SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 1O-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
--------------
Commission File Number 0-17977
BOUNDLESS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
13-3469637
(I.R.S. Employer Identification No.)
100 Marcus Blvd.
Hauppauge, NY
(Address of principal executive offices)
11788
(Zip Code)
(516) 342-7400
(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 April 10, 1998, the Registrant had approximately 5,139,228 shares of
Common Stock, $.01 par value per share outstanding.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 1998 (unaudited) and
December 31, 1997......................................................... 3
Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 1998 and 1997........................ 4
Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 1998 and 1997........................ 5
Notes to Consolidated Financial Statements (unaudited)....................... 6
2
<PAGE>
BOUNDLESS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------------ -----------------
Current assets: (unaudited)
<S> <C> <C>
Cash and cash equivalents................................... $ 2,710 $ 2,929
Trade accounts receivable, net.............................. 12,224 14,395
Income tax refund........................................... 800 800
Inventories................................................. 14,231 13,682
Deferred income taxes....................................... 1,561 1,561
Prepaid expenses and other current assets................... 595 711
------------------ -----------------
Total current assets..................................... 32,121 34,078
Property and equipment, net.................................... 10,536 10,614
Goodwill, net.................................................. 8,158 8,428
Other assets................................................... 1,211 1,428
------------------ -----------------
$ 52,026 $ 54,548
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable............................................... $ 9,000 $ 7,650
Current portion of long-term debt........................... 8,000 3,250
Accounts payable............................................ 7,437 8,840
Accrued expenses............................................ 5,476 5,378
Deferred revenue............................................ 108 180
------------------ -----------------
Total current liabilities................................ 30,021 25,298
Long-term liabilities:
Long-term debt, less current maturities..................... - 8,000
Deferred income taxes....................................... 1,561 1,561
Other ...................................................... 860 727
------------------ -----------------
Total long-term liabilities.............................. 2,421 10,288
------------------ -----------------
Total liabilities........................................ 32,442 35,586
Commitments and contingencies..................................
Mandatorily redeemable preferred stock of subsidiary........... 3,555 3,555
Stockholders' equity:
Preferred stock............................................. - -
Common stock................................................ 51 51
Additional paid-in capital.................................. 34,094 34,094
Accumulated deficit......................................... (18,116) (18,738)
------------------ -----------------
Total stockholders' equity............................... 16,029 15,407
------------------ -----------------
$ 52,026 $ 54,548
================== =================
See accompanying notes to condensed consolidated financial statements.
3
</TABLE>
<PAGE>
BOUNDLESS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1998 1997
------------------ -----------------
(unaudited) (unaudited)
<S> <C> <C>
Revenue...................................... $ 22,864 $ 23,924
Cost of revenue.............................. 16,603 18,467
------------------ -----------------
Gross margin...................... 6,261 5,457
Operating expenses:
Sales and marketing....................... 2,034 1,782
General and administrative................ 1,413 1,629
Research and development.................. 868 724
Other charges............................. 71 (5)
------------------ -----------------
Total operating expenses............... 4,386 4,130
------------------ -----------------
Operating income.................. 1,875 1,327
Interest expense.......................... 671 807
------------------ -----------------
Income before income taxes 1,204 520
Income tax expense........................... 459 -
------------------ -----------------
Net income................................... 745 520
Dividend on preferred stock of subsidiary.... 124 124
------------------ -----------------
Earnings available for common shareholders... $ 621 $ 396
================== =================
Weighted average common shares outstanding... 5,139 4,863
================== =================
Basic earnings per common share.............. $ 0.12 $ 0.08
Weighted average dilutive shares outstanding. 5,163 4,935
================== =================
Diluted earnings per common share............ $ 0.12 $ 0.08
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
BOUNDLESS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
For the Three Months Ended March 31,
(unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 745 $ 520
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization.......................... 809 790
Loss from disposal of fixed assets...................... 24 -
