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UNITED STATES
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: June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period___________ to _____________
Commission file number: 0-28114
PARAVANT COMPUTER SYSTEMS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 59-2209179
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1615A West Nasa Boulevard
Melbourne, Florida 32901
(Address of Principal Executive Offices)
407-727-3672
(Issuer's Telephone Number)
(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 [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
At August 11, 1997, there were outstanding 7,993,652
shares of Common Stock, $.015 par value per share.
Transitional Small Business Disclosure Format (check one): [ ] Yes [X] No
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PARAVANT COMPUTER SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Balance Sheet - June 30, 1997...................................................... 2
Condensed Statements of Earnings for the three months ended June 30,
1997 and 1996.............................................................................. 4
Condensed Statements of Earnings for the nine months ended June 30,
1997 and 1996.............................................................................. 5
Condensed Statements of Cash Flows for the nine months
ended June 30, 1997 and 1996............................................................... 6
Notes to Condensed Financial Statements...................................................... 8
Item 2. Management's Discussion and Analysis of Operations............................ 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................. 16
SIGNATURES................................................................................... 17
</TABLE>
1
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<PAGE>
PART I - FINANCIAL INFORMATION
PARAVANT COMPUTER SYSTEMS, INC.
Condensed Balance Sheet
June 30, 1997
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $ 424,742
Accounts receivable, net 3,536,841
Employee receivables and advances 21,815
Inventory (note 2) 3,985,306
Prepaid expenses 114,169
Deferred income taxes 167,047
------------
Total current assets 8,249,920
Property, plant and equipment, net 790,501
Intangible assets, net 72,750
Demonstration pool and custom mold, net 357,635
Other assets 100,999
------------
$ 9,571,805
------------
------------
</TABLE>
See accompanying notes to condensed financial statements
2
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
<S> <C>
Current liabilities:
Other note payable $ 50,000
Current maturities of long-term debt 110,004
Current maturities of capital lease obligations 144,533
Accounts payable 613,468
Accrued commissions 339,616
Accrued expenses 573,913
Accrued incentive compensation 136,488
Income taxes payable 45,372
-----------
Total current liabilities 2,013,394
Long-term debt, less current maturities 36,648
Capital lease obligations, less current maturities 96,355
Deferred income taxes 7,657
-----------
Total liabilities 2,154,054
-----------
Stockholders' equity:
Preferred stock, par value $.01 per share. Authorized 2,000,000
shares, none issued -
Common stock, par value $.015 per share. Authorized 30,000,000
shares, issued and outstanding 7,993,652 shares 119,449
Additional paid-in capital 5,066,068
Retained earnings 2,232,234
------------
Total stockholders' equity 7,417,751
------------
$ 9,571,805
------------
------------
</TABLE>
3
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PARAVANT COMPUTER SYSTEMS, INC.
Condensed Statements of Earnings
For the three months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
(UNAUDITED)
1997 1996
---- ----
<S> <C> <C>
Revenues $ 3,069,223 1,957,228
Cost of revenues 1,657,386 1,121,953
----------- ---------
Gross profit 1,411,837 835,275
Selling and administrative expense 1,048,838 906,425
----------- ---------
Income (loss) from operations 362,999 (71,150)
Other income (expense):
Interest expense (17,952) (107,023)
Miscellaneous 4,897 (30,640)
----------- ----------
Income (loss) before income taxes 349,944 (208,813)
Income tax benefit (expense) (123,618) 72,701
----------- ----------
Net income (loss) $ 226,326 (136,112)
----------- ----------
----------- ----------
Weighted average number of shares outstanding 12,806,956 4,883,333
----------- ----------
----------- ----------
Earnings (loss) per share $ .03 (.03)
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to condensed financial statements.
4
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PARAVANT COMPUTER SYSTEMS, INC.
