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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission file number 000-22235
---------------------------------
Objective Communications, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 54-1707962
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
50 International Drive
Portsmouth, NH 03801
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(Address of Principal Executive Offices)
(603) 334-6700
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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APPLICATION ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of May 13, 1998: 5,723,100
Transitional Small Business Disclosure Format (check one):
Yes No X
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Part I - Financial Information
ITEM 1. FINANCIAL STATEMENTS
OBJECTIVE COMMUNICATIONS, INC.
(A Development Stage Enterprise)
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
March 31, 1998 December 31, 1997
-------------- -----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,541,148 $ 18,199,434
Inventory 6,289,556 1,700,935
Other current assets 1,094,906 675,289
------------ ------------
Total current assets 15,925,610 20,575,658
Property and equipment, net 5,112,556 2,306,048
Trademarks and patents 130,420 108,475
Other assets 89,966 92,519
------------ ------------
$ 21,258,552 $ 23,082,700
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 230,063 $ -
Accounts payable 5,194,253 3,077,723
Deferred revenue 78,434 133,180
Accrued liabilities 605,262 752,018
Obligations under capital lease, current portion 591,012 190,454
------------ ------------
Total current liabilities 6,699,024 4,153,375
Obligations under capital lease, less current portion 90,176 57,196
------------ ------------
Total liabilities 6,789,200 4,210,571
Stockholders' equity:
Preferred Stock, par value $.01, 250,000 shares authorized; none
issued and outstanding at March 31, 1998 and December 31, 1997
Common stock, par value $.01, 10,000,000 shares authorized;
5,676,850 issued and outstanding at March 31, 1998 and
December 31, 1997, respectively 56,769 56,769
Additional paid-in capital 36,101,388 35,960,466
Deficit accumulated during development stage (21,688,805) (17,145,106)
------------ ------------
Total stockholders' equity 14,469,352 18,872,129
------------ ------------
$ 21,258,552 $ 23,082,700
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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OBJECTIVE COMMUNICATIONS, INC.
(A Development Stage Enterprise)
Statements of Operations
(Unaudited)
-----------
<TABLE>
<CAPTION>
For the three months ended For the period
March 31, October 5, 1993
(date of inception) to
1998 1997 March 31, 1998
---- ---- --------------
<S> <C> <C> <C>
Revenues $ 110,505 $ - $ 606,165
Cost of sales 64,304 - 313,679
----------- ----------- -----------
Gross margin 46,201 - 292,486
----------- ----------- -----------
Operating expenses:
Research and development 2,616,588 459,934 11,339,978
Selling, general and administrative 1,741,344 661,866 8,329,969
Depreciation and amortization 398,008 109,858 1,450,244
Other - - 15,997
----------- ----------- -----------
Total operating expenses 4,755,940 1,231,658 21,136,188
----------- ----------- -----------
Loss from operations (4,709,739) (1,231,658) (20,843,702)
Interest (income) expense, net (166,040) 210,387 438,206
----------- ----------- -----------
Net loss $(4,543,699) $(1,442,045) $(21,281,908)
----------- ----------- -----------
Net loss per common share - basic $ (0.80) $ (0.40)
=========== ===========
Shares outstanding - basic 5,676,850 3,607,634
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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OBJECTIVE COMMUNICATIONS, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the period
October 5, 1993
Three months ended March 31, (Date of inception) to
1998 1997 March 31, 1998
---- ---- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($4,543,699) ($1,442,045) ($21,281,908)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 398,008 109,856 1,450,244
Interest expenses related to issuance of warrants - 195,334 706,789
Non-cash compensation expense 140,922 340,166 481,088
Stock issued in exchange for services rendered - - 55,834
Changes in operating assets and liabilities:
Accounts receivable - 49,132 -
Other current assets (189,554) (185,747) (864,843)
Inventory (4,588,621) (105,259) (6,289,556)
Trademarks and patents (24,082) (14,523) (111,934)
Other assets 2,553 - (117,142)
Accounts payable 2,116,530 16,520 5,194,253
Deferred revenue (54,746) - 78,434
Accrued liabilities (146,756) (116,716) 605,262
----------- ----------- -----------
Net cash used in operating activities (6,889,445) (1,153,282) (20,093,479)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (2,615,306) (191,985) (5,307,799)
----------- ----------- -----------
Net cash used in investing activities (2,615,306) (191,985) (5,307,799)
----------- ----------- -----------
Cash flows from financing activities:
Net proceeds from the issuance of Series A Preferred Stock - 962,203 1,810,643
Net proceeds from the issuance of common stock - - 32,344,683
Net proceeds from the issuance of notes payable - - 2,550,000
