-----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, WI/7YDQlo8nFBMuPl+ipSx055c65ii2LuuVrEfrySleqt6NcNHwKwdk8vJcPmcZK uuDWTemu63S3BNpNmCikUQ== /in/edgar/work/0000950148-00-002100/0000950148-00-002100.txt : 20001012 0000950148-00-002100.hdr.sgml : 20001012 ACCESSION NUMBER: 0000950148-00-002100 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000831 FILED AS OF DATE: 20001011 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENSE PAC MICROSYSTEMS INC CENTRAL INDEX KEY: 0000784770 STANDARD INDUSTRIAL CLASSIFICATION: [3674 ] IRS NUMBER: 330033759 STATE OF INCORPORATION: CA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-14843 FILM NUMBER: 738178 BUSINESS ADDRESS: STREET 1: 7321 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 BUSINESS PHONE: 7148980007 MAIL ADDRESS: STREET 1: 7321 LINCOLN WAY STREET 2: 7321 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 10QSB/A 1 v66274a1e10qsba.txt FORM 10QSB, AMENDMENT NO.1 1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A Amendment No. 1 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- --------------------- Commission file number 0-14843 DENSE-PAC MICROSYSTEMS, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) CALIFORNIA 33-0033759 (State or other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 7321 LINCOLN WAY GARDEN GROVE, CALIFORNIA 92841 (Address of Principal Executive Offices) (714) 898-0007 Issuer's Telephone Number Not Applicable (Former Name, Former Address and Former Fiscal Year if Changed Since Last Year) 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 issuer 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 CORPORATE ISSUERS The number of shares of common stock, no par value, outstanding as of September 29, 2000 was 19,918,000. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] ----- ----- - -------------------------------------------------------------------------------- TOTAL PAGES: 10 2 PART I- FINANCIAL INFORMATION ITEM 1. Financial Statements Dense-Pac Microsystems, Inc. Consolidated Balance Sheet
August 31, February 29, 2000 2000 ------------ ------------ (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 4,959,746 $ 2,949,562 Accounts receivable, net 2,760,945 3,346,318 Inventories, net 2,128,578 1,778,959 Other current assets 234,655 200,120 ------------ ------------ Total current assets 10,083,924 8,274,959 Property, net 5,446,139 5,819,824 Other assets 29,171 29,171 ------------ ------------ $ 15,559,234 $ 14,123,954 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 560,586 $ 671,336 Accounts payable 1,258,876 1,152,151 Accrued compensation 443,773 782,996 Other accrued liabilities 91,333 353,393 Deferred revenue 300,000 450,000 ------------ ------------ Total current liabilities 2,654,568 3,409,876 Other long-term debt 1,009,153 1,263,544 Stockholders' equity Common stock 20,766,929 20,039,109 Unearned compensation expense (37,661) (116,131) Accumulated deficit (8,833,755) (10,472,444) ------------ ------------ Total stockholders' equity 11,895,513 9,450,534 ------------ ------------ $ 15,559,234 $ 14,123,954 ============ ============
See accompanying notes to condensed consolidated financial statements. -2- 3 Dense-Pac Microsystems, Inc. Consolidated Statements of Operations ( Unaudited )
For the quarter ended Six months ended, August 31, August 31, August 31, August 31, 2000 1999 2000 1999 ----------- ------------ ------------ ------------- NET SALES $ 7,204,949 $ 7,355,581 $ 18,185,152 $ 13,396,618 COST OF SALES 4,823,680 4,805,052 12,697,849 9,404,765 ------------ ------------ ------------ ------------ GROSS PROFIT 2,381,269 2,550,529 5,487,303 3,991,853 COSTS AND EXPENSES: Selling, general and administrative 1,557,898 1,499,289 2,975,212 2,526,515 Research and development 436,795 263,562 858,944 442,215 ------------ ------------ ------------ ------------ Total costs and expenses 1,994,693 1,762,851 3,834,156 2,968,730 PROFIT FROM OPERATIONS 386,576 787,678 1,653,147 1,023,123 ------------ ------------ ------------ ------------ OTHER EXPENSE (INCOME) Interest expense 33,950 94,996 70,805 133,586 Interest income (66,979) (7,813) (109,347) (14,451) ------------ ------------ ------------ ------------ Total other expense (income) (33,029) 87,183 (38,542) 119,135 PROFIT BEFORE INCOME TAX PROVISION 419,605 700,495 1,691,689 903,988 INCOME TAX PROVISION 13,000 20,800 53,000 20,800 ------------ ------------ ------------ ------------ NET PROFIT $ 406,605 $ 679,695 $ 1,638,689 $ 883,188 ============ ============ ============ ============ BASIC NET INCOME PER SHARE $ 0.02 $ 0.04 $ 0.08 $ 0.05 ============ ============ ============ ============ DILUTED NET INCOME PER SHARE $ 0.02 $ 0.03 $ 0.08 $ 0.04 ============ ============ ============ ============ WEIGHTED AVERAGE SHARES USED TO CALCULATE BASIC NET INCOME PER SHARE 19,835,505 18,595,000 19,612,042 18,460,000 ============ ============ ============ ============ WEIGHTED AVERAGE SHARES USED TO CALCULATE DILUTED NET INCOME PER SHARE 20,946,642 19,876,000 20,633,423 19,689,000 ============ ============ ============ ============
