<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- OF 1934
For the fiscal year ended June 30, 1998
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the Transition Period From to
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Commission File Number 0-4169
SYS
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(Name of Small Business Issuer in Its charter)
California 95-2467354
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
9620 Chesapeake Drive, San Diego, California 92123
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(Address of Principal Executive Offices) (Zip Code)
(619) 715-5500
- ------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, No Par Value
Preferred Stock, $.50 Par Value
Indicate by check mark 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 past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in
1
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
SELECTED FINANCIAL DATA:
The data that follows summarizes financial information about the Company that is
further discussed below:
AS OF AND FOR THE FISCAL YEARS ENDED JUNE 30
(thousands except per share amounts)
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
OPERATING RESULTS:
- ------------------
Contract revenues $7,877 $7,649 $5,942
Costs and expenses:
Contract costs 6,653 6,596 4,933
General and administrative 868 783 681
Income from operations 356 270 328
Other (income) expense:
Expenses related to settlement of
litigation and rescinded acquisition 0 0 156
Interest income (9) 0 0
Interest expense 38 40 44
Income before income taxes 327 230 128
Provision for income taxes 43 1 0
Net income 284 229 128
Net income applicable to
common stock 275 220 126
Basic earnings per common share 0.09 0.07 0.04
Diluted earnings per common share 0.08 0.07 0.04
BALANCE SHEET DATA:
- -------------------
Total assets 1,816 1,615 1,310
Borrowings-bank line of credit 119 0 98
Long-term obligations (including
current portion) 214 239 73
Stockholders' equity 892 612 380
</TABLE>
12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SYS
By: /s/ Robert D. Mowry Date: 10/13/98
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ROBERT D. MOWRY
Chairman and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: Date:
----------------------------------- -----------------------
PAUL I. ANDERSON
Director
By: Date:
----------------------------------- -----------------------
ROBERT E. CARROLL
Director
By: /s/ Lawrence L. Kavanau Date: 10/13/98
----------------------------------- -----------------------
LAWRENCE L. KAVANAU
Director and Chief Financial Officer
By: /s/ L. Randolph Knapp Date: 10/13/98
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L. RANDOLPH KNAPP
Director
By: /s/ Robert D. Mowry Date: 10/13/98
----------------------------------- -----------------------
ROBERT D. MOWRY
Director
By: /s/ W. Gerald Newmin Date: 10/13/98
----------------------------------- -----------------------
W. GERALD NEWMIN
Director and Corporate Secretary
By: /s/ Charles E. Vandeveer Date: 10/13/98
----------------------------------- -----------------------
CHARLES E. VANDEVEER
Director
By: /s/ Charles H. Werner Date: 10/13/98
----------------------------------- -----------------------
CHARLES H. WERNER
Director
By: /s/ Richard W. Wood Date: 10/13/98
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RICHARD W. WOOD
Director
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SYS
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
Convertible Retained
Convertible Series B Earnings
Preferred Stock Preference Stock Common Stock (Accumu-
----------------- ------------------ ------------------- lated
Shares Amount Shares Amount Shares Amount Deficit) Total
------- -------- ------- -------- --------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1996 110,000 $55,000 139,561 $139,561 2,827,186 $372,878 $(187,858) $379,581
Cash dividends on
4% convertible preferred
stock at $.05 per share (5,500) (5,500)
Issuance of common stock
as compensation 3,500 175 175
Proceeds from exercise
of stock options 180,000 9,000 9,000
Conversion of 9% convertible
Series B preference stock
into common stock (61,366) (61,366) 122,732 61,366
Net income 229,008 229,008
------- -------- ------- -------- --------- --------- ----------- --------
Balance, June 30, 1997 110,000 55,000 78,195 78,195 3,133,418 443,419 35,650 612,264
Cash dividends on
4% convertible preferred
stock at $.02 per share (2,200) (2,200)
Cash dividends on
9% convertible Series B
preference stock at
$.02 per share (1,405) (1,405)
Conversion of 9% convertible
Series B preference stock
into common stock (7,550) (7,550) 15,100 7,550
Net income 283,706 283,706
------- -------- ------- -------- --------- --------- ----------- --------
Balance, June 30, 1998 110,000 $ 55,000 70,645 $ 70,645 3,148,518 $450,969 $ 315,751 $892,365
------- -------- ------- -------- --------- --------- ----------- --------
------- -------- ------- -------- --------- --------- ----------- --------
</TABLE>
See Notes to Financial Statements.
