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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
CAPRI CORP.
(Name of Small Business Issuer in Its Charter)
MINNESOTA 41-1704533
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2301 WEST 22ND STREET, SUITE 203, OAK BROOK, ILLINOIS 60523
(Address of Principal Executive Offices) (Zip Code)
(630) 645-0145
Issuer's Telephone Number
Securities to be registered pursuant to Section 12(b) of the Act:
None
----
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
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PART I
(ALTERNATIVE 2)
ITEM 6. DESCRIPTION OF BUSINESS.
GENERAL. Capri Corp. was incorporated in Minnesota in 1991, and is engaged
in developing computer software that provides a specialized enterprise resource
planning (S/ERP) solution to printed circuit board (PCB) manufacturers. The
license rights to the use of the software are marketed and sold under the
trademarks Paradigm(R) and Paradeim(R). In addition, the Company provides
technical support and user training and distributes certain hardware and third
party software. Capri Corp. carries on all of its business through its
wholly-owned operating subsidiary, Cimnet Systems, Inc., formed in 1988,
("Cimnet") and Cimnet's subsidiaries, all of which are wholly-owned. The term
"Company" is used herein to refer collectively to Capri Corp., Cimnet and
Cimnet's subsidiaries. Capri Corp.'s common stock is currently quoted on the
electronic "Pink Sheets" of the National Quotation Bureau and, upon the
effectiveness of this Registration Statement, Capri Corp. intends to apply to
have its common stock quoted on the NASD OTC Bulletin Board, where it was quoted
prior to October, 1999.
In 1988, the founders of the Company recognized the following:
- The market conditions within the manufacturing software marketplace
were creating an opportunity for highly specialized information
systems designed around the PCB industry;
- The increasing need for manufacturing organizations to become more
efficient due to increasing global competition;
- The increasing use of client/server platforms as opposed to
mini/mainframe environments;
- The increasing access to information processing due to the decreased
cost of computing power; and
- The lack of offerings within the marketplace for specialized
information systems targeted to meet the needs of PCB manufacturing
companies.
The Company sought to capitalize on these conditions by offering
Paradigm(R), one of the first information systems designed around client/server
architecture running on Local Area Networks. Paradigm(R) incorporates advanced
software technologies along with the latest manufacturing concepts such as
"Total Quality Management" and "Just In Time" production scheduling and
inventory control. Although the Paradigm(R) system falls primarily into the
category of Manufacturing Resource Planning (MRP-II), it goes well beyond
traditional MRP-II functionality by including features such as "intelligent
engineering," statistical process control, plant maintenance, and real-time
scheduling. The Company believes that this set of features and
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functionalities has provided the Company with a significant competitive
advantage over other system suppliers.
The Company is investigating additional marketing initiatives to support
growth and long term viability. Strategies currently under consideration include
diversification outside of the PCB industry and improving market share within
the PCB industry, both geographically and through new product offerings.
PRODUCTS AND SERVICES. The Company believes its flagship software product,
Paradigm,(R) provides a fully integrated set of superior capabilities that
improves speed, cost, efficiency, flexibility and visibility. Reducing cycle
time, eliminating waste and inefficiency, tightening process controls, and
achieving superior customer responsiveness are some of the critical success
factors that are greatly influenced by the capabilities built into Paradigm(R).
The Company has the ability to supply turnkey systems solutions which allow
manufacturing companies to manage their business with a single information
system. The components of the Company's offerings are:
- Software
- Installation, Training, and Consultation
- Software Maintenance
- Custom Programming Services
- Hardware and Network Services
Software. Paradigm(R) supports state-of-the-art manufacturing concepts
such as "Just in Time" and "Activity Based Management". The Company believes
Paradigm(R) is the most advanced engineering, production, planning, and material
control software ever developed for the PCB industry. Paradigm(R) is comprised
of the following set of 20 integrated modules:
- - Data Control - Sales Forecasting
- - Sales Control - Lot/Serial Tracking
- - Material Control - JIT Delivery Performance
- - Production Control - Cycle-Time Performance
- - Master Scheduling - Plant Maintenance
- - Financial Control - Statistical Process Control
- - Intelligent Engineering - EDI Interface
- - Report Generation - RFQ Interface
- - Executive Information System - Shop Floor Monitor
- - Bar Coding and Data Collection - System Administration
These modules are priced individually and licensed for a specific number of
authorized users. Typical software license fees for a small installation (10
users) are approximately $100,000 while a large installation (100 users) may
exceed $500,000.
The Company has recently introduced Paradigm(R) LT - an entry-level system
designed for smaller and emerging PCB manufacturing companies. This new product
offers some of the
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basic core functionality at a lower cost to companies that in
the past have been unable to consider installing the full Paradigm(R) system at
their facilities. The Paradigm(R) LT product is limited to a maximum of 15 users
with an average list price of $50,000.
In addition to it's proprietary software Paradigm(R), the Company is an
authorized reseller of products such as Oracle Corporation's Oracle(R) 7
Workgroup Server (TM) and Oracle(R) 7 Server Enterprise Edition (TM),
Cognos(R)'s Impromptu(R) and Powerplay(R), Pervasive Software, Inc.'s P.SQL(R),
NextPage, LC's Folio Views(R) and certain of Computerwise(R), Inc.'s shop floor
data collection products.
The Company devotes significant resources to creating enhancements to
existing functionalities and to developing and expanding product offerings to
its customers. During the fiscal years ended June 30, 1999 and June 30, 1998,
the Company invested approximately $739,000 and $524,000, respectively, in
research and development activities, of which approximately $380,000 and
$227,000, respectively, was charged to expense. The remaining balances of
$359,000 and $297,000, respectively, were capitalized and will be charged to
expense in future periods.
Installation, Training and Consultation. These services are provided as
separate billable services for assisting customers with the implementation of
the Paradigm(R) system. Additionally, the Company offers education covering
manufacturing concepts and methodologies as well as technical issues. Training
and consultation is typically provided at the customer location to provide
hands-on assistance. Typical revenues for these services range from $10,000 for
a small installation to more than $50,000 for a large installation. The Company
believes the potential for generating additional revenues in this area is
significant.
Software Maintenance. Software maintenance is offered on a contractual
basis to each customer licensing the Paradigm(R) software. The software
maintenance entitles the customer to support and software enhancements. The
annual maintenance fee is typically 15% of the software license fee.
