<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period ____________ to ___________
Commission File Number 0-21892
PINNACLE MICRO, INC.
(Exact name of the registrant as specified in its charter)
Delaware 33-0238363
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19 Technology Drive, Irvine, California 92718
(Address of principal executive offices)
714/789-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X.
---- ----
As of May 13, 1996, there were outstanding 7,916,550 shares of the Registrant's
Common Stock.
Page 1 of 13 Pages
Exhibit Index appears on page 12
<PAGE> 2
PINNACLE MICRO, INC.
INDEX
Part I. Financial Information
<TABLE>
<S> <C>
Item 1. Financial Statements
Condensed Balance Sheets at March 30, 1996
and December 30, 1995 3
Condensed Statements of Operations for the thirteen
weeks ended March 30, 1996 and April 1, 1995 4
Condensed Statements of Cash Flows for the thirteen
weeks ended March 30, 1996 and April 1, 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS:
PINNACLE MICRO, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 30, December 30,
1996 1995
--------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,812,000 $ 3,606,000
Accounts receivable, net 12,089,000 11,354,000
Income taxes receivable 999,000 999,000
Inventories 13,733,000 11,413,000
Prepaid expenses and other current assets 1,114,000 961,000
Deferred income taxes 1,058,000 1,058,000
------------ ------------
Total current assets 32,805,000 29,391,000
Furniture and equipment, net 2,362,000 2,098,000
Deferred income taxes 213,000 213,000
Other assets 446,000 303,000
------------ ------------
Total assets $ 35,826,000 $ 32,005,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 15,214,000 $ 11,644,000
Accrued expenses 1,590,000 1,244,000
Payroll related liabilities 1,120,000 956,000
Note payable to bank and current
portion of long-term debt 3,781,000 6,000
------------ ------------
Total current liabilities 21,705,000 13,850,000
Long-term debt, less current portion 6,000 14,000
Accrued litigation settlement 1,400,000 1,400,000
Commitments and contingencies
Stockholders' equity:
Common stock 8,000 8,000
Additional paid-in capital 16,158,000 16,158,000
Retained earnings (3,140,000) 775,000
Foreign currency translation adjustment (311,000) (200,000)
------------ ------------
Total stockholders' equity 12,715,000 16,741,000
------------ ------------
Total liabilities and stockholders' equity $ 35,826,000 $ 32,005,000
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
PINNACLE MICRO, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirteen Weeks Ended
March 30, 1996 April 1, 1995
-------------- -------------
<S> <C> <C>
Net sales $ 17,434,000 $ 20,185,000
Cost of sales 14,306,000 14,501,000
------------ ------------
Gross profit 3,128,000 5,684,000
------------ ------------
Operating expenses:
Selling, general and administrative 5,252,000 4,692,000
Research and development 1,592,000 789,000
Nonrecurring charges 164,000 225,000
------------ ------------
Total operating expenses 7,008,000 5,706,000
------------ ------------
Operating loss (3,880,000) (22,000)
Interest income (expense) (32,000) 41,000
------------ ------------
Income (loss) before income taxes (3,912,000) 19,000
Income tax expense 3,000 7,000
------------ ------------
Net income (loss) $ (3,915,000) $ 12,000
============ ============
Net income (loss) per share $ (0.50) $ 0.00
============ ============
Weighted average common shares outstanding 7,868,000 7,925,000
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
PINNACLE MICRO, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirteen Weeks Ended
March 30, 1996 April 1, 1995
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(3,915,000) $ 12,000
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 328,000 217,000
Provision for doubtful accounts 220,000 77,000
Provision for product returns and price protection 406,000 7,000
Provision for inventory obsolescence 338,000 4,000
Deferred compensation recognized -- 4,000
Changes in operating assets and liabilities:
Accounts receivable (1,361,000) (2,710,000)
Income taxes receivable -- (73,000)
Inventories (2,658,000) (907,000)
Prepaid expenses and other current assets (153,000) (141,000)
Other assets (167,000) (173,000)
Accounts payable and accrued expenses 3,833,000 6,567,000
Payroll related liabilities 164,000 62,000
Income taxes payable -- (294,000)
----------- -----------