Repayments of notes payable - - (2,550,000)
Proceeds from the issuance of notes payable to related parties - - 716,223
Repayment of notes payable to related parties - - (364,000)
Debt issue costs - - (258,131)
Principal payments on capital leases (153,535) (1,391) (306,992)
----------- ----------- -----------
Net cash provided by financing activities (153,535) 960,812 33,942,426
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (9,658,286) (384,455) 8,541,148
Cash and cash equivalents, at beginning of period 18,199,434 623,241 -
---------- ---------- ----------
Cash and cash equivalents, at end of period $8,541,148 $ 238,786 $8,541,148
========== ========== ==========
Supplemental disclosure of non-cash investing and financing activities:
Current asset financed by issuance of note payable $ 230,063
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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OBJECTIVE COMMUNICATIONS, INC.
(A Development Stage Enterprise)
Notes To Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed financial statements as of March 31,
1998 and for the three months ended March 31, 1998 and 1997 have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
such financial statements contain all adjustments consisting only of normal
recurring entries, necessary to present fairly the financial position as of
March 31, 1998 and the results of operations for the three months ended March
31, 1998 and 1997. The interim financial statements should be read in
conjunction with the audited financial statements and notes thereto for the
year ended and as of December 31, 1997 included in the Objective
Communications, Inc. (the "Company") Annual Report on Form 10-KSB, dated
March 31, 1998, as filed with the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended. Certain prior year items
have been reclassified to conform to the current period's format. The results
of operations for the three months ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the entire year.
2. Net Loss Per Share
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share," which modifies the calculation of earnings (loss) per
share. Net loss per common share is based on the weighted average number of
common shares and dilutive common share equivalents outstanding during the
periods presented. Basic earnings (loss) per share are calculated by dividing
net income (loss) by the weighted average shares outstanding. Diluted
earnings (loss) per share reflect the dilutive effect of stock options and
warrants and are presented only if the effect is not anti-dilutive.
3. Income taxes
The Company did not record a provision for income taxes for the three
months ended March 31, 1998 and 1997 since the Company has had net operating
losses during each of those periods. The Company recorded a full valuation
allowance against the net deferred tax asset generated primarily from its net
operating loss carryforwards.
4. Accounting Standards
In June 1997, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive
Income" and SFAS No. 131 "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 130 requires that changes in comprehensive
income be shown in a financial statement that is displayed with the same
prominence as other financial statements. The Company has adopted the new
standard beginning in the three months ended March 31, 1998. There were no
items of comprehensive income for the three months ended March 31, 1998.
SFAS No. 131 specifies new guidelines for determining a company's operating
segments and related requirements for disclosure. The Company is in the
process of evaluating the impact of the new standard on the presentation of
the financial statements and the disclosures therein. The Statement will
become effective for fiscal years beginning after December 15, 1997. The
Company will adopt the new standard for the fiscal year ending December 31,
1998.
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5. Inventory consisted of the following at:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Raw Material $3,422,895 $901,548
Work in Progress 72,147 24,272
Finished Goods 2,794,514 775,115
---------- ----------
$6,289,556 $1,700,935
========== ==========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements contained in this Quarterly Report on Form 10-QSB
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All such forward-looking statements
involve known and unknown risks, uncertainties or other factors which may
cause actual results, performance or achievement of the Company to be
materially different from any future results, performance or achievement
expressed or implied by such forward-looking statements. Factors that might
cause such a difference include risks and uncertainties related to the
Company's dependence on the emerging market for video broadcast, retrieval
and conferencing, development of additional products, protection of the
Company's intellectual property, limited marketing experience, limited number
of customers, and the need for additional personnel, as well as risks and
uncertainties associated with the Company's growth strategy, technological
changes affecting the Company and competitive factors affecting the Company.
