U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No.:0-23819
COLE COMPUTER CORPORATION
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(Name of Small Business Issuer in its Charter)
NEVADA 76-0547762
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
11711 South Portland
Oklahoma City, Oklahoma 73170
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (405) 692-5351
N/A
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(Former Name or Former Address, 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 Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes____ 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:
March 31, 1999
Common - 9,990,900 shares
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
Transitional Small Business Issuer Format Yes X No
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required
to be filed with this 10-QSB Quarterly Report were prepared by management and
commence on the following page, together with related Notes. In the opinion
of management, the Consolidated Financial Statements fairly present the
financial condition of the Company.
<TABLE>
COLE COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
As of March 31, 1999
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash $ 58,586
Accounts receivable 126,921
Inventory 880,275
Other current assets 10,588
Total Current Assets 1,076,370
EQUIPMENT, less accumulated depreciation of $38,923 66,817
TOTAL ASSETS $1,143,187
CURRENT LIABILITIES
Current portion of installment
notes payable $ 9,332
Demand note payable to stockholder 52,046
Accounts payable 666,326
Accrued expenses 116,927
Total Current Liabilities 844,631
LONG-TERM DEBT, net of current portion 22,009
Total Liabilities 866,640
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 25,000,000
shares authorized, 9,990,900 shares
issued and outstanding 9,991
Paid in capital 495,704
Retained earnings (Deficit) ( 229,148)
Total Stockholders' Equity (Deficit) 276,547
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,143,187
</TABLE>
<TABLE>
COLE COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1999 and 1998
<CAPTION>
1999 1998
<S> <C> <C>
REVENUES $2,562,892 $1,619,753
COST OF SALES
Materials 2,151,609 1,334,710
Labor 87,058 40,842
Other 51,834 21,141
Total Cost of Sales 2,290,501 1,396,693
GROSS MARGIN 272,391 223,060
Selling expenses 165,359 94,942
General and administrative 131,073 85,819
NET INCOME (LOSS) FROM OPERATIONS ( 24,041) 42,299
Interest (income) ( 29) ( 59)
Interest expense 715 5,764
NET INCOME (LOSS) BEFORE TAXES ( 24,727) 36,594
INCOME TAX 3,530
NET INCOME (LOSS) $( 24,727) $ 33,064
Income (loss) per common share $(.002) $ .004
Weighted average shares outstanding 9,975,900 7,300,002
</TABLE>
<TABLE>
COLE COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
Three Months Ended March 31, 1999 and 1998
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $( 24,726) $ 33,064
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,219 4,574
Change in cash from:
Accounts receivable ( 40,863) ( 1,955)
Inventory (228,679) (132,064)
Other current assets 4,179
Accounts payable 111,879 57,597
Accrued expenses ( 38,656) ( 1,130)
Income taxes payable 3,530
NET CASH FROM OPERATING ACTIVITIES (215,826) ( 32,206)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment ( 2,701) ( 20,468)
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock 50,000
Advances by stockholders 2,982 48,153
New installment loans 20,468
Principal payments on installment loans ( 2,286) ( 4,318)
NET CASH FROM FINANCING ACTIVITIES 50,695 64,303
NET INCREASE (DECREASE) IN CASH (167,832) 11,629
CASH ON HAND - beginning of period 226,418 22,960
- end of period $ 58,586 $ 34,589
SUPPLEMENTAL DISCLOSURES
Interest paid $ 715 $ 5,765
Income taxes paid 0 0
</TABLE>
COLE COMPUTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim financial statements of Cole Computer
Corporation have been prepared in accordance with generally accepted
accounting principles and the rules of the Securities and Exchange Commission.
In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
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Computer Masters has developed the unique opportunity in the
computer markets with sales of parts, software, upgrade components and custom
designed computer systems coupled with quality and personal service to retail
and wholesale customers as well as local, state and federal government
agencies.
This market niche exists because of the monumental and rapid changes
in the computer industry wherein a computer system from last year (or even
last
month) needs to be upgraded due to technology advances. The ultimate design of
every computer system today must consider the need for interchangeable parts
so
that these systems can be upgraded, with ease, when future technology advances
are made.
