<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, 1996
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)
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)
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)
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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 11, 1996 was approximately $5,957,000. As of
December 11, 1996, there were outstanding 1,964,200 shares of Common Stock of
the Registrant, par value $.001 per share.
DOCUMENTS INCORPORATED BY REFERENCE.
Part II Annual Report to Stockholders for
fiscal year ended September 30, 1996
(cover page 2 of 2 pages)
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PART I
ITEM 1. BUSINESS
General
THE COMPANY
CAM Data Systems, Inc. (the "Company") was organized under the laws of
the State of Delaware on April 29, 1987. On June 5, 1987, CAM Data Systems,
Inc., a corporation organized on September 20, 1983, under the laws of the State
of California was merged with and into the Company. The Company's principal
business is to design, assemble, market, service, and support point of sale,
order entry, inventory control, and accounting systems for small to medium size
retailers. The Company earns revenues from the sale of its systems and monthly
service fees charged to its customers under service agreements. Sales and
service operations are located in California, Florida and Massachusetts while
the Company's customers are located throughout the United States.
On April 12, 1996, CAM Data Systems, Inc., acquired Interactive
Computer Systems, Inc. (ICS), of Las Vegas, Nevada, for cash and additional
consideration consisting of shares of common stock to be issued upon meeting
certain revenue and earnings levels. ICS is a reseller and "master developer"
for M.A.S. 90(R) accounting, distribution and manufacturing software. M.A.S.
90(R) is a product of State of The Art of Irvine, California. ICS is operated as
a wholly owned subsidiary.
THE SYSTEMS
The Company offers two Turn Key Systems:
1. THE CAM SYSTEM - designed for hardgoods retailers whose inventory is
reorderable in nature.
2. THE PROFIT$ 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.
The Company's systems integrate IBM compatible computers, electronic
and terminal style cash registers, hand held and table top bar code laser
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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, 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.
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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
sells M.A.S. 90(R) software and provides training to its customers that want a
fully integrated accounting and inventory control 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 Lucent Technologies, formerly known as 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.
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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, Florida 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.
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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 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 11, 1996, backlog was approximately $1,364,000 as
compared to $583,000 on December 10, 1995. 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.
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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 $1,219,300, $979,400, and $652,300 on
software development, including amounts capitalized during the years ended
September 30, 1996, 1995, and 1994, 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 sixteen programmers and four
quality control and testing personnel.
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EMPLOYEES
The Company has one hundred and thirty-four full time employees, eight
of whom are employed in finance and administration, twenty in programming and
testing, twenty-nine in sales and marketing, and seventy-seven 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
In January 1996, the Company purchased 2.4 acres of land in the Wagon
Wheel Industrial Park in Henderson, Nevada, for a total sum of $143,000. The
Company plans to construct an 11,000-square foot building which will house its
development group and the ICS staff. The construction is under way and is
expected to be completed in the Spring of 1997.
The Company currently leases approximately 15,900 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 $145,000 a year. This
facility houses the Company's executive and administrative offices, service and
support staff, and inventory warehouse.
In addition, the Company also leases the following properties: (i)
approximately 1,400 square feet of office space in Millis, Massachusetts on a
month to month lease of $800 per month; (ii) approximately 300 square feet of
office space in Altamonte Springs, Florida on a month to month lease of $350 per
month; (iii) approximately 2,600 square feet of office space in Boulder City,
Nevada, which houses the Company's research and development team, on a month to
month lease of $2,000 per month; and (iv) approximately 4,200 square feet of
office space in Las Vegas, Nevada, which houses the Company's subsidiary, ICS,
on a month to month lease of $2,800 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.
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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.
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 1996 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.
ANNUAL REPORT
FORM 10-K TO STOCKHOLDERS
--------- ---------------
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.
Information for Item 8 is included in the Company's financial
statements as of September 30, 1996 and 1995 and for each of the three years in
the period ended September 30, 1996, and the Company's unaudited quarterly
financial data for the two years ended September 30, 1996, on pages 6 through 13
and page 15, respectively, of the Company's 1996 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.
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PART III
MANAGEMENT
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
IDENTIFICATION OF EXECUTIVE OFFICERS AND DIRECTORS
As of September 30, 1996, 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 38 Chief Executive Officer, Chairman
of the Board and Secretary
David A. Frosh 38 President and Director
Paul Caceres, Jr. 36 Chief Financial Officer and
Chief Accounting Officer
Timothy D. Coco 39 Vice President, Customer Service
and Installations
David Fuller 52 Vice President, Research and
Development
Walter W. Straub 53 Director
Dr. Fred M. Haney 55 Director
Corley Phillips 41 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 bachelor's
degree in marketing from the University of Oregon in 1980.
David A. Frosh joined the Company as president in June 1996. Mr. Frosh
has been a member of the board directors since August 1991. From June 1990 to
June 1996, Mr. Frosh was 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
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and facsimile machines. Mr. Frosh received a bachelor's degree in marketing from
Central Michigan University 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 bachelor's degree 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 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.
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 bachelor's degree in
electrical engineering in 1965 and a master's degree in finance in 1970 from
Drexel University.
Dr. Fred M. Haney joined CAM Data as director in September 1996. Dr.
Haney has been the president of Venture Management Company, Palos Verdes
Estates, California, since 1991. From 1984 to 1991, he was founder and manager
of 3I Ventures, California, a high technology venture capital fund. From 1980 to
1983, he performed senior management functions at TRW, and from 1968 to 1980, he
held management positions at Xerox Corporation and Computer Science Corporation.
Dr. Haney has extensive experience in strategic planning, operations and finance
in the information and computer industry. Dr. Haney holds a doctorate in
computer science from Carnegie-Mellon University.
