory. All inventory
information, once entered into the system, is updated for each sale that is
transmitted from the cash register to the computer. The systems are able to
provide the following managerial reports:
1. POPULARITY RANKING. The systems will report on the popularity of each
item in the store by producing a report listing each item of inventory ranked
according to the number of sales of each item. The report is generated
automatically and can produce a list on daily, weekly, monthly, year-to-date
and/or trailing 13 months of sales basis. The systems will also analyze the
popularity data and indicate to the retailer which particular items of
inventory are needed and which items are overstocked.
2. ZERO SALES REPORT. The systems provide a sales analysis on a monthly
and year-to-date basis for inventory items for which no sales have been made.
The analysis can be reported on a total sales basis or on a departmental or
item level basis.
3. INVENTORY TABULATION AND VALUATION. The systems provide reports
listing all inventory on hand, the valuation of such inventory on a cost and
retail basis, the average cost of each item in inventory, and all items of
inventory on order but not yet received.
4
<PAGE> 5
4. AUTOMATIC PURCHASING. The systems provide a report listing all items
that should be ordered based upon historical data stored in the system,
including the number of items in inventory, the number on the shelf, the
number on order and the minimum quantities required. The systems can also
automatically provide a purchase order if desired.
5. PRICING. The systems are capable of producing price stickers in 20
customized label formats, assigning Uniform Purchase Code numbers and printing
bar-codes directly upon the price labels for reading by laser scanners. In
addition, if there is a price change, the systems will automatically update the
pricing information and, if desired, print new pricing labels.
6. REPORTS. The systems permit the retailer to customize and produce
reports and forms utilizing the data in the system in a format preferred by the
retailer.
ACCOUNTING MANAGEMENT
The CAM system is capable of performing accounting functions through
software available from the Company. The system can maintain accounts
receivable, accounts payable and general ledgers and can maintain and perform
all payroll functions including the printing of payroll checks. The Company
markets Great Plains software to customers that want accounting functions for
the Profit$ system.
SERVICE AND SUPPORT
Customer service and support is a critical element in maintaining
customer satisfaction. Each purchaser of a system, for an ongoing fee ranging
from .75% to 1.2% per month of the initial purchase price of the system
purchased, receives service and support from the Company. The service and
support provided by the Company includes:
1. HARDWARE SERVICE. The Company's service representatives will service the
computer hardware included in a system at the customer's location, and
currently contracts with AT&T for on site service and repair. The
representatives are trained to determine the source of the problem or
malfunction in the hardware and, once determined, replace the defective
component. The Company's on-site service representatives do not attempt to
repair defective components. Defective components, after removal from the
system, are either repaired at the Company's facility or sent to a
manufacturer's authorized service center for repair
2. SOFTWARE SERVICE AND ENHANCEMENTS. Software service involves either the
replacement or reinstallation of existing software. The Company, while not
performing any customizing of its software for particular customers, is
sensitive to comments from customers concerning the Company's software.
5
<PAGE> 6
Such comments, together with planned revisions to the software, result in
enhancements and improvements which are provided without additional cost to all
customers on a service contract.
3. TRAINING. In order to assure a customer that he will be able to properly
integrate the Company's system into his business, the Company provides training
on the use and application of the system to each customer at the Company's
in-house training facility during the ninety day warranty period. Customers
located away from a CAM office, receive two on-site visits for initial
installation and training. The amount of training required depends upon the
knowledge and experience of the user plus the complexity of the business to
which the system is being adapted. The data input into the system by a
retailer is also dependent upon the complexity of the business plus the
functions the user intends the system to perform.
4. PHONE ASSISTANCE. By having phone assistance available seven days a week,
the Company enables a customer to obtain assistance whenever necessary.
MARKETING
DIRECT SALES
The Company markets its systems primarily through the Company's direct
sales force consisting of seventeen salespersons, all of whom work exclusively
for the Company. The Company's marketing efforts extend nationwide with
offices in the states of California and Massachusetts. Each salesperson is
assigned a specific geographical territory in which to offer the systems.
Typically, the salesperson will telephone canvas an area, and in some cases
make visits to retailers in the assigned territory. Each salesperson is
provided with a sales kit and demonstration equipment. Each salesperson is
trained by the Company to be able to define the needs of the potential
customer, recommend a system configuration, and provide appropriate price
quotes. Upon the execution of a typical sales contract, the Company is
generally able to install an entire system within four to six weeks. The
Company is paid directly by the customer or by third party leasing companies.
Salespersons are compensated on the basis of a percentage of gross profit to
the Company for each system sold.
BROCHURES, TRADE SHOWS, AND ADVERTISING MEDIA
The Company continues to increase awareness of its systems by
advertising in trade journals and other print media targeted at retail
businesses, attending industry specific trade shows, the use of sales
promotional videos on VHS format, and through direct mail advertising.
ASSEMBLY AND SOURCES OF SUPPLY
The computer hardware which makes up the Company's systems consists
primarily of standard components purchased by the Company from outside
distributors and manufacturers such as Okidata (printers), Symbol
6
<PAGE> 7
Technologies (hand held laser scanners and portable data terminals), Wyse
(Terminals), Ithaca (40 column printers),and U.S. Robotics (modems). For most
computer hardware components, the Company has more than one source of supply.
Certain hardware, such as the Company's proprietary computer circuit
board, was designed by the Company and is manufactured to the Company's
specifications by manufacturers unaffiliated with the Company. The Company
does not have any agreements with the manufacturers of its proprietary circuit
boards but management believes if the current manufacturers were not available,
additional manufacturers could readily provide the required services.
BACKLOG
The Company purchases component hardware for its systems based upon
system purchase orders and its forecast of demand for its products. Orders
from customers are usually shipped by the Company pursuant to an agreed upon
schedule. However, orders may be cancelled or rescheduled by the customer
without penalty. For this reason, management believes backlog information is
not indicative of the Company's future sales or business trends and is subject
to fluctuation. As of December 10, 1995, backlog was approximately $583,000 as
compared to $1,200,000 on December 10, 1994. Backlog is based upon purchase
orders placed with the Company which the Company believes are firm orders.
COMPETITION
The industry in which the Company operates is highly competitive. The
Company competes with suppliers dedicated to one type of business and suppliers
of software that provide functions similar to the Company's software.
The Company competes on the basis of the capabilities and
competitiveness of its systems and the additional information they provide and
functions they perform. The Company believes its systems offer greater
capabilities to the small and medium size retailers than suppliers of other
systems. Included among such capabilities are multi-user capability, ongoing
software enhancement, and a service organization in place to support the
customer after the initial sale.
The Company also competes with vertical market suppliers of automated
retail systems which include hardware and software intended for use by a
particular retail industry segment. Some of these suppliers have a shorter
operating history, less financial resources and overhead expenses, and attempt
to compete with the Company on the basis of lower pricing. This has caused the
Company to discount sales prices in some instances, and this may continue in
future periods.
7
<PAGE> 8
The ability of the Company to meet competition will depend upon, among
other things, the Company's ability to maintain its marketing effort, increase
the capabilities of its systems through ongoing enhancements and improvements,
contend with sales price discounting, and to obtain financing when, and if,
needed.
PATENTS AND TRADEMARKS
The Company does not hold any patents or trademarks. The Company
relies on a combination of trade secrets, copyright laws and technical measures
to protect its rights to its proprietary software. The software included in a
system is not accessible by customers for purposes of revisions or copying as
the Company does not release the software source code to customers. In
addition, as the Company performs software service at the customer's location,
the Company maintains strict control of its software disks.
The Company's proprietary circuit board was designed specifically to
link the computer hardware included in the CAM system with the CAM software.
The expertise required to design and build such circuit boards is readily
available to competitors and there can be no assurance that such circuit boards
will not be produced and utilized by such competitors.
SEASONALITY
The Company believes that seasonality has not had a significant
effect on their business.
SOFTWARE DEVELOPMENT
The Company's software has been developed using a modular approach.
Modular designing allows a programmer to incorporate, replace or delete parts
of a computer software program without affecting the operation of the remaining
parts of the program. Accordingly, modular design facilitates the development
of the Company's software and new products enabling the Company's programmers
to incorporate entire sections from existing programs into the designs for such
products. The incorporation of existing software, which has already been fully
tested, into new products, reduces the time and expense that the Company would
otherwise incur in developing and enhancing its products.
The Company spent approximately $979,400, $652,300, and $513,400 on
software development, including amounts capitalized during the years ended
September 30, 1995, 1994, and 1993, respectively. The Company anticipates that
it will continue to incur software development costs in connection with
enhancements and improvements of its software and the development of new
products. These activities may require an increase in the Company's
programming and technical staff which presently consists of ten programmers and
four quality control and testing personnel.
8
<PAGE> 9
EMPLOYEES
The Company has one hundred and two full time employees, seven of whom
are employed in administration, fifteen in programming and testing, twenty-five
in sales and marketing, and fifty-five in operations, installation, and service
and support.
None of the Company's employees are represented by a labor union and
the Company believes that it enjoys harmonious relationships with its
employees.
ENVIRONMENTAL REGULATIONS
There has been no material effect on the Company from compliance with
environmental regulations.
ITEM 2. PROPERTIES
The Company currently leases approximately 15,200 square feet of space
in Fountain Valley, California pursuant to a five-year lease expiring January
31, 1998 at an average annual rent of approximately $119,000 a year. This
facility houses the Company's executive and administrative offices, research
and development facilities, service and support staff, and inventory warehouse.
In addition, the Company also leases the following properties: (i)
approximately 2,513 square feet of office space in Hayward, California pursuant
to a twelve month lease expiring on April 30, 1996, at an annual rent of
approximately $16,500; and (ii) approximately 1,400 square feet of office space
in Millis, Massachusetts on a month to month lease of $800 per month.
ITEM 3. LEGAL PROCEEDINGS
The Company believes that there are no material legal proceedings,
pending or contemplated, to which the Company or any of the Company's
properties is the subject or to which the Company is a party and which are not
in the ordinary course of business. The Company is not aware of any material
legal proceeding pending or threatened, or judgments entered against any
director or executive officer of the company in his capacity as such where the
position of any such director or executive officer is adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Neither the Board of Directors nor any security holder submitted any
matter during the fourth quarter of the fiscal year covered by this report to a
vote of security holders through the solicitation of proxies or otherwise.
9
<PAGE> 10
PART II
Pursuant to General Instruction G(2), Items, 5, 6, 7 and 8 have been
omitted since the required information is contained in the Company's 1995
Annual Report to Stockholders pursuant to Rule 14A-3(B), copies of which are
being filed as an Exhibit to the Form 10-K, and is hereby incorporated by
reference herein.
<TABLE>
<CAPTION>
ANNUAL REPORT
FORM 10-K TO STOCKHOLDERS
--------- ---------------
<S> <C> <C>
ITEM 5: MARKET FOR REGISTRANT'S PAGE 14: STOCK AND DIVIDEND
COMMON EQUITY AND RELATED DATA.
