-----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, N65ji5Tp6BuLWTj1f1sgC0bcdCv1srCA+PnAc+JXqCW+h99//JNFuIAUwTPbTKzV GBNn2cKCT3NqHXYyWkdhyg== 0000016590-04-000012.txt : 20040810 0000016590-04-000012.hdr.sgml : 20040810 20040810085036 ACCESSION NUMBER: 0000016590-04-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040704 FILED AS OF DATE: 20040810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMBEX CORP CENTRAL INDEX KEY: 0000016590 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 042442959 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-06933 FILM NUMBER: 04962982 BUSINESS ADDRESS: STREET 1: 115 FLANDERS ROAD CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 508-983-1200 MAIL ADDRESS: STREET 1: 115 FLANDERS ROAD STREET 2: . CITY: WESTBOROUGH STATE: MA ZIP: 01581 FORMER COMPANY: FORMER CONFORMED NAME: CAMBRIDGE MEMORIES INC DATE OF NAME CHANGE: 19801204 10QSB 1 q20410q.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Quarterly Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 For the Quarter Ended: July 4, 2004 Commission File No: 0-6933 CAMBEX CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-244-2959 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 115 Flanders Road, Westborough, Massachusetts (Address of principal executive offices) 01581 (Zip Code) Registrant's telephone number, including area code: (508) 983-1200 Indicate by "X" 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 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 Indicate the number of shares outstanding of each of the issuer's classes of stock, As of the latest practicable date. Class Outstanding as of July 4, 2004 Preferred 245,463 shares Common 18,320,351 shares Part I. FINANCIAL INFORMATION Item 1. Financial Statements CAMBEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JULY 4, 2004 AND DECEMBER 31, 2003 ASSETS JULY 4, DECEMBER 31, 2004 2003 (unaudited) (audited) CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 210,699 $ 268,807 ACCOUNTS RECEIVABLE, Less Reserves of $52,000 in 2004 and $120,000 in 2003 111,387 765,931 INVENTORIES 341,369 316,514 PREPAID EXPENSES 115,373 111,322 TOTAL CURRENT ASSETS $ 778,828 $ 1,462,574 PROPERTY AND EQUIPMENT, at cost: MACHINERY AND EQUIPMENT $ 416,468 $ 436,148 FURNITURE AND FIXTURES 14,186 14,186 $ 430,654 $ 450,334 LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION 430,654 441,635 NET PROPERTY AND EQUIPMENT $ - $ 8,699 OTHER ASSETS: GOODWILL $ - 257,372 OTHER 37,830 37,830 TOTAL OTHER ASSETS $ 37,830 $ 295,202 TOTAL ASSETS $ 816,658 $ 1,766,475 2 CONSOLIDATED BALANCE SHEETS JULY 4, 2004 AND DECEMBER 31, 2003 LIABILITIES AND STOCKHOLDERS' INVESTMENT JULY 4, DECEMBER 31, 2004 2003 (unaudited) (audited) CURRENT LIABILITIES: LOAN AGREEMENT $ 994,154 $ 1,033,016 LINE OF CREDIT - 525,520 NOTES PAYABLE 754,669 784,669 ACCOUNTS PAYABLE 358,945 843,775 OBLIGATIONS FOR TRADE-IN MEMORY 240,000 240,000 OTHER LIABILITIES 1,776,778 1,815,805 ACCRUED EXPENSES 1,730,597 1,992,173 TOTAL CURRENT LIABILITIES $ 5,855,143 $ 7,234,958 STOCKHOLDERS' INVESTMENT: PREFERRED STOCK, $ 1.00 PAR VALUE PER SHARE AUTHORIZED - 3,000,000 SHARES SERIES A - ISSUED - 98,223 shares $ 98,223 $ 98,223 SERIES B - ISSUED - 147,240 shares 147,240 147,240 COMMON STOCK, $ .10 PAR VALUE PER SHARE AUTHORIZED - 25,000,000 SHARES ISSUED -19,865,609 shares 1,986,561 1,986,561 CAPITAL IN EXCESS OF PAR VALUE 20,498,545 20,498,545 ACCUMULATED OTHER COMPREHENSIVE INCOME 100,528 100,528 RETAINED EARNINGS (DEFICIT) (26,980,611) (27,410,609) LESS - COST OF SHARES OF COMMON STOCK HELD IN TREASURY - 1,545,258 (888,971) (888,971) TOTAL STOCKHOLDERS' INVESTMENT $ (5,038,485) $ (5,468,483) TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 816,658 $ 1,766,475 3 CAMBEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 4, 2004 AND JUNE 30, 2003 For the Quarter Ended For the Six Months Ended July 4, June 30, July 4, June 30, 2004 2003 2004 2003 REVENUES $ 633,951 $2,473,581 $1,584,019 $5,303,701 COST OF SALES 129,923 1,571,877 665,145 3,237,271 Gross profit $ 504,028 $ 901,704 $ 918,874 $2,066,430 OPERATING EXPENSES: Research and development $ 168,754 $ 166,418 $ 340,675 $ 355,994 Selling 89,463 606,855 300,598 1,340,182 General and administrative 103,394 138,268 258,575 279,917 Total operating expenses $ 361,611 $ 911,541 $ 899,848 $1,976,093 OPERATING INCOME (LOSS) $ 142,417 $( 9,837)$ 19,026 $ 90,337 OTHER INCOME (EXPENSE): Gain on sale of customer information and rights - - 792,628 - Loss on discontinuance of subsidiary's operations - - (275,161) - Other (26,142) 34,696 (106,495) ( 