Corley Phillips joined CAM Data as a director in September 1996. Since
August 1996, Mr. Phillips has been president, CEO and a director for Telephone
Response Technologies, a Roseville, California-based developer of computer
technology software. Mr. Phillips also serves on the board of
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directors for Presentation Electronics and the Sacramento Entrepreneurship
Academy, a non-profit organization that supports college student entrepreneurs
in the Sacramento area. From 1995 to 1996, Mr. Phillips served as vice president
of marketing and product support for State of The Art, an accounting software
company based in Irvine, California. From 1990 to 1994, Mr. Phillips was
president and CEO of Manzanita Software Systems, a developer of Windows-based
accounting software. From 1984 to 1990, Mr. Phillips was president and
co-founder of Grafpoint, a developer of software for computer applications based
in San Jose, California. Mr. Phillips has also held various sales and marketing
positions with Envision Technology and Hewlett-Packard. Mr. Phillips holds both
a bachelor's degree and a master's degree in electrical engineering from
Washington University in St. Louis, Missouri, as well as a master's degree in
business administration from Santa Clara University in Santa Clara, California.
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.
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, 1996, except as noted below. These reports were subsequently filed.
The following table sets forth the individual(s) who met the requirements of
Section 16(a) during the year ended September 30, 1996, 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>
Tim Coco 1 1 --
</TABLE>
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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, 1996, and the prior two fiscal years, to the
Company's Chief Executive Officer and each additional executive officer whose
total compensation exceeded $100,000:
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 1996 $194,600 $54,300 -- 0 $1,800
the Board 1995 $164,500 $31,400 -- 0 $2,000
CEO 1994 $150,000 $13,000 -- 50,000 $2,000
Paul Caceres Jr.
CFO 1996 $132,200 $34,500 -- 0 0
1995 $103,800 $20,000 -- 0 $2,000
1994 $ 90,000 $ 9,000 -- 45,000 $2,000
Timothy D. Coco
Vice Pres. 1996 $ 92,400 $27,700 -- 0 0
Customer 1995 $ 84,000 $16,800 -- 0 0
Service 1994 $ 80,000 $ 8,000 -- 10,000 0
Dave Fuller
Vice Pres. 1996 $ 91,200 $13,500 -- 0 0
R & D
</TABLE>
(1) Bonuses paid to the Named executives are pursuant to annual incentive
compensation programs established each year for selected employees of the
Company, including the Company's executive officers. Under this program,
performance goals, relating to such matters as sales growth, gross profit margin
and net income as a percentage of sales and individual efforts were established
each year. Incentive compensation, in the form of cash
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bonuses, was awarded based on the extent to which the Company and the individual
achieved or exceeded the performance goals.
(2) All other compensation consists of interest on employee notes payable to the
Company, that was declared compensation during the year.
The following table sets forth information concerning grants of stock options
during the fiscal year ended September 30, 1996, to the officers identified in
the Summary Compensation Table:
OPTION GRANTS IN FISCAL YEAR 1996
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(1) Potential Realizable
Number of Value at Assumed
Securities % of Total (2) Annual Rates of
Underlying Options Exercise Stock Price
Options Granted to or Base Appreciation for
Granted Employees Price Expiration Option Term
Name (#) in 1996 ($/Sh) Date 5($) 10($)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tim Coco 10,000 6% 4.75 06/26/06 29,900 75,700
</TABLE>
(1) Options granted in fiscal year 1996 vest over a four-year period.
(2) The exercise price was equal to the market price on the date of grant.
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 1996 1996
on Value(1) Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Geoff Knapp -- -- 60,000/ 0 $157,600/$ 0
Paul Caceres Jr. -- -- 42,500/ 2,500 $111,900/$ 6,200
Timothy D. Coco -- -- 11,300/ 3,800 $ 22,700/$ 8,600
David Fuller -- -- 15,800/14,200 $ 37,600/$33,600
</TABLE>
(1) Market value of the underlying securities at the exercise date minus the
exercise price of the options.
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
15
<PAGE> 16
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's performance.
In determining the management compensation, this Committee compares the
compensation paid to management to the level and structure of compensation paid
to management of 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 1996 with a 103% increase in net
income.
The committee examines compilations of executive compensation such as
various industry compensation surveys for middle market companies. In 1996, 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, 1996
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
16
<PAGE> 17
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 650,000 shares of the Company's common stock. The
Plan has a term of ten years. There have been 479,500 options granted under the
1993 Plan as of September 30, 1996.
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, 1996, totaled $ 42,000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 1996, 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
17
<PAGE> 18
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 (8) Class (9)
----- ----- ------------- ---------
<S> <C> <C> <C>
Common Stock Geoffrey D. Knapp(1) 387,900(2) 17.8%
Common Stock Paul Caceres Jr. (1) 42,500(3) 2.0%
Common Stock Timothy D. Coco (1) 11,900(4) *
Common Stock David Fuller (1) 15,800(5) *
Common Stock Walter W. Straub(1) 72,500(6) 3.3%
Common Stock David Frosh (1) 60,300(7) 2.8%
Common Stock ZPR Investment Mgmt. 528,000 24.2%
Common Stock All Directors and
Officers as a
Group (of 7 persons) 590,900 27.1%
</TABLE>
* Less than 1.0%.
(1) c/o Cam Data Systems, Inc., 17520 Newhope Street, Suite 100, Fountain
Valley, California 92708.
(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
27,500 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 4,400 shares of Common
Stock until April 1, 2003, at a price of $3.38 per share (ii) an aggregate of
7,500 shares of Common Stock until January 3, 2004, at a price of $2.13 per
share.
(5) Includes options to purchase an aggregate of 15,800 shares of Common Stock
until March 13, 2005, at a price of $2.25 per share.
18
<PAGE> 19
(6) Includes options to purchase (i) 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 (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
(iv) options to purchase an aggregate of 7,500 shares until the sooner of May
25, 2005, or twelve months after ceasing to serve as a director at a price of
$2.375 per share (v) options to purchase an aggregate of 7,500 shares until the
sooner of May 9, 2006, or twelve months after ceasing to serve as a director at
a price of $5.50 per share.
(7) Includes options to purchase (i) 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 (ii) 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 (iii) options to
purchase an aggregate of 7,500 shares until the sooner of May 25, 2005, or
twelve months after ceasing to serve as a director at a price of $2.375 per
share (vi) options to purchase an aggregate of 7,500 shares until the sooner of
May 9, 2006, or twelve months after ceasing to serve as a director at a price of
$5.50 per share.
(8) 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, 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.
