<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Mark One
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
- ------------
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
- ------------
Commission File Number: 1-13160
DYCAM, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 95-4202424
(State or other jurisdiction (I.R.S. Employer
or organization) Identification Number)
9414 Eton Ave.
Chatsworth, California 91311
(Address of principal executive offices)
(818) 998-8008
(Issuer's telephone number, including area code)
(NONE)
(Former name, address and fiscal year, if changed 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 preceeding 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
------ ------
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Common Stock, $.01 Par Value, 3,120,836 shares as of October 31, 1996
Transitional Small Business Disclosure Format (Check one)
YES NO X
------- -------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DYCAM, INC.
BALANCE SHEETS
September 30, 1996
ASSETS
------
<TABLE>
<CAPTION>
Sept. 30, 1996 December 31, 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 925,000 $ 1,374,000
Accounts receivable, net 222,000 115,000
Inventory 586,000 698,000
Prepaid expenses and other current assets 31,000 37,000
----------- -----------
Total current assets 1,764,000 2,224,000
Goodwill, net of accumulated amortization 4,819,000 5,027,000
Property and equipment, net 444,000 452,000
Deposits 20,000 33,000
Note Receivable from Styles 1,000,000 1,000,000
----------- -----------
$ 8,047,000 $ 8,736,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Current liabilities:
Accounts payable $ 134,000 $ 120,000
Accrued payroll and related expenses 65,000 65,000
Accrued expenses 24,000 14,000
----------- -----------
Total current liabilities 223,000 199,000
Stockholders' equity
Common stock (par value $.01) 31,000 31,000
Additional paid in capital 10,710,000 10,710,000
Retained earnings (deficit) (2,917,000) (2,204,000)
----------- -----------
Total shareholders' equity 7,824,000 8,537,000
----------- -----------
Total liabilities and
shareholders' equity $ 8,047,000 $ 8,736,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
DYCAM INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
Quarter ended Nine months ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1995
<S> <C> <C> <C> <C>
Revenues
Camera Sales $525,000 $400,000 $1,889,000 $1,207,000
Contract engineering fees $43,000 $6,000 $176,000 $21,000
License fees $0 $10,000 $18,000 $17,000
--------------- --------------- --------------- ---------------
Total Revenues $568,000 $416,000 $2,083,000 $1,245,000
--------------- --------------- --------------- ---------------
Cost of revenues
Camera Sales 317,000 250,000 1,220,000 805,000
Contract engineering fees 15,000 9,000 23,000 18,000
License fees 11,000
--------------- --------------- --------------- ---------------
Total cost of revenues 332,000 259,000 1,254,000 823,000
--------------- --------------- --------------- ---------------
Gross profit 236,000 157,000 829,000 422,000
Operating expenses:
Selling, general & administrative expenses 291,000 292,000 889,000 898,000
Research and Development 137,000 190,000 435,000 579,000
Depreciation and amortization 113,000 83,000 334,000 250,000
--------------- --------------- --------------- ---------------
Total operating expenses 541,000 565,000 1,658,000 1,727,000
--------------- --------------- --------------- ---------------
Loss from operations (305,000) (408,000) (829,000) (1,305,000)
Non - operating income 36,000 80,000 116,000 198,000
--------------- --------------- --------------- ---------------
Loss before taxes (269,000) (328,000) (713,000) (1,107,000)
Provision for income taxes 0 0 0 0
--------------- --------------- --------------- ---------------
Net loss ($269,000) ($328,000) ($713,000) ($1,107,000)
=============== =============== =============== ===============
Net income (loss) per share: ($0.09) ($0.11) ($0.23) ($0.35)
Weighted average shares of common
stock outstanding 3,120,836 3,120,836 3,120,836 3,120,836
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
DYCAM INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED 1995 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Common Stock
-------------------------- Additional Accumulated Stockholders
Shares Amount Paid-in Cap. Deficit Equity
