-----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, Q+UZnuHeAwHwuDFBtJTi1e6YzvmcIHBUMQnRBm/ScPdJps+vHSQTQquPurY6OIXm 2ksC8gu9fNvRF1BaeiiuPA== 0000001988-98-000004.txt : 19980312 0000001988-98-000004.hdr.sgml : 19980312 ACCESSION NUMBER: 0000001988-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980311 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: SEC FILE NUMBER: 002-33108 FILM NUMBER: 98562454 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 January 31, 1998 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 Identification 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 January 31, 1998: Common Stock, no par value: 4,865,559 shares. PART I. FINANCIAL INFORMATION ACCESS CORPORATION BALANCE SHEETS ASSETS
January 31, April 30, 1998 1997 CURRENT ASSETS: Cash $1,380,172 $1,404,708 Accounts Receivable, Less Allowances 1,975,019 2,151,829 for Doubtful Accounts of $21,000 in January 1998 and $12,000 in April 1997 Inventories Raw Materials and Purchase Parts 120,744 96,673 Work - in - Process 4,379 56,401 Finished Goods 5,227 13,551 ---------- ---------- 130,350 166,625 Prepaid Expenses 116,000 229,862 Deferred Income Tax Benefit 112,000 112,000 ---------- ---------- TOTAL CURRENT ASSETS 3,713,541 4,065,024 EQUIPMENT AND LEASEHOLD IMPROVEMENTS Computer Hardware & Software 1,340,144 1,533,592 Machinery and Equipment 250,883 503,337 Office and Service Equipment 360,461 380,248 Leasehold Improvements 15,656 13,405 Tools, Dies and Fixtures 8,946 97,832 --------- ---------- 1,976,090 2,528,414 Less Accumulated Depreciation (1,786,411) (2,289,920) ---------- ---------- 189,679 238,494 GOODWILL 139,068 165,191 DEFERRED INCOME TAX BENEFIT 548,882 548,882 ---------- ---------- TOTAL ASSETS $4,591,170 $5,017,591 ========== ========== SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY January 31, April 30, 1998 1997 CURRENT LIABILITIES Accounts Payable $ 231,635 $ 291,339 Accrued Salaries, Wages and Commissions 193,092 216,232 Accrued Taxes 15,859 4,198 Accrued Warranty Expense 13,009 11,018 Other Accrued Liabilities 28,374 69,206 Accrued Royalty 535,948 519,916 Advances from Customers 343,028 195,145 ---------- ---------- TOTAL CURRENT LIABILITIES 1,360,945 1,307,054 PREPAID MAINTENANCE CONTRACT REVENUE 550,202 675,245 MANDATORILY REDEEMABLE PREFERRED STOCK 1,500,000 1,500,000 STOCKHOLDERS' EQUITY Capital Stock Common Stock, No Par Value, Authorized 488,183 488,183 8,000,000 Shares, Issued and Outstanding 4,881,829 Shares Additional Paid-In Capital 10,657,652 10,657,652 Deficit from April 1, 1985 (9,950,429) (9,595,160) 16,270 Common Stock Shares In (15,383) (15,383) Treasury, at Cost ----------- ---------- TOTAL STOCKHOLDERS' EQUITY 1,180,023 1,535,292 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,591,170 $5,017,591 ========== ========== SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION STATEMENT OF OPERATIONS Three Months Ended January 31, 1998 1997 ------------------- REVENUE System Sales $ 569,326 $ 506,570 Service & Service Depot 1,185,943 842,345 ---------- ---------- Total 1,755,269 1,348,915 COST OF REVENUE System Sales, excluding amortization of software computer costs 296,068 318,451 Service & Service Depot 1,120,462 599,865 ---------- ---------- Total 1,416,530 918,316 GROSS PROFIT BEFORE AMORTIZATION OF COMPUTER SOFTWARE 338,739 430,599 AMORTIZATION OF COMPUTER SOFTWARE COSTS 732,071 GROSS PROFIT (LOSS) 338,739 (301,472) Sales and Administrative 769,403 615,398 Engineering, Research and Development 89,241 ---------- ---------- Total Costs and Expenses 769,403 704,639 EARNINGS (LOSS) FROM OPERATIONS (430,664) (1,006,111) OTHER INCOME (EXPENSE) Interest Income 19,652 21,154 Other Income 102 5,169 Interest Expense (511) (1,020) Other (2,990) NET LOSS BEFORE INCOME TAXES (414,411) (980,808) INCOME TAXES (BENEFIT) (21,291) NET LOSS (393,120) (980,808) PREFERRED DIVIDEND - - LOSS APPLICABLE TO BASIC AND DILUTIVE COMMON SHARES $ (393,120) $ (980,808) ========== ========== PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENTS Net Loss $ (0.08) $ (0.20) ========== ========== SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION STATEMENT OF EARNINGS Nine Months Ended January 31, 1998 1997 REVENUE System Sales $3,372,676 $1,667,988 Service & Service Depot 3,825,372 2,883,886 ---------- ---------- 7,198,048 4,551,874 COST OF REVENUE System Sales, excluding amortization of computer software costs 1,934,309 966,877 Service & Service Depot 3,488,311 1,892,944 ---------- ---------- 5,422,620 2,859,821 GROSS PROFIT BEFORE AMORTIZATION OF COMPUTER SOFTWARE 1,775,428 1,692,053 