Custom Programming Services. Although the Company primarily offers a
standard product to its customers, special custom programming services are
available for developing interfaces to other systems. With an Asian operation
based in India, the Company will have access to highly talented programmers at a
much lower cost, creating an opportunity to expand its custom programming
services.
COMPETITION. Although the Company competes with other companies producing
software written specifically for the PCB industry, the Company believes that
its products are more comprehensive and its sales of software to the PCB
manufacturing industry are significantly greater than any of these specialized
competitors. In addition, the Company also competes with software programs of
general manufacturing application and "home grown" non-integrated programs.
Capital barriers to entry into competition with Paradigm(R) and other
computer software programs being developed by the Company are low. In addition,
many program development
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companies are larger and better financed than the Company. There is no barrier
to such companies producing programs which would compete directly with those of
the Company.
REVENUE AND WORKING CAPITAL. The Company's revenues reflect a fluctuating
revenue stream primarily due to the following:
- The inability of the Company to control when a customer will enter
into a license agreement with the Company;
- The increasing complexity and cost of Paradigm(R) system installations
due to an increasing need for information by the Company and the
Company's continued penetration of the large user market;
- The license agreements entered into by the Company, many of which
carry terms and conditions that require the Company to recognize
revenue over a period of time and only after certain conditions are
met.
This combination of circumstances may cause revenues to appear to have
fluctuated further when viewed in a single quarter, or when they are being
compared to a corresponding prior period.
Revenues derived from maintenance services are based on a percentage of
installed software, and therefore provide a relatively stable and recurring
revenue stream. For example, today these maintenance revenues substantially
cover the support and administrative activities of the Company. The Company will
continue to explore product offerings with a view towards stabilizing future
revenue streams.
The Company's principal assets are cash and accounts receivable, which are
in turn used to fund payroll and growth. During the fiscal year ended June 30,
1999, and continuing into the current fiscal year, the Company has invested
heavily in its professional staff, equipment and infrastructure while
aggressively pursuing its commitment to a global growth strategy. In the current
fiscal year, the Company has established subsidiaries in India and Hong Kong,
formed strategic sales alliances with companies in Taiwan and Europe and is
negotiating a Japanese distributorship relationship.
Cash is generally received in periodic installments throughout the course
of product installation, which leads to a need for increased working capital
between such payment periods. Due to these cyclical fluctuations, the Company
retains a significant amount of cash to fund ongoing growth and operations.
Historically, the Company has invested its excess cash in cash equivalents
through its bank. Beginning in this fiscal year, the Company has begun investing
its excess cash in short term government bonds and high grade commercial paper,
enabling it to spread and reduce investment risk while maximizing yield. The
Company entered into a revolving credit agreement with the American National
Bank and Trust Company of Chicago, dated October 30, 1999, which provides an
open line of credit of up to five hundred thousand dollars ($500,000).
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This line of credit, which expires on October 30, 2000, provides for interest at
one percent over the published prime rate of the bank on funds used and is
secured by the assets of the Company and it's domestic subsidiary.
EMPLOYEES AND LABOR RELATIONS. As of June 30, 1999, the Company had 33
employees. The Company believes that this staffing will be sufficient to manage
the Company and carry out its current base of business. Staffing will need to be
increased to meet future operational requirements The employees are not members
of any collective bargaining unit. The Company believes that relations with its
employees are good. There were no work stoppages in the fiscal year ended June
30, 1999 and none are expected in the fiscal year ending June 30, 2000.
CUSTOMERS. Current customers of the Company include six of the ten largest
PCB producers in the world today.
MARKETING. The PCB industry generates approximately $36 billion in revenues
worldwide and is growing steadily. The total number of manufacturers is close to
1500, which is almost equally divided among North America (US and Canada),
Western Europe and Asia.
The Company's fundamental marketing strategy has been to focus on a
specific vertical segment within the manufacturing industry. The Company
competes within the global manufacturing software market by providing goods and
services that have industry specific capabilities. This approach has allowed the
Company to gain market leadership in the targeted process flow manufacturing
niche by providing products and services which meet the specific needs of
manufacturers.
In order to gain market share and visibility within the PCB industry the
Company continues to attend numerous trade shows in North America, Europe, and
Asia. Combined with a targeted ad campaign and selected mailings, the Company
has been successful in selling its products to many PCB manufacturing companies
around the world.
The Company has entered into agreements with sales representatives to
market and sell its products in Belgium, China, France, Germany, Hong Kong,
Italy, Korea, Malaysia, Netherlands, Portugal, Scandinavia, Singapore, South
Korea, Spain, Switzerland, Thailand and the United Kingdom. The remaining
markets are being pursued mainly through direct sales efforts.
The Company and certain of its customers have created an active Paradigm(R)
Users Group which discusses product enhancements, future releases and new
features. The users group conducts regularly scheduled conference calls and
holds an annual meeting.
With nearly 100 installed sites, the Company believes it is the leading
systems supplier to the PCB market. Future marketing plans within the PCB market
involve the following:
- Marketing services to large PCB producers who have grown through
acquisitions.
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- Addressing the large concentrations of PCB companies in Taiwan, Japan,
and the emerging markets in China.
FOREIGN OPERATIONS. The Company conducts its foreign operations through its
subsidiaries. The subsidiary's sales and consulting efforts are augmented by
certain strategic alliances with local companies in key market areas. These
companies operate as contracted sales representatives for the Company and
perform specific commissioned services within clearly defined territories.
In the summer of 1991, the Company formed a wholly owned subsidiary, Cimnet
Informationssysteme GmbH in Munich, Germany, to address the requirements of the
European PCB market. Today, the Paradigm(R) system has been fully translated
into German. Currently, Cimnet Informationssysteme GmbH is staffed with a highly
technical, multi-lingual staff capable of installing, training, and supporting
the Company's European customers.
On July 3, 1999, the Company formed an Asian sales and support office based
in Bangalore, India, incorporated as Cimnet Systems India Private Limited. This
office will be the base for future growth within the Pacific Rim. In addition to
providing a direct presence in the Asian market, India offers a highly talented
workforce at a lower cost. Future plans include the potential of expanding
product development capabilities into India.
In November, 1999, the Company formed a wholly owned subsidiary in Hong
Kong, to provide a local presence in the important PCB manufacturing community
in the Far East. The Company has established sales representative relationships
to serve the Far East marketplace and is negotiating a distributorship
arrangement to serve the Japanese market. The Company plans to provide local
professional, technical and installation support to its customers. Paradigm(R)
is currently being translated into Chinese and Japanese.
