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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission file number 1-12312
CAMINOSOFT CORP
(Name of small business issuer in its charter)
CALIFORNIA 95-3880130
(State of incorporation) (I.R.S. Employer Identification No)
600 HAMPSHIRE ROAD, SUITE 105, WESTLAKE VILLAGE, CALIFORNIA 91361
(Address of principal executive offices)
Issuer's telephone number: (805) 370-3100
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Number of shares outstanding of each of the issuer's classes of common stock, as
of July 31, 2000: 7,389,556 shares of common stock, no par value.
Transitional Small Business Disclosure Format:
YES [ ] NO [X]
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CAMINOSOFT CORP
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 2000
and September 30, 1999 3 - 4
Statements of Operations for the Three
Months Ended June 30, 2000 and 1999 5
Statements of Operations for the Nine
Months Ended June 30, 2000 and 1999 6
Statements of Cash Flows for the Nine
Months Ended June 30, 2000 and 1999 7
Note to the Financial Statements 8
Item 2. Management's Discussion and Analysis and Plan of Operation 9
PART II - OTHER INFORMATION 12
Item 2 Changes in Securities and Use of Proceeds
Item 6 Exhibits and Reports on Form 8-K
</TABLE>
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PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements.
CAMINOSOFT CORP
BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited Audited
June 30, September 30,
2000 1999
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $2,888,630 $ 464,311
Accounts receivable, net of allowance for doubtful
accounts of $5,687 and $53,687 85,467 45,444
Other Receivables 85,000 --
Inventory -- 208,442
Deferred income taxes 250,000 250,000
---------- ----------
Total current assets 3,309,097 968,197
Property and Equipment, net of accumulated depreciation 29,201 7,746
of $2,431 and $22,989
SOFTWARE 502,372 502,372
OTHER ASSETS
Patents, net of accumulated amortization 327,373 414,951
of $406,381 and $318,803
Deposits 19,236 11,280
---------- ----------
Total other assets 346,609 426,231
Total assets $4,187,279 $1,904,546
</TABLE>
See accompanying note to Financial Statements
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CAMINOSOFT CORP
BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited Audited
June 30, September 30,
2000 1999
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long term debt $ 11,257 $ 114,607
Trade accounts payable 210,251 462,722
Accrued liabilities 53,640 271,516
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Total current liabilities 275,148 848,845
Long term debt 58,025 500,000
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Total liabilities 333,173 1,348,845
SHAREHOLDERS' EQUITY
Common stock, no par value; authorized 100,000,000 shares;
issued and outstanding 7,389,556 shares 12,116,630 8,626,430
Accumulated deficit (8,262,524) (8,070,729)
------------ -----------
Total shareholders' equity 3,854,106 555,701
Total liabilities and shareholders' equity $ 4,187,279 $ 1,904,546
</TABLE>
See accompanying note to Financial Statements
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CAMINOSOFT CORP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
June 30,
2000 1999
<S> <C> <C>
SALES $ 129,335 $ 338,655
COST OF SALES 28,500 123,599
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GROSS PROFIT 100,835 215,056
OPERATING EXPENSES
General and administrative 612,584 274,828
Depreciation and amortization 27,390 18,028
----------- -----------
Total operating expenses 639,974 292,856
Operating income (Loss) (539,139) (77,800)
OTHER INCOME (expense)
Interest income 44,006 --
Interest expense (95) (3,506)
Other Income 19,978 --
----------- -----------
Total other income (expense) 63,889 (3,506)
Earnings (loss) from continuing operations (475,250) (81,306)
----------- -----------
Net Income (loss) $ (475,250) $ ( 81,306)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,389,556 5,236,556
Net income per common share (basic and diluted)
----------- -----------
Net income (loss) per common share ($0.06) ($0.02)
=========== ===========
</TABLE>
See accompanying note to Financial Statements
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CAMINOSOFT CORP
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
June 30,
2000 1999
<S> <C> <C>
SALES $ 909,703 $ 1,486,289
COST OF SALES 526,768 608,946
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GROSS PROFIT 382,935 877,343
OPERATING EXPENSES
General and administrative 1,609,898 617,011
Depreciation and amortization 80,924 54,084
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Total operating expenses 1,690,822 671,095
Operating income (loss) (1,307,887) 206,248
OTHER INCOME (expense)
Interest income 51,951 43
Interest expense (20,517) (20,852)
Other income 19,978 --
Gain on Legal Settlement (net of legal cost of $182,000) 768,000 --
