-----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, Vqg+9zdHNAwvc91qjEPyKLe1pTq+ZHRx8DspiUoxii62AJjSpC/ymBqo8lQI944L JxK7R/2u1maChex9iEEBbQ== 0000001988-96-000011.txt : 19960829 0000001988-96-000011.hdr.sgml : 19960829 ACCESSION NUMBER: 0000001988-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960828 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCESS CORP CENTRAL INDEX KEY: 0000001988 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 310673364 STATE OF INCORPORATION: OH FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-33108 FILM NUMBER: 96622211 BUSINESS ADDRESS: STREET 1: 4350 GLENDALE MILFORD RD STREET 2: STE 250 CITY: CINCINNATI STATE: OH ZIP: 45215-3700 BUSINESS PHONE: 5137868350 MAIL ADDRESS: STREET 1: 4350 GLENDALE MILFORD RD STREET 2: STE 250 CITY: CINCINNATI STATE: OH ZIP: 45242-3700 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarterly Period Ended July 31, 1996 OR [ ] 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 2-33108 ACCESS CORPORATION (Exact name of registrant as specified in its charter) Ohio 31-0673364 -------------------------------------- --------------------------- (State or other jurisdiction of incorporation) (I.R.S.Employer Id Number) 4350 Glendale-Milford Road, Suite 250, Cincinnati, Ohio 45242-3700 - -------------------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (513)786-8350 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 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 common shares, as of July 31, 1996. Common Stock, no par value: 4,865,559 shares. PART I. FINANCIAL INFORMATION ACCESS CORPORATION BALANCE SHEETS ASSETS July 31, April 30, 1996 1996 CURRENT ASSETS: Cash $ 1,773,715 $ 2,071,772 Accounts Receivable, Less Allowances for Doubtful Accounts of $328,612 in July 1996 and $189,685 in April 1996 1,947,553 1,890,673 Inventories Raw Materials and Purchase Parts 54,283 64,553 Work - in - Process 97,715 102,900 Finished Goods 18,307 21,057 --------- ----------- 170,305 188,510 Prepaid Expenses 133,740 106,283 Deferred Income Tax Benefit 112,000 112,000 TOTAL CURRENT ASSETS ---------- ----------- 4,137,313 4,369,238 EQUIPMENT AND LEASEHOLD IMPROVEMENTS Computer Hardware & Software 1,475,810 1,449,310 Machinery and Equipment 503,337 503,337 Office and Service Equipment 371,195 364,492 Leasehold Improvements 13,405 13,405 Tools, Dies and Fixtures 115,013 115,013 ----------- ----------- 2,478,760 2,445,557 Less Accumulated Depreciation (2,219,527) (2,187,785) ------------ ----------- 259,233 257,772 COMPUTER SOFTWARE COSTS 900,497 1,068,923 DEFERRED INCOME TAX BENEFIT 545,700 545,700 ----------- ------------ TOTAL ASSETS $5,842,743 $6,241,633 SEE NOTES TO CONDENSED FINANCIAL STATEMENTS ACCESS CORPORATION BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY July 31, April 30, CURRENT LIABILITIES 1996 1996 ---------- ---------- Accounts Payable $ 213,509 $ 285,703 Accrued Salaries, Wages and Commissions 141,829 367,282 Accrued Taxes 24,660 22,400 Accrued Warranty Expense 4,500 - Capital Leases - Current 11,900 19,599 Other Accrued Liabilities 94,101 49,385 Accrued Royalty 388,720 291,192 Advances from Customers 300,400 408,460 ---------- ------------ TOTAL CURRENT LIABILITIES 1,179,619 1,444,021 PREPAID MAINTENANCE CONTRACT REVENUE 614,246 609,078 MANDATORILY REDEEMABLE PREFERRED STOCK 1,500,000 1,500,000 Accrued Preferred Dividends 102,510 102,510 STOCKHOLDERS' EQUITY Capital Stock Common Stock, No Par Value, Authorized 8,000,000 Shares, Issued and Outstanding 4,881,829 Shares 488,183 488,183 Additional Paid-In Capital 10,657,652 10,657,652 Deficit from April 1, 1985 (8,684,084) (8,544,428) 16,270 Common Stock Shares In Treasury, at Cost (15,383) (15,383) -------------- ------------- TOTAL STOCKHOLDERS' EQUITY 2,446,368 2,586,024 TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY 5,842,743 6,241,633 SEE NOTES TO CONDENSED FINANCIAL STATEMENTS ACCESS CORPORATION STATEMENT OF OPERATIONS Three Months Ended July 31, 1996 1995 REVENUE System Sales $ 593,969 216,061 Service & Service Depot 1,081,382 1,141,210 ----------- ---------- Total 1,675,351 1,357,271 COST OF REVENUE System Sales, exclusive of amortization shown seperatly below 323,411 151,598 Service & Service Depot 670,838 607,853 ---------- --------- Total 994,249 759,451 GROSS PROFIT BEFORE AMORTIZATION 681,102 597,820 AMORTIZATION OF COMPUTER SOFTWARE COST 168,426 168,426 GROSS PROFIT 512,676 429,394 Sales and Administrative 612,725 337,758 Engineering, Research and Development 60,315 109,289 --------- --------- Total Costs and Expenses 673,040 447,047 LOSS FROM OPERATIONS (160,364) (17,653) OTHER INCOME (EXPENSE) Interest Income 21,835 12,414 Other Income (31) 66 Interest Expense (1,032) (2,176) Other (65) (7,723) ---------- --------- NET LOSS BEFORE INCOME TAXES (139,657) (15,072) INCOME TAXES - - NET LOSS (139,657) (15,072) PREFERRED DIVIDEND - - LOSS APPLICABLE TO COMMON