F-5
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SYS
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and summary of significant accounting policies
(continued):
Earnings per common share:
Effective June 30, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, EARNINGS PER
SHARE ("SFAS 128"), which replaced the presentation of "primary" and
"fully-diluted" earnings per common share required under previously
promulgated accounting standards with the presentation of "basic" and
"diluted" earnings per common share.
Basic earnings per common share is calculated by dividing net income
applicable to common stock by the weighted average number of common
shares outstanding during the period. The calculation of diluted
earnings per common share is similar to that of basic earnings per
common share, except that the denominator is increased to include the
number of additional common shares that would have been outstanding if
all potentially dilutive common shares, principally those issuable
upon the conversion of preferred stock and the exercise of stock
options, were issued during the period.
The following table summarizes the calculation of basic and diluted
earnings per common share for each period:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Numerators:
Net income (A) $ 283,706 $ 229,008
Deduct - preferred dividend requirements 8,558 9,238
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Net income applicable to common stock (B) $ 275,148 $ 219,770
----------- -----------
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Denominators:
Weighted average shares for basic net
earnings per common share (C) 3,144,171 2,946,054
Add effects of dilutive securities from
assumed:
Conversion of preferred stock 255,637 351,462
Exercise of stock options 40,476 1,215
----------- -----------
Weighted average shares for diluted net
earnings per common share (D) 3,440,284 3,298,731
----------- -----------
----------- -----------
Basic net earnings per common share (B DIVIDED BY C) $ .09 $ .07
----------- -----------
----------- -----------
Diluted net earnings per common share (A DIVIDED BY D) $ .08 $ .07
----------- -----------
----------- -----------
</TABLE>
F-8
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SYS
NOTES TO FINANCIAL STATEMENTS
Note 2 - Contract receivables:
Contract receivables consist of the following at June 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------------- -------------
<S> <C> <C>
Amounts billed, less allowance for doubtful
accounts of $7,000 $ 688,064 $ 177,083
Recoverable costs and accrued profit on
progress completed - not billed 62,895 610,970
Retentions, due upon completion of contracts 123,655 74,947
Recoverable costs subject to closure of
contracts - not billed, less allowance
for doubtful accounts of $19,000 310,664 179,520
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Totals $ 1,185,278 $ 1,042,520
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</TABLE>
At June 30, 1998 recoverable costs and accrued profit on progress completed
- not billed consisted of amounts billed in July 1998. The balances
comprising receivables pursuant to retainage provisions will be due upon
completion of the contracts and acceptance by the customer; based on the
Company's experience with similar contracts in recent years, the balances
at June 30, 1998 are expected to be collected in fiscal 1999 and 2000.
Recoverable costs subject to closure of contracts - not billed consist
primarily of revenues recognized on specific delivery orders as a result of
actual indirect expense rates exceeding the Defense Contract Audit Agency
approved billing rates. The Company does not recognize revenues in excess
of the allowable funding limitations on each delivery order. These
receivables will be due upon closure of the specific delivery orders or the
contracts.
Note 3 - Receivables from related parties:
Receivables from related parties consisted of the following at June 30,
1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Receivable from company in which an officer
of the Company has an interest $189,774 $ 79,439
Receivable from officer of the Company 50,000
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Totals $239,774 $ 79,439
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</TABLE>
The balances are due on demand and are noninterest bearing.
F-10