------------ ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 3,120,836 $31,000 $10,710,000 ($852,000) $9,889,000
Net loss (1,352,000) (1,352,000)
Balance at December 31, 1995 3,120,836 31,000 10,710,000 (2,204,000) 8,537,000
Net loss for first nine months (713,000) (713,000)
------------ ----------- ------------- ----------- --------------
Balance at September 30, 1996 3,120,836 31,000 10,710,000 (2,917,000) 7,824,000
</TABLE>
-4-
<PAGE>
DYCAM INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1995
<TABLE>
<CAPTION>
Sept. 30, 1996 Sept. 30, 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ($713,000) ($1,107,000)
---------- ------------
Adjustments to reconcile Net Income (loss)
to Net Cash provided by (used in) operating activities:
Depreciation 126,000 44,000
Amortization of goodwill 208,000 208,000
Allowance for doubtful accounts
Changes in assets and liabilities:
(Increase) / decrease in accounts receivable (107,000) (140,000)
(Increase) / decrease in royalty receivable 0 0
(Increase) / decrease in inventories 112,000 (234,000)
(Increase) / decrease in prepaid expenses 6,000 0
(Increase) / decrease in other current assets 0 0
Increase / (decrease) in accounts payable 14,000 (34,000)
Increase / (decrease) in accounts payable-intercompany 0 (129,000)
Increase / (decrease) in accrued expenses 10,000 (56,000)
Increase / (decrease) in accrued payroll and related expenses 0 0
Increase / (decrease) in deferred revenue 0 0
Increase / (decrease) in income taxes payable 0 0
-------- -------------
Total adjustments 35,000 (593,000)
-------- -------------
Net cash provided by operating activities (344,000) (1,448,000)
-------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) / decrease in property and equipment (118,000) (173,000)
(Increase) / decrease in Note receivable from SOV 0 (500,000)
(Increase) / decrease in deposits 13,000 (21,000)
-------- -----------
Net cash used in investing activities (105,000) (694,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Offering Expenses 0 0
Issuance of common stock 0 0
-------- ----------
Net cash provided by financing activities 0 0
NET INCREASE / (DECREASE) IN CASH (449,000) (2,142,000)
CASH, BEGINNING BALANCE 1,374,000 3,715,000
--------- ----------
CASH, ENDING BALANCE $925,000 $1,573,000
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
DYCAM INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
General
The accompanying unaudited interim financial statements of Dycam Inc. (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Certain notes and other information have been condensed or omitted from
the interim financial statements presented in this report. 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, the financial statements reflect all adjustments considered
necessary for a fair presentation and all such adjustments are of a normal and
recurring nature. The results of operations for the nine months ended September
30, 1996 are not necessarily indicative of the results to be expected for the
full year. For further information refer to the financial statements and
footnotes thereto included in the Company's annual report on form 10-KSB for the
year ended December 31, 1995 as filed with the U.S. Securities and Exchange
Commission.
Property and Equipment
Included in property and equipment is camera equipment held under lease to a
subsidiary of Styles in the amount of $244,000. Equipment under operating
leases is recorded at cost, net of accumulated depreciation. Such camera
equipment is being depreciated over four years.
Goodwill
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over the expected periods
to be benefited. Dycam assesses the recoverability of this intangible asset by
determining whether the amortization of the goodwill balance over its remaining
life can be recovered through projected undiscounted future cash flows. The
amount of goodwill impairment, if any, is measured based on projected
undiscounted future cash flows and is charged to operations in the period in
which goodwill impairment is determined by management. Goodwill is being
amortized on a straight-line basis over the expected 20 year life. Goodwill
amortization of $208,000 was recorded for the nine months ended September 30,
1996 and 1995, respectively. At September 30, 1996 no impairment of goodwill
was determined by management.