----------- -----------
Total other income (expense) 819,412 (20,809)
Earnings (loss) from continuing operations (488,475) 185,439
DISCONTINUED OPERATIONS
Income from discontinued operations 296,680 --
----------- -----------
Net Income (loss) $ (191,795) $ 185,439
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,389,556 5,236,556
Net income per common share (basic and diluted)
From continuing operations $ (0.07) $ 0.04
From discontinued operations 0.04 0.00
----------- -----------
Net income (loss) per common share $ (0.03) $ 0.04
=========== ===========
</TABLE>
See accompanying note to Financial Statements
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CAMINOSOFT CORP
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
June 30,
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ($ 191,795) $ 185,439
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 80,925 39,084
Changes in operating assets and liabilities:
Accounts receivable (210,023) 401,360
Prepaid expenses and other receivables 85,000 --
Inventories 208,442 (162,600)
Deposits and other (7,956) --
Accounts payable and accrued expenses (387,676) (182,480)
Patent Acquisition 9,759 --
Settlement with unsecured creditors -- 86,904
----------- ---------
Net cash provided by operating activities (413,324) 367,707
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Property & Equipment (24,561) --
Net cash provided by (used in) investing activities (24,561) --
CASH FLOWS FROM FINANCING ACTIVITIES
Sale common stock 3,490,200 --
Principal reductions of short-term and long-term
obligations (Pre-payment bank notes) (627,996) (822,281)
----------- ---------
Net cash provided by (used in) financing activities 2,862,204 (822,281)
----------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,424,319 (454,574)
CASH AND CASH EQUIVALENTS, beginning of period 464,311 522,060
----------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 2,888,630 $ 67,486
=========== =========
Supplemental cash flow information
The Company received a $950,000 from Legal
Settlement During the Period Sale of Fusing
Agent business for $550,000 with a net gain
of $296,680 During the Period
</TABLE>
See accompanying note to Financial Statements
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CAMINOSOFT CORP
NOTE TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1.
The accompanying financial statements of CaminoSoft Corp (the
"Company") have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosure normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
financial statements and related footnotes included in the Company's latest
Annual Report on Form 10-KSB. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of June 30, 2000, and the statements of its
operations for the three month periods ended June 30, 2000 and 1999, and the
statements of its operations and its cash flows for the nine month periods ended
June 30, 2000 and 1999 have been included. The results of operations for interim
periods are not necessarily indicative of the results which may be realized for
the full year.
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents. These interim
financial statements for the period ended June 30, 2000, reflect continuing
operations; discontinued or sold subsidiaries have been included on a separate
line item.
SIGNIFICANT EVENTS
In December 1999, the Company reached a settlement with OCE GmbH and
OCE Printing Systems, USA Inc., ("OCE") resolving all disputes between the
companies. Under the settlement, the Company retained all rights to its Fusing
Agent Patent, and all lawsuits pending between the Company and OCE were
dismissed. The Company also received $950,000 from OCE on December 31, 1999 and
both sides have released all claims against each other. Legal expense of
$182,000 related to the settlement were booked during the current nine month
period.
On January 25, 2000, the Company sold all assets relating to the
fusing agent business to The Bradshaw Group for $550,000 in cash. Assets
included inventory and work in process located in Chino, California and the
exclusive right to use the Company's U.S. Fusing Agent Patent number 5,333,042.
During March 2000, the Company completed a private placement of
$3,270,000 of common stock. It is anticipated that these funds will be used to
expand the Highway Server business.
On April 17, 2000, the Company held its annual meeting of
shareholders. Five individuals were elected as directors until the next annual
meeting, Dr. Kyo Paul Jhin, Robert Pearson, Norman Baker, Steven Spector and
Walter Kornbluh as Chairman of the Board. The Articles of Incorporation were
amended to change the name of the Corporation to CaminoSoft Corp. The Articles
of Incorporation were also amended to increase the number of authorized shares
of the Company's Common Stock from 10,000,000 to 100,000,000. The shareholders
also approved the Company's 2000 Stock Option Plan.
