-----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, MTOO4IRpyePyLMQG7x57PFt1WzIA4uOP0ZG6lO2UYEtYuVlpFd1ssg+cIQkbeeNl gzz+QLZ2lOTJ30JfXKlxMw== 0000913906-97-000157.txt : 19971117 0000913906-97-000157.hdr.sgml : 19971117 ACCESSION NUMBER: 0000913906-97-000157 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER MARKETPLACE INC CENTRAL INDEX KEY: 0000900475 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 330558415 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22014 FILM NUMBER: 97719541 BUSINESS ADDRESS: STREET 1: 1490 RAILROAD ST CITY: CORONA STATE: CA ZIP: 91720 BUSINESS PHONE: 9097352102 MAIL ADDRESS: STREET 1: 1490 RAILROAD ST CITY: CORONA STATE: CA ZIP: 91720 10QSB 1 10 - QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 --------- FORM 10-QSB Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended September 30, 1997 Commission File Number 0-14731 COMPUTER MARKETPLACE(R), INC. (Exact name of registrant as specified in its charter) Delaware 33-0558415 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1171 Railroad Street Corona, California 91720 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (909) 735-2102 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 and 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 As of November 12, 1997, 1,352,424 shares of the issuer's common stock, par value, $.0001 per share were outstanding. COMPUTER MARKETPLACE(R), INC., AND SUBSIDIARIES - ------------------------------------------------------------------------------ INDEX - ------------------------------------------------------------------------------ Part I: FINANCIAL INFORMATION Item 1: Financial Statements Condensed Consolidated Balance Sheet as of September 30, 1997 [Unaudited].................................................. 1 Condensed Consolidated Statements of Operations for the three months ended September 30, 1997 and 1996 [Unaudited]......... 2 Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 1997 and 1996 [Unaudited]......... 3 Notes to Condensed Consolidated Financial Statements [Unaudited].. 4 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 5 - 7 Signature Page........................................................ 8 . . . . . . . . PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS - ------------------------------------------------------------------------------ COMPUTER MARKETPLACE(R), INC., AND SUBSIDIARIES - ------------------------------------------------------------------------------ CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997. [UNAUDITED] - ------------------------------------------------------------------------------ Assets: Current Assets: Cash and Cash Equivalents $ 472,908 Accounts Receivable - Net 1,903,992 Inventory - Net 515,486 Other Current Assets 31,251 ----------- Total Current Assets 2,923,637 Property Held for Sale - Net 486,534 Property and Equipment - Net 621,925 Other Assets 100,720 Total Assets $ 4,132,816 =========== Liabilities and Stockholders' Equity: Current Liabilities: Notes Payable $ 514,080 Accounts Payable 603,502 Accrued Payroll and Payroll Related Liabilities 98,868 Current Portion of Long-term Debt 192,862 Other Current Liabilities 381,534 ----------- Total Current Liabilities 1,790,846 Long-Term Debt 157,625 Minority Interest in Net Assets of Subsidiary 92,009 ----------- Commitments and Contingencies -- Stockholders' Equity: Preferred Stock - $.0001 Par Value, 1,000,000 Shares Authorized, No Shares Issued and Outstanding -- Common Stock - $.0001 Par Value, 50,000,000 Shares Authorized, 1,352,424 Shares Issued and Outstanding 135 Deferred Compensation (411,550) Capital in Excess of Par Value 8,785,099 Accumulated Deficit (6,281,348) Total Stockholders' Equity 2,092,336 Total Liabilities and Stockholders' Equity $ 4,132,816 =========== The Accompanying Notes are an Integral Part of these Condensed Consolidated Financial Statements. 1 COMPUTER MARKETPLACE(R), INC. AND SUBSIDIARIES - ------------------------------------------------------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED] - ------------------------------------------------------------------------------ Three months ended September 30, 1 9 9 7 1 9 9 6 ------- ------- Revenues: Product Sales, Rental, Service and Other $2,595,281 $ 7,179,879 ---------- ----------- Cost and Expenses: Cost of Revenues - Product Sales, Rental, Service and Other 2,085,546 6,259,661 Selling, General and Administrative 975,422 1,259,830 Total Cost and Expenses 3,060,968 7,519,491 ---------- ----------- Operating Loss (465,687) (339,612) ---------- ----------- Other Income [Expense]: Interest Expense (13,721) (115,510) Interest Income 15,287 234 Miscellaneous Income 24,103 9,491 ---------- ----------- Total Other Income [Expense] 25,669 (105,785) ---------- ----------- Loss Before Income Taxes, Minority Interest in Income of Subsidiary and Extraordinary Item (440,018) (445,397) Provision for Income Taxes -- -- Minority Interest in Income of Subsidiary 26,429 -- ---------- ----------- Loss Before Extraordinary Item (413,589) (445,397) Extraordinary Item: Gain from Extinguishment of Debt [Net of Income Taxes of $-0-] 98,226 -- ---------- ----------- Net Loss $ (315,363) $ (445,397) ========== =========== Loss Per Share: Loss Before Extraordinary Item [Net of Income Taxes] $ (.30) $ (.33) Extraordinary Item .07 -- ---------- ----------- Net Loss Per Share $ (.23) $ (.33) ========== =========== Weighted Average Common Shares Outstanding 1,352,424 1,352,424 ========== =========== The Accompanying Notes are an Integral Part of these Condensed Consolidated Financial Statements.