See accompanying notes to condensed financial statements. -3- 4 Dense-Pac Microsystems, Inc. Statements of Cash Flow (Unaudited)
For the six months ended August 31, August 31, 2000 1999 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,638,689 $ 883,188 Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 726,618 679,704 Amortization of unearned compensation expense 78,470 Changes in operating assets and liabilities: Accounts receivable 585,373 (1,424,690) Inventories (349,619) 1,513,049 Other current assets (34,535) 51,104 Accounts payable 106,725 (478,256) Accrued compensation (339,223) 252,945 Other Accrued liabilities (262,060) (41,453) Deferred revenue (150,000) ----------- ----------- Net cash provided by operations 2,000,438 1,435,591 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Property additions (352,933) (643,890) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt (365,141) (238,494) Proceeds from issuance of common stock 727,820 81,209 ----------- ----------- Net cash provided by (used in) financing activities 362,679 (157,285) ----------- ----------- ........... NET INCREASE IN CASH 2,010,184 634,416 CASH AT BEGINNING OF YEAR 2,949,562 1,273,887 ----------- ----------- CASH AT END OF PERIOD $ 4,959,746 $ 1,908,303 =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 70,413 $ 151,720 =========== =========== Income taxes paid $ 61,000 $ 800 =========== =========== SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Acquisition of property under capital leases $ 663,282 =========== =========== Conversion of notes payable to related parties to common stock $ 1,200,000 =========== ===========
See accompanying notes to condensed financial statements. -4- 5 DENSE-PAC MICROSYSTEMS, INC. CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - Dense-Pac Microsystems, Inc. (Dense-Pac or the Parent Company), a California corporation, and its wholly-owned subsidiary, TypeHaus, Inc. (TypeHaus) (together, the Company) designs and manufacturers proprietary chip-stacking components and subsystems. The Company's revenues are generated primarily from manufacturers of electronic components, as well as from subcontracts where the primary contractor is the United States government. The Company grants credit to customers included in the military, aerospace, and a variety of commercial industries. TypeHaus provides printer media devices, printer memory, and electronic laser products to a variety of OEM customers. It also supplies custom memory subsystems and support software for OEM manufacturers of laser printers. NOTE 2 - As contemplated by the Securities and Exchange Commission ("SEC") under Item 310 (b) of Regulation S-B, the accompanying financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. This report on Form 10-QSB for the period ended August 31, 2000 should be read in conjunction with the Company's Annual Report on Form 10-KSB for the fiscal year ended February 29, 2000 filed with the SEC. In the opinion of the Company management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position as of August 31, 2000 and the results of its operations and its cash flows for the quarters ended August 31, 2000 and 1999. Results for the interim periods are not necessarily indicative of those to be expected for the full year. NOTE 3 - Recent Accounting Pronouncements - In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. The Company does not invest in derivative investments nor does it engage in hedging activity and, therefore, does not believe that the adoption of SFAS No. 133 will have an impact on the Company's financial statements. In fiscal 1999, the Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. This statement establishes standards for the way companies report information about operating segments in annual financial statements. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. The Company engages in business activity primarily in two operating segments: the design and manufacturing of proprietary and patented three-dimensional, high-density semiconductor products and the design and manufacturing of memory and memory related products for the laser printer industry (through its wholly-owned subsidiary, TypeHaus, Inc.). The revenue and operational results for TypeHaus are immaterial in the consolidated financial statements of Dense-Pac Microsystems. -5- 6 NOTE 4 - The following table summarizes stock option activity under Dense-Pac's 1985 and 1996 Stock Option Plans for the six months ended August 31, 2000:
Number of Price per Number of Shares Share Options Exercisable ------------- --------------- ------------------- Balance, February 29, 2000 2,071,500 $ .94 - $7.56 653,150 ---------- --------------- --------- Granted 466,000 $5.50 - $8.63 Exercised (543,900) $1.00 - $4.50 Canceled (127,000) $1.56 - $8.63 ---------- --------------- --------- Balance, August 31, 2000 1,866,600 $ .94 - $8.63 318,525 ========== =============== =========
NOTE 5 - The weighted average shares outstanding during the three and six month period ended August 31, 2000 was 19,836,000 and 19,612,000. The fully diluted shares outstanding for the three and six month period ended August 31, 2000 was 20,947,000 and 20,633,000. Options to purchase shares of common stock during these periods were included in the above calculations. ITEM 2 - Management's Discussion and Analysis or Plan of Operation RESULTS OF OPERATIONS Net sales for the quarter ended August 31, 2000 decreased $ 151,000 or 2% compared to the quarter ended August 31, 1999. The decrease in net sales for the quarter ended August 31, 2000, when compared to the same quarter in the prior year was due primarily to a decrease in the industrial and defense portion of the business, offset by an increase in the royalty revenue for the company. Additionally, during the quarter, the overall units shipped for the commercial stack business decreased by 30% as compared from the same quarter in the previous year, but did not materially affect revenue due to the product mix. During the second quarter ended August 31, 2000, the supply of the DRAM became allocated to the end users because of output capacity and demand, and as a result, many of the silicon suppliers were selling DRAM directly into the marketplace versus stacking them. This resulted in a short-term delay in the availability of the DRAM for the use in stacking, although the demand for high-density technology did not go away. The commercial product mix during the second quarter ended August 31, 2000, changed as to the relationship between consigned material in the total revenue versus the material purchased on behalf of the customer. For the commercial high-density product, approximately 50% of the revenue for the quarter ended August 31, 2000 was represented with the memory cost contained in the revenue. In these cases, the Company will purchase material for the commercial order and will determine the final purchase price prior to the order, in order to avoid any price volatility in the components. This compares to no memory contained in the stacked revenue for the same period in the prior year's record quarter. See "Forward Looking Statements." Net sales for the six months ended August 31, 2000 increased $4,789,000 or 36% compared to the same period in the previous year's period. The increase in revenue for the six month period was primarily during the first quarter ended May 31, 2000, when the commercial -6- 7 stacks sold during the quarter, was approximately 50% more during as compared to the comparable period in the prior year. For the commercial high-density product, approximately 50% of the commercial stack sales were comprised of memory costs for the six months ended August 31, 2000 as compared to 14% in the same period for the previous fiscal year. For the second quarter ended August 31, 2000, approximately $538,000 of revenue was generated from the Company's wholly-owned subsidiary (TypeHaus) as compared to $428,000 in the previous year's second quarter. For the six month period ended August 31, 2000, TypeHaus accounted for approximately $796,000 of the total revenue as compared to $848,000 for the same period in the prior year. TypeHaus' had a loss for the quarter and six month period ended August 31, 2000 of $1,200 and $38,000, respectfully. Gross profit as a percentage of sales was 33% for the three month period ended August 31, 2000, as compared to 35% for the three month period ended August 31, 1999. For the six month