PATENTS, TRADEMARKS AND LICENSES. The Company's performance and its ability
to compete are dependent, to a significant degree, on its proprietary products.
The Company relies on a combination of copyright, trade secret and trademark
laws, with parallel contractual provisions incorporated into the software
license agreements in place with all customers, as well as proprietary rights
assignment, confidentiality, non-disclosure, and non-compete agreements executed
by employees and consultants as a means of establishing and protecting its
proprietary interests. Paradigm(R), the registered U.S. trademark of Cimnet, was
granted to Cimnet on January 26, 1993. In Germany, the software carries the
registered trademark of Paradeim(R).
In addition to its proprietary software Paradigm(R), the Company is an
authorized reseller of certain other products compatible with Paradigm(R) and
its use. No officer, director or employee of the Company or any of its operating
subsidiaries holds any license or trademark that is critical to the operation of
the Company.
RISK FACTORS. The Common Stock of the Company involves a high degree of
risk and is intended for long term investment. The following specific risk
factors should be read in light of the more complete discussion elsewhere in
this Registration Statement.
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Dependence on One Product. The Company is currently marketing/licensing
only one product, Paradigm(R). In addition to fees collected from licensing
Paradigm(R), the Company also collects fees for support and maintenance,
enhancement, and implementation of the software and training. There is no
assurance that it will be able to successively develop or market any additional
products or that it will be able to continue to successfully market its current
product.
Competition. The business of developing, marketing and licensing
computer software programs is fiercely competitive and entry barriers into this
business are relatively minimal. The vast majority of current and potential
competitors of the Company are better capitalized, have greater name
recognition, and are better staffed than the Company.
No Dividends. The Company intends to retain all working capital for the
growth of the Company and, as a result, has not, and does not intend to, pay any
dividends within the foreseeable future.
Dependence on Current Management. The Company depends upon the current
management for the development and marketing of computer software programs. In
particular, the loss of Mehul J. Dave or P. Balasubramanian would seriously
hamper the operations and continued viability of the Company.
Financial Position of the Company. The Company will have a continuing
need for working capital in the future for the development of new computer
software programs; however, the management of the Company has no definitive
plans at this time for obtaining such working capital.
ITEM 7. DESCRIPTION OF PROPERTY.
The Company is headquartered in approximately 5300 square feet of leased
space at 2301 West 22nd Street, Suite 203, Oak Brook, Illinois. The Company also
leases office space in Munich, Germany, Bangalore, India and Hong Kong.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.
Below are the names, ages, positions with the Company and business
experience for the last five years of the executive officers and directors of
Capri Corp.
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NAME POSITION AGE
---- -------- ---
Mehul J. Dave President and Chairman of the Board of 44
Directors
P. Balasubramanian Executive Vice President, Secretary, 43
Treasurer and Director
David L. Harris Vice President (Cimnet) 57
Robert W. Heller Director 53
Thomas Mueller Director 58
Jason W. Levin Director 41
MEHUL J. DAVE, Director, Chairman of the Board and President of the
Company, from 1992 to present and President and Chief Executive Officer of
Cimnet from 1988 to present. Mr. Dave holds a Masters Degree in Environmental
Systems from Governors State University, a Bachelors Degree in Mechanical
Engineering from Illinois Institute of Technology, and has completed coursework
towards a Ph.D. in Space Physics at the University of Michigan. Mr. Dave is
responsible for the overall operation of the Company including product
development, marketing and sales, financing and accounting and administration.
P. BALASUBRAMANIAN, Director, Executive Vice President, Secretary and
Treasurer of Company, from 1992 to present; Vice President of Software
Engineering of Cimnet, from 1988 to present. Mr. Balasubramanian holds a Masters
Degree in Computer Science from Illinois Institute of Technology and a Bachelors
Degree in Mechanical Engineering from Annamalai University. Mr. Balasubramanian
is responsible for the development staff of software engineers of Cimnet.
DAVID L. HARRIS, Vice President-Marketing, Sales and Services of Cimnet.
Mr. Harris has been employed by the Company since 1998. From 1997 to 1998, Mr.
Harris was a principal and owner of DLH & Associates, a consulting firm to the
semiconductor, PWB and capital equipment industries. From 1995 to 1997, Mr.
Harris was Vice President- Sales , Marketing and Services of Semitool, Inc, a
seller of capital equipment to the semiconductor industry, and from 1983 to
1995, Mr. Harris was a General Manager in WR Grace's photopolymer systems
business. Mr. Harris holds a Bachelor's Degree in Marketing and Economics from
the University of Maryland and a Certificate in Business Management from MIT's
Greater Boston Executive Program.
ROBERT W. HELLER, Director of the Company, September, 1996 to present. Mr.
Heller is currently an independent consultant. From 1998 to 1999, Mr. Heller was
Vice President of Operations at Fieldworks, Inc. From 1996 to 1997, Mr. Heller
was Chief Executive Officer of MiTech R&D Inc., and was Chief Executive Officer
of Advance Circuits Inc. from 1994 to 1995. Mr. Heller holds a Masters Degree in
Industrial Engineering from North Dakota State University and a Bachelors Degree
in Industrial Administration from Purdue.
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THOMAS MUELLER, Director of the Company, 1997 to present. Mr. Mueller has
been Vice President of Finance since 1995 of Help/Systems, a manufacturer of
operations automation software for the IBM AS/400 computer. Mr. Mueller is a
Certified Public Accountant and a member of the American Institute of Certified
Public Accountants and Minnesota Society of Certified Public Accountants. Mr.
Mueller holds a Bachelors Degree in Accounting from the University of Minnesota.
JASON W. LEVIN, Director of the Company, 1997 to present. Mr. Levin has
been a partner in the law firm of Piper Marbury Rudnick & Wolfe, counsel to the
Company, from 1998 to present and a partner in the law firm of Fagel & Haber,
from 1989 to 1998. Mr. Levin is a director of Strube Celery and Vegetable
Company, a corporation engaged in the wholesale distribution of fresh fruits and
vegetables in the Midwestern United States, and a member of the Board of
Managers of the Logan Square Club of the Boys and Girls Club of Chicago. Mr.
Levin holds a Bachelor of Science Degree in Finance and a Juris Doctor degree
from Indiana University.
