UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| (Mark One) | ||
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended August 31, 2001 | ||
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from _______________ to _______________ | ||
Commission file number 0-14843
DPAC TECHNOLOGIES CORP.
(Exact Name of Registrant Issuer as Specified in Its Charter)
| CALIFORNIA (State or other Jurisdiction of Incorporation or Organization) | 33-0033759 (IRS Employer Identification No.) |
7321 LINCOLN WAY
GARDEN GROVE, CALIFORNIA 92841
(Address of Principal Executive Offices)
(714) 898-0007
Issuer’s Telephone Number, Including Area Code
Dense-Pac Microsystems, Inc.
(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
PART I- FINANCIAL INFORMATION
ITEM 1. Financial Statements
DPAC Technologies Corp.
| August 31, | February 28, | |||||||||||
| 2001 | 2001 | |||||||||||
| (unaudited) | ||||||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 4,656,804 | $ | 5,346,525 | ||||||||
| Accounts receivable, net | 3,020,360 | 3,300,702 | ||||||||||
| Inventories, net | 586,273 | 1,444,063 | ||||||||||
| Other current assets | 558,816 | 281,504 | ||||||||||
| Total current assets | 8,822,253 | 10,372,794 | ||||||||||
| Property, net | 5,137,890 | 5,380,800 | ||||||||||
| Goodwill, net | 5,172,921 | 5,630,944 | ||||||||||
| Other assets | 375,688 | 378,565 | ||||||||||
| $ | 19,508,752 | $ | 21,763,103 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Current portion of long-term debt | $ | 499,506 | $ | 456,683 | ||||||||
| Accounts payable | 653,841 | 1,153,548 | ||||||||||
| Income taxes payable | — | 1,545,649 | ||||||||||
| Accrued compensation | 519,567 | 551,623 | ||||||||||
| Other accrued liabilities | 356,277 | 684,540 | ||||||||||
| Deferred revenue | 14,635 | 363,000 | ||||||||||
| Total current liabilities | 2,043,826 | 4,755,043 | ||||||||||
| Long-term debt, net of current portion | 665,892 | 786,828 | ||||||||||
| Stockholders’ equity | ||||||||||||
| Common stock | 24,877,222 | 24,871,477 | ||||||||||
| Accumulated deficit | (8,078,188 | ) | (8,650,245 | ) | ||||||||
| Total stockholders’ equity | 16,799,034 | 16,221,232 | ||||||||||
| $ | 19,508,752 | $ | 21,763,103 | |||||||||
See accompanying notes to condensed consolidated financial statements.
DPAC Technologies Corp.
| For the quarter ended: | For the six months ended: | |||||||||||||||||
| August 31, | August 31, | August 31, | August 31, | |||||||||||||||
| 2001 | 2000 | 2001 | 2000 | |||||||||||||||
| NET SALES | $ | 8,201,071 | $ | 7,204,949 | $ | 15,654,462 | $ | 18,185,152 | ||||||||||
| COST OF SALES | 5,685,700 | 4,823,680 | 10,924,767 | 12,697,849 | ||||||||||||||
| GROSS PROFIT | 2,515,371 | 2,381,269 | 4,729,695 | 5,487,303 | ||||||||||||||
| COSTS AND EXPENSES: | ||||||||||||||||||
| Selling, general and administrative | 1,387,332 | 1,557,898 | 2,915,987 | 2,975,212 | ||||||||||||||
| Amortization of goodwill | 194,485 | — | 387,939 | — | ||||||||||||||
| Research and development | 473,603 | 436,795 | 891,455 | 858,944 | ||||||||||||||
| Total costs and expenses | 2,055,420 | 1,994,693 | 4,195,381 | 3,834,156 | ||||||||||||||
| INCOME FROM OPERATIONS | 459,951 | 386,576 | 534,314 | 1,653,147 | ||||||||||||||
| OTHER INCOME: | ||||||||||||||||||
| Interest income | 40,717 | 66,979 | 108,406 | 109,347 | ||||||||||||||
| Interest expense | (39,301 | ) | (33,950 | ) | (70,663 | ) | (70,805 | ) | ||||||||||
| Total other income | 1,416 | 33,029 | 37,743 | 38,542 | ||||||||||||||
| INCOME BEFORE INCOME TAX PROVISION | 461,367 | 419,605 | 572,057 | 1,691,689 | ||||||||||||||
| INCOME TAX PROVISION | — | 13,000 | — | 53,000 | ||||||||||||||
| NET INCOME | $ | 461,367 | $ | 406,605 | $ | 572,057 | $ | 1,638,689 | ||||||||||
| NET INCOME PER SHARE: | ||||||||||||||||||
| Basic and Diluted | $ | 0.02 | $ | 0.02 | $ | 0.03 | $ | 0.08 | ||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||||
| Basic | 20,956,000 | 19,836,000 | 20,950,000 | 19,612,000 | ||||||||||||||
| Diluted | 21,338,000 | 20,947,000 | 21,176,000 | 20,633,000 | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
DPAC Technologies Corp.