period ended August 31, 2000 the gross margin was 30% as compared to 30% for the six month period ended August 31, 1999. Any change in the gross margins can typically be attributed to the type of products that the company was selling during the comparable quarters as well as the royalty income generated during the periods. The Company increased its production during the first quarter of fiscal year 2001 creating an increase in the economics of production with the variable of gross margin being the direct labor force. During the slower periods the labor force is adjusted match the production needs. The Company also shipped commercial orders for approximately $2,585,000 for the three month period and $7,611,00 for the six month period ended August 31, 2000, where the margin was lower due to the fact that the Company procured the memory for the order as compared to none in the previous years second quarter and $1,205,000 for the six months. The balance of the commercial orders had consigned memory associated with the sale. During the second quarter of fiscal year 2001, the Company continued its offering of commercial products and focused on those products that relate to the Company's proprietary packaging technology. In this manner, the Company believes that the Company has been able to define a niche for the products that use a unique proprietary stacking technology and has been marketing these products to a defined market. The Company believes that margins should improve due to increased production. See "Forward-Looking Statements." Selling, general and administrative expenses increased in the second quarter of fiscal 2001 by $59,000 or 4% from the second quarter of the prior fiscal year. For the six month period ended August 31, 2000, these expenses increased by $449,000 or 18% over the same period in the prior year. The majority of the increase in selling general and administrative expenses can be attributed to an increase in legal expense of $247,000 for the quarter ended August 31, 2000 as compared to the same quarter in the prior year and an increase of $470,000 for the six month period ended August 31, 2000 as compared to the previous period. The legal increase is associated with a patent infringement and trade secret theft lawsuit and other legal expenses. See the Company's 10-QSB for the period ended May 31, 2000 for a current status of the legal cases. Additionally, during the quarter and six months ended August 31, 2000, there was a decrease in the bonus/profit sharing expense which partially offset the increase in legal expense. For the quarter ended August 31, 2000, research and development costs increased $173,000 or 66% from the same quarter in the previous fiscal year. For the six months ended August 31, 2000 research and development costs increased $417,000 or 94% for the same period in the prior fiscal year. The increase is primarily due to continued efforts to allocate resources to the development and production of unique new technologies into the commercial -7- 8 marketplace. The Company is continuing to invest in research and development for new products in the aerospace and commercial marketplace. See "Forward Looking Statements". For the three months ended August 31, 2000, other expenses decreased $120,000 and for the six months decreased $158,000 from the same period last year. This decrease is due to additional interest income associated with the increase in the cash reserves and a reduction in the interest expense due to payments toward equipment leases. The Company additionally established a relationship with a new bank during the period and established a investment facility for available idle cash to be invested. LIQUIDITY AND CAPITAL RESOURCES The Company's primary source of liquidity for the second quarter of fiscal 2000 was the cash generated from the operations. The Company continued to improve its operating performance and generate cash for operation purposes. Assuming that the Company is successful in its efforts to continue its quarterly financial performance, the Company believes that the cash from operations will be sufficient to meet the Company's operating cash needs for the next twelve months. Additionally, the Company has received a credit facility for three million dollars from a financial institute if the need should arise for additional working capital to support operations. See "Forward Looking Statements." Net cash provided by operations was approximately $2,000,000 during the first six months of fiscal