STOCKHOLDER'S MATTERS.
ITEM 6: SELECTED FINANCIAL DATA. PAGE 15: SELECTED FINANCIAL
DATA.
ITEM 7: MANAGEMENT'S DISCUSSION PAGES 4-5: MANAGEMENT'S
AND ANALYSIS OF DISCUSSION AND
FINANCIAL CONDITION AND ANALYSIS OF
RESULTS OF OPERATIONS FINANCIAL CONDITION
AND RESULTS OF
OPERATIONS
ITEM 8: FINANCIAL STATEMENTS AND SEE BELOW.
SUPPLEMENTARY DATA.
</TABLE>
Information for Item 8 is included in the Company's financial
statements as of September 30, 1995 and 1994 and for each of the three years in
the period ended September 30, 1995 and the Company's unaudited quarterly
financial data for the two years ended September 30, 1995 on pages 6 through 13
and page 15, respectively, of the Company's 1995 Annual Report to Stockholders
which is hereby incorporated by reference. The report of the independent
auditors is included on page 14 of the Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
NOT APPLICABLE.
10
<PAGE> 11
PART III
MANAGEMENT
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
IDENTIFICATION OF EXECUTIVE OFFICERS AND DIRECTORS
As of September 30, 1995, the executive officers and directors of the
Company and their ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
<S> <C> <C>
Geoffrey D. Knapp 37 Chief Executive Officer, President
Secretary and Director
Paul Caceres, Jr. 35 Chief Financial Officer and
Chief Accounting Officer
Timothy D. Coco 38 Vice President, Customer Service
Mark Bolton 37 Vice President, Operations
David Fuller 51 Vice President, Research and
Development
Walter W. Straub 52 Director
David Frosh 37 Director
</TABLE>
Geoffrey D. Knapp, founder of the Company, has been a director, and an
officer of the Company since its organization in September, 1983. From 1980 to
1983, he was employed by Triad Systems Corporation as a point of sale systems
salesman selling to retail hardware stores. Mr. Knapp received a B.S. in
marketing from the University of Oregon in 1980.
Paul Caceres, Jr. has been the Chief Financial Officer and Chief
Accounting Officer of the Company since September 1987. From 1982 to 1987, Mr.
Caceres was employed by Arthur Young & Company, the predecessor to Ernst &
Young LLP, as an Audit Senior and in 1987, was promoted to Audit Manager. He
received a B.S. in Business Administration from the University of Southern
California in 1982.
Timothy D. Coco has been the Vice President of Customer Service since
January 1994. From 1990 to 1993, Mr. Coco served as sales manager for Lindy
Office products, a company that sells office supplies, office furniture and
printing services to small and medium size businesses. From 1989 to 1990, Mr.
Coco served as a sales trainer and management consultant for IDK Group Inc., a
company that provides sales training, management
11
<PAGE> 12
consulting, and employee development related services to the micro computer
industry. From 1984 to 1989, Mr. Coco was the President of his own Company
called Quality Automation Systems (QAS). QAS developed and marketed turn key
computerized distribution management, point of sale, and accounting systems to
the office supply industry. Mr. Coco sold this company in 1989.
Mark Bolton has been the Vice President of Operations since January
1994. From 1991 to 1994, Mr. Bolton was employed by Disneyland as the
Supervisor of Transportation Services. From 1987 to 1991, Mr. Bolton was
employed by CAM Data Systems in various positions that included customer
service representative, installation coordinator, purchasing agent, inventory
control, and most recently, operations manager. From 1985 to 1987, Mr. Bolton
was employed by JANACO BMW as the service manager.
David Fuller has been the Vice President of Research and Development
since April 1995. From 1988 to 1995, Mr. Fuller was the sole proprietor of
Retail Software Innovators, a company that provided point of sale software,
programming services, and technical support to small and medium size retailers.
From 1982 to 1988, Mr. Fuller was the Vice President of Research and
Development for Retail Solutions Inc., a company that provided point of sale
software, programming services, and technical support to small and medium size
retailers.
Walter W. Straub, has been a director of the Company since May 1989.
He is also currently, and has been since October 1983, President, Chief
Executive and a director of Rainbow Technologies, Inc., a public company
engaged in the business of designing, developing, manufacturing and marketing
of proprietary computer related security products. Mr. Straub received a B.S.
in Electrical Engineering in 1965 and an MBA in Finance in 1970 from Drexel
University.
David A. Frosh was elected as a director in August 1991. Since June
1990, Mr. Frosh has been employed as a sales executive for the national
accounts division of Automatic Data Processing (ADP). ADP provides computerized
transaction processing, data communications and information services. From
June 1988 to June 1990, Mr. Frosh served as director of marketing for Optima
Retail Systems, a privately held company which manufactured and marketed
inventory control systems for the retail apparel industry. From July 1980 to
June 1988, Mr. Frosh held several marketing and management positions including
national accounts manager for the Los Angeles division of Savin Corporation, a
marketer of office copier and facsimile machines. Mr. Frosh received a B.A. in
Marketing from Central Michigan University in 1980.
The terms of office of directors expire at the next Annual Meeting of
Shareholders, or at such time as their successors have been duly elected and
qualified.
12
<PAGE> 13
Directors who are not officers of the Company are entitled to an
expense reimbursement for attending meetings. Officers serve at the discretion
of the Board of Directors.
Except as stated, there are no arrangements or understandings by or
between any director or executive officer and any other person(s), pursuant to
which he or she was or is to be selected as a director or officer,
respectively.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Company's common stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (SEC). Officers,
directors and greater than ten percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Management believes all such individuals were in compliance with Section
16(a) at September 30, 1995, except as noted below. These reports were
subsequently filed.
The following table sets forth the individuals who met the requirements of
Section 16(a) during the year ended September 30, 1995 and were filed late:
<TABLE>
<CAPTION>
No. of No. of
No. of Transactions reports
Name Late Reports on Late Reports Not Filed
- ---- ------------ --------------- ---------
<S> <C> <C> <C>
Walter Straub 1 1 --
David Frosh 1 1 --
</TABLE>
CERTAIN SIGNIFICANT EMPLOYEES
The Company does not have any significant employees who are not
officers.
FAMILY RELATIONSHIPS
There are no family relationships by or between any director or
officer of the Company.
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth, as of the date
hereof, information concerning cash compensation, bonuses and deferred
compensation paid by the Company for services rendered to the Company during
the fiscal year ended September 30, 1995, and the prior two fiscal years, to
the Company's Chief Executive Officer and each additional executive officer
whose total compensation exceeded $100,000:
13
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
Name and Other (2)
Principal (1) Annual Number of All Other
Position Year Salary Bonus Compensation Options Compensation
- -------- ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Geoffrey Knapp
Chairman of 1995 $164,500 $31,400 -- 0 $2,000
the Board 1994 $150,000 $13,000 -- 50,000 $2,000
CEO 1993 $131,500 $30,000 -- 10,000 $2,000
Paul Caceres Jr.
CFO 1995 $103,800 $20,000 -- 0 $2,000
1994 $ 90,000 $ 9,000 -- 45,000 $2,000
1993 $ 85,000 $18,000 -- 0 $1,700
Timothy D. Coco
Vice Pres. 1995 $ 84,000 $16,800 -- 0 0
Customer 1994 $ 80,000 $ 8,000 -- 10,000 0
Service 1993 $ 32,500 $ 0 -- 5,000 0
</TABLE>
(1) Bonuses paid to the Named executives are pursuant to annual incentive
compensation programs established each year for selected employees of the
Company, including the Company's executive officers. Under this program,
performance goals, relating to such matters as sales growth, gross profit
margin and net income as a percentage of sales and individual efforts were
established each year. Incentive compensation, in the form of cash bonuses,
was awarded based on the extent to which the Company and the individual
achieved or exceeded the performance goals.
(2) All other compensation consists of interest on employee notes payable to
the Company, that was declared compensation during the year.
There were no options issued to officers in fiscal 1995, table is excluded.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
Shares at Sept. 30, at Sept. 30,
Acquired 1995 1995
on Value(1) Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Geoff Knapp -- -- 60,000/ 0 $97,600/ $0
Paul Caceres Jr. -- -- 32,500/12,500 $54,400/$18,800
Timothy D. Coco -- -- 4,400/ 5,600 $ 6,600/$ 8,400
</TABLE>
(1) Market value of the underlying securities at the exercise date minus the
exercise price of the options.
14
<PAGE> 15
REPORT OF COMPENSATION COMMITTEE
The following report of the Compensation Committee is provided solely to the
shareholders of the Company pursuant to the requirements of Schedule 14A
promulgated under the Securities Exchange Act of 1934, and shall not be deemed
to be "filed" with the Securities and Exchange Commission for the purpose of
establishing statutory liability. The Report shall not be incorporated by
reference in any document previously or subsequently filed with the Securities
and Exchange Commission that incorporates by reference all or any portion of
this document.
TO: THE BOARD OF DIRECTORS
As members of the Compensation Committee, it is our duty to review and
recommend the compensation levels for members of the Company's management,
evaluate the performance of management and administer the Company's various
incentive plans. This Committee has reviewed in detail the Compensation of the
Company's five executive officers. In the opinion of the Committee, the
compensation of the five executive officers of the Company is reasonable in
view of its performance and the respective contributions of such officers to
the Company' performance.
In determining the management compensation, this Committee compares the
compensation paid to management to the level and structure of compensation paid
to competing companies. Additionally, the Committee considers the sales and
earnings performance of the Company compared to competing and similarly
situated companies. The Committee also takes into account such relevant
external factors as general economic conditions, geographic market of work
place, stock price performance and stock market prices.
Management compensation is comprised of 75% to 80% of fixed salary, and 20%
to 25% variable compensation based on performance factors. Stock options are
granted at the discretion of the Board of Directors, and there is no set
minimum or maximum amount of options that can be issued. Performance factors
that determine management compensation are sales and net income of the Company.
These performance factors were exceeded in fiscal 1995, with a revenue increase
of 11%, and a 56% increase in net income.
The committee examines compilations of executive compensation such as
various industry compensation surveys for middle market companies. In 1995,
the compensation for the Chief Executive Officer was comparable to other Chief
Executive Officers of middle market companies in related industries.
Mr. Knapp, a member of the Committee, is also an executive officer of
the Company. However, Mr. Knapp abstained from any considerations with respect
to any decision directly affecting his compensation.
Compensation Committee
David Frosh, Walter Straub and Geoffrey D. Knapp
December 1, 1995
15
<PAGE> 16
INCENTIVE STOCK OPTION PLAN
An Incentive Stock Option Plan (the "ISO Plan") in accordance with
Section 422A of the Internal Revenue Code of 1954, as amended (the "Code"), was
adopted by the Board of Directors and approved by the stockholders of the
Company in June 1987. The ISO Plan authorizes the Board of Directors to grant
options from time to time to directors, officers and key employees of the
Company. In April 1990, the total number of shares of the Company's Common
Stock that may be issued or delivered under the ISO Plan net of forfeiture and
based on the present capitalization was increased from 100,000 to 250,000
shares.