Net cash provided by (used in) operating activities (2,965,000) 2,652,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of short-term investments -- 1,235,000
Purchase of furniture and equipment (568,000) (190,000)
----------- -----------
Net cash provided by (used in) investing activities (568,000) 1,045,000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable to bank 3,775,000 --
Principal payments on note payable to bank -- (1,400,000)
Principal payments on long-term debt (8,000) (11,000)
Proceeds from exercise of stock options -- 2,000
Proceeds from issuance of stock through
the employee stock purchase plan -- 62,000
----------- -----------
Net cash provided by (used in) financing activities 3,767,000 (1,347,000)
----------- -----------
Effect of exchange rate changes on cash (28,000) 5,000
----------- -----------
Increase in cash and cash equivalents 206,000 2,355,000
Cash and cash equivalents at beginning of period 3,606,000 4,866,000
----------- -----------
Cash and cash equivalents at end of period $ 3,812,000 $ 7,221,000
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 36,000 $ 9,000
=========== ===========
Income taxes $ -- $ 375,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
PINNACLE MICRO. INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 30, 1996
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Period Accounting Policies
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles.
Certain information normally included in annual financial statements
prepared in accordance with generally accepted accounting principles
has been condensed or omitted pursuant to the rules and regulations of
the Securities and Exchange Commission, and these financial statements
should be read in conjunction with the Company's Form 10-K for the year
ended December 30, 1995. In the opinion of management, the accompanying
condensed financial statements reflect all material adjustments which
are necessary for a fair presentation of the financial position and
results of operations and cash flows as of and for the thirteen weeks
ended March 30, 1996 and April 1, 1995.
Revenue Recognition
The Company recognizes product sales revenue at the time of shipment
and records a reserve for estimated sales returns and price
adjustments. The Company has agreements with its resellers which, under
certain circumstances, provide for stock rotation for slow-moving items
and price protection for inventories held by resellers at the time of
published price reductions.
Foreign Currency Transactions
Gains and losses from foreign currency transactions are included in
operating results, in selling, general and administrative expenses.
Transaction gains increased operating income in the thirteen weeks
ended March 30, 1996 by approximately $48,000. Transaction losses
decreased operating income in the thirteen weeks ended April 1, 1995 by
approximately $585,000. Losses resulted from the strength in the
Japanese Yen in relationship to the U.S. dollar, while gains resulted
from weakness in the Japanese Yen in relationship to the U.S. dollar.
6
<PAGE> 7
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 30, December 30,
1996 1995
---- ----
<S> <C> <C>
Components and work-in-process $12,444,000 $ 9,522,000
Finished goods 1,289,000 1,891,000
----------- -----------
$13,733,000 $11,413,000
----------- -----------
</TABLE>
3. INCOME TAXES
The Company estimated an effective tax rate of 38.5% for the thirteen
weeks ended April 1, 1995. The Company did not accrue a tax benefit for
the operating loss incurred in the thirteen week period ended March 30,
1996, as it believes it will incur additional operating losses in the
foreseeable future which may reduce the likelihood that such benefits
could be realized.
4. CONTINGENCIES
The Company and members of its senior management have been the subject
of an investigation by the Securities and Exchange Commission (the
"SEC") relating principally to the restatement of the Company's
previously-reported financial results. The Company and its management
cooperated fully with the investigation.
The resignation of the Company's prior independent public accountants
on February 20, 1996, led to additional inquiries by the SEC. These
inquiries related principally to the Company's accounting for
expenditures to design and develop components incorporated into certain
of the Company's products. The Company continues to cooperate fully
with the SEC. The Company expects to incur significant legal costs
related to these investigations in 1996.