2 COMPUTER MARKETPLACE(R), INC. AND SUBSIDIARIES - ------------------------------------------------------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED] - ------------------------------------------------------------------------------ Three months ended September 30, 1 9 9 7 1 9 9 6 ------- ------- Operating Activities: Net Loss $ (315,363) $ (445,397) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Depreciation and Amortization 85,243 67,161 Provisions for Losses on Accounts Receivable (16,823) (10,842) Provisions for Losses on Inventory (74,482) 30,000 Minority Interest in Consolidated Subsidiary (26,429) -- Gain on Extinguishment of Debt (98,226) -- Changes in Assets and Liabilities: Accounts Receivable (191,936) (330,794) Inventory 51,419 550,721 Other Current Assets 21,341 53,702 Accounts Payable (525,310) 362,683 Accrued Payroll and Related Liabilities (56,177) (84,771) Other Current Liabilities 120,229 (91,669) ---------- ----------- Net Cash - Operating Activities (1,026,514) 100,794 ---------- ----------- Investing Activities: Decrease in Loans/Notes Receivable - Related Parties -- 18,699 Purchases of Property and Equipment (10,723) (9,375) Other (54,350) (2,432) ---------- ----------- Net Cash - Investing Activities (65,073) 6,892 ---------- ----------- Financing Activities: Net Decrease in Notes Payable 70,690 (163,354) Principal Payments on Long-term Debt (6,735) (14,019) ---------- ----------- Net Cash - Financing Activities 63,955 (177,373) ---------- ----------- Net [Decrease] in Cash and Cash Equivalents (1,027,632) (69,687) Cash and Cash Equivalents - Beginning of Periods 1,500,540 594,921 ---------- ----------- Cash and Cash Equivalents - End of Periods $ 472,908 $ 525,234 ========== =========== Supplemental Disclosures of Cash Flow Information: Cash Paid for Interest $ 13,720 $ 115,046 Cash Paid for Income Taxes $ -- $ -- Supplemental Disclosure of Non-Cash Investing and Financing Activities: Reclassification of Accounts Payable to/from Other Liabilities to Reflect Negotiated Payment Terms $ 150,000 $ 45,431 Transfer of Inventory Items to/from Rental Equipment $ -- $ 93,511
The Accompanying Notes are an Integral Part of these Condensed Consolidated Financial Statements. 3 COMPUTER MARKETPLACE(R), INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED] - ------------------------------------------------------------------------------ [1] Significant Accounting Policies Significant accounting policies of Computer Marketplace(R), Inc. and Subsidiaries [the "Company"] are set forth in the Company's Form 10-KSB for the year ended June 30, 1997, as filed with the Securities and Exchange Commission. [2] Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments [consisting only of normal recurring accruals] necessary for a fair presentation of the consolidated financial position of the Company as of September 30, 1997, the consolidated results of its operations for the three month periods ending September 30, 1997 and 1996 and its cash flows for the three month periods ending September 30, 1997 and 1996. Although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Results of operations for the period ended September 30, 1997 are not necessarily indicative of results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended June 30, 1997. [3] Stock Transactions In April 1997, the Company effected a one-for-six reverse stock split of the outstanding shares of common stock of the Company by changing the 8,114,542 then outstanding shares of common stock, par value $.0001 per share, into 1,352,424 shares of common stock of the Company, par value $.0001 per share. All share data has been adjusted and retroactively restated to reflect this change. [4] Extraordinary Item During the three months ended September 30, 1997, the Company negotiated payment terms of certain accounts payable, resulting in a gain of $98,226. There was no income tax effect on this transaction. . . . . . . . . . . 