SHARES $(139,657) $(15,072) PER COMMON SHARE AND COMMON SHARE EQUIVALENTS Net loss $ (0.03) $ (0.00) SEE NOTES TO CONDENSED FINANCIAL STATEMENTS ACCESS CORPORATION STATEMENTS OF CASH FLOW Three Months Ended July 31, 1996 1995 CASH FLOW FROM: OPERATING ACTIVITIES Net (Loss) $(139,657) $(15,072) Adjustments to Reconcile Net Earnings To Net Cash Used in Operations: Depreciation 31,742 33,760 Amortization 168,426 168,426 Deferred Income Tax - - (Gain) Loss on Sale of Fixed Asset - 7,377 Changes in Assets and Liabilities Accounts Receivable (56,880) 291,313 Inventories 18,205 (33,846) Prepaid Expenses (27,457) (83,210) Accounts Payable (72,194) 132,895 Accrued Liabilities (173,977) (65,516) Accrued Royalties 97,528 (749) Advances From Customers (108,060) 8,223 Prepaid Maintenance Contract Revenue 5,169 63,715 ------------ ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES (257,155) 507,316 INVESTING ACTIVITIES: Capital Additions (33,203) (12,045) Acquisition of business, net of cash received - (148,629) ----------- ------------ NET CASH (USED IN) INVESTING ACTIVITIES (33,203) (160,674) FINANCING ACTIVITIES-Payments on Capital Leases Payments on Capital Leases (7,699) (13,508) ------------- ----------- (7,699) (13,508) NET CHANGE IN CASH (298,057) 333,134 CASH, Beginning of the Year 2,071,772 883,487 ------------- ------------- CASH, July 31, 1996 and 1995 $1,773,715 $1,216,621 SEE NOTES TO CONDENSED FINANCIAL STATEMENTS ACCESS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS JULY 31, 1996 NOTE A - Condensed Financial Statements The condensed balance sheet as of July 31, 1996, the condensed statement of earnings for the three month periods ended July 31, 1996 and 1995, and the condensed statements of cash flows for the three month periods ended July 31, 1996 and 1995, have been prepared by the Company without audit. These financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All adjustments made during the quarter ended July 31, 1996 are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended April 30, 1996. The results of operations for the period, ended July 31, 1996 are not necessarily indicative of the operating results for the full year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: The Company has two primary lines of business. Over the years the Company has built a substantial, continuing field maintenance service business. This business services, on a nationwide basis, hardware and, on a national and international basis, software for the Company's installed base of customers and third parties. The Company is also a leader in the sale of Electronic Document Management Systems (EDMS) software systems. In this line of business, the Company develops and markets software solutions for its customers' technical processes. EDMS has the potential for substantial growth in revenue and profits in that it serves a potentially large, worldwide market opportunity. Fiscal year 1997 first quarter revenue of $1.7 million was up $318,100 (23%) compared with the first quarter of fiscal 1996. Service revenue of $1.1 million decreased $59,800 (5%) compared with the first quarter of fiscal 1996. This decrease in revenue occurred in Hardware Service as the result of the loss of micrographic product lines being replaced with current technology. EDMS revenue of $594,000 increased $377,900 (175%) compared with the first quarter of fiscal 1996. The major contributor of this increase was due to the acquisition of CimSoft Incorporated on July 31, 1995. The Company's current backlog of orders is $2.05 million compared to $2.07 million at the end of the three months ended July 31, 1995. Current EDMS backlog of $497,000 is 53% lower than that at the same date last year. This decrease in backlog is the result of the Company delivering a majority of its UNIX orders and cancellation of a large AS/400 systems order over the past year. Service backlog of $1.6 million was 54% higher at July 31, 1996 compared with July 31, 1995. This increase in backlog was due to the increase in orders for Cimage software support, which the company began selling with the acquisition of CimSoft Inc. on July 31, 1995. This Service backlog is expected to be delivered within the next twelve months. Gross Profits for the first quarter ended July 31, 1996 of 31% was the same gross margin of that for the comparable period in fiscal 1996. EDMS gross margin before amortization for the first quarter of fiscal 1997 was 46%, which was an increase from the first quarter of fiscal 1996 level of 29%. EDMS gross margin after amortization was 17% , compared to (49%) for the same period last year. In the first quarter of fiscal 1996 the Company sold a substantial amount of low margin hardware as well as an increase in third party hardware support. Service gross margin of 38% for the period ended July 31, 1996 decreased from 47% for the period ended July 31, 1995. This