UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the three month period ended September 30, 1999
[ ] 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 small business issuer as specified in its charter)
Delaware 23-2472952
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1060 Windward Ridge Parkway, Suite 100, Alpharetta, GA 30005
------------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (770) 625-0000
N/A
---
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 8,546,674 shares of common stock on
November 10, 1999.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
COMPUTONE CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of September 30,
1999 and April 2, 1999 3
Consolidated Statements of Operations for the three
months ended September 30, 1999 and October 2, 1998 4
Consolidated Statements of Operations for the six
months ended September 30, 1999 and October 2, 1998 5
Consolidated Statements of Cash Flows for the six
months ended September 30, 1999 and October 2, 1998 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis or Plan of
Operations for the three and six months ended
September 30, 1999 compared to three and six months
ended October 2, 1998 9
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 12
ITEM 2. Changes in Securities 12
ITEM 3. Defaults Upon Senior Securities 12
ITEM 4. Submission of Matters to a Vote of Security Holders 12
ITEM 5. Other Information 12
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Computone Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
September 30, 1999 April 2, 1999
------------------ -------------
(unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 38 $ 18
Receivables, net of allowance for doubtful accounts
of $345 at September 30, 1999 and $489 at April 2, 1999 1,655 1,963
Inventories, net 2,326 2,197
Prepaid expenses and other 81 63
---------- ----------
Total current assets 4,100 4,241
Property, equipment and improvements, net 649 591
Intangible assets, net 396 438
Other 19 38
---------- ----------
TOTAL ASSETS $ 5,164 $ 5,308
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 2,192 $ 2,143
Accrued liabilities:
Payroll 60 83
Deferred sales 377 229
Professional fees 82 109
Other 673 520
Line of credit 418 1,049
Notes payable to stockholders 590 590
Current maturities of long-term debt 146 132
---------- ----------
Total current liabilities 4,538 4,855
Long-term debt, less current maturities 273 347
---------- ----------
Total liabilities 4,811 5,202
---------- ----------
Stockholders' equity:
Convertible redeemable preferred stock, $.01 par value;
10,000,000 shares authorized; no shares issued -- --
Common stock, $.01 par value; 25,000,000 shares
authorized; 8,471,674 and 8,321,674 shares outstanding 85 83
Additional paid-in capital 47,536 47,369
Accumulated deficit (47,268) (47,346)
---------- ----------
Total stockholders' equity 353 106
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,164 $ 5,308
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Computone Corporation and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
----------------------------------------
September 30, 1999 October 2, 1998
------------------ ---------------
(unaudited)
Revenues:
Product sales $ 2,646 $ 2,808
---------- ----------
Expenses:
Cost of products sold 1,577 1,883
Selling, general and administrative 946 1,196
Product development 430 521
---------- ----------
2,953 3,600
---------- ----------
Operating loss (307) (792)
Other income (expense):
Other income (expense) -- 2
Interest expense - affiliates (18) (18)
Interest expense - other (26) (11)
---------- ----------
Loss before income taxes (351) (819)
Provision for income taxes -- --
---------- ----------
Net loss $ (351) $ (819)
========== ==========
Loss per common share:
Basic $ (0.04) $ (0.11)
========== ==========
Diluted $ (0.04) $ (0.11)
========== ==========
See accompanying notes to the consolidated financial statements.
4
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Computone Corporation and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
Six Months Ended
------------------------------------
September 30, 1999 October 2, 1998
------------------ ---------------
(unaudited)
Revenues:
Product sales $ 7,379 $ 5,652
---------- ----------
Expenses:
Cost of products sold 4,427 3,881
Selling, general and administrative 1,887 2,525
Product development 889 957
---------- ----------
7,203 7,363
---------- ----------
Operating income (loss) 176 (1,711)
Other income (expense):
Other income (expense) -- 2
Interest expense - affiliates (38) (28)
Interest expense - other (60) (32)
---------- ----------
Income (loss) before income taxes 78 (1,769)
Provision for income taxes -- --
---------- ----------
Net income (loss) $ 78 $ (1,769)
========== ==========
Income (loss) per common share:
Basic $ 0.01 $ (0.23)
========== ==========
Diluted $ 0.01 $ (0.23)
========== ==========
See accompanying notes to the consolidated financial statements.
