-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HqU0oeUUKarvcAuPRz12LFuvpBk8N8NtcZZeeSead43qfHRxSwjt2JtSU0kbRy+j 4EwfdNb1qBmboYHS8ZfnAg== 0000892569-97-003450.txt : 19971216 0000892569-97-003450.hdr.sgml : 19971216 ACCESSION NUMBER: 0000892569-97-003450 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19971212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROCOM TECHNOLOGY INC CENTRAL INDEX KEY: 0001025711 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 330268063 STATE OF INCORPORATION: CA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21653 FILM NUMBER: 97737715 BUSINESS ADDRESS: STREET 1: 2181 DUPONT DR CITY: IRVINE STATE: CA ZIP: 92715 BUSINESS PHONE: 7148521000 MAIL ADDRESS: STREET 1: 2181 DUPONT DRIVE CITY: IRVINE STATE: CA ZIP: 92715 10-Q 1 QUARTERLY REPORT FOR THE QUARTER ENDED 10-31-1997 1 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended OCTOBER 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _______________ Commission file number 0-21053 PROCOM TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) California 33-0268063 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 2181 Dupont Drive, Irvine, CA 92612 (Address of principal executive office) (Zip Code) (714) 852-1000 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding in 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 The number of shares of Common Stock, $.01 par value, outstanding on November 30, 1997, was 11,066,048. 2 PART I FINANCIAL INFORMATION ITEM 1. Financial Statements. PROCOM TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS ASSETS
OCTOBER 31, JULY 31, 1997 1997 ----------- ----------- (UNAUDITED) (AUDITED) Current assets: Cash ............................................................... $ 518,000 $ 227,000 Marketable securities .............................................. 19,404,000 18,550,000 Accounts receivable, less allowance for doubtful accounts and sales returns of $1,300,000 and $992,000, respectively ........................................... 14,956,000 12,545,000 Inventories, net ................................................... 10,628,000 9,063,000 Deferred income taxes .............................................. 1,405,000 1,405,000 Prepaid expenses ................................................... 491,000 588,000 Other current assets ............................................... 16,000 49,000 ----------- ----------- Total current assets ....................................... 47,418,000 42,427,000 Property and equipment, net .......................................... 937,000 816,000 Other assets ......................................................... 33,000 31,000 ----------- ----------- Total assets ............................................... $48,388,000 $43,274,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ................................................... $12,400,000 $10,518,000 Accrued expenses and other current liabilities ..................... 877,000 764,000 Accrued compensation ............................................... 1,222,000 1,462,000 Capital lease obligations .......................................... 29,000 29,000 Income taxes payable ............................................... 1,216,000 434,000 ----------- ----------- Total current liabilities .................................. 15,744,000 13,207,000 ----------- ----------- Total liabilities .......................................... 15,744,000 13,207,000 ----------- ----------- Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding .................................... -- -- Common stock, $.01 par value; 65,000,000 shares authorized, 11,066,048 and 11,024,562 shares issued and outstanding, respectively ..................................................... 111,000 110,000 Additional paid in capital ......................................... 16,570,000 16,467,000 Retained earnings .................................................. 15,963,000 13,490,000 ----------- ----------- Total shareholders' equity ................................. 32,644,000 30,067,000 ----------- ----------- Total liabilities and shareholders' equity ................... $48,388,000 $43,274,000 =========== ===========
The accompanying notes are an integral part of these consolidated balance sheets. 2 3 PROCOM TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED --------------------------------- OCTOBER 31, OCTOBER 25, 1997 1996 ------------ ------------ (UNAUDITED) (UNAUDITED) Net sales ........................... $ 31,291,000 $ 24,915,000 Cost of sales ....................... 20,607,000 16,490,000 ------------ ------------ Gross profit ................... 10,684,000 8,425,000 Selling, general and administrative expenses .......................... 5,663,000 4,367,000 Research and development expenses .......................... 1,280,000 688,000 ------------ ------------ Operating income ............... 3,741,000 3,370,000 Other (income) expense Interest income .................... 287,000 -- Interest (expense) ................. -- (60,000) ------------ ------------ Income before income taxes .......... 4,028,000 3,310,000 Provision for income taxes .......... 1,555,000 1,295,000 ------------ ------------ Net income ..................... $ 2,473,000 $ 2,015,000 ============ ============ Net income per share ................ $ 0.22 $ 0.22 ============ ============ Weighted average number of shares ............................ 11,210,000 9,172,000 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 3 4 PROCOM TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