Revenue Recognition
Revenue from camera sales is recognized upon shipment of products. Contract
engineering fees are recognized when the service is performed. Approximately
$100,000 in certain license fee revenues from a subsidiary of Styles have been
deferred and will be recognized when received. All other license fee revenue is
recognized when earned. Revenue from camera equipment leased to a subsidiary of
Styles is included in camera sales and is being recognized when earned.
-6-
<PAGE>
DYCAM INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Loss Per Common Share
Loss per common share has been computed on the weighted average number of common
and equivalent shares outstanding. Primary and fully diluted net loss per share
are approximately the same. Dycam has granted certain options which have been
treated as common share equivalents in calculating net loss per share, unless
antidilutive.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could materially differ from those estimates.
NOTE 2 - CONCENTRATIONS
- -----------------------
Major Customers/Vendors
One customer accounted for 20% of camera sales for the three months ended
September 30, 1996, and a second customer accounted for 11% of camera sales.
One customer accounted for 10% of camera sales for the nine month period ended
September 30, 1996. One customer accounted for 12% of camera sales for the
three month period ended September 30, 1995. No customer accounted for more
than 10% of camera sales for the nine month period ended September 30, 1995.
One customer accounted for $33,000 of contract engineering fees (77% of contract
engineering fees) for the three months ended September 30, 1996, and $156,000 of
contract engineering fees (89% of contract engineering fees) for the nine months
ended September 30, 1996.
Dycam purchased materials from one vendor for $770,000 which represented 65% of
all materials purchased during the nine months ended September 30, 1996. Dycam
purchased materials from this same vendor for $175,000 and $36,000, which
represented 57% and 10% of all materials purchased during the three months ended
September 30, 1996 and 1995, respectively. Substantially all of such purchases
are related to standard digital cameras private labeled and packaged to Dycam
specification by the manufacturer.
Concentration of Credit Risk
Financial investments which potentially expose the Company to a concentration of
credit risk as defined by Statement of Financial Accounting Standards No. 105,
consist primarily of cash and accounts receivable. The Company places its cash
with high credit quality institutions but at times has amounts in one
institution in excess of the federally insured limit of $100,000. Concentration
of credit risk with respect to trade receivables is limited due to the diversity
of the Company's customer base. Generally, the Company does not require
collateral or other security to support customer receivables. Management
consistently monitors the financial condition of its customers to reduce the
risk of loss.
-7-
<PAGE>
DYCAM INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE 3 - TRANSACTIONS WITH STYLES
- ---------------------------------
Note Receivable from Styles on Video Inc.
On December 14, 1994, Dycam loaned to Styles $500,000. On January 25, 1995,
Dycam loaned an additional $500,000 to Styles. Styles signed an amended and
restated promissory note dated January 25, 1995 for the full $1,000,000 note,
bearing interest at 2% above a bank's prime rate, interest payable monthly, with
a maturity date of September 1, 1995. Dycam subsequently extended the maturity
date of the note to December 31, 1998, and fixed the interest rate at 10%. The
interest is payable monthly. The Note is secured by a pledge of 1,916,667
shares of the common stock of Dycam owned by Styles. Interest income of
approximately $25,000 is included in the accompanying September 30, 1996
statement of operations related to the Styles loan. The carrying amount of the
note receivable approximates its fair market value at December 31, 1995.
Accounts Receivable From Subsidiary of Styles
Included in accounts receivable at September 30, 1996 is approximately $137,000
due from a subsidiary of Styles.
Revenues
Included in the accompanying September 30, 1996 statement of operations under
camera sales is approximately $53,000 of revenues related to camera equipment
leased to a subsidiary of Styles.
Deferred revenues
Commencing April 1996, Dycam and a subsidiary of Styles entered into an
agreement to defer certain license revenues due Dycam for a period of up to 12
months. Such revenues will be recognized when received. As of September 30,
1996, approximately $100,000 had been deferred under this agreement.