On March 15, 1996, a complaint was filed against the Company and
certain of its officers and directors in a securities class action
lawsuit which alleges that Company management engaged in improper
accounting practices and made certain false and misleading statements.
The complaint was filed in the United States District Court for the
Central District of California under the case name Wills, Cohen, et al.
v. William Blum et al., Case No. SACV96-261GLT. The ultimate outcome
of this matter cannot presently be determined. Accordingly, no
provision for any liability that may result has been made in the
accompanying financial statements. However, any adverse determination
with respect to the pending lawsuit could have a material adverse
effect on the Company's financial statements. The Company expects to
incur significant legal costs relating to this suit in 1996.
The Company is also subject to other legal proceedings and claims which
arise in the normal course of business. While the outcome of these
proceedings cannot be predicted with certainty, the Company does not
believe that the outcome of these other legal matters will have a
material adverse effect on the Company's financial statements.
7
<PAGE> 8
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANINGS
OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934. ACTUAL RESULTS AND EVENTS COULD
DIFFER MATERIALLY FROM THOSE PROJECTED AS A RESULT OF THE RISK
FACTORS SET FORTH IN EACH SECTION OF THIS REPORT.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company's quarterly operating results can fluctuate significantly depending
on factors such as timing of product introductions by the Company and its
competitors, market acceptance of new products and enhanced versions of the
Company's existing products, changes in pricing policies by the Company and its
competitors, currency fluctuations and the timing of expenditures on
advertising, promotion and research and experimentation.
In addition, the Company's component purchases, production and spending levels
are based upon forecasted demand for the Company's products. Accordingly,
any inaccuracy in forecasting could adversely affect the Company's results of
operations. Demand for the Company's products could be adversely affected by a
slowdown in the overall demand for computer systems or data storage products.
Further, as is common in many high technology companies, the Company's shipments
tend to be disproportionately higher in the latter part of each quarter. The
Company has historically experienced an increase in the number of orders and
shipments in the latter part of each calendar quarter and the Company expects
this pattern to continue in the future. This pattern was seen in the first
quarter. The Company's failure to receive anticipated orders or to complete
shipments in the latter part of a quarter could have a material adverse
effect on the Company's results of operations for that quarter. Past results
are not necessarily indicative of future performance for any particular period.
The Company continues to face competition from other, much larger, magnetic and
optical storage device developers, including Fujitsu, Sony and Philips. These
competitors have much larger R&D budgets and staffs, much greater engineering
and manufacturing experience, and may be able to bring products to market that
force the Company to reduce its prices in order to remain competitive. Such
price competition would likely have the effect of reducing the Company's
margins, thereby making it more difficult for the Company to maintain or
increase its revenues and consequently to achieve a profit.
Net Sales
Net sales were $20,185,000 and $17,434,000 for the thirteen weeks ended April 1,
1995 and March 30, 1996, respectively, representing a decrease of approximately
14%. This decrease is primarily attributable to decreased unit sales of the
Sierra and Tahoe products which are nearing the end of their product lives, and
reduced unit sales price for CD-R products.
Gross Profit
Gross profit decreased from $5,684,000 for the thirteen weeks ended April 1,
1995, to $3,128,000 for the thirteen weeks ended March 30, 1996, and decreased
as a percentage of net sales from approximately 28.2% to 17.9%. Part of this
reduction in gross profit has occurred as a result of the Sierra and Tahoe
products approaching the end of their product lives. Additionally, the Company
has observed increased competition in the recordable CD market. This competition
has placed additional pressures on selling prices and gross margins in the
current period, and it is expected to continue to place pressure on gross
margins in future periods.
In addition, the Company has established manufacturing facilities in Colorado
Springs, Colorado, which are devoted to the production of the Company's Vertex
and Apex products. At present, only very small volumes of these products have
been produced at low yields which has resulted in high scrap and rework costs.
These costs, along with the overhead associated with this facility, have also
significantly reduced the Company's gross margin in the current period. This
facility and its operations will continue to negatively impact the Company's
gross margin until production yields and volumes increase significantly for
the Vertex and Apex products.