Condensed Statements of Earnings
For the nine months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
(UNAUDITED)
1997 1996
---- ----
<S> <C> <C>
Revenues $ 8,196,533 3,682,110
Cost of revenues 4,377,275 2,253,864
----------- ---------
Gross profit 3,819,258 1,428,246
Selling and administrative expense 3,216,759 2,315,082
----------- ---------
Income (loss) from operations 602,499 (886,836)
Other income (expense):
Interest expense (83,245) (329,225)
Miscellaneous 23,120 (32,646)
----------- ----------
Income (loss) before income taxes 542,374 (1,248,707)
Income tax benefit (expense) (190,699) 463,769
----------- ----------
Net income (loss) $ 351,675 (784,938)
----------- ----------
----------- ----------
Weighted average number of shares outstanding 12,806,956 4,883,333
----------- ----------
----------- ----------
Earnings (loss) per share $ .04 (.16)
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to condensed financial statements.
5
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PARAVANT COMPUTER SYSTEMS, INC.
Condensed Statements of Cash Flows
For the nine months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
(UNAUDITED)
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 351,675 (784,938)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 332,347 165,671
Deferred income taxes (27,320) (463,769)
Increase (decrease) in cash caused by change in:
Accounts receivable 3,624,351 2,384,843
Employee receivables and advances 51,687 2,851
Inventory (1,481,414) (1,438,312)
Costs and estimated earnings in excess of billings on
uncompleted contracts - 322,071
Prepaid expenses 27,022 12,685
Income taxes receivable - (11,017)
Other assets (84,863) (6,172)
Accounts payable (430,263) (805,188)
Accrued commissions (109,635) (169,951)
Accrued expenses 143,013 (132,622)
Accrued incentive compensation (3,512) -
Income taxes payable (289,621) (317,665)
--------- ---------
Net cash provided by (used in) operating activities 2,103,467 (1,241,513)
--------- ---------
Cash flows from investing activities:
Acquisitions of property, plant and equipment (347,805) (57,617)
Acquisitions of demonstration pool and custom mold (117,725) (59,249)
Acquisition of rights (5,000) -
-------- --------
Net cash used in investing activities (470,530) (116,866)
-------- --------
(Continued)
</TABLE>
6
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PARAVANT COMPUTER SYSTEMS, INC.
Condensed Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
(UNAUDITED)
1997 1996
---- ----
<S> <C> <C>
Cash flows from financing activities:
Repayments on long-term debt (582,503) (82,692)
Repayments on other note payable (50,000) (275,000)
Repayments of note payable to bank (540,000) (2,960,000)
Repayments on capital lease obligations (120,992) (50,189)
Proceeds from sale of common stock 20,231 4,591,556
----------- ---------
Net cash provided by (used in) financing activities (1,273,264) 1,223,675
----------- ---------
Net increase (decrease) in cash and cash equivalents 359,673 (134,704)
Cash and cash equivalents at beginning of the period 65,069 211,426
----------- ---------
Cash and cash equivalents at end of the period $ 424,742 76,722
----------- ---------
----------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 85,663 329,225
----------- ---------
----------- ---------
Income taxes $ 460,327 28,406
----------- ---------
----------- ---------
Supplemental disclosure of noncash investing and financing
activities:
The Company entered into capital lease agreements for
office equipment and furniture totaling $194,753 and
$27,371 during the nine months ended June 30, 1997
and 1996, respectively.
The Company converted $500,000 of its notes payable to
bank to long-term debt during the nine months ended
June 30, 1996.
</TABLE>
See accompanying notes to condensed financial statements.
7
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PARAVANT COMPUTER SYSTEMS, INC.
Notes to Condensed Financial Statements
June 30, 1997 and 1996
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of Paravant
Computer Systems, Inc. (the "Company" or "Paravant") have been prepared in
accordance with the instructions and requirements of Regulation S-B and,
therefore, do not include all information and footnotes necessary for a
fair presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles. In the
opinion of management, such financial statements reflect all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
statement of financial position, results of operations and cash flows for
the interim periods presented. Operating results for the interim periods
are not necessarily indicative of the results that may be expected for the
full fiscal years.
These condensed financial statements and footnotes should be read in
conjunction with the Company's audited financial statements for the fiscal
years ending September 30, 1996 and 1995 included in the Company's Annual
Report on Form 10-KSB as filed with the Securities and Exchange
Commission. The accounting principles used in preparing these condensed
financial statements are the same as those described in such statements.