| For the six months ended | |||||||||
| August 31, | August 31, | ||||||||
| 2001 | 2000 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net income | $ | 572,057 | $ | 1,638,689 | |||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||
| Depreciation and amortization | 1,101,406 | 726,618 | |||||||
| Amortization of unearned compensation | — | 78,470 | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | 280,342 | 585,373 | |||||||
| Inventories | 857,789 | (349,619 | ) | ||||||
| Other current assets | (274,435 | ) | (34,535 | ) | |||||
| Accounts payable | (499,706 | ) | 106,725 | ||||||
| Income taxes payable | (1,545,649 | ) | — | ||||||
| Accrued compensation | (32,056 | ) | (339,223 | ) | |||||
| Other accrued liabilities | (328,263 | ) | (262,060 | ) | |||||
| Deferred revenue | (348,365 | ) | (150,000 | ) | |||||
| Net cash provided by (used in) operations: | (216,880 | ) | 2,000,438 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Property additions | (283,338 | ) | (352,933 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Principal payments on long-term debt | (256,093 | ) | (365,141 | ) | |||||
| Proceeds from issuance of common stock | 66,590 | 727,820 | |||||||
| Net cash provided by (used in) financing activities | (189,503 | ) | 362,679 | ||||||
| NET INCREASE (DECREASE) IN CASH | (689,721 | ) | 2,010,184 | ||||||
| CASH, BEGINNING OF YEAR | 5,346,525 | 2,949,562 | |||||||
| CASH, END OF PERIOD | $ | 4,656,804 | $ | 4,959,746 | |||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||
| Interest paid | $ | 70,663 | $ | 70,413 | |||||
| Income taxes paid | $ | 1,545,000 | $ | 61,000 | |||||
| SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | |||||||||
| Acquisition of property under capital leases | $ | 177,980 | $ | — | |||||
See accompanying notes to condensed financial statements.
DPAC TECHNOLOGIES CORP.
NOTE 1 — DPAC Technologies Corp. (formerly Dense-Pac Microsystems) and its wholly owned subsidiaries (collectively called “we,” “us,” “DPAC” or the “Company”), is a technology company that provides products and services for the Integration Age. DPAC was founded in 1982 and has three operating units, the System Design Group, the Advanced Packaging Group, and the Value Added Manufacturing Group, each of which is certified 9001 compliant.
