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Previous: PLM INTERNATIONAL INC, 10-Q, 1995-11-01 |
Next: MERRILL LYNCH MICHIGAN MUNICIPAL BOND FUND, 497J, 1995-11-01 |
<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 7, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-16172
COMPUTONE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2472952
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1100 Northmeadow Parkway, Suite 150, Roswell, GA 30076
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 475-2725
--------------
N/A
---
(Former name, former address and former fiscal year, if change
since last report)
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 .
--- ---
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15 (d)
of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No .
--- ---
As of November 17, 1994, there were 6,205,217 shares of common
stock outstanding.
1
<PAGE>
COMPUTONE CORPORATION
INDEX TO FORM 10-Q/A
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
- ------------------------------------
ITEM 1. Financial Statements:
Interim Condensed Consolidated Balance Sheets
as of October 7, 1994 and April 1, 1994 3
Interim Condensed Consolidated Statements of Income
for the three months ended October 7, 1994 and October 1, 1993 4
Interim Condensed Consolidated Statements of Income
for the six months ended October 7, 1994 and October 1, 1993 5
Interim Condensed Consolidated Statements of Cash Flows
for the six months ended October 7, 1994 and October 1, 1993 6
Notes to Interim Condensed Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9
PART II. OTHER INFORMATION
- --------------------------------
ITEM 1. Legal Proceedings 11
ITEM 2. Changes in Securities 11
ITEM 3. Defaults Upon Senior Securities 11
ITEM 4. Submission of Matters to a Vote of Security Holders 11
ITEM 5. Other Information 11
Signature 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Computone Corporation
Interim Condensed Consolidated Balance Sheets
(in thousands except par value and shares)
<TABLE>
<CAPTION>
October 7, 1994 April 1, 1994
(unaudited) (audited)
--------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 321 $ 215
Receivables, net 3,322 2,905
Inventories, net 1,843 2,621
Prepaid expenses and other 55 48
-------- --------
Total current assets 5,541 5,789
Property, equipment and improvements, net 1,073 1,168
Intangible assets, net 911 1,023
Other 221 167
-------- --------
Total assets $ 7,746 $ 8,147
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 931 $ 1,201
Accrued liabilities:
Payroll 165 101
Costs related to discontinued operations 458 473
Other 1,037 1,198
Current maturities of long term obligations 491 791
-------- --------
Total current liabilities 3,082 3,764
Notes payable to affiliates 270 270
Other long term obligations 67 336
Commitments and contingencies - -
Stockholders' Equity
Convertible redeemable preferred stock, $.01 par value;
10,000,000 shares authorized; 200,000 share issued 2 2
Common stock, $.01 par value; 50,000,000 shares
authorized; 6,205,217 and 6,201,883 shares outstanding
at October 7, 1994 and April 1, 1994, respectively 62 62
Additional paid in capital 41,636 41,649
Accumulated deficit (37,373) (37,936)
-------- --------
Total stockholders' equity 4,327 3,777
-------- --------
Total liabilities and stockholders' equity $ 7,746 $ 8,147
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
ITEM 1. Financial Statements (continued)
Computone Corporation
Interim Condensed Consolidated Statements of Income
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 7, 1994 October 1, 1993
--------------- ---------------
<S> <C> <C>
Revenues:
Product sales 3,985 $ 3,197
Royalties - -
--------- ----------
Net revenues 3,985 3,197
Expenses:
Cost of products sold 2,452 1,807
Selling, general and administrative 1,090 902
Product development 283 325
--------- ---------
3,825 3,034
--------- ---------
Operating income from continuing operations 160 163
Non-Operating income (expense):
Other income (expense) (1) 27
Interest expense (6) (51)
--------- ---------
Income from continuing operations before taxes 153 139
Income tax expense (benefit):
Current - 178
Deferred - (178)
--------- ---------
Income from continuing operations 153 139
Discontinued operations:
Income on disposal - 1,921
--------- ---------
Income from discontinued operations - 1,921
--------- ---------
Income before extraordinary item 153 2,060
Extraordinary item:
Debt foregiveness 202 -
--------- ---------
Net income $ 355 $ 2,060
========= =========
Net income per common share and common
share equivalents:
Income from continuing operations 0.02 0.03
Income from discontinued operations - 0.38
Income from extraordinary item 0.04 -
--------- ---------
Net income per common share $ 0.06 $ 0.41
========= =========
Weighted average common shares and
common share equivalents outstanding 6,412 5,071
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
ITEM 1. Financial Statements (continued)