(2) INVENTORY
The following is a summary of inventory at June 30, 1997:
Raw materials $2,618,244
Work in process 1,188,130
Finished goods 254,509
----------
4,060,883
Reserve for obsolete inventory (75,577)
----------
$3,985,306
----------
----------
(Continued)
8
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PARAVANT COMPUTER SYSTEMS, INC.
Notes to Condensed Financial Statements
(3) NOTE PAYABLE TO BANK
In April 1997, the Company renegotiated the terms of its line of credit
arrangement with a bank. Under the new terms, all borrowings bear interest
at the bank's prime rate, or at the 30 or 60 day LIBOR plus 2.70%.
(4) STOCK OPTIONS
On November 29, 1996, the Company granted options under its incentive
stock option plan to employees to purchase 208,000 shares of the Company's
common stock at an exercise price of $5.125 per share, which was the
market price of the shares at the date of issuance.
On February 27, 1997, the Company granted options under its nonemployee
director stock option plan to purchase 15,000 shares of the Company's
common stock at an exercise price of $6.00 per share, which was the market
price of the shares at the date of issuance.
(5) EARNINGS (LOSS) PER SHARE
Earnings (loss) per share have been computed by dividing net income (loss)
by the weighted average number of common shares outstanding. The weighted
average number of shares outstanding have been determined assuming shares
and options issued subsequent to June 30, 1997 were outstanding for the
periods presented. When dilutive, stock options and warrants are included
as common share equivalents using the treasury stock method. Fully diluted
earnings per common share amounts did not differ from amounts computed
under the primary computation for the periods ended June 30, 1997 and
1996.
(Continued)
9
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PARAVANT COMPUTER SYSTEMS, INC.
Notes to Condensed Financial Statements
(6) FUTURE APPLICATION OF ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share".
Statement No. 128 supersedes APB Opinion No. 15, "Earnings Per Share" and
specifies the computation, presentation and disclosure requirements for
earnings per share ("EPS") for entities with publicly held common stock or
potential common stock. Statement 128 was issued to simplify the
computation of EPS. It requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.
Statement 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted. After adoption, all prior EPS data presented shall be restated
to conform with Statement 128. The Company does not expect the adoption of
Statement 128 to have a material impact on the EPS data that has been
presented.
10
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<PAGE>
Item 2. Management's Discussion and Analysis of Operations
RESULTS OF OPERATIONS
Three months ended June 30, 1997 vs. June 30, 1996
Revenues for the three months ended June 30, 1997 were $3,069,223, an
increase of $1,111,995 or 57% over the three months ended June 30, 1996 revenues
of $1,957,228. This increase is primarily due to Paravant's strong backlog
($9,099,394 at June 30, 1997) and continued full scale production deliveries to
Raytheon in support of the U.S. Marine Corps HAWK/AVENGER Air Defense missile
system upgrade and additional requirements of Lockheed Martin's Enhanced
Diagnostic Aid ("EDNA") systems for use by the U.S. Air Force on F-16 Fighter
Aircraft.
Gross profit was $1,411,837 for the three months ended June 30, 1997, or
46% of sales, compared to $835,275 or 43% of sales in the three months ended
June 30, 1996, a total increase of $576,562 or 69%. This increase in gross
profitability results primarily from the increased revenues discussed above.
Selling and administrative expenses of $1,048,838 in the three months ended
June 30, 1997, increased by $142,413 or 16% from the three months ended June 30,
1996 expenses of $906,425. As a percentage of sales, selling and administrative
expenses were 34% and 46% in the three months ended June 30, 1997 and 1996,
respectively. The increased selling and administrative costs are due primarily
to increased sales commissions directly attributable to the increased sales
discussed earlier herein, increased professional fees and increased expenditures
for research and development.
Income from operations improved to $362,999 for the three months ended June
30, 1997 from a loss of $(71,150) in the three months ended June 30, 1996, an
improvement of $434,149. As a percentage of sales, income from operations
improved to 12% in the three months ended June 30, 1997 from a loss of (4%) in
the three months ended June 30, 1996. The improvement in income (loss) from
operations overall resulted primarily from increased revenues and gross
profits, offset in part by increased selling and administrative expenses as
discussed above.