Each of the Company's directors were appointed to serve as directors on May
6, 1999, and each will hold office until the next annual meeting of
shareholders. No director has resigned since May 6, 1999 and no director has
declined to stand for re-election in 2000. Each of the Company's executive
officers were elected on May 6, 1999, and each will hold office until the next
annual board of directors meeting. The term of office of each director expires
at each annual meeting of shareholders and upon the election and qualification
of his successor. Except for Messrs. Dave, Balasubramanian, and Harris, who are
subject to contracts of employment with the Company, there are no arrangements
with any director or officer regarding any election or appointment to any office
of the Company.
There are no family relationship between any director or executive officer
of the Company. No director, executive officer or significant employee of the
Company, during the prior five years, (i) has filed a petition under the
Bankruptcy Act or any State insolvency law or has had the same filed against
him, or has had a receiver, fiscal agent or similar officer appointed by a court
for the business or property of such person, or any partnership in which he was
a general partner at or within two years before the time of such filing, or any
corporation or business association of which he was an executive officer at or
within two years before the time of such filing; or (ii) has been convicted in a
criminal proceeding.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS.
The following table sets forth (i) the aggregate remuneration of each of
the three highest paid persons who are officers or directors of the Company
during the Company's last fiscal year (the "Named Parties") and (ii) the
aggregate remuneration of all officers and directors of the Company as a group.
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NAME OF INDIVIDUAL OR CAPACITIES IN WHICH AGGREGATE
IDENTITY OF GROUP REMUNERATION WAS RECEIVED REMUNERATION
----------------- ------------------------- ------------
Mehul J. Dave President $242,022
P. Balasubramanian Secretary/Treasurer $177,767
David L. Harris Vice President (Cimnet) $ 57,936
All Officers and Directors as
a Group (6) $479,725
The above table includes all cash remuneration and is presented on an
accrual basis. The Company also pays certain automobile expenses and life
insurance premiums for Messrs. Dave and Balasubramanian. Each of Messrs. Dave,
Balasubramanian and Harris has an employment agreement with the Company which
provides for a variable annual salary and bonus. All outside directors, except
Mr. Levin, receive $1,000 for each regular Board of Directors meeting attended
and $400 for each special Board of Directors Meeting attended.
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS.
(a) The following table sets forth information as to the record ownership
of the Company's Common Stock by the (i) Named Parties, (ii) the officers and
directors as a group and (iii) each person who owns more than 10% or more of
Capri Corp.'s Common Stock.
NAME OF OWNER(1) AMOUNT OWNED PERCENT OF CLASS
------------- ------------ ----------------
Mehul J. Dave 4,745,000 38.6
P. Balasubramanian 1,375,000 11.2
All Officers and
Directors as a Group (6) 6,582,000 53.6
(1) The address of each of Messrs. Dave and Balasubramanian is 2301 West
22nd Street, Suite 203, Oak Brook, Illinois.
(b) The following table sets forth information as to options, warrants and
other rights to purchase Common Stock held by the Named Parties:
AMOUNT OF COMMON
STOCK SUBJECT TO OPTIONS, EXERCISE PRICE
NAME OF OWNER WARRANTS OR RIGHTS PER SHARE
------------- ------------------ ---------
Mehul J. Dave 100,000 $0.044
P. Balasubramanian 150,000 $0.044
David L. Harris 300,000(1) $0.60
(1) 75,000 currently exercisable. The remaining 225,000 options vest in 3
equal annual installments.
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ITEM 11. INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.
Jason W. Levin, a director of the Company, is a partner in the law firm of
Piper Marbury Rudnick & Wolfe, counsel to the Company. With the exception of Mr.
Levin's indirect interest, during the last two years, the Company has not
engaged in any material transaction, and there is no presently proposed
transaction, in which any director, officer or principal security holder of the
Company, any nominee for election as a director of the Company, any director or
officer of any subsidiary of the Company, or any relative or spouse of any of
the foregoing, had or is anticipated to have a direct or indirect material
interest.
ITEM 12. SECURITIES BEING REGISTERED.
Common Stock is the only class of shares of the Company currently
authorized, issued, and outstanding. The following sets forth certain material
terms of the Common Stock.
VOTING RIGHTS. The holder of a share of Common Stock is entitled to one
vote for all purposes. Cumulative voting is not permitted in the election of
directors. Accordingly, the holders of more than 50% of all of the outstanding
shares of Common Stock may elect all of the directors. Significant corporate
transactions such as amendments to the Certificate of Incorporation, mergers,
sale of assets and dissolution or liquidation of the Company requires the
approval by the affirmative vote of the holders of at least a majority the
outstanding shares of Common Stock. Other matters to be voted upon by the
holders of Common Stock normally require the affirmative vote of a majority of
the shares present at the particular shareholders meeting.
DIVIDEND RIGHTS. The holder of a share of Common Stock is entitled to
participate pro rata in dividends paid by the Company, which may be declared,
from time to time, by the Board of Directors out of funds of the Company legally
available for the payment of dividends. The declaration in the future of any
cash or stock dividends will be at the discretion of the Board of Directors and
will depend upon the earnings, capital requirements, and financial position of
the Company, general economic conditions, and other pertinent factors. There is
no assurance that any dividends will be paid in the near future as the Company
has no present plans to pay dividends. Receipt of dividends may also be subject
to claims of any preferred stock issued by Capri Corp. Capri Corp. is presently
not authorized to issue preferred stock and has no present plans to obtain such
authorization.
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LIQUIDATION RIGHTS. Each share of Common Stock shares pro rata with each
other share of Common Stock in any distribution in any liquidation of the
Company. Such rights will be subject to the prior claims of creditors of the
Company.
PREEMPTIVE RIGHTS, CONVERSION RIGHTS, REDEMPTION PROVISIONS, SINKING FUND
PROVISION AND LIABILITY TO FURTHER CALLS AND ASSESSMENTS. There are no
preemptive or conversion rights, redemption provisions, or sinking fund
provisions relating to the Common Stock. All currently outstanding shares of
Common Stock are fully paid and nonassessable. The rights of holders of the
existing class of Common Stock may in the future become subject to prior and
superior rights and preferences in the event the Board of Directors establishes
one or more classes or series of capital stock of the Company. The Board of
Directors has no present plan to establish any such class or series.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
Since October 8, 1999, the Common Stock has been quoted on the
electronic "pink sheets" of the National Quotation Bureau under the symbol
"CAPI". From September 20, 1991 through October 7, 1999, the common stock was
quoted on the NASD OTC Bulletin Board, also under the symbol "CAPI". The
following table provides the quarterly high and low bids per share of Common
Stock reported on the pink sheets or the OTC Bulletin Board, as applicable. The
following quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions. No
distributions have been declared on the Common Stock.
