1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-QSB/A
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(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
- - ----- Act of 1934
For the quarterly period ended June 30, 1998
Transition report under Section 13 or 15(d) of the Securities Exchange
- - ----- Act of 1934
For the period from to
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Commission file number: 1-11686
CYCOMM INTERNATIONAL INC.
(Exact name of small business issuer as specified in its charter)
Wyoming 54-1779046
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1420 Springhill Road, Suite 420
McLean, Virginia 22102
(Address of principal executive offices)
(703) 903-9548
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
As of August 1, 1998, the Registrant had 11,170,735 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format: Yes No X
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CYCOMM INTERNATIONAL INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets....................... 3
Condensed Consolidated Statements of Operations............. 4
Condensed Consolidated Statements of Cash Flows............. 5
Condensed Consolidated Statement of Stockholders' Equity.... 6
Notes to Condensed Consolidated Financial Statements........ 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION........................................... 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS........................................... 12
ITEM 2. CHANGES IN SECURITIES....................................... 12
ITEM 3. DEFAULT UPON SENIOR SECURITIES.............................. 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 12
ITEM 5. OTHER INFORMATION........................................... 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................ 13
SIGNATURES ............................................................ 14
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CYCOMM INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
JUNE 30, DECEMBER 31,
1998 1997
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $847,077 $617,636
Accounts receivable, net 5,020,421 5,171,402
Inventories 5,390,619 5,374,511
Prepaid expenses 106,153 96,029
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Total current assets 11,364,270 11,259,578
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Fixed assets, net 1,513,638 1,582,475
Goodwill, net 2,345,200 2,534,733
Other assets:
Notes receivable 141,552 183,185
Deferred financing costs, net 129,817 179,460
Other 392,870 211,845
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664,239 574,490
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$15,887,347 $15,951,276
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable- trade $2,832,630 $3,386,543
Accrued liabilities 1,556,905 1,481,427
Due to affiliate 423,352 318,603
Deferred revenue 196,582
Dividends payable on preferred stock 25,000 ---
Current portion of capital lease obligations 22,074 29,468
Revolving credit facility 3,123,921 2,629,308
Current portion of notes payable and convertible debentures 3,189,324 413,575
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Total current liabilities 11,369,788 8,258,924
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Capital lease obligations, less current portion 47,051 54,294
Notes payable and convertible debentures, less current portion 299,763 3,394,425
Stockholders' equity:
Series B Preferred Stock, 15 shares issued and outstanding at
June 30, 1998 650,000 ---
Common Stock, no par value, unlimited authorized shares,
11,061,522 and 9,816,877 shares issued and outstanding
at June 30, 1998 and December 31, 1997 49,643,252 47,491,611
Accumulated deficit (46,122,507) (43,247,978)
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Total stockholders' equity 4,170,745 4,243,633
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$15,887,347 $15,951,276
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See accompanying notes to condensed consolidated financial statements.
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CYCOMM INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------- --------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
Sales $ 5,539,733 $ 3,408,977 $ 10,123,072 $ 7,033,684
Cost of sales 4,363,048 2,437,669 7,601,278 4,953,094
------------ ------------ ------------ ------------
Gross profit 1,176,685 971,308 2,521,794 2,080,590
------------ ------------ ------------ ------------
Expenses
Selling, general and administrative 1,608,986 1,761,857 3,406,697 3,290,322
Research and product development 308,980 320,846 680,894 548,300
Depreciation and amortization 528,917 179,180 918,752 370,003
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2,446,883 2,261,883 5,006,343 4,208,625
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LOSS FROM OPERATIONS (1,270,198) (1,290,575) (2,484,549) (2,128,035)
OTHER INCOME (EXPENSE)
Interest income 18,032 24,086 31,281 35,903
Interest expense (201,384) (256,450) (390,099) (583,122)
Unrealized holding gain on marketable securities --- 32,155 --- 32,155
Other income --- --- 1,508 ---
------------ ------------ ------------ ------------
(183,352) (200,209) (357,310) (515,064)
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NET LOSS $ (1,453,550) $ (1,490,784) $ (2,841,859) $ (2,643,099)
============ ============ ============ ============
LOSS PER SHARE
Net loss per share $ (0.14) $ (0.16) $ (0.28) $ (0.30)
============ ============ ============ ============
Weighted average number of common shares
outstanding 10,358,742 9,274,994 10,174,191 8,858,879
============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements.