Interest expense for the three months ended June 30, 1997 was reduced by
$89,071 or 83% to $17,952 compared to $107,023 in the three months ended June
30, 1996. As a percentage of sales, interest expense decreased to 1% in the
three months ended June 30, 1997 from 5% in the three months ended June 30,
1996. This decrease is due to a significant decline in outstanding credit
balances made possible by application of a portion of the proceeds of the
Company's initial public offering of securities (IPO) in June, 1996.
As a result, the Company's net income improved by 266% to $226,326 in the
three months ended June 30, 1997 when compared to a loss of $(136,112) in 1996,
an increase of $362,438 in total. Net income as a percentage of sales was 7% in
the three months ended June 30, 1997 and net loss as a percentage of sales was
(7%) in the three months ended June 30, 1996. The improvement in net income
overall resulted primarily from increased revenue, gross profits and reduced
interest expense, offset in part by increased selling and administrative
expenses as discussed above.
11
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<PAGE>
Nine months ended June 30, 1997 vs. June 30, 1996
Revenues for the nine months ended June 30, 1997 were $8,196,533, an
increase of $4,514,423 or 123% over the nine months ended June 30, 1996 revenues
of $3,682,110. This increase is primarily due to Paravant's strong backlog
($9,099,394 at June 30, 1997) and continued full scale production deliveries to
Raytheon in support of the U.S. Marine Corps HAWK/AVENGER Air Defense missile
system upgrade and additional requirements of Lockheed Martin's EDNA systems for
use by the U.S. Air Force on F-16 Fighter Aircraft.
Gross profit was $3,819,258 for the nine months ended June 30, 1997, or 47%
of sales, compared to $1,428,246 or 39% of sales in the nine months ended
June 30, 1996, a total increase of $2,391,012 or 167%. This increase in gross
profitability results primarily from the increased revenues discussed above.
Selling and administrative expenses of $3,216,759 in the nine months ended
June 30, 1997, increased by $901,667 or 39% from the nine months ended June 30,
1996 expenses of $2,315,082. As a percentage of sales, selling and
administrative expenses were 39% and 63% in the nine months ended June 30, 1997
and 1996, respectively. The increased selling and administrative costs are due
primarily to increased sales commissions directly attributable to the increased
sales discussed earlier herein, increased professional fees and increased
expenditures for research and development.
Income from operations improved to $602,499 for the nine months ended June
30, 1997 from a loss of $(886,836) in the nine months ended June 30, 1996, an
improvement of $1,489,335. As a percentage of sales, income from operations
improved to 7% in the nine months ended June 30, 1997 from a loss of (24%) in
the nine months ended June 30, 1996. The improvement in income (loss) from
operations overall resulted primarily from increased revenues and gross profits,
offset in part by increased selling and administrative expenses as discussed
above.
Interest expense for the nine months ended June 30, 1997 was reduced by
$245,980 or 75% to $83,245 compared to $329,225 in the nine months ended June
30, 1996. As a percentage of sales, interest expense decreased to 1% in the nine
months ended June 30, 1997 from 9% in the nine months ended June 30, 1996. This
decrease is due to a significant decline in outstanding credit balances made
possible by the proceeds of the Company's IPO in June, 1996.
As a result, the Company's net income improved by 141% to $351,675 in the
nine months ended June 30, 1997 when compared to a net loss of $(784,938) in
1996, an increase of $1,136,613 in total. Net income as a percentage of sales
was 4% in the nine months ended June 30, 1997 and net loss as a percentage of
sales was (21%) in the nine months ended June 30, 1996. The improvement in net
income overall resulted primarily from increased revenue, gross profits and
reduced interest expense, offset in part by increased selling and administrative
expenses as discussed above.
12
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LIQUIDITY AND CAPITAL RESOURCES
In June 1996, the Company completed its IPO, resulting in aggregate net
proceeds of $4,594,332 to the Company after deducting certain commissions,
expenses and offering costs. The Company used a portion of the net proceeds of
the IPO to repay certain loans referred to below in the aggregate principal
amount of $1,102,294, and paid approximately $88,000 of the net proceeds of the
IPO to reimburse UES, Inc., an affiliate of the Company which is controlled by
Krishan K. Joshi, the Company's Chairman ("UES"), for certain health insurance
and other expenses paid on the Company's behalf. Substantially all of the
remaining balance of the net proceeds of the IPO were utilized to reduce
indebtedness then outstanding under the Company's revolving credit arrangement
with National City Bank in Dayton, Ohio described below, resulting in increased
availability under the credit arrangement for working capital needs and general
corporate purposes.