Options granted under the ISO Plan must comply with certain provisions
of the Code relating to, among other things, the maximum dollar amount of
options that may be exercised by an optionee in any calendar year, the minimum
exercise price of an option and the persons eligible to be granted options. No
options granted under the ISO Plan will be exercisable for a period exceeding
five years, and the ISO Plan expires in June 1997.
Except as otherwise required by the Code with respect to optionees
owning 10% or more of the Common Stock outstanding at the time of grant, the
exercise price of an option under the ISO Plan must not be less than 100% of
the fair market value of the underlying Common Stock at the time of grant. The
fair market value of a share of Common Stock is to be determined by the Board
of Directors, or by a committee of the Board of Directors, as the case may be,
in good faith based upon the trading market of such shares.
The exercise price of any options granted pursuant to the ISO Plan to
optionees owning more than 10% of the Common Stock outstanding at the time of
grant may not be less than 110% of the fair market value of the underlying
Common Stock at the time of grant.
1993 STOCK OPTION PLAN
In April 1993, the shareholders of the Company approved the Company's
1993 Stock Option Plan (the "1993 Plan") under which non- statutory options may
be granted to key employees and individuals who provide services to the
Company, at a price not less than the fair market value at the date of grant,
and expire ten years from the date of grant. The options are exercisable based
on vesting periods as determined by the Board of Directors. The Plan allows
for the issuance of an aggregate of 400,000 shares of the Company's common
stock. The Plan has a term of ten years. There have been 327,000 options
granted under the 1993 Plan as of September 30, 1995.
16
<PAGE> 17
401-K PLAN
In July 1991, the Company adopted a contributory profit-sharing plan
under Section 401(k) of the Internal Revenue Code, which covers substantially
all employees. Under the plan, eligible employees are able to contribute up to
15% of their compensation. The Company's contributions are at the discretion
of the board of directors. The Company contribution for the fiscal year ended
September 30, 1995, totaled $34,000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 1995, certain
information regarding ownership of the Company's Common Stock by (i) each
person that the Company knows is the beneficial owner of more than 5% of the
Company's outstanding Common Stock, (ii) each director and executive officer
of the Company who owns Common Stock and (iii) all directors and officers as a
group, without naming them, showing name and address, amount and nature of
shares beneficially owned and the percentage of the class owned.
<TABLE>
<CAPTION>
Name and Address Amount & Nature Percentage
Title of of Beneficial of Beneficial of
Class Owner Ownership (9) Class (10)
----- ----- ------------- ----------
<S> <C> <C> <C>
Common Stock Geoffrey D. Knapp(1) 387,900(2) 18.1%
Common Stock Paul Caceres Jr. (1) 52,500(3) 2.5%
Common Stock Timothy D. Coco (1) 7,500(4) *
Common Stock Mark Bolton (1) 4,400(5) *
Common Stock David Fuller (1) 5,000(6) *
Common Stock Walter W. Straub(1) 65,000(7) 3.0%
Common Stock David Frosh (1) 32,800(8) 1.5%
Common Stock ZPR Investment Mgmt. 437,200 20.4%
Common Stock All Directors and
Officers as a
Group (of 7 persons) 555,100 26.4%
</TABLE>
* Less than 1.0%.
(1) c/o Cam Data Systems, Inc., 17520 Newhope Street, Suite 100, Fountain
Valley, California 92708.
17
<PAGE> 18
(2) Includes (i) an aggregate of 3,100 shares of Common Stock held in trust for
three daughters of Mr. Geoffrey Knapp over which he has shared voting power
(ii) options to purchase an aggregate of 10,000 shares until the sooner of
October 12, 1997 or twelve months after ceasing to serve as a director at a
price of $2.34 per share.(iii) options to purchase an aggregate of 50,000
shares until October 20, 2003 at a price of $1.93 per share.
(3) Includes options to purchase (i) an aggregate of 15,000 shares of Common
Stock until October 20, 2003 at a price of $1.75 per share (ii) an aggregate of
17,500 shares of Common Stock until January 3, 2004 at a price of $2.13 per
share.
(4) Includes options to purchase (i) an aggregate of 3,100 shares of Common
Stock until April 1, 2003 at a price of $3.38 per share (ii) an aggregate of
4,400 shares of Common Stock until January 3, 2004 at a price of $2.13 per
share.
(5) Includes options to purchase an aggregate of 4,400 shares of Common Stock
until January 3, 2004 at a price of $2.13 per share
(6) Includes options to purchase an aggregate of 5,000 shares of Common Stock
until March 13, 2005 at a price of $2.25 per share
(7) Includes options to purchase (i) an aggregate of 10,000 shares of Common
Stock until the sooner of August 29, 1995 or twelve months after ceasing to
serve as a director at a price of $.50 per share and (ii) options to purchase
an aggregate of 10,000 shares until the sooner of August 7, 1996 or twelve
months after ceasing to serve as a director at a price of $.875 per share and
(iii) options to purchase an aggregate of 10,000 shares until the sooner of
October 12, 1997 or twelve months after ceasing to serve as a director at a
price of $2.125 per share (iv) options to purchase an aggregate of 7,500 shares
until the sooner of October 19, 2003 or twelve months after ceasing to serve as
a director at a price of $1.75 per share.
(8) Includes options to purchase (i) options to purchase an aggregate of 5,000
shares until the sooner of August 7, 1996 or twelve months after ceasing to
serve as a director at a price of $.875 per share and (ii) options to purchase
an aggregate of 10,000 shares until the sooner of October 12, 1997 or twelve
months after ceasing to serve as a director at a price of $2.125 per share
(iii) options to purchase an aggregate of 7,500 shares until the sooner of
October 19, 2003 or twelve months after ceasing to serve as a director at a
price of $1.75 per share.
(9) For the purposes of the above table and the notes thereto, the Company's
Common Stock shown as "beneficially owned" includes all securities which
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
may be deemed to be "beneficially owned" including,
18
<PAGE> 19
without limitation, all securities which the "beneficial owner" has the right
to acquire within 60 days, as, for example, through the exercise of any option,
warrant or right, the conversion of convertible securities or pursuant to the
power to revoke a trust, discretionary account or similar arrangement.
(10) The percentage of ownership of the class of voting securities in the above
table has been calculated by dividing (i) the aggregate number of shares of
such class actually owned plus all shares of such class which may be deemed to
be "beneficially owned," by (ii) the number of shares of such class actually
outstanding plus the number of shares of such class such "beneficial owner" may
be deemed to "beneficially own" assuming no other acquisitions of shares of
such class through the exercise of any option, warrant or right by any other
person.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended September 30, 1995, the Company granted
non-qualified options to certain employees and directors to purchase an
aggregate of 65,000 shares of Common Stock of the Company at a price ranging
from $2.25 to $2.37 per share expiring ten years from the date of grant.
19
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The financial statements required to be filed hereunder are listed on
page 10 hereof. See Part II, Item 8 of this report for information regarding
the incorporation by reference herein of such financial statements.
(A) 2. FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule of CAM Data Systems Inc.,
is included on page 25 hereof:
<TABLE>
<CAPTION>
Page
<S> <C>
Schedule II - Valuation and Qualifying Accounts 25
</TABLE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
(A) 3. OTHER EXHIBITS
3(a) Articles of Incorporation of the Company, as amended (incorporated by
reference to Exhibit 3(a) to the 1988 Annual Report on Form 10-K filed
on January 12, 1989 - File No. 0-16569).
3(b) By-Laws of the Company (incorporated by reference to Exhibit 3(b) to
the S-18 Registration Statement).
10(a) Incentive Stock Option Plan (incorporated by referenced to Exhibit
10(b) to the S-18 Registration Statement).
10(b) Company's Lease for premises at Fountain Valley, California
(incorporated by reference to Exhibit 10(b) to the 1988 Annual Report
on Form 10-K filed on January 12, 1989 - File No. 0-16569).
10(c) 1993 Stock Option Plan (incorporated by reference to the exhibits on
Form S-8 Registration Statement filed on June 21, 1993).
10(d) Registration Statement (incorporated by reference to the exhibits on
Form S-3 No. 33-57564 Registration Statement filed on June 17, 1993).
20
<PAGE> 21
10(e) Extension to Company's Lease for premises at Fountain Valley,
California (incorporated by reference to Exhibit 10 (i) to the 1993
Annual Report on Form 10-K filed on December 27, 1993 - File No.
0-16569).
10(f) Line of Credit Agreement, dated July 17, 1995, with Silicon Valley
Bank.
10(g) Amendment to Company's lease for premises at Hayward, California, dated
May 1, 1995
13(a) Annual Report to Stockholders for the fiscal year ended September 30,
1995.
23 Consent of Independent Auditors.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the last quarter of the
year ended September 30, 1995 covered by this report.
21
<PAGE> 22
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 filed on
its behalf by the undersigned, thereunto duly authorized.
CAM DATA SYSTEMS, INC.
By: /s/ Geoffrey D. Knapp
--------------------------------
Geoffrey D. Knapp,
Chief Executive Officer
By: /s/ Paul Caceres, Jr.
--------------------------------
Paul Caceres, Jr.,
Chief Financial Officer and Chief
Accounting Officer
Date: December 20, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Geoffrey D. Knapp Chief Executive December 20, 1995
- ---------------------
Geoffrey D. Knapp Officer and Director
/s/ Walter W. Straub Director December 20, 1995
- --------------------
Walter W. Straub
/s/ David Frosh Director December 20, 1995
- ---------------
David Frosh
</TABLE>
22
<PAGE> 23
CAM DATA SYSTEMS, INC.
INDEX TO
FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
ITEM 14(A)
<TABLE>
<CAPTION>
Page Reference
--------------
Annual Report
-------------
to Stockholders Form 10-K
------------ ---------
<S> <C> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . 14
Balance Sheets at September 30, 1995 and 1994 . . . . . . . . . . . 6
Statements of Income for Years Ended
September 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . 7
Statements of Cash Flows for Years Ended
September 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . 8
Statements of Stockholders' Equity
for Years Ended September 30, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . 10-13
Report of Independent Auditors on Financial
Statement Schedule . . . . . . . . . . . . . . . . . . . . . . . . 24
Financial Statement Schedule
II. Valuation and Qualifying Accounts
for the Years Ended
September 30, 1995, 1994 and 1993 . . . . . . . . . . . . . 25
</TABLE>
All other financial statement schedules are omitted as the required information
is inapplicable or the information is presented in the financial statements or
related notes.
23
<PAGE> 24
REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE
The Board of Directors
CAM Data Systems, Inc.