DPAC’s System Design Group is a leading supplier of outsourced design, product development, production and engineering for telecommunications, networking, Internet devices, and industrial markets, with particular expertise in providing networking and DSL product development solutions. The Advanced Packaging Group provides patented component packaging technology to create high-density, board space—saving products. The Value Added Manufacturing Group provides contract manufacturing of prototype devices and low to medium volume production runs of circuit boards. DPAC’s products are used in electronic circuits found in network servers, computer storage devices, medical instrumentation and communication devices. The DPAC Web site is at www.DPACtech.com
NOTE 2 — Basis of Presentation — The accompanying unaudited interim consolidated financial statements of DPAC Technologies Corp. a California Corporation, as of August 31, 2001 and for the three and six months ended August 31, 2001 and 2000 reflect all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. These financial statements have been prepared in accordance with generally accepted accounting principles of interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for completed financial statements.
These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual report on Form 10-KSB for the year ended February 28, 2001. Effective March 1, 2001, the Company no longer qualifies as a “small business issuer” under Rule 12b-2 and is required to file under the application of general rules and regulations for its quarterly and annual reports.
Operating results for the three and six months ended August 31, 2001 are not necessarily indicative of the results that may be expected for the full year ended February 28, 2002.
NOTE 3 — In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 141 (“SFAS 141”), “Business Combinations.” SFAS 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. SFAS 141 also requires reclassification of certain identifiable assets to a separate financial statement line to the extent they meet certain criteria. The Company does not believe that the adoption of SFAS 141 will have a significant impact on its financial statements.
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In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets”, which will become effective for the Company in March of 2002. SFAS No. 142 requires that goodwill and other intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually. The Company will continue to assess its recorded goodwill and other intangible assets under current generally accepted accounting principles at each reporting period until the standard is adopted. The adoption of SFAS No. 142 in March of 2002 will eliminate charges to operations for goodwill amortization and change the method for determining impairment. The effect on the financial statements has not been determined. Currently, the Company’s amortization of goodwill is approximately $200,000 per quarter.
NOTE 4 — Acquisitions — The results of operations of Productivity Enhancement Products acquired in Q3 2001, are included in the consolidated financial statements from the date of acquisition. Thus, the three and six month results ended August 31, 2001 include actual operating results of this acquisition. During the quarter ended August 31, 2001, the Company finalized purchase accounting resulting in a net decrease to goodwill of approximately $70,000. The following unaudited pro forma information assumes that the acquisition had occurred on the first day of the Company’s fiscal year ended February 29, 2001. The pro forma information is based on historical information and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of the combined enterprise.
Six months ended August 31, 2000
| Net sales | $ | 21,639,000 | |||
| Net income | 861,000 | ||||
| Net income per share: | |||||
| Basic and diluted | $ | 0.04 | |||
NOTE 5 — The following table summarizes stock option activity under DPAC’s 1985 and 1996 Stock Option Plans for the six months ended August 31, 2001:
| Number of | Price per | Number of | |||||||||||
| Shares | Share | Options Exercisable | |||||||||||
| Balance, February 28, 2001 | 2,187,000 | $ | .94-$7.56 | 598,726 | |||||||||
| Granted | 440,000 | 1.00-3.50 | |||||||||||
| Exercised | (50,750 | ) | 1.00-1.50 | ||||||||||
| Canceled | (110,875 | ) | 1.00-8.63 | ||||||||||
| Balance, August 31, 2001 | 2,465,675 | $ | .94-$7.56 | 902,911 | |||||||||
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NOTE 6 — The Company computes net income per share in accordance with SFAS No. 128, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earning per share reflects the potential dilution of securities by including other common stock equivalents, such as stock options, in the weighted average number of shares outstanding, if dilutive.
The table below sets forth the reconciliation of the denominator of the earnings per share calculations:
| Three months ended | ||||||||
| August 31, | ||||||||
| 2001 | 2000 | |||||||
| Shares used in computing basic net income per share | 20,956,000 | 19,836,000 | ||||||
| Dilutive effect of stock options | 382,000 | 1,111,000 | ||||||
| Shares used in computing diluted net income per share | 21,338,000 | 20,947,000 | ||||||
| Six Months Ended | ||||||||
| August 31, | ||||||||
| 2001 | 2000 | |||||||
| Shares used in computing basic net income per share | 20,950,000 | 19,612,000 | ||||||
| Dilutive effect of stock options | 226,000 | 1,021,000 | ||||||
| Shares used in computing diluted net income per share | 21,176,000 | 20,633,000 | ||||||
NOTE 7 — SEGMENT INFORMATION — Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Company’s chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The operating segments of the Company are managed separately because each segment represents a strategic business unit that offers different products or services.