The Company has a secured revolving credit arrangement with National City
Bank in Dayton, Ohio (the "Bank") for a credit line of up to $4,000,000 that is
due on demand and bears interest at the prime rate, or 30 or 60 day LIBOR rates
plus 2.70%. All borrowings are collateralized by accounts receivable, inventory
and equipment. As of June 30, 1997, there were no borrowings outstanding under
this arrangement. The Company intends to maintain this arrangement with the Bank
for the foreseeable future, although there can be no assurance that the Bank
will not in the future demand repayment of any amounts then outstanding under
its loan arrangement. The Company also has a secured term loan provided by the
Bank bearing interest at a rate adjusted monthly to prime plus 1.5% at June 30,
1997. Monthly principal payments of $9,167 are due through October 1998. All
borrowings thereunder are secured by a lien on accounts receivable, inventory
and equipment. As of June 30, 1997, there was $146,652 outstanding under this
arrangement with the Bank. The Company also has capital lease obligations of
$240,888 at June 30, 1997. These capital lease obligations bear interest rates
of 1.25% to 1.50% over the prime rate and are expected to be satisfied within 3
years.
On April 22, 1997, the Company prepaid a note payable to the Bank in an
aggregate principal amount of $500,000. Such note bore interest at the prime
rate, and was scheduled to be due and payable in March 1998.
In August 1995, the Company borrowed $400,000 pursuant to bridge notes
("Notes") from a group of private investors at an annual interest rate of 6%. In
addition, the Company sold to the same investors warrants to purchase 480,000
shares of Common Stock, exercisable until June 3, 2001 at an exercise price of
$2.00 per share. The Notes, which bear interest at 6%, have an outstanding
balance of $50,000 at June 30, 1997.
In connection with certain sales of shares of Common stock in March 1996 by
UES Florida, Inc. (a subsidiary of UES), Richard P. McNeight, the President and
Chief Operating Officer of the Company, William R. Craven, the Vice President of
Marketing of the Company, and another shareholder, such shareholders loaned to
the Company in April 1996, for working capital purposes, the sums of $646,294;
$78,000; $26,000 and $52,000, respectively, or an aggregate of $802,294 of the
proceeds realized from such sales, at an interest rate of 6% per annum. Such
loans, plus accrued interest thereon in an aggregate amount of $8,681, were
repaid in June 1996 in accordance with their terms from a portion of the net
proceeds of the IPO.
The Company has, and continues to have, a dependence upon a few major
customers for a significant portion of its revenues. This dependence for
revenues has not been responsible for any unusual fluctuations in operating
results in the past, and management does not believe this concentration will
generate fluctuations in operating results in the future. However, the potential
impact of losing a major customer without securing offsetting and equivalent
orders could result in a significant negative impact to the operating results of
the Company. The gross margin contributions of
13
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the Company's major customers are not generally different than those from its
other customers as a whole.
The Company's operating cash flow was $2,103,467 for the nine months ended
June 30, 1997. The improvement in the Company's operating cash flow resulted
primarily from improved net income as more fully described under "Results of
Operations" herein for the three and nine months ended June 30, 1997 and
improved working capital as more fully presented in the Condensed Statements of
Cash Flows for the same period. Negative cash flows for the years ended
September 30, 1996 and 1995, ($1,426,090) and $(298,577), respectively, were
primarily associated with general increases in inventory levels and temporary
increases associated with accounts receivable, all in support of the Company's
rapid increase in operations reflected by the growth in annual revenues from
$4,621,527 in fiscal 1993 to $10,495,063 in fiscal 1996, an increase of almost
127%. In addition, the Company invested $347,805 in the nine months ended June
30, 1997, $127,352 in fiscal 1996 and $60,350 in fiscal 1995 to acquire
manufacturing equipment also in support of these expanded operating levels.