NOTE 4 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment at September 30, 1996 consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Machinery and equipment $293,000
Camera equipment 306,000
Office equipment 112,000
--------
711,000
Less: accumulated depreciation (267,000)
--------
$444,000
--------
</TABLE>
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
General
The Company commenced operations in April 1988, and was incorporated in
Delaware in July, 1988. The Company became a wholly owned subsidiary of Styles
on Video Inc. a publicly traded Delaware corporation (Styles) on February 7,
1994. Effective September 21, 1994, the Company effected an underwritten Rights
Offering of 1,000,000 shares of its Common Stock. From and after the close of
the Rights Offering, Styles owned approximately 55% of the Company's common
stock. Since its inception, the Company's business has been the design,
manufacture and sale of digital cameras and associated hardware and software
products primarily for use with personal computers. Substantially all of the
Company's revenues are derived from sales of digital cameras and supporting
software and accessory products, technology licensing fees, and contract
engineering work.
Except for the historical information contained herein, the matters discussed
in this Management's Discussion and Analysis are forward-looking statements that
involve risks and uncertainties and, in some cases, are based upon various
factors beyond Dycam's control. These factors include, among other things, the
ability of Forever Yours Inc., a key strategic partner, to execute its business
plan for the purchase and utilization of Dycam's digital cameras pursuant to
their existing agreement, the ability of SOV to continue to service its
outstanding indebtedness owed to Dycam, the market reception for digital cameras
in general and Dycam's products specifically, the impact of competition from
other companies in the digital camera industry, developments which may render
Dycam's products and services obsolete or less attractive, Dycam's financial
constraints, and overall economic conditions.
Results of Operations
Three months ended September 30, 1996 compared to the three months ended
------------------------------------------------------------------------
September 30, 1995
- ------------------
Total revenues for the three months ended September 30, 1996 were $568,000.
Total revenues increased $152,000 (37%) from revenues of $416,000 for the three
months ended September 30, 1995. The increase in revenue was primarily
associated with increased camera sales and contract engineering services.
Revenues from camera sales were $525,000 (92% of total revenue) in the three
months ended September 30, 1996 as compared to $400,000 in 1995 (96% of total
revenue). Revenues from contract engineering were $43,000 (8% of revenue) in
the period as compared to $6,000 (1% of total revenue) of contract engineering
revenues in the same period of 1995. Pursuant to a license fee deferral
agreement executed in May 1996 between Dycam and Forever Yours Inc., payment of
certain license revenues due Dycam from Forever Yours may be accrued by Forever
Yours until April 1997. Such fees amounted to approximately $56,000 in the
three months ended September 30, 1996, and will be recognized by Dycam when
payment is received.
Dycam continues to pursue its standard product strategy by facilitating the
use of general purpose digital cameras, and selling a range of Dycam branded and
third party digital camera products, software, and accessories to selected
target markets. Dycam, however, will continue to devote the majority of its
engineering efforts to the custom product lines to exploit the opportunities to
design products that combine custom built digital cameras with specialized
software, hardware or packaging in order to satisfy an identified business
opportunity. During 1995, Dycam devoted a substantial portion of its resources
to pursuing custom and contract engineering business with the goal of generating
future sales. One example of this strategy is Dycam's relationship with Forever
Yours. Dycam believes that during 1997 a substantial portion of its revenues
will be comprised of revenues derived from the sale of cameras to, and licensing
revenues from, Forever Yours. The core element of the Forever Yours camera
system is a specialized digital camera subsystem engineered and produced by
Dycam under an exclusive contract with Forever Yours.
Gross profits are comprised of revenues less direct costs of products and
services. Gross profits as a percentage of revenues for the three months ended
September 30, 1996 were 42%, compared to 38% in the three months ended September
30, 1995, primarily as a result of increased leased camera revenues and
engineering
-9-
<PAGE>
services. Gross margins may decline if the Company's custom products business
does not contribute a significant portion to the Company's revenues due to lower
gross margins from the standard product lines.