COMMON STOCK ----------------------- PAID IN RETAINED SHARES AMOUNT CAPITAL EARNINGS TOTAL ---------- ------- ---------- ---------- ---------- Balance at July 29, 1994 9,000,000 $ 3,000 $ -- $ 1,561,000 $ 1,564,000 Net income ............ -- -- 723,000 723,000 ---------- -------- ---------- ----------- ----------- Balance at July 28, 1995 9,000,000 3,000 -- 2,284,000 2,287,000 Net income ............ -- -- -- 2,849,000 2,849,000 ---------- -------- ---------- ----------- ----------- Balance at July 26, 1996 9,000,000 3,000 -- 5,133,000 5,136,000 Change in par value to -- $.01 per share ...... -- 87,000 3,000 (90,000) -- Public offering of .... 2,000,000 20,000 16,166,000 -- 16,186,000 2,000,000 shares Compensatory .......... -- -- 35,000 -- 35,000 stock options Exercise of employee stock options ....... 24,562 -- 62,000 -- 62,000 Tax benefit from exer- -- -- 201,000 -- 201,000 cise of stock options Net income ............ -- -- -- 8,447,000 8,447,000 ---------- -------- ----------- ------------ ----------- Balance at July 31, 1997 11,024,562 110,000 16,467,000 13,490,000 30,067,000 Exercise of employee stock options and related tax benefit . 41,486 1,000 103,000 -- 104,000 Net income ............ -- -- -- 2,473,000 2,473,000 ---------- -------- ----------- ------------ ----------- Balance at October 31, 1997 (unaudited) ...... 11,066,048 $111,000 $16,570,000 $ 15,963,000 $32,644,000 ========== ======== =========== ============ ===========
The accompanying notes are an integral part of these consolidated financial statements. 4 5 PROCOM TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED ----------------------------- OCTOBER 31, OCTOBER 25, 1997 1996 ------------ ------------ (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Net income $ 2,473,000 $ 2,015,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 104,000 64,000 Changes in assets and liabilities: Accounts receivable (2,411,000) (1,849,000) Inventories (1,565,000) (2,799,000) Deferred income taxes -- (185,000) Prepaid expenses 97,000 (35,000) Other current assets 33,000 (2,000) Other assets (2,000) (1,000) Accounts payable 1,882,000 3,329,000 Accrued expenses 113,000 121,000 Accrued compensation (240,000) (1,638,000) Income taxes payable 782,000 913,000 ------------ ------------ Net cash provided by operating activities 1,266,000 (67,000) ------------ ------------ Cash flows from investing activities: Purchase of property and equipment (225,000) (141,000) ------------ ------------ Cash flows from financing activities: Principal payments for capital lease obligations -- (2,000) Exercise of stock options 104,000 -- Borrowings on line of credit -- 22,575,000 Payments made on line of credit -- (23,100,000) Net cash provided by (used in) financing activities 104,000 (527,000) ------------ ------------ Increase (decrease) in cash 1,145,000 (735,000) Cash and marketable commercial paper at beginning of period 18,777,000 793,000 ------------ ------------ Cash and marketable commercial paper at end of period $ 19,922,000 $ 58,000 ============ ============ Supplemental disclosures of cash flow information: Cash paid during the periods for: Interest $ -- $ 106,000 Income taxes $ 775,000 $ 500,000
The accompanying notes are an integral part of these consolidated financial statements. 5 6 PROCOM TECHNOLOGY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED OCTOBER 31, 1997 AND OCTOBER 25, 1996 NOTE 1. GENERAL The accompanying financial information is unaudited, but in the opinion of management, reflects all adjustments (which include only normally recurring adjustments) necessary to present fairly the financial position of Procom Technology, Inc. and its consolidated subsidiary (the "Company") as of the dates indicated and the results of operations for the periods then ended. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. While the Company believes that the disclosures are adequate to make the information presented not misleading, the financial information should be read in conjunction with the audited financial statements, and notes thereto for the three years ended July 31, 1997 included in the Company's Report on Form 10-K for fiscal 1997. Results for the interim period are not necessarily indicative of the results for the entire year. NOTE 2. EARNINGS PER SHARE. Net income (loss) per share has been computed using the weighted average number of shares outstanding during the periods presented. Following the principles of APB 25, the Company has included the dilutive value of stock options outstanding in the calculation of weighted average shares outstanding. Fully diluted earnings per share are not presented because the difference between primary and fully diluted earnings per share is not material. Primary and fully diluted earnings per share amounts are based upon the weighted average number of shares and dilutive common stock equivalents for each period presented. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128). This statement is effective for both interim and annual periods ending after December 15, 1997, and replaces the presentation of "primary" earnings per share with "basic" earnings per share and the presentation of "fully diluted" earnings per share with "diluted" earnings per share. Earlier application is not permitted. When adopted, all previously reported earnings per common share amounts must be restated based on the provisions of the new standard. Pro forma basic and diluted earnings per share calculated in accordance with SFAS No. 128 is provided below. "Diluted" earnings per share are not presented because the difference between "basic" and "diluted" earnings per share, as defined by SFAS No. 128, is not material.