(9) 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, 1996, the Company granted
non-qualified options to certain employees and directors to purchase an
aggregate of 157,500 shares of Common Stock of the Company at a price ranging
from $3.38 to $5.50 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:
Page
Schedule II - Valuation and Qualifying Accounts 25
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).
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).
20
<PAGE> 21
10(f) Line of Credit Agreement, dated July 18, 1996, with Silicon Valley
Bank.
13(a) Annual Report to Stockholders for the fiscal year ended September 30,
1996.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
(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, 1996, 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, 1996
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>
<CAPTION>
<S> <C> <C>
/s/ Geoffrey D. Knapp Chief Executive December 20, 1996
- --------------------- Officer and Chairman
Geoffrey D. Knapp of the Board
/s/ David Frosh President and December 20, 1996
- --------------------- Director
David Frosh
/s/ Walter W. Straub Director December 20, 1996
- ---------------------
Walter W. Straub
Director December 20, 1996
- ---------------------
Dr. Fred M. Haney
- --------------------- Director December 20, 1996
Corley Phillips
</TABLE>
22
<PAGE> 23
CAM DATA SYSTEMS, INC.
INDEX TO
FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
ITEM 14(a)
Page Reference
--------------
Annual Report
-------------
to Stockholders Form 10-K
--------------- ---------
Report of Independent Auditors............... 14
Consolidated Balance Sheets at
September 30, 1996 and 1995................. 6
Consolidated Statements of Income for Years
Ended September 30, 1996, 1995 and 1994..... 7
Consolidated Statements of Cash Flows for Years
Ended September 30, 1996, 1995 and 1994...... 8
Consolidated Statements of Stockholders' Equity
for Years Ended September 30, 1996,
1995 and 1994............................... 9
Notes to Consolidated Financial Statements.... 10-13
Report of Independent Auditors on Consolidated
Financial Statement Schedule ................ 24
II. Valuation and Qualifying Accounts
for the Years Ended
September 30, 1996, 1995 and 1994..... 25
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 consolidated financial statements of CAM Data Systems, Inc.
as of September 30, 1996 and 1995, and for each of the three years in the period
ended September 30, 1996, and have issued our report thereon dated November 18,
1996. Our audits also included the financial statement schedule of CAM Data
Systems, Inc. listed in the accompanying index to the consolidated 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 18, 1996
24
<PAGE> 25
CAM DATA SYSTEMS, INC.
SCHEDULE II-- VALUATION AND QUALIFYING ACCOUNTS
Years Ended September 30, 1996, 1995, and 1994
<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>
1996: $140,000 $175,600 $165,600 $150,000
1995: $120,000 $157,800 $137,800 $140,000
1994: $ 90,000 $135,900 $105,900 $120,000
</TABLE>
25
<PAGE> 26
CAM DATA SYSTEMS, INC.
EXHIBITS TO FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<PAGE> 27
CAM DATA SYSTEMS, INC.
EXHIBIT INDEX TO THE FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1996
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 18, 1996, with Silicon Valley
Bank.
13(a) Annual Report to Stockholders for the fiscal year ended September 30,
1996.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
<PAGE> 1
10(f) LINE OF CREDIT AGREEMENT, DATED JULY 18, 1996, WITH SILICON VALLEY BANK
<PAGE> 2
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 18, 1996
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
<PAGE> 3
in 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> 4
BORROWER: SILICON:
CAM DATA SYSTEMS, INC. SILICON VALLEY BANK
BY_______________________________ BY______________________________
PRESIDENT OR VICE PRESIDENT TITLE___________________________
BY_______________________________
SECRETARY OR ASS'T SECRETARY
<PAGE> 5
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 18, 1996
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.
<PAGE> 6
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, 1997
PRIOR NAMES OF BORROWER
(Section 3.2): ICS
TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 1643 NEVADA HWY., BOULDER CITY, NV 89005;
352 VILLAGE STREET, MILLIS, MA 02054;
<PAGE> 7
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,
<PAGE> 8
licenses, patents, trademarks, trade names,
copy rights, and franchises.
"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
<PAGE> 9
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 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.
BORROWER:
CAM DATA SYSTEMS, INC.
BY_______________________________
PRESIDENT OR VICE PRESIDENT
BY_______________________________
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY_______________________________
TITLE____________________________
<PAGE> 10
SILICON VALLEY BANK
CERTIFIED RESOLUTION
BORROWER: CAM DATA SYSTEMS, INC., A CORPORATION ORGANIZED
UNDER THE LAWS OF THE STATE OF DELAWARE
DATE: JULY 18, 1996
I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon Valley Bank
("Silicon"), from time to time, such sum or sums of money as, in the
judgment of the officer or officers hereinafter authorized hereby, this
corporation may require.
RESOLVED FURTHER, that any officer of this corporation be, and he or she is
hereby authorized, directed and empowered, in the name of this corporation,
to execute and deliver to Silicon, and Silicon is requested to accept, the
loan agreements, security agreements, notes, financing statements, and
other documents and instruments providing for such loans and evidencing
and/or securing such loans, with interest thereon, and said authorized
officers are authorized from time to time to execute renewals, extensions
and/or amendments of said loan agreements, security agreements, and other
documents and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all
indebtedness of this corporation to Silicon, whether arising pursuant to
this resolution or otherwise, to grant, transfer, pledge, mortgage, assign,
or otherwise hypothecate to Silicon, or deed in trust for its benefit, any
property of any and every kind, belonging to this corporation, including,
but not limited to, any and all real property, accounts, inventory,
equipment, general intangibles, instruments, documents, chattel paper,
notes, money, deposit accounts, furniture, fixtures, goods, and other
property of every kind, and to execute and deliver to Silicon any and all
grants, transfers, trust receipts, loan or credit agreements, pledge
agreements, mortgages, deeds of trust, financing statements, security
agreements and other hypothecation agreements, which said instruments and
the note or notes and other instruments referred to in the preceding
paragraph may contain such provisions, covenants, recitals and agreements
as Silicon may require and said authorized officers may approve, and the
execution thereof by said authorized officers shall be conclusive evidence
of such approval.