Selling, general and administrative expenses consist of administrative
expenses at the Company headquarters, the salaries of corporate officers and
sales personnel, advertising and promotion, accounting, legal and other
professional expenses, rent, and occupancy costs. Selling, general and
administrative expenses decreased $1,000 for the three months ended September
30, 1996 to $291,000 (51% of revenues) from $292,000 (70% of revenues) for the
same period in 1995.
Product development and research expenses decreased $53,000 to $137,000 (24%
of revenues) in the three months ended September 30, 1996 compared to $190,000
(46% of revenues) in the same period of 1995. This decrease is attributable to
reductions in personnel, and the completion of certain developments of products
introduced for sale in 1995, including the camera developed in conjunction with
Forever Yours, Inc. The Company believes that continuing research and
development is essential to maintaining its competitive position, and expects to
continue to expend funds in this area.
Inventories decreased by $112,000 to $586,000 at September 30, 1996 when
compared to December 31, 1995, primarily as a result of the increase in camera
shipments, including the Forever Yours camera system, and continuing sales of
older products from inventory. The acceptance and success of the Forever
Yours business is not yet assured, and if unsuccessful may result in lower
than anticipated revenues for the Company and a write down of the carrying value
of that unique inventory associated with the Forever Yours camera system.
Certain digital camera components and assemblies used by the Company, including
standard digital cameras private labeled for the Company, must be ordered up to
four months in advance to assure timely delivery. A strategic inventory of such
components and assemblies is maintained by the Company, however, any disruptions
in delivery or in the relationships with suppliers of such components could
cause delays in the Company's camera production activities. The Company
believes that its relations with its strategic suppliers are good.
The net loss per common share was ($0.09) for the three months ended
September 30, 1996 compared to net loss per common share of ($0.11) for the
three months ended September 30, 1995.
Nine months ended September 30, 1996 compared to the Nine months ended
----------------------------------------------------------------------
September 30, 1995
- ------------------
Revenues are derived from sales of digital cameras and supporting software
and accessory products, technology licensing fees, and contract engineering
work. Sales during the nine month period ended September 30, 1996 were
$2,083,000. Total sales increased by $838,000 (67%) from $1,245,000 for the
period ended September 30, 1995. The increase in revenue was due primarily to
increased sales of camera equipment.
Gross profits are comprised of revenues less direct costs of products and
services. Gross profits as a percentage of revenues increased to 40% in the
first nine months of 1996, compared to 34% in the first nine months of 1995,
primarily as a result of the increase in camera and related accessory sales, and
decreased start-up costs associated with the initial shipments of new products.
Selling, general, and administrative expenses consist of administrative
expenses at the company's headquarters, the salaries of corporate officers and
sales personnel, advertising and promotion, accounting, legal and other
professional expenses, rent, and other occupancy costs. Selling, general, and
administrative costs decreased by $9,000 for the first nine months of 1996 to
$889,000 (43% of revenues) from $898,000 (72% of revenues) for the first nine
months of 1995. The decrease resulted primarily from a decrease in the employee
base of the company. Product development expenses decreased $144,000 to
$435,000 (21% of revenues) for the nine month period compared to $579,000 (47%
of revenues) for the same period in 1995. The decrease is attributable to
reductions in personnel, and the completion of certain developments of products
introduced for sale in 1995, including the camera developed in conjunction with
Forever Yours, Inc. Depreciation and amortization costs for the first nine
months of 1996 were $334,000.
-10-
<PAGE>
Net loss per common share was ($0.23) for the first nine months of 1996 and
($0.35) for the first nine months of 1995.
Liquidity and Capital Resources
At September 30, 1996, Dycam had cash and short-term investments on hand of
$925,000, down $449,000 from $1,374,000 at December 31, 1995.
Accounts receivable, net of allowance for doubtful accounts of $5,000,
increased $107,000 during the nine months ended September 30, 1996 when compared
to December 31, 1995.