4 Item 2: COMPUTER MARKETPLACE(R), INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------ Results of Operations The following information should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in this quarterly report and in the audited financial statements and management discussion and analysis of financial condition and results of operations contained in the Company's Form 10-KSB for the fiscal year ended June 30, 1997. Quarter ended September 30, 1997 Compared to Quarter ended September 30, 1996 Total revenues for the quarter ended September 30, 1997 were $2,595,281 compared to $7,179,879 for the quarter ended September 30, 1996. This represents a decrease of $4,584,598 or 64%. Revenues from computer product sales and rentals for the quarter ended September 30, 1997 totaled $1,204,647 a $3,594,094 or 75% decrease compared to $4,798,741 for the quarter ended September 30, 1996. The sales decrease results in part from price reductions in new computer hardware which negatively impacts selling prices and sales of used computer hardware. The Company anticipates the lower compueter product sales trend to continue into the second quarter. The most significant factor resulting in this decrease in sales is that all branch offices of the Company were closed down during the year ending June 30, 1997. The sales associated with these offices diminished substantially. In addition, the sales staff at the main facility in Corona, California was reduced. Medical product sales and rentals contributed $1,390,634 in revenues for the quarter ended September 30, 1997, compared to $2,381,138 for the quarter ended September 30, 1996. The comparative quarter ending September 30, 1996 included two transactions totaling $1,500,000. Long lead times required in concluding many of the transactions associated with the medical equipment business, primarily having to do with the timing and complexity of the installations, reduce the accuracy of comparisons by quarter. In addition, a considerable time investment occurred during the quarter ending Sptember 30, 1997 in the creation of substantial offshore business, as well as developing our new leasing subsidiary, New Millennium Leasing. The prospects for increased business and margins in the second quarter 1997 resulting from the aforementioned activities, is positive and the Company has derived a benefit from those activities which will be reflected in the second quarter 1997. Continutuing investments made by Medical Marketplace, Inc. in experienced sales representatives and technical staff, as well as a growing recognition within the industry as an established reseller of previously owned and upgraded magnetic resonance imaging, computed tomography scanner and ultrasound equipment have positively impacted the sales of this subsidiary. Continued revenue growth and sustained profitablity for this subsidiary are expected througout the fiscal year. Previsously owned medical equipment is continuting to gain acceptance in the health care community as a cost effective altenrative to new equipment. The Company believes that its field representative program, financial strength and support structure will provide Medical Marketplace, Inc. a distinct advanatgae over many of the subsidiary's competitors. Total aggregate cost of revenues for the quarter ended September 30, 1997 and 1996 were $2,085,546 or 80% of revenues and $6,259,661 or 87% of revenues, respectively. Cost of revenues for computer products were $884,167 or 73% of revenues and $4,325,265 or 90% of revenues for the quarters ended September 30, 1997 and 1996, respectively. The decrease of cost to revenue is due largely to the increase in profitablity associated with end user sales, compared to increased cost to revenue associated with wholesale or dealer sales. 5 COMPUTER MARKETPLACE(R), INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------ Quarter ended September 30, 1997 Compared to Quarter ended September 30, 1996 [Continued] Costs of revenues for medical products were $1,201,379 or 86% of revenues and $1,934,396 or 81% of revenues for the quarters ended September 30, 1997 and 1996, respectively. The 5% increase in cost of revenue primarily has to do with market fluctuations and mangement does not view this 5% differential as a trend. Total selling, general and administrative ["SG&A"] expenses for the quarter ended September 30, 1997 and 1996 were $975,422 or 38% of revenues and $1,259,830 or 18% of revenues, respectively. The aggregate decrease in SG&A expenses from the prior period was $284,408 or 23%. SG&A expenses attributed to computer products were $635,617 or 53% of revenues and $1,101,044 or 23% of revenues for the quarters ended September 30, 1997 and 1996, respectively. The increase in SG&A expenses as a percentage of revenues is due primarily to the sales volume decrease previously mentioned. SG&A expense attributed to medical products were $339,805 or 24% of revenues and $158,786 or 7% of revenues for the quarters ended September 30, 1997 and 1996, respectively. The