-----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, KaB+YXid/2BL6FkOtWVWTegpTgfqfC0gZSK2Rsp7ixXEC/r1kumVM67WWVe0PU5u ftbKdNGotxgX2Z78BNEUKQ== 0000950116-96-000800.txt : 19960816 0000950116-96-000800.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950116-96-000800 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMTREX SYSTEMS CORP CENTRAL INDEX KEY: 0000769525 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 222353604 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13732 FILM NUMBER: 96612007 BUSINESS ADDRESS: STREET 1: 102 EXECUTIVE DR SUITE 1 CITY: MOORESTOWN STATE: NJ ZIP: 08057 BUSINESS PHONE: 6097780090 MAIL ADDRESS: STREET 1: 102 EXECUTIVE DRIVE SUITE 1 CITY: MOORESTOWN STATE: NJ ZIP: 08057 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-13732 COMTREX SYSTEMS CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-2353604 - -------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 102 Executive Drive, Moorestown, NJ 08057-4224 - ---------------------------------------- ----------------- (Address of principal executive offices) (Zip Code) (609) 778-0090 Registrant's telephone number, including area code 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 stock, as of the latest practicable date. Class Outstanding at July 26, 1996 - ----- ---------------------------- Common Stock, par value $.001 3,164,022 - 1 - COMTREX SYSTEMS CORPORATION BALANCE SHEETS These statements are unaudited. ASSETS
Current assets: June 30, 1996 March 31, 1996 ------------- -------------- Cash and cash equivalents $ 277,794 $ 218,166 Certificate of deposit 100,000 100,000 Accounts receivable, net of reserve of $166,742 and $141,037 as of 3/31/1996 and 6/30/1996, respectively 1,116,463 1,084,254 Note receivable and accrued interest 34,949 51,936 Inventories 1,138,570 929,885 Prepaid expenses and other 87,724 91,029 ----------- ----------- Total current assets 2,755,500 2,475,270 ----------- ----------- Property and equipment: Machinery, equipment, furniture and leasehold improvements 1,018,638 958,268 Less - accumulated depreciation (836,406) (815,742) ----------- ----------- Net property and equipment 182,232 142,526 ----------- ----------- Other assets: Purchased and capitalized software and design 948,572 894,393 Less - accumulated amortization and depreciation (649,715) (643,395) ----------- ----------- Total other assets 298,857 250,998 ----------- ----------- TOTAL ASSETS $ 3,236,589 $ 2,868,794 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 708,189 $ 431,581 Accrued expenses 105,361 85,587 Customer deposits 45,888 25,439 ----------- ----------- Total current liabilities 859,438 542,607 ----------- ----------- Shareholders' equity: Preferred stock, $1 par value, 1,000,000 shares authorized, none outstanding -- -- Common stock, $.001 par value, 5,000,000 shares authorized, 3,164,022 issued and outstanding as of 6/30/1996 and 3/31/1996 3,165 3,165 Additional paid-in capital 5,315,970 5,315,970 Accumulated deficit (2,941,984) (2,992,948) ----------- ----------- Total shareholders' equity 2,377,151 2,326,187 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,236,589 $ 2,868,794 =========== ===========
The accompanying notes are an integral part of these financial statements. - 2 - COMTREX SYSTEMS CORPORATION STATEMENTS OF OPERATIONS These statements are unaudited.
Three months ended June 30, 1996 1995 -------------------------------------- Net sales $ 1,485,856 $ 1,320,172 ----------- ----------- Costs and expenses Cost of sales 907,040 877,050 Administrative 170,062 181,953 Research and development 29,239 42,250 Sales and marketing 197,177 167,741 Customer support 108,537 86,010 Depreciation and amortization 26,984 26,401 ----------- ----------- 1,439,039 1,381,405 ----------- ----------- Income (loss) from operations 46,817 (61,233) Interest income, net 4,147 6,535 ----------- ----------- Income (loss) before income taxes Provision for income taxes (20,386) -- ----------- ----------- Income (loss) before extraordinary credit 30,578 (54,698) Extraordinary credit, reduction of income taxes arising from carryforward of prior years' operating losses 20,386 -- ----------- ----------- Net income (loss) $ 50,964 $ (54,698) =========== =========== Per share data: Income (loss) before extraordinary credit $ .01 $ (.02) Extraordinary credit $ .01 $ .00 ----------- ----------- Net income (loss) $ .02 $ (.02) =========== =========== Weighted average shares outstanding 3,171,523 3,167,678 ----------- -----------
The accompanying notes are an integral part of these financial statements. - 3 - COMTREX SYSTEMS CORPORATION STATEMENTS OF CASH FLOWS These statements are unaudited.