THREE-MONTH PERIOD ENDED ------------------------- OCT. 31, OCT. 25, 1997 1996 ------- ------- Basic earnings per share ................... $ .22 $ .22 ======= =======
6 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General OVERVIEW This Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, comments regarding the Company's revenue, revenue mix, product pricing, gross margins, increased promotional, advertising, research and development spending, and the expanded marketing efforts of the Company. Actual results could differ materially from those projected in the forward-looking statements as a result of important factors including, without limitation, competitive product introductions, price competition, any failure or delay in the Company's ability to develop and introduce new products, the failure of any significant customer, adverse economic conditions generally and other factors set forth in the Company's filings with the Securities and Exchange Commission. The Company was formed in 1987. The Company began producing aftermarket disk drive upgrade products for computer products sold by other manufacturers, and such upgrade products continue to be an important area of focus of the Company's business. In fiscal 1994, the Company introduced its CD server and array product line while continuing to provide a broad line of disk drive upgrade products. In addition, during fiscal 1994, the Company began utilizing computer resellers and VARs as its primary sales channel instead of mass merchants and national distributors and commenced shipment of its first RAID arrays and fault tolerant, high performance storage servers. The Company generally records sales upon product shipment. The Company presently maintains agreements with many of its computer resellers, VARs and distributors that allow limited returns (including stock balancing) and price protection privileges. The Company has in the past experienced high return rates. The Company maintains reserves for anticipated returns (including stock balancing) and price protection privileges. These reserves are adjusted at each financial reporting date to state fairly the anticipated returns (including stock balancing) and price protection claims relating to each reporting period. Generally, the reserves will increase as sales and corresponding returns increase. In addition, under a product evaluation program established by the Company, computer resellers, VARs, distributors and end users generally are able to purchase products on a trial basis and return the products within a specified period if they are not satisfied. Evaluation units are not recorded as sales until the customer has paid for such units. All of the Company's sales are denominated in U.S. dollars, and accordingly, the Company does not believe that fluctuations in foreign exchange rates have had or will have a material adverse effect on the Company's results of operations or financial condition, except to the extent that such fluctuations could cause the Company's products to become relatively more expensive to end users in a particular country, leading to a reduction of sales in that country. Historically, the Company's gross margins have experienced significant volatility. The Company's gross margins vary significantly by product line, and, therefore, the Company's overall gross margin varies with the mix of products sold by the Company. The Company's markets are also characterized by intense competition and declining average unit selling prices as products mature over the course of the relatively short life cycle of individual products, which have often ranged from six to twelve months. In addition, the Company's gross margins may be adversely affected by availability and price increases associated with key products and components from the Company's suppliers, some of which have been in short supply, and inventory obsolescence resulting from older generation products or the unexpected discontinuance of third party components. Finally, the Company's margins vary with the mix of its distribution channels and with general economic conditions. 7 8 RESULTS OF OPERATIONS The following table sets forth the Company's statement of operations data as a percentage of net sales for the periods indicated.