Computone Corporation
Interim Condensed Consolidated Statements of Income
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
October 7, 1994 October 1, 1993
--------------- ---------------
<S> <C> <C>
Revenues:
Product sales $ 7,390 $ 7,059
Royalties - 882
--------- ---------
Net revenues 7,390 7,941
Expenses:
Cost of products sold 4,544 4,173
Selling, general and administrative 2,071 1,889
Product development 575 654
--------- ---------
7,190 6,716
--------- ---------
Operating income from continuing operations 200 1,225
Non-Operating income (expense):
Other income (expense) 1 34
Interest expense (7) (112)
--------- ---------
Income from continuing operations before taxes 194 1,147
Income tax expense (benefit):
Current - 561
Deferred - (561)
--------- ---------
- -
--------- ---------
Income from continuing operations 194 1,147
Discontinued operations:
Income on disposal 86 1,921
--------- ---------
Income from discontinued operations 86 1,921
--------- ---------
Income before extraordinary item 280 3,068
Extraordinary item:
Debt foregiveness 202 -
--------- ---------
Net income $ 482 $ 3,068
========= =========
Net income per common share and common
share equivalents:
Income from continuing operations 0.03 0.23
Income from discontinued operations 0.01 0.38
Income from extraordinary item 0.04 -
--------- ---------
Net income per common share $ 0.08 $ 0.61
========= =========
Weighted average common shares and
common share equivalents outstanding 6,205 5,071
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
ITEM 1. Financial Statements (continued)
Computone Corporation
Interim Condensed Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
October 7, 1994 October 1, 1993
(unaudited) (unaudited)
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 396 $ 1,147
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Depreciation and amortization 438 320
Provision for doubtful accounts (28) 135
Foregiveness of debt (202) -
Amortization of debt discount - 10
Changes in assets and liabilities:
Receivables (389) 425
Inventories 859 (745)
Prepaid expenses and other (7) (8)
Deferred taxes - (561)
Accounts payable and accrued liabilities (682) 1,543
----- -------
Net cash provided by continuing operations 385 2,266
Income from discontinued operations 86 1,921
Adjustments to reconcile loss from discontinued
operations to net cash used in discontinued operations:
Income on disposal (86) -
Change in net assets of discontinued operations (104) -
Provision for loss on disposal - (1,921)
----- -------
Net cash used in discontinued operations (104) 0
----- -------
Net cash provided by operating activities 281 2,266
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in other assets (54) (120)
Capitalization of software costs (123) (227)
Purchase and capitalization of property and equipment (40) -
----- -------
Net cash used in investing activities (217) (347)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long term debt agreements 300 -
Repayment of debt (270) (1,527)
Exercise of common stock options 12 71
----- -------
Net cash (used in) provided by financing activities 42 (1,456)
----- -------
Net increase in cash and cash equivalents 106 463
Cash and cash equivalents at beginning of period 215 104
----- -------
Cash and cash equivalents at end of period $ 321 $ 567
===== =======
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 7 $ 5
===== =======
</TABLE>
See accompanying notes to the consolidated financial statements.
6
<PAGE>
COMPUTONE CORPORATION
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
---------------------
The financial statements included in this Form 10-Q have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting
principles, have been condensed, or omitted, pursuant to such rules and
regulations. These financial statements should be read in conjunction
with the financial statements and related notes included in the
Company's Fiscal 1994 Form 10-K.
The financial statements presented herein, as of October 7, 1994
and for the three and six months then ended, reflect in the opinion of
management, all adjustments necessary for a fair presentation of
financial position and the results of operations for the periods
presented. The results of operations for any interim period are not
necessarily indicative of the results for the full year.
2. INVENTORIES
-----------
Inventories, net of a reserve for obsolete, excess and non-salable
items, consisted of the following at October 7, 1994 and April 1, 1994
(in thousands):
<TABLE>
<CAPTION>
Oct. 7, 1994 Apr. 1, 1994
------------ ------------
<S> <C> <C>
Finished goods $ 483 $ 799
Work in progress 347 542
Raw materials 1,013 1,280
------ ------
$1,843 $2,621
------ ------
</TABLE>
3. INCOME PER SHARE
----------------
Income per common share is computed by dividing net income
applicable to common stock by the weighted average number of shares of
common stock and common share equivalents outstanding during each
period.