Deferred revenues....................................... (72) 50
Provision for doubtful accounts......................... 24 118
Provision for excess and obsolete inventory............. 477 422
Changes in assets and liabilities:
Trade accounts receivable............................... 2,146 7,082
Inventories............................................. (1,026) 2,571
Other assets............................................ 38 (1,333)
Accounts payable and accrued expenses................... (1,293) (9,018)
----------- -------------
Net cash provided by operating activities..................... 1,872 1,202
----------- -------------
Cash flows from investing activities:
Capital expenditures....................................... (191) (53)
----------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock..................... - 2
Proceeds from debt issuance................................ - 1,700
Payments on loans payable.................................. (1,900) (3,200)
Payments on capital leases................................. - (4)
----------- -------------
Net cash (used in) financing activities....................... (1,900) (1,502)
----------- -------------
Net (decrease) in cash and cash equivalents................... (219) (353)
Cash and cash equivalents at beginning of period.............. 2,929 5,213
----------- -------------
Cash and cash equivalents at end of period.................... $ 2,710 $ 4,860
=========== =============
Non-cash transactions:
Dividend on preferred stock of subsidiary.................. $ 124 $ 124
Conversion of notes payable to common stock................ - 228
Cash paid for:
Interest................................................... 347 293
Taxes...................................................... 125 6
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
BOUNDLESS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands)
(unaudited)
1. Condensed Consolidated Financial Statements
Basis of Presentation
- ---------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
occurring accruals) considered necessary for a fair presentation have been
included. Certain prior period amounts in these financial statements have been
reclassified to conform to current period presentation. Operating results for
the three-month period ended March 31, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998. For
further information refer to the consolidated financial statements and footnotes
thereto in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
2. Background
Boundless Corporation (the "Company") is engaged, through its subsidiary,
Boundless Technologies, Inc. ("Boundless"), in designing and manufacturing
computer terminals for business use. The Company's general strategy is to
provide access to corporate computing environments, including mainframes, LANs,
WANs, intranets and the Internet. Boundless principally designs, assembles,
sells and supports (i) General Display Terminals, (ii) Windows(R)-based
Terminals ("WBTs"), sometimes referred to as "thin clients", and (iii) other
terminal products that are used in multi-user, personal computer and
mini-computer-based environments. The Company is a party to a royalty agreement
with a partnership (the "GAI Partnership") formed by Boundless and General
Automation, Inc. ("GAI") and managed by GAI. The GAI Partnership designs,
integrates, sells and supports multi-user computer systems that can manage large
volumes of data running Boundless' and GAI's versions of a data-based system
licensed from Pick Systems.
3. Inventories
Inventories are stated at the lower of cost or market. Cost is determined on a
first-in first-out basis. The major components of inventories are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------------- -------------------
<S> <C> <C>
Raw materials and purchased components.................. $ 10,762 $ 10,723
Finished goods.......................................... 3,060 2,477
Demonstration equipment................................. 59 135
Service parts........................................... 350 347
---------------- -------------------
$ 14,231 $ 13,682
================ ===================
</TABLE>
6
<PAGE>
4. Equity
At March 31, 1998 and December 31, 1997 stockholders' equity consisted of the
following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------------- -------------------
<S> <C> <C>
Preferred stock, $0.01 par value, 1,000,000 shares
authorized, none issued.............................. $ - $ -
Common stock, $0.01 par value, 25,000,000 shares
authorized, 5,139,228 and 5,139,228 shares issued
at March 31, 1998 and December 31,1997, respectively. 51 51
Additional paid-in capital.............................. 34,094 34,094
Accumulated deficit..................................... (18,116) (18,738)
---------------- -------------------
Total stockholders' equity........................... $ 16,029 $ 15,407
================ ===================
</TABLE>
5. Major Customers
The Company markets its terminal products through original equipment
manufacturers ("OEMs") and reseller distribution channels. Customers can buy
Boundless' products from an international network of value-added resellers
(VARs) and regional distributors. Through its sales force, the Company sells
directly to large VARs and regional distributors and also sells to major
national and international distributors. For the first quarter ended March 31,
1998 and 1997, sales to two major OEMs as a percentage of total revenues were
21% and 26%, respectively.