Camera equipment related to operating leases to Forever Yours, increased by
$105,000 during the nine months ended September 30, 1996. Such camera equipment
will be depreciated over the life of the leases.
Current liabilities during the nine months ended September 30, 1996 increased
by $24,000 to $223,000 as compared to $199,000 at December 31, 1995, primarily
as a result of increases in accounts payable of $14,000.
Dycam's working capital at September 30, 1996 was $1,541,000 a decrease of
$484,000 when compared to $2,025,000 at December 31, 1995. Working capital
decrease was primarily the result of net losses of $713,000. The current ratio
at September 30, 1996 was 7.9 to 1 compared to 11.2 to 1 at December 31, 1995.
Dycam does not have any long term indebtedness and does not currently
maintain any credit facilities.
In December 1994 Dycam made a secured loan of $500,000 to Styles. Dycam
determined that it was in the best interests of Dycam and its shareholders that
it make this loan, which enabled Styles to continue funding Forever Yours, and
thus the development and manufacture of the Forever Yours digital camera by
Forever Yours and Dycam. In January 1995 Dycam approved an additional secured
loan of $500,000 to Styles. The two loans were memorialized in a single note
bearing interest at the Bank of America NS&TA prime rate plus two percentage
points and was payable interest only for seven months with the entire principal
balance plus accrued and unpaid interest thereon due and payable on September 1,
1995. Dycam subsequently extended the maturity date of the note to December 31,
1998, and fixed the interest rate at 10% per year. All interest payments due
have been paid. The note is secured by 1,916,667 shares of Dycam's Common Stock
owned by Styles. If Styles is unable to satisfy its obligations under the note,
Dycam may not be repaid and will exercise its right to acquire the 1,916,667
shares of Dycam Common Stock owned by Styles.
Since the closing of the Rights Offering, Dycam has expended approximately
$4,000,000 of the moneys raised in that offering, which amount includes the
above-referenced $1,000,000 secured loan to Styles. Commencing in the second
quarter of 1994, Dycam embarked on a program to market and sell its standard
digital camera products to select markets. Although Dycam was able to generate
short term increases in sales in these markets, it has determined that a large
market does not currently exist for its standard digital camera systems.
Consequently, during the first quarter of 1995, Dycam decided to de-emphasize
the sale of its internally designed standard products and will, in the future,
concentrate its efforts on custom product development, value added distribution
of standard digital cameras produced by others for Dycam, and cooperative
ventures. These cooperative ventures include Dycam's ongoing relationship with
Forever Yours, for whom Dycam has developed a digital imaging system designed
for taking photographs of newborn infants.
Dycam anticipates that its operating and research and development activities
in fiscal 1996 will continue to use cash and expects that its cash balance in
fiscal 1996 will continue to decline. However, Dycam believes that its existing
cash balances, the payments due under the intercompany loan, payments due for
deferred license revenues, and cash flow from operations will be sufficient to
meet its cash requirements through September 1997, after which time it may be
required to raise additional capital. In addition, to the extent Dycam
experiences growth in the future, or its cash flow from operations is less than
anticipated, Dycam may be required to obtain additional sources of cash. There
is no assurance that such sources will be available.
-11-
<PAGE>
DYCAM INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Issuer has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dycam Inc.
November 6, 1996 By: John Edling
/s/ John Edling
---------------
John Edling, President
and Chief Financial Officer
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 925,000
<SECURITIES> 0
<RECEIVABLES> 227,000
<ALLOWANCES> 5,000
<INVENTORY> 586,000
<CURRENT-ASSETS> 1,764,000
<PP&E> 711,000
<DEPRECIATION> 267,000
<TOTAL-ASSETS> 8,047,000
<CURRENT-LIABILITIES> 223,000
<BONDS> 0
0
0
<COMMON> 31,000
<OTHER-SE> 7,793,000
<TOTAL-LIABILITY-AND-EQUITY> 8,047,000
<SALES> 568,000
<TOTAL-REVENUES> 568,000
<CGS> 332,000
<TOTAL-COSTS> 332,000
<OTHER-EXPENSES> 541,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (269,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (269,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (269,000)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
<PAGE>
EXHIBIT 99
DYCAM ANNOUNCES RESULTS FOR THIRD QUARTER
ENDED SEPTEMBER 30, 1996
PRESS RELEASE
Chatsworth, California - November 12, 1996, Dycam Inc. (AMEX: DYC) today
announced results for the quarter and nine months ended September 30, 1996.