THREE MONTHS ENDED ----------------------------- OCTOBER 31, OCTOBER 25, 1997 1996 ----------- ----------- (UNAUDITED) (UNAUDITED) Net sales ................................... 100.0% 100.0% Cost of sales ............................... 65.9 66.2 ------- ------- Gross profit .............................. 34.1 33.8 Selling, general and administrative expenses .................................. 18.1 17.5 Research and development expenses .................................... 4.0 2.8 ------- ------- Operating income (loss) ................... 12.0 13.5 Interest income and (expense), net .......... 0.9 (0.2) ------- ------- Income (loss) before income taxes ................................... 12.9 13.3 Provision (benefit) for income taxes ..................................... 5.0 5.2 ------- ------- Net income (loss) ......................... 7.9% 8.1% ======= =======
QUARTER ENDED OCTOBER 31, 1997 COMPARED TO QUARTER ENDED OCTOBER 25, 1996 Net Sales Net sales increased 25.7% from $24.9 million for the quarter ended October 25, 1996 to $31.3 million for the quarter ended October 31, 1997. This increase was primarily due to increases in sales of CD servers and arrays and sales of disk drive upgrade subsystems for desktop and notebook computers and, to a lesser extent, increases in net sales of RAID high capacity storage devices. For the quarter ended October 31, 1997, sales of the Company's "Intelligent Network Storage Products", which comprise CD servers and arrays and RAID storage systems, comprised approximately 50%, with sales of disk drive storage upgrade products also comprising approximately 50% of net sales. International sales decreased from $2.2 million, or approximately 9.0% of net sales, in the quarter ended October 25, 1996 to $1.7 million, or approximately 5.4% of net sales, in the quarter ended October 31, 1997. The Company's fiscal second quarter sales have historically remained relatively flat due primarily to heavy reseller participation in trade shows that detract from reseller selling efforts, end user budget constraints that restrict end user purchases and a higher than average number of holidays during the fiscal second quarter which reduce the number of selling days during the quarter by nine. Gross Profit The Company's gross margins increased from 33.8% of net sales for the quarter ended October 25, 1996 to 34.1% of net sales for the quarter ended October 31, 1997. These increases were primarily the result of higher margins on increased sales of recently introduced CD servers and arrays. In addition, the Company realized higher margins on increased sales of disk drive upgrade products for notebook computers and RAID storage products, and such increases more than offset the effect of competition and price erosion typical in the disk drive upgrade industry. 8 9 Selling, General and Administrative Expenses Selling, general and administrative expenses increased from $4,367,000 for the quarter ended October 25, 1996 to $5,663,000 for the quarter ended October 31, 1997. These expenses represented 17.5% and 18.1% of net sales in the quarters ended October 25, 1996 and October 31, 1997, respectively. The dollar increase in selling, general and administrative expenses for the first quarter of fiscal 1997 was primarily a result of increased marketing and promotional costs and increased personnel and related costs necessary to support the Company's growth in net sales. Bad debt expense for the three months of fiscal 1997 was approximately $87,000 or .28% of net sales, compared to approximately $124,000, or .5% of net sales, for the first three months of fiscal 1996. The Company anticipates that the dollar amount of its selling, general and administrative expenses will increase as the Company continues to expand its efforts to penetrate certain sales channels and regions and continues to strengthen and upgrade its existing management information and telecommunications systems. Research and Development Research and development expenses increased 86.1% from $688,000 for the quarter ended October 25, 1996 to $1,280,000 for the quarter ended October 31, 1997. These expenses represented 2.8% and 4.0% of net sales for the each of the quarters ended October 25, 1996 and October 31, 1997, respectively. These increases were primarily due to continued increases in additional hardware developers and software programmers, including the use of independent contract programmers and increased related support costs to develop additional products and enhance existing product features. The Company anticipates that the dollar amount of its research and development expenses will continue to increase, and also may increase as a percentage of net sales, with the expected addition of dedicated engineering resources to develop new product categories, to increase the likelihood that the Company's products will be compatible with a wide range of hardware platforms and network topologies and to further develop CD-FORCE, the Company's proprietary client/server management storage architecture. In addition, the Company intends to continue to update software drivers to ensure that the Company's CD servers and arrays function with a variety of hardware platforms and network operating systems. To date, all of the Company's software development costs have been expensed as incurred, as the impact of capitalizing software costs under Financial Accounting Standard No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed" would have been immaterial to the Company's financial statements. Income Taxes The Company's