-----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, RmyeJzFj4e3NJcRiluNd9eaasDqKooZF9kvIDKzpZ/+/0xXzevgyQWIdsHmId670 6QSZFZx6xABw91Tog689+A== 0000712815-97-000009.txt : 19970410 0000712815-97-000009.hdr.sgml : 19970410 ACCESSION NUMBER: 0000712815-97-000009 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970409 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREATIVE COMPUTER APPLICATIONS INC CENTRAL INDEX KEY: 0000712815 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 953353465 STATE OF INCORPORATION: CA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-13268 FILM NUMBER: 97576774 BUSINESS ADDRESS: STREET 1: 26115 A MUREAU RD CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8188806700 MAIL ADDRESS: STREET 1: 26115 A MUREAU ROAD CITY: CALABASAS STATE: CA ZIP: 91302 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ____________ to _______________ Commission file number 0-12551 CREATIVE COMPUTER APPLICATIONS, INC. (Exact name of small business issuer as specified in its charter) California 95-3353465 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 26115-A Mureau Road, Calabasas, California 91302 (Address of principal executive offices) (818) 880-6700 Issuer's telephone number: 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 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 2,832,865 common shares as of March 24, 1997. Transitional Small Business Disclosure Format (check one): Yes No X FORM 10-QSB I N D E X PART I - Financial Information: PAGE Condensed Balance Sheets, as at February 28, 1997 and August 31, 1996 3 Condensed Statements of Income for the three months ended February 28, 1997 and February 29, 1996 4 Condensed Statements of Income for the six months ended February 28, 1997 and February 29, 1996 5 Condensed Statements of Cash Flows for the six months ended February 28, 1997 and February 29, 1996 6 Notes to Condensed Financial Statements 7 Management's Discussion and Analysis or Plan of Operation 7 PART II - Other Information: Items 1 through 6 9 Signatures 9 PART 1 - FINANCIAL INFORMATION CONDENSED BALANCE SHEETS ____________________________________
February 28, August 31, 1997 1996 * (Unaudited) ASSETS CURRENT ASSETS: Cash $ 205,577 $ 253,201 Receivables 2,069,171 1,678,564 Inventories 674,045 642,787 Prepaid expenses and other assets 104,838 86,881 Deferred tax asset 437,000 437,000 TOTAL CURRENT ASSETS 3,490,631 3,098,433 PROPERTY AND EQUIPMENT, net 559,274 480,108 INVENTORY OF COMPONENT PARTS 127,357 148,357 CAPITALIZED SOFTWARE COSTS, net of accumulated amortization of $291,319 and $446,632 796,199 693,696 INTANGIBLES, net 289,966 315,551 OTHER ASSETS 22,721 23,480 DEFERRED TAX ASSET 77,600 77,600 TOTAL ASSETS $5,363,748 $4,837,225 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable to bank $ 320,000 $ 191,875 Accounts payable 472,050 306,321 Accrued liabilities: Vacation Pay 175,549 157,106 Other 415,367 426,341 Deferred service contract income 446,179 464,076 Capital lease obligations, current portion 24,189 27,489 TOTAL CURRENT LIABILITIES 1,853,334 1,573,208 NOTES PAYABLE TO BANK, NET OF CURRENT PORTION 27,296 0 CAPITAL LEASE OBLIGATIONS, net of current portion 10,797 21,250 DEFERRED RENT 20,134 35,235 TOTAL LIABILITIES 1,911,561 1,629,693 SHAREHOLDERS' EQUITY: Preferred shares, no par value; 500,000 shares authorized; no shares outstanding - - Common shares, no par value; 20,000,000 shares authorized; 2,832,865 and 2,820,915 shares outstanding 5,732,135 5,714,570 Accumulated deficit (2,279,948) (2,507,038) TOTAL SHAREHOLDERS' EQUITY 3,452,187 3,207,532 $5,363,748 $4,837,225
See Notes to Financial Statements. * As presented in the audited financial statements CONDENSED STATEMENTS OF INCOME
Three Months Ended February 28 & 29, 1997 1996 (unaudited) NET SYSTEM SALES AND SERVICE REVENUE System sales $1,337,303 $ 937,260 Service revenue 502,262 510,531 1,839,565 1,447,791 COST OF PRODUCTS AND SERVICES SOLD System sales 630,674 453,015 Service revenue 335,036 310,031 965,710 763,046 Gross profit 873,855 684,745 OPERATING EXPENSES: Selling, general and administrative 600,117 483,186 Research and development 134,216 124,218 734,333 607,404 Operating income 139,522 77,341 INTEREST AND OTHER INCOME 1,325 889 INTEREST EXPENSE (10,690) (15,510) Income before taxes on income 130,157 62,720 TAXES ON INCOME (2,850) (3,700) NET INCOME $ 127,307 $ 59,020 EARNINGS PER COMMON SHARE (Note 2): $ .04 $ .02 WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON STOCK EQUIVALENTS OUTSTANDING 2,995,355 3,295,998
See Notes to Financial Statements. CONDENSED STATEMENTS OF INCOME
Six Months Ended February 28 & 29, 1997 1996 (unaudited) NET SYSTEM SALES AND SERVICE REVENUE System sales $2,503,456 $2,158,755 Service revenue 1,070,680 1,004,570 3,574,136 3,163,325 COST OF PRODUCTS AND SERVICES SOLD System sales 1,230,305 1,056,189 Service revenue 650,693 600,177 1,880,998 1,656,366 Gross profit 1,693,138 1,506,959 OPERATING EXPENSES: Selling, general and administrative 1,174,300 952,175 Research and development 268,603 261,742 1,442,903 1,213,917 Operating income 250,235 293,042 INTEREST AND OTHER INCOME 2,544 1,345 INTEREST EXPENSE (16,488) (23,075) Income before taxes on income 236,291 271,312 TAXES ON INCOME (9,200) (20,300) NET INCOME $ 227,091 $ 251,012 EARNINGS PER COMMON SHARE (Note 2): $ .08 $ .09 WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON STOCK EQUIVALENTS OUTSTANDING 3,008,355 3,282,090