27,069) Total other income(expense) $ (26,142)$ 34,696 $ 410,972 $ ( 27,069) INCOME BEFORE INCOME TAXES $ 116,275 $ 24,859 $ 429,998 $ 63,268 Provision for income taxes - - - - NET INCOME $ 116,275 $ 24,859 $ 429,998 $ 63,268 INCOME PER COMMON SHARE $ 0.01 $ 0.00 $ 0.02 $ 0.00 Weighted Average Common Shares Outstanding 18,320,000 18,320,000 18,320,000 18,320,000 Weighted Average Common and Common Equivalent Shares Outstanding 18,320,000 18,320,000 18,320,000 18,320,000 4 CAMBEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT Common Stock Capital in Accumulated Retained Cost of $.10 Excess of Other Earnings Shares Par Value Par Value Comprehensive (Deficit) Held in Income Treasury BALANCE AT JANUARY 1, 2003 $1,986,561 $20,498,545$101,774 $(27,530,827)$(888,971) ADD: Net income $ - $ - $ - $ 63,268 $ - BALANCE AT JUNE 30, 2003 $1,986,561 $20,498,545$101,774 $(27,467,559)$(888,971) BALANCE AT JANUARY 1, 2004 $1,986,561 $20,498,545$100,528 $(27,410,609)$(888,971) ADD: Net income $ - $ - $ - $ 429,998 $ - BALANCE AT JULY 4, 2004 $1,986,561 $20,498,545$100,528 $(26,980,611)$(888,971) Series A Series B Preferred Stock Preferred Stock $1.00 Par Value $1.00 Par Value BALANCE AT JANUARY 1, 2003 $ 98,223 $ 147,240 ADD: BALANCE AT JUNE 30, 2003 $ 98,223 $ 147,240 BALANCE AT JANUARY 1, 2004 $ 98,223 $ 147,240 ADD: BALANCE AT JULY 4, 2004 $ 98,223 $ 147,240 5 CAMBEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE SIX MONTHS ENDED JULY 4, 2004 AND JUNE 30, 2003 Six Months Ended July 4, June 30, 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 429,998 $ 63,268 Adjustments to reconcile net income to net cash provided by(used in) operating activities: Depreciation $ 866 $ 7,065 Amortization of prepaid expenses 12,381 9,550 Gain on sale of customer information and rights ( 792,628) - Loss on discontinuance of subsidiary's operations 275,161 - Changes in operating assets and liabilities: Accounts receivable 690,436 512,201 Inventory ( 34,329) 71,547 Prepaid expenses ( 16,432) ( 11,113) Accounts payable ( 15,758) ( 411,545) Accrued expenses ( 44,394) 148,258 Other liabilities ( 39,027) ( 434,914) Total adjustments $ 36,276 $( 108,951) Net cash provided by(used in) operating activities $ 466,274 $( 45,683) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment, net $ - $ - Proceeds from sale of customer information and rights 70,000 - Net cash provided by(used in)investing activities $ 70,000 $ - CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments)under line of credit $( 525,520)$( 345,210) Net borrowings (repayments)under loan agreement ( 38,862) ( 8,809) Increase(decrease)in notes payable ( 30,000) 70,000 Net cash provided by (used in) financing activities $( 594,382)$( 284,019) Effect of exchange rate changes on cash - - Net increase (decrease) in cash and cash equivalents $( 58,108)$( 329,702) Cash and cash equivalents at beginning of period 268,807 544,911 Cash and cash equivalents at end of period $ 210,699 $ 215,209 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 36,254 $ 39,569 Income Taxes - - Non-cash financing and investing activities: Sale of customer information and rights $ 980,000 $ - Accounts payable converted into notes payable - 219,669 6 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Notes & Comments: (1)Significant Accounting Policies The accompanying consolidated financial statements include our accounts and our wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. The condensed financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. 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 such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. The information furnished includes all adjustments and accruals consisting only of normal recurring accrual adjustments which are, in our opinion, necessary for a fair presentation of results for the interim period. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in our latest annual report on Form 10-KSB. Inventories, which include raw materials, labor and manufacturing overhead are stated at the lower of cost (first-in, first-out) or market and consist of the following: July 4, December 31, 2004 2003 Raw materials $ 276,475 $ 238,092 Work-in-process 29,154 42,866 Finished goods 35,740 35,556 $ 341,369 $ 316,514 7 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Notes & Comments (Continued): (2) Income and Dividends Per Share Per share amounts are based on the weighted average number of shares outstanding during each period plus applicable common stock equivalents. There were no material differences for per share amounts assuming