RESOLVED FURTHER, that the Silicon may conclusively rely upon a certified
copy of these resolutions and continue to conclusively rely on such
certified copy of these resolutions for all past, present and future
transactions until written notice of any change hereto is given to Silicon
by this corporation by certified mail, return receipt requested.
<PAGE> 11
The undersigned further hereby certifies that the following persons are the duly
elected and acting officers of the corporation named above as borrower and that
the following are their actual signatures:
NAMES OFFICE(S) ACTUAL
- ----- --------- ------
SIGNATURES
- ----------
______________________________ _________________________
X________________________
______________________________ _________________________
X________________________
______________________________ _________________________
X________________________
______________________________ _________________________
X________________________
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or Assistant
Secretary on the date set forth above.
___________________________________
___________
Secretary or Assistant Secretary
<PAGE> 1
13 (a) ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1996.
<PAGE> 2
LETTER TO STOCKHOLDERS
================================================================================
On behalf of the management and employees of CAM Data Systems, I am very pleased
to announce that 1996 was a record-setting year for both profit and revenue. It
was also a very productive year from an operational standpoint. We improved the
Company's overall efficiency, quality and productivity while continuing to
aggressively invest in research and development. We strengthened our management
team and leadership with the addition of a president and two new members to the
board of directors. We also strengthened our position in the marketplace with
the successful introduction of new products and a strategic acquisition.
FINANCIAL RESULTS
Pre-tax earnings doubled from $600 thousand in 1995 to $1.2 million in 1996, and
after tax earnings doubled from $413 thousand or 21 cents per share to $840
thousand or 39 cents per share. The increase in earnings was primarily
attributable to increased operating efficiencies, higher sales and lower
amortization of capitalized software.
Total revenues increased 6.4 percent from $14.7 million in 1995 to $15.7
million in 1996. Both service revenue and system sale revenue increased. We
would definitely like to see top-line growth increase at a much faster rate in
1997 and beyond. Our current and future strategic plans will focus on achieving
a higher revenue growth rate. This may mean some short-term investments in
marketing and operations in 1997, which we expect to result in longer-term
benefits in future years.
Our cash position increased 10 percent from $3.0 million in 1995 to $3.3
million in 1996. Considering our cash expenditure in April to purchase
Interactive Computer Systems (ICS) of Las Vegas, Nevada, we are very pleased
with this result. Our cash position equals $1.68 per share. In addition, our
current ratio improved from 2.62 to 2.80 while our net worth improved from $4.1
million to $5.0 million. Working capital increased 18 percent to $3.9 million
from $3.3 million. In our market, which is characterized by dozens of smaller,
under capitalized private companies, our balance sheet and overall financial
strength give us a tremendous competitive advantage.
We continued to improve the operational efficiency of our technical support
and service department and we strengthened other areas of the business as well.
The majority of benefits were the result of programs implemented in the prior
year which showed their impact in 1996. We benefited financially from lower
levels of software amortization, having amortized the majority of our software
assets through 1995. However, we did add some new amortizable assets with the
acquisition of ICS. In 1997, we expect to see increases in our fixed overhead as
we look to provide the infrastructure to support the higher revenue goals we
have set. Part of this increase will be slightly higher research and development
expenses as we continue to aggressively invest in enhancing our existing
products and developing new products.
SENIOR MANAGEMENT AND LEADERSHIP CHANGES
In June of this year, David Frosh was recruited as president of CAM Data. David
comes from a highly successful management career at Automated Data Processing
(ADP) and also has five years experience with CAM Data as a director. In
addition, prior to his joining the board of CAM Data in 1991, he had worked
within our industry with a competitor, Optima Retail Systems. David is a
first-rate manager and I am pleased that he has joined our management team.
In September, Corley Phillips and Fred Haney joined our board of directors.
Corley is the CEO of Telephone Response Technologies and has a broad background
in computer software and peripherals. Fred is president of Venture Management
Company and serves on the boards of three other public technology companies. We
specifically targeted enhancing our board with individuals who have experience
directly applicable to our business and our future plans. We feel very fortunate
to have attracted such a high level of talent to our board. If you believe, as I
do, that top quality management and leadership will produce exceptional results,
these additions to our senior management team and board of directors certainly
give us reason to be optimistic about the future.
RESEARCH AND DEVELOPMENT
I mentioned last year that David Fuller joined CAM Data in April of 1994 as vice
president of research and development. With eighteen months at CAM Data behind
him, David has now accomplished many of the goals we set back in 1994. The most
significant of which is the centralization of our product development group in
southern Nevada, which has resulted in increased productivity and better project
management. When our new research and development offices are completed in
February, most of the few remaining remote positions will be relocated to the
new office. We expect to see further improvements in this group as a result of
this centralization and
1
<PAGE> 3
adding new personnel. And, as a result of targeted investments, we have improved
our products and documentation, which should result in significant gains in
1997.
NETWORK SERVICES
As we continue to sell, install and service more complex networking solutions
for our customers, we have also invested in networking talent. Our new network
services group not only supports our internal business, but began to win
significant contracts for network consulting services and installation outside
of our traditional customer base. For example, we sold, installed and now
service a large network for Caesars Palace in Las Vegas. We also provide
networking services for several other businesses in Nevada including the Desert
Springs Hospital, the Laughlin Hilton, and the Flamingo Hilton, among others. We
are focused on expanding this business in the future as we add network
specialists. We currently have three dedicated network specialists on staff who
handle our needs for CAM, Profit$ and M.A.S 90 systems as well as outside
business.
ACQUISITIONS
On April 15th we completed the acquisition of ICS of Las Vegas. ICS is a master
developer and distributor for M.A.S 90 accounting, distribution and
manufacturing software developed by STATE OF THE ART of Irvine, California. This
strategic decision was made to better control the accounting software offered
with our CAM and Profit$ products as well as to provide a solution for our
wholesale and manufacturer customers and prospective customers. We also sought
to improve our accounting interface software to provide a seamless link between
our software and M.A.S 90 accounting software. ICS and the Profit$ development
group have since developed an interface to our Profit$ software which is totally
seamless and requires no steps on the users part to export data from Profit$ to
M.A.S 90. For our CAM system, we have developed an interface that requires only
one simple step to export data to M.A.S 90. We are extremely satisfied with our
relationship with STATE OF THE ART and feel like we are on board with the clear
market leader. ICS achieved sales in 1995 of $750 thousand and we expect
significant revenue increases next year. Based on our success with ICS, we
intend to target more opportunities to purchase other geographically strategic
M.A.S 90 distributors or master developers.