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FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report
contains forward-looking statements. The forward-looking statements contained
herein are subject to certain risks and uncertainties that could cause actual
results to differ materially from those reflected in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in the section entitled "Management's Discussion and
Analysis and Plan of Operation." Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. CaminoSoft Corp (the "Company") undertakes
no obligation to publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date hereof. Readers should
carefully review the risks described in other documents the Company files from
time to time with the Securities and Exchange Commission, including the Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1999, the
Quarterly Reports on Form 10-QSB to be filed by the Company and any Current
Reports on Form 8-K by the Company.
Item 2. Management's Discussion and Analysis and Plan of Operation.
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto in this quarterly report.
OVERVIEW
In December 1999, the Company, OCE GmbH and OCE Printing Systems,
USA Inc. (the "OCE Group") reached a settlement resolving all disputes regarding
the Company's Fusing Agent Patent and the Company's allegations that the OCE
Group and others committed violations of the U.S. antitrust laws which damaged
the Company. Under the settlement, the Company retained all rights to its Fusing
Agent Patent, and all lawsuits pending between the Company and OCE Group were
dismissed. The Company has also received $950,000 from the OCE Group and both
sides have released all claims against each other. Legal expense of $182,000
related to the settlement was booked during current nine month period. The
Company has retained all rights against Siemens Corporation for violations of
the U.S. antitrust laws by Siemens prior to April 1, 1996 which affected the
Company. In June 2000, the Company filed suit against Siemens in the Federal
Court in Los Angeles, California.
On September 17, 1999, the Company acquired the assets of Camino
Software Systems, Inc. ("Camino") for 468,000 shares of the Company's common
stock and assumed $315,172 of certain Camino liabilities. The Company had
considered over 65 companies as possible acquisition candidates prior to the
acquisition of the Camino assets. The Camino assets consisted of the name,
Camino Software Systems, Inc., the data storage management software, certain
business contracts and intangible personal property. Camino had developed the
Highway Server hierarchical storage management ("HSM") software. The Company
plans on improving sales, marketing and customer service while continuing
development of its HSM technology. The objective of the acquisition of Camino
was to diversify the Company's revenue base to initially augment and eventually
replace declining revenues from the traditional fusing agent and toner business.
Camino's Highway Server software provides a solution for addressing
the increasing need for sophisticated management of data. Designed to meet the
data storage management requirements for local area networks (LAN), wide area
networks (WAN), and intranet environments, the Highway Server offers its users
the ability to more efficiently manage available storage within a multi-server
environment where mass storage devices are used to increase storage capacity. As
more and more companies move away from mid and main frame computer to networked
systems to meet their computing requirements, the need for more sophisticated
software to emulate the flexibility and power of mid and main frames has become
more acute. With the exponential growth of information, data storage
requirements have also grown
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exponentially. The result has been that network managers are having to deal with
the re-occurring "out of disk space" problem on their company's network. Though
hardware cost of storage continues to decrease, the cost of managing the data
being stored has increased. Human intervention is still required on the part of
network managers to determine which data files on the system need to be
"on-line", "near-line", or are used sufficiently infrequently to be relegated to
"off-line" storage.
Prior to January 25, 2000 the Company's principal product was a
liquid Fusing Agent used by the Model 2200 Siemens Printer. The Company sold the
Fusing Agent to distributors of the product including OCE Printing Systems, USA
Inc., The Bradshaw Group and NCR Corporation. On January 25, 2000, the Company
sold all of the assets related to the Fusing Agent business to the Bradshaw
Group for $550,000 in cash.
During March 2000, the Company completed a private placement of
$3,270,000 of common stock. It is anticipated that these funds will be used to
expand the Highway Server business.
During April 2000, the Company held its annual meeting of
shareholders at which, five directors were elected to the Board, the Company
changed its name to CaminoSoft Corp., the number of authorized shares of Common
Stock was changed from 10,000,000 to 100,000,000 and the 2000 Stock Option Plan
was approved.
During June 2000, the Company liquidated the remaining parts
inventory and closed the Los Angeles warehouse where the parts had been located.
The liquidation created an additional tax loss of approximately $5,000,000 to
add to the tax losses previously booked by the Company.
On June 14, 2000, the Company commenced trading under its new symbol
"CMSF". The common stock had been trading on the OTC Bulletin Board under the
symbol "IEIC". The Company changed the name and trading symbol to reflect a new
direction and focus for the Company built around the acquisition of Camino
Software Systems and the "Highway Server" software.
On July 10, 2000, the Company announced release of its new version
of "Highway Server" software, to provide automated network storage access
management system for Novell NetWare 5.x operating system platform. The new
version of Highway Server provides advanced data storage management
capabilities, enabling automated network access to archived files any time from
any station.