We have audited the financial statements of CAM Data Systems, Inc. as of
September 30, 1995 and 1994, and for each of the three years in the period
ended September 30, 1995, and have issued our report thereon dated November 17,
1995. Our audits also included the financial statement schedule of CAM Data
Systems, Inc. listed in the accompanying index to financial statements and
financial statement schedules (Item 14(a)). This schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Orange County, California
November 17, 1995
24
<PAGE> 25
CAM DATA SYSTEMS, INC.
SCHEDULE II-- VALUATION AND QUALIFYING ACCOUNTS
Years Ended September 30, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Deductions/
Balance at Additions Accounts written
Beginning charged to off net of Balance at
of Year income recoveries end of year
Allowance for doubtful
accounts receivable:
<S> <C> <C> <C> <C>
1995: $120,000 $157,800 $137,800 $140,000
1994: $90,000 $135,900 $105,900 $120,000
1993: $85,000 $124,800 $119,800 $90,000
</TABLE>
25
<PAGE> 26
CAM DATA SYSTEMS, INC.
EXHIBIT INDEX TO THE FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<PAGE> 27
CAM DATA SYSTEMS, INC.
EXHIBIT INDEX TO THE FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1995
3(a) Articles of Incorporation of the Company, as amended (incorporated by
reference to Exhibit 3(a) to the 1988 Annual Report on Form 10-K
filed on January 12, 1989 - File No. 0-16569).
3(b) By-Laws of the Company (incorporated by reference to Exhibit 3(b) to
the S-18 Registration Statement).
10(a) Incentive Stock Option Plan (incorporated by referenced to Exhibit
10(b) to the S-18 Registration Statement).
10(b) Company's Lease for premises at Fountain Valley, California
(incorporated by reference to Exhibit 10(b) to the 1988 Annual Report
on Form 10-K filed on January 12, 1989 - File No. 0-16569).
10(c) 1993 Stock Option Plan (incorporated by reference to the exhibits on
Form S-8 Registration Statement filed on June 21, 1993).
10(d) Registration Statement (incorporated by reference to the exhibits on
Form S-3 No. 33-57564 Registration Statement filed on June 17, 1993).
10(e) Extension to Company's Lease for premises at Fountain Valley,
California (incorporated by reference to Exhibit 10 (i) to the 1993
Annual Report on Form 10-K filed on December 27, 1993 - File No.
0-16569).
10(f) Line of Credit Agreement, dated July 17, 1995, with Silicon Valley
Bank.
10(g) Amendment to Company's lease for premises at Hayward, California,
dated May 1, 1995
13(a) Annual Report to Stockholders for the fiscal year ended September 30,
1995.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
<PAGE> 28
10(f) Line of Credit Agreement, dated July 17, 1995, with
Silicon Valley Bank.
<PAGE> 1
Exhibit 10(f)
SILICON VALLEY BANK
AMENDMENT TO LOAN AND
SECURITY AGREEMENT
BORROWER: CAM DATA SYSTEMS, INC.
ADDRESS: 17520 NEWHOPE STREET, SUITE 100
FOUNTAIN VALLEY, CALIFORNIA 92708
DATE: JULY 17, 1995
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT is entered into
between SILICON VALLEY BANK ("Silicon") and the borrower named above (the
"Borrower").
The Parties agree to amend the Loan and Security Agreement between
them, dated June 30, 1992, as amended by that certain Amendment to Loan
Agreement dated July 7, 1993, and as amended by that Amendment to Loan
Agreement dated June 28, 1994 (as amended, the "Loan Agreement"), as follows.
(Capitalized terms used but not defined in this Amendment, shall have the
meanings set forth in the Loan Agreement.)
1. AMENDED SCHEDULE. The Schedule to Loan and Security Agreement
is amended, effective on the date hereof, to read as set forth on the Amended
Schedule to Loan and Security Agreement attached hereto.
2. FINANCIAL REPORTING. Section 3.7 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
3.7 FINANCIAL CONDITION AND STATEMENTS. All financial
statements now or in the future delivered to Silicon have
been, and will be, prepared in conformity with generally
accepted accounting principles and now and in the future will
completely and accurately reflect the financial condition of
the Borrower, at the times and for the periods therein stated.
Since the last date covered by any such statement, there has
been no material adverse change in the financial condition or
business of the Borrower. The Borrower is now and will
continue to be solvent. The Borrower will provide Silicon:
(i) at all times that any Obligations remain outstanding,
within 30 days after the end of each month, a monthly
financial statement prepared by the Borrower, and a monthly
Compliance Certificate; the Compliance Certificate shall be in
<PAGE> 2
such form as Silicon shall reasonably specify, signed by the
Chief Financial Officer of the Borrower, certifying that
throughout such month, the Borrower was in full compliance
with all of the terms and conditions of this Agreement, and
setting forth calculations showing compliance with the
financial covenants set forth on the Schedule and such other
information as Silicon shall reasonably request; (ii) at all
other times, within 30 days after the end of each fiscal
quarter, a quarterly financial statement prepared by the
Borrower, and a quarterly Compliance Certificate; the
Compliance Certificate shall be in such form as Silicon shall
reasonably specify, signed by the Chief Financial Officer of
the Borrower, certifying that throughout such fiscal quarter,
the Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations
showing compliance with the financial covenants set forth on
the Schedule and such other information as Silicon shall
reasonably request; (iii) copies of the Borrower's Reports to
the Securities Exchange Commission on Forms 10-Q and 10-K
within five days after the earlier of the date they are filed
or are required to be filed with the Securities Exchange
Commission; and (iv) within 90 days following the end of the
Borrower's fiscal year, complete annual financial statements,
certified by independent certified public accountants
acceptable to Silicon and accompanied by the unqualified
report thereon by said independent certified public
accountants.
3. FACILITY FEE. Borrower shall concurrently pay to Silicon a
facility fee in the amount of $1,875.00, which shall be in addition to all
interest and all other fees payable to Silicon and shall be non-refundable.
4. REPRESENTATIONS TRUE. Borrower represents and warrants to
Silicon that all representations and warranties set forth in the Loan
Agreement, as amended hereby, are true and correct.
5. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any
prior written amendments to the Loan Agreement signed by Silicon and the
Borrower, and the other written documents and agreements between Silicon and
the Borrower set forth in full all of the representations and agreements of the
parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof. Except as herein expressly amended, all of
the terms and provisions of the Loan Agreement, and all other documents and
agreements between Silicon and the Borrower shall continue in full force and
effect and the same are hereby ratified and confirmed.
<PAGE> 3
BORROWER: SILICON:
CAM DATA SYSTEMS, INC. SILICON VALLEY BANK
BY_______________________________ BY_______________________________
PRESIDENT OR VICE PRESIDENT TITLE____________________________
BY_______________________________
SECRETARY OR ASS'T SECRETARY
<PAGE> 4
SILICON VALLEY BANK
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: CAM DATA SYSTEMS, INC.
ADDRESS: 17520 NEWHOPE STREET, SUITE 100
FOUNTAIN VALLEY, CALIFORNIA 92708
DATE: JULY 17, 1995
<TABLE>
<S> <C>
CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of:
(i) $750,000 at any one time outstanding;
or (ii) 75% of the Net Amount of
Borrower's accounts, which Silicon in its
discretion deems eligible for borrowing.
"Net Amount" of an account means the
gross amount of the account, minus all
applicable sales, use, excise and other
similar taxes and minus all discounts,
credits and allowances of any nature
granted or claimed.
Without limiting the fact that the
determination of which accounts are
eligible for borrowing is a matter of
Silicon's discretion, the following will
not be deemed eligible for borrowing:
accounts outstanding for more than 90
days from the invoice date, accounts
subject to any contingencies, accounts
owing from an account debtor outside the
United States (unless pre-approved by
Silicon in its discretion, or backed by a
letter of credit satisfactory to Silicon,
or FCIA insured satisfactory to Silicon),
accounts owing from one account debtor to
the extent they exceed 25% of the total
eligible accounts outstanding, accounts
owing from an affiliate of Borrower, and
accounts owing from an account debtor to
whom Borrower is or may be liable for
goods purchased from such account debtor
or otherwise. In addition, if more than
50% of the accounts owing from an account
debtor are outstanding more than 90 days
from the invoice date or are otherwise
not eligible accounts, then all accounts
owing from that account debtor will be
deemed ineligible for borrowing.
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
LETTERS OF CREDIT SUBLIMIT Silicon, in its discretion, will from
Time to time during the term of this
Agreement issue letters of credit for the
account of the Borrower ("Letters of
Credit"), in an aggregate amount at any
one time outstanding not to exceed
$100,000, upon the request of the
Borrower and upon execution and delivery
by the Borrower of Applications for
Letters of Credit and such other
documentation as Silicon shall specify
(the "Letter of Credit Documentation").
Fees for the Letters of Credit shall be
as provided in the Letter of Credit
Documentation. The Credit Limit set forth
above and the Loans available under this
Agreement at any time shall be reduced by
the face amount of Letters of Credit from
time to time outstanding.
INTEREST RATE (Section 1.2): A rate equal to the "Prime Rate" in
effect from time to time, plus 1.00% per
annum. Interest shall be calculated on
the basis of a 360-day year for the
actual number of days elapsed. "Prime
Rate" means the rate announced from time
to time by Silicon as its "prime rate;"
it is a base rate upon which other rates
charged by Silicon are based, and it is
not necessarily the best rate available
at Silicon. The interest rate applicable
to the Obligations shall change on each
date there is a change in the Prime Rate.
LOAN ORIGINATION FEE (Section 1.3): SEE AMENDMENT TO LOAN AND SECURITY
AGREEMENT OF EVEN DATE.
MATURITY DATE
(Section 5.1): JUNE 5, 1996
PRIOR NAMES OF BORROWER
(Section 3.2): SILVER PLUS
TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 3423 INVESTMENT, SUITE 10, HAYWARD,
CA 94545;
2401 HASSELL ROAD, SUITE 1515, HOFFMAN
ESTATES, IL 60195;
352 VILLAGE STREET, MILLIS, MA 02054
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent,
Borrower may do the following, provided
that, after giving effect thereto, no
Event of Default has occurred and no
event has occurred which, with notice or
passage of time or both, would constitute
an Event of Default, and provided that
the following are done in compliance with
all applicable laws, rules and
regulations: (i) repurchase shares of
Borrower's stock pursuant to any employee
stock purchase or benefit plan, provided
that the total amount paid by Borrower
for such stock does not exceed $100,000
in any fiscal year.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the
following covenants. Compliance shall
be determined as of the end of each
quarter, except as otherwise specifically
provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of
"Quick Assets" to current liabilities
of not less than 1.25 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net
worth of not less than $2,000,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total
liabilities to tangible net worth of
not more than 1.00 to 1.
PROFITABILITY Borrower shall not incur a loss (after
taxes) for any fiscal year, except that
in a single fiscal quarter during each
fiscal year Borrower may incur a loss
(after taxes) in an amount not to exceed
$100,000.