6. Business Segments
The Company's business is concentrated almost entirely in one product area-
computer terminals- which are sold throughout many diverse markets. It is not
possible, therefore, to divide the Company's business into meaningful industry
segments.
The Company's operations are worldwide and can be grouped into several
geographic segments. The Company's manufacturing is conducted at its New York
facility and its sales force operates from six geographically dispersed
locations in the United States and a European office in the Netherlands. During
1997, the Company expanded its marketing efforts to include South America,
Asia-Pacific, Australia and New Zealand.
Pertinent financial data by major geographic segments for the first quarter
ended March 31, 1998 and 1997 are:
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
---------------- ------------
<S> <C> <C>
Net sales to unaffiliated customers:
United States................................................. $ 15,714 $ 16,149
Europe........................................................ 5,955 6,389
Other foreign areas........................................... 1,195 1,386
================ ============
Net sales as reported in the accompanying income statement $ 22,864 $ 23,924
================ ============
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The numbers and percentages contained in this Item 2 are approximate. Dollar
amounts are stated in thousands.
7
<PAGE>
First quarter of 1998 compared with first quarter of 1997
- ---------------------------------------------------------
Revenue - Revenue for the quarter ended March 31, 1998 was $22,864 as compared
to $23,924 for the quarter ended March 31, 1997.
Sales of the Company's General Display Terminals declined 2% to $18,878 for the
quarter ended March 31, 1998 from $19,226 for the quarter ended March 31, 1997.
The decline for the latest quarter is principally attributable to a decline of
$3,259 in sales to VT and Dorio distributors, offset by increased sales of
$1,366 to Digital Equipment Corporation ("Digital") and $1,122 to customers of
Boundless' ADDS(R)-branded products. The VT and Dorio terminals are based on a
proprietary architecture and, as a result, its users requiring flexibility are
prone to more quickly move to alternative platforms. Demand for the General
Display Terminals continues to decline as competing technologies, including
WBTs, are gaining market share. For these reasons, sales of General Display
Terminals for 1998 are not expected to reach the levels achieved in 1997.
Sales of the Company's WBT hardware and software, marketed under the trade names
Viewpoint(R) TC and Viewpoint(R) Administrator, respectively, amounted to $2,074
versus $140 for the periods ended March 31, 1998 and 1997, respectively. The
company is targeting the approximately 35 million users of General Display
Terminals and Network Graphics Displays many of whom are currently transitioning
or intending to transition to graphical applications that include Windows, the
Intranet and Java. In addition, the Company is targeting the task-oriented users
of older, less capable PCs that are unable to run the latest Windows
applications, including those users in business and education. The Company
believes its unique ability to customize its Viewpoint TC products to meet
specific end-customer needs will give it a sustainable competitive advantage.
Historically, this ability has been of great value to the Company's terminal
customers and the Company believes that this strategy will be equally
advantageous in the corporate thin client marketplace.
Revenues from the Company's WBTs are expected to increase during the third and
fourth quarters of 1998 with the availability of new Viewpoint TC models and
Viewpoint Administrator software and on the basis of the anticipated maturing of
the market for thin client devices in the third quarter of 1998, the versatility
of the Company's new Viewpoint TC thin client product line, the significant
number of end-user trials of the new products now in progress and the Company's
strong OEM relationships.
Sales of X Windows-based Network Graphics Displays declined $1,645 to $511 for
the quarter ended March 31, 1998, from $2,156 for the quarter ended March 31,
1997. Sales of the Company's Network Graphics Displays have generally been
limited to a few large telecommunications customers. Due to the small customer
base, the low margins associated with Network Graphics Displays, and the
emergence of WBTs, the Company announced a discontinuation of this product
family in early 1998. As a result, the Company recorded an inventory reserve of
$252 against a portion of the remaining Network Graphics Displays inventory.
