<PAGE> 1
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 MARCH 31, 1998
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.
(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 92708
FOUNTAIN VALLEY, CALIFORNIA (Zip code)
(Address of principal
executive offices)
(714) 241-9241
(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 March 31, 1998 there were 2,089,500 shares of common stock outstanding.
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CAM DATA SYSTEMS, INC.
INDEX
PART I Financial Information
<TABLE>
<CAPTION>
Item 1 Condensed Financial Statements: Page Number
<S> <C> <C>
o Condensed Balance Sheet at March 31, 1998 and 3
September 30, 1997
o Condensed Statement of Operations for three
months ended March 31, 1998 and 1997 4
o Condensed Statement of Income for six
months ended March 31, 1998 and 1997 5
o Condensed Statement of Cash Flows for
six months ended March 31, 1998 and 1997 6
o Notes to Financial Condensed Statements 7-8
Item 2 Management's Discussion and Analysis of Financial Condition and 9-10
Results of Operations
PART II Other Information 11
o Signature Page 12
</TABLE>
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PART I. FINANCIAL INFORMATION
CAM DATA SYSTEMS, INC.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31 SEPTEMBER 30
1998 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,335,800 $ 2,916,300
Accounts receivable, net 2,610,800 2,354,500
Inventories 548,800 523,000
Prepaid expenses 147,700 256,200
Deferred income taxes 123,000 123,000
----------- -----------
Total current assets 5,766,100 6,173,000
Property and equipment, net 811,400 788,600
Intangible assets, net 912,700 597,300
Note receivable from officer 11,300 12,300
Other assets 57,500 36,900
----------- -----------
Total assets $ 7,559,000 $ 7,608,100
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 930,900 $ 1,140,100
Accrued compensation and related expenses 467,900 466,000
Customer deposits and deferred service revenue 525,100 420,300
Accrued installation costs 165,000 100,000
Other accrued liabilities 212,100 197,700
----------- -----------
Total current liabilities 2,301,000 2,324,100
Stockholders' equity:
Common stock, $.001 par value, 5,000,000
shares authorized, 2,089,500 shares issued
and outstanding (2,008,700 at
Sept. 30, 1997) 2,100 2,000
Paid-in capital 4,144,700 3,944,800
Less notes receivable for purchase of
common stock (26,900) (30,900)
Retained earnings 1,138,100 1,368,100
----------- -----------
Total stockholders' equity 5,258,000 5,284,000
----------- -----------
Total liabilities and stockholders' equity $ 7,559,000 $ 7,608,100
----------- -----------
</TABLE>
See notes to financial statements
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CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
-----------------------------
MARCH 31 MARCH 31
1998 1997
----------- -----------
<S> <C> <C>
REVENUES
Net system revenues $ 3,378,600 $ 2,668,100
Net service revenues 1,024,100 929,400
----------- -----------
Total net revenues 4,402,700 3,597,500
COSTS AND EXPENSES
Costs of system revenues 1,940,800 1,480,000
Costs of service revenues 593,400 472,300
----------- -----------
Total costs of revenues 2,534,200 1,952,300
Selling, general and administrative expenses 1,730,400 1,380,800
Research and development expense 283,700 361,400
Interest income (27,300) (28,900)
----------- -----------
Total costs and expenses 4,521,000 3,665,600
----------- -----------
Loss before (benefit) for income taxes (118,300) (68,100)
(Benefit) provision for income taxes -- (20,000)
NET LOSS $ (118,300) $ (48,100)
----------- -----------
Basic net loss per share $ (.06) $ (.02)
----------- -----------
Diluted net loss per share $ (.06) $ (.02)
----------- -----------
Shares used in computing basic
net loss per share 2,089,500 1,993,700
Shares used in computing
diluted net loss per share 2,089,500 1,993,700
</TABLE>
See notes to financial statements
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CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
-----------------------------
MARCH 31 MARCH 31
1998 1997
---- ----
<S> <C> <C>
REVENUES
Net system revenues $ 6,565,600 $ 6,552,400
Net service revenues 2,045,100 1,823,900
----------- -----------
Total net revenues 8,610,700 8,376,300
COSTS AND EXPENSES
Costs of system revenues 3,818,400 3,531,300
Costs of service revenues 1,171,000 930,300
----------- -----------
Total costs of revenues 4,989,400 4,461,600
Selling, general and administrative expenses 3,332,700 3,059,700
Research and development expense 575,700 720,400
Interest income (57,100) (64,400)
----------- -----------
Total costs and expenses 8,840,700 8,177,300
----------- -----------
(Loss) income before provision for
income taxes (230,000) 199,000
Provision for income taxes -- 60,000
----------- -----------
NET (LOSS) INCOME $ (230,000) $ 139,000
----------- -----------
Basic net (loss) income per share $ (.11) $ .07
----------- -----------
Diluted net (loss) income per share $ (.11) $ .06
----------- -----------
Shares used in computing basic
net (loss) income per share 2,089,500 1,982,600
Shares used in computing
diluted net (loss) income per share 2,089,500 2,151,500
</TABLE>
See notes to financial statements
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CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
-----------------------------
MARCH 31 MARCH 31
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ($ 230,000) $ 139,000
Adjustments to reconcile net income
(loss) to net cash (used in) provided by
operations:
Depreciation and amortization 240,600 218,800
Provision for doubtful accounts 30,000 10,000
Other (15,000) 6,000
Net changes in operating assets and liabilities (226,700) (567,200)
----------- -----------
Net cash (used in) provided by operations (201,100) (193,400)
----------- -----------
Investing activities:
Purchase of property, plant and equipment (211,400) (791,200)
Capitalized software (168,000) --
----------- -----------
Cash used in investing activities (379,400) (791,200)
Financing activities:
Proceeds from exercise of stock options -- 68,100
----------- -----------
Net (decrease) in cash and cash equivalents (580,500) (916,500)
Cash and cash equivalents at beginning of period 2,916,300 3,338,200
----------- -----------
Cash and cash equivalents at end of period $ 2,335,800 $ 2,421,700
----------- -----------
</TABLE>
See notes to financial statements
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CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements of the Company for the three and six
months ended March 31, 1998 and 1997 are unaudited, but include all adjustments
(consisting only of normal recurring adjustments) which the Company considers
necessary for a fair presentation of its financial position, results of
operations and cash flows for such periods. Certain information and notes
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The interim
financial statements should be read in conjunction with the financial statements
and related notes included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997. The interim financial information
contained herein is not necessarily indicative of the results to be expected for
any other interim period or for the full fiscal year ending September 30, 1998.