DEFINITIONS: "Current assets," and "current
liabilities" shall have the meanings
ascribed to them in accordance with
generally accepted accounting principles.
"Tangible net worth" means the excess of
total assets over total liabilities,
determined in accordance with generally
accepted accounting principles, excluding
however all assets which would be
classified as intangible assets under
generally accepted accounting principles,
including without limitation goodwill,
licenses, patents, trademarks, trade
names, copyrights, and franchises.
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
"Quick Assets" means cash on hand or on
deposit in banks, readily marketable
securities issued by the United States,
readily marketable commercial paper rated
"A-1" by Standard & Poor's Corporation
(or a similar rating by a similar rating
organization), certificates of deposit
and banker's acceptances, and accounts
receivable (net of allowance for doubtful
accounts).
SUBORDINATED DEBT: "Liabilities" for purposes of the
foregoing covenants do not include
indebtedness which is subordinated to the
indebtedness to Silicon under a
subordination agreement in form specified
by Silicon or by language in the
instrument evidencing the indebtedness
which is acceptable to Silicon.
OTHER COVENANTS (Section 4.1): Borrower shall at all times comply with
all of the following additional
covenants:
1. BANKING RELATIONSHIP. Borrower
shall at all times maintain its primary
banking relationship with Silicon.
2. BORROWING BASE CERTIFICATE AND
LISTING. At all times that any
Obligations remain outstanding, within 20
days after the end of each month,
Borrower shall provide Silicon with a
Borrowing Base Certificate in such form
as Silicon shall specify, and an aged
listing of Borrower's accounts receivable
and accounts payable. At all other
times, within 30 days after the end of
each fiscal quarter, Borrower shall
provide Silicon with a Borrowing Base
Certificate in such form as Silicon shall
specify, and an aged listing of
Borrower's accounts receivable.
Additionally, prior to any new Loans
being advanced, Borrower shall provide
Silicon with a current Borrowing Base
Certificate in such form as Silicon shall
specify, and an aged listing of
Borrower's accounts receivable and
accounts payable.
3. INDEBTEDNESS. Without limiting
any of the foregoing terms or provisions
of this Agreement, Borrower shall not in
the future incur indebtedness for
borrowed money, except for (i)
indebtedness to Silicon, and (ii)
indebtedness incurred in the future for
the purchase price of or lease of
equipment in an aggregate amount not
exceeding $250,000 at any time
outstanding.
4. COPYRIGHT SECURITY AGREEMENT.
Borrower shall continue in full force and
effect the Security Agreement
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
in Copyrighted Works, executed by
Borrower in favor of Silicon, in
conjunction with the Amendment to Loan
Agreement dated July 7, 1993. The
Borrower shall cause the Security
Agreement in Copyrighted Works to remain
in full force and effect while any
Obligations remain outstanding.
5. ACCOUNTS RECEIVABLE AUDITS. No
accounts receivable audits as set forth
under Section 4.5 of this Agreement shall
be required during periods in which no
Obligations remain outstanding. An
accounts receivable audit as set forth
under Section 4.5 of this Agreement shall
be conducted and completed, with
satisfactory results, within 30 days
after any new Loan is made hereunder.
Additionally, at all times that any
Obligations remain outstanding, the
accounts receivable audits by third
parties retained by Silicon as set forth
in Section 4.5 of this Agreement shall be
conducted on a semi-annual basis.
</TABLE>
BORROWER:
CAM DATA SYSTEMS, INC.
BY_______________________________
PRESIDENT OR VICE PRESIDENT
BY_______________________________
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY_______________________________
TITLE____________________________
<PAGE> 1
10(G) Amendment to Company's lease for premises at Hayward, California,
dated May 1, 1995
<PAGE> 2
AMENDMENT TO LEASE - RENEWAL
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the "Amendment") is made and entered into as of
February 6, l995, by and between Cam Data Systems, Inc., a Delaware
Corporation, dba: Cam Data Systems. ("Lessee"), and Eden Landing Associates a
California General Partnership, dba Commerce Park Eden Landing by R&B
Commercial Management Company, Inc., as Manager and Agent for Owner ("Lessor"),
with respect to that certain Occupancy Agreement dated as of February 6, 1995
(the "Lease"), and entered into by and between Lessor and Lessee, pursuant to
which Lessee Leases from Lessor those certain premises (the "Premises")
described as 3423 Investment Blvd., Suite 10, Hayward, California in that
certain project (the "Project") known as Commerce Park Eden Landing located at
Hayward, California. Unless otherwise defined herein, all capitalized terms
used in this Amendment shall have the same meanings as are ascribed to such
terms in the Lease. Lessor and Lessee hereby agrees as follows:
AMENDMENTS
"1.06 LEASE TERM" shall hereafter additionally provide as follows: The term
of this Lease shall be renewed for a period twelve (12) months and 0 days,
commencing on May 1, l995 and ending on April 30, l996.
"1.07 BASE MONTHLY RENT" shall hereafter additionally provide as follows:
The Base Monthly Rent for the renewal period $1,450.00 in lawful money of the
United States of America.
"1.08 SECURITY DEPOSIT" shall hereafter additionally provide as follows: The
Security Deposit for the renewal period shall be $1,510.00 which represents an
increase of $42.72 over the amount currently deposited with Lessor. Lessee
acknowledges that the incremental increase amount is due and payable
immediately upon execution of this Amendment.
SPECIAL PROVISIONS
Special Provisions of the Amendment number 34.00 through 34.00 are attached
hereto and made a part hereof.
INCORPORATION
Except as otherwise expressly set forth herein, and to the extent necessary to
give effect to the provisions hereof, all terms and conditions of the Lease
shall remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment as of
the date first set forth above.
<TABLE>
<CAPTION>
LESSOR LESSEE
<S> <C>
EDEN LANDING ASSOCIATES, CAM DATA SYSTEMS, INC.
A CALIFORNIA GENERAL PARTNERSHIP A DELAWARE CORPORATION,
DBA: COMMERCE PARK DBA: CAM DATA SYSTEMS
EDEN LANDING
By: R&B COMMERCIAL MANAGEMENT
COMPANY INC. (Agent), A California Corporation
By: By:
---------------------------------- -------------------------------------------
Frances Gurriere Paul Caceres
Regional Manager Chief Financial Officer
----------------------------------- -------------------------------------------
---------------------------------- -------------------------------------------
(Execution Date) (Execution Date)
</TABLE>
<PAGE> 1
13(a) Annual Report to Stockholders for the fiscal year ended September 30,
1995.
<PAGE> 2
LETTER TO STOCKHOLDERS
I am pleased to report that 1995 was a very productive year for CAM Data. This
was our fourth consecutive profitable year. Our balance sheet strength
increased substantially in 1995 and remains very strong for a company of our
size. Best of all, the outlook for the Company's future has never been
brighter.
Highlights of the year:
o Fiscal 1995 revenues increased 11% to a record
$14.7 million compared to $13.2 million in 1994.
o Sales have increased over 175% in the past five
years, with each successive year showing an
increase to new record levels.
o Pre-tax earnings for fiscal 1995 increased 101%
to $603,000, compared to $300,000 in 1994.
o After tax earnings increased 56% to $413,000 or
$.20 per share in 1995 compared to $265,000 or
$.13 per share in 1994.
o Our cash position increased 87%, or $1.4 million
from $1.6 million in 1994 to $3 million in 1995.
o The Company's current cash position represents
$1.56 per share in cash.
o Working capital increased 42% from $2,352,000
in 1994 to $3,340,000 in 1995.
Sales of our Profit$ product for shoe, apparel, sporting goods and
gift stores was the primary reason for the overall increase in Company
revenues. The Profit$ product saw many significant improvements in 1995 and
continues as the clear market leader in our primary target markets. We have
aggressive plans for enhancing Profit$ during the next year and are expanding
our development group for this product.
In April, we acquired the product rights to "The Retailer" and "POS
Retailer" software products. We also took over the customer base of more than
1,000 "Retailer" customers; our "CAM" software product is a natural upgrade for
the these customers. In addition, we are continuing to support the remaining
dealer network and derive revenue from the distribution of the "Retailer"
software products through this channel.
At the same time we acquired the rights to "The Retailer" products and
customers, we made a very important addition to our management team. David
Fuller has joined CAM Data in the newly created position of vice president of
research and development. Mr. Fuller has significant research and development
management experience with IBM, Itel and Retail Solutions, Inc. (the designer
of "The Retailer"). Under Fuller's leadership, we have already seen significant
improvement in the productivity of our development group. We have great
expectations in this area for the coming year.
In September, we achieved a milestone for our Company by taking our
CAM system from a proprietary operating environment to an "open" environment.
We now offer our CAM system in DOS, Novell, Windows and Windows 95 operating
environments. We also will continue to offer the product in its traditional
environment which offers several competitive advantages. While our proprietary
operating environment continues to offer price and performance competitive
advantages in most situations, there are those customers whose requirements
mandate that we offer an "open architecture," network-based solution. Another
significant aspect of our new product is the ability to handle larger
retailers. By offering new operating environments, we have substantially
increased the number of system users that our CAM system can handle and we have
opened the doors to handling much larger databases. We expect sales of our CAM
product to increase as a result of our new "open" environment options. Interest
in this new product appears to be growing rapidly.
In 1995, we made significant improvements in the quality of service we
provide to the more than 4,000 retail stores using our products to manage their
businesses. These improvements are the result of a very focused, company-wide
effort. Our automated service system shows us that we take approximately 1,000
support calls per week from our customer base. Of those 1,000 calls over 50
percent are handled in less than 15 minutes, while over 90 percent are handled
within one hour. The "Quality Surveys" regularly sent to our customers show a
significant increase in the level of customer satisfaction. Another indication
that our service efforts over the past year are paying big dividends is the
informal, positive feedback we have received at trade shows, user group
meetings and other events. We have turned our service department into an
industry leader and a company strength. We are very proud of our initial
accomplishments, and we will continue to strive to achieve excellence in our
service department in 1996.
1
<PAGE> 3
LETTER TO STOCKHOLDERS
A further benefit of our automated service system has been its ability
to show us areas in our products and within our company that can be improved to
minimize the Company's service load and improve our products for our customers.
Management receives reports showing why customers call and what types of
problems they might be experiencing. The reports also show how much time is
spent on particular types of problems by our service department and which
customers utilize our service the most. This information may suggest that
programming changes be made to improve an area of our software, that a customer
receive additional training or that a certain section of the documentation be
improved. These reports may also suggest new procedures during initial
installations of our systems that might be helpful or that we may have a
problem with a particular type of hardware we are providing. In short, the
information provided by our automated service system is invaluable in helping
to improve the efficiency and profitability of our entire company by showing
management the areas to focus on that will have the greatest impact for our
customers as well as our bottom line.