Three months ended June 30, 1996 1995 -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 50,964 $ (54,698) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities - Depreciation and amortization 26,984 26,401 Provisions for losses on accounts receivable 12,200 13,205 Provisions for losses on inventories 33,000 19,825 (Increase) decrease in - Certificate of deposit -- -- Accounts receivable (44,409) (388,362) Note receivable 16,987 3,747 Inventories (241,685) (388,795) Prepaid expenses and other 3,305 23,346 Increase (decrease) in - Accounts payable 276,608 272,142 Accrued expenses 19,774 (12,573) Customer deposits 20,449 (8,974) --------- --------- Net cash provided by (used in) operating activities 174,177 (494,736) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Sale of property and equipment -- -- Purchases of property and equipment (60,370) (43,196) Purchases of software and capitalized software and design (54,179) (29,288) --------- --------- Net cash provided by (used in) investing activities (114,549) (72,484) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings under line of credit -- -- Repayments under line of credit -- -- Proceeds from issuing equity securities -- 2,650 --------- --------- Net cash provided by financing activities -- 2,650 --------- --------- Net increase (decrease) in cash 59,628 (564,570) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 218,166 750,719 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD 277,794 186,149 --------- ---------
The accompanying notes are an integral part of these financial statements. - 4 - COMTREX SYSTEMS CORPORATION NOTES TO FINANCIAL STATEMENTS 1. Interim financial reporting: The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company's latest Annual Report on Form 10-KSB. These interim financial statements reflect all adjustments, of a normal and recurring nature, which are, in the opinion of management, necessary for a fair statement of the results for the interim period(s) presented. The results for the period(s) herein presented are not necessarily indicative of the results for the entire fiscal year. 2. Inventories: June 30, March 31, 1996 1996 ----------- ---------- Raw materials $ 701,184 $ 827,393 Work-in-process 210,988 159,782 Finished goods 347,454 30,765 Reserve for excess and obsolete inventory (121,056) (88,055) ---------- ---------- $1,138,570 $ 929,885 ========== ========== 3. Income taxes: The consolidated statements of operations reflect a provision for income taxes at the rate of 40 percent, which represents the federal statutory rate of 34 percent plus an effective state tax rate of 6 percent. The provisions for income taxes are offset by tax benefits arising from an extraordinary credit from the utilization of prior years' operating losses. The Company has net operating loss carryforwards of approximately $3,230,000 for financial reporting and for federal income tax purposes, which begin to expire in 2004. The Company has tax credit carryforwards for federal income tax purposes of approximately $148,000. Net operating loss carryforwards are also available for state income tax purposes. - 5 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Liquidity and Capital Resources As of June 30, 1996, the Company had total current assets of $2,755,500, including cash, cash equivalents and certificates of deposits of $377,794, as compared to $2,475,270 and $318,166, respectively, as of March 31, 1996. The Company had current liabilities of $859,438, resulting in a current ratio of 3.2 as of June 30, 1996, compared to $542,607 and 4.6, respectively, as of March 31, 1996. The Company reported net income of $50,964 for the three months ended June 30, 1996. The Company has net operating loss carryforwards of approximately $3,230,000 for federal income tax purposes, which do not begin to expire until 2004, and tax credit carryforwards of approximately $148,000. Operating activities generated $174,177 of cash during the first three months of fiscal year 1997, as compared with cash consumption of $494,736 for the corresponding prior year period. Cash and cash equivalents increased by $59,628 during the three month period of fiscal year 1997. Investing activities consumed $114,549 of cash, both as a result of purchased and capitalized software development costs and the purchase of the assets of AUBIS Hospitality Systems. Inventories, net of reserves, increased by $208,685 during the quarter, from $929,885 as of March 31, 1996 to $1,138,570 as of June 30, 1996. This increase is due primarily to initial stocking of parts for the PCS-5000 series in anticipation of product release. First shipments of demonstration equipment were made late in June. Accounts receivable, net of reserves, rose by $32,209 during the first quarter as a result of increased sales over the fourth quarter of the preceding fiscal year. On April 1, 1996, the Company acquired substantially all the assets of AUBIS Hospitality Systems, Inc., an Atlanta, Georgia based company, which related to the resale activity of Comtrex point of sale products. The Company opened a District Office in Atlanta, to sell products directly to end-user customers, primarily restaurants and quick service food outlets, in both the metropolitan