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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended JUNE 30, 1996
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-16569
CAM DATA SYSTEMS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3866450
--------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
17520 NEWHOPE STREET # 100
FOUNTAIN VALLEY, CALIFORNIA 92708
--------------------------- ----------
(Address of principal (Zip code)
executive offices)
(714) 241-9241
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(Registrant's telephone number including area code)
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
--- ---
As of June 30, 1996 there were 1,954,200 shares of common stock outstanding.
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1
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CAM DATA SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I Financial Information
Item 1 Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets at June 30,
1996 and September 30, 1995 3
Condensed Consolidated Statements of Income for three
months ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Income for nine
months ended June 30, 1996 and 1995 5
Condensed Consolidated Statements of Cash Flows for
nine months ended June 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-10
PART II Other Information 11
Signature page 12
</TABLE>
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2
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PART I. FINANCIAL INFORMATION
CAM DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30 SEPTEMBER 30
1996 1995
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $3,002,500 $3,015,700
Accounts receivable, net 2,453,500 1,817,100
Inventories 629,400 433,800
Prepaid expenses 109,600 76,600
Deferred income taxes 50,000 50,000
---------- ----------
Total current assets 6,245,000 5,393,200
Property and equipment, net 590,100 442,600
License agreement, capitalized software
costs and intangible assets, net 549,800 268,100
Note receivable from officer 14,300 15,000
Other assets 24,800 22,200
---------- ----------
Total assets $7,424,000 $6,141,100
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 979,400 $ 615,200
Accrued compensation and related expenses 618,000 594,000
Income taxes payable 280,800 201,300
Customer deposits and deferred service revenue 322,000 151,800
Accrued installation costs 135,000 110,000
Other accrued liabilities 328,900 381,000
---------- ----------
Total current liabilities 2,664,100 2,053,300
Stockholders' equity:
Common stock, $.001 par value,
5,000,000 shares authorized,
1,954,200 shares issued and
outstanding (1,931,000 at Sept. 30, 1995) 2,000 1,900
Paid-in capital in excess of par 3,836,100 3,795,700
Less notes receivable for purchase
of common stock (44,900) (60,900)
Retained earnings 966,700 351,100
---------- ----------
Total stockholders' equity 4,759,900 4,087,800
---------- ----------
Total liabilities and stockholders' equity $7,424,000 $6,141,100
========== ==========
</TABLE>
See notes to financial statements
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3
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CAM DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
JUNE 30 JUNE 30
1996 1995
----------- -----------
<S> <C> <C>
REVENUES:
Net system revenues $3,916,200 $3,118,700
Net service revenues 797,600 685,200
---------- ----------
Total net revenues 4,713,800 3,803,900
COSTS AND EXPENSES:
Costs of system revenues 1,904,900 1,455,400
Costs of service revenues 385,800 415,500
---------- ----------
Total costs of revenues 2,290,700 1,870,900
Selling, general and
administrative expenses 1,637,800 1,532,000
Research and development expense 343,000 217,500
Interest income (30,200) (19,200)
---------- ---------
Total costs and expenses 4,241,300 3,601,200
---------- ----------
Income before provision for income taxes 472,500 202,700
Provision for income taxes 184,700 25,000
---------- ----------
NET INCOME $ 287,800 $ 177,700
========== ==========
Primary net income per share $ .13 $ .09
========== ==========
Fully-diluted net income per share $ .13 $ .09
========== ==========
Shares used in computing primary
net income per share 2,165,900 2,006,700
========== ==========
Shares used in computing fully-diluted
net income per share 2,168,700 2,006,700
========== ==========
</TABLE>
See notes to financial statements
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CAM DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------------
JUNE 30 JUNE 30
1996 1995
----------- -----------
<S> <C> <C>
REVENUES:
Net system revenues $ 9,312,700 $ 8,702,500
Net service revenues 2,141,800 2,025,800
----------- -----------
Total net revenues 11,454,500 10,728,300
COSTS AND EXPENSES:
Costs of system revenues 4,337,700 4,106,400
Costs of service revenues 1,092,900 1,363,500
----------- -----------
Total costs of revenues 5,430,600 5,469,900
Selling, general and
administrative expenses 4,212,900 4,404,700
Research and development expense 900,000 652,600
Interest income (98,600) (50,700)
----------- -----------
Total costs and expenses 10,444,900 10,476,500
----------- -----------
Income before provision for income taxes 1,009,600 251,800
Provision for income taxes 394,000 62,000
----------- -----------
NET INCOME $ 615,600 $ 189,800
=========== ===========
Primary net income per share $ .29 $ .10
=========== ===========