effective tax rates for the quarters ended October 31, 1997 and October 25, 1996 were approximately 38.6% and 39.1% of pretax income, respectively, which approximate the federal and state statutory rates with modest reductions for benefits resulting from the Company's use of its foreign sales corporation ("FSC") and benefits accruing from the increases in research and development activity, causing an increased research and development credit. Interest Income and Expense As a result of the initial public offering of 2,000,000 shares of the Company's common stock completed in December 1996, the Company received net proceeds, after underwriting discounts and offering costs, of approximately $ 15.9 million. As a result of the offering net proceeds, the Company has, in late December 1996, both reduced amounts outstanding under its line of credit, thereby reducing interest expense, and invested the remaining proceeds in short-term investment grade commercial paper, thereby earning interest income. Accordingly, net interest expense for the first three months of fiscal 1996 was $106,000, while interest income generated in the first three months of fiscal 1997 was $287,000. 9 10 General comments The Company's results of operations have in the past varied significantly and are likely in the future to vary significantly as a result of a number of factors, including the mix of products sold, the volume and timing of orders received during the period, the timing of new product introductions by the Company and its competitors, product line maturation, the impact of price competition on the Company's average selling prices, the availability and pricing of components for the Company's products, changes in distribution channel mix and product returns or price protection charges from customers. Many of these factors are beyond the Company's control. Although the Company has experienced growth in sales in recent periods, there can be no assurance that the Company will experience growth in the future or be profitable on an operating basis in any future period. In addition, due to the short product life cycles that characterize the Company's markets, a significant percentage of the Company's sales each quarter may result from new products or product enhancements introduced in that quarter. Since the Company relies on new products and product enhancements for a significant percentage of sales, failure to continue to develop and introduce new products and product enhancements or failure of these products or product enhancements to achieve market acceptance could have a material adverse effect on the Company's business, financial condition and results of operations. Historically, as the Company has planned and implemented new products, it has experienced unexpected reductions in sales and gross profit of older generation products as customers have anticipated new products. These reductions have in the past given and could continue to give rise to charges for obsolete or excess inventory, returns of older generation products by computer resellers, VARs and distributors or substantial price protection charges. From time to time, the Company has experienced and may in the future experience inventory obsolescence resulting from the unexpected discontinuance of third party components, such as disk drives, included in the Company's products. To the extent the Company is unsuccessful in managing product transitions, it may have a material adverse effect on the Company's business, financial condition and results of operations. The Company also has historically capitalized on short-term market opportunities for volume purchases of certain components at favorable prices. For example, the Company has capitalized on several opportunities to sell a significant volume of high capacity disk drive upgrade products purchased at below market prices, which have resulted in price advantages to the Company that enhanced the Company's sales and results of operations for the corresponding fiscal quarter. There can be no assurance that the Company will be able to capitalize on such opportunities in the future. In addition, the Company's fiscal second quarter sales, compared to sales in the Company's fiscal first quarter, have historically remained relatively flat due primarily to heavy reseller participation in trade shows that detract from reseller selling efforts, end user budget constraints that restrict end user purchases, and a higher than average number of holidays during that quarter which reduce the available selling and shipping days during the quarter. LIQUIDITY AND CAPITAL RESOURCES In November 1994, the Company instituted a revolving line of credit with Finova Capital ("Finova"). The facility was amended in November 1996 to provide the Company with up to $20.0 million in working capital loans, based upon the Company's accounts receivable and inventory levels. The line of credit accrues certain commitment fees, unused facility fees and interest on outstanding amounts at the lender's prime rate (8.5% at October 31, 1997) plus 1.5%. Finova also makes available to the Company various flooring commitments pursuant to which the Company may finance the purchase of up to $13.0 million in inventory (less any amounts outstanding in working capital loans) from certain of the Company's vendors who have credit arrangements with Finova. As of October 31, 1997, there was no balance outstanding under the credit facility, and $ 3.8 million outstanding under the flooring arrangements. The agreement governing the credit facility requires