full dilution in either period. (3) Short Term Borrowings We have a loan and security agreement with B.A. Associates, Inc. which is a corporation owned by a son-in-law of Joseph F. Kruy, our Chairman, President and Chief Executive Officer. The outstanding balance due to B.A. Associates, Inc. was $994,154 and $1,033,016 at July 4, 2004 and December 31, 2003, respectively. Our Super PC Memory, Inc. subsidiary had a line of credit of $2,000,000 available from The CIT Group/Commercial Services, Inc., limited to 75% of the eligible receivables of Super PC Memory, Inc. The line of credit agreement terminated on March 26, 2004 and we did not renew this line of credit. Notes payable of $754,669 and $784,699 at July 4, 2004 and December 31, 2003, respectively, include $475,000 of advances payable which are due on demand. The $475,000 of advances payable includes amounts of $375,000 from related parties. The balances of $279,669 and $309,669 as of July 4, 2004 and December 31, 2003 include $150,000 of series 1 bridge financing notes issued in 2000. The balances of $279,669 and $309,669 as of July 4, 2004 and December 31, 2003, respectively, also include $129,669 and $159,669, respectively, of accounts payable converted to notes payable. (4)Purchase Agreement On January 30, 2004, Super PC Memory, Inc., a wholly-owned subsidiary of Cambex Corporation, entered into an agreement with Silicon Mountain Memory Incorporated, a privately-held company, pursuant to which Silicon Mountain Memory Incorporated purchased a portion of Super PC Memory's customer information and rights to do business with said customers with respect to Wintel products. Sales to said customers with respect to Wintel products was a substantial portion of our revenues in 2003 and 2002. These sales were sales with lower gross margins. The total purchase price is $1,050,000 subject to allocation as to cash or note payments, the exact amount and terms 8 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Notes & Comments (Continued): (4)Purchase Agreement (continued) of payment is dependent upon the revenues generated by Silicon Mountain Memory from Super PC Memory customers. The first payment of $35,000 was received at closing. According to terms of the agreement, beginning on May 15, 2004, and on or before the 15th of each month, Silicon Mountain Memory will make a payment to Super PC Memory based upon gross profit for the preceding month according to the following formula: if the gross profit is less than $100,000, the payment will be 25% of gross profit; if the gross profit is between $100,000 and $140,000, the payment will be $35,000; and if the gross profit is in excess of $140,000, the payment will be 35% of gross profit. A payment of $35,000 was received in May. The Company recorded other income of $792,628 from this transaction during the quarter ended April 4, 2004. (5)Discontinuance of Super PC Memory, Inc. Operations On May 21, 2004, the Company's Super PC Memory, Inc. subsidiary discontinued its operations and executed an Assignment for the Benefit of Creditors. The purpose of the Assignment is to provide an orderly liquidation of Super PC's assets and distribution of the proceeds to Super PC's creditors. Super PC's assets primarily consist of inventory, receivables, fixed assets and a Purchase Agreement for the sale of Super PC's customer base relating to Wintel Products and rights to do business with said customers. The Company recorded a loss of $275,161 during the quarter ended April 4, 2004 on this transaction. The Assignee is Maximum Asset Recovery Services, Inc., a Los Angeles, California based financial consulting and management firm. Maximum Asset Recovery Services, Inc. has no relationship to Super PC Memory, Cambex Corporation or any of their affiliates. The Company acquired Super PC Memory in March 2002. Super PC Memory incurred substantial operating losses in fiscal year 2003 and fiscal year 2004 to date. Due to unfavorable memory market conditions, Super PC's cost structure could not be supported by the revenues and gross profit Super PC could generate. Consequently, Super PC Memory executed an Assignment for the Benefit of Creditors. Cambex Corporation and its other subsidiaries are unaffected by the Super PC Memory action. However, the Assignment will significantly reduce the Company's revenues. On the other hand, it also will reduce its operating costs and positively impact its cash flow. 9 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 2. Management's Discussion and Analysis or Plan of Operation The statements contained in "Management Discussion and Analysis or Plan of Operation" and elsewhere throughout this Report on Form 10-QSB that are not historical facts are "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. These forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those reflected in the forward-looking statements. These forward-looking statements reflect management's analysis, judgment, belief or expectation only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof or to publicly release the results of any revisions to such forward-looking statements that may be made to reflect events or circumstances after the date hereof. In addition to the disclosure contained herein, readers should carefully review any disclosure of risks and uncertainties contained in other documents we file or have filed from time to time with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. We are a designer and supplier of data storage products and solutions. Our products include memory for computing systems and fibre channel connectivity and storage products used to build storage area networks (SANs). We design, manufacture, and market memory products that enhance the performance and reliability of computing systems and networking devices. We have been selling memory products to our customers since 1970. A processor's memory is used to hold temporary instructions and data needed to execute tasks. This enables the computer's CPU to access instructions and data quickly. After upgrading a processor's memory, the computer will process data faster, because it will need to access its slower secondary storage (i.e., the disk drive) less frequently. We provide memory upgrade solutions for all the major servers and workstations manufactured by IBM, Sun and Hewlett-Packard. Adding additional memory is both application transparent and the most cost-effective solution for eliminating many system performance bottlenecks. We develop and offer fibre channel host bus adapters and hubs, high availability software, fibre channel disk storage arrays and management software for the deployment of SAN solutions. SANs enhance and simplify the centralized management and sharing of data storage resources while providing improved availability, scalability, performance, and disaster recovery. SANs have been enabled by the emergence of fibre channel, a new generation of server to storage communications technology. By reselling fibre channel hardware and software products from leading manufacturers, together with our internally developed products, we are able to offer customers a complete interoperable SAN solution. 10 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 2. Management's Discussion and Analysis or Plan of Operation (continued) Comparison of the quarter ended July 4, 2004 and the quarter ended June 30, 2003 Our revenues were $633,951 for the quarter ended July 4, 2004 and $2,473,581 for the quarter ended June 30, 2003. Revenues for the three months ended July 4, 2004 decreased 74% compared to revenues for the same three months in the prior year due to decreased memory sales by our Super PC Memory, Inc. subsidiary which was partially offset by increased sales of our fibre channel connectivity products. The decreased memory sales are primarily the result of selling our WINTEL business. Gross profit rate was 80% of sales for the three months ended July 4, 2004 and 36% for the three months ended June 30, 2003. The increase was due to the product mix as there are higher gross margins on our fibre channel connectivity products than our subsidiary's memory products. Operating expenses for the three months ended July 4, 2004 decreased by 60% in comparison to operating expenses for the comparable three months of the prior year. Selling expenses for the three months ended July 4, 2004 decreased by 85% compared to the amount of these expenses in the second quarter of fiscal 2003 due to reductions in personnel and related expenses of our subsidiary. Other income(expense) for the quarter ended July 4, 2004 includes $20,309 of income from the write-off of accrued liabilities and $46,451 of interest expense. Other income(expense) for the quarter ended June 30, 2003 includes other income of $98,000 relating to the reversal of accrued expenses and $63,304 of interest expense. Net income for the second quarter of fiscal 2004 was $116,000, or $0.01 per share, as compared with net income of $25,000, or $0.00 per share, for the second quarter of fiscal 2003. Recent Developments On May 21, 2004 the Company's Super PC Memory, Inc. subsidiary discontinued its operations and executed an Assignment for the Benefit of Creditors. The purpose of the Assignment is to provide an orderly liquidation of Super PC's assets and distribution of the proceeds to Super PC's creditors. Super PC's assets primarily consist of inventory, receivables, fixed assets and a Purchase Agreement for the sale of Super PC's customer base relating to Wintel Products and rights to do business with said customers. The Company recorded a loss of $275,161 during the quarter ended April 4, 2004 on this transaction. 