year 2001, which was mainly generated from the profitable results of operations. These increases included depreciation and amortization of $727,000, and a decrease in accounts receivable of $585,000. The Company also generated cash from the exercise of employee stock options of $728,000 during the six month period ended August 31, 2000. The Company purchased approximately $353,000 in new equipment during the first six months of fiscal year 2001. The Company is expecting that it may incur additional lease debt with the purchase of additional equipment during the next six months. The Company expects that it will not purchase more than one million dollars in additional equipment for the remainder of the year. See "Forward-Looking Statements". FORWARD-LOOKING STATEMENTS Included in the Notes to Consolidated Financial Statements, this Item 2. Management's Discussion and Analysis or Plan of Operation and elsewhere in this Report are certain statements that do not present historical information. These forward-looking statements reflect the Company's current expectations. Although the Company believes that its expectations are based on reasonable assumptions, there can no assurance that the Company's financial goals or expectations will be realized. Numerous factors may affect the Company's actual results and may cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the Company. Some of these factors include demand for and acceptance of new and existing products, technological advances and product obsolescence, availability of semiconductor devices at reasonable prices, competitive factors, costs and risks concerning litigation, the ability to protect proprietary intellectual property, and the availability of capital to finance growth. These and other factors which could cause actual results to differ materially from those in the forward looking statements are discussed in greater detail in the Company's Annual Report on Form 10-KSB for the year ended February 29, 2000 under the heading "Cautionary Statements". Investors are cautioned against ascribing undue weight to any forward looking statements herein. -8- 9 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders 1. (a) Annual Shareholders' Meeting - August 11, 2000.
(b) Election of Directors: Votes For Withheld Richard J. Dadamo 17,760,362 492,766 Ted Bruce 17,760,362 492,766 Roger Claes 17,759,862 493,266 Samuel W. Tishler 17,760,362 492,766 Gordon M. Watson 17,760,362 492,766 Richard H. Wheaton 17,760,362 492,766
- Directors were elected (c) Approval of amendment to the Company's 1996 Stock Option Plan to increase the number of shares of Common Stock which may be subject to options under the plan by 1,000,000 shares. Votes For Against 8,183, 061 1,613,271 - Motion passed (d) Proposal to approve the re-incorporation of the Company as a Delaware corporation, which will also be named Dense-Pac Microsystems, Inc. pursuant to a merger of the Company into a wholly-owned Delaware subsidiary and the conversion of each share of the Common Stock of the Company into one share of the common stock, par value $.01 per share, of the surviving corporation. Votes For Against Broker Non Votes 8,396,626 1,419.565 8,423,496 - Motion did not pass Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits The exhibits listed below are hereby filed with the Securities and Exchange Commission as part of the Quarterly Report. Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K - No reports on Form 8-K were filed during the second quarter of fiscal 2001 covered by this Form 10-QSB. -9- 10 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. DENSE-PAC MICROSYSTEMS, INC. (Small Business Issuer) October 11, 2000 /s/ Ted Bruce - ----------------------------- ------------------------------------------- Date Ted Bruce, Chief Executive Officer October 11, 2000 /s/ William M. Stowell - ----------------------------- ------------------------------------------- Date William M. Stowell, Chief Financial Officer -10- EX-27 2 v66274a1ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB FOR THE QUARTER ENDED AUGUST 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB FOR THE QUARTER ENDED AUGUST 31, 2000 6-MOS FEB-28-2001 MAR-01-2000 AUG-31-2000 4,959,746 0 2,845,945 85,000 2,128,578 10,083,924 5,446,139 0 15,559,234 2,654,568 0 20,766,929 0 0 (37,661) 15,559,234 18,185,152 18,185,152 12,697,849 16,532,005 (38,542) 85,000 109,347 1,691,689 53,000 1,638,689 0 0 0 1,638,689 .02 .02
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