AMORTIZATION OF COMPUTER SOFTWARE COSTS 1,068,923 GROSS PROFIT 1,775,428 623,130 Sales and Administrative 2,164,409 1,717,005 Engineering, Research and Development 233,865 ---------- ---------- Total Costs and Expenses 2,164,409 1,950,870 LOSS FROM OPERATIONS (388,981) (1,327,740) OTHER INCOME (EXPENSE) Interest Income 47,076 62,695 Other Income 4 11,316 Interest Expense (829) (3,196) Other (12,539) (362) LOSS BEFORE INCOME TAXES (355,269) (1,257,287) INCOME TAXES NET LOSS (355,269) (1,257,287) PREFERRED DIVIDENDS --------- ----------- LOSS APPLICABLE TO BASIC AND DILUTIVE COMMON SHARES $ (355,269) $(1,257,287) ========== =========== PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENTS Net Loss $ (0.07) $ (0.26) =========== =========== SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION STATEMENTS OF CASH FLOW Nine Months Ended January 31, 1998 1997 CASH FLOW FROM: OPERATING ACTIVITIES Net Earnings (Loss) $ (355,269) $(1,257,287) Adjustments to Reconcile Net Earnings To Net Cash Provided by (Used in) Operations: Depreciation 84,723 98,552 Amortization 9,612 1,068,923 Deferred Income Tax - (2,972) (Gain) Loss on Sale of Fixed Asset 7,630 (2,355) Changes in Assets and Liabilities Accounts Receivable 176,808 642,098 Inventories 36,275 69,173 Prepaid Expenses 130,374 (23,688) Accounts Payable (59,704) (228,686) Accrued Liabilities (50,319) (222,879) Accrued Royalties 16,032 (158,100) Advances From Customers 147,883 (170,453) Prepaid Maintenance Contract Revenue (125,042) 2,117 --------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 19,003 (185,557) INVESTING ACTIVITIES: Capital Additions (43,539) (101,561) --------- -------- NET CASH USED IN INVESTING ACTIVITIES (43,539) (101,561) FINANCING ACTIVITIES Payments of Preferred Dividends - (102,510) Payments on Capital Leases - (19,598) --------- -------- - (122,108) NET CHANGE IN CASH (24,536) (409,226) CASH, Beginning of the Year 1,404,708 2,071,772 --------- --------- CASH, January 31, 1998 and 1997 $1,380,172 $1,662,546 ========== ========== SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
ACCESS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS JANUARY 31, 1998 NOTE A - Condensed Financial Statements The condensed balance sheet as of January 31, 1998, the condensed statements of earnings for the three and nine month periods ended January 31, 1998 and 1997, and the condensed statements of cash flows for the nine month periods ended January 31, 1998 and 1997 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 January 31, 1998 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, 1997. The results of operations for the period ended January 31, 1998 are not necessarily indicative of the operating results for the full year. NOTE B - Calculation of Net Income (Loss) Per Share The Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standard (SFAS) no. 128 - "Earnings per Share" in February 1997. It replaced the presentation of primary and fully diluted earnings per share (EPS) with basic and diluted EPS. Basic EPS excludes all dilution. It is based upon the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that would occur if stock options were exercised. However, if the effect on EPS assuming exercise of stock options is anti-dilutive, which it would have been in the periods presented, such dilution is not considered. The Company adopted SFAS No. 128 in the third quarter of 1998. All previously reported EPS amounts have been restated to the new presentation. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: The Company has two primary lines of business, Service and Electronic Document Management Systems (System Sales). Originally, the Company's service activities were limited to the support of its proprietary products. The Company is currently building and growing its business of maintaining equipment manufactured and sold by third parties. The Company is working with manufacturers and distributors of high value equipment to develop its service business. The Company services on a nationwide basis, end users on both maintenance contracts and a time and material basis. The Company is also a leader in the Electronic Document Management Systems (EDMS) software business. In this line of business, the Company is the exclusive North American reseller of Cimage software. Fiscal year 1998 third quarter revenue of $1.8 million was up $406,400 (30%) compared with revenue for the third quarter of fiscal 1997. Service revenue of $1.2 million increased $343,600 (41%) compared with the third quarter of fiscal 1997. $146,600 of this increase represented servicing