11 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 2. Management's Discussion and Analysis or Plan of Operation (continued) The Assignee is Maximum Asset Recovery Services, Inc., a Los Angeles, California based financial consulting and management firm. Maximum Asset Recovery Services, Inc has no relationship to Super PC Memory, Cambex Corporation or any of their affiliates. The Company acquired Super PC Memory in March 2002. Super PC Memory incurred substantial operating losses in fiscal year 2003 and fiscal year 2004 to date. Due to unfavorable memory market conditions, Super PC's cost structure could not be supported by the revenues and gross profit Super PC could generate. Consequently, Super PC Memory executed an Assignment for the Benefit of Creditors. Cambex Corporation and its other subsidiaries are unaffected by the Super PC Memory action. However, the Assignment will significantly reduce the Company's revenues. On the other hand, it also will reduce its operating costs and positively impact its cash flow. Inflation We did not experience any material adverse effects in the second quarter of 2004 or in the second quarter of 2003 due to general inflation. Liquidity and Capital Resources We have suffered substantial recurring losses from operations for six of the prior seven years. Consequently, our ability to continue as a going concern, is dependent upon several factors including, but not limited to our ability to generate gross profit in significantly greater amounts than in the past five fiscal years, and our ability to raise additional capital. Our working capital deficit is a significant threat to our ability to continue as a going concern. Management continues to work to establish new strategic alliances that it believes will result in increases in revenues and gross profit in the future through the sale of a greater volume of products. Management has also been active in trying to secure additional capital. We cannot give any assurances that the actions taken to date will increase revenues and gross profit or raise additional capital. 12 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 2. Management's Discussion and Analysis or Plan of Operation (continued) Requirements We need additional capital and additional financing may not be available. We believe that the combination of current existing cash, available borrowing capacity and our ability to obtain additional long-term indebtedness may not be adequate to finance our operations for our current activities and foreseeable future activities. We are trying to raise additional capital and if we are unable to raise additional capital, we may not be able to meet our anticipated working capital requirements. We have a loan and security agreement with B.A. Associates, Inc. which is a corporation owned by a son-in-law of Joseph F. Kruy, our Chairman, President and Chief Executive Officer. The outstanding balance due to B.A. Associates, Inc. was $994,154 at July 4, 2004. We also have notes payable of $754,669 at July 4, 2004, including $475,000 of advances payable which are due on demand. The $475,000 of advances payable includes $375,000 of borrowings from related parties. The notes payable balance of $279,669 includes $150,000 of the series 1 bridge financing note issued to Arab Commerce Bank in 2000 and $129,669 of accounts payable converted to notes payable. 13 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 2. Management's Discussion and Analysis or Plan of Operation (continued) Resources Our cash was $211,000 and $269,000 at July 4, 2004 and December 31, 2003, respectively. Working capital was a deficit of $5,076,000 and $5,772,000 at July 4, 2004 and at December 31, 2003, respectively. During the quarter ended July 4, 2004, we did not expend any funds for capital equipment. During fiscal 2004, we expect to acquire less than $100,000 of capital equipment. We have a revolving credit facility with B.A. Associates, Inc. which is a corporation owned by a son-in-law of Joseph F. Kruy, our Chairman, President and Chief Executive Officer under