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 statement of cash flows are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------
MARCH 31 MARCH 31
1998 1997
---- ----
<S> <C> <C>
(Increase) decrease in:
Accounts receivable $(286,300) $ 68,800
Inventories (25,800) (192,100)
Prepaid expenses and other assets 108,500 (58,400)
Increase (decrease) in:
Accounts payable (209,200) (161,800)
Accrued compensation and related expenses 1,900 (266,000)
Accrued installation costs 65,000 (11,000)
Customer deposits 104,800 233,200
Accrued liabilities 14,400 (179,900)
--------- ---------
Net changes in operating assets and liabilities $(226,700) $(567,200)
--------- ---------
</TABLE>
Income taxes paid during the six months ended March 31, 1998 and 1997 were $500
and $209,000,respectively. There was no interest expense paid in the first six
months of 1998 or 1997.
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CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NET INCOME (LOSS) PER SHARE
The company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", which replaces the presentation of "primary" earnings per
share with "basic" earnings per share and the presentation of "fully diluted"
earnings per share with "diluted" earnings per share. All previously reported
earnings per share amounts have been restated based on the provisions of the new
standard. Basic earnings per share are based upon the weighted average number of
common shares outstanding. Diluted earnings per share amounts are based upon the
weighted average number of common shares and common equivalent shares for each
period presented. Common equivalent shares include stock options assuming
conversion under the treasury stock method. The computation of basic and diluted
earnings per share for the three and six month periods ended March 31, 1998 and
March 31, 1997 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------- -----------
MARCH 3 MARCH 31
NUMERATOR: 1998 1997
---- ----
<S> <C> <C>
Net loss, numerator for basic and diluted
net loss per share $ (118,300) $ (48,100)
----------- -----------
DENOMINATOR:
Weighted-average shares outstanding 2,089,500 1,993,700
----------- -----------
Denominator for basic net loss per share -
weighted-average shares 2,089,500 1,993,700
Effect of dilutive securities:
Stock options -- --
----------- -----------
Denominator for diluted net loss per share -
weighted-average shares and assumed conversions 2,089,500 1,993,700
----------- -----------
Basic net loss per share $ (.06) $ (.02)
----------- -----------
Diluted net loss per share $ (.06) $ (.02)
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------- ----------
MARCH 31 MARCH 31
NUMERATOR: 1998 1997
---- ----
<S> <C> <C>
Net (loss) income, numerator for basic and
diluted net (loss) income per share $ (230,000) $ 139,000
----------- ----------
DENOMINATOR:
Weighted-average shares outstanding 2,089,500 1,982,600
----------- ----------
Denominator for basic net (loss) income per
share - weighted-average shares 2,089,500 1,982,600
Effect of dilutive securities:
Stock options -- 168,900
----------- ----------
Denominator for diluted net (loss) income
per share - weighted-average shares and
assumed conversions 2,089,500 2,151,500
----------- ----------
Basic net (loss) income per share $ (.11) $ .07
----------- ----------
Diluted net (loss) income per share $ (.11) $ .06
----------- ----------
</TABLE>
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CAM DATA SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998, AS COMPARED TO
THREE MONTHS ENDED MARCH 31, 1997
SIX MONTHS ENDED MARCH 31, 1998, AS COMPARED TO
SIX MONTHS ENDED MARCH 31, 1997
RESULTS OF OPERATIONS
NET REVENUES for the three months ended March 31, 1998, increased 22% to
$4,402,700 consisting of a 27% increase in system revenues, and a 10% increase
in service revenues compared to the three months ended March 31, 1997. The
increase in system revenues was due to a 60% increase in sales to existing
customers, and an 18% increase in sales to new customers for the quarter.