of prepress equipment, which the Company commenced with the purchase of GST's assets in April 1997. The Company has grown its business of maintaining equipment manufactured and sold by third parties in the third quarter of fiscal 1998 of $225,700 by $125,500, excluding the prepress equipment. EDMS revenue of $569,300 increased $62,800 (12%) compared with that in the third quarter of fiscal 1997. Cimage software increased $79,000 in the third quarter of fiscal 1998 compared to the third quarter in fiscal 1997. Revenue for the first nine months of fiscal 1998 of $7.2 million increased 58% from that for the nine months ended January 31, 1998. Service revenue of $3.8 million was $941,500 (33%) higher than the $2.9 million of service revenue recorded for the nine months ended January 31, 1997. The increase in revenue for service was attributable to the new prepress service business the Company acquired from GST in April 1997 and the increase volume of business for maintaining equipment manufactured and sold by third parties. The increase in revenue for prepress and other third party revenue for the nine months ended January 31, 1998 were $740,600 and $639,400, respectively. The increase in third party revenue more than offset the decrease of $372,500 in revenue from servicing the Company's proprietary equipment. EDMS revenue of $3.4 million was $1.7 million (102%) greater than EDMS revenue of $1.7 million recorded in the first nine months of fiscal 1998. This increase resulted from three customers purchasing software resulting in $1.7 million. EDMS revenue is generated from large orders and tends to fluctuate substantially from period to period depending upon the timing of placement and shipping of orders. The Company's current backlog of orders is $2.1 million compared to $2.4 million at January 31, 1997. Service backlog of $805,400 was 33% lower at January 31, 1998 than at January 31, 1997. Backlog relating to maintenance contracts on the Company's proprietary micrographic hardware decreased $431,800. The Company discontinued manufacturing this equipment in fiscal 1993. The Service backlog is expected to be delivered within the next twelve months. Current EDMS backlog of $820,200 is 45% higher than that at the same date last year. This increase in backlog is the result of the Company receiving more orders for EDMS professional services which are delivered over a length of time and three orders received in January for software and hardware. The professional services are expected to be delivered within the next twelve months. The software and hardware is expected to be delivered in the next three months. Gross Margin for the third quarter ended January 31, 1998 of 19% deceased from those in the comparable period in fiscal 1997, which was 32%. Service gross margin of 6% was lower than the 29% for this same period in fiscal 1997. With the Company's entry into servicing the prepress market, it doubled its number of field service representatives. The addition of these trained personnel greatly expands the capability of the Company to deliver service on a nationwide basis. In the third quarter of fiscal 1998, the additional capacity was not fully utilized, thus reducing the Company's gross margin for that period. The Company anticipates growth in its service business, increased utilization of this additional personnel and improved service gross margins within the next twelve months. EDMS gross margin before amortization for the third quarter of fiscal 1998 was 48%, which was higher than the 38% recorded in the third quarter of fiscal 1997. EDMS gross margin after amortization was 48% , compared to a negative margin of 107% for the same period last year. The Company did not incur amortization expense for EDMS Capitalized Software in the third quarter of fiscal 1998 because the remaining EDMS computer software development costs were written off in the third quarter of fiscal 1997. Selling and administrative expenses of $769,400 for the third quarter of fiscal 1998 were $154,000 (25%) higher than similar expenses in the third quarter of fiscal 1997. Selling expenses increased due to increased commissions on orders received in the third quarter of fiscal 1998. Engineering, research and development expenses were incurred for maintaining, upgrading current products and developing new products in the third quarter of fiscal 1997. Cimage Enterprise Systems Limited performs all the engineering, research and development for the Cimage software; therefore, the Company will no longer have a development expense. Interest income for the third