Atlanta area and throughout the southeastern United States. While the Company does extend terms to its end-user customers, direct sales are generally accompanied by a down payment. The terms extended to direct customers are in line with the terms extended by the Company to its dealers. Inventory for sale to end-users will primarily be maintained at the Company's manufacturing facility in New Jersey, although inventory for service of direct customers will be maintained in the Atlanta District Office. The Company does not expect any appreciable increase in either accounts receivable or inventories in conjunction with its direct sales efforts, other than through increases in sales through the Atlanta District Office. - 6 - Liquidity and Capital Resources (continued) The Company believes that its cash balance, together with its line of credit, provides the Company with adequate liquidity to finance the increases in accounts receivable and inventories. In July of 1996, the Company and Fleet Bank (formerly Nat West Bank N.A.) renewed an existing line of credit agreement, and extended the facility through July of 1997. The agreement provides for borrowings of up to $750,000, with a limitation depending on eligible receivables, as defined in the agreement. Borrowings bear interest at the bank's prime rate and are collateralized by substantially all assets of the Company. The Company did not borrow under this credit facility during the first quarter. The Company expects to utilize its credit facility from time to time for short term cash requirements. As of June 30, 1996, the Company had no material commitments for capital expenditures. - 7 - Results of Operation Net sales during the first quarter of fiscal year 1997 increased 13% to $1,485,856, as compared with corresponding sales of $1,320,172 during the first quarter of fiscal year 1996. Net income for the quarter of $50,964, or $.02 per share, compares favorably against the loss of $54,698, or $.02 per share, reported for the comparable prior year period. The Company's products are distributed in the United States through a network of approximately eighty authorized dealers. The Company does not intend to increase the number of its authorized dealers during fiscal year 1997, but rather to increase training and support programs for its existing dealers, and to seek alternative representation in areas where sales penetration of the Company's products is negligible. On April 1, 1996, the Company acquired substantially all the assets of AUBIS Hospitality Systems, Inc., an Atlanta, Georgia based company, which related to the resale activity of Comtrex point of sale products and opened a District Office. Sales through the District Office were approximately 20% of the Company's total revenues during the first quarter of fiscal year 1997. The Company will consider opening additional District Offices, as an alternative to seeking a new dealer relationship, in areas where current dealer representation has been unsuccessful in generating significant sales. Sales, marketing and customer support expenses increased from $253,751, or 19% of sales, for the first quarter of fiscal year 1996 to $305,714, or 21% of sales, during the most recent quarter. Substantially all of the operating expense of the Company's District Office is allocated to sales, marketing and customer support. Administrative expense declined to $170,062 during the most recent quarter, from $181,953 for the first quarter of fiscal year 1996. Cost of sales during the three months ended June 30, 1996 represented 61% of net sales, as compared to 66% of net sales for the comparable period last fiscal year. The Company realizes significantly higher gross margins on its direct sales to end-users than on sales to its dealers. Offsetting this higher gross margin are the fixed operating expenses of a direct sales office. As of July 26, 1996, the Company's backlog was approximately $310,857, as compared with a corresponding backlog of approximately $110,453 as of July 31, 1995. As stated earlier, the Company's U.S. dealers typically place orders with the Company based on their sales activities with end user customers, and do not maintain significant inventory levels of the Company's products. Sales by the Company's District Office are generally placed one or more months before actual delivery and installation. The Company expects that substantially all of its current backlog will be shipped within the next 90 days. - 8 - 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. COMTREX SYSTEMS CORPORATION (Registrant) Date: August 13, 1996 By: /s/ Lisa J. Mudrick ------------------- ------------------------------------- Lisa J. Mudrick Chief Financial & Chief Accounting Officer Date: August 13, 1996 By: /s/ Jeffrey C. Rice ------------------- -------------------------------------- Jeffrey C. Rice Chief Executive Officer - 9 - EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1 3-MOS MAR-31-1997 JUN-30-1996 277,794 100,000 1,292,449 141,037 1,138,570 2,755,500 1,018,638 836,406 3,236,589 859,438 0 3,165 0 0 5,315,970 3,236,589 1,485,856 1,490,003 907,040 1,439,039 0 12,200 0 50,964 (20,386) 30,578 0 20,386 0 50,964 .02 .02
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