which we may borrow up to $1,100,000. At July 4, 2004 we had a balance of $994,154 outstanding under this revolving credit facility. We need additional capital and additional financing may not be available. We believe that the combination of current existing cash, available borrowing capacity and our ability to obtain additional long-term indebtedness may not be adequate to finance our operations for our current activities and foreseeable future activities. We are actively pursuing raising additional capital and if we are unable to raise additional capital, we may not be able to meet our anticipated working capital requirements. If we are not successful in raising additional capital or increasing our sales to adequate levels, we will not be able to continue our current operations and there is substantial doubt as to our ability to continue as a going concern. There can be no assurance that we will be successful in raising such additional capital at all or on terms commercially acceptable to us or our shareholders. 14 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 3. Controls and Procedures Our principal executive officer and principal financial officer, Joseph F. Kruy, has evaluated the effectiveness of our disclosure controls and procedures and concluded that there are no significant deficiencies in the design or operation of internal controls which could adversely affect our ability to record, process, summarize and report financial data and has determined that there are no material weaknesses in internal controls. There were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation. 15 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Part II. OTHER INFORMATION Item 1. Legal Proceedings The Company is a party to litigation and claims arising in the normal course of its business. Barring unforeseen circumstances, management does not expect the results of these actions to have a material adverse effect on the Company's business or financial condition. Item 2. Change in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits EXHIBIT INDEX The following exhibits are filed herewith or incorporated by reference herein. Exhibit 3.1 Restated Articles of Organization of Cambex Corporation (included as Exhibit 3.1 to the Company's Registration Statement on Form SB-2, declared effective with the Commission on November 7, 2000, Reg. No. 333-43294, and incorporated herein by reference). 16 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 6. Exhibit Index (continued) 3.2 Restated By-laws of Cambex Corporation (included as Exhibit 3.2 to the Company's Registration Statement on Form SB-2, declared effective with the Commission on November 7, 2000, Reg. No. 333-43294, and incorporated herein by reference). 3.3 Series A Preferred Stock Certificate of Designations (included as Exhibit 10.37 to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 and incorporated herein by reference). 3.4 Series B Preferred Stock Certificate of Designations (included as Exhibit 10.39 to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 and incorporated herein by reference). 4.1 Specimen Stock Certificate (included as Exhibit 4.1 to the Company's Registration Statement on Form SB-2, declared effective with the Commission on November 7, 2000, Reg. No. 333-43294, and incorporated herein by reference). 4.2 Registration Rights Agreement among the Company and the Purchasers identified therein (the "Sovereign Purchasers") dated as of January 18, 2000 (included as Exhibit 4.1 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 4.3 Registration Rights Agreement between the Company and Thumberland Limited dated as of July 14, 2000 (included as Exhibit 4.3 to the Company's Registration Statement on Form SB-2, declared effective with the Commission on November 7, 2000, Reg. No. 333-43294, and incorporated herein by reference). 10.1 Employment Agreement between Joseph F. Kruy and the Company, dated as of November 18, 1994 (included as Exhibit 10.1 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.2 Incentive Bonus Plan (included as Exhibit 10.2 to the Company's Registration Statement on Form SB-2, declared effective with the Commission on November 7, 2000, Reg. No. 333-43294, and incorporated herein by reference). 10.3 1987 Combination Stock Option Plan (included as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1987, and incorporated herein by reference). 17 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 6. Exhibit Index (continued) 10.4 2000 Equity Incentive Plan (included as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, and incorporated herein by reference). 