During the year, we not only focused on after-sale service, but we
focused on the quality of our initial training and installation. In this area,
we also instituted a procedure of performing "Quality Surveys" of our customers
after initial installation. The quality of our installation and training
programs has improved dramatically based on the overwhelmingly positive
feedback we have received from the "Quality Surveys" of new customers. These
surveys also provide valuable information on areas that the installation and
sales group can improve in. It is now rare that we receive any kind of
significant negative response on the surveys.
The Company continues to benefit from excellent financial controls. We
work hard to maintain optimal relationships with our vendors, paying all of our
obligations on time. Our excellent cash flow and enhanced cash position are in
part reflective of our controls and efficient finance department.
As I have in past years, I feel it is important to again mention the
outstanding performance of our twenty-one person sales force. Our sales people
continue to be the most experienced and productive group in the industry. As a
result, they also continue to receive the best overall compensation in the
industry. We had a fifth straight year of zero unforced turnover within the
sales force.
We are establishing a marketing presence in Canada. We made the
necessary modifications to our CAM and Profit$ products to be able to market
our software in this country and have begun significant marketing activities
in this new territory. Initial response has been excellent and we expect this
to be a growth area for the Company in 1996.
Again, this past year no new competitors of any significance have
appeared in the marketplace. Most of our competitors continue to be small or
"boutique" private companies. We still believe that we are by far the largest
company addressing our primary target market from a financial standpoint.
Furthermore, we believe that no primary competitor comes close to matching the
Company's infrastructure and overall resources. We feel that no company is
positioned better than CAM Data to address the needs of our target market.
In October of 1995, we established a new network services division.
This division provides network consulting services, installation and hardware
to our retail customers as well as other industries. We have already had a
strong response from several larger customers and prospects regarding these
services. The network services division should provide future growth
opportunities for CAM Data in 1996 and beyond.
In August, we completed the sale of our Silver Plus division for
$255,000 in cash. This division, which targeted the office products dealer and
small wholesaler markets, had declining revenues and was not profitable this
past year. Silver Plus represented less than 3 percent of our sales, and
management determined that the current results and future potential of this
division no longer warranted the distraction from our primary business. The
sale of Silver Plus now allows management to focus on the profit opportunities
of our target markets.
Last year in this letter, I discussed my disappointment with the
historical performance of the securities of the Company. I also stated that I
felt the only long-term solution was to focus on our business and continue to
improve our financial performance. With
2
<PAGE> 4
some of our success over the past year we have seen the number of market makers
in our stock nearly double, the trading volume and frequency of trading
increase and the volume of requests for information rise. The value of the
Company's stock has also increased 80 percent, based on the closing bid in
fiscal 1995 compared to fiscal 1994. We will continue to focus on our business
and our financial performance as our primary vehicle in meeting our goal of
enhancing shareholder value.
As always, I would like to thank our stockholders, customers and
dedicated employees for their support and confidence in us as we continue to
build and grow the Company. The management of CAM Data remains committed to
serving all of your interests to the best of our abilities.
Sincerely,
Sig
Geoffrey D. Knapp
Chief Executive Officer and
Chairman of the Board
<TABLE>
<CAPTION>
Net Revenues
------------
(in thousands)
<S> <C>
1995 $14,734
1994 $13,218
1993 $11,922
1992 $ 9,047
1991 $ 5,318
</TABLE>
3
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED WITH FISCAL 1994
NET REVENUES for the fiscal year ended September 30, 1995 increased
11% to $14,733,800, consisting of a 12% increase in system revenues and a 10%
increase in service revenues from the year ended September 30, 1994. The
increase in system revenues was primarily a result of increased demand for the
PROFIT$ software product, sales for this product increased 30% in 1995. The
increase in service revenues was attributed to an increase in the installed
customer base.
GROSS MARGIN increased to 50% in fiscal 1995. The gross margin for
system revenues increased to 53% in fiscal 1995 compared to 51% in fiscal 1994.
There were no significant price increases in fiscal 1995. The gross margin for
service revenues was 36% in fiscal 1995 compared to 22% in fiscal 1994. The
increase in gross margin for system revenues was due to less list price
discounting for both the CAM and PROFIT$ software products, partially offset by
higher installation costs. The margin increase related to service revenue was
due to the realignment of the labor force resulting in better efficiency,
combined with service revenue increases related to a larger customer base.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES expressed as a percentage
of net revenues was 40% for fiscal 1995 compared to 39% for fiscal 1994.
Selling, general, and administrative expenses increased by 14% to $5,886,600 in
fiscal 1995 from $5,168,700 in fiscal 1994. The increase in expenditures was
due to an increase in sales commissions related to higher sales, and increases
in telephone, advertising, trade show expenses and payroll costs.
RESEARCH AND DEVELOPMENT EXPENSE increased 57% to $967,100 in fiscal
1995 from $617,000 in fiscal 1994. This increase was related to both the
continued enhancement of the CAM and Profit$ software products, and the
research and development of new software products.
THE EFFECTIVE INCOME TAX RATE was 32% for fiscal 1995, compared to 12%
for fiscal 1994. The Company's income tax rate in fiscal 1995 increased versus
fiscal 1994, as the net operating loss carryforwards have now been fully
utilized for both federal and state income tax purposes.
FISCAL 1994 COMPARED WITH FISCAL 1993
NET REVENUES for the fiscal year ended September 30, 1994 increased
11% to $13,217,900, consisting of an 11% increase in system revenues and a 10%
increase in service revenues from the year ended September 30, 1993. The
increase in system revenues is attributed to increased marketing. This
marketing activity resulted in higher sales volume and a higher average system
price due to an increase in larger system sales. The increase in service
revenues was attributed to an increase in the installed customer base.
GROSS MARGIN decreased to 46% in fiscal 1994. The gross margin for
system revenues remained constant at 51% in fiscal 1994 compared to fiscal
1993. There were no significant price increases in fiscal 1994. The gross
margin for service revenues was 22% in fiscal 1994 compared to 35% in fiscal
1993. The margin decrease in service revenue was due to an increase in service
personnel and related expenses required to service the increased customer base.
In order to provide superior service more efficiently, we continued to develop
and implement a new automated service system. In addition, we have increased
the size of our phone support staff to handle the increased number of calls we
are receiving from our larger customer base and to accommodate the growth of
our customer base. The Company should benefit from increased efficiency in the
service department, and from a more satisfied customer base.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES expressed as a
percentage of net revenues was 39% for fiscal 1994 compared to 38% for fiscal
1993. Selling, general, and administrative expenses increased by 13% to
$5,168,700 in fiscal 1994 from $4,570,600 in fiscal 1993. The increase in
expenditures was due to an increase in personnel, and increases in telephone,
advertising, and trade show expenses.
RESEARCH AND DEVELOPMENT EXPENSE increased 52% to $617,000 in fiscal
1994 from $407,000 in 1993. This increase was related to both the continued
enhancement of the CAM and Profit$ software products, and the development of
new software technologies.
4
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE EFFECTIVE INCOME TAX RATE was 12% for fiscal 1994, compared to 11%
for fiscal 1993. The Company's tax rate is less than the statutory rate
primarily due to the utilization of net operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $3,015,700 at September
30, 1995 compared to $1,614,900 on September 30, 1994. The Company generated
$1,356,600 from operations in fiscal 1995 compared to $942,700 in fiscal 1994.
In fiscal 1995 the Company generated $254,700 from the sale of the Silver Plus
division. The Company expended $220,500 in fiscal 1995 for the purchase of
computer equipment compared to the utilization of $421,300 in fiscal 1994. In
June 1995, the Company renewed a line of credit with a commercial bank which
expires in June 1996, for borrowings up to $750,000 with interest at the Banks
prime rate plus 1%. Borrowings under the line of credit are secured by the
assets of the Company. As of September 30, 1995, the Company had no amounts
outstanding under the line.
The Company has no significant commitments for expenditures other than
the lease of its corporate and sales offices. However, the Company plans to
build a facility in Nevada to house the research and development group.
Management believes the Company's existing working capital, coupled
with funds generated from the Company's operations, will be sufficient to fund
its presently anticipated working capital requirements for the foreseeable
future.
Inflation has had no significant impact on the Company's operations.
5
<PAGE> 7
BALANCE SHEETS
<TABLE>
<CAPTION>
==============================================================================================================================
September 30,
-----------------------------
1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $3,015,700 $1,614,900
Accounts receivable, net of allowance for
doubtful accounts of $140,000 in 1995 ($120,000 in 1994) 1,817,100 1,892,400
Inventories 433,800 310,400
Prepaid expenses 76,600 83,400
Deferred income taxes 50,000 --
----------------------------
Total current assets 5,393,200 3,901,100
Furniture and equipment, net 442,600 514,800
License agreement and capitalized software costs,
net of accumulated amortization 268,100 752,800
Note receivable from officer/stockholder, due
upon demand, with interest at prime rate 15,000 17,600
----------------------------
Other assets 22,200 16,100
----------------------------
Total Assets $6,141,100 $5,202,400
LIABILITIES & STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $615,200 $791,100
Accrued compensation and related expenses 594,000 354,000
Income taxes payable 201,300 21,100
Customer deposits and deferred service revenue 151,800 183,000
Accrued installation costs 110,000 107,000
Other accrued liabilities 381,000 93,400
Total current liabilities 2,053,300 1,549,600
Stockholders equity:
Common stock, $.001 par value, 5,000,000 shares authorized, 1,931,000 shares
issued and outstanding in 1995, (1,911,000 shares in 1994) 1,900 1,900
Paid-in capital in excess of par value 3,795,700 3,785,700
Notes receivable for purchase of common stock (60,900) (72,800)
Retained earnings (accumulated deficit) 351,100 (62,000)
----------------------------
Total stockholders equity 4,087,800 3,652,800
----------------------------
Total liabilities and stockholders equity $6,141,100 $5,202,400
============================
</TABLE>
See accompanying notes.
6
<PAGE> 8
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
==============================================================================================================================
Years Ended
September 30,
-----------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Net system revenues $12,043,300 $10,762,400 $9,692,800
Net service revenues 2,690,500 2,455,500 2,229,000
-----------------------------------------
Total net revenues 14,733,800 13,217,900 11,921,800
-----------------------------------------
COSTS AND EXPENSES:
Cost of system revenues 5,625,000 5,238,600 4,723,400
Cost of service revenues 1,730,000 1,911,500 1,446,800
-----------------------------------------
Total cost of revenues 7,355,000 7,150,100 6,170,200
Selling, general and administrative expenses 5,886,600 5,168,700 4,570,600
Research and development expense 967,100 617,000 407,000
Interest expense -- -- 4,000
Interest income (78,000) (17,400) (16,900)
-----------------------------------------
Total costs and expenses 14,130,700 12,918,400 11,134,900
-----------------------------------------
Income before taxes 603,100 299,500 786,900
Provision for income taxes 190,000 35,000 86,600
-----------------------------------------
Net income $ 413,100 $ 264,500 $ 700,300
=========================================
Primary net income per share $ .21 $ .14 $ .37
=========================================
Fully diluted net income per share $ .20 $ .13 $ .36
=========================================
Shares used in computing primary net income per share 1,999,200 1,959,800 1,892,800
=========================================
Shares used in computing fully-diluted net income per share 2,107,600 2,021,600 1,931,400
=========================================
</TABLE>
See accompanying notes.