QUALITY SERVICE
Throughout 1996 we continued to focus on the quality of the service we provide.
In our last quarterly quality survey 90 percent of our Profit$ customers stated
that they would recommend CAM Data. Scores in nearly all areas of the survey
improved throughout the year. We continue to increase staffing to handle higher
call volumes and we continue to invest heavily in training new employees to
bring them up to a high level of productivity as quickly as possible. We have
also focused on the quality of our hiring procedures, not only in the service
department but throughout the company. We screen candidates very carefully and
put prospective employees through a rigorous hiring procedure to insure that the
people we hire meet our high standards. Our primary goal for 1997 is to reduce
call response times to fifteen minutes or less for the vast majority of
technical support calls. Our challenge is not unlike that of our customers:
although staffed adequately for most situations, there are those times when more
customers come to the cash registers at once than can be handled properly and
someone has to wait longer than they would like to. Thus, no matter how hard we
try, we know that it is impossible to get to the point where every single call
is handled immediately. We intend to get as close as possible and to meet or
exceed our customers expectations in this regard. We will continue to monitor
our success in relation to these expectations by regularly surveying our
customer base. We are also focusing on reducing call loads through software
improvements and reducing the average time it takes to resolve a call through
additional internal training programs. Our product development group is
regularly furnished with a "top ten" list from service of those items that can
be changed or added to the software which would eliminate or reduce calls. I
would like to thank Tim Coco, our vice president of service, and all of his hard
working service staff for the excellent job they have done this past year. They
are a dedicated group of people who sincerely care about our customers.
SALES FORCE
We expanded our direct sales force slightly in 1996 and expect to do the same in
1997. We continue to enjoy the largest, most experienced and productive direct
sales force in our primary markets. We hope to leverage this strength by
offering additional strategic products through our direct distribution channel
in 1997.
2
<PAGE> 4
LETTER TO STOCKHOLDERS
================================================================================
FINANCIAL CONTROLS
We continued to operate under very tight and conservative financial controls.
Our Chief Financial Officer Paul Caceres, who has been with the company in this
capacity since 1987, does an excellent job and has a very competent and
dedicated staff. We maintain excellent relationships with all of our vendors. We
do a good job with cash collection in a traditionally difficult market. Our
financial policies are conservative.
STOCK VALUE
While our stock price improved 40 percent from its closing bid on September 30,
1995, of $3.375 to $4.50 for the same date in 1996, we remain very dissatisfied
with the market valuation of our Company and the trading volume of the stock. We
know we need to grow our top-line revenues at a greater rate while maintaining a
long term earnings growth rate. In addition, we know we need to do a better job
communicating our growth plans to the investment community. We plan to make our
plans clear in 1997 as we are able to realize some of the strategic objectives
we have set for ourselves and are better able to communicate our successes. As I
have stated in the past, we still believe that the greatest long-term
shareholder value comes from focusing on our business and financial goals and
achieving positive results. Creating this value for all of our stakeholders
remains one of our primary goals.
Thank you for your support. I sincerely hope you feel as we do that we are
making real progress in developing our Company. We are proud of the last year's
accomplishments, although certainly not satisfied. We are determined to achieve
much greater levels of success as we look forward to an exciting and challenging
1997. The management at CAM Data remains committed to serving the needs of all
of our stakeholders.
Sincerely,
Geoffrey D. Knapp
Chief Executive Officer and
Chairman of the Board
3
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
RESULTS OF OPERATIONS
FISCAL 1996 COMPARED WITH FISCAL 1995
NET REVENUES for the fiscal year ended September 30, 1996, increased 6% to
$15,669,500, consisting of a 5% increase in system revenues and a 12% increase
in service revenues from the year ended September 30, 1995. The increase in
system revenues was primarily a result of the introduction of the new CAM III
product and the overall increased demand for the Company's products. The
increased in service revenues was attributed to an increase in the installed
customer base for CAM and PROFIT$.
GROSS MARGIN for system revenues remained constant at 51% in fiscal 1995 and
1996. There were no significant price increases in fiscal 1996. The gross margin
for service revenues was 50% in fiscal 1996 compared to 36% in fiscal 1995. The
margin increase related to service revenue was largely due to the sale of the
Silver Plus division in September 1995, in which direct labor and amortization
costs resulted in higher cost of sales in 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES expressed as a percentage of
net revenues was 36% for fiscal 1996 compared to 38% for fiscal 1995. Selling,
general, and administrative expenses for fiscal 1996 were $5,620,700 compared to
$5,597,400 in fiscal 1995. The decrease in expenditures, expressed as a
percentage of total revenues, was due to improved operating efficiencies.
RESEARCH AND DEVELOPMENT EXPENSE increased 26% to $1,219,300 in fiscal 1996
from $967,100 in fiscal 1995. This increase was related to the development of
the new CAM III product, continued enhancement of the CAM and PROFIT$ software
products, and the research and development of new software products.
THE EFFECTIVE INCOME TAX RATE was 31% for fiscal 1996, compared to 32% for
fiscal 1995.
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, as 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 48% in fiscal 1995. The gross margin for system
revenues increased to 51% in fiscal 1995 compared to 49% in fiscal 1994. 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 38% for fiscal 1995 compared to 37% for fiscal 1994. Selling,
general, and administrative expenses increased by 14% to $5,597,400 in fiscal
1995 from $4,902,300 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 carry forwards had been fully utilized
for both federal and state income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $3,338,200 at September 30,
1996, compared to $3,015,700 on September 30, 1995. The Company generated
$1,096,400 from operations in fiscal 1996 compared to $1,356,600 in fiscal 1995.
