-----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, QsNdx0jjqzVDIg5r4refa4Z5nCPNjPHtGNg5ZP/rU0SUwyps70yZxUmTK9uOkbvb 2aeani12rTVzMymCLzjlEQ== 0000950128-96-000402.txt : 19960715 0000950128-96-000402.hdr.sgml : 19960715 ACCESSION NUMBER: 0000950128-96-000402 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960712 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER RESEARCH INC CENTRAL INDEX KEY: 0000201511 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 251201499 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05954 FILM NUMBER: 96593788 BUSINESS ADDRESS: STREET 1: CHERRINGTON CORPORATE CTR BLDG 200 CITY: CORAOPOLIS STATE: PA ZIP: 15108 BUSINESS PHONE: 4122624430 MAIL ADDRESS: STREET 1: CHERRINGTON CORPORATE CENTER BLDG 200 CITY: CORAOPOLIS STATE: PA ZIP: 15108 10QSB 1 COMPUTER RESEARCH 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended MAY 31, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT For the transition period from ---------- to --------------- 0-5954 Commission File No.------------------------- COMPUTER RESEARCH, INC. - ------------------------------------------------------------------------------ (Exact name of small business issuer as specified in its charter) PENNSYLVANIA 25-1201499 - ------------------------------- ------------------------- (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification No. CHERRINGTON CORPORATE CENTER, BUILDING 200, CORAOPOLIS, PENNSYLVANIA 15108 - ------------------------------------------------------------------------------ (Address of principal executive offices) (412) 262-4430 - ----------------------------------------------------------------------------- (Issuer's telephone number) - ----------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,014,300 - ------------------------------------- 2 PART I - FINANCIAL STATEMENTS ITEM I A. COMPUTER RESEARCH, INC. BALANCE SHEET MAY 31, 1996 AND AUGUST 31, 1995 ASSETS
MAY 31, AUGUST 31, 1996 1995 --------- ---------- CURRENT ASSETS Cash and Cash Equivalents $1,884,241 $ 873,508 Accounts Receivable - Trade (net of allowance for doubtful accounts of $45,000 and $30,000 at 5/31/96 and 8/31/95 respectively) 904,167 776,099 Inventories (first-in, first-out) or market 49,404 80,518 Prepaid Expenses 46,760 75,911 ---------- ---------- Total Current Assets 2,884,572 1,806,036 ---------- ---------- EQUIPMENT and LEASEHOLD IMPROVEMENTS - At Cost Data Processing Equipment 4,325,247 4,255,912 Data Processing Equipment Under Capital Leases 162,031 104,339 Other 818,775 798,889 ---------- ---------- 5,306,053 5,159,140 Less Accumulated Depreciation and Amortization 4,995,697 4,879,610 ---------- ---------- 310,356 279,530 ---------- ---------- OTHER ASSETS -0- 1,341 $3,194,928 $2,086,907 ========== ==========
The accompanying notes are an integral part of these financial statements. 2 3 A. COMPUTER RESEARCH, INC. BALANCE SHEET - CONT'D. MAY 31, 1996 AND AUGUST 31, 1995 LIABILITIES
MAY 31, AUGUST 31, 1996 1995 -------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Note Payable to Bank $ - $ 25,000 Current Portion of Long-Term Obligations 72,668 45,852 Accounts Payable 80,228 82,057 Accrued Payroll 241,610 157,036 Accrued Income Taxes 215,300 27,500 Accrued Vacation 311,970 281,720 Customer Deposits 127,938 70,350 Accrued Rent 41,650 103,847 Accrued Lease Obligation 15,516 20,204 Other Current Liabilities 5,268 4,746 ---------- ---------- Total Current Liabilities 1,112,148 818,312 LONG-TERM OBLIGATIONS 22,108 35,885 ACCRUED LEASE OBLIGATION 7,444 17,909 ---------- ---------- Total Liabilities 1,141,700 872,106 ---------- ---------- COMMITMENTS STOCKHOLDERS' EQUITY Common Stock - No Par Value; $.0008 Stated Value; 5,000,000 Shares Authorized; 4,014,300 and 3,887,895 Shares Issued and Outstanding at 5/31/96 and 8/31/95, Respectively 3,211 3,110 Additional Paid-In Capital 744,361 715,842 Retained Earnings 1,305,656 495,849 ---------- ---------- Total Stockholders' Equity 2,053,228 1,214,801 ---------- ---------- $3,194,928 $2,086,907 ========== ==========
The accompanying notes are an integral part of these financial statements. 3 4 B. COMPUTER RESEARCH, INC. CAPITALIZATION AND STOCKHOLDERS' EQUITY MAY 31, 1996
DEBT AMOUNT --------- Short-Term Loans, Notes $ - Long-Term Debt (Including $72,668 due within one year) 94,776 ---------- Total Debt $ 94,776 ---------- STOCKHOLDERS' EQUITY SHARES ISSUED AMOUNT ------------- --------- Preferred Stock -0- Common Stock 4,014,300 $ 3,211 Capital in Excess of Par Value 744,361 Retained Earnings - Balance at Beginning of Current Fiscal Year 495,849 Net Income for Period 809,807 ---------- 1,305,656 ---------- Total Stockholders' Equity $2,053,228 ==========
The accompanying notes are an integral part of these financial statements. 4 5 C. COMPUTER RESEARCH, INC. STATEMENT OF INCOME FOR THE NINE MONTHS ENDED MAY 31, 1996 AND 1995