7
<PAGE> 9
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
===============================================================================================================================
Years Ended
September 30,
------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 413,100 $ 264,500 $ 700,300
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 563,400 555,500 495,300
Provision for doubtful accounts 157,800 135,900 124,800
Decrease in notes receivable 14,500 12,200 15,300
Other -- -- (3,500)
Net changes in operating assets and liabilities 207,800 (25,400) (715,100)
------------------------------------------
Cash provided by operating activities 1,356,600 942,700 617,100
------------------------------------------
Cash flows from investing activities:
Purchase of furniture and equipment (208,200) (386,100) (266,500)
Capitalized software costs (12,300) (35,300) (106,400)
Sale of Silver Plus division 254,700 -- --
------------------------------------------
Cash provided by (used in) investing activities 34,200 (421,400) (372,900)
------------------------------------------
Cash flows from financing activities:
Proceeds from exercise of stock options and warrants 10,000 61,800 57,100
Repayment of notes -- -- (80,000)
Notes receivable repayments -- 28,200 --
------------------------------------------
Cash provided by (used in) financing activities 10,000 90,000 (22,900)
------------------------------------------
Net increase in cash and cash equivalents 1,400,800 611,300 221,300
Cash and cash equivalents at beginning of year 1,614,900 1,003,600 782,300
------------------------------------------
Cash and cash equivalents at end of year $ 3,015,700 $ 1,614,900 $ 1,003,600
==========================================
</TABLE>
See accompanying notes.
8
<PAGE> 10
STATEMENT OF STOCKHOLDERS EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
====================================================================================================================================
Notes
Paid-in receivables Retained
Common Stock capital in for purchases earnings
------------ excess of of common (accumu-
Shares Amount par value stock lated deficit) Total
------ ------ --------- ----- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1992 1,348,000 $1,300 $3,135,600 $(72,200) $(1,026,800) $2,037,900
Issuance of common stock
upon exercise of stock
options 132,000 200 82,700 (25,800) -- 57,100
Issuance of common stock
related to acquisition
of PROFIT$ software 300,000 300 479,700 -- -- 480,000
Notes receivable write-off -- -- -- 12,000 -- 12,000
Net income -- -- -- -- 700,300 700,300
------------------------------------------------------------------------------------------------
Balance at September 30, 1993 1,780,000 1,800 3,698,000 (86,000) (326,500) 3,287,300
Issuance of common stock
upon exercise of stock
options 131,000 100 87,700 (26,000) -- 61,800
Notes receivable write-off -- -- -- 11,000 -- 11,000
Notes receivable payments -- -- -- 28,200 -- 28,200
Net income -- -- -- -- 264,500 264,500
------------------------------------------------------------------------------------------------
Balance at September 30, 1994 1,911,000 1,900 3,785,700 (72,800) (62,000) 3,652,800
Issuance of common stock
upon exercise of stock
options 20,000 -- 10,000 -- -- 10,000
Notes receivable write-off -- -- -- 11,900 -- 11,900
Net income -- -- -- -- 413,100 413,100
------------------------------------------------------------------------------------------------
Balance at September 30, 1995 1,931,000 $ 1,900 $ 3,795,700 $(60,900) $ 351,100 $4,087,800
================================================================================================
</TABLE>
See accompanying notes.
9
<PAGE> 11
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION, BUSINESS, AND PRESENTATION
The Company's principal business is to design, assemble, market,
service, and support point of sale, order entry, inventory control, and
accounting systems for small to medium size retailers. The Company earns
revenues from the sale of its systems and monthly service fees charged to its
customers under service agreements. Sales and service operations are located in
California and Massachusetts, while the Company's customers are located
throughout the United States.
CASH EQUIVALENTS
Cash equivalents represent highly liquid investments with original
maturities of three months or less.
INVENTORIES
Inventories are stated at the lower of cost determined on a first-in,
first-out basis, or net realizable value, and are composed of electronic point
of sale hardware and computer equipment used in the sale and service of the
Company's products.
FURNITURE AND EQUIPMENT
Furniture and equipment is stated at cost and is composed of the
following:
<TABLE>
<CAPTION>
September 30,
------------------------
1995 1994
------------------------
<S> <C> <C>
Computer equipment and furniture $1,059,600 $ 980,500
Automobiles 82,200 100,700
Demonstration and loaner equipment 308,200 340,000
------------------------
1,450,000 1,421,200
Less accumulated depreciation 1,007,400 906,400
------------------------
$ 442,600 $ 514,800
------------------------
</TABLE>
Depreciation is provided on the straight-line method over the
estimated useful lives (primarily three to five years) of the respective
assets.
CONCENTRATIONS OF CREDIT RISK
The Company sells its products primarily to small to medium size
retailers. Credit is extended based on an evaluation of the customer's financial
condition and collateral is generally not required. Credit losses have
traditionally been minimal and such losses have been within management's
expectations.
REVENUE RECOGNITION POLICY
In accordance with Statement of Position 91-1 (Software Revenue
Recognition) systems revenue is recognized when the hardware and software are
shipped to the customer. Service revenue for phone, software, and hardware
support is recognized ratably over the period of the service contract.
PER SHARE INFORMATION
Net income per share is based on the weighted average number of common
and common equivalent shares outstanding.
RECLASSIFICATIONS
Certain 1994 and 1993 amounts have been reclassified to conform with
the 1995 presentation.
ADVERTISING
The Company expenses the production costs of advertising as incurred.
Advertising expense for the years ended September 30, 1995, 1994 and 1993 was
$225,300, $181,100 and $154,100, respectively.
STATEMENTS OF CASH FLOWS
Net changes in operating assets and liabilities as shown in the
statements of cash flows are as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
-----------------------------------------------
1995 1994 1993
-----------------------------------------------
<S> <C> <C> <C>
Decrease (increase) in:
Accounts receivable $ (82,500) $ (202,700) $(791,100)
Inventory (123,400) 37,700 (167,100)
Prepaid expenses 6,800 500 (26,100)
Deferred income taxes (50,000) -- --
Other assets (6,100) 300 --
Increase (decrease) in:
Accounts payable (175,900) 123,500 184,400
Accrued installation costs 3,000 (18,000) 49,000
Accrued compensation 240,000 (42,000) (40,000)
Customer deposits (31,200) 126,800 3,200
Income taxes payable 180,200 (3,300) (28,100)
Other accrued liabilities 246,900 (48,200) 100,700
-----------------------------------------------
Net changes in operating
assets and liabilities $ 207,800 $ (25,400) $(715,100)
-----------------------------------------------
</TABLE>
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
2. ACQUISITIONS, DISPOSALS, LICENSE AGREEMENTS, AND CAPITALIZED SOFTWARE COSTS
In August of 1995, the Silver Plus division was sold for the net
amount of $254,700 in cash. The sale included all rights and title to the
Silver Plus software products, right to the revenue and the assumptions of
obligations under existing service contracts with Silver Plus customers, and
the rights to the Silver Plus customer lists. There was no gain or loss
recognized on this sale. The Silver Plus division marketed and serviced
computerized order entry and inventory management systems to office supply
wholesalers and retailers. The Silver Plus division contributed less than three
percent of the Company's total revenues, and was not a material component of the
Company.
In October of 1992, the Company acquired the PROFIT$ software package
by issuing 300,000 shares of its common stock with a fair market value of $1.60
per share ($480,000 in the aggregate). The PROFIT$ software is an inventory
management and point of sale software package aimed at the softgoods retail
market, such as shoes and apparel.
The Company capitalizes costs incurred to develop new marketable
software and enhance the Company's existing systems software. Costs incurred in
creating the software are charged to expense when incurred as research and
development until technological feasibility has been established through the
development of a detailed program design. Once technological feasibility has
been established, software production costs are capitalized and reported at the
lower of amortized cost or net realizable value.
License agreements, capitalized software, and intangible assets are
amortized on the straight-line method over estimated useful lives ranging from
three to five years. The assets are stated at cost and consist of the
following:
<TABLE>
<CAPTION>
September 30,
--------------------------
1995 1994
--------------------------
<S> <C> <C>
Capitalized software costs $1,175,200 $1,664,900
License agreement 200,000 200,000
Other intangible assets -- 168,000
--------------------------
1,375,200 2,032,900
Less accumulated amortization 1,107,100 1,280,100
--------------------------
$ 268,100 $ 752,800
--------------------------
</TABLE>
Amortization of capitalized license agreement, capitalized software
costs and other intangible assets charged to cost of sales for the years ended
September 30, 1995, 1994 and 1993, was $283,000, $317,500 and $355,100,
respectively.
3. LINE OF CREDIT
In July 1995, the Company renewed a line of credit with a commercial
bank for borrowings up to the lesser of $750,000 or 75% of the Company's
eligible accounts receivable with interest at the Bank's prime rate plus 1%
(9.75% at September 30, 1995). Borrowings under the line of credit are secured
by the assets of the Company. Under the terms of the credit agreement, the
Company is restricted from certain transactions and is required to maintain
certain financial ratios. As of September 30, 1995, the Company was in
compliance with its debt covenants. The line of credit expires in June 1996. As
of September 30, 1995, the Company had no amounts outstanding under the line
and there were no borrowings under the line during fiscal 1995, 1994 or 1993.
Interest paid was $4,000 during fiscal 1993. There was no interest paid in
fiscal 1995 or 1994.
4. TAXES BASED ON INCOME
The Company utilizes the liability method of accounting for income
taxes under which deferred taxes are determined based on differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates.
At September 30, 1995, the Company has general business credit
carryforwards of approximately $68,000 for federal and state income tax
purposes which begin to expire in fiscal year 2003.
The Company has AMT credit carryforwards of approximately $12,000,
which may be carried forward indefinitely.