On November 30, 1993, the Company effected a one-for-six reverse
stock split of the Company's Common Stock effective as of that date.
Accordingly, the weighted average number of shares outstanding and per
share amounts in the accompanying condensed consolidated financial
statements have been restated for all periods.
7
<PAGE>
COMPUTONE CORPORATION
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. INCOME TAXES
------------
On April 3, 1993, the Company adopted the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Such
adoption had no cumulative effect on the Company's consolidated
financial statements. Prior years' financial statements have not been
restated.
The Company has available net operating and capital loss
carryforwards, including preacquisition operating loss carryforwards
which relate to a predecessor company, which expire during the period
2003-2008. The Company's possible use of the loss carryforwards will be
limited as a result of several different changes in ownership which have
occurred since the carryforwards started to accumulate. The use of the
net operating loss carryforwards are limited due to statutory provisions
which apply after certain changes in control occur.
For financial reporting purposes, a valuation allowance has been
established to reflect a net deferred tax balance of $0 as of the date
of adoption of FAS 109 as well as at October 7, 1994.
The Company estimates that no current provision for income taxes is
required for the six months ended October 7, 1994.
5. DEBT
----
On August 12, 1994, the Company secured financing from a bank in
the form of a $300,000 note payable and a $500,000 line of credit. The
note bears interest at a rate of floating prime plus 2% and is due in
monthly installments of $16,666.67 plus accrued interest. The line of
credit also bears interest at a rate of floating prime plus 2% on any
proceeds and .25% on any unused portion of the line.
6. EXTRAORDINARY ITEM
------------------
During the three months ended October 7, 1994, the Company
identified opportunities to reduce its working capital requirements by
negotiating lump-sum payment settlements with various vendors with which
the Company had previously restructured outstanding debt. As a result
of these negotiations, the Company was able to reduce the amounts
payable to these vendors by approximately $202,000, which was accounted
for as extraordinary income.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION FOR THE THREE AND SIX MONTHS ENDED
OCTOBER 7, 1994.
INTRODUCTION
- ------------
The comparative information contained herein includes results of
operations for the Company's continuing businesses. Certain previous
components of the Company are presented as discontinued operations in
the accompanying Consolidated Financial Statements.
LIQUIDITY
- ---------
Cash provided by income from continuing operations amounted to
$385,000 for the six months ended October 7, 1994 compared to cash
provided from continuing operations of $2,266,000 for the comparable six
months ended October 1, 1993. The reduction in cash provided by
continuing operations as compared to the prior year fiscal quarter
primarily reflects the termination of a royalty agreement and a lump sum
payment received during the six months ended October 1, 1993.
Cash provided by financing activities amounted to $42,000 for the
six months ended October 7, 1994 compared with an outflow of $1,456,000
for the comparable six months of the prior fiscal year. This net cash
resulted from the financing secured during the quarter and simultaneous
repayment of a previous debt.
Working capital amounted to $2,459,000 at October 7, 1994, an
increase of $434,000 since April 1, 1994. The ratio of current assets
to current liabilities at October 7, 1994 was 1.80 to 1.00 compared to
1.54 to 1.00 at April 1, 1994. The increase in working capital is
primarily attributable to income from continuing operations.
On August 12, 1994, the Company secured financing from a bank in
the form of a $300,000 note payable and a $500,000 line of credit. The
note bears interest at a rate of floating prime plus 2% and is due in
monthly installments of $16,666.67 plus accrued interest. The line of
credit also bears interest at a rate of floating prime plus 2% on any
proceeds and .25% on any unused portion of the line.
RESULTS OF OPERATIONS
- ---------------------
Product sales revenue from continuing operations for the quarter
ended October 7, 1994 totaled approximately $3,985,000 compared to
$3,197,000 for the comparable quarter of the prior fiscal year, a 25%
increase. Product sales revenues for the six months ended October 7,
1994 were $7,390,000, versus $7,059,000 during the same period of the
prior fiscal year, a 5% increase. Net revenues for the six months ended
October 1, 1993 included $882,000 related to royalties received. The
increases in product sales revenues can be attributed to the Company's
continuing efforts to open new distribution channels throughout the
world.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION FOR THE THREE AND SIX MONTHS ENDED
OCTOBER 7, 1994. (CONTINUED).