5
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Computone Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------
September 30, 1999 October 2, 1998
------------------ ---------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) from operations $ 78 $ (1,769)
Adjustments to reconcile income (loss) from operations
to net cash provided by (used in) operations:
Depreciation and amortization 219 224
Provision for uncollectible accounts 63 26
Provision for inventory reserve 100 60
Changes in current assets and current liabilities:
Accounts receivable 245 985
Inventories (229) 1,210
Prepaid expenses and other (18) (16)
Accounts payable and accrued liabilities 300 (392)
---------- ----------
Net cash provided by operations 758 328
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in other assets 19 (450)
Capitalization of software costs (75) (88)
Capital expenditures (160) (94)
---------- ----------
Net cash used in investing activities (216) (632)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from affiliates -- 400
Repayment of debt - net (60) (25)
Net repayments (borrowings) under lines of credit - others (631) (943)
Exercise of common stock options and warrants 169 3
Issuance of common stock -- 829
---------- ----------
Net cash (used in) provided by financing activities (522) 264
---------- ----------
Net increase in cash and cash equivalents 20 (40)
Cash and cash equivalents, beginning of period 18 146
---------- ----------
Cash and cash equivalents, end of period $ 38 $ 106
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 60 $ 60
</TABLE>
See accompanying notes to the consolidated financial statements.
6
<PAGE>
COMPUTONE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
All statements contained in this Form-10QSB Quarterly Report that are not
historical facts are based on current expectations. Such statements are
forward-looking (as defined in the Private Securities Litigation Reform Act of
1995) in nature and involve a number of risks and uncertainties. Actual results
could vary materially. The factors that could cause actual results to vary
materially include: the ability of the Company to obtain and maintain adequate
working capital, future supply and demand for the Company's products, the
resolution of a Securities and Exchange Commission ("SEC") complaint filed
against the Company and certain of its former officers on September 28, 1999,
changes in business and economic conditions, availability of raw materials and
parts, possible disruptions of normal business activity from year 2000 issues,
and other risks that may be described from time to time in reports the Company
files with the SEC. Undue reliance should not be placed on any such
forward-looking statements.
1. BASIS OF PRESENTATION
---------------------
The financial statements included in this Form 10-QSB Quarterly Report have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the SEC. 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 Annual
Report on Form 10-KSB for its fiscal year ended April 2, 1999.
The financial statements presented herein as of September 30, 1999 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. REVENUE RECOGNITION
-------------------
Product sales are generally recognized, net of an allowance for estimated
sales returns and allowances, when the related products are shipped. Beginning
with the fourth quarter of the fiscal year ended April 3, 1998, the Company
modified the application of its revenue recognition policy to defer recognition
of revenue on sales to customers who are not end users of the Company's products
until such time as the product has been sold through to the end user.
A warranty reserve of less than one percent of sales is accrued at the date
of shipment. The Company generally provides a warranty of five years on all of
its products sold.
3. INVENTORIES
-----------
Inventories are valued at the lower of cost or market, with cost determined
on the first-in, first-out method.
Raw materials that have no planned production life or exceed 18 months of
anticipated supply are deemed excess and are fully reserved. Reserves are also
established, as management deems appropriate, for obsolete, excess and
non-salable inventories, including finished goods inventories.
Inventories are net of a reserve for obsolete, excess and non-salable items
of $762,000 and $908,000 at September 30, 1999 and April 2, 1999, respectively.
7
<PAGE>
COMPUTONE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
3. INVENTORIES, CONTINUED
----------------------
Inventories, net of a reserve for obsolete, excess and non-salable items,
consisted of the following at September 30, 1999 and April 2, 1999 (in
thousands):
September 30, 1999 April 2, 1999
------------------ -------------
Finished goods $ 599 $ 165
Work in progress 513 877
Raw materials 1,214 1,155
---------- ----------
$ 2,326 $ 2,197
========== ==========
4. INCOME (LOSS) PER SHARE
-----------------------
Basic EPS excludes dilution and is computed by dividing income (loss)
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. For purposes of computing basic and
diluted EPS, the net income (loss) for each period presented (the numerator) is
divided by the weighted average number of common shares outstanding (the
denominator). Basic and diluted EPS was a loss of $0.04 for the three months
ended September 30, 1999 and a loss of $0.11 for the three months ended October
2, 1998. The weighted average number of common shares outstanding used in the
basic EPS calculation are 8,468,359 and 7,468,000 for the three month periods
ended September 30, 1999 and October 2, 1998, respectively. For purposes of
computing diluted EPS for these three months period, the Company excluded the
effects of outstanding common stock options and warrants because they were
anti-dilutive. Basic and diluted EPS was $0.01 for the six months ended
September 30, 1999 and a loss of $0.23 for the six months ended October 2, 1998.