Revenues for the third quarter ended September 30, 1996, were $568,000, an
increase of $152,000 or 37% from revenues of $416,000 for the comparable period
in 1995. Net losses for the quarter ended September 30, 1996 were $(269,000) or
$(.09) per share as compared to net losses of $(328,000) or $(0.11) per share in
the quarter ended September 30, 1995. Revenues for the nine months ended
September 30, 1996 were $2,083,000, an increase of $838,000 or 67% from
$1,245,000 for the nine months ended September 30, 1995. Net losses for the nine
months ended September 30, 1996 were $(713,000) or $(.23) per share as compared
to net losses of $(1,107,000) or $(.35) per share in the nine months ended
September 30, 1995. Losses for the quarter and nine months ended September 30,
1996 were primarily the result of selling, general, and administrative expense,
continuing investment in research and development, amortization of Goodwill, and
increased depreciation and related expenses for leased camera systems.
John Edling, President and CEO of Dycam Inc., commented on the third
quarter results, saying, "Dycam experienced improved revenues and reduced net
losses in comparison to the same period in 1995. We believe that our established
capabilities in the design of digital cameras and related systems, and in
integrating digital photography with specialized software to create imaging
solutions, enable us to compete effectively in the digital photography industry.
As the markets for digital photography mature, we look forward to many
opportunities for Dycam."
Dycam Inc., based in Chatsworth, California, has been an international
leader in digital camera technology and related products for digital imaging
applications since 1988. Dycam's products include gray-scale and color digital
cameras, digital camera accessories and lenses, custom digital camera systems,
digital camera software, and engineering services.
With the exception of the historical information, the matters discussed in
this news release include forward looking statements that involve risks and
uncertainties, including the ability of Dycam to control costs and maintain
pricing at levels necessary to maintain gross profit margins; the market
reception for digital cameras in general, and Dycam's products specifically; the
ability of certain strategic customers to successfully execute their business
plans; and the effects of competition. These and other factors are discussed in
Dycam's SEC filings, including the Form 10-K report for the year ended December
31, 1995.
<PAGE>
DYCAM INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
Quarters Ended Nine Months Ended
--------------------------------------- ---------------------------------------
September 30, 1996 September 30, 1995 September 30, 1996 September 30, 1995
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues $ 568,000 $ 416,000 $2,083,000 $1,245,000
Cost of revenues 332,000 259,000 1,254,000 823,000
Gross profit 236,000 157,000 829,000 422,000
Operating expenses 541,000 565,000 1,658,000 1,727,000
Non - operating income 36,000 80,000 116,000 198,000
---------- ---------- ---------- -----------
Loss before taxes (269,000) (328,000) (713,000) (1,107,000)
Provision for income taxes 0 0 0 0
---------- ---------- ---------- -----------
Net loss ($269,000) ($328,000) ($713,000) ($1,107,000)
========== ========== ========== ===========
Net loss per share: ($0.09) ($0.11) ($0.23) ($0.35)
========== ========== ========== ===========
Weighted Average shares of common
stock outstanding: 3,120,825 3,120,825 3,120,825 3,120,825
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
DYCAM INC.
BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Current assets $1,764 $2,224
Total assets 8,047 8,736
------ ------
Current liabilities 223 199
Total liabilities 223 199
Total stockholders' equity 7,824 8,537
------ ------
Total liabilities and
Stockholders equity $8,047 $8,736
------ ------
</TABLE>