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto appearing elsewhere in this Quarterly
Report on Form 10-QSB.
OVERVIEW
Objective Communications designs, develops and markets the first high
quality, cost-effective video network system that supports video broadcast,
retrieval of stored video and multi-party conferencing to and from a desktop
personal computer or conference room over the same wire used by the
telephone lines. The Company was incorporated in October 1993. The Company's
operations to date have related primarily to organizational activities,
including research and development, the development and shipment of its
initial products, recruiting management and technical personnel, and raising
capital.
To date, the Company has not generated substantial revenues from the sale
of its products and services. Late in the fourth quarter of 1997 the Company
shipped 40 Vidphone(R) video network systems to customers and resellers.
These initial shipments constituted the first deployment of the new
Vidphone(R) system technology. Installation and acceptance of these systems
began in the three months ended March 31, 1998. However, the Company
has deferred revenue recognition pending customer acceptance of a majority
of these initial shipments.
The Company expects to incur substantial operating expenses in the future
to support its product development efforts, expand and enhance significantly
its sales and marketing capabilities and organization, expand its technical
and management personnel, and for other selling, general and administrative
expenses. Through March 31, 1998, the Company had cumulative losses since
inception of approximately $21.3 million. The Company expects to incur
additional operating losses until the Company's products achieve commercial
acceptance, which is expected to occur in 1998. The Company's results of
operations may vary significantly from quarter to quarter during this period.
Through March 31, 1998, the Company's operations have been funded primarily
through public and private sales of debt and equity securities.
During November 1997, the Company issued 1,000,000 shares of Common Stock
at $23.125 per share and received net proceeds of approximately $21.5 million
(net of underwriting discounts) in a public offering pursuant to Registration
Statement on Form SB-2 (File No. 333-35913) (the "Follow-on Offering"). These
proceeds are being used to fund the Company's inventory,
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capital expenditures (including facilities expansion), sales and marketing,
product development, working capital and general corporate purposes.
During the first quarter, the Company leased an additional facility in
Portsmouth, New Hampshire to house the Company's headquarters, research and
development, administrative, financial, and marketing and sales activities.
The original New Hampshire facility leased by the Company is now occupied by
the Company's production and customer service and support organizations. The
Company maintains a sales office in the Washington, D.C. metropolitan area
and intends to hire additional sales personnel for the new New Hampshire
facility. At March 31, 1998 the Company had approximately 115 employees.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
Revenues. The Company recognized revenues of approximately $111,000 in the
three months ended March 31, 1998. The Company did not recognize any revenue
in the three months ended March 31, 1997. The revenue recognized in the first
quarter of 1998 related to equipment shipments made in the fourth quarter of
1997 that were accepted by the customer in the first quarter of 1998 and for
which the Company received full payment. Fourteen additional systems were
shipped in the first quarter of 1998, payment for ten of which is expected
to generate revenues in 1998. During the first quarter of 1997, the Company
devoted all of its resources to the development and production of the
VidPhone(R) system and related software products and did not ship any
products during such period or recognize any revenue.
Cost of sales in the three months ended March 31, 1998 were approximately
$64,000. The Company did not incur any cost of sales in the three months
ended March 31, 1997 because there were no sales in such period. Cost of
sales includes costs of materials, labor, and allocated manufacturing
overhead associated with the manufacture of equipment.
Gross margin on sales as a percentage of total revenues was approximately
$46,000, or 41.8%, in the three months ended March 31, 1998. The Company did
not report any revenues in the three months ended March 31, 1997.
Research and Development. Research and development expenses increased by
approximately $2.2 million, or 469%, for the three months ended March 31,
1998, to approximately $2.6 million as compared to $460,000 for the three
months ended March 31, 1997. Approximately $700,000 of the increase was due
to hiring of technical staff, approximately $860,000 of the increase was due
to increased use of materials, and approximately $250,000 of the increase was
due to increased levels of spending in connection with final product design.