The weighted average number of common shares outstanding used in the basic EPS
calculation are 8,468,359 and 7,468,000 for the 1999 and 1998 periods,
respectively. The weighted average number of common shares outstanding used in
the diluted EPS calculation is 8,487,025 for the six month period ended
September 30, 1999. For purposes of computing diluted EPS for the six month
period ended October 2, 1998, the Company excluded the effects of outstanding
common stock options and warrants because they were anti-dilutive.
5. INCOME TAXES
------------
The Company had available net operating and capital loss carryforwards
amounting to approximately $50 million at April 2, 1999, including operating
loss carryforwards which relate to a predecessor company, which expire in 2014.
As a result of several ownership changes which have occurred since the losses
started to accumulate, statutory provisions will substantially limit the
Company's future use of the loss carryforwards.
6. DEBT
----
On November 17, 1998, the Company entered into a financing arrangement
which provides for a line of credit that is primarily collateralized by the
Company's accounts receivable and inventory. On October 1, 1999, the Company
renewed this financing agreement. The renewed agreement provides for a line of
credit up to $1,400,000 ($418,000 outstanding at September 30, 1999) and is
based on the available borrowing base, at an interest rate of prime plus 2.00%.
This financing arrangement expires in November 2000.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE
AND SIX MONTHS ENDED OCTOBER 2, 1998.
RESULTS OF OPERATIONS
- ---------------------
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
- ---------------------------------------------
The Company reported a net loss for the three month period ended September
30, 1999 of $351,000 compared to a net loss of $819,000 for the comparable three
month period of the prior fiscal year. The Company's operating results for the
three months ended September 30, 1999 were favorably affected by increased gross
margins and decreased general and administrative expenses and unfavorably
affected by a reduction in shipments described below.
Product sales revenue for the three month period ended September 30, 1999
totaled approximately $2,646,000 compared to $2,808,000 for the comparable three
month period of the prior fiscal year, a decrease of $162,000, or 6%. This
slight decrease is due to lower sales to the Company's VAR customers, partially
offset by higher sales to major customers. In addition, some customers have
postponed projects until the first quarter of next year due to year 2000
considerations.
Cost of products sold for the three month period ended September 30, 1999
amounted to $1,577,000, or 60% of product sales revenues, versus $1,883,000, or
67%, for the comparable three month period of the prior year. The decrease in
cost of products sold as a percentage of revenues is due to pricing
improvements, lower component costs and a change in product mix.
Selling, general and administrative expenses amounted to $946,000, or 36%
of product sales revenue, for the three months ended September 30, 1999 versus
$1,196,000, or 43%, for the comparable three months of the prior fiscal year.
The decrease in selling, general and administrative expenses during the three
month period ended September 30, 1999 versus the same period of the prior fiscal
year is attributable to decreases in compensation costs due to staff reductions,
reduced legal costs due to settlement of litigation in the prior fiscal year,
and the successful implementation of other cost reduction efforts.
Product development expenses amounted to $430,000, or 16% of product sales
revenue, for the three months ended September 30, 1999 versus $521,000, or 19%,
for the comparable three month period of the prior fiscal year. The Company
expects that product development expenses will continue at the current level for
the remainder of the fiscal year.
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
- -------------------------------------------
The Company reported net income for the six month period ended September
30, 1999 of $78,000 compared to a net loss of $1,769,000 for the comparable six
month period of the prior fiscal year. The Company's operating results for the
six months ended September 30, 1999 were favorably affected by increased sales
volumes, higher gross margins and decreased general and administrative expenses.
Product sales revenue for the six month period ended September 30, 1999
totaled approximately $7,379,000 compared to $5,652,000 for the comparable six
month period of the prior fiscal year, an increase of $1,727,000 or 31%. This
increase is attributable to higher sales through the distribution channel and to
major customers.
9
<PAGE>
Cost of products sold for the six month period ended September 30, 1999
amounted to $4,427,000, or 60% of product sales revenues versus $3,881,000, or
69%, for the comparable six month period of the prior year. The decrease in cost
of products sold as a percentage of revenues is due to pricing improvements,
lower component costs and a change in product mix.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE
AND SIX MONTHS ENDED OCTOBER 2, 1998, CONTINUED.