10.5 Series 1 Bridge Note Purchase Agreement among the Company and the Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit 10.7 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.6 Escrow Agreement among the Company, the Sovereign Purchasers and Suntrust Bank, Atlanta dated as of January 6, 2000 (included as Exhibit 10.8 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.7 Placement Agent Agreement between the Company and Sovereign Capital Advisors, LLC ("Sovereign Advisors") dated as of January 18, 2000 (included as Exhibit 10.9 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.8 Guaranty Agreement among Joseph F. Kruy, the Company and the Sovereign Purchasers dated as of January 18, 2000. (included as Exhibit 10.10 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.9 Guaranty Agreement among CyberFin Corporation, the Company and the Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit 10.11 to the Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.10 Stock Pledge Agreement by Joseph F. Kruy in favor of the Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit 10.12 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.11 Stock Pledge Agreement by CyberFin Corporation in favor of the Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit 10.13 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 18 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 6. Exhibit Index (continued) 10.12 Series 1 Bridge Financing Note in favor of SovCap Equity Partners, Ltd. dated as of January 18, 2000 (included as Exhibit 10.14 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.13 Series 1 Bridge Financing Note in favor of Correllus International, Ltd. dated as of January 18, 2000 (included as Exhibit 10.16 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.14 Common Stock Purchase Warrant in favor of SovCap Equity Partners, Ltd. dated as of January 18, 2000 (included as Exhibit 10.18 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.15 Common Stock Purchase Warrant in favor of Correllus International, Ltd. dated as of January 18, 2000 (included as Exhibit 10.19 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.16 Sovereign Warrant Agreement between the Company and Sovereign Advisors dated as of January 18, 2000 (included as Exhibit 10.20 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.17 Warrant Certificate registered in the name of Sovereign Advisors dated January 18, 2000 (included as Exhibit 10.21 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.18 Series 1 Bridge Financing Note in favor of Arab Commerce Bank Ltd. dated as of February 9, 2000 (included as Exhibit 10.22 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.19 Common Stock Purchase Warrant in favor of Arab Commerce Bank Ltd. dated as of February 9, 2000 (included as Exhibit 10.24 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 19 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 6. Exhibit Index (continued) 10.20 Series 1 Bridge Financing Note in favor of SovCap Equity Partners, Ltd. dated as of February 9, 2000 (included as Exhibit 10.25 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.21 Common Stock Purchase Warrant in favor of SovCap Equity Partners, Ltd. dated as of February 9, 2000 (included as Exhibit 10.27 to the Company's Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended April 1, 2000, and incorporated herein by reference). 10.22 Loan and Security Agreement, as amended, by and between the Company and BA Associates, Inc. (included as Exhibit 10.27 to the Company's Registration Statement on Form SB-2 filed with the Commission on November 29, 2000, Reg. No. 333-50936, and incorporated herein by reference.) 10.23 Fifth Amendment to Loan and Security Agreement, as amended, by and between the Company and B.A. Associates, Inc., dated as of December 27, 2000 (included as Exhibit 10.28 to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 and incorporated herein by reference). 10.24 Form of Warrant Certificate between the Company and B.A. Associates, Inc. (included as Exhibit 10.29 to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 and incorporated herein by reference). 10.25 Sixth Amendment to Loan and Security Agreement, as amended, by and between the Company and B.A. Associates, Inc., dated as of December 27, 2001(included as Exhibit 10.30 to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002 and incorporated herein by reference). 