increase in SG&A expenses as a percentage of revenues is due primarily to the increase in personnel expense. Total operating loss was $465,687 and $339,612 for the quarters ended September 30, 1997 and 1996, respectively. This $126,075 or 37% unfavorable change was a result of the business conditions described herein. Operating loss for computer products was $315,137 and $627,568 for the quarters ended September 30, 1997 and 1996, respectively. Operating [loss] income for medical products was $(150,550) and $287,956 for the quarters ended September 30, 1997 and 1996, respectively. Interest expense for the three months ended September 30, 1997, was $13,721 compared to $115,510 for the three months ended September 30, 1996. The decrease of $101,789 or 88% is due to the repayment of the mortgage payable associated with the sale of the Company's headquarters facility in the year ended June 30, 1997. The Company's consolidated net loss was $315,363 or $.23 per share for the quarter ended September 30, 1997, versus $445,397 or $.33 per share for the quarter ended September 30, 1996. The net loss was a result of the business conditions described herein. In addition, during the three months ended September 30, 1997, the Company negotiated payment terms of certain accounts payable, resulting in a gain of $98,226, shown as an extraodinary item in the financial statements. Variability of Periodic Results and Seasonality Results from any one period cannot be used to predict the results for other fiscal periods. Revenues fluctuate from period to period; however, management does not see any seasonality or predictability to these fluctuations. 6 COMPUTER MARKETPLACE(R), INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------ Liquidity and Capital Resources The Company has historically financed its growth and cash needs primarily through borrowings and cash generated from operations. The funds received through the initial public offering in June 1993, in the amount of approximately $6.6 million, enabled the Company to eliminate most of its long-term debt at that time. Working capital at September 30, 1997 and 1996, was $1,132,791 and $2,375,922, respectively. During the quarter ended September 30, 1997, the Company used the June 30, 1997 available cash and cash equivalents of approximately $1,500,000, the availability of borrowing under the Company's revolving credit facility, vendor extended credit in order to fund the operations of the Company. Management has implemented a "just in time" concept concerning the purchase of equipment, therefore increasing efficiency, while reducing inventory and accounts payable. Management has continued to emphasize the inventory reduction program, believing that these disciplined strategic reductions will enhance the Company's operating effectiveness and provide additional liqudity. In addition, the Company is in engaging in discussion with multiple lending institutions, as well as with the present lender, to replace the current credit line which expires December 31, 1997. New Millennium Leasing, Inc. ["NMLI"] was formed in early 1997. The primary focus of the Company is to provide leasing for a majority of the sales generated by its parent, Medical Marketplace, Inc. ["MMP"]. In so doing, NMLI will add incremental revenue and net income by discounting those leases, on a non recourse basis, to lenders who buy leases in this manner. The stated goal of NMLI is to both increase the profitability of each transaction entered into by MMP, and, via leasing, to generate new transactions that MMP would not have previously been able to generate due to the lack of a leasing division. 7 SIGNATURE In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly executed on this 14th day of November, 1997. COMPUTER MARKETPLACE(R), INC. By: /s/ L. Wayne Kiley L. Wayne Kiley President, Chief Executive Officer, (Chief Accounting Officer) and Director Signing on behalf of the Registrant and as Principal Financial and Accounting Officer. 8 EX-27 2 FDS --
5 This schedule contains summary information extracted from the condolidated balance sheet and the consolidated statement of operations and is qualified in its entirety by reference to specified documents. 3-mos jun-30-1997 sep-30-1997 472,908 0 1,903,992 0 515,486 2,923,637 621,925 0 4,132,816 1,790,846 0 0 0 135 2,092,201 4,132,816 2,595,281 2,595,281 2,085,546 975,422 (25,669) 0 0 (440,018) 0 (440,018) 0 98,226 0 (315,363) (0.23) (0.23)
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