Computer Masters has sought to fill this market need by its
selection
of strategic suppliers, including Advanced Micro Devices, Microsoft and many
others, and has grown with such partners to now hold direct purchasing power,
which provides a substantial economic advantage over other competitors in its
area of focus.
Computer Masters has found that rural and small-town computer
markets
have been left alone by the major computer companies which have chosen to
focus
on sales or complete systems alone or by major retailers who fail to offer
parts,
upgrade components or professional support to the computer user.
From its home base in central Oklahoma, Computer Masters has and
will continue to be in the development of select market areas in the Midwest,
especially rural and "small-town" America, which have been neglected by major
computer retailers. This niche currently seeks personal contact with quality
support and services to meet their information systems needs, no matter if
such consumer is a family, small business, school district, federal government
agency or military forces base.
Results of Operations.
- ----------------------
The Company achieved revenues from commercial operations of
$2,562,892 for the quarter ended March 31, 1999, as compared to $1,619,753 for
the quarter ended March 31, 1998. Such revenues were derived from sales of
computer systems, component parts and upgrade parts from its nine storefront
locations in Oklahoma and Arkansas. During 1998, the Company opened four new
locations and is pleased to report significant activity accomplishments at
each existing and new location.
During 1998, the Company's gross profit margin was an estimated
10.7% of net sales. This includes wholesale, government and retail sales
activities. No single customer accounted for more than 10% of sales
activities for the year. This gross margin percentage reflects the opening of
four new store fronts in 1998.
The Company incurred a ($24,727) net loss after taxes for the
quarter ended March 31, 1999, as compared to a net income of $33,064 after
taxes for the quarter ended March 31, 1998. Such activities include all costs
of operations along with incurred or accrued costs from the reorganization
activities between the public corporation and the privately held Computer
Masters.
Liquidity.
- ----------
The Company had current assets of $58,586 in cash, $126,921 in
Accounts Receivable and $880,275 of inventory. The Company had trade accounts
payable of $666,326, accrued purchases/expenses of $116,927, along with
current portions of installments and notes payable of $9,332.
The Company also raised $392,900 through the sale of 392,900 shares
of its common stock ("restricted securities") during 1998.
Year 2000
- ---------
All hardware products sold by the Company are Year 2000 compliant.
However, the Company accepts no responsibility or Y2K compliance with regards
to software. Software compliance is the sole responsibility of its respective
manufacturers.
The Company can give no assurance that third parties with whom it
intends to do business will ensure Year 2000 compliance in a timely manner or
that, if they do not, their computer systems will not have an adverse effect
on the Company. However, the Company does not believe that Year 2000
compliance issues of third parties will result in a material adverse
effect on its financial condition or results of operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the Company's security holders
during the first quarter of the calendar year covered by this Report.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
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.
COLE COMPUTER CORPORATION
Date: 5/20/99 By/s/Homer O. Cole III
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Homer O. Cole III, Director
and President
Date: 5/20/99 By/s/Cynthia A. Cole
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Cynthia A. Cole, Director
and Secretary/Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated:
COLE COMPUTER CORPORATION
Date: 5/20/99 By/s/Homer O. Cole III
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Homer O. Cole III, Director
and President
Date: 5/20/99 By/s/Cynthia A. Cole
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Cynthia A. Cole, Director
and Secretary/Treasurer
Date: 5/20/99 By/s/Kam Mar
------------ ------------------------------
Kam Mar, Director
Date: 5/20/99 By/s/S. F. Hartley, D.P.M.
------------ ------------------------------
S. F. Hartley, D.P.M., Director
<TABLE> <S> <C>
<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 58586
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<RECEIVABLES> 126921
<ALLOWANCES> 0
<INVENTORY> 880275
<CURRENT-ASSETS> 1076370
<PP&E> 105740
<DEPRECIATION> 38923
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 1143187
<SALES> 2562892
<TOTAL-REVENUES> 2562892
<CGS> 2290501
<TOTAL-COSTS> 2586933
<OTHER-EXPENSES> 296432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 715
<INCOME-PRETAX> (24727)
<INCOME-TAX> 0
<INCOME-CONTINUING> (24727)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24727)
<EPS-PRIMARY> (0.002)
<EPS-DILUTED> (0.002)
</TABLE>