See Notes to Financial Statements. CONDENSED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash
Six Months Ended February 28 & 29, 1997 1996 (unaudited) OPERATING ACTIVITIES: Net income $ 227,091 $ 251,012 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 222,189 166,461 Provision for possible losses 4,078 (4,068) Changes in operating assets and liabilities: Receivables (394,685) (156,334) Inventories (31,258) 76,923 Prepaid expenses and other assets (33,058) (24,511) Accounts payable 165,729 (136,515) Accrued liabilities (10,428) 79,460 Net cash provided by operating activities 149,658 252,428 INVESTING ACTIVITIES Additions to property and equipment (164,515) (192,341) Capitalized software costs (192,000) (135,000) Net cash used in investing activities (356,515) (327,341) FINANCING ACTIVITIES: Additions to (payments on) notes payable, net 155,421 35,069 Decrease in capital lease obligations, net of payments (13,753) (18,033) Exercise of Stock Options 17,565 1,890 Net cash provided by financing activities 159,233 18,926 NET DECREASE IN CASH (47,624) (55,987) Cash, beginning of period 253,201 377,813 Cash, end of period $ 205,577 $ 321,826
See notes to financial statements. NOTES TO CONDENSED FINANCIAL STATEMENTS Note 1. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments (which include only normal recurring accruals) necessary to present fairly the Company's financial position as of February 28, 1997 and August 31, 1996, the results of its operations for the three months and six months ended February 28, 1997 & February 29, 1996, and cash flows for the six months ended February 28, 1997 and February 29, 1996. Note 2. Earnings per common share are computed by dividing the net income for each period by the weighted average number of common shares plus the weighted average of dilutive common share equivalents outstanding during the period using the treasury stock method. Common share equivalents consist of stock options and warrants. Common stock equivalents are considered dilutive for earnings per share if the average stock price exceeds the exercise price during the period. The common stock equivalents are weighted from the beginning of the earliest quarter in which they become dilutive. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition This following section of the report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties so that the actual results may vary materially. Results of Operations Sales for the second quarter of fiscal 1997 ended February 28, 1997 increased by $391,774 or 27% compared to the same quarter of fiscal 1996. For the six month period ended February 28, 1997 sales increased $410,811 or 13% compared to the same period in fiscal 1996. When analyzed by product category for the quarter and six month periods, sales of Clinical Information Systems increased $415,945 or 67% and $273,295 or 16% respectively, sales of data acquisition products decreased $18,321 or 6% and increased $66,562 or 14% respectively, and service and other revenues decreased by $5,849 or 1% and increased $70,954 or 7% respectively. The Company's new CIS products have continued to receive interest from the healthcare market which resulted in increased new orders for such products during the quarter and a marked increase in new quotations for potential sales. The increase in service revenues for the six month period is indicative of a greater number of accounts under contract. In the second half of fiscal 1996 management restructured its sales and marketing activities, including the recruitment of a Vice President of Sales and Business Development. The Company also began strategic joint marketing partnerships with other companies which improved the Company's market penetration. Management views the near term outlook for the continued sale of CIS products favorably during the second half of the 1997 fiscal year. However, the Company's future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the volume mix and timing of orders received during any quarter or annual periods. Cost of sales for the second quarter and six month period ended February 28, 1997 increased by $202,664 or 27% and $224,632 or 14% respectively as compared to the same quarter and six month period of 1996. For the quarter and six month period the increase in costs of sales was primarily attributable to an increase in material costs of $118,836 or 65% and $87,540 or 18% respectively, and increases in other costs of $63,809 or 25% and $101,075 or 18% respectively, and by increases in labor costs of $20,019 or 6% and $36,017 or 6% respectively. The overall increases were attributable to a higher volume of sales of Clinical Information Systems and data acquisition products in the current quarter and six month period ending February 28, 1997. For the current quarter and six month period ended February 28, 1997, cost of sales as a percentage of sales decreased to 52% from 53% and increased to 53% from 52% respectively. Selling and administration expenses increased $116,931 or 24% and $222,125 or 23% in comparing the current quarter and six months ending February 28, 1997 with the same periods of fiscal 1996. The increase was primarily attributable to planned expenditures in sales and marketing associated with the Company's CIS products. Management