Net revenue from the Company's repairs and spare parts business decreased 23%,
or $246, to $810 for the quarter ended March 31, 1998, from $1,056 for the
quarter ended March 31, 1997. The decline was due to reduced spares sales to
Digital, resulting from the overall decline in unit sales to Digital during
1997. Due to new designs and engineering changes resulting in fewer components
and increased reliability, the Company does not anticipate that repair and spare
parts revenue will meet prior period levels.
The GAI Partnership agreement provides for the payment of royalties to the
Company as a percentage of partnership revenues, since May 1995, as follows:
months 1-12, 12%; months 13-24, 10%; months 25-36, 9%; months 37-48, 8%; and
months 49-60, 7%. GAI Partnership royalties received for the quarter ending
March 31, 1997, were $197. At March 31, 1998 the Company was owed $1,467 and had
not received required payments since June 1997. Discussions regarding payment of
the past due amount are ongoing. During the fourth quarter of 1997, the Company
began to record GAI Partnership revenue only to the extent of cash received.
IBM was the most significant customer for the Company's products, accounting for
16% of revenue for the quarter ended March 31, 1998. Although both Digital and
NCR are expected to remain significant customers for the Company's products,
neither is expected to account for revenues of the Company comparable to 1997
which were 3% and 6%, respectively. The loss of IBM, Digital, or NCR as a
customer, and as a distribution channel for the Company's products, would have a
material adverse effect on the Company's results of operations and liquidity.
8
<PAGE>
Gross Margin - Gross margin for the three months ended March 31, 1998 was $6,261
(27% of revenue) compared to gross margin of $5,457 (23% of revenue) for the
first quarter of 1997. Gross margin for the first quarter of 1998 includes a
reserve of $252 established against the obsolescence risk associated with the
Company's announced discontinuation of its Network Graphics Displays product
line. The increase in gross margin is attributable to cost reductions achieved
in the Company's General Display Terminals and WBTs product lines. The increase
in gross margin as a percent of revenue stems primarily from cost reductions and
a more favorable revenue mix between the Company's spare and repair business as
compared to the prior year.
In a continuing effort to maintain and improve margins in an industry otherwise
characterized by commodity pricing, management has focused on quality,
flexibility, and product cost reductions. In addition, sales of the Company's
WBTs, which carry margins greater than its General Display Terminals, are
expected to positively impact the Company's gross margins. However, there can be
no assurance, given the recent introduction of this new technology, that sales
of the Company's WBTs will improve overall gross margins.
From time-to-time margins are adversely affected by industry shortages of key
components. The Company emphasizes product cost reductions in its research and
development activities and frequently reviews its supplier relationships with
the view to obtaining the best component prices available.
Total Operating Expenses - For the quarter ended March 31, 1998, operating
expenses were $4,386 (19% of revenue), compared to expenses for the first
quarter of 1997 of $4,130 (17% of revenue).
Sales and Marketing Expenses - Sales and marketing expenses increased 14% to
$2,034 (9% of revenue) for the quarter ended March 31, 1998 from $1,782(7% of
revenue) for the quarter ended March 31, 1997. The increase stems from
participation in a number of important tradeshows during the first quarter of
1998 and increases in marketing expenses associated with the Company's WBTs.
The Company promotes its products using media advertising, direct mail,
telemarketing, public relations and cooperative channel marketing programs. The
Company's installed base of over five million units is the primary target market
for its new line of Viewpoint TC WBTs. The Company's plan to reach this market
is based on direct mail, telemarketing and advertising and an aggressive public
relations campaign, including several domestic and international press tours.
The Company will also participate in several key trade shows during the
remainder of 1998.
General and Administrative Expenses - General and administrative expenses
decreased to $1,413 (6% of revenue), from $1,629 (7% of revenue) for the three
months ended March 31, 1998 and 1997, respectively. The decline is a result of
reductions in legal expenses and depreciation.
Research and Development Expenses - Research and development expenses for the
first quarter increased 20% to $868 in 1998 from $724 in 1997. The increase is
related to development expenses associated with the Company's Viewpoint product
family. Research and development expenses are expected to exceed 1997 spending
levels due to investment in software for the Company's WBTs.