quarter ended January 31, 1998 was $19,700 compared with $21,200 for the third quarter ended January 31, 1997. Interest income for fiscal 1998 and 1997 was primarily the interest received on cash being invested in short term investments. LIQUIDITY AND CAPITAL RESOURCES During the first nine months of fiscal 1998, the Company decreased its cash balance by $24,500 resulting in a $1,380,200 cash balance. The Company provided $2,400 in cash from operations, invested $43,500 in fixed assets and provided $16,500 for transactions relating to the assets acquired from GST. On large customer orders there are provisions for progress payments to be made by customers based on predetermined events. These advances increased approximately $147,900 since April 30, 1997. Working capital on January 31, 1998 was approximately $2,352,600, which is $310,900 lower than the April 30, 1997 level. This primarily was the result of the loss of $355,300 for the nine months ended January 31, 1998. The Company believes it is well positioned for the near future. The Company is a relatively small participant in the technically dynamic market which is populated by large players like Microsoft and IBM, as well as many middle and small size firms. In this fragmented market, a great many companies are competing for each new customer order. The Company faces a future filled with opportunities but also filled with a great many risks, many of which are beyond its control. On January 29, 1998, Universal Document Management Systems, Inc. ("UDMS") advised Access that UDMS would be unable to complete its acquisition of Access' assets as previously approved by Access' shareholders. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Refer to EXHIBIT INDEX on page 14 of this Quarterly Report on Form 10-Q (b) Reports on Form 8-K. No reports on Form 8-K were filed during the third quarter of fiscal year 1998. 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: March 10, 1998 s/Newton D. Baker ----------------- Newton D. Baker Executive Vice President Date: March 10, 1998 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: March 10, 1998 NEWTON D. BAKER _________________________ Newton D. Baker Executive Vice President Date: March 10, 1998 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 January 31, 1998 and 1997 is attached as Exhibit 11(a) (b) The calculation of net earnings per common share and common share equivalent for nine month periods ended January 31, 1998 and 1997 is attached as Exhibit 11(b). 10 EX-27 2
5 3-MOS APR-30-1998 JAN-31-1998 1,380,172 0 1,996,019 21,000 130,350 3,713,541 1,976,090 1,786,411 4,591,170 1,360,945 0 1,500,000 0 488,183 0 4,591,170 1,755,269 1,755,269 1,416,530 2,185,933 2,990 0 511 (414,411) (21,291) (393,120) 0 0 0 (393,120) (.08) (.08)
EX-11 3 Exhibit 11(a) ACCESS CORPORATION CALCULATION OF NET LOSS PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENT Three Months Ended January 31, 1998 1997 NET LOSS APPLICABLE TO BASIC AND DILUTIVE COMMON SHARES AND COMMON SHARE EQUIVALENTS: Net Loss $(393,120) $(980,808) Preferred Dividend - - Net Loss Applicable to Basic and Dilutive Common Shares and Common Share Equivalents $(393,120) $(980,808) CALCULATION OF PRIMARY NET LOSS PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENTS: Average Number of Common Shares and Common Share Equivalents Outstanding 4,865,559 4,865,559 PRIMARY NET LOSS PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENT: Net Loss per Basic and Dilutive Common Share and Common Share Equivalents $ (0.08) $ (0.20) ========= ========= a) Common Share Equivalents have not been included as their inclusion would be anti- dilutive
EX-11 4 Exhibit 11(b) ACCESS CORPORATION CALCULATION OF NET LOSS BASIC AND DILUTIVE PER COMMON SHARE AND COMMON SHARE EQUIVALENT Nine Months Ended January 31, 1998 1997 NET LOSS APPLICABLE TO BASIC AND DILUTIVE COMMON SHARES AND COMMON SHARE EQUIVALENTS: Net Loss $ (355,269) $(1,257,287) Preferred Dividend Net Loss Applicable to Basic and Dilutive Common Shares and Common Share Equivalents $ (355,269) $(1,257,287) CALCULATION OF PRIMARY NET LOSS PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENTS: Average Number of Common Shares and Common Share Equivalents Outstanding 4,865,559 4,865,559 PRIMARY NET LOSS PER BASIC AND DILUTIVE COMMON SHARE AND COMMON SHARE EQUIVALENT: Net Loss per Basic and Dilutive Common Share and Common Share Equivalents $ (0.07) $ (0.26) ========== ========= a) Common Share Equivalents have not been included as their inclusion would be anti-dilutive
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