Fully-diluted net income per share $ .28 $ .09
=========== ===========
Shares used in computing primary
net income per share 2,134,800 1,990,200
=========== ===========
Shares used in computing fully-diluted
net income per share 2,168,700 2,006,700
=========== ===========
</TABLE>
See notes to financial statements
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5
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CAM DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------------
JUNE 30 JUNE 30
1996 1995
---------- ----------
<S> <C> <C>
Operating activities:
Net income $ 615,600 $ 189,800
Adjustments to reconcile net
income to net cash provided
by operations:
Depreciation and amortization 327,900 442,700
Provision for doubtful accounts 10,000 10,000
Other 16,700 8,300
Net changes in operating assets and
liabilities (266,800) (184,700)
---------- ----------
Net cash provided by operations 703,400 466,100
---------- ----------
Investing activities:
Purchase of property and equipment (357,100) (136,500)
Business acquisitions and other investments (400,000) (5,100)
---------- ----------
Cash used in investing activities (757,100) (141,600)
---------- ----------
Financing activities:
Proceeds from exercise of stock options 40,500 7,500
---------- ----------
Net increase (decrease) in cash (13,200) 332,000
Cash and cash equivalents at
beginning of period 3,015,700 1,614,900
---------- ----------
Cash and cash equivalents at end of period $3,002,500 $1,946,900
========== ==========
</TABLE>
See notes to financial statements
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CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The balance sheet as of June 30, 1996, and the related statements of
operations for the three and nine month periods ended June 30, 1996 and 1995,
and statements of cash flows for the nine month periods ended June 30, 1996 and
1995 are unaudited; in the opinion of management, all adjustments necessary for
a fair presentation of such financial statements have been included. Such
adjustments consisted only of normal recurring items. Interim results are not
necessarily indicative of results for a full year. The condensed financial
statements and notes are presented as permitted by Form 10-Q, and therefore
should be read in the conjunction with the Company's annual report on Form 10-K
for the year ended September 30, 1995.
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.
STATEMENTS OF CASH FLOWS
Net changes in operating assets and liabilities as shown in the condensed
consolidated statements of cash flows are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------------
JUNE 30 JUNE 30
1996 1995
--------- ---------
<S> <C> <C>
(Increase) decrease in:
Accounts receivable $(646,400) $(257,400)
Inventory (195,600) (140,300)
Prepaid expenses (33,000) 19,200
Increase (decrease) in:
Accounts payable 364,200 (147,900)
Sales commission payable 24,000 66,000
Accrued installation costs 25,000 7,000
Customer deposits 170,200 15,000
Accrued liabilities 24,800 253,700
--------- ---------
Net changes in operating assets
and liabilities $(266,800) $(184,700)
========= =========
</TABLE>
Income taxes paid during the nine months ended June 30, 1996 and 1995 were
$240,80. There was no interest expense paid in the first nine months of 1996
or 1995.
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7
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CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. ACQUISITIONS
On April 12, 1996, CAM Data Systems announced the acquisition of
Interactive Computer Systems, Inc. (ICS) of Las Vegas, Nevada, for cash and
additional consideration consisting of shares of common stock to be issued
contingent upon meeting certain revenue and earnings levels. ICS is a reseller
and "master developer" for M*A*S 90(R) accounting, distribution and
manufacturing software. M*A*S 90 is a product of State Of The Art(TM) of
Irvine, CA. CAM Data Systems will offer integrated M*A*S 90 accounting
solutions with its CAM and Profit$ software for retailers. The Company will
also offer M*A*S 90 distribution and manufacturing solutions. ICS will be
operated as a wholly owned subsidiary.
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CAM DATA SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996, AS COMPARED TO
THREE MONTHS ENDED JUNE 30, 1995
NINE MONTHS ENDED JUNE 30, 1996, AS COMPARED TO
NINE MONTHS ENDED JUNE 30, 1995
RESULTS OF OPERATIONS
NET REVENUES for the three months ended June 30, 1996 increased 24% to
$4,713,800 consisting of a 26% increase in system revenues, and a 16% increase
in service revenues compared to the three months ended June 30, 1995. Net
revenues for the nine months ended June 30, 1996 increased 7% to $11,454,500
consisting of a 7% increase in system revenues, and a 6% increase in service
revenues compared to the nine months ended June 30, 1995. The increase in
system revenues for the three and nine month periods ended June 30, 1996 was
primarily a result of higher sales volume related in part to the introduction
of the new CAM III product. The increase in service revenues for the three and
nine month periods ended June 30, 1996, was attributed to an increase in the
installed customer base for CAM and Profit$ and the inclusion of ICS revenue,
offset by the decreased service revenue related to the sale of the Silver Plus
division in September 1995.