Interest Expense - Interest expense for the quarter ended March 31, 1998 was
$671 compared to $807 for the comparable period in 1997. The decline is related
to the reduction in the amount of debt outstanding under the Company's revolving
credit facility and a decline in interest rates.
Income Tax Expense - There was no provision for income tax expense for the
quarter ended March 31, 1997 due to net operating loss carryforwards available
resulting from the discontinuation of operations of TradeWave. Income tax
expense for the first quarter of 1998 was $459, or 38% of income before taxes.
Net Income - For the quarter ended March 31, 1998, net income was $745 (3% of
revenue), compared to $520 (2% of revenue) for 1997.
Impact of Inflation - The Company has not been adversely affected by inflation
because technological advances and competition within the microcomputer industry
have generally caused prices of products sold by the Company to decline. The
Company has flexibility in its pricing and could, if necessary, pass along price
changes to most of its customers.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The discussion below regarding liquidity and capital resources should be read
together with the information included in the Notes to Consolidated Financial
Statements.
As of March 31, 1998, the Company had working capital of $2,100 as compared to
$8,780 at December 31, 1997. The decline stems from the reclassification of an
$8,000 note, due January 31, 1999, from long-term debt to short-term debt.
Historically, the Company has relied on cashflow from operations, bank
borrowings and sales of its common stock to finance its working capital, capital
expenditures and acquisitions. As a result of positive cash flows, the Company
has reduced its outstanding borrowings under its revolving credit agreement by
$18,332 since December 1996.
The Company is highly leveraged. As of March 31, 1998, the Company had tangible
net worth of $6,856 and total liabilities of $32,442. The Company's cash
requirements at March 31, 1998, included repayment of a revolving loan of
$9,000, plus interest, due December 1998; payment of an $8,000 note, plus
interest, payable to NCR on January 31, 1999; payment of $3,555 to NCR if it
exercises a put option at any time in 1999; and annual payments to NCR, until
such put option is exercised, of $498 in cash or the Company's Common Stock.
Borrowing under the revolving loan is based on a borrowing base formula of up to
80% of eligible receivables, plus 50% of delineated eligible inventory, plus 30%
of non-delineated eligible inventory. Up to $7,500 is available under the
revolving loan for letters of credit. As a result of the borrowing base formula,
the credit available to the Company could be adversely restricted in the event
of further declines in the Company's sales and increases in orders may not be
able to be financed under the Company's revolving credit line.
With the exception of the $8,000 NCR note, which is secured by a mortgage on the
Company's Hauppauge facility, and which the Company believes will have to be
refinanced before its January 31, 1999 due date, the Company believes that cash
generated from operations and available under the Company's revolving credit
line will be sufficient to pay its obligations as they become due. The Company
anticipates that it will negotiate an extension of its current revolving credit
line which expires in December 1998. In the event there is a decline in the
Company's sales and earnings and/or a decrease in availability under the credit
line, the Company's cash flow would be adversely affected. Accordingly, the
Company may not have the necessary cash to fund all of its obligations.
Net cash provided by operating activities for the three months ended March 31,
1998 was $1,872; due principally to net income of $745, non-cash expenses
(principally depreciation) of $1,334 and reductions in receivables of $2,146.
These increases in cash provided by operating activities were partially offset
by a decrease in payables and accrued expenses of $1,293 and an increase in
inventories of $1,026. Net cash used in investing activities was comprised of
capital expenditures of $191. Net cash used in financing activities was $1,900
to reduce the balance of the Company's term and revolving loans.
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This Form 10-Q contains forward-looking statements and information that are
based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this document, the words
"anticipate," "believe," "estimate," "expect," and, depending on the context,
"will," and similar expressions are intended to identify forward-looking
statements. Such statements reflect the Company's current views with respect to
future events and are subject to certain risks, uncertainties and assumptions,
including the specific risk factors described in the Company's Form 10-K for the
year ended December 31, 1997. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, believed, estimated or expected. The
Company does not intend to update these forward-looking statements and
information.