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CYCOMM INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
SIX MONTHS ENDED
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JUNE 30, JUNE 30,
1998 1997
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OPERATING ACTIVITIES
Net loss $(2,841,859) $(2,643,099)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 918,752 370,003
Unrealized holding gain on marketable securities --- (32,155)
Write-down of investments 50,000 ---
Non-cash expenses 13,889 400,479
Research and product development 6,502 35,924
Change in operating assets and liabilities (441,984) (713,107)
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Cash used in operating activities (2,294,700) (2,581,955)
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INVESTING ACTIVITIES
Acquisition of fixed assets (137,895) (206,918)
Proceeds on disposal of fixed assets --- 35,590
Increase in long-term investment --- (205,000)
Decrease in long-term investment --- 513,500
Increase in notes receivable (50,000) (184,000)
Decrease in notes receivable 46,249 41,521
Other (225,276) (125,904)
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Cash used in investing activities (366,922) (131,211)
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FINANCING ACTIVITIES
Issuance of common stock 1,620,000 ---
Issuance of preferred stock 900,000 ---
Borrowings under revolving credit facility 494,613 552,755
Repayment of notes payable and convertible debentures (78,913) (99,401)
Borrowings under convertible debentures --- 3,000,000
Deferred financing costs on convertible debentures (30,000) (300,000)
Repayment - capital leases (14,637) (53,518)
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Cash provided by financing activities 2,891,063 3,099,836
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Increase in cash and cash equivalents during the period 229,441 386,670
Cash and cash equivalents, beginning of period 617,636 1,220,544
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Cash and cash equivalents, end of period $ 847,077 $ 1,607,214
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 373,867 $ 129,601
Income taxes paid $ --- $ ---
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of convertible debentures to common stock $ 273,970 $ 2,618,961
Conversion of preferred stock to common stock $ 257,671 $ ---
See accompanying notes to condensed consolidated financial statements.
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CYCOMM INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30, 1998
(UNAUDITED)
PREFERRED PREFERRED COMMON COMMON ACCUMULATED
SHARES STOCK SHARES STOCK DEFICIT
---------- ---------- ---------- ------ -----------
BALANCE, DECEMBER 31, 1996 --- --- 8,050,401 $42,970,749 $(37,825,326)
Net loss (5,422,652)
Issuance of common stock:
Conversion of debentures 1,219,727 2,742,753
Private placement 120,000 180,000
Acquisition earn-out 426,749 1,264,776
Beneficial conversion feature of
convertible debt 333,333
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BALANCE, DECEMBER 31, 1997 --- --- 9,816,877 47,491,611 (43,247,978)
Net loss (2,841,859)
Issuance of preferred stock:
Private placement 20 $900,000
Issuance of common stock:
Conversion of debentures 236,380 273,970
Conversion of preferred stock (5) (250,000) 108,265 257,671
Private placement 900,000 1,620,000
Dividends payable - preferred
stock (32,670)
-------- -------- ----------- ----------- -------------
BALANCE, JUNE 30, 1998 15 $650,000 11,061,522 $49,643,252 $(46,122,507)
======== ======== =========== =========== =============
See accompanying notes to condensed consolidated financial statements.
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CYCOMM INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - GENERAL
The interim financial information furnished herein was prepared from the
books and records of Cycomm International Inc. and its subsidiaries (the
"Company") as of June 30, 1998 and for the period then ended, without audit;
however, such information reflects all normal and recurring accruals and
adjustments which are, in the opinion of management, necessary for a fair
presentation of financial position and of the statements of operations and
cash flows for the interim period presented. The interim financial
information furnished herein should be read in conjunction with the
consolidated financial statements included in this report and the
consolidated financial statements and notes contained in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1997. The
interim financial information presented is not necessarily indicative of the
results from operations expected for the full fiscal year.
NOTE 2 - INVENTORIES
The following is a summary of inventories at June 30, 1998 and December 31,
1997:
JUNE 30, DECEMBER 31,
1998 1997
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Raw materials $2,327,302 $1,988,897
Work in process and sub-assemblies 2,145,360 2,591,442
Finished goods 917,957 794,172
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$5,390,619 $5,374,511
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NOTE 3 - NOTES PAYABLE AND CONVERTIBLE DEBