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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 DECEMBER 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 December 31, 1999 there were 2,479,000 shares of common stock outstanding.
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CAM DATA SYSTEMS, INC.
INDEX
PART I Financial Information
Item 1 Condensed Financial Statements: Page Number
o Condensed Balance Sheet at December 31, 1999 and 3
September 30, 1999
o Condensed Statement of Statement of Income for
three months ended December 31, 1999 and 1998 4
o Condensed Statement of Cash Flows for
three months ended December 31, 1999 and 1998 5
o Notes to Condensed Financial Statements 6-7
Item 2 Management's Discussion and Analysis of Financial 8-9
Condition and Results Operations
PART II Other Information 10
o Signature Page 11
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAM DATA SYSTEMS, INC.
CONDENSED BALANCE SHEET
(all figures in thousands except per share data)
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31 SEPTEMBER 30
1999 1999
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,114 $ 5,049
Accounts receivable, net 2,879 3,439
Inventories 712 763
Prepaid expenses 155 73
-------- --------
Total current assets 8,860 9,324
Property and equipment, net 978 1,060
Intangible assets, net 1,926 1,297
Other assets 216 218
-------- --------
Total assets $ 11,980 $ 11,899
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 986 $ 1,644
Accrued compensation and related expenses 730 1,110
Customer deposits and deferred service revenue 742 899
Income taxes payable 125 219
Other accrued liabilities 255 439
-------- --------
Total current liabilities 2,838 4,311
Stockholders' equity:
Common stock, $.001 par value, 5,000 shares
authorized, 2,479 shares issued and outstanding 2 2
Paid-in capital 5,918 4,586
Less notes receivable for purchase of common stock (13) (15)
Retained earnings 3,235 3,015
-------- --------
Total stockholders' equity 9,142 7,588
-------- --------
Total liabilities and stockholders' equity $ 11,980 $ 11,899
======= ========
</TABLE>
See accompanying notes.
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CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF INCOME
(all figures in thousands except per share data)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
------------------
DECEMBER 31 DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
REVENUES
Net system revenues $ 5,477 $ 4,463
Net service revenues 1,162 1,154
------- -------
Total net revenues 6,639 5,617
COSTS AND EXPENSES
Costs of system revenues 2,935 2,746
Costs of service revenues 622 546
------- -------
Total costs of revenues 3,557 3,292
Selling, general and administrative expenses 2,445 1,847
Research and development expense 346 245
Interest income (48) (27)
------- -------
Total costs and expenses 6,300 5,357
------- -------
Income before provision for taxes 339 260
Provision for income taxes 119 104
------- -------
NET INCOME $ 220 $ 156
------- -------
Basic net income per share $ .10 $ .07
------- -------
Diluted net income per share $ .08 $ .07
------- -------
Shares used in computing basic
net income per share 2,309 2,139
Shares used in computing
diluted net income per share 2,711 2,289
</TABLE>
See accompanying notes.
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CAM DATA SYSTEMS, INC.
CONDENSED STATEMENT OF CASH FLOWS
(all figures in thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
------------------
DECEMBER 31 DECEMBER 31
1999 1998
----------- ------------
<S> <C> <C>
Operating activities:
Net income $ 220 $ 156
Adjustments to reconcile net income to net cash
(used in) provided by operations:
Depreciation and amortization 190 163
Other 2 2
Net changes in operating assets and liabilities (938) 67
------- -------
Net cash (used in) provided by operations (526) 388
------- -------
Investing activities:
Purchase of property, plant and equipment (53) (197)
Capitalized software (88) (44)
------- -------
Cash used in investing activities (141) (241)
------- -------
Financing activities:
Proceeds from exercise of stock options 732 --
------- -------
Net increase in cash and cash equivalents 65 147
Cash and cash equivalents at beginning of period 5,049 2,812
------- -------
Cash and cash equivalents at end of period $ 5,114 $ 2,959
------- -------
</TABLE>
See accompanying notes.
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CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS DESCRIPTION
CAM Data Systems, Inc. provides total commerce solutions for small to medium
size, traditional as well as web retailers that are based on the company's open
architecture software products for managing inventory, point of sale, sales
transaction processing and accounting. In addition to software, these solutions
often include hardware, installation, training, service and consulting provided
by the company.
PRESENTATION OF CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements of the Company for the three months ended
December 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 conjunction with the Company's annual
report on Form 10-K for the year ended September 30, 1999.
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>
(all figures in thousands)
THREE MONTHS ENDED
------------------
DECEMBER 31 DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
(Increase) decrease in:
Accounts receivable $ 560 $(382)
Inventories 51 (213)
Prepaid expenses and other assets (76) 4
Increase (decrease) in:
Accounts payable (658) 198
Accrued compensation and related expenses (380) 23
Customer deposits (157) 150
Income tax payable (94) 7
Accrued liabilities (184) 280
----- -----
Net changes in operating assets and liabilities $(938) $ 67
----- -----
</TABLE>
Income taxes paid during the three months ended December 31, 1999, and 1998 was
$212,000 and $100,000, respectively. There was no interest expense paid in the
first three months of 1999 or 1998.
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CAM DATA SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NET INCOME 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 month periods ended December 31, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
(all figures in thousands except per share data)
THREE MONTHS ENDED
------------------
DECEMBER 31 DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
NUMERATOR:
Net income numerator for basic and diluted net income
per share $ 220 $ 156
------ ------
DENOMINATOR:
Weighted-average shares outstanding 2,309 2,139
------ ------
Denominator for basic net income per share -
weighted-average shares 2,309 2,139
Effect of dilutive securities:
Stock options 402 150
------ ------
Denominator for diluted net income per share -
weighted-average shares and assumed conversions 2,711 2,289
------ ------
Basic net income per share $ .10 $ .07
------ ------
Diluted net income per share $ .08 $ .07
------ ------
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAM DATA SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999, AS COMPARED TO
THREE MONTHS ENDED DECEMBER 31, 1998
RESULTS OF OPERATIONS
NET REVENUES for the three months ended December 31, 1999, increased 18% to
$6,639,000, consisting of a 23% increase in system revenues, and a 1% increase
in service revenues compared to the three months ended December 31, 1998. The
increase in system was a result of an increase in sales to existing customers
for the quarter, plus an increase in sales to new customers from the Retail Star
product. Service revenues were relatively flat due to the Company's choice to
discontinue certain hardware service contracts, which were not deemed
profitable.
GROSS MARGIN for the three months ended December 31, 1999, was 46%, compared to
41% for the three months ended December 31, 1998. Gross margin on system
revenues increased to 46%, for the three months ended December 31, 1999,
compared to 38% for the three months ended December 31, 1998. Gross margin for
service revenue was 46% for the three months ended December 31, 1999, compared
to 53% for the three months ended December 31, 1998. The margin increase in
system revenues was a result of higher margins on hardware sales. The decrease
in gross margin for service revenue is related to the increase in labor costs
due to the staffing of open positions for customer service personnel.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES expressed as a percentage of net
revenues increased for the three month period ended December 31, 1999, to 37%,
compared to 33% for the three month period ended December 31, 1998. Selling,
general and administrative expenses for the three months ended December 31,
1999, increased 32% to $2,445,000 from the three months ended December 31, 1998.
The increase was related to increases in marketing expenses, commission expenses
related to higher sales, and payroll expenses.
RESEARCH AND DEVELOPMENT EXPENSE increased 41% to $346,000 for the three month
period ended December 31, 1999, from $245,000 for the same period in the prior
year. The increase for the period was attributed to higher payroll expense
related to increased staffing of R & D personnel.
INCOME TAXES, the effective tax rate was 35% for the three months ended December
31, 1999, compared to 40%, for the three month period ended December 31, 1998.
This decrease was based on the revised annual rate for fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents totaled $5,114,000 on December 31, 1999,
compared to $5,049,000 on September 30, 1999. The Company used $526,000 for
operations, and expended $141,000 for fixed assets and the capitalization of
software, and received proceeds of $732,000 from the exercise of stock options.
This was compared to the generation of $388,000 from operations, and the
utilization of $241,000 for the purchase of fixed assets and capitalized
software for the three months ended December 31, 1998.
The Company has no significant commitments for expenditures.
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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 COMPLIANCE
We developed a plan to modify our information technology to recognize the year
2000, and we converted our critical data processing systems. We completed this
project for a cost of $30,000. This figure included internal costs, but excluded
the costs to upgrade and replace systems in the normal course of business. There
have been no adverse effects on our Company from any Year 2000 compliance
related issues, nor are any anticipated in the future.
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.
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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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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: February 10, 2000 By /S/ Paul Caceres Jr.
----------------- --------------------
Paul Caceres Jr.
Chief Financial and
Accounting Officer
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EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 5,114
<SECURITIES> 0
<RECEIVABLES> 3,259
<ALLOWANCES> 380
<INVENTORY> 712
<CURRENT-ASSETS> 8,860
<PP&E> 2,341
<DEPRECIATION> 1,363
<TOTAL-ASSETS> 11,980
<CURRENT-LIABILITIES> 2,838
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 9,140
<TOTAL-LIABILITY-AND-EQUITY> 11,980
<SALES> 6,639
<TOTAL-REVENUES> 6,639
<CGS> 3,557
<TOTAL-COSTS> 3,557
<OTHER-EXPENSES> 2,743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 339
<INCOME-TAX> 119
<INCOME-CONTINUING> 220
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 220
<EPS-BASIC> .10
<EPS-DILUTED> .08
</TABLE>