Research and development expenses include the costs associated with all
personnel, materials and contract personnel engaged in research and
development for the Company, as well as an allocated portion of overhead
expenses, such as rent, telephone, and office supplies.
The Company intends to continue to expand research and development by
hiring additional technical staff and purchasing additional research and
development related material. As the Company continues developing, testing,
and demonstrating its product line, the Company expects research and
development expenses to continue to increase.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by approximately $1.1 million, or 163%, in
the three months ended March 31, 1998 to approximately $1.7 million from
approximately $662,000 during the same period in 1997. Sales and marketing
costs increased and will continue to increase as the Company further
facilitates acceptance of its products in the marketplace. Customer support
staffing and related costs increased during the three months ended March 31,
1998 compared to the same period in 1997 to support installation activities
for systems shipped in the fourth quarter of 1997 and the first quarter of
1998. A non-cash compensation charge of $340,000 was recorded in the three
months ended March 31, 1997 and a non-cash consulting charge of $141,000 was
recorded in the three months ended March 31, 1998. Increased costs of
administrative and finance staff as well as increased professional fees,
which increases are a result of the Company's growth, becoming a
publicly-traded company and the increased size and complexity of operations,
have contributed to the net increase of general and administrative costs. The
Company expects to continue to expand rapidly the sales and marketing staff
in 1998 in order to implement an aggressive marketing plan during the third
and fourth quarters of 1998, which the Company expects will continue to
increase costs. Additional administrative personnel will also be required to
support the sales and customer service and support activities of the Company
over the coming months.
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Depreciation and Amortization. Depreciation and amortization increased
approximately $288,000 to $398,000 in the first quarter of 1998 from
approximately $110,000 in the first quarter of 1997. The increase is due
primarily to increased levels of fixed assets and capitalized leases and, to
a lesser extent, increased levels of intellectual property held by the
Company.
Net Interest Income. The Company recorded approximately $166,000 of net
interest income during the three months ended March 31, 1998 compared to
incurring approximately $210,000 of interest expense in the three months
ended March 31, 1997. The approximately $178,000 in interest income recorded
in the three months ended March 31, 1998, earned on invested proceeds of the
Follow-on Offering, was partially offset by approximately $12,000 of
interest expense, incurred primarily in connection with capital lease
obligations. The $210,000 of interest expense recorded in the three months
ended March 31, 1997 was incurred primarily in connection with warrant
issuance costs associated with notes issued by the Company in connection
with a bridge financing completed in November 1996. There was no interest
income earned in the three months ended March 31, 1997.
Net Loss. As a result of the foregoing factors, the net loss increased by
approximately $3.1 million, or 215%, to approximately $4.5 million for the
three months ended March 31, 1998 from approximately $1.4 million during the
three months ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred cumulative losses aggregating approximately $21.3
million from inception through March 31, 1998. The Company expects to incur
additional operating losses for the foreseeable future, principally as a
result of expenses associated with the Company's product development efforts
and anticipated sales, marketing and general and administrative expenses.
During the first quarter of 1998, the Company satisfied its cash requirements
principally from the proceeds of the initial public offering of the Company's
common stock, completed in April 1997, and the Follow-on Offering and from
private sales of equity and debt securities completed during 1997. The
primary uses of cash have been to fund research and development, sales,
general and administrative expenses, and to build inventory levels to support
shipments of the Company's products in 1998.
The Company's cash and cash equivalents decreased by approximately $9.7
million to $8.5 million at March 31, 1998, compared to $18.2 million at
December 31, 1997. The Company utilized a portion of such cash for inventory
for units shipped in the first quarter of 1998, costs related to research and
development in response to market demands for functionality, and marketing
capabilities to support major potential reseller relationships. The Company
plans to utilize the remaining proceeds from the Follow-on Offering and cash
flows from recent and future sales to fund continued product development,
fund working capital and facilitate expansion of the Company's business.