10.26 Stock Purchase and Sale Agreement dated as of January 31, 2002 by and among Cambex Corporation, Super PC Memory, Inc., Son T. Pham, Simon Le and Richard G. Schaefer (included as Exhibit 2.1 to the Company's Current Report on Form 8-K dated March 27, 2002, and incorporated herein by reference). 10.27 Amendment to the Stock Purchase and Sale Agreement dated as of July 29, 2002 by and among Cambex Corporation, Super PC Memory, Inc., Son T. Pham, Simon Le and Richard G. Schaefer (included as Exhibit 10.32 to the Company's Quarterly Report on 10QSB for the quarter ended June 30, 2002, and incorporated herein by reference). 20 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 6. Exhibit Index (continued) 10.28 Securities Exchange Agreement dated as of June 28, 2002 by and among the Company and Richard Calvert(included as Exhibit 10.33 to the Company's Quarterly Report on 10QSB for the quarter ended June 30, 2002, and incorporated herein by reference). 10.29 Securities Exchange Agreement dated as of June 28, 2002 by and among the Company and H. Terry Snowday(included as Exhibit 10.34 to the Company's Quarterly Report on 10QSB for the quarter ended June 30, 2002, and incorporated herein by reference). 10.30 Securities Exchange Agreement dated as of June 28, 2002 by and among the Company and The Hankins Family Trust(included as Exhibit 10.35 to the Company's Quarterly Report on 10QSB for the quarter ended June 30, 2002, and incorporated herein by reference). 10.31 Securities Exchange Agreement dated as of June 28, 2002 by and among the Company and Joseph Kruy(included as Exhibit 10.36 to the Company's Quarterly Report on 10QSB for the quarter ended June 30, 2002, and incorporated herein by reference). 10.32 Securities Exchange Agreement dated as of June 28, 2002 by and among the Company and SovCap Equity Partners, Ltd. (included as Exhibit 10.38 to the Company's Quarterly Report on 10QSB for the quarter ended June 30, 2002, and incorporated herein by reference). 10.33 Lease by and between the Company and Bertech Flanders, LLC dated as of April 24, 2003(included as Exhibit 10.33 to the Company's Quarterly Report on 10QSB for the quarter ended March 31, 2003, and incorporated herein by reference). 10.34 Purchase Agreement dated January 30, 2004 by and between Silicon Mountain Memory Incorporated and Super PC Memory, Inc.(included as Exhibit 99.2 to the Company's Current Report on Form 8-K dated January 30, 2004 and incorporated herein by reference). 10.35 General Assignment dated May 21, 2004 by Super PC Memory, Inc. to Maximum Asset Recovery Services, Inc. (included as Exhibit 10.35 to the Company's Quarterly Report on 10QSB for the quarter ended April 4, 2004, and incorporated herein by reference). 31.1 Certification as required by section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification as required by section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code). 21 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 Item 6. Exhibit Index and Reports on Form 8-K(continued) (b) Reports on Form 8-K On May 21, 2004, we filed a report on Form 8-K regarding Super PC Memory, Inc., a wholly-owned subsidiary of Cambex Corporation, discontinuing its operations and executing an Assignment for the Benefit of Creditors. 22 FORM 10-QSB CAMBEX CORPORATION AND SUBSIDIARIES For The Quarter Ended: July 4, 2004 Commission File: 0-6933 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAMBEX CORPORATION By: /s/ Joseph F. Kruy Joseph F. Kruy President and Treasurer Dated: August 10, 2004 23 EX-31.1 2 cert311.txt Certifications: I, Joseph F. Kruy, certify that: 1. I have reviewed this quarterly report on Form 10QSB of Cambex Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 10, 2004 /s/ Joseph F. Kruy Joseph F. Kruy President and Treasurer (principal executive officer and principal financial officer) EX-32.1 3 cert.txt Exhibit 32.1 Form of Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code I, Joseph F. Kruy, the chief executive officer and chief financial officer of Cambex Corporation, certify that (i) This quarterly report on Form 10QSB for the fiscal quarter ended July 4, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) The information contained in this quarterly report on Form 10QSB fairly presents, in all material respects, the financial condition and results of operations of Cambex Corporation. Dated: August 10, 2004 /s/ Joseph F. Kruy Joseph F. Kruy President and Treasurer [principal executive officer and principal financial officer] This certification accompanies this quarterly report pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 10 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----