The Company has a June 30 fiscal year end.
HIGH LOW
---- ---
FISCAL 1998
-----------
First Quarter $.31 $.23
Second Quarter .31 .24
Third Quarter .27 .13
Fourth Quarter .31 .15
HIGH LOW
---- ---
FISCAL 1999
-----------
First Quarter $.19 $.13
Second Quarter .40 .16
Third Quarter .70 .40
Fourth Quarter .69 .50
HIGH LOW
---- ---
FISCAL 2000
-----------
First Quarter $.94 $.49
Second Quarter (through December 9, 1999) .50 .25
As of October 31, 1999, the Company's transfer agent reported 316
record holders of the Common Stock.
ITEM 2. LEGAL PROCEEDINGS.
In September, 1999, the Company's wholly-owned subsidiary, Cimnet
Systems, Inc., received a letter on behalf of Cimnet, Inc., alleging Cimnet's
use of its tradename, Cimnet Systems, Inc., appeared to present a source of harm
to Cimnet, Inc. While Cimnet is still investigating the allegation of Cimnet,
Inc., Cimnet believes it has superior rights in its tradename, Cimnet Systems,
Inc., to those rights, if any, of Cimnet, Inc. To the Company's knowledge, no
legal process has been instituted by Cimnet, Inc. against Cimnet with respect to
this matter.
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ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three year period, the following unregistered sales of
Common Stock were made by the Company. The following table sets forth the
individuals, the date purchased, and the number of shares. All transactions were
for exercised stock options. The Company relied on the exemptions provided by
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act")
and Rule 701 promulgated under the Securities Act in making these unregistered
sales.
DATE OF NUMBER EXERCISE PRICE
NAME EXERCISE OF SHARES PER SHARE
---- -------- --------- ---------
John Kim July, 1996 150,000 $0.04
Harish Padukone January, 1997 20,000 $0.04
Bryce Crapse August, 1997 30,000 $0.35
Harish Padukone January, 1999 10,000 $0.04
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 302A.521 of the Minnesota Statutes permits indemnification of
officers and directors of domestic or foreign corporations under certain
circumstances and subject to certain limitations. Capri Corp.'s Certificate of
Incorporation and Bylaws contain provisions for indemnification of the Company's
directors, officers, and employees consistent with the provisions of Section
302A.521 of the Minnesota Statutes.
14
<PAGE> 16
PART F/S
The following financial statements of the Company are included herein:
AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
(a) Independent Auditor's Report
(b) Consolidated Balance Sheets
(c) Consolidated Statements of Operations
(d) Consolidated Statements of Stockholders' Equity
(e) Consolidated Statements of Cash Flows
(f) Notes to Consolidated Financial Statements
UNAUDITED INTERIM FINANCIAL STATEMENTS
(a) Consolidated Balance Sheet as of September 30, 1999
(b) Consolidated Statements of Income for the Three Months ended September 30,
1999 and 1998
(c) Consolidated Statements of Stockholders' Equity for the Three Months ended
September 30, 1999 and 1998
(d) Consolidated Statements of Cash Flows for the Three Months ended September
30, 1999 and 1998
15
<PAGE> 17
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Capri Corp.
Oak Brook, Illinois
We have audited the consolidated balance sheets of Capri Corp. and Subsidiary as
of June 30, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Capri Corp. and
Subsidiary as of June 30, 1999 and 1998, and the results of their operations and
their cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Klesman, Halper & Co., P.C.
August 20, 1999
16
<PAGE> 18
Capri Corp. and Subsidiary
Consolidated Balance Sheets
June 30, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,769,628 $ 1,225,667
Trade receivables, net of allowance
for doubtful accounts of $192,639
in 1999 and $123,244 in 1998 2,083,508 1,770,384
Other Current Assets 33,671 28,031
----------- -----------
Total current assets 3,886,807 3,024,082
Fixed assets, net 293,415 270,019
Unamortized software development costs 638,288 442,000
Other assets 98,000 --
----------- -----------
Total assets $ 4,916,510 $ 3,736,101
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Current liabilities:
Accounts payable $ 8,339 $ 59,271
Accrued expenses 458,964 214,002
Customer advances and deferred sales 204,000 229,056
Other current liabilities 516,469 385,581
----------- -----------
Total current liabilities 1,187,772 887,910
Non-current liabilities:
Deferred income taxes 207,534 154,877
----------- -----------
Total liabilities 1,395,306 1,042,787
----------- -----------
Stockholders' equity:
Common stock 122,853 122,753
Additional paid-in capital 1,197,538 1,197,238
Retained earnings 2,269,577 1,425,376
Foreign currency translation (68,764) (52,053)
----------- -----------
Total stockholders' equity 3,521,204 2,693,314
----------- -----------
Total liabilities and
stockholders' equity $ 4,916,510 $ 3,736,101
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
17
<PAGE> 19
Capri Corp. and Subsidiary
Consolidated Statements of Operations
Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Sales revenue:
Hardware $ 198,240 $ 144,245
Software 3,050,175 1,409,078
Software maintenance 1,314,761 1,083,741
Other 816,897 359,145
----------- -----------
Total sales revenue 5,380,073 2,996,209
Cost of sales 1,940,882 1,190,867
----------- -----------
Gross profit 3,439,191 1,805,342
Selling and marketing expenses 695,433 532,974
General and administrative expenses 1,419,370 846,091
----------- -----------
Operating income 1,324,388 426,277
----------- -----------
Other income (expense):
Interest income 81,194 66,658
Other income (expense) (19,439) 7,292
----------- -----------
Total other income (expense) 61,755 73,950
----------- -----------
Income before income taxes 1,386,143 500,227
Income taxes 541,942 208,051
----------- -----------
Net income $ 844,201 $ 292,176
=========== ===========
Earnings Per Share:
Basic $ 0.07 $ 0.02
=========== ===========
Diluted $ 0.06 $ 0.02
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
18
<PAGE> 20
Capri Corp. and Subsidiary
Consolidated Statements of Stockholders' Equity
Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Stock
------------------- Additional Foreign
Common Paid-in Retained Currency
Shares Amount Capital Earnings Translation
------ ------ ------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance, June 30,
1997 12,225,257 $ 122,253 $1,186,438 $1,133,200 $ (40,379)
Net income -- -- -- 292,176 --
Translation ad-
justment re-
sulting from
exchange rate
changes and
intercompany
transactions -- -- -- -- (11,674)
Common stock
issued 50,000 500 10,800 -- --
---------- ---------- ---------- ---------- ----------
Balance, June 30,
1998 12,275,257 122,753 1,197,238 1,425,376 (52,053)
Net income -- -- -- 844,201 --
Translation ad-
justment re-
sulting from
exchange rate
changes and
intercompany
transactions -- -- -- -- (16,711)
Common stock
issued 10,000 100 300 -- --
---------- ---------- ---------- ---------- ----------
Balance, June 30,
1999 12,285,257 $ 122,853 $1,197,538 $2,269,577 $ (68,764)
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
19
<PAGE> 21
