-----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, GajHUg9w6P2W16SFMQFPveHDDtBMD7M+xMNjNmyF1PaAsy1QZR4VL8sGHmZqPwJw ol3bnKnXRbzXsdeBtaipPQ== 0000868268-96-000003.txt : 19960619 0000868268-96-000003.hdr.sgml : 19960619 ACCESSION NUMBER: 0000868268-96-000003 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAMET SYSTEMS INC CENTRAL INDEX KEY: 0000868268 STANDARD INDUSTRIAL CLASSIFICATION: 7373 IRS NUMBER: 042985838 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 033-36989 FILM NUMBER: 96567938 BUSINESS ADDRESS: STREET 1: 1000 MAIN ST CITY: ACTON STATE: MA ZIP: 01720 BUSINESS PHONE: 5082632060 MAIL ADDRESS: STREET 2: 1000 MIN STREET CITY: ACTON STATE: MA ZIP: 01720 10QSB/A 1 PAMET SYSTEMS, INC. 10-QSB/A-1 FOR Q1 1996 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-QSB/A-1 Mark one [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from _________to _________ Commission File No. 1-10623 Pamet Systems, Inc. ____________________________________________________________________ (exact name of small business issuer as specified in its charter) Massachusetts 04-2985838 ____________________________________________________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 Main Street, Acton, Massachusetts 01720 ____________________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (508) 263-2060 Check whether the issurer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 close of the period covered by this report: Title of each class Number of shares outstanding Common stock 2,043,250 ($.01 par value) Transitional Small Business Disclosure Format YES______ NO___X___ PART I - FINANCIAL INFORMATION Item 1 - Financial Statements PAMET SYSTEMS, INC.
Condensed Balance Sheets March 31, December 31, 1996 1995 CURRENT ASSETS (unaudited) Cash $ 12,286 $ 28,264 Accounts receivable, net of allowance for doubtful accounts of $20,000 134,277 246,161 Inventory 28,461 26,921 Prepaid expenses and other current assets 47,433 46,644 ---------- ---------- TOTAL CURRENT ASSETS 222,457 347,990 PROPERTY AND EQUIPMENT, net 910,149 922,596 OTHER ASSETS 1,025 1,025 RESTRICTED CASH 26,621 26,450 ---------- ---------- TOTAL OTHER ASSETS 27,646 27,475 $1,160,252 $1,298,061 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable $202,336 $ 245,516 Accrued expenses 167,741 140,684 Notes payable-related party 124,099 81,099 Deferred software maintenance revenue 112,507 190,034 Current portion of long-term debt 14,987 13,069 ---------- ---------- TOTAL CURRENT LIABILITIES 621,670 670,402 LONG TERM DEBT, less current portion 504,629 509,426 UNEARNED SUPPORT REVENUE 79,283 79,283 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued Common Stock, $.01 par value, 7,500,000 shares authorized; 1,966,250 issued and outstanding 20,433 20,183 Additional paid-in Capital 4,089,379 4,072,629 Accumulated deficit (4,155,142) (4,053,862) ---------- ---------- (45,330) 38,950 $1,160,252 $1,298,061 ========== ==========
See accompanying "Notes to Financial Statements" Item 1 - Financial Statements PAMET SYSTEMS, INC.
Statements of Operations (Unaudited) Three Months Ended March 31, 1996 1995 Net sales $ 238,204 $ 180,127 Cost of product 73,791 97,921 --------- --------- 164,413 82,206 Operating expenses: Personnel costs 170,840 171,793 Rent, utilities and telephone 15,234 17,746 Travel and entertainment 10,069 11,791 Professional fees 9,990 12,846 Depreciation 12,447 19,412 Other operating expenses 31,966 25,611 --------- --------- Total operating expenses 250,546 259,199 --------- --------- Income (loss) from operation (86,133) (176,993) Interest income (expense) Net (15,147) (12,466) Net income (loss) (101,280) (189,459) ========= ========= Net income (loss) per share $(.05) $(.10) ====== ====== Shares Outstanding 2,043,250 1,966,250 ========= =========
See accompanying "Notes to Financial Statements (unaudited)" Item 1 - Financial Statements PAMET SYSTEMS, INC.
