<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, 1999
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
(Address of principal (Zip code)
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, 1999 there were 2,144,000 shares of common stock outstanding.
- --------------------------------------------------------------------------------
1
<PAGE> 2
CAM DATA SYSTEMS, INC.
INDEX
PART I Financial Information
<TABLE>
<CAPTION>
Item 1 Condensed Financial Statements: Page Number
<S> <C>
o Condensed Balance Sheet at March 31, 1999 and September 30,
1998 3
o Condensed Statement of Income (loss) for three months ended
March 31, 1999 and 1998 4
o Condensed Statement of Income (loss) for six months ended
March 31, 1999 and 1998 5
o Condensed Statement of Cash Flows for six months ended March
31, 1999 and 1998 6
o Notes to Condensed Financial Statements 7-8
Item 2 Management's Discussion and Analysis of Financial Condition and
Results 9-10
PART II Other Information 11
o Signature Page 12
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAM DATA SYSTEMS, INC.
CONDENSED BALANCE SHEET
(all figures in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 SEPTEMBER 30
1999 1998
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,307 $ 2,812
Accounts receivable, net 3,525 3,009
Inventories 815 622
Prepaid expenses 67 66
------- -------
Total current assets 7,714 6,509
Property and equipment, net 965 828
Intangible assets, net 976 984
Other assets 161 181
------- -------
Total assets $ 9,816 $ 8,502
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,367 $ 1,190
Accrued compensation and related expenses 622 565
Customer deposits and deferred service revenue 900 524
Accrued installation costs 125 135
Other accrued liabilities 684 291
------- -------
Total current liabilities 3,698 2,705
Stockholders' equity:
Common stock, $.001 par value, 5,000,000
shares authorized, 2,144,000 shares issued
and outstanding 2 2
Paid-in capital 4,293 4,283
Less notes receivable for purchase of common
stock (19) (23)
Retained earnings 1,842 1,535
------- -------
Total stockholders' equity 6,118 5,797
------- -------
Total liabilities and stockholders' equity $ 9,816 $ 8,502
------- -------
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
3
<PAGE> 4
CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF INCOME (LOSS)
(all figures in thousands except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
MARCH 31 MARCH 31
1999 1998
-------- --------
<S> <C> <C>
REVENUES
Net system revenues $ 5,200 $ 3,379
Net service revenues 1,106 1,024
------- -------
Total net revenues 6,306 4,403
COSTS AND EXPENSES
Costs of system revenues 3,133 1,941
Costs of service revenues 586 593
------- -------
Total costs of revenues 3,719 2,534
Selling, general and administrative expenses 2,127 1,730
Research and development expense 235 284
Interest income (27) (27)
------- -------
Total costs and expenses 6,054 4,521
------- -------
Income (loss) before provision for income
taxes 252 (118)
Provision for income taxes 101 --
------- -------
NET INCOME (LOSS) $ 151 $ (118)
------- -------
Basic net income (loss) per share $ .07 $ (.06)
------- -------
Diluted net income (loss) per share $ .06 $ (.06)
------- -------
Shares used in computing basic
net income (loss) per share 2,144 2,089
Shares used in computing
diluted net income (loss) per share 2,415 2,089
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
4
<PAGE> 5
CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF INCOME (LOSS)
(all figures in thousands except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
MARCH 31 MARCH 31
1999 1998
-------- --------
<S> <C> <C>
REVENUES
Net system revenues $ 9,713 $ 6,566
Net service revenues 2,210 2,045
-------- --------
Total net revenues 11,923 8,611
COSTS AND EXPENSES
Costs of system revenues 5,878 3,818
Costs of service revenues 1,132 1,171
-------- --------
Total costs of revenues 7,010 4,989
Selling, general and administrative expenses 3,971 3,333
Research and development expense 484 576
Interest income (54) (57)
-------- --------
Total costs and expenses 11,411 8,841
-------- --------
Income (loss) before provision for income taxes
512 (230)
Provision for income taxes 205 --
-------- --------
NET INCOME (LOSS) $ 307 $ (230)
-------- --------
Basic net income (loss) per share $ .14 $ (.11)
-------- --------
Diluted net income (loss) per share $ .13 $ (.11)
-------- --------
Shares used in computing basic
net income (loss) per share 2,141 2,089
Shares used in computing
diluted net income (loss) per share 2,353 2,089
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
5
<PAGE> 6
CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF CASH FLOWS
(all figures in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------
MARCH 31 MARCH 31