Capri Corp. and Subsidiary
Consolidated Statements of Cash Flows
Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 844,201 $ 292,176
----------- -----------
Adjustments to reconcile net income
to net cash provided by (used in)
Operating activities:
Depreciation and amortization 294,682 213,121
Provision for bad debts 123,869 159,198
Loss on sale or disposal of equipment 4,626 1,298
Foreign currency translation
adjustment (15,932) (11,071)
(Increase) decrease in:
Receivables (436,993) (842,594)
Unamortized software development
costs (409,000) (347,000)
Other current assets (10,640) (19,174)
Other assets (60,000) --
Increase (decrease) in:
Accounts payable (50,932) (49,480)
Deferred sales (25,056) 103,556
Accrued expenses 244,962 42,381
Other current liabilities 6,201 3,703
Accrued and deferred income
taxes payable 176,942 70,154
----------- -----------
Total adjustments (157,271) (675,908)
----------- -----------
Net cash provided by (used in)
operating activities 686,930 (383,732)
----------- -----------
Cash flows from investing activities:
Advance to India company (33,000) --
Purchase of fixed assets (110,369) (87,877)
----------- -----------
Net cash used in investing
activities (143,369) (87,877)
----------- -----------
Cash flows from financing activities:
Issuance of common stock 400 11,300
----------- -----------
Net cash provided by financing
activities 400 11,300
----------- -----------
Net increase (decrease) in cash
and cash equivalents 543,961 (460,309)
Cash and cash equivalents, beginning
of year 1,225,667 1,685,976
----------- -----------
Cash and cash equivalents, end of
year $ 1,769,628 $ 1,225,667
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
20
<PAGE> 22
Capri Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended June 30, 1999 and 1998
Note 1. Summary of significant accounting policies
Principles of consolidation
The consolidated financial statements include the accounts of
Capri Corp. (the "Company") and its subsidiary, after eliminating
material intercompany balances and transactions. The subsidiary
consists of Cimnet Systems, Inc. and its wholly-owned foreign
subsidiary, Cimnet Informationssysteme GmbH, a German
corporation.
Basis of accounting
The Company recognizes income and expense on the accrual basis
for financial reporting purposes. Revenue from the development
and sale of computer software license rights is recognized as the
software is delivered to the particular customer's site. Revenue
from the sale of computer hardware and other services is
recognized at the time of delivery of the products and services.
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles 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 consolidated
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from the estimates.
Industry operations
The Company's subsidiaries are in the business of developing
computer software and then selling the license rights for the use
of its software product. In addition, the subsidiaries distribute
computer hardware and provide technical support and training for
their software product. The computer software is primarily
designed for companies engaged in the manufacture of printed
circuit boards. The subsidiaries grant credit to their customers
who are located throughout the world.
Cash and cash equivalents
For purposes of the consolidated balance sheets and consolidated
statements of cash flows, the Company considers demand deposits
and eurodollar overnight and time deposits with maturities of
three months or less to be cash and cash equivalents.
At June 30, 1999, cash and cash equivalent deposits exceeded
federally insured limits by approximately $1,500,000. In
addition, approximately $118,000 of the balance of cash and cash
equivalents is held in foreign bank accounts.
Trade receivables
An allowance for doubtful accounts is established, through a
provision charged to expense, when management believes that the
collectibility of an account receivable is unlikely.
21
<PAGE> 23
Capri Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended June 30, 1999 and 1998
Note 1. Summary of significant accounting policies (continued)
Software development costs
The Company capitalizes certain personnel and related costs that
are incurred in the development of new software components for
its computer software products. The Company's policy is to
amortize capitalized software costs by the greater of (a) the
ratio that current gross revenues for a product bear to the total
of current and anticipated future gross revenues for that
product, or (b) the straight-line method over the remaining
estimated economic life of the product including the period being
reported upon. It is reasonably possible that the estimates of
anticipated future gross revenues, the remaining estimated
economic life of the product, or both, will be reduced
significantly in the near term. As a result, the carrying amount
of the capitalized software costs may be reduced materially in
the near term.
During 1999 and 1998, the amortization of software development
costs was approximately $213,000 and $141,000, respectively, and
was included in cost of sales in the accompanying consolidated
statements of operations.
In addition, research and development costs amounting to
approximately $380,000 and $227,000 in 1999 and 1998,
respectively, have been included in cost of sales in the
accompanying consolidated statements of operations.
Fixed assets, net
Fixed assets are stated at cost less an allowance for
depreciation, which is computed using the double-declining
balance and straight-line methods for equipment, and the
straight-line method for purchased computer software, over the
estimated useful lives of the assets as indicated in the
following tabulation:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Office equipment 5
Computer hardware 5
Computer software 3-4
Office furniture and fixtures 7
</TABLE>
Income taxes
Income taxes are provided for the tax effects of the transactions
reported in the consolidated financial statements, and consist of
taxes currently due plus deferred taxes related to differences
between financial and income tax reporting. The deferred tax
assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or
settled.
22
<PAGE> 24
Capri Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended June 30, 1999 and 1998
Note 1. Summary of significant accounting policies (continued)
Foreign currency translation
Assets and liabilities of the foreign subsidiary are translated at the
current exchange rate, and income statement items are translated at the
average exchange rate. Resulting translation adjustments are recorded
as a separate component of stockholders' equity.
Note 2. Fixed assets, net
Fixed assets at June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Office equipment $ 80,437 $ 74,946
Computer hardware and software 355,197 481,278
Office furniture and fixtures 110,018 110,018
--------- ---------
545,652 666,242
Accumulated depreciation (252,237) (396,223)
--------- ---------
$ 293,415 $ 270,019
========= =========
</TABLE>
Depreciation and amortization expense was $81,970 and $71,793 for the
years ended June 30, 1999 and 1998, respectively.