Service revenues increased due to an increase in consulting services during the
quarter. Net revenues for the six months ended March 31, 1998, increased 3% to
$8,610,700 mainly due to a 12% increase in service revenues compared to the six
months ended March 31, 1997. The increase in service revenues for the six months
ended March 31, 1998 is due to an increase in consulting services.
GROSS MARGIN for the three months and six months ended March 31, 1998, was 42%,
compared to 46% and 47% for the three and six months ended March 31, 1997. Gross
margin on system revenues decreased to 43% and 42%, for the three months and six
months ended March 31, 1998, compared to 45% and 46% for the three and six
months ended March 31, 1997. Gross margin for service revenue was 42% and 43%
for the three and six months ended March 31, 1998, compared to 49% for the three
and six months ended March 31, 1997. The decrease in gross margin for system
revenues was a result of a higher installation costs due to increases in labor
and travel expenses. The decrease in gross margin for service revenue is related
to the increase in labor costs in providing consulting and technical services.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES expressed as a percentage of net
revenues increased for the three month period ended March 31, 1998, to 39%,
compared to 38% for the three month period ended March 31, 1997. Selling,
general and administrative expenses for the three months ended March 31, 1998,
increased 25% to $1,730,400 from the three months ended March 31, 1997. Selling,
general and administrative expenses expressed as a percentage of net revenues
increased for the six month period ended March 31, 1998, to 39%, compared to 37%
for the six month period ended March 31, 1997. Selling, general and
administrative expenses for the six months ended March 31, 1998, increased 9% to
$3,332,700 from the six months ended March 31, 1997. The increase in the dollar
amount of selling, general, administrative expenses and as a percent of revenue
was mainly attributed to higher commissions due to a higher sales volume for the
three months ended March 31, 1998, combined with higher payroll expenses for the
six months ended March 31, 1998.
RESEARCH AND DEVELOPMENT EXPENSE decreased 21% to $283,700 for the three month
period ended March 31, 1998, from $361,400 for the same period in 1997. Research
and development expense decreased 20% to $575,700 for the six month period ended
March 31, 1998, from $720,400 for the same period in 1997. The decrease for the
periods was attributed to the increase in the rate of software capitalization in
1998 relative to the development of new software products.
INCOME TAXES, there was no income tax expense booked due to the loss for the
three and six months ended March 31, 1998. The effective tax rate was 30% for
the three and six months ended March 31, 1997.
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<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $2,335,800 on March 31, 1998,
compared to $2,916,300 on September 30, 1997. The Company used $201,100 for
operations, expended $211,400 for fixed assets, and $168,000 for capitalized
software development during the six months ended March 31, 1998, compared to the
utilization of $193,400 for operations, and the utilization of $791,200 for the
purchase of fixed assets and the construction of a facility in Nevada for the
six months ended March 31, 1997.
The Company has no significant commitments for expenditures.
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 next twelve months.
Inflation has had no significant impact on the Company's operations.
This section contains certain forward looking statements regarding the Company,
its business, liquidity, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause the Company's actual business, liquidity, prospects and results of
operations to differ materially from those that may be anticipated by such
forward looking statements. All statements contained herein that are not
historical facts, including but not limited to, statements regarding anticipated
future revenue and expense levels, and capital requirements, and the Company's
ability to generate cash from operations, are forward looking statements based
on current expectations. No assurances can be given that events or results
mentioned in any such forward looking statements will in fact occur. Readers are
cautioned not to place undue reliance on any forward looking statements, which
speak only as of the date of this report. The Company undertakes no obligation
to revise any forward looking statements in order to reflect events or
circumstances that may subsequently arise. Readers are urged to carefully review
and consider the various disclosures made by the Company in this report and in
the Company's other reports filed with the Securities and Exchange Commission.
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CAM DATA SYSTEMS, INC.
PART II - OTHER INFORMATION
Items 1 - 5 Not Applicable
Item 6 Exhibits and Reports on Form 8-K
(A) Exhibits: Exhibit 27 Financial Data Schedule
(B) Reports on Form 8-K None
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<PAGE> 12
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: May 12, 1998 By /S/ Paul Caceres Jr.
------------ --------------------
Paul Caceres Jr.
Chief Financial and
Accounting Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 2,335,800
<SECURITIES> 0
<RECEIVABLES> 2,800,800
<ALLOWANCES> 190,000
<INVENTORY> 548,800
<CURRENT-ASSETS> 5,766,100
<PP&E> 1,801,200
<DEPRECIATION> 989,800
<TOTAL-ASSETS> 7,559,000
<CURRENT-LIABILITIES> 2,301,000
<BONDS> 0
0
0
<COMMON> 2,100
<OTHER-SE> 5,255,900
<TOTAL-LIABILITY-AND-EQUITY> 7,559,000
<SALES> 8,610,700
<TOTAL-REVENUES> 8,610,700
<CGS> 4,989,400
<TOTAL-COSTS> 4,989,400
<OTHER-EXPENSES> 3,851,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (230,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (230,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,000)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