GROSS MARGIN for the three months ended June 30, 1996 and 1995 remained
constant at 51%. Gross margin on system sales decreased to 51% for the three
months ended June 30, 1996 compared to 53% for the three months ended June 30,
1995. Gross margin for the nine months ended June 30, 1996 was 53% compared to
49% for the nine months ended June 30, 1995. Gross margin on system sales was
53% for the nine months ended June 30, 1996, and 1995. The flat gross margins
on system sales reflect the competitive nature of the marketplace. Gross
margin for service revenue was 52% for the three months ended June 30, 1996
compared to 39% for the same period of 1995. Gross margin for service revenue
was 49% for the nine months ended June 30, 1996 compared to 33% for the nine
months ended June 30, 1995. The margin increase in service revenue was due to
a decrease in costs related to the sale of the Silver Plus division in
September 1995. There was also a decrease in 1996 service costs due to certain
unstaffed positions in customer support that should be filled in the near
future.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES expressed as a percentage of net
revenues decreased for the three month period ended June 30, 1996 to 35%,
compared to 40% for the three month period ended June 30, 1995. Selling,
general and administrative expenses for the three months ended June 30, 1996
increased 7% to $1,637,800, from the three months ended June 30, 1995. The
increase was mainly due to expenses related to ICS, combined with increases in
advertising and commissions expense. Selling, general and administrative
expenses expressed as a percentage of net revenues decreased for the nine month
period ended June 30, 1996 to 37%, compared to 41% for the nine month period
ended June 30, 1995. Selling, general and administrative expenses for the nine
months ended June 30, 1996 decreased 4% to $4,212,900, from the nine months
ended June 30, 1995. The decrease was due to a decrease in expenses related to
the sale of the Silver Plus division in September 1995.
RESEARCH AND DEVELOPMENT EXPENSE increased 58% to $343,000 for the three month
period ended June 30, 1996 from $217,500 for the three month period ended June
30, 1995.
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9
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Research and development expense increased 38% to $900,000 for the nine month
period ended June 30, 1996 from $652,600 for the nine month period ended June
30, 1995. The increase for both periods was related to the enhancement of the
CAM and Profit$ software products.
INCOME TAXES, the effective tax rate was 39% for the three and nine months
ended June 30, 1996. The Company was in an alternative minimum tax position
for federal income tax purposes for the nine months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $3,002,500 on June 30, 1996
compared to $3,015,700 on September 30, 1995. The Company generated $703,400
of cash from operations, and utilized $757,100 for the purchase of land in
Nevada, fixed assets, and for the acquisition of the ICS subsidiary during the
nine months ended June 30, 1996, compared to the generation of $466,100 from
operations, and utilization of $141,600 for the purchase of fixed assets for
the nine months ended June 30, 1995.
The Company has no significant commitments for expenditures. 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.
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CAM DATA SYSTEMS, INC.
PART II - OTHER INFORMATION
Items 1 - 3 Not Applicable
Items 4 Submission of Matters to a Vote of Security Holders
On May 9, 1996, the Company held its annual meeting of shareholders.
The following items were voted upon at the annual meeting with the results of
the voting:
1. The re-election of three persons to serve on the Company's Board of
Directors. The term shall be until the next meeting of shareholders
in 1997.
VOTES
<TABLE> -----
<CAPTION>
For Against Abstain Unvoted
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Geoffrey D. Knapp 1,614,832 4,600 -- --
Walter Straub 1,614,832 4,600 -- --
David Frosh 1,614,832 4,600 -- --
</TABLE>
2. The confirmation of Ernst & Young as the independent auditors of the
Company.
VOTES
<TABLE> -----
<CAPTION>
For Against Abstain Unvoted
--------- ------- ------- -------
<S> <C> <C> <C>
1,616,332 100 3,000 --
</TABLE>
3. The amendment of the Company's 1993 Stock Option Plan to increase from
400,000 to 650,000 the number of shares of the Company's Common Stock for
which options may be granted to directors, officers and employees of, and
consultants to, the Company.