The Company expended $823,100 in fiscal 1996 for the purchase of land in Nevada,
fixed assets, and for an acquisition, compared to the expenditures of $220,500
in fiscal 1995. In
4
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
June 1996, the Company renewed its line of credit with a commercial bank which
expires in June 1997, for borrowings up to $750,000 with interest at the Bank's
prime rate plus 1%. Borrowings under the line of credit are secured by the
assets of the Company. As of September 30, 1996, 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
STATEMENT OF CONSOLIDATED BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
September 30,
------------------------------
1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,338,200 $ 3,015,700
Accounts receivable, net of an allowance for doubtful accounts of
$150,000 in 1996 ($140,000 in 1995) 2,024,600 1,817,100
Inventories 438,500 433,800
Prepaid expenses 95,400 76,600
Deferred income taxes 150,000 50,000
----------- -----------
Total current assets 6,046,700 5,393,200
Property and equipment, net 571,900 442,600
Intangible assets, net 500,100 268,100
Note receivable from officer/stockholder, due
upon demand, with interest at prime rate 14,300 15,000
Other assets 24,800 22,200
----------- -----------
Total assets $ 7,157,800 $ 6,141,100
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 650,400 $ 615,200
Accrued compensation and related expenses 640,000 594,000
Income taxes payable 136,200 201,300
Customer deposits and deferred service revenue 295,600 151,800
Accrued installation costs 111,000 110,000
Other accrued liabilities 327,600 381,000
----------- -----------
Total current liabilities 2,160,800 2,053,300
Stockholders' equity:
Common stock, $.001 par value, 5,000,000 shares authorized, 1,964,200 shares
issued and outstanding in 1996 (1,931,000 shares in 1995) 2,000 1,900
Paid-in capital in excess of par value 3,844,800 3,795,700
Notes receivable for purchase of common stock (40,900) (60,900)
Retained earnings 1,191,100 351,100
----------- -----------
Total stockholders' equity 4,997,000 4,087,800
----------- -----------
Total liabilities and stockholders' equity $ 7,157,800 $ 6,141,100
=========== ===========
</TABLE>
See accompanying notes.
6
<PAGE> 8
STATEMENTS OF CONSOLIDATED INCOME
================================================================================
<TABLE>
<CAPTION>
Years Ended
September 30,
-----------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Net system revenues $ 12,665,600 $ 12,043,300 $ 10,762,400
Net service revenues 3,003,900 2,690,500 2,455,500
------------ ------------ ------------
Total net revenues 15,669,500 14,733,800 13,217,900
------------ ------------ ------------
COSTS AND EXPENSES:
Cost of system revenues 6,239,200 5,914,200 5,505,000
Cost of service revenues 1,507,000 1,730,000 1,911,500
------------ ------------ ------------
Total cost of revenues 7,746,200 7,644,200 7,416,500
Selling, general and administrative expenses 5,620,700 5,597,400 4,902,300
Research and development expense 1,219,300 967,100 617,000
Interest income (127,200) (78,000) (17,400)
------------ ------------ ------------
Total costs and expenses 14,459,000 14,130,700 12,918,400
------------ ------------ ------------
Income before taxes 1,210,500 603,100 299,500
Provision for income taxes 370,500 190,000 35,000
------------ ------------ ------------
Net income $ 840,000 $ 413,100 $ 264,500
------------ ------------ ------------
Primary net income per share $ .39 $ .21 $ .14
------------ ------------ ------------
Fully diluted net income per share $ .39 $ .20 $ .13
------------ ------------ ------------
Shares used in computing primary net income per share 2,130,900 1,999,200 1,959,800
------------ ------------ ------------
Shares used in computing fully diluted net income per share 2,173,500 2,107,600 2,021,600
============ ============ ============
</TABLE>
See accompanying notes.
7
<PAGE> 9
STATEMENTS OF CONSOLIDATED CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Years Ended
September 30,
-------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income $ 840,000 $ 413,100 $ 264,500
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 462,100 563,400 555,500
Provision for doubtful accounts 165,600 157,800 135,900
Decrease in notes receivable 20,700 14,500 12,200
Deferred income taxes (100,000) (50,000) --
Net change in operating assets and liabilities (292,000) 257,800 (25,400)
---------- ----------- -----------
Cash provided by operating activities 1,096,400 1,356,600 942,700
---------- ----------- -----------
Investing activities:
Purchase of property and equipment (427,500) (208,200) (386,100)
Business acquisitions and other investments (395,600) (12,300) (35,300)
Sale of Silver Plus division -- 254,700 --
---------- ---------- ----------
Cash provided by (used in) investing activities (823,100) 34,200 (421,400)
---------- ---------- ----------
Financing activities:
Proceeds from exercise of stock options and warrants 49,200 10,000 61,800
Notes receivable repayments -- -- 28,200
---------- ---------- ----------
Cash provided by financing activities 49,200 10,000 90,000
---------- ---------- ----------
Net increase in cash and cash equivalents 322,500 1,400,800 611,300
Cash and cash equivalents at beginning of year 3,015,700 1,614,900 1,003,600
---------- ---------- ----------
Cash and cash equivalents at end of year $3,338,200 $3,015,700 $1,614,900
========== ========== ==========
</TABLE>
See accompanying notes.
8
<PAGE> 10
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1996, 1995, AND 1994
================================================================================
<TABLE>
<CAPTION>
Notes
Paid-in receivable for Retained
Common Stock capital in purchase of earnings
------------------- excess of par common (accumulated
Shares Amount value stock deficit) Total
------ ------ ----- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
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
Issuance of common stock
upon exercise of stock options 33,200 100 49,100 -- -- 49,200
Notes receivable write-off -- -- -- 20,000 -- 20,000
Net income -- -- -- -- 840,000 840,000
======================================================================================
Balance at September 30, 1996 1,964,200 $2,000 $3,844,800 $(40,900) $ 1,191,100 $4,997,000
======================================================================================
</TABLE>
See accompanying notes.
9
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
================================================================================
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.
The consolidated financial statements include the accounts of the Company
and its subsidiary. All intercompany accounts and transactions have been
eliminated. Certain 1995 and 1994 amounts have been reclassified to conform with
the 1996 presentation.