8
<PAGE> 9
Selling, General and Administrative
Selling, general and administrative expenses were $4,692,000 and $5,252,000 in
the thirteen weeks ended April 1, 1995 and March 30, 1996, respectively, and
represented approximately 23.2% and 30.1% of net sales, respectively. In the
thirteen weeks ended April 1, 1995 and March 30, 1996, selling, general and
administrative expenses increased by $585,000 and decreased by $48,000,
respectively, as a result of the U.S. dollar fluctuating in value in
relationship to the Japanese Yen for transactions denominated in Japanese
Yen. The increase in expenditures was also the result of increased advertising
and promotional expenditures and the expansion of the Company's sales and
administrative staffs.
Research and Development
Research and development expenses were approximately $789,000 and $1,592,000 for
the thirteen weeks ended April 1, 1995 and March 30, 1996, respectively, or 3.9%
and 9.1% of net sales, respectively. These increases resulted from increased
staffing at the Company's research and development facility, along with
expenses for Vertex and Apex prototypes and for ASIC development fees paid to
third parties. The Company expects to increase its research and development
during the next twelve months to complete the development of the Vertex and
Apex products, and to fund new product development projects.
Nonrecurring charges
Nonrecurring charges were approximately $225,000 and $164,000 in the thirteen
weeks ended April 1, 1995 and March 30, 1996, respectively. Included in
nonrecurring charges are certain professional fees related to the restatements
of certain of the Company's financial statements and related legal matters.
Management expects legal fees to continue at significant levels through 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of March 30, 1996, the Company had cash and cash equivalents of $3,812,000 as
compared to $3,606,000 at December 30, 1995. During the thirteen weeks ended
April 1, 1995 the Company's operations provided $2,652,000 in cash, while they
used $2,965,000 in cash during the thirteen weeks ended March 30, 1996.
Inventories increased from $11,413,000 at December 30, 1995 to $13,733,000 at
March 30, 1996 as additional Vertex and Apex related inventory was received, but
shipments of these products were at lower levels than had been planned. Accounts
payable increased from $11,644,000 at December 30, 1995 to $15,214,000 at March
30, 1996 as higher than normal levels of inventory components were received
late in the current period, such that associated suppliers were not paid until
the subsequent period. Accounts receivable increased from $11,354,000 at
December 30, 1995 to $12,089,000 at March 30, 1996 as the Company experienced
increased sales late in the current period.
Portions of the Company's accounts payable balance typically include items
denominated in Japanese Yen. As the Japanese Yen generally strengthened during
the thirteen weeks ended April 1, 1995, the cost to repay these liabilities in
terms of U.S. dollars increased substantially. In contrast, as the Japanese Yen
generally weakened during the thirteen weeks ended March 30, 1996, the cost to
repay these liabilities in terms of U.S. dollars decreased. (See "Selling,
General and Administrative" above for details of these expenses during the
thirteen weeks ended April 1, 1995 and March 30, 1996.) While a portion of these
Japanese Yen liabilities were hedged at March 30, 1996, the Company's hedged
position varies, and at times the Company is unhedged.
The Company's investing activities during the thirteen weeks ended March 30,
1996 included capital expenditures for test and manufacturing equipment
primarily associated with the Company's manufacturing facility in Colorado.