The Company engages in business activity primarily in three operating segments: the “Advanced Packaging Group” provides component packaging technology to create high-density, space-saving surface mount electronic components, the “System Design Group” provides outsourced engineering design services to aid customers in creating cost saving circuit designs and the “Value Added Manufacturing Group” provides contract manufacturing of prototype designs and medium volume production runs of circuit boards. The System Design and the Value Added Manufacturing Group do not qualify as reportable segments (neither segment has net sales greater than 10% of total company net sales) and separate information has not been provided.
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Operating segment data for the three months and the six month period ended August 31, 2001 and 2000 were as follows:
| Advanced | |||||||||||||||||
| Packaging | Other | Eliminations | Total | ||||||||||||||
| Three months ended August 31, 2001 | |||||||||||||||||
| Net sales | 7,634,000 | 567,000 | 8,201,000 | ||||||||||||||
| Cost of sales | 5,027,000 | 659,000 | 5,686,000 | ||||||||||||||
| Gross profit (loss) | 2,607,000 | (92,000 | ) | — | 2,515,000 | ||||||||||||
| Six months ended August 31, 2001 | |||||||||||||||||
| Net sales | 14,102,000 | 1,591,000 | (39,000 | ) | 15,654,000 | ||||||||||||
| Cost of sales | 9,583,000 | 1,381,000 | (39,000 | ) | 10,925,000 | ||||||||||||
| Gross profit | 4,519,000 | 210,000 | — | 4,730,000 | |||||||||||||
| Three months ended August 31, 2000 | |||||||||||||||||
| Net sales | 6,666,000 | 539,000 | — | 7,205,000 | |||||||||||||
| Cost of sales | 4,437,000 | 387,000 | — | 4,824,000 | |||||||||||||
| Gross profit | 2,229,000 | 152,000 | — | 2,381,000 | |||||||||||||
| Six months ended August 31, 2000 | |||||||||||||||||
| Net sales | 17,389,000 | 796,000 | — | 18,185,000 | |||||||||||||
| Cost of sales | 12,150,000 | 548,000 | — | 12,698,000 | |||||||||||||
| Gross profit | 5,239,000 | 248,000 | — | 5,487,000 | |||||||||||||
License revenues for the three months ended August 31, 2001 and 2000 were $165,000 and $437,000, respectively and for the six months ended August 31, 2001 and 2000 were $311,000 and $851,000, respectively.
The Company had export sales (primarily to Western European customers) accounting for approximately 3% of net sales for the three months ended August 31, 2001 and 2000, and approximately 3% and 5% of net sales for the six months ended August 31, 2001 and 2000, respectively.
ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
Net sales for the three months ended August 31, 2001 increased $996,000 or 14% compared to the quarter ended August 31, 2000. The increase in net sales for the quarter ended August 31, 2001, when compared to the comparable quarter in the prior year, was due primarily to an increase in the high-density commercial portion of the company’s business. The overall unit increase in commercial stacks shipped during the quarter increased by 66% from the comparable quarter in the prior year. Additionally, the product mix within the commercial business changed as to the relationship as between consigned material and material purchased on behalf of the customer. For the commercial high density product, the revenues of products containing the
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memory components we purchase on the customer’s behalf decreased to 30% of total revenues as compared to 35% from the second quarter in the prior fiscal year. In the case of products including memory we purchased on the customer’s behalf, the Company will purchase material for the commercial order and will determine the customer’s final purchase price prior to the order, in order to avoid any price volatility in the components. The price of DRAM components has also experienced a decrease in price, thereby affecting the overall gross revenue when the components are part of the overall sale. See “Forward Looking Statements.”