Note 3. Income taxes
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Income tax expense (benefit):
Current:
Federal $ 374,214 $ (62,001)
State 86,768 (11,033)
Foreign (5,390) --
Deferred:
Federal 69,870 232,264
State 16,480 48,821
--------- ---------
Total income taxes $ 541,942 $ 208,051
========= =========
</TABLE>
Deferred income taxes are a result of the Company's recognition of
income and expense on the accrual basis for financial reporting
purposes and on the cash basis for income tax reporting purposes, and
differences related to the depreciation methods and lives used for
financial reporting and income tax reporting.
23
<PAGE> 25
Capri Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended June 30, 1999 and 1998
Note 3. Income taxes (continued)
The income tax provision differs from the expense that would result
from applying federal statutory rates to income before income taxes
primarily because of state income taxes, net of the federal tax
benefit.
The net deferred tax liability in the accompanying consolidated balance
sheets includes the following components:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax liabilities $(1,030,308) $ (872,438)
Deferred tax assets 286,321 214,800
----------- -----------
Net deferred tax liability $ (743,987) $ (657,638)
=========== ===========
</TABLE>
Note 4. Stockholders' equity
The Company's certificate of incorporation authorizes 20,000,000 shares
of common stock and 10,000,000 shares of undesignated stock, each with
a par value of $.01. As of June 30, 1999 and 1998, there were
12,285,257 and 12,275,257 shares of common stock issued, respectively.
There were no shares of undesignated stock issued as of June 30, 1999
and 1998.
Note 5. Operating leases
The Company has entered into operating leases for its office
facilities, and these leases are scheduled to expire in the coming
fiscal year. Total rental expense for the operating leases was $110,821
and $98,215 for the years ended June 30, 1999 and 1998, respectively.
There is approximately $78,000 of minimum rental payments remaining in
the next fiscal year under these operating leases.
Note 6. Profit sharing plan
Cimnet Systems, Inc. has a qualified profit sharing retirement plan
with a 401(k) deferred compensation provision for all of its eligible
U.S. employees. The 401(k) portion of the Plan calls for employer
contributions of 50% of the amounts contributed by the employee,
limited to 3% of each eligible employee's wages. The Plan also provides
for discretionary employer profit sharing contributions as determined
annually by the Company's Board of Directors. Contributions charged to
operations for the Plan amounted to approximately $41,000 for 1999 and
$36,000 for 1998.
24
<PAGE> 26
Capri Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended June 30, 1999 and 1998
Note 7. Major customer
For the year ended June 30, 1999, sales to a major customer amounting
to more than 10% of total sales was $883,000. The accounts receivable
balance for the major customer was $308,000 as of June 30, 1999. During
1998, sales to major customers were $380,000 and accounts receivable
balances to major customers were $513,000 as of June 30, 1998.
Note 8. Other cash flow information
Income taxes paid during the years ended June 30, 1999 and 1998 were
$365,000 and $137,851, respectively. There were no cash payments for
interest during 1999 or 1998.
Note 9. Common stock option plans
The Company adopted incentive and nonqualified stock option plans for
certain directors and employees beginning on October 1, 1995. The
incentive stock option plan is intended to qualify under Section 422 of
the Internal Revenue Code. Under the terms of the plan, options to
purchase common stock are granted at not less than the estimated fair
market value at the date of the grant and are exercisable during
specified future periods.
A summary of the stock option transactions are as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------- ---------------------
Weighted Weighted
Average Average
Number of Price Number of Price
Shares Per Share Shares Per Share
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Balance, beginning
of year 635,000 $ .1319 639,000 $ .1236
Granted 135,834 .3699 46,000 .3500
Exercised (10,000) .4000 (50,000) .2260
Canceled or
expired - -
------- -------
Balance, end of
year 760,834 .1761 635,000 .1319
======= =======
</TABLE>
As of June 30, 1999, there were 641,834 shares which are exercisable.
The expiration dates for these stock options range from October, 2000
through April, 2004.
25
<PAGE> 27
Capri Corp. and Subsidiary
Notes to Consolidated Financial Statements
Years Ended June 30, 1999 and 1998
Note 10. Available line of credit
At June 30, 1999, the Company had $150,000 of credit available under a
line of credit arrangement. Any amounts drawn against this line of
credit would require monthly payments of interest on the unpaid balance
at a rate of one percent over the bank's prime lending rate. The line
of credit is collateralized by the cash and cash equivalents of Cimnet
Systems, Inc., the Company's subsidiary, and is due on demand.
Note 11. Earnings per share
A reconciliation of net income and shares outstanding relating to the
calculation of basic and diluted earnings per share follows:
<TABLE>
<CAPTION>
Per-share
Income Shares amount
------ ------ ---------
<S> <C> <C> <C>
For the year ended June 30, 1999:
Basic earnings per share $ 844,201 12,279,449 $ 0.07
=========
Effect of Dilutive Securities:
Stock Option Plan -- 766,642
---------- ----------
Diluted earnings per share $ 844,201 13,046,091 $ 0.06
========== ========== =========
For the year ended June 30, 1998:
Basic earnings per share $ 292,176 12,257,065 $ 0.02
=========
Effect of Dilutive Securities:
Stock Option Plan -- 653,192
---------- ----------
Diluted earnings per share $ 292,176 12,910,257 $ 0.02
========== ========== =========
</TABLE>
Note 12. Subsequent event
On July 3, 1999, the Company's subsidiary, acquired all the common
stock of a company with operations similar to the Company's subsidiary
and located in Bangalore, India. The purchase price of the Company's
common stock is immaterial to the consolidated financial statements.
During the year ended June 30, 1999, in anticipation of this
acquisition, the Company's subsidiary provided working capital to the
India operation totaling $33,000.