CASH EQUIVALENTS
Cash equivalents represent highly liquid investments with original
maturities of three months or less.
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.
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.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and is composed of the following:
<TABLE>
<CAPTION>
September 30,
------------------------------
1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
Land $ 143,400 $ --
Computer equipment and furniture 1,071,700 1,059,600
Automobiles 64,000 82,200
Demonstration and loaner equipment 257,100 308,200
---------- ----------
1,536,200 1,450,000
Less accumulated depreciation 964,300 1,007,400
========== ==========
$ 571,900 $ 442,600
========== ==========
</TABLE>
Depreciation is provided on the straight-line method over the estimated
useful lives (primarily three to five years) of the respective assets.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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.
LONG-LIVED ASSETS
In 1996, the Company adopted SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used in operations or are
expected to be disposed of, when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying value of the assets. There were no impairment losses recorded in
fiscal 1996 as the result of adopting SFAS No. 121.
ADVERTISING
The Company expenses the production costs of advertising as incurred.
Advertising expenses for the years ended September 30, 1996, 1995 and 1994 were
$328,200, $225,300, and $181,100, respectively.
10
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
================================================================================
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,
-----------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Decrease (increase) in:
Accounts receivable $ (373,100) $ (82,500) $(202,700)
Inventories (4,700) (123,400) 37,700
Prepaid expenses (18,800) 6,800 500
Other assets (2,900) (6,100) 300
Increase (decrease) in:
Accounts payable 35,200 (175,900) 123,500
Accrued compensation 46,000 240,000 (42,000)
Income taxes payable (65,100) 180,200 (3,300)
Customer deposits 143,800 (31,200) 126,800
Accrued installation costs 1,000 3,000 (18,000)
Other accrued liabilities (53,400) 246,900 (48,200)
-----------------------------------------
Net changes in operating
assets and liabilities $ (292,000) $ 257,800 $ (25,400)
=========================================
</TABLE>
STOCK OPTION PLANS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123). As permitted by SFAS 123, the Company intends to
continue to account for employee stock options under previous accounting
standards, and will make pro forma disclosures required by SFAS 123 in fiscal
1997.
2. ACQUISITIONS AND DISPOSALS
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.
On April 12, 1996, the Company acquired Interactive Computer Systems, Inc.
(ICS) of Las Vegas, Nevada, for cash and additional consideration consisting of
shares of common stock to be issued contingent upon meeting certain revenue and
earnings levels. ICS is a reseller and "master developer" for M.A.S 90(R)
accounting, distribution and manufacturing software. M.A.S 90 is a product of
State of The Art(TM) of Irvine, California. ICS is operated as a wholly owned
subsidiary.
3. INTANGIBLE ASSETS
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 agreement, capitalized software, and goodwill are amortized on the
straight-line method over estimated useful lives ranging from three to eight
years. The assets are stated at cost and consist of the following:
<TABLE>
<CAPTION>
September 30,
1996 1995
- --------------------------------------------------------------
<S> <C> <C>
Capitalized software costs $1,175,200 $ 1,175,200
License agreement 200,000 200,000
Goodwill 400,300 --
---------- -----------
1,775,500 1,375,200
Less accumulated amortization 1,275,400 1,107,100
-------------------------
$ 500,100 $ 268,100
=========================
</TABLE>
Amortization of capitalized license agreement and software costs charged to cost
of sales for the years ended September 30, 1996, 1995 and 1994, were $145,200,
$283,000, and $317,500 respectively.
11
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
================================================================================
4. LINE OF CREDIT
In July 1996, the Company renewed its 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%. 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, 1996, the Company was in compliance with its debt covenants. The
line of credit expires in June 1997. As of September 30, 1996, the Company had
no amounts outstanding under the line and there were no borrowings under the
line during fiscal 1996, 1995 or 1994. There was no interest paid in fiscal
1996, 1995 or 1994.
5. TAXES BASED ON INCOME
The Company utilizes the liability method of accounting for income taxes
where by 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, 1996, the Company has general business credit carry
forwards of approximately $20,000 for state income tax purposes which begin to
expire in fiscal year 2003. The Company also has AMT credit carry forwards of
approximately $12,000 which may be carried forward indefinitely.
The provision (benefit) for taxes based on income consists of the following:
<TABLE>
<CAPTION>
Years Ended September 30,
-------------------------------------
1996 1995 1994
- -------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 422,500 $ 220,000 $23,000
State 48,000 20,000 12,000
--------- --------- -------
470,500 240,000 35,000
Deferred:
Federal (132,000) (50,000) --
State 32,000 -- --
========= ========= =======
(100,000) (50,000) --
========= ========= =======
Total provision $ 370,500 $ 190,000 $35,000
========= ========= =======
</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,
-------------------------------------
1996 1995 1994
- --------------------------------------------------------------------
<S> <C> <C> <C>
Income tax at
statutory rate $ 411,600 $ 205,000 $ 101,800
Increases (decreases)
in taxes resulting from:
Increase (decrease) in
valuation allowance (94,000) 126,000 (78,000)
Utilization of general
business credits (28,700) (125,900) --
State income taxes,
net of federal
benefit 52,800 13,200 7,900
Other, net 28,800 (28,300) 3,300
--------- --------- ---------
$ 370,500 $ 190,000 $ 35,000
========= ========= =========
</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 carry forwards which give rise to deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Accruals not currently
deductible for tax $ 184,000 $ 189,000 $ 64,000
Book depreciation
in excess
of tax depreciation 96,000 53,000 13,000
General business
credit carry forwards 20,000 68,000 25,000
AMT credit
carry forward 12,000 12,000 24,000
R&D expenditures
capitalized for tax 9,000 11,000 15,000
Net operating loss
carry forwards -- -- 33,000
--------- --------- ---------
Total deferred tax
assets 321,000 333,000 174,000
Valuation allowance
for deferred tax assets (166,000) (260,000) (134,000)
--------- --------- ---------
155,000 73,000 40,000
Deferred tax liabilities:
Software costs capitalized
for book purposes (5,000) (23,000) (40,000)
---------------------------------------
Net deferred tax assets $ 150,000 $ 50,000 $ --
=======================================
</TABLE>
12
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
================================================================================
Income taxes paid were $530,900, $24,400, and $32,700 during the years ended
September 30, 1996, 1995 and 1994, respectively.