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 307 ($ 230)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operations:
Depreciation and amortization 341 241
Provision for doubtful accounts -- 30
Other 4 (15)
Net changes in operating assets and liabilities 305 (227)
------- -------
Net cash provided by (used in) operations 957 (201)
------- -------
Investing activities:
Purchase of property, plant and equipment (370) (211)
Capitalized software (102) (168)
------- -------
Cash used in investing activities (472) (379)
Financing activities:
Proceeds from exercise of stock options 10 --
------- -------
Net (decrease) in cash and cash equivalents 495 (580)
Cash and cash equivalents at beginning of period 2,812 2,916
------- -------
Cash and cash equivalents at end of period $ 3,307 $ 2,336
------- -------
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
6
<PAGE> 7
CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. PRESENTATION OF CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements of the Company for the three and six
months ended March 31, 1999 and 1998 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, 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
statement of cash flows are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------
MARCH 31 MARCH 31
1999 1998
-------- --------
(all figures in thousands)
<S> <C> <C>
(Increase) decrease in:
Accounts receivable $(516) $(286)
Inventories (193) (26)
Prepaid expenses and other assets 21 108
Increase (decrease) in:
Accounts payable 177 (209)
Accrued compensation and related expenses 57 2
Accrued installation costs (10) 65
Customer deposits and deferred revenue 376 105
Accrued liabilities 393 14
----- -----
Net changes in operating assets and liabilities $ 305 $(227)
----- -----
</TABLE>
Income taxes paid during the six months ended March 31, 1999 and 1998 were
$168,000 and $500, respectively. There was no interest expense paid in the first
six months of 1999 or 1998.
- --------------------------------------------------------------------------------
7
<PAGE> 8
CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NET INCOME (LOSS) PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to the
Statement 128 requirements. The computation of basic and diluted earnings per
share for the three and six month periods ended March 31, 1999 and March 31,
1998 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
MARCH 31 MARCH 31
NUMERATOR: 1999 1998
-------- --------
(all figures in thousands
except per share data)
<S> <C> <C>
Net income (loss) numerator for basic and diluted net
income (loss) per share $ 151 $ (118)
------- -------
DENOMINATOR:
Weighted-average shares outstanding 2,144 2,089
------- -------
Denominator for basic net income (loss) per share -
weighted-average shares 2,144 2,089
Effect of dilutive securities:
Stock options 271 --
------- -------
Denominator for diluted net income (loss) per share -
weighted-average shares and assumed conversions 2,415 2,089
------- -------
Basic net income (loss) per share $ .07 $ (.06)
------- -------
Diluted net income (loss) per share $ .06 $ (.06)
------- -------
<CAPTION>
SIX MONTHS ENDED
-------------------------
MARCH 31 MARCH 31
NUMERATOR: 1999 1998
-------- --------
(all figures in thousands
except per share data)
<S> <C> <C>
Net income (loss), numerator for basic and diluted
net income (loss) per share $ 307 $ (230)
------- -------
DENOMINATOR:
Weighted-average shares outstanding 2,141 2,089
------- -------
Denominator for basic net income (loss) per share -
weighted-average shares 2,141 2,089
Effect of dilutive securities:
Stock options 212 --
------- -------
Denominator for diluted net income (loss) per share -
weighted-average shares and assumed conversions 2,353 2,089
------- -------
Basic net income (loss) per share $ .14 $ (.11)
------- -------
Diluted net income (loss) per share $ .13 $ (.11)
------- -------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE> 9
CAM DATA SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999, AS COMPARED TO
THREE MONTHS ENDED MARCH 31, 1998
SIX MONTHS ENDED MARCH 31, 1999, AS COMPARED TO
SIX MONTHS ENDED MARCH 31, 1998
RESULTS OF OPERATIONS
NET REVENUES for the three months ended March 31, 1999, increased 43% to $6.3
million, consisting of a 54% increase in system revenues, and an 8% increase in
service revenues compared to the three months ended March 31, 1998. Net revenues
for the six months ended March 31, 1999, increased 38% to $11.9 million,
consisting of a 48% increase in system revenues, and an 8% increase in service
revenues compared to the six months ended March 31, 1998. The increase in system
revenues was due to an increase in sales to existing customers. Service revenues
increased due to higher consulting services in 1999.