Due to the Company's orders related to U.S. Department of Defense
procurements, the operations of the Company have been cyclical and have
historically resulted in a significant increase in deliveries and revenues in
the fourth quarter of its fiscal year ending on September 30. Due to the
Company's strong backlog and increased revenues, this cycle is less significant
in the first nine months of the current fiscal year, resulting in a significant
improvement in cash provided from operations, as discussed earlier herein, and
less significant changes in inventory levels than the prior period.
As of June 30, 1997, management believes inventory balances are not in
excess of requirements for deliveries and normal minimum stocking levels.
Generally, accounts receivable at the end of each quarter are collected
within the following quarter. However, the Company's major customer, Raytheon,
has traditionally averaged approximately 80 to 100 days in satisfaction
of outstanding accounts receivable balances. This situation is improving
through negotiation with Raytheon, and Management believes that average
outstanding balances will be reduced to more traditional levels in
the future, although there can be no assurance of such. The Company's total
outstanding account receivable balance of $3,536,841 at June 30, 1997 has
been subsequently reduced by approximately $779,289 in cash collections.
Notwithstanding this condition, the Company has not been required to write
off any significant bad debt in the past, and management does not believe
that any significant accounts receivable at June 30, 1997 are likely to be
uncollectible.
As of June 30, 1997 and 1996, the Company's backlog was $9,099,394 and
$4,507,747, respectively, consisting of firm fixed price purchase orders. All of
these purchase orders are expected to generate profits within the Company's
historical levels and the Company believes that the completion of the orders
comprising its backlog, and any new orders which may be accepted by the Company
in the future, should not result in additional liquidity pressures which cannot
be addressed in a manner consistent with the Company's past practices. The
Company presently expects to manufacture and deliver most of the products in
backlog within the next 12 months.
The Company anticipates, based on its currently proposed plans and
assumptions relating to its operations, that the proceeds of the IPO, which was
consummated in June 1996, together with estimated working capital from
operations and other sources of funds, will be adequate to sustain operations
for at least twelve months. As the Company continues to grow, additional bank
borrowings, other debt placements and equity offerings may be considered,
in part or in combination, as the situation warrants. In addition, in the event
the Company's plans change or its assumptions change or prove to be inaccurate,
or if projected cash flow otherwise proves insufficient to
14
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fund operations, the Company might need to seek other sources of financing to
conduct its operations. There can be no assurance that any such other sources of
financing would be available when needed, on commercially reasonable terms, or
at all.
CAUTIONARY STATEMENT
This Quarterly Report of Form 10-QSB contains certain forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements as a result of various factors, including but not
limited to the budgetary and appropriations policies of the Company's
governmental customers, the competitive environment for the Company's products
and services, the timing of new orders and the degree of market penetration of
the Company's new products.
15
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PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
<TABLE>
<S> <C>
27 Finanical Data Schedule
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1997.
16
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PARAVANT COMPUTER SYSTEMS, INC.
Date: August 13, 1997 By /s/ Kevin J. Bartczak
--------------------------
Kevin J. Bartczak, Vice
President, Treasurer and
Chief Financial Officer
(as both a duly authorized
officer of Registrant and
as principal financial
officer of Registrant)
17
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEETS OF PARAVANT COMPUTER SYSTEMS, INC. AS OF JUNE 30, 1997
AND THE RELATED CONDENSED STATEMENTS OF EARNINGS AND CASH FLOWS FOR THE NINE
MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 9-MOS
<CASH> 424,742
<SECURITIES> 0
<RECEIVABLES> 3,558,656
<ALLOWANCES> 0
<INVENTORY> 3,965,306
<CURRENT-ASSETS> 8,249,920
<PP&E> 1,697,030
<DEPRECIATION> 906,529
<TOTAL-ASSETS> 9,571,805
<CURRENT-LIABILITIES> 2,013,394
<BONDS> 36,648
<COMMON> 119,449
0
0
<OTHER-SE> 7,298,302
<TOTAL-LIABILITY-AND-EQUITY> 9,571,805
<SALES> 8,196,533
<TOTAL-REVENUES> 8,196,533
<CGS> 4,377,275
<TOTAL-COSTS> 4,377,275
<OTHER-EXPENSES> 3,216,759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,245
<INCOME-PRETAX> 542,374
<INCOME-TAX> 190,699
<INCOME-CONTINUING> 351,675
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 351,675
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