26
<PAGE> 28
CAPRI CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet
September 30, 1999
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,528,750
Accounts receivable, net 1,980,775
Other current assets 35,345
-----------
Total current assets 3,544,870
Unamortized software costs 681,788
Fixed assets, net 359,509
Other assets 65,000
-----------
Total assets $ 4,651,167
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current Liabilities:
Accounts payable and accrued expenses $ 340,386
Deferred sales 87,219
Accrued and deferred income taxes 343,207
-----------
Total current liabilities 770,812
Non-current liabilities:
Accrued and deferred income taxes 274,987
-----------
Total liabilities 1,045,799
-----------
Stockholders' equity:
Common stock 122,853
Additional paid in capital 1,197,538
Retained earnings 2,342,066
Accumulated other comprehensive income:
Foreign currency translation adjustments (57,089)
-----------
Total stockholders' equity 3,605,368
-----------
Total liabilities and
stockholders' equity $ 4,651,167
===========
27
<PAGE> 29
CAPRI CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
---------- ----------
REVENUE:
Software sales $ 382,123 $ 786,839
Software maintenance 370,819 293,273
Other 378,853 240,250
---------- ----------
Total revenues 1,131,795 1,320,362
COST OF REVENUES 437,551 374,621
---------- ----------
Gross profit 694,244 945,741
OTHER OPERATING COST:
Research and development 87,626 85,000
Selling and marketing 218,353 135,673
General and administrative 319,489 272,907
---------- ----------
Operating income 68,776 452,161
---------- ----------
OTHER INCOME (EXPENSE):
Interest income 20,751 18,063
Other income/expense (38) (213)
---------- ----------
Total income (expense) 20,713 17,850
---------- ----------
Net income before income taxes 89,489 470,011
INCOME TAX EXPENSE 17,000 180,000
---------- ----------
Net income $ 72,489 $ 290,011
========== ==========
Earnings per share:
Basic $ 0.01 $ 0.02
========== ==========
Diluted $ 0.01 $ 0.02
========== ==========
28
<PAGE> 30
CAPRI CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Foreign
Additional currency
Common paid-in Retained translation
Total stock capital earnings adjustments
----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1999 $ 3,521,204 $ 122,853 $1,197,538 $ 2,269,577 $ (68,764)
Comprehensive income:
Net income 72,489 - - 72,489 -
Other comprehensive income:
Foreign currency translation adjustment 11,675 - - - 11,675
----------- ---------- ---------- ----------- -----------
Total comprehensive income 84,164 - - 72,489 11,675
----------- ---------- ---------- ----------- -----------
Balance, September 30, 1999 $ 3,605,368 $ 122,853 $1,197,538 $ 2,342,066 $ (57,089)
=========== ========== ========== =========== ===========
Balance, June 30, 1998 $ 2,693,314 $ 122,753 $1,197,238 $ 1,425,376 $ (52,053)
Comprehensive income:
Net income 290,011 - - 290,011 -
Other comprehensive income:
Foreign currency translation adjustment 30,962 - - - 30,962
----------- ---------- ---------- ----------- -----------
Total comprehensive income 320,973 - - 290,011 30,962
----------- ---------- ---------- ----------- -----------
Balance, September 30, 1998 $ 3,014,287 $ 122,753 $1,197,238 $ 1,715,387 $ (21,091)
=========== ========== ========== =========== ===========
</TABLE>
29
<PAGE> 31
CAPRI CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
For Three Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 72,489 $ 290,011
----------- -----------
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 49,438 47,145
Provision for bad debt 6,000 6,000
Foreign currency translation
adjustment 11,675 30,962
(Increase) decrease in:
Accounts receivables 96,733 75,402
Unamortized software
development costs (75,000) (70,000)
Other current assets (2,056) (23,071)
Increase (decrease) in:
Accounts payable and accrued expenses (114,644) 150,308
Deferred sales (116,781) (229,056)
Accrued and deferred income
taxes payable (98,000) 181,792
----------- -----------
Total adjustments (242,635) 169,482
----------- -----------
Net cash provided by
(used in) operating activities (170,146) 459,493
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (70,732) (30,430)
----------- -----------
Net cash used in investing activities (70,732) (30,430)
----------- -----------
Net increase (decrease) in cash
and cash equivalents (240,878) 429,063
CASH AND CASH EQUIVALENTS:
Beginning of period 1,769,628 1,225,667
----------- -----------
End of period $ 1,528,750 $ 1,654,730
=========== ===========
</TABLE>
30
<PAGE> 32
PART III
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 Articles of Incorporation of Capri Corp.*
2.2 Bylaws of Capri Corp.*
3.1 Specimen Certificate for Common Stock.*
6.1 Stock Option Plan of Capri Corp.*
6.2 Mehul J. Dave Employment Agreement*
6.3 P. Balasubramanian Employment Agreement*
6.4 David L. Harris Employment Agreement*
10.1 Consent of Klesman, Halper & Co., P.C.
27.1 Financial Data Schedule
- -------------------
* To be filed by amendment.
31
<PAGE> 33
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
CAPRI CORP.
(Registrant)
Date: December 13, 1999 By: /s/ Mehul J. Dave
------------------------------------
Mehul J. Dave
Chairman of the Board, President
and Chief Executive Officer
32
<PAGE> 1
EXHIBIT 10.1
CONSENT OF ACCOUNTANT
We hereby consent to the use of our report dated August 20, 1999, on
the financial statements of Capri Corp. and Subsidiary for the years ended June
30, 1999 and 1998. Such report is being included in a Registration Statement to
be filed by Capri Corp. on Form 10-SB.
/s/ Klesman, Halper & Co., P.C.
Palos Heights, Illinois
December 8, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-2000
<PERIOD-START> JUL-01-1998 JUL-01-1999
<PERIOD-END> JUN-30-1999 SEP-30-1999
<CASH> 1,769,628 1,528,750
<SECURITIES> 0 0
<RECEIVABLES> 2,276,147 2,181,098
<ALLOWANCES> 192,639 200,323
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,886,807 3,544,870
<PP&E> 545,652 629,684
<DEPRECIATION> 252,237 270,175
<TOTAL-ASSETS> 4,916,510 4,651,167
<CURRENT-LIABILITIES> 1,187,772 770,812
<BONDS> 0 0
0 0
0 0
<COMMON> 122,853 122,853
<OTHER-SE> 3,398,351 3,482,515
<TOTAL-LIABILITY-AND-EQUITY> 4,916,510 4,651,167
<SALES> 198,240 73,313
<TOTAL-REVENUES> 5,380,073 1,131,795
<CGS> 156,860 63,829
<TOTAL-COSTS> 1,560,160 437,551
<OTHER-EXPENSES> 380,722 87,626
<LOSS-PROVISION> 123,869 6,000
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 1,386,143 89,489
<INCOME-TAX> 541,942 17,000
<INCOME-CONTINUING> 844,201 72,489
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 844,201 72,489
<EPS-BASIC> 0.07 0.01
<EPS-DILUTED> 0.06 0.01
</TABLE>