Selling, general and administrative expenses amounted to $1,887,000, or 26%
of product sales revenue, for the six months ended September 30, 1999 versus
$2,525,000, or 45%, for the comparable six months of the prior fiscal year. The
$638,000 decrease in selling, general and administrative expenses during the six
month period ended September 30, 1999 versus the same period of the prior fiscal
year is attributable to decreases in compensation costs due to staff reductions,
reduced legal costs due to settlement of litigation in the prior fiscal year,
and the successful implementation of other cost reduction efforts.
Product development expenses amounted to $889,000, or 12% of product sales
revenue, for the three months ended September 30, 1999 versus $957,000, or 17%,
for the comparable six month period of the prior fiscal year. The Company
expects that product development expenses will continue at the current level for
the remainder of the fiscal year.
LIQUIDITY
- ---------
On November 17, 1998, the Company entered into a financing arrangement
which provides for a line of credit that is primarily collateralized by the
Company's accounts receivable and inventory. On October 1, 1999, the Company
renewed this financing agreement. The renewed agreement provides for a line of
credit up to $1,400,000 ($418,000 outstanding at September 30, 1999) and is
based on the available borrowing base, at an interest rate of prime plus 2.00%.
This financing arrangement expires in November 2000. At September 30, 1999, the
borrowing availability under this line of credit was $262,000.
The Company's primary cash commitments in fiscal 2000 include payments
under non-cancelable operating leases ($293,000), short-term debt ($736,000) and
investments in research and development ($889,000 in the six months of fiscal
year 2000). With respect to notes payable and current maturities of long-term
debt, approximately $590,000 of the $736,000 is due to related parties, the
payment terms of which the Company believes can be extended as needed.
Cash provided by operations amounted to $758,000 for the six months ended
September 30, 1999 compared to $328,000 for the six months ended October 2,
1998. The increase in cash provided by operations compared to the prior year
fiscal period primarily reflects the fact that the Company operated at a profit
in the 1999 period compared to a loss in the 1998 period.
Cash used in investing activities amounted to $216,000 for the six months
ended September 30, 1999 compared with $632,000 for the six months ended October
2, 1998. This decrease from the same period of the prior fiscal year is
attributable to the decrease in other assets. The Company does not anticipate a
significant increase in the level of capital expenditures.
Cash used in financing activities during the six months ended September 30,
1999 was $522,000 versus cash provided by financing activities of $264,000 for
the six months ended October 2, 1998. This decrease is primarily due to a
decrease in cash received from the issuance of common stock.
The Company is endeavoring to raise $1.0 to $1.5 million in equity capitial
by the end of the Company's fiscal year by offering for sale, to accredited
investors, up to 1,500,000 shares of the Company's common stock under
Regulatiion D of the Securities Act of 1993. The funds will be used for working
capital purposes and to
10
<PAGE>
fund investments in research and development and marketing of new products.
However, no assurances can be given that the Company will be successful in
raising additional capital. Further, there can be no assurance, assuming the
Company successfully raises additional funds, that the Company will maintain
profitability or positive cash flow.
Working capital was a deficit of $438,000 at September 30, 1999 versus a
deficit of $614,000 at April 2, 1999, an improvement of $176,000. The ratio of
current assets to current liabilities at September 30, 1999 was .90 to 1.00
compared to .87 to 1.00 at April 2, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE
AND SIX MONTHS ENDED OCTOBER 2, 1998, CONTINUED.
YEAR 2000 RISKS
- ---------------
The year 2000 issue relates to computer programs and systems that recognize
dates using two digit year data rather than four digit year data. As a result,
such programs and systems may fail or provide incorrect information when using
dates after December 31, 1999.
The Company believes that its current product line, including its Value
Port, Intelliport II, Intelliport Plus, Intelliport II Expandable, Intelliport
III and IntelliServer product families, does not create, access, or depend upon
absolute date information and is, therefore, year 2000 compliant.
The Company has substantially completed a comprehensive program designed to
identify internal computer and information systems, manufacturing and delivery
equipment, and facilities equipment to determine their year 2000 readiness. The
process includes replacing equipment that does not meet year 2000 readiness
standards. In order to improve operating efficiencies, the Company has
implemented a new financial and manufacturing software package. The Company
believes the functions of this software package relating to critical operations
such as accounting, order entry, purchasing, inventory, production, shipping and
billing are year 2000 compliant.