Statements of Cash Flows (Unaudited) Three Months Ended March 31, 1996 March 31, 1995 Cash flows provided by (used in) operating activities: Net loss $(101,280) $(189,459) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,447 32,146 Change in assets and liabilities: Decrease accounts receivable 111,884 209,459 (Increase) Decrease in inventory (1,540) 20,763 (Increase) Decrease in prepaids and other current assets (789) (9,654) (Increase) Decrease in other assets (171) (172) (Decrease) Increase in accounts payable (43,180) (49,585) (Decrease) in deferred software maintenance revenue (77,527) (71,882) Increase (Decrease) in accrued payroll 27,057 9,681 -------- ------- Total adjustments 28,181 140,756 Net cash provided by (used in) operating activities (73,099) (48,703) Cash flows from investing activities: Sale of computer Equipment 0 927 -------- ------- Net cash used in investing activities 0 927
(continued on following page) Item 1 - Financial Statements PAMET SYSTEMS, INC.
Statements of Cash Flows (Unaudited) Three Months Ended March 31, 1996 March 31, 1995 Cash flows from financing activities: Payment of mortgage (2,879) (2,887) Net Change Note payable related party 43,000 36,900 Issuance of Capital Stock 17,000 0 -------- ------- Net cash provided by financing activities 57,121 34,013 Net increase (decrease) in cash (15,978) (13,763) Cash and cash equivalents at beginning of period 28,264 16,103 Cash and cash equivalents at end of period $12,286 $ 2,340 ======= ======= Supplemental disclosure of cash flow information: Cash paid for interest: $15,740 $13,439
See accompanying "Notes to Financial Statements" PAMET SYSTEMS, INC. Notes to Condensed Financial Statements (Unaudited) Note (1) Statement Presentation In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 1996 and the results of operations for the three month periods and changes in cash flows for the period then ended. There were no material unusual charges or credits to operations during the recently completed fiscal quarter. The results reported for the three month periods ended March 31, 1996 are not necessarily indicative of the results of operations which may be expected for the entire year. Note (2) Mortgage on Corporate Training, Development and Headquarters Facility On April 21, 1992 the Registrant consummated an agreement with the Lexington Savings Bank of Lexington, MA. to mortgage the Registrant's development, training and headquarters facility, located at 1000 Main Street, Acton, Massachusetts. The original principal amount of the mortgage was $560,000. On June 21, 1995 the note was extended for a one year term with monthly payments determined according to a twenty-year amortization period. $5,741, including interest at 11%, is payable monthly. The bank has required an interest bearing compensating balance account. On March 31, 1996 this account equaled $26,621. Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Overview The Registrant's net sales consist primarily of sales of software and turnkey computer systems, and support and update service fees. Sales increased 32.2% for the three month period ended March 31, 1996 (the 1996 period) over the sales for the three month period ended March 31, 1995 (the 1995 period). Management believes that although sales have increased over the 1995 period the lack of profitability for the 1996 period was due to communities' continuing to delay purchases of systems to take advantage of the grants that they believed would be released pursuant to the "Violent Crime Control and Law Enforcement Act of 1994" (the 1994 Crime Bill). However, in recent weeks the Registrant has learned of many grants finally being awarded. There can be no assurance as to when, if at all, these awards will result in sales to the Registrant. The Registrant is experiencing cash flow shortages due to the delay of orders into the second and third quarters of the year. Management has taken initiatives, however, to insure that adequate working capital is available during the first 6 months of 1996. In addition, in anticipation of the increased working capital needs associated with the increased sales from the crime bill grants, management is exploring other additional financing alternatives. Three Months Ended March 31, 1996 vs. Three Months Ended March 31, 1995 Net sales increased $58,077 or 32.2% to $238,204 for the 1996 period from $180,127 for the 1995 period. The increase in total revenues is due to an increase in sales of the Registrant's new imaging product. Municipalities are continuing to delay the procurement of the Registrant's full records and dispatch products to take advantage of the Federal grants associated with the 1994 Crime Bill. Sales during the 1996 period consisted of hardware and software enhancements and imaging systems. There were no new system sales during the 1996 or 1995 periods. Software support revenues increased 3.7% to $88,640 for the 1996 period from $85,482 for the 1995 period reflecting the increase in the customer base from the 1995 period. Cost of product decreased $24,131 to $73,791 for the 1996 period from $97,921 for the 1995 period reflecting the higher margins associated with the imaging systems. Gross margin increased to 69.0% for the 1996 period compared to 45.6% for the 1995 period reflecting the increased imaging margins. The 1995 period also included some pass through services which carried no markup. Operating expenses decreased $8,653 or 3.3% to $250,546 for the 1996 period compared to $259,199 for the 1995 period. Personnel costs decreased slightly to $170,840 for the 1996 period compared to $171,793 for the 1995 period. The slight decrease is due to changes in vacation pay. Rent, utilities and telephone decreased 14.2% to $15,234 for the 1996 period from $17,746 