1996 1995 ---- ---- REVENUES Sales of Services $5,463,468 $4,321,124 Sales of Equipment, Software and Supplies 48,971 70,083 Rental Income From Operating Leases 28,205 36,545 Other Income 63,761 34,412 ---------- ---------- 5,604,405 4,462,164 ---------- ---------- COSTS AND EXPENSES Operating Expenses 3,029,025 2,861,565 Selling and Administrative Expenses 1,392,315 1,281,147 Depreciation and Amortization 116,087 63,844 Cost of Equipment, Software and Supplies Sold 37,347 45,322 Interest Expense 9,824 8,581 ---------- ---------- 4,584,598 4,260,459 ---------- ---------- INCOME BEFORE INCOME TAXES 1,019,807 201,705 LESS: PROVISION FOR INCOME TAXES 210,000 9,000 ---------- ---------- NET INCOME $ 809,807 $ 192,705 ---------- ---------- Average Number of Shares Outstanding 4,014,300 3,883,895 ---------- --------- Earnings Per Common Share $ .20 $ .05 ---------- ---------- DIVIDENDS PER COMMON SHARE $ - $ - ---------- ----------
The results for the period ended May 31, 1996, are not necessarily indicative of the results to be expected for the year. All known adjustments necessary for a fair presentation of the financial information of the Company have been reflected for the nine months ended May 31, 1996. The accompanying notes are an integral part of these financial statements. 5 6 C. COMPUTER RESEARCH, INC. STATEMENT OF INCOME FOR THE FISCAL THIRD QUARTER ENDED MAY 31, 1996 AND 1995
1996 1995 ---- ---- REVENUES Sales of Services $1,784,830 $1,526,074 Sales of Equipment, Software and Supplies 29,375 61,690 Rental Income From Operating Leases 7,565 11,640 Other Income 24,613 13,086 ---------- ---------- 1,846,383 1,612,490 ---------- ---------- COSTS AND EXPENSES Operating Expenses 1,055,769 1,008,696 Selling and Administrative Expenses 458,262 439,545 Depreciation and Amortization 46,949 22,050 Cost of Equipment, Software and Supplies Sold 23,391 42,295 Interest Expense 3,072 2,981 ---------- ---------- 1,587,443 1,515,567 ---------- ---------- INCOME BEFORE INCOME TAXES 258,940 96,923 LESS: PROVISION FOR INCOME TAXES 60,000 9,000 ---------- ---------- NET INCOME $ 198,940 $ 87,923 ---------- ---------- Average Number of Shares Outstanding 4,014,300 3,883,895 ---------- ---------- Earnings Per Common Share $ .05 $ .02 ---------- ---------- DIVIDENDS PER COMMON SHARE $ - $ - ========== ==========
The results for the period ended May 31, 1996, are not necessarily indicative of the results to be expected for the year. All known adjustments necessary for a fair presentation of the financial information of the Company have been reflected for the three months ended May 31, 1996. The accompanying notes are an integral part of these financial statements. 6 7 D. COMPUTER RESEARCH, INC. STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 1996 AND 1995
1996 1995 ---- ---- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Net Income $ 809,807 $ 192,705 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and Amortization 116,087 63,844 Provision for Losses on Doubtful Accounts 15,000 10,000 Change in Assets and Liabilities: Accounts Receivable (143,068) (257,212) Inventories 31,114 (779) Prepaid Expenses 29,151 1,972 Other Assets 1,341 3,280 Accounts Payable, Accrued Expenses and Other Current Liabilities 239,120 28,355 Customer Deposits 57,588 42,723 Accrued Lease Obligation (15,153) (56,411) ---------- ---------- Total Adjustments 331,180 (164,228) ---------- ---------- Net Cash (Used In) Provided by Operating Activities 1,140,987 28,477 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Equipment and Leasehold Improvements (89,221) (48,713) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Stock 28,620 3,611 Proceeds From Line of Credit - 100,000 Payments on Capital Lease Obligations (44,653) (4,794) Payments on Line of Credit (25,000) (120,000) ---------- ---------- Net Cash Provided by (Used In) Financing Activities (41,033) (21,183) ---------- ---------- Net Increase (Decrease) in Cash 1,010,733 (41,419) Cash and Cash Equivalents at August 31, 1995 and 1994 873,508 691,881 ---------- ---------- Cash and Cash Equivalents at May 31, 1996 and 1995 $1,884,241 $ 650,462 ========== ========== CASH PAID DURING THE PERIOD 5/31/96 5/31/95 ---------- ---------- Interest $ 9,824 $ 8,581 ========= ========== Income Taxes $ 22,500 $ - ========= ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES For the nine months ended May 31, 1996, the Company entered into a capital lease for the purchase of new equipment for $57,692. The accompanying notes are an integral part of these financial statements. 7 8 COMPUTER RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED MAY 31, 1996 NOTE A - COMPANY'S ANNUAL REPORT UNDER FORM 10-KSB The accompanying financial information should be read in conjunction with the Company's 1995 Annual Report on Form 10-KSB. NOTE B - ADJUSTMENTS In the opinion of management, all adjustments that were made, which are necessary to a fair statement of the results for the interim periods, were of a normal and recurring nature. 