VOTES
<TABLE> -----
<CAPTION>
For Against Abstain Unvoted
--------- ------- ------- -------
<S> <C> <C> <C>
1,175,354 179,325 12,000 252,753
</TABLE>
Items 5 Not Applicable
Item 6 Exhibits and Reports on Form 8-K
(A) Exhibits:
Exhibit 11 Computation of Net Income Per Share
Exhibit 27 Financial Data Schedule
(B) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAM DATA SYSTEMS, INC. (Registrant)
Date: August 7, 1996 By /s/ PAUL CACERES JR.
-------------------------------
Paul Caceres Jr.
Chief Financial and
Accounting Officer
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EXHIBIT 11
CAM DATA SYSTEMS, INC.
COMPUTATION OF NET INCOME PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
PRIMARY NET INCOME PER SHARE
THREE MONTHS ENDED
----------------------------------
JUNE 30 JUNE 30
1996 1995
---------- ----------
<S> <C> <C>
Net income applicable to common and
common equivalent shares $ 287,800 $ 177,700
========== ==========
Average number of common shares
outstanding during the period 1,942,400 1,926,000
Net shares assumed issued using
treasury stock method for stock
options outstanding during the period 223,500 80,700
---------- ----------
Common and common equivalent shares 2,165,900 2,006,700
========== ==========
Net income per share $ .13 $ .09
========== ==========
FULLY DILUTED NET INCOME PER SHARE
THREE MONTHS ENDED
----------------------------------
JUNE 30 JUNE 30
1996 1995
---------- ----------
<S> <C> <C>
Net income applicable to common and
common equivalent shares $ 287,800 $ 177,700
========== ==========
Average number of common shares
outstanding during the period 1,954,200 1,926,000
Net shares assumed issued using
treasury stock method for stock
options outstanding during the period 214,500 80,700
---------- ----------
Common and common equivalent shares 2,168,700 2,006,700
========== ==========
Net income per share $ .13 $ .09
========== ==========
</TABLE>
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13
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EXHIBIT 11
CAM DATA SYSTEMS, INC.
COMPUTATION OF NET INCOME PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
PRIMARY NET INCOME PER SHARE
NINE MONTHS ENDED
----------------------------------
JUNE 30 JUNE 30
1996 1995
---------- ----------
<S> <C> <C>
Net income applicable to common and
common equivalent shares $ 615,600 $ 189,800
========== ==========
Average number of common shares
outstanding during the period 1,941,500 1,926,000
Net shares assumed issued using
treasury stock method for stock
options outstanding during the period 193,300 64,200
---------- ----------
Common and common equivalent shares 2,134,800 1,990,200
========== ==========
Net income per share $ .29 $ .10
========== ==========
FULLY DILUTED NET INCOME PER SHARE
NINE MONTHS ENDED
-----------------------------------
JUNE 30 JUNE 30
1996 1995
----------- -----------
<S> <C> <C>
Net income applicable to common and
common equivalent shares $ 615,600 $ 189,800
========== ==========
Average number of common shares
outstanding during the period 1,954,200 1,926,000
Net shares assumed issued using
treasury stock method for stock
options outstanding during the period 214,500 80,700
---------- ----------
Common and common equivalent shares 2,168,700 2,006,700
========== ==========
Net income per share $ .28 $ .09
========== ==========
</TABLE>
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14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 3,002,500
<SECURITIES> 0
<RECEIVABLES> 2,603,500
<ALLOWANCES> 150,000
<INVENTORY> 385,800
<CURRENT-ASSETS> 6,245,000
<PP&E> 1,786,500
<DEPRECIATION> 1,196,400
<TOTAL-ASSETS> 7,424,000
<CURRENT-LIABILITIES> 2,664,100
<BONDS> 0
0
0
<COMMON> 2,000
<OTHER-SE> 4,757,900
<TOTAL-LIABILITY-AND-EQUITY> 7,424,000
<SALES> 11,454,500
<TOTAL-REVENUES> 11,454,500
<CGS> 5,430,600
<TOTAL-COSTS> 5,430,600
<OTHER-EXPENSES> 5,014,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,009,600
<INCOME-TAX> 394,000
<INCOME-CONTINUING> 615,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 615,600
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
</TABLE>