RESULTS OF OPERATIONS (CONTINUED)
- ---------------------------------
Cost of products sold for the quarter amounted to $2,452,000 or 62%
of product sales revenues versus $1,807,000 or 57% for the comparable
quarter of the prior year. For the six months ended October 7, 1994,
cost of products sold amounted to $4,544,000 or 61% of product sales
revenue, versus $4,173,000 or 59% for the comparable six months of the
prior fiscal year. The Company experienced an increase in cost of
products sold resulting from some initial start-up costs related to the
implementation of a program to outsource the production of its
products. These initial costs will be offset by a reduction in future
costs of products sold as a result of the production outsourcing and
subsequently increase income from operations.
Selling, general and administrative expenses amounted to
$1,090,000 and $2,071,000 or 27.4% and 28.0% of product sales revenue
for the three and six months ended October 7, 1994, versus $902,000 and
$1,889,000 or 28.2% and 26.8% of product sales revenue for the
comparable quarter and six months of the prior fiscal year,
respectively. The reductions in selling, general and administrative
expenses as a percentage of product revenues can be attributed to a
reduction in overhead costs.
Product development expenses amounted to $283,000 and $575,000 or
7.1% and 7.8% of product sales revenue for the three and six month
periods ended October 7, 1994. This compares to $325,000 and $654,000
or 10.2% and 9.3% of product sales revenue for the comparable three and
six month periods of the prior fiscal year. This reduction in product
development expenses results from the decrease in support costs
attributed to new and existing end users of the Company's products.
Income from continuing operations for the quarter ended October 7,
1994 amounted to $153,000 compared to $139,000 for the comparable
quarter of the prior fiscal year, a 10% increase. When excluding a
one-time occurrence of $882,000 in royalties from the six months ended
October 1, 1993, income from continuing operations for the six months
ended October 7, 1994 was $194,000 versus $265,000 during the same
period of the prior fiscal year, a decrease of 27%. These increases in
income for the three months ended October 7, 1994 can be attributed the
Company's increased levels of product sales while the Company's decrease
in income for the six months ended October 7, 1994 can be attributed to
the increase in cost of products sold resulting from the initial
start-up costs associated with the production outsourcing.
Income from discontinued operations totaled $86,000 for the six
months ended October 7, 1994 compared to $1,921,000 for the six months
ended October 1, 1993. The $86,000 related to the sale of certain
assets of discontinued operations which the Company had reduced to zero
net value in prior years. The $1,921,000 related to the fact that the
loss on disposal of Princeton and Denison was less than originally
provided for and, therefore, the estimated disposal costs were reduced.
During the three months ended October 7, 1994, the Company
identified opportunities to reduce its working capital requirements by
negotiating lump-sum payment settlements with various vendors with which
the Company had previously restructured outstanding debt. As a result
of these negotiations, the Company was able to reduce the amounts
payable to these vendors by approximately $202,000, which was accounted
for as extraordinary income.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None, other than those matters described in Item 3 to the
Company's Annual Report on Form 10-K for the year ended
April 1, 1994.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) No exhibits are furnished with this report.
b) No reports on FORM 8-K or FORM 8 were filed during the quarter
to which this report pertains.
11
<PAGE>
SIGNATURE
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 signed on its behalf by the undersigned, thereunto duly
authorized.
COMPUTONE CORPORATION
Date: November 1, 1995 By: / s/ Thomas J. Anderson
------------------------
Thomas J. Anderson
President & Chief Operating Officer
(duly authorized officer and
Principal Executive Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-07-1995
<PERIOD-START> JUL-02-1994
<PERIOD-END> OCT-07-1994
<CASH> 321
<SECURITIES> 0
<RECEIVABLES> 4,145
<ALLOWANCES> 823
<INVENTORY> 1,843
<CURRENT-ASSETS> 5,541
<PP&E> 3,536
<DEPRECIATION> 2,463
<TOTAL-ASSETS> 7,746
<CURRENT-LIABILITIES> 3,082
<BONDS> 0
<COMMON> 62
0
2
<OTHER-SE> 4,263
<TOTAL-LIABILITY-AND-EQUITY> 7,746
<SALES> 3,985
<TOTAL-REVENUES> 3,985
<CGS> 2,452
<TOTAL-COSTS> 3,825
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 153
<INCOME-TAX> 0
<INCOME-CONTINUING> 153
<DISCONTINUED> 0
<EXTRAORDINARY> 202
<CHANGES> 0
<NET-INCOME> 355
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
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