for the 1995 period due primarily to the reduced phone expense due to discounts and reduced support usage. Travel and entertainment expenses decreased 14.6% to $10,069 for the 1996 period from $11,791 for the 1995 period. This decrease reflects the reduction in travel associated with a major project in the southeast that has been completed. Professional fees decreased 22.2% to $9,990 for the 1996 period from $12,846 for the 1995 period, primarily due to the reduced use of a public relations firm in the 1996 period. Depreciation expense decreased 35.9% to $12,447 for the 1996 period from $19,412 for the 1995 period primarily as a result of the reduced depreciation on the older computer equipment and office furnishings and the write off of previous development expense during 1995. Other operating expenses increased 24.8% to $31,966 for the 1996 period from $25,611 for the 1995 period due the payment of director fees and the increased expenses associated with snow removal for the last winter season. Net interest expense for the 1996 period was $15,147 compared to $12,466 for the 1995 period. This reflects the increased interest associated with the working capital loan and the increased interest rate on the mortgage. The net loss for the 1996 period decreased by $88,179 to $(101,280) for the 1996 period from $(189,459) for the 1995 period. This loss is the result of the delayed sales. Liquidity and Capital Resources The Registrant's working capital decreased to a deficit of $399,213 at March 31, 1996 from a deficit of $322,412 at December 31, 1995 due to the loss during the quarter. Cash decreased to $12,286 at March 31, 1996 from $28,264 at December 31, 1995. Accounts receivable decreased significantly to $134,277 at March 31, 1996 from $246,161 at December 31, 1995. The lower level of accounts receivable reflects the decreased sales and the results of the collection activities during the 1996 period. The Registrant is experiencing an accounts receivable level that averages 60 days sales outstanding. The Registrant's backlog was approximately $250,000 at March 31, 1996. The Registrant also is continuing its cost improvement program and continues an aggressive sales effort. Specifically, sales of the Registrant's imaging product are expected to increase during 1996. The continuing delays in system sales as a result of the delays in awards of grants under the 1994 Crime Bill continue to have an adverse effect on sales and the Registrant's resulting cash position. During the 1996 period, however, the Registrant began to be notified by potential customers who had participated in the Registrant's grant writing seminars that they had received awards. Many of these prospective customers will still have to proceed with a competitive bidding process as required by their respective state laws, consequently there can be no assurance as to when, if at all, these awards will result in sales to the Registrant. In addition, the Registrant is continuing to consider projects to increase its cash position such as mergers, acquisitions or other business combinations, as well as capital raising alternatives. To date there have been no agreements or arrangements. The Registrant has also received short term financing commitments from Directors and Officers to support operations, if needed. The Registrant believes its existing backlog, combined with working capital loans from directors and shareholders and sales resulting from the grants associated with the 1994 Crime Bill will be sufficient to ensure the continued operations through the year. As of March 31,1996, the Registrant had accumulated approximately $4,000,000 and $3,200,000 in net operating loss carryforwards for federal and state income tax purposes respectively. The loss carryforwards expire in the year 2009. Under the Internal Revenue Code of 1986, as amended, the rate at which a corporation may utilize its net operating losses to offset its income for federal tax purposes is subject to specified limitations during periods after the corporation has undergone an "ownership change". It has been determined that an ownership change did take place at the time of the Registrant's initial public offering. However, the limitations on the loss carryforward exceed the accumulated loss at the time of the "ownership change". Thus there is no restriction on its use. Inflation Inflation has not had a significant impact on the Registrant's operations to date. Forward Looking Statements This Management's Discussion and Analysis of Financial condition and Results of Operations may include forward-looking statements that may or may not materialize. Additional information of factors that could potentially affect the Company's financial results may be found in the Company's filings with the Securities and Exchange Commission. PART II - OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Changes in Securities Not applicable. Item 3 - Defaults Upon Senior Securities Not applicable. Item 4 - Submission of Matters to a note of Security Holders None Item 5 - Other Information Not applicable. Item 6 - Exhibits and Reports on Form 8-K a. Exhibits - none b. Reports on form 8-K - none 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 Pamet Systems, Inc. (Registrant) May 14, 1996 Richard C. Becker _______________________________ ______________________ Date Richard C. Becker Vice President Principal Financial Officer EX-27 2 PAMET SYSTEMS Q1 1996 10-QSB/A-1 FDS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1 3-MOS DEC-31-1996 MAR-31-1996 12,286 0 134,277 0 28,461 222,457 1,424,920 514,771 1,160,252 621,670 0 20,133 0 0 -65,763 1,160,252 282,204 282,204 73,791 0 250,546 0 15,147 -101,280 0 -101,280 0 0 0 -101,280 -0.050 0.000
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