The Company is currently contacting its suppliers, service providers and
other business associates to evaluate their year 2000 readiness. In the event
any of these businesses are unlikely to resolve their year 2000 issues, the
Company's contingency plans include seeking alternative sources of supply for
products and services.
The Company cannot reasonably estimate the cost or related contingencies
that could be incurred if the year 2000 issue results in significant operational
difficulties.
Many of the factors that would guarantee year 2000 compliance are beyond
the control of the Company. These factors include the availability of vendor
compliant products and services, interface system partner compliance, government
activity and suppliers in areas such as utilities, communications,
transportation and other services. Because of the technological interdependence
of commercial activities, the Company cannot realistically offer any
certifications, representations or guarantees of total year 2000 compliance.
Although the Company has been able to timely address any year 2000 issues that
it identifies, there can be no assurance that certain factors relating to year
2000 compliance issues, including litigation, will not have a material adverse
effect on the Company's business, financial condition, cash flows or results of
operations.
11
<PAGE>
OUTLOOK FOR REMAINDER OF FISCAL YEAR 1999
- -----------------------------------------
Management believes that new or redesigned products will enhance the
Company's ability to increase its sales in fiscal 2000. The new "Gold" card
family of products are high performance, cost effective PCI controller products
specifically designed to meet the needs of the remote access market. The
Intelliserver RAS-2000 Powerrack is a redesign of the Powerrack family with
enhanced performance, remote access server features and configurations added.
During the first half of fiscal 2000, the Company's backlog decreased from
$2,573,000 at April 2, 1999 to $281,000 at September 30, 1999. On November 9,
1999, the backlog was $443,000. The backlog at April 2, 1999 was significantly
higher than would normally be expected. During the fourth quarter of fiscal year
1999, the Company resolved a payment issue with its principal contract
manufacturing supplier. However, due to long lead times for certain components
the supplier was unable to make significant deliveries during the later portion
of fiscal year 1999. The Company anticipates that substantially all of its
backlog at September 30, 1999 will be shipped during the third quarter of fiscal
year 2000.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 28, 1999, the SEC filed a complaint (Civil Action No.
1:99-CV-2496) in the United States District Court for the Northern
District of Georgia against the Company and five former officers of
the Company. The complaint alleges a pervasive effort by former senior
management employees to overstate the Company's income from October
1993 through October 1997. The complaint seeks permanent injunctions
against all the defendants, and seek civil money penalties against the
five former officers, and disgorgement plus prejudgement interest
against one former officer.
The Company and the SEC have initiated discussions to attempt to
settle this matter, and the Company believes this matter can be
resolved by December 31, 1999.
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
The Company held, on August 12, 1999, its Annual Meeting of
Shareholders at which the following actions were taken:
1. Four directors were elected to serve until the 2000 Annual
Meeting of Shareholders and until their successors are elected:
Name For Withheld
---- --- --------
John D. Freitag 4,526,159 9,736
Richard A. Hansen 4,526,142 9,753
Erik Monninkhof 4,526,159 9,736
Perry J. Pickerign 4,526,159 9,736
2. A proposal to adopt the Company's 1998 Equity Incentive Plan for
officers and employees was approved:
For Against Abstain
--- ------- -------
4,472,243 29,306 34,346
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not Applicable.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COMPUTONE CORPORATION
Date: November 12, 1999 By: /s/ Perry J. Pickerign
----------------------
Perry J. Pickerign
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Keith H. Daniel
-------------------
Keith H. Daniel
Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000819479
<NAME> Computone Corporation
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 38
<SECURITIES> 0
<RECEIVABLES> 2,000
<ALLOWANCES> 345
<INVENTORY> 2,326
<CURRENT-ASSETS> 4,100
<PP&E> 4,410
<DEPRECIATION> 3,761
<TOTAL-ASSETS> 5,164
<CURRENT-LIABILITIES> 4,220
<BONDS> 0
0
0
<COMMON> 85
<OTHER-SE> 268
<TOTAL-LIABILITY-AND-EQUITY> 5,164
<SALES> 7,379
<TOTAL-REVENUES> 7,379
<CGS> 4,427
<TOTAL-COSTS> 7,203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 78
<INCOME-TAX> 0
<INCOME-CONTINUING> 78
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