RESULTS OF OPERATIONS
The Three Month Periods Ended June 30, 2000 and June 30, 1999.
Sales during the current quarter decreased by approximately $209,000
or 62% as compared to the quarter ended June 30, 1999. Revenues for the current
quarter were derived solely from sales of the "Highway Server" software and
related services. Sales for the quarter ended June 30, 1999 related to the
Company's discontinued or sold operations. Sales of software during the quarter
remained flat as compared to the quarter ended March 31, 2000. The Company has
added three new regional sales people in Los Angeles, Dallas and New York and
signed a representation agreement for Canadian distribution with All-Comm
Computer Products, Ltd. in Wiarton, Ontario, Canada. Additional sales personnel
are currently being interviewed for Chicago and Washington D.C.
Cost of sales decreased by approximately $95,000 or 77%. The
decrease was due to the change in the Company's line of business and the lower
cost of sales associated with the new software products. Gross profit for the
current quarter decreased by approximately $114,000 as compared to the quarter
ended last year, but gross profit as a percentage of sales increased from 64%
last year to 78% for the current three month period.
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Selling and administrative expenses increased by approximately
$338,000 or 123% over the comparable period last year. The increase is due to
the expansion of the Company's staff in preparation for additional Highway
Server sales and development. The Company had 5 employees during the period
ended June 30, 1999 while currently the Company employs 14 people with further
expansion planned through the end of the calendar year. This increase also
includes approximately $54,000 in legal fees associated with final settlement of
the OCE Printing Systems litigation. Additional items relating to the newly
acquired software business included, approximately $83,000 for advertising and
sales and marketing and approximately $76,000 in technical consulting and
development.
Other income increased by approximately $67,000 for the current
quarter over the comparable period last year as a result of $44,000 in interest
income and a one time gain for settlement of an alleged stock sale violation by
a Company insider for approximately $20,000.
The loss for the period of $475,250 represents the expense relating
to the closure of all historical lines of business and the increase in expense
for the newly acquired software business including additional personnel,
technical, sales and marketing and market research expenses.
The Nine Month Periods Ended June 30, 2000 and June 30, 1999.
Sales for the current nine month period decreased by approximately
$577,000 or 39% as compared to the prior period. The reduction is due to the
sale of the fusing agent business and discontinuance of other historical lines
of business during the period. Revenues derived from software sales for the nine
month period represent approximately 33% of the total revenue and these sales
did not exist last year.
Cost of sales decreased by approximately $82,000 or 13% as compared
to the prior year period. The decrease in cost of sales is due to sale and
closure of the historical lines of business during the current nine month period
and the addition of the software business that has a lower associated cost of
sale.
Sales and administrative expenses increased approximately $1,020,000
or 152% as compared to the prior year nine month period. This was due to the
startup expenses of the new business acquired in September 1999, and the final
charges for legal and accounting fees associated with settlement of litigation
and closure and sale of the Company's historical fusing agent and maintenance
business.
The income from Legal Settlement reflects the net income received
from OCE Corp. on settling the Company's claims on an anti-trust matter.
Income from Discontinued Operations of $296,680 reflects the sale of
the fusing agent business after all expenses.
Net loss for the nine month period WAS result of the transition from
the Company's historical lines of business to become a developer and seller of
data management software, which is now the focus of all the Company's efforts
and resources.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased in the nine months by approximately $2,4000,000 as a
result of the Company completing a $3,270,000 private placement of common stock.
The Company believes that its working capital and projected cash flow from
operations will be sufficient to meet its ongoing operational requirements over
the next twelve months. The Company presently has over $2,800,000 in cash and
short term investments and no bank debt and limited long term obligations.
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PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On March 1, 2000, the Company sold an aggregate of 1,635,000 shares
of its Common Stock to 23 investors for $3,270,000 pursuant to a private
placement under Rule 506 of Regulation D. The purchasers were all accredited
investors as defined in Rule 501.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
SIGNATURE
In accordance with the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CAMINOSOFT CORP
Date: August 11, 2000 /s/ Walter Kornbluh
---------------------------------------------
Walter Kornbluh, Chairman of the Board,
President and Chief Executive Officer
Date: August 11, 2000 /s/ Stephen Crosson
---------------------------------------------
Stephen Crosson, Vice President of Operations
and Chief Accounting Officer
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