Net cash used in operating activities in the three months ended March 31,
1998 was approximately $6.9 million. The net loss in the first quarter,
reduced by depreciation and amortization and the non-cash compensation
charge, was $4.0 million. Inventories increased by $4.6 million, funded in
part by an increase of $2.1 million in accounts payable over the quarter.
Inventory at March 31, 1998 was approximately $6.3 million, compared to
approximately $1.7 million at December 31, 1997. Inventory at March 31, 1998
included approximately $2.8 million of finished goods representing the value
of equipment shipped in the fourth quarter of 1997 and the first quarter of
1998 which the Company expects will be fully installed in the second quarter
of 1998.
Net cash used in investing activities in the three months ended March 31,
1998 was approximately $2.6 million, approximately $1.9 million of which was
related to improving, furnishing and equipping the new facility in New
Hampshire. The remaining investments in capital equipment consisted primarily
of computer and production equipment. Of the total of approximately $3.2
million in additions to property and equipment in the quarter, $587,000 were
financed by additions to capital lease obligations and the remainder were due
primarily to leasehold improvements.
Net cash used in financing activities was approximately $154,000
consisting of principal payments on capital lease obligations.
At March 31, 1998, the Company had cash and cash equivalents of
approximately $8.5 million, compared to approximately $18.2 million at
December 31, 1997. Based on the Company's anticipated level of expenditures
and commitments, management anticipates that its current financial resources,
together with cash generated by operations, will be sufficient to continue to
fund operations through June 1998. Cash flows from operations are not
currently expected to be sufficient to fund the Company's op-
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erations during 1998, and management anticipates that it will continue to
experience negative cash flow from operations for the foreseeable future
until its products achieve commercial acceptance, which currently is
estimated to occur in late 1998. As reflected in the audited financial
statements of the Company for the year ended December 31, 1997, and the
report of the Company's independent accountants thereon, the Company has
suffered recurring losses from operations and has a working capital and an
accumulated deficit that raise substantial doubt about its ability to
continue as a going concern. Accordingly, the Company is currently pursuing
additional sources of financing, and is considering both debt and equity
alternatives. The Company has required substantial funding through debt and
equity financings since its inception and, historically, has been successful
in obtaining debt and equity financing from unaffiliated third parties. The
Company has established relationships with investment banking firms, and
management anticipates that it will be able to raise additional capital to
meet its obligations and fund working capital requirements after June 1998 as
such obligations come due. However, the Company does not currently have any
commitments for debt or equity financing and accordingly, there can be no
assurance that it will be successful in its efforts to secure additional
financing on terms acceptable to the Company or at all.
Part II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3.1 Amended and Restated Certificate of Incorporation (Incorporated by
reference to Exhibit No. 3.1 forming a part of the Company's
Registration Statement on Form SB-2 (File No. 333-20625) filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended).
3.2 Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2
forming a part of Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (File No. 333-20625) filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended).
4.1 Form of Warrant for the Purchase of Shares of Common Stock, issued in
connection with the private placement of 2,000,000 aggregate principal
amount of Bridge Notes (Incorporated by reference to Exhibit 3.4
forming a part of the Company's Registration statement on Form SB-2
(File No. 333-20625) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
4.2 Form of Warrant to Purchase Common Stock of the Company, issued in
connection with the private placement of units in June 1995 and August
1996 (Incorporated by reference to Exhibit 3.5 forming a part of the
Company's Registration Statement on Form SB-2 (File No. 333-20625)
filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended).
4.3 Form of Warrants for the Purchase of 100,000 Shares of Common Stock,
$.01 par value per share, issued in connection with the private
placement of Series A Convertible Preferred Stock and warrants in
December 1996 and January 1997 (Incorporated by reference to Exhibit
3.7 forming a part of the Company's Registration Statement on Form SB-2
(File No. 333-20625) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
4.4 Form of Option for the Purchase of 180,000 shares of Common Stock
issued to Barington Capital Group, L.P. (Incorporated by reference to
Exhibit 3.8 forming a part of the Company's Registration Statement on
Form SB-2 (File No. 333-20625) filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended).