COMPLIANCE WITH YEAR 2000 ISSUE
Management has initiated a Company wide program to prepare the Company's
computer systems and applications for Year 2000 compliance. The Company expects
to incur internal staff costs as well as other expenses necessary to prepare its
systems for the year 2000. The Company expects to both replace some systems and
upgrade others. Maintenance or modification costs will be expensed as incurred.
The total cost of this effort is still being evaluated, but is not expected to
be material to the Company.
10
<PAGE>
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 129, "Disclosure of Information
about Capital Structure" ("SFAS No. 129") is effective for financial statements
ending after December 15, 1997. The new standard reinstates various securities
disclosure requirements previously in effect under Accounting Principles Board
Opinion No. 15, which has been superseded by SFAS No. 128. The Company does not
expect adoption of SFAS No. 129 to have a material effect, if any, on its
consolidated financial position or results of operations.
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130") is effective for financial statements with fiscal years
beginning after December 15, 1997. Earlier application is permitted. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. The
Company does not expect adoption of SFAS No. 130 to have a material effect, if
any, on its consolidated financial position or results of operations.
Statement of Financial Accounting Standard No. 131, "Disclosure about Segments
of an Enterprise and Related Information" ("SFAS No. 131") is effective for
financial statements beginning after December 15, 1997. The new standard
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the enterprise
and in condensed financial statements of interim periods issued to stockholders.
It also requires that public business enterprises report certain information
about their products and services, the geographic areas in which they operate
and their major customers. The Company will include information required by SFAS
No. 131 in the Notes to Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
None.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
As of January 2, 1998, stockholders owning 2,643,938 (approximately 51%) of the
5,139,228 (post-reverse split) outstanding shares of the Company's Common Stock
consented in writing to the following:
o Amending the Company's Certificate of Incorporation (a) to effect a
one-for-ten reverse split of the issued and outstanding shares of Common
Stock, and (b) to decrease the total number of shares of Common Stock which
the Company has authority to issue from 100,000,000 to 25,000,000; and
o Approving the Company's 1997 Incentive Plan permitting the grant of stock
options, stock appreciation rights, performance shares, stock awards, stock
units and incentive awards to employees, directors and others.
An Information Statement relating to the foregoing stockholder actions was
distributed on or about March 6, 1998 to stockholders of record as of the close
of business on December 31, 1997, as required by Regulation 14C under the
Securities Exchange Act of 1934, and such actions became effective March 26,
1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11: Statement Concerning Computation of Per Share Earnings is hereby
incorporated by reference to "Condensed Consolidated Statements of Operations"
of Part I- Financial Information, Item 1- Financial Statements, contained in
this Form 10-Q.
Exhibit 27: Financial Data Schedule for the quarter ended March 31, 1998.
(b) Reports on Form 8-K - None
11
<PAGE>
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.
Dated: May 8, 1998
Boundless Corporation
By: /s/Joseph Gardner
- ----------------------------------------
Joseph Gardner
Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFOMRATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,710
<SECURITIES> 0
<RECEIVABLES> 12,668
<ALLOWANCES> 444
<INVENTORY> 14,231
<CURRENT-ASSETS> 32,121
<PP&E> 14,412
<DEPRECIATION> 3,876
<TOTAL-ASSETS> 52,026
<CURRENT-LIABILITIES> 30,021
<BONDS> 8,000
3,555
0
<COMMON> 51
<OTHER-SE> 15,978
<TOTAL-LIABILITY-AND-EQUITY> 52,026
<SALES> 22,864
<TOTAL-REVENUES> 22,864
<CGS> 16,603
<TOTAL-COSTS> 16,603
<OTHER-EXPENSES> 5,057
<LOSS-PROVISION> 24
<INTEREST-EXPENSE> 671
<INCOME-PRETAX> 1,204
<INCOME-TAX> 459
<INCOME-CONTINUING> 745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 745
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