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
The provision (benefit) for taxes based on income consists of the following:
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 220,000 $ 23,000 $ 12,000
State 20,000 12,000 74,600
--------------------------------------------
240,000 35,000 86,600
Deferred:
Federal (50,000) -- --
State -- -- --
(50,000) -- --
--------------------------------------------
Total provision $ 190,000 $ 35,000 $ 86,600
============================================
</TABLE>
A reconciliation of taxes computed at the statutory federal income tax
rate to income tax expense is as follows:
<TABLE>
<CAPTION>
Years Ended September 30,
--------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax at
statutory rate $ 205,000 $ 101,800 $ 267,500
Increases/(decreases)
in taxes resulting
from:
Increase (decrease) in federal
valuation allowance 65,500 (78,000) (235,500)
Utilization of general
business credits (125,900) -- --
State income taxes,
net of federal
benefit 13,200 7,900 49,200
Other,net 32,200 3,300 5,400
--------------------------------------------
$ 190,000 $ 35,000 $ 86,600
============================================
</TABLE>
Deferred income taxes are recorded to reflect the tax consequences on future
years of differences between the tax bases of assets and liabilities and their
bases for financial reporting purposes. Temporary differences and net operating
loss carryforwards which give rise to deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss
carryforwards $ -- $ 33,000 $ 147,000
General business
credit carryforwards 68,000 25,000 25,000
AMT credit
carryforward 12,000 24,000 --
Book depreciation in
excess of tax
depreciation 53,000 13,000 18,000
R&D expenditures
capitalized for tax 11,000 15,000 --
Accruals not currently
deductible for tax 189,000 64,000 95,000
--------------------------------------------
Total deferred tax
assets 333,000 174,000 285,000
Valuation allowance
for deferred tax
assets (260,000) (134,000) (226,000)
73,000 40,000 59,000
Deferred tax liabilities:
Software costs
capitalized for
book purposes (23,000) (40,000) (59,000)
--------------------------------------------
Net deferred tax assets $ 50,000 $ -- $ --
============================================
</TABLE>
Income taxes paid were $24,400, $32,700 and $114,700 for the years
ended September 30, 1995, 1994 and 1993, respectively.
5. COMMITMENTS AND CONTINGENCIES
The Company is committed at September 30, 1995 under various operating leases
for office facilities and equipment through January 1998. Minimum payments due
under these leases are as follows:
<TABLE>
<CAPTION>
Year ending
September 30
--------------------------------
<S> <C>
1996 $ 156,200
1997 154,400
1998 51,700
--------------------------------
$ 362,300
</TABLE>
Total rent expense for the years ended September 30, 1995, 1994 and
1993 was $305,300, $243,000 and $221,100, respectively.
12
<PAGE> 14
The Company is currently involved in litigation arising in the normal
course of business. Management believes that such litigation will have no
material effect on the Company's financial position or results of operations.
6. STOCK OPTIONS AND WARRANTS
In June 1987, the Board of Directors approved an Incentive Stock Plan
(the "ISO Plan") whereby eligible employees may be granted incentive stock
options to purchase the Company's common stock at a price not less than the fair
market value at the date of grant. The options are exercisable no earlier than
one year from the date of grant and thereafter in installments as may be
determined by the Board of Directors, and expire five years from the date of
grant. The Plan has a term of ten years. In April 1990, the shareholders of the
Company agreed to increase to 250,000, the number of shares of common stock
available for grant under the ISO Plan. There are currently no shares available
for future grant under the ISO Plan. There are currently no shares available
for future grant under the ISO Plan.
In April 1993, the shareholders of the Company approved the Company's
1993 Stock Option Plan (the "1993 Plan") under which non-statutory options may
be granted to key employees and individuals who provide services to the
Company, at a price not less than the fair market value at the date of grant,
and expire ten years from the date of grant. The options are exercisable based
on vesting periods as determined by the Board of Directors. The Plan allows for
the issuance of an aggregate of 400,000 shares of the Company's common stock.
The Plan has a term of ten years. There have been 327,000 options granted under
the 1993 Plan as of September 30, 1995.
A summary of stock option activity is as follows:
<TABLE>
<CAPTION>
ISO Non-ISO Option
Shares Shares Price
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at
September 30, 1992 115,000 185,000 $.50 to $3.75
Granted -- 45,000 $2.12 to $3.37
Exercised (29,000) (103,000) $.50 to $1.62
----------------------------------------------
Outstanding at
September 30, 1993 86,000 127,000 $.50 to $3.75
Granted -- 277,000 $1.75 to $2.13
Exercised (81,000) (50,000) $.50 to $2.13
----------------------------------------------
Outstanding at
September 30, 1994 5,000 354,000 $.50 to $3.75
Granted 65,000 $2.25 to $2.37
Exercised (5,000) (15,000) $.50
----------------------------------------------
Outstanding at
September 30, 1995 -- 404,000 $.87 to $3.75
==============================================
</TABLE>
There are 244,800 exercisable Non-ISO options outstanding at
September 30, 1995.
7. BENEFIT PLAN
The Company adopted a 401 (k) Plan for all eligible employees
effective July 1991. The Company may provide a matching contribution at the
discretion of the Companys Board of Directors. The Company's contribution
charged to operations during fiscal 1995, 1994 and 1993 pursuant to the plan
totaled $34,000, $17,000 and $16,500, respectively.
13
<PAGE> 15
REPORT OF INDEPENDENT AUDITORS
Board of Directors
CAM Data Systems, Inc.
We have audited the accompanying balance sheets of CAM Data Systems,
Inc. as of September 30, 1995 and 1994, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended September 30, 1995. These financial statements are the responsibility of
the Companys 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 financial statements referred to above present
fairly, in all material respects, the financial position of CAM Data Systems,
Inc. at September 30, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1995,
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Orange County, California
November 17, 1995
STOCK AND DIVIDEND DATA
The common stock of CAM Data Systems, Inc., is traded on the
over-the-counter market under the NASDAQ symbol CADA. Quarterly market price
information shown below represents the high and low bid prices. The OTC
quotations shown reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not represent actual transactions.
<TABLE>
<S> <C> <C>
Fiscal Year Ended September 30, 1995 High Low
Quarter Ended:
December 31 $ 2 1/2 $ 1 7/8
March 31 2 5/16 1 7/8
June 30 2 1/2 2 1/8
September 30 3 3/8 2 1/4
Fiscal Year Ended September 30, 1994
Quarter Ended:
December 31 $ 2 3/4 $ 1 3/4
March 31 3 1/2 2 1/8
June 30 3 1/2 2 3/4
September 30 3 1/8 2
</TABLE>
As of December 10, 1995, there were approximately 75 holders of record
of the Company's common stock. The Company believes there are in excess of 500
beneficial owners of the Company's common stock.
The Company does not anticipate paying dividends in the foreseeable future. The
Company has not paid dividends in the past and the payment of dividends in the
future is at the discretion of the Board of Directors, subject to any
limitations imposed by the laws of the State of Delaware.
14
<PAGE> 16
SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
==================================================================================================================
(Unaudited)
1995 Fiscal Quarter Ended
----------------------------------------------------------
In thousands, except per-share data. Dec 31 Mar 31 June 30 Sept 30
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net system and service revenues $ 3,743 $ 3,182 $ 3,804 $ 4,005
Gross profit 1,828 1,498 1,933 2,120
Income (loss) before taxes 137 (88) 203 351
Net income (loss) 84 (72) 178 223
Primary earnings (loss) per share .04 (.04) .09 .11
Fully diluted earnings (loss) per share .04 (.04) .09 .11
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1994 Fiscal Quarter Ended
---------------------------------------------------------
Dec 31 Mar 31 June 30 Sept 30
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net system and service revenues $ 3,194 $ 3,199 $ 3,354 $ 3,471
Gross profit 1,491 1,472 1,574 1,531
Income before taxes 129 52 72 47
Net income 103 52 68 42
Primary earnings per share .05 .03 .03 .03
Fully diluted earnings per share .05 .03 .03 .02
----------------------------------------------------------
</TABLE>
SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
====================================================================================================================================
In thousands, except per-share data. 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net system and service revenues $ 14,734 $ 13,218 $ 11,922 $ 9,047 $ 5,318
Income (loss) before taxes 603 300 787 567 (278)
Net income (loss) 413 265 700 510 (278)
Primary earnings (loss) per share .21 .14 .37 .33 (.25)
Fully diluted earnings (loss) per share .20 .13 .36 .28 (.25)
Total assets 6,141 5,202 4,698 3,263 1,605
Working capital 3,340 2,352 1,857 966 575
Long-term debt -- -- -- -- --
--------------------------------------------------------------------------
</TABLE>
15
<PAGE> 17
COMPANY INFORMATION
BOARD OF DIRECTORS
Geoffrey D. Knapp
Chairman and Chief Executive Officer
CAM Data Systems, Inc.
Walter Straub
President
Rainbow Technologies
David Frosh
Sales Executive
Automatic Data Processing
OFFICERS
Geoffrey D. Knapp
Chief Executive Officer
Paul Caceres Jr.
Chief Financial Officer
Timothy D. Coco
Vice President, Customer Service
Mark Bolton
Vice President, Operations
David Fuller
Vice President, Research and Development
CORPORATE OFFICE
17520 Newhope Street
Fountain Valley, CA 92708
(714) 241-9241
Facsimile: (714) 241-9893
REGISTRAR AND TRANSFER AGENT
American Stock Transfer Company
99 Wall Street
New York, NY 10005
INDEPENDENT AUDITORS
Ernst & Young LLP
18400 Von Karman Avenue
Irvine, CA 92715
SECURITIES COUNSEL
Phillips & Haddan
4695 MacArthur Court
Newport Beach, CA 92660
GENERAL COUNSEL
Lundell & Spadafore
1065 Asbury Street
San Jose, CA 95126
FORM 10-K
A copy of the Company's annual report on Form 10-K, (without exhibits), as filed
with the Securities and Exchange Commission, will be furnished to any
stockholder free of charge upon written request to the Companys Corporate
Finance Department.
16
<PAGE> 1
23 Consent of Independent Auditors.
<PAGE> 2
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of CAM Data Systems, Inc. of our report dated November 17, 1995, included in
the 1995 Annual Report to Stockholders of CAM Data Systems, Inc.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1993 Stock Option Plan of CAM Data Systems, Inc.
and in the Registration Statement (Form S-3 No. 33-57564) of CAM Data Systems,
Inc. and in the related Prospectuses of our reports dated November 17, 1995,
with respect to the consolidated financial statements and schedule of CAM Data
Systems, Inc. incorporated by reference, and included in this Annual Report
(Form 10-K) for the year ended September 30, 1995, respectively.
ERNST & YOUNG LLP
Orange County, California
December 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 3,015,700
<SECURITIES> 0
<RECEIVABLES> 1,957,100
<ALLOWANCES> 140,000
<INVENTORY> 433,800
<CURRENT-ASSETS> 5,393,200
<PP&E> 1,450,000
<DEPRECIATION> 1,007,400
<TOTAL-ASSETS> 6,141,100
<CURRENT-LIABILITIES> 2,053,300
<BONDS> 0
<COMMON> 1,900
0
0
<OTHER-SE> 4,085,900
<TOTAL-LIABILITY-AND-EQUITY> 6,141,100
<SALES> 14,733,800
<TOTAL-REVENUES> 14,733,800
<CGS> 7,355,000
<TOTAL-COSTS> 7,355,000
<OTHER-EXPENSES> 6,775,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 603,100
<INCOME-TAX> 190,000
<INCOME-CONTINUING> 413,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 413,100
<EPS-PRIMARY> .21
<EPS-DILUTED> .20
</TABLE>