4.5 Form of Stock Option Agreement, dated December 18, 1997, by and between
the Company and Barington Capital Group, L.P. (Incorporated by
reference to Exhibit 10.8 forming a part of the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997).
4.6 Specimen certificate evidencing shares of Common Stock of the Company
(Incorporated by reference to Exhibit 4.2 forming a part of Amendment
No. 2 to the Company's Registration Statement on Form SB-2 (File No.
333-20625) filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended).
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10.1 1994 Stock Option Plan (Incorporated by reference to Exhibit 10.1
forming a part of the Company's Registration Statement on Form SB-2
(File No. 333-20625) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.2 1996 Stock Incentive Plan (Incorporated by reference to Exhibit No.
10.2 forming a part of the Company's Registration Statement on Form
SB-2 (File No. 333-20625) filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended).
10.3 Employment Agreement between the Company and Steven A. Rogers
(Incorporated by reference to Exhibit No. 10.3 forming part of
Amendment No. 2 to the Company's Registration Statement on Form SB-2
(File No. 333-20625) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.4 Form of Consulting Agreement by and between the Company and Barington
Capital Group, L.P. (Incorporated by reference to Exhibit No. 10.4
forming a part of the Company's Registration Statement on Form SB-2
(File No. 333-20625) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.5 Letter Agreement, dated October 7, 1996, between Barington Capital
Group and the Company (Incorporated by reference to Exhibit No. 10.5
forming a part of Amendment No. 2 to the Company's Registration
Statement on Form SB-2 (File No. 33-20625) filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended).
10.6 Letter Agreement, dated December 5, 1995, by and among PVR Securities,
Inc., the Company, Steven A. Rogers and John B. Torkelsen (Incorporated
by reference to Exhibit No. 10.6 forming a part of Amendment No. 2 to
the Company's Registration Statement on Form SB-2 (File No. 333-20625)
filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended).
10.7 Voting Agreement, dated December 19, 1996, by and among the Company,
Steven A. Rogers, Applewood Associates, L.P. and Acorn Technology
Partners, L.P. (Incorporated by reference to Exhibit No. 10.7 forming a
part of Amendment No. 2 to the Company's Registration Statement on Form
SB-2 (File No. 333-20625) filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended).
11 Statement re: computation of per share earnings.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K during the quarter ended March 31, 1998.
The Company's Current Report on Form 8-K dated April 10, 1998 and filed
April 15, 1998 for the purpose of filing as an exhibit a press release
relating to shipments made by the Company during the first quarter of
1998 and revenue recognition for the period.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Objective Communications, Inc.
By: /s/ Steven A. Rogers
---------------------
Steven A. Rogers
President and Chief Executive Officer
(duly authorized executive officer)
/s/ Robert H. Emery
--------------------
Robert H. Emery
Vice President, Administration and Finance
(principal financial officer)
May 15, 1998
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Objective Communication
Weighted average
Exhibit 11
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Weighted average common shares outstanding 5,676,850 1,711,413
Shares issued within one year of filing of initial
public offering - 350,431
Options issued within one year of filing of initial
public offering - 138,000
Warrants issued within one year of filing of initial
public offering - 907,790
Convertible securities issued within one year of
filing of initial public offering - 500,000
--------- -------
5,676,850 3,607,634
========= =========
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,541,148
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 6,289,556
<CURRENT-ASSETS> 15,925,610
<PP&E> 6,295,982
<DEPRECIATION> 1,183,426
<TOTAL-ASSETS> 21,258,552
<CURRENT-LIABILITIES> 6,699,024
<BONDS> 0
0
0
<COMMON> 56,769
<OTHER-SE> 14,412,583
<TOTAL-LIABILITY-AND-EQUITY> 21,258,552
<SALES> 110,505
<TOTAL-REVENUES> 110,505
<CGS> 64,304
<TOTAL-COSTS> 64,304
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (166,040)
<INCOME-PRETAX> (4,543,699)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,543,699)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,543,699)
<EPS-PRIMARY> (.80)
<EPS-DILUTED> (.80)
</TABLE>