Net sales for the six months ended August 31, 2001 decreased $2,531,000 or 14% compared to the comparable period ended August 31, 2000. The decrease in net sales for the six month period ended August 31, 2001, when compared to the comparable period in the prior year was due primarily to a decrease in material price of the DRAM components. The overall units in commercial stacks shipped during the six month period ended August 31, 2001 increased by 3% from the comparable six month period of the previous fiscal year. Additionally, the product mix within the commercial business changed as to the relationship as between consigned material and material purchased on behalf of the customer. For the commercial high density product, the revenue of products containing the memory components we purchased decreased to 33% of total revenue as compared to 42% from the same period in the prior fiscal year.
Gross profit as a percentage of sales was 31% for the three month period ended August 31, 2001, as compared to 33% for the three month period ended August 31, 2000. For the six month periods ended August 31, 2001 and 2000, gross profit as a percentage of sales was 30%. The consistency in the gross margins for the six month ended August 31, 2001 can be attributed to the negative effect of lower overall revenues offset by the positive effect of lower revenues from commercial products for which we purchased the memory components. During the second quarter ended August 31, commercial orders with memory included, accounted for $2,652,000 compared to $3,327,000 in the previous year second quarter. The gross margin was slightly lower due to the fact the company had reduced some of its pricing on the service of stacking components. For the six month ended August 31, 2001, approximately $6,511,000 of commercial orders contained procured memory as compared to $8,377,000. The balance of the commercial orders had consigned memory associated with the sale.
During the second quarter of fiscal year 2002, the Company continued its offering of commercial products and focused on those products that relate to the Company’s proprietary packaging technology. Additionally, the Company has numerous products that have been designed into industrial, defense and aerospace applications. It is unknown at this time, whether or not, there will be a change in demand for these proprietary products, due to the political unrest in the world.
The Company believes that it has been able to define a niche for products that use a unique proprietary stacking technology and has been marketing these products to a defined market. See “Forward-Looking Statements.”
Selling, general and administrative expenses decreased in the second quarter of fiscal year 2002 by $171,000 or 11% from the second quarter of the prior fiscal year. For the six month period in fiscal year 2002, selling general and administrative expenses decreased $59,000 or 2% from the same period in the prior fiscal year. The decrease in general and administrative expenses for the second quarter ended August 31, 2001 versus the same quarter in the prior year can be mainly attributed to a decrease in legal fees of $100,000 associated with decreased legal costs in defending the lawsuit brought by Simple Technology, Inc., and a decrease in compensation costs of $65,000. For the six month ended August 31, 2001, the majority of the decrease was attributed to a decrease in legal expenses of approximately $200,000 associated with decreased legal costs in defending the lawsuit brought by Simple Technology, Inc., and a
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decrease in compensation costs of $80,000 offset by increases of occupancy costs related to the acquisition of Productivity Enhancements Products, Inc in October 2000.
Amortization of goodwill was $194,000 for the quarter ended August 31, 2001, and $388,000 for the six month period ended August 31, 2001, as compared to no expense in the prior year’s periods. The amortization is related to the acquisition of Productivity Enhancement Products, Inc. completed in the third quarter of fiscal year 2001. The current net balance of the goodwill is $ $5,173,000 and is being amortized over a seven year period.
For the quarter ended August 31, 2001 research and development costs increased by $37,000 and increased by $33,000 for the six month period ended August 31, 2001. For the quarter ended August 31, 2001, the research and development expense represented 5.7% of net sales as compared to 6.1% of net sales from the same quarter in the previous fiscal year. For the six month period ended August 31, 2001, research and development represented 5.7% as compared to 4.7% in the same period from the prior year. The amount in absolute dollars spent on research and development has remained relatively constant year over year. The continued investment in research and development is primarily due to continued efforts to allocate resources to the development and production of unique new technologies into the commercial marketplace. The Company is continuing to invest in research and development for new products in the advanced technology marketplace. See “Forward Looking Statements”.