8 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS 1. CAPITAL RESOURCES AND LIQUIDITY The cash and cash equivalents on hand for the first nine months of the current year increased from approximately $873,000 to approximately $1,885,000. The primary reason for this increase was due to an approximate $810,000 net income generated by operations during the first nine months of the current year. Should it be needed, the Company has a $750,000 line of credit available for future use. The Company's operating cash flow, borrowing capacity, and liquidity should provide adequate funds for continuing operations for the foreseeable future. During the last quarter of the 1997 fiscal year, the Company intends to complete an ongoing project to have the software of its product line operational on IBM computer equipment. At that time, the Company will have the option to purchase computer processing time on the IBM equipment from an outside supplier or if justified business wise, purchase and install IBM computer equipment of its own for its service business processing needs. 2. RESULTS OF OPERATIONS REVENUES The Company's principal source of revenue is derived from providing computerized accounting and support services to securities brokerage firms, banks and other financial institutions. The Company's revenues are directly affected by securities trading volume and the number of transactions processed for its clients. Due to the volatile nature of the industry served, the results of operations for the period represented are not necessarily indicative of the results of operations to be expected for the full year or any specific period. The revenues for the first nine months of the current year increased by approximately 26% over the previous year to a figure of approximately $5,604,000. While revenues from banking clients accounted for the majority of this increase, revenues from brokerage clients, as well as programming fees, also increased. 9 10 The revenues for the fiscal third quarter of the current year increased by approximately 15% over the comparable period of the previous year. This is primarily attributable to increased service fees from the brokerage and banking clients of the Company's service business. In March of 1996, the Company and Wachovia Operational Services Corporation, an affiliate of a major service client that accounts for more than 10% of the consolidated revenues of the Company, entered into an agreement to convert the Company's production software from its existing hardware platform to operate on an IBM AS/400 configuration. Upon successful completion of this project, which is anticipated to occur during the fourth quarter of the Company's 1997 fiscal year, the Company intends to begin licensing the software to third parties for in-house utilization. The licensing of the software to Wachovia Operational Services Corporation will result in a reduction of service fees from the major client in the 1998 fiscal year. However, the conversion of the Company's existing software to the IBM AS/400 configuration will enhance the ability to secure software license revenues. Management believes the ability to generate software license revenues and continued growth in recurring revenues from existing clients and potential new service clients will serve to offset any decrease in revenues that might occur. COSTS AND EXPENSES The total costs and expenses for the first nine months of the current year increased by approximately 8% over the previous year to $4,584,598. An allocation of Company funds to an employee profit sharing plan, in addition to the cost of an additional computer configuration installed during the second quarter of the current year, were contributors to this increase. The total costs and expenses for the fiscal third quarter of the current year increased by approximately 5% over the comparable period of the previous year to $1,587,443. NET INCOME The net income for the first nine months of the current fiscal year was $809,807 or $.20 per share. The net income for the first nine months of the previous year was $192,705 or $.05 per share. The net income for the fiscal third quarter of the current year was $198,940 or $.05 per share as compared to $87,923 or $.02 per share for the comparable period of the previous year. 10 11 PART II - OTHER INFORMATION Not applicable. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COMPUTER RESEARCH, INC. ------------------------------------- (Registrant) /s/ JAMES L. SCHULTZ -------------------------------------- Date 7/12/96 James L. Schultz, President & Treasurer 11 EX-27 2 COMPUTER RESEARCH
5 0000201511 COMPUTER RESEARCH, INC. 9-MOS AUG-31-1996 SEP-01-1995 MAY-31-1996 1,884,241 0 949,167 45,000 49,404 2,884,572 5,306,053 4,995,697 3,194,928 1,112,148 94,776 0 0 3,211 2,050,017 3,194,928 48,971 5,604,405 37,347 4,584,598 0 15,000 9,824 1,019,807 210,000 809,807 0 0 0 809,807 .20 .20
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