As a direct result of the fourth quarter 1995 and first quarter 1996 operating
losses, the Company was in default of certain covenants related to its
$5,000,000 line of credit agreement. While this agreement was extended through
June 16, 1996, the lender requested and obtained the Company's consent to enter
into a general security agreement
9
<PAGE> 10
pledging the Company's assets to collateralize the Company's obligation to the
lender. In the event a replacement lender is not obtained, the Company may not
be able to make complete repayment of all amounts payable under the line of
credit if demand for payment is made. Management is working diligently to enter
into a new lending relationship, but asset backed financing may not be
sufficient as losses are forecast to continue and revenues are likely to also
decline, unless or until Vertex and Apex begin shipment. Consequently, the
Company is seeking additional capital through various means. Under the
circumstances, the Company's cost of credit and capital will likely increase,
and may reduce future earnings. The Company is working to reduce expenses
significantly. The Company plans to make substantial progress towards raising
capital and reducing expenses in the second and third quarters. If the Vertex
and Apex manufacturing delays extend into and past the third quarter of 1996,
the Company may face cash flow pressures which in turn may affect the
strategic direction of the Company. The Company's cash reserves could be
materially affected by a number of different factors including, but not
limited to, changes in operating results, currency fluctuations, changes in
market conditions, the overall state of the economy, and litigation in which
the Company is currently engaged.
RECENT DEVELOPMENTS
Vertex and Apex
A portion of the shortfall in revenue is attributable to continuing
difficulties in the engineering and testing the Vertex and Apex products, as
well as to problems experienced in a CD-R product transition. Vertex was not
manufactured in acceptable yields in the first quarter, which resulted in
limited sales. Vertex and Apex are responsible for increased scrap and rework
costs and continuing test and engineering expenses. The additional overhead
expenses of the Colorado Springs manufacturing facility were not offset by
anticipated revenues from Vertex and Apex. The Company's Sierra and Tahoe
products are reaching the end of their lives with related declines in revenue
and margin contribution.
Business Risks
The Company expects that ending gross margins on existing products, competitive
pressures and costs associated with launching Vertex and Apex, as well as
temporary restructuring charges arising from the reduction in force, will cause
losses to continue at approximately the current rate into the third quarter.
The Company's ability to be profitable is dependent upon its ability to ship
the new Vertex and Apex products. As the Company has previously stated in other
public releases, its research and development team has continued to encounter
unexpected engineering problems associated with manufacturing Vertex and Apex
in large volumes. The Company has not yet met manufacturing yield targets for
Apex or Vertex and may not be able to do so in the future.
The engineering problems which delayed the original shipment of Vertex and Apex
drives, are expected to continue to do so in the second quarter and additional
delays may continue thereafter. The Company currently plans to redesign Vertex
with new shipments to begin in the third quarter. The Company also intends to
redesign and update Apex with new shipments to begin in the fourth quarter.
However, the actual production ship date for both Vertex and Apex critically
depend upon keeping the current engineering team together, adding personnal
where needed and the cooperation of suppliers of key components and
subassemblies. Although the Company is working to solve all of these problems
and ship Vertex and Apex in volume, it may be unable to do so.
Management Restructuring
There has been a complete restructuring of the Company's existing management
team. William F. Blum, founder, President and CEO retired on May 12, 1996.
Lawrence Goelman, who was recently named to the Company's Board of Directors,
will serve as President and CEO until a permanent replacement for William F.
Blum can be found. The Company also announced the hiring of an Executive Vice
President of Technology, a new General Counsel, and the acceptance of an offer
for employment by a permanent CFO. The Company learned on May 13, that the CFO
to be reneged on his acceptance to take another position; Daryl White, an
outside board member, is the new Chairman of the Board.
The new management team, built in the first quarter, consists of: Lawrence
Goelman, President and Chief Executive Officer; Ken Campbell, Executive Vice
President, Technology and General Manager; Scott Blum, Executive Vice President,
Marketing; James Hanley, Senior Vice President, Corporate Development; Phil
Gioia, Vice President, Manufacturing and Procurement; and Jonathan Eddison, Vice
President and General Counsel. The Company is actively recruiting a new Chief
Financial Officer.
10
<PAGE> 11
Loan Default
As disclosed in the Company's 1995 Annual Report on Form 10K, as a direct result
of the fourth quarter 1995 operating loss, the Company was in default of certain
of its loan covenants. While the lender has extended the current financing
relationship, borrowings under this agreement are due and payable upon demand.