For the three months ended August 31, 2001, other income increased $32,000 from the same period last year and increased $800 for the six month period. These changes primarily relate to the impact of interest rates and cash reserves on interest income. The interest expense remained relatively constant for the periods.
For the three and six months ended August 31, 2001, the Company recorded no income tax provision as available net operating loss carryforwards are expected to offset any current year income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary source of liquidity for the six month period ended August 31, 2001 was cash generated from the operations excluding the effects of payment of an acquired tax liability. Excluding this payment, the Company continued to generate cash for use in operations. 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 institution if the need should arise for additional working capital to support operations. The credit facility contains certain financial covenants, including minimum tangible net worth requirements. The Company was in compliance with all covenants at August 31, 2001. See “Forward-Looking Statements.”
Net cash used in operations was approximately $217,000 during the six month period and included a $1.5 million tax payment associated with a tax liability assumed in the purchase of Productivity Enhancement Products, Inc. The offsetting non-uses of cash included depreciation and amortization of $1,101,000, a decrease in accounts receivable of $280,000 and a decrease in inventory of $858,000.
The Company purchased for cash, approximately $283,000 in new equipment during the first six months of fiscal year 2002. The Company is expecting that it may incur additional lease debt with the acquisition of additional equipment during the next six months. The Company expects that it will not acquire more than one million dollars in additional equipment for the remainder of the fiscal year. See “Forward-Looking Statements”.
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Net cash used in financing activities was approximately $190,000 during the six months ended August 31, 2001 and principally relates to debt repayments of $256,000 offset by proceeds from stock purchases of $66,000.
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, limited experience in acquisitions, business interruptions due to acts of terrorism, 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, 2001 under the heading “Cautionary Statements”. Investors are cautioned against ascribing undue weight to any forward looking statements herein.
PART II — OTHER INFORMATION
Item 1 — Legal Proceedings
The information is incorporated herein by reference to Form 10-KSB filed February 28, 2001. There has been no significant changes in the status of these legal proceedings.
Item 4 — Submission of Matters to a Vote of Security Holders
| 1. | (a) Annual Shareholders’ Meeting — August 10, 2001. |
| (b) | Election of Directors: | Votes For | Withheld | ||||||
| Richard J. Dadamo | 19,197,739 | 727,854 | |||||||
| Ted Bruce | 19,007,849 | 917,744 | |||||||
| Samuel W. Tishler | 19,211,227 | 714,366 | |||||||
| Gordon M Watson | 19,211,419 | 714,174 | |||||||
| Richard H. Wheaton | 19,205,667 | 719,926 |
| (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 2,000,000 shares and increase the number of options in the plan by 4% of the total number of outstanding shares of Common Stock each year until the end of the option plan. |
| Votes For | Against | Abstain | |||
| 8,951,087 | 2,232,355 | 143,858 |
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| (d) Proposal to amend the Company’s Articles of Incorporation to change the name of the Company to DPAC Technologies Corp. from Dense-Pac Microsystems, Inc. |
| Votes For | Against | Abstain | |||
| 19,475,038 | 353,279 | 97,276 |
Item 6 — Exhibits and Reports on Form 8-K
(a) Exhibits
| None |
(b) Reports on Form 8-K
| No reports on Form 8-K were filed during the second quarter of fiscal 2002 covered by this Form 10-Q. |
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.
| DPAC TECHNOLOGIES CORP. (Registrant) | ||
| October 10, 2001 | /s/ Ted Bruce | |
| Date | Ted Bruce, Chief Executive Officer | |
| October 10, 2001 | /s/ William M. Stowell | |
| Date | William M. Stowell, Chief Financial Officer |
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