GROSS MARGIN for the three months and six months ended March 31, 1999, was 41%,
compared to 42% for the three and six months ended March 31, 1998. Gross margin
on system revenues decreased to 40% and 39%, for the three months and six months
ended March 31, 1999, compared to 43% and 42% for the three and six months ended
March 31, 1998. Gross margin for service revenue was 47% and 49% for the three
and six months ended March 31, 1999, compared to 42% and 43% for the three and
six months ended March 31, 1998. The margin decrease in system revenues was a
result of a higher mix of hardware sales versus software sales, and higher sales
to existing customers, which yield a lower gross margin. The increase in gross
margin for service revenue is related to the decrease in labor costs due to open
positions for technical support personnel. This trend will stabilize once the
positions are filled.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES expressed as a percentage of net
revenues decreased for the three month period ended March 31, 1999, to 34%,
compared to 39% for the three month period ended March 31, 1998. Selling,
general and administrative expenses for the three months ended March 31, 1999,
increased 23% to $2.1 million, from the three months ended March 31, 1998.
Selling, general and administrative expenses expressed as a percentage of net
revenues decreased for the six month period ended March 31, 1999, to 33%,
compared to 39% for the six month period ended March 31, 1998. Selling, general
and administrative expenses for the six months ended March 31, 1999, increased
19% to $4 million, from the six months ended March 31, 1998. The increase was
related to increases in bad debt expense, payroll expense, telephone expense,
and commission expense related to higher sales volume.
RESEARCH AND DEVELOPMENT EXPENSE decreased 17% to $235,000 for the three month
period ended March 31, 1999, from $284,000 for the same period in 1998. Research
and development expense decreased 16% to $484,000 for the six month period ended
March 31, 1999, from $576,000 for the same period in 1998. The decrease for the
periods was attributed to an overall decrease in Research and development
expenses in 1999.
INCOME TAXES, the effective tax rate was 40% for the three and six months ended
March 31, 1999. There was no income tax expense booked due to the loss for the
six months ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $3.3 million on March 31, 1999,
compared to $2.8
- --------------------------------------------------------------------------------
9
<PAGE> 10
million on September 30, 1998. The Company generated $1 million from operations,
expended $.5 million for fixed assets and capitalized software development
during the six months ended March 31, 1999, compared to the utilization of
$201,000 for operations, and expended $379,000 for fixed assets and capitalized
software development during the six months ended March 31, 1998.
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 foreseeable future.
Inflation has had no significant impact on the Company's operations.
YEAR 2000 ISSUE
We have developed a plan to modify our information technology to recognize the
year 2000 and we are converting our critical data processing systems. We
currently expect the project to be substantially complete by late summer 1999
and to cost between twenty-five and fifty thousand dollars. This estimate
includes internal costs, but excludes the costs to upgrade and replace systems
in the normal course of business. We do not expect this project to have a
significant effect on operations. As of March 31, 1999, approximately $20,000
has been expended on this project. We will continue to implement systems with
strategic value though some projects may be delayed due to resource constraints.
The Company has relationships with various third parties on whom it relies to
provide goods and services. These include suppliers and vendors. As part of its
determination of Year 2000 readiness, the Company has identified material
relationships with third party vendors, and is in the process of assessing the
status of their compliance through the use of inquiries and review of hardware
and software documentation. Due to the broad diversification of these vendors,
the risk associated with potential business interruption as a result of year
2000 non-compliance by one or more vendors is not considered significant.
It is anticipated that the steps the Company has taken and is continuing to take
to deal with the year 2000 issue will reduce the risk of significant business
interruptions, but there is no assurance that this outcome will be achieved.
Failure to detect and correct all internal instances of non-compliance or the
inability of third parties to achieve timely compliance could result in the
interruption of normal business operations which could, depending on its
duration, have an adverse effect on the Company.
This Item II 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.
- --------------------------------------------------------------------------------
10
<PAGE> 11
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
- --------------------------------------------------------------------------------
11
<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, 1999 By /s/ Paul Caceres Jr.
------------ ------------------------------------
Paul Caceres Jr.
Chief Financial and Accounting Officer
- --------------------------------------------------------------------------------
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 3,307
<SECURITIES> 0
<RECEIVABLES> 3,760
<ALLOWANCES> 235
<INVENTORY> 815
<CURRENT-ASSETS> 7,714
<PP&E> 2,236
<DEPRECIATION> 1,271
<TOTAL-ASSETS> 9,816
<CURRENT-LIABILITIES> 3,698
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 6,116
<TOTAL-LIABILITY-AND-EQUITY> 9,816
<SALES> 11,923
<TOTAL-REVENUES> 11,923
<CGS> 7,010
<TOTAL-COSTS> 7,010
<OTHER-EXPENSES> 4,401
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 512
<INCOME-TAX> 205
<INCOME-CONTINUING> 307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 307
<EPS-PRIMARY> .14
<EPS-DILUTED> .13
</TABLE>