decrease in gross margin is the result of the CimSoft acquisition. The Cimage software maintenance requires the Company to pay a royalty to the proprietor of the Cimage software. Selling and administrative expenses of $351,200 for the first quarter of fiscal 1997 were $243,500 (226%) higher than the first quarter of fiscal 1996. Selling expenses increased due to the acquisition of CimSoft. CimSoft Inc. had a sales office in California which Access acquired at the time of acquisition. The Company will continue to grow the sales operation to take advantage of the sales opportunities resulting from the CimSoft acquisition. Administrative expenses of $261,500 have increased $35,400 due to the spending for acquisition development. This expense funds outside activity in the search for attractive acquisition candidates. Engineering, research and development expenses are incurred for maintaining, upgrading and developing new products. The first quarter expense for engineering, research and development of $60,300 decreased $46,400 (43%) from the first quarter of last fiscal year. This decrease is primarily due to the fact that more time is being spent on inventory projects versus development projects, as well as decreases in expenses for depreciation and occupancy charges. In fiscal 1996, the Company reported the over/under absorption for Installations Management/ Professional Services as a cost to Research and Development. This department in fiscal 1997 will focus on delivering services Interest income for the first quarter ended July 31, 1996 was $20,803 compared with $10,238 for the first quarter ended July 31, 1995. Interest income for fiscal 1997 and 1996 was primarily the interest received on cash being invested in short term investments. LIQUIDITY AND CAPITAL RESOURCES During the first three months of fiscal 1997, the Company decreased its cash balance by $298,100 leaving $1,773,700 in cash. The Company used $257,200 in cash from operations, invested $33,200 in fixed assets and spent $7,700 for payments on capital leases. Accrued Royalties increased $97,500 since April 30, 1996. The major contributor for this increase was the accrual of royalties to Cimage Enterprise Systems for software sold in Fiscal 1997. On large customer orders there are provisions for progress payments to be made by customers based on predetermined events. These advances decreased approximately $108,100 since April 30, 1996. Working capital on July 31, 1996 was approximately $2,957,700, which is $327,500 higher than the April 30, 1996 level. This primarily was the result of reductions in accruals for wages, royalties and prepaid expenses. The Company's operations are structured so that revenues from its ongoing service business, in combination with the sale of new Cimage , AS/400 and UNIX products are expected to provide the cash flow required to operate the Company. 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. ACCESS CORPORATION Date: August 30, 1996 /s/ Newton D. Baker ------------------------- Newton D. Baker Executive Vice President Date: August 30, 1996 /s/ Barbara A. Sommer ------------------------- Barbara A. Sommer Assistant Treasurer & Chief Accounting Officer 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. ACCESS CORPORATION Date: August 30, 1996 NEWTON D. BAKER ----------------------------- Newton D. Baker Executive Vice President Date: August 30, 1996 BARBARA A. SOMMER ------------------------------ Barbara A. Sommer Assistant Treasurer & Chief Accounting Officer EXHIBIT INDEX (11) Statement re-computation of per share earnings (a) The calculation of net earnings per common share and common share equivalent for three month periods ended July 31, 1996 and 1995 is attached as Exhibit 11(a). EX-27 2
5 3-MOS APR-30-1997 JUL-31-1996 1,773,715 0 1,947,553 328,612 170,305 4,137,313 2,478,760 (2,219,527) 5,842,743 1,179,619 0 1,500,000 0 488,183 0 5,842,743 1,675,351 1,675,351 994,249 1,162,675 20,707 0 1,032 (139,657) 0 (139,657) 0 0 0 (139,657) (0.03) (0.03)
EX-11 3 Exhibit 11(a) ACCESS CORPORATION CALCULATION OF NET EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENT Three Months Ended July 31, 1996 1995 NET EARNINGS APPLICABLE TO COMMON SHARES AND COMMON SHARE EQUIVALENTS: Net Earnings $(139,657) $(15,072) Preferred Dividend - - Net Earnings Applicable to Common Shares and Common Share Equivalents $(139,657) $(15,072) CALCULATION OF PRIMARY NET EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS: Average Number of Common Shares and Common Share Equivalents Outstanding 4,865,559 4,865,559 PRIMARY NET EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENT: Net Earnings per Common Share and Common Share Equivalents after Discontinued Operations $ (0.03) $ (0.00) a) Common Share Equivalents have not been included as their inclusion would be anti-dilutive or dilution is less than 3% -----END PRIVACY-ENHANCED MESSAGE-----