If the loan is not extended, it could become payable in full on June 16, 1996 if
the lender were to demand payment at that time. The Company's borrowings at
March 30, 1996 totaled $3,775,000. Management believes that a replacement lender
can be found in the second quarter, and is in active discussions with several
institutions. No lending commitments have been made as of the date of this
report and the effect of the Company's first quarter loss on lenders'
willingness to extend credit is uncertain. As any such replacement lender will
be a secured lender, the capital available to the Company will be constrained by
CD-R and CD-ROM sales accounts receivable (which are subject to quarterly and
seasonal fluctuations as described elsewhere in the Company's reports) until
Vertex and Apex ship in volume. (See "Liquidity and Capital Resources.")
Legal Proceedings
The Company and members of its senior management have been the subject of an
investigation by the Securities and Exchange Commission (the "SEC") relating
principally to the restatement of the Company's previously-reported financial
results. The Company and its management have been cooperating fully with the
investigation. The resignation of the Company's prior independent public
accountants on February 20, 1996, led to additional inquiries by the SEC.
On March 15, 1996, a complaint was filed against the Company and certain of its
officers and directors in a securities class action lawsuit which alleges that
Company management engaged in improper accounting practices and made certain
false and misleading statements. The Company denies all allegations and intends
to vigorously contest the suit. The ultimate outcome of this matter cannot
presently be determined. The Company expects to incur significant legal costs
relating to this suit in 1996. (See Note 4 of Notes to Condensed Financial
Statements.)
Optical Patent Licensing
If and when Vertex and Apex go into mass production, the Company believes that
it will be necessary to enter into license negotiations with certain licensors.
The Company already has agreements with certain suppliers which shift the
royalty burden, or a portion of it, to them. The Company believes that it will
be able to successfully conclude license negotiations on terms comparable to
similarly situated licensees. At present there can be no assurance as to when
those negotiations will be concluded or what effect any royalty payments will
have on the Company's results of operations.
Because of these and other factors affecting the Company's operating results,
including the uncertainties relating to the pending litigation and SEC
investigations, past financial performance should not be considered a reliable
indicator of future performance, and investors should not use historical trends
to anticipate results or trends in future periods.
11
<PAGE> 12
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K, dated February
20, 1996, announcing the resignation of Coopers & Lybrand L.L.P.,
the former independent accountants of the Company.
The Company filed a Current Report on Form 8-K, dated March 14,
1996, announcing the engagement of BDO Seidman, LLP, as its
independent auditors.
12
<PAGE> 13
SIGNATURES
PINNACLE MICRO, INC.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
May 14, 1996 By: /s/ Lawrence Goelman
---------------------------------
Lawrence Goelman, President and
Chief Executive Officer
(Duly Authorized Officer)
May 14, 1996
By: /s/ Kevin L. Lehnert
---------------------------------
Kevin L. Lehnert
Acting Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED BALANCE SHEET AS OF MARCH 30, 1996 AND THE UNAUDITED
CONDENSED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED MARCH 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> MAR-30-1996
<CASH> 3,812
<SECURITIES> 0
<RECEIVABLES> 13,672
<ALLOWANCES> 1,583
<INVENTORY> 13,733
<CURRENT-ASSETS> 32,805
<PP&E> 4,963
<DEPRECIATION> 2,601
<TOTAL-ASSETS> 35,826
<CURRENT-LIABILITIES> 21,705
<BONDS> 6
0
0
<COMMON> 8
<OTHER-SE> 12,707
<TOTAL-LIABILITY-AND-EQUITY> 35,826
<SALES> 17,434
<TOTAL-REVENUES> 17,434
<CGS> 14,306
<TOTAL-COSTS> 14,306
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 565
<INTEREST-EXPENSE> 36
<INCOME-PRETAX> (3,912)
<INCOME-TAX> 3
<INCOME-CONTINUING> (3,915)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,915)
<EPS-PRIMARY> (0.50)
<EPS-DILUTED> (0.50)
</TABLE>