the Company to maintain certain financial covenants (including the maintenance of working capital of at least $500,000), minimum levels of tangible net worth and minimum levels of liquidity. As 10 11 of October 31, 1997, the Company was in material compliance with the covenants of the Finova line of credit. The initial term of the line of credit expires on November 29, 1997, but automatically renews for successive one year periods unless terminated by either party within a specified period in advance of the automatic renewal date. As of October 31, 1997, the Company had cash balances of $ 19.9 million and $16.2 million of availability under its line of credit. The Company believes that the cash proceeds from its December 1996 public offering, together with existing cash balances and available credit under its existing line of credit, will be sufficient to meet anticipated cash requirements for at least the next twelve months. As of October 31, 1997, the Company had no material commitments for capital expenditures. While the Company has no present plans, agreements or commitments to make any acquisitions, the Company may acquire businesses, products and technologies that are complementary to those of the Company. In the event the Company's plans require more capital than is presently anticipated, the Company's remaining cash balances may be consumed and additional sources of liquidity such as debt or equity financings may be required to meet working capital needs. There can be no assurance that additional capital beyond the amounts currently forecasted by the Company will not be required nor that any such required additional capital will be available on reasonable terms, if at all, at such time or times as required by the Company. 11 12 PART II OTHER INFORMATION Item 1. Legal Proceedings. Not applicable. Item 2. Changes in Securities and Use of Proceeds. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) See Exhibit Index. No Statement re Computation of Per Share Earnings is included, because the computation can be clearly determined from material contained in this Report. See the Consolidated Statements of Operations, and the Notes thereto. (b) No reports on Form 8-K have been filed during the quarter for which this Report on Form 10-Q is filed. 12 13 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, in the City of Irvine, County of Orange, State of California, on the 12th day of November, 1997. PROCOM TECHNOLOGY, INC. By: /s/ Alex Razmjoo ---------------------------- Alex Razmjoo Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report on Form 10-Q has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Alex Razmjoo Chairman of the Board, President and November 12, 1997 - ------------------------------------- Chief Executive Officer (Principal Alex Razmjoo Executive Officer) /s/ Alex Aydin Executive Vice President, Finance and November 12, 1997 - ------------------------------------- Administration (Principal Financial Alex Aydin Officer) /s/ Frederick Judd Vice President, Finance and General November 12, 1997 - ------------------------------------- Counsel (Principal Accounting Officer) Frederick Judd
13 14 INDEX TO EXHIBITS
SEQUENTIALLY EXHIBIT NUMBER NUMBER DESCRIPTION PAGE - -------- ----------- ------------ 3.1+ Amended and Restated Articles of Incorporation of the Company.................................. 3.2+ Amended and Restated Bylaws of the Company..................................................... 10.1+ Form of Indemnity Agreement between the Company and each of its executive officers and directors........................................................ 10.2+ Form of Amended and Restated Procom Technology, Inc. 1995 Stock Option Plan.................... 10.3+ Amended and Restated Executive Employment Agreement, dated as of October 28, 1996, between the Company and Alex Razmjoo......................................... 10.4+ Amended and Restated Executive Employment Agreement, dated as of October 28, 1996, between the Company and Frank Alaghband...................................... 10.5+ Amended and Restated Executive Employment Agreement, dated as of October 28, 1996, between the Company and Alex Aydin........................................... 10.6+ Amended and Restated Executive Employment Agreement, dated as of October 28, 1996, between the Company and Nick Shahrestany..................................... 10.7+ Form of Registration Rights Agreement.......................................................... 10.8+ Lease, dated February 10, 1992, between 2181 Dupont Associates and the Company, as amended.................................................................... 10.9+ Loan and Security Agreement, dated November 18, 1994, by and between the Company and FINOVA Capital Corporation, as amended................................. 11.1+ Statement re: Computation of Earnings Per Share................................................ 21.1+ List of Subsidiaries........................................................................... 27.1 Financial Data Schedule........................................................................
- ---------- + Previously filed 14 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 3-MOS JUL-31-1998 AUG-01-1997 OCT-31-1997 518,000 19,404,000 14,956,000 1,300,000 10,628,000 47,418,000 2,480,000 1,543,000 48,388,000 15,744,000 0 0 0 111,000 0 48,388,000 31,291,000 31,291,000 20,607,000 20,607,000 6,943,000 0 (287,000) 4,028,000 1,555,000 2,473,000 0 0 0 2,473,000 .22 .22
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