anticipates the increased level of sales and marketing expenditures to continue in the second half of fiscal 1997 as the Company expands its sales and marketing activities related to the sale of its CIS products across a broader market spectrum. Research and Development expense increased $9,998 or 8% and $6,861 or 3% for the current quarter and six months ending February 28, 1997 compared to the same periods of fiscal 1996. The increases were primarily attributable to a greater amount of labor costs incurred in the current periods due to a number of new software products in development. As a result of the aggregate factors discussed above the Company earned net income of $127,307 or $.04 per share and $227,091 or $.08 per share for the current quarter and six month period ending February 28, 1997 compared to net income of $59,020 or $.02 per share and a net income of $251,012 or $.09 per share in the comparable quarter and six month period one year ago. Capital Resources and Liquidity As of February 28, 1997, the Company's working capital amounted to $1,637,297 compared to $1,525,225 at August 31, 1996. The ratio of the Company's current assets to current liabilities was approximately 1.9 to 1 at February 28, 1997 compared to 2.0 to 1 at August 31, 1996. The Company's bank line of credit as of February 28, 1997 amounted to approximately $580,000, of that amount $347,000 was outstanding as of that date. The Company was in compliance with all covenants and financial ratios required by its bank as of February 28, 1997. The Company believes that its cash flows from operations together with its bank credit facilities should be sufficient to fund its working capital requirements for its 1997 fiscal year. Seasonality, Inflation and Industry Trends The Company sales are generally lower in the summer and higher in the fall and winter. Inflation has had no material effect on the Company business since the Company has been able to adjust the prices of its products and services. Management believes that most phases of the healthcare segment of the computer systems industry will continue to be competitive and that the changes making place in healthcare will have a long term positive impact on its business. In addition, management believes that the industry will experience more significant technological advances which will improve the quality of service and reduce costs. The Company is poised to meet these challenges by continuing to employ new technologies when they become available, diversifying its product offerings, and by constantly enhancing its software applications. PART II - OTHER INFORMATION Items 1 through 5. NOT APPLICABLE Item 6. Exhibits and Reports on Forms 8-K (a) Exhibit 11 - Statement re: computation of per share earnings. Exhibit 27 - Financial Data Schedule. (b) There were no reports filed on Form 8-K during the quarter ended February 28, 1997. SIGNATURES In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CREATIVE COMPUTER APPLICATIONS, INC. (Company) Date: April 4, 1997 /S/ Steven M. Besbeck Steven. M. Besbeck, President Chief Executive Officer, Chief Financial Officer Date: April 4, 1997 /S/ Carol Bessel Carol Bessel,Controller and Chief Accounting Officer Exhibit 11 CREATIVE COMPUTER APPLICATIONS, INC. COMPUTATION OF EARNINGS PER COMMON SHARE
Six Months Ended Three Months Ended February 28 & 29, February 28 & 29, 1997 1996 1997 1996 ENDING MARKET PRICE PER SHARE $ 1.50 $ 2.25 $ 1.50 $ 2.25 AVERAGE MARKET PRICE PER SHARE $ 1.81 $ 1.86 $ 1.75 $ 1.93 NET INCOME $ 227,091 $ 251,012 $ 127,307 $ 59,020 PRIMARY EARNINGS PER SHARE: Shares: Weighted average number of common shares outstanding 2,828,198 2,737,815 2,831,532 2,737,815 Shares issuable upon exercise of options and warrants 663,000 927,755 623,000 927,755 Shares assumed to be repurchased under the treasury stock method (1) (2) (82,843) (383,480) (459,177) (369,572) Adjusted weighted average number of common shares outstanding 3,008,355 3,282,090 2,995,355 3,295,998 Primary earnings per share: $ .08 $ .09 $ .04 $ .02 FULLY DILUTED EARNINGS PER SHARE: Shares: Weighted average number of common shares outstanding 2,828,198 2,737,815 2,831,532 2,737,815 Shares issuable upon exercise of options and warrants 663,000 927,755 623,000 927,755 Shares assumed to be repurchased under the treasury stock method (1) (2) (482,843) ( 317,010) (459,177) (317,010) Adjusted weighted average number of common shares outstanding 3,008,355 3,348,560 2,995,355 3,348,560 Fully diluted earnings per share: $ .08 $ .09 $ .04 $ .02
(1) Shares assumed to be repurchased under the treasury stock method: Primary common stock equivalents are assumed to be repurchased at average market price. Fully diluted common stock equivalents are assumed to be repurchased at the greater of average or ending market price. Shares assumed to be repurchased under the treasury stock method are limited to 20% of the number of shares outstanding at the end of the period in accordance with Accounting Principals Board Statement No. 15. (2) Shares assumed to be repurchased under the treasury stock method were based on proceeds of assumed options of $873,946 & $803,560 for primary and fully diluted for the six months & three months ending February 28, 1997. CREATIVE COMPUTER APPLICATIONS, INC. CREATIVE COMPUTER APPLICATIONS, INC. EX-27 2
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