6. COMMITMENTS AND CONTINGENCIES
The Company is committed at September 30, 1996, 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>
1997 $ 154,400
1998 48,600
---------------------
$ 203,000
=====================
</TABLE>
Total rent expense for the years ended September 30, 1996, 1995 and 1994 was
$278,800, $305,300, and $243,000, respectively.
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.
7. 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.
In April 1993, the shareholders of the Company approved the Company's 1993
Stock Option Plan (the "1993 Plan") under which nonstatutory 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 650,000 shares of the Company's common stock. The
Plan has a term of ten years. There have been 479,500 options granted under the
1993 Plan as of September 30, 1996.
A summary of stock option activity follows:
<TABLE>
<CAPTION>
ISO Non-ISO Option
Shares Shares Price
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
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
Granted -- 157,500 $3.38 to $5.50
Exercised -- (33,200) $ .87 to $2.13
Expired -- (35,000) $1.75
----------------------------------------------------
Outstanding at
September 30, 1996 -- 493,300 $ .87 to $5.50
====================================================
</TABLE>
There are 328,500 exercisable options outstanding at September 30, 1996.
8. BENEFIT PLAN
The Company sponsors a 401 (k) Plan for all eligible employees. The Company
may provide a matching contribution at the discretion of the Company's Board of
Directors. The Company's contribution charged to operations during fiscal 1996,
1995 and 1994 pursuant to the plan totaled $42,000, $34,000, and $17,000,
respectively.
13
<PAGE> 15
REPORT OF INDEPENDENT AUDITORS
================================================================================
Board of Directors
CAM Data Systems, Inc.
We have audited the accompanying consolidated balance sheets of CAM Data
Systems, Inc. as of September 30, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CAM Data
Systems, Inc. at September 30, 1996 and 1995, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended September 30, 1996, in conformity with generally accepted accounting
principles.
Orange County, California
November 18, 1996
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>
<CAPTION>
- --------------------------------------------------------------------------------
Fiscal Year Ended September 30, 1996 High Low
<S> <C> <C>
Quarter Ended:
December 31 $ 4 1/8 $ 3 1/8
March 31 5 3 1/2
June 30 6 4 3/8
September 30 5 1/2 4 3/8
- --------------------------------------------------------------------------------
<CAPTION>
Fiscal Year Ended September 30, 1995
<S> <C> <C>
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
</TABLE>
As of December 10, 1996, 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
================================================================================
(Unaudited)
<TABLE>
<CAPTION>
1996 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 $ 3,329 $ 3,412 $ 4,714 $ 4,215
Gross profit 1,770 1,831 2,423 2,091
Income before taxes 265 272 473 201
Net income 162 166 288 224
Primary earnings per share .08 .08 .13 .10
Fully diluted earnings per share .08 .08 .13 .10
</TABLE>
<TABLE>
<CAPTION>
1995 Fiscal Quarter Ended
-------------------------------------------
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>
SELECTED FINANCIAL DATA
FOR THE FIVE YEARS ENDED SEPTEMBER 30, 1996
================================================================================
<TABLE>
<CAPTION>
In thousands, except per-share data. 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net system and service revenues $ 15,669 $14,734 $13,218 $11,922 $ 9,047
Income before taxes 1,210 603 300 787 567
Net income 840 413 265 700 510
Primary earnings per share .39 .21 .14 .37 .33
Fully diluted earnings per share .39 .20 .13 .36 .28
Total assets 7,158 6,141 5,202 4,698 3,263
Working capital 3,886 3,340 2,352 1,857 966
Long-term debt -- -- -- -- --
=====================================================
</TABLE>
15
<PAGE> 17
COMPANY INFORMATION
================================================================================
BOARD OF DIRECTORS
- ------------------
Geoffrey D. Knapp
Chairman and Chief Executive Officer
CAM Data Systems, Inc.
David Frosh
President
CAM Data Systems, Inc.
Walter Straub
President
Rainbow Technologies
Corley Phillips
CEO, President
Telephone Response Technologies
Fred Haney
President
Venture Management Company
OFFICERS
- --------
Geoffrey D. Knapp
Chief Executive Officer
David Frosh
President
Paul Caceres Jr.
Chief Financial Officer
Timothy D. Coco
Vice President, Customer Service
David Fuller
Vice President, Research and Development
CORPORATE OFFICE
- ----------------
17520 Newhope Street
Fountain Valley, CA 92708
(714) 241-9241
Facsimile: (714) 241-9893
Internet address: http://www.camdata.com
REGISTRAR AND TRANSFER AGENT
- ----------------------------
American Stock Transfer Company
40 Wall Street
New York, NY 10005
INDEPENDENT AUDITORS
- --------------------
Ernst & Young LLP
18400 Von Karman Avenue
Irvine, CA 92612
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 Company's Corporate
Finance Department.
16
<PAGE> 1
23 CONSENT OF INDEPENDENT AUDITORS
<PAGE> 2
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 18, 1996, included in the
1996 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 18, 1996,
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, 1996, respectively.
ERNST & YOUNG LLP
Orange County, California
December 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 3,338,200
<SECURITIES> 0
<RECEIVABLES> 2,174,600
<ALLOWANCES> 150,000
<INVENTORY> 438,500
<CURRENT-ASSETS> 6,046,700
<PP&E> 1,536,200
<DEPRECIATION> 964,300
<TOTAL-ASSETS> 7,157,800
<CURRENT-LIABILITIES> 2,160,800
<BONDS> 0
0
0
<COMMON> 2,000
<OTHER-SE> 4,995,000
<TOTAL-LIABILITY-AND-EQUITY> 7,157,800
<SALES> 15,669,500
<TOTAL-REVENUES> 15,669,500
<CGS> 7,746,200
<TOTAL-COSTS> 7,746,200
<OTHER-EXPENSES> 6,712,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,210,500
<INCOME-TAX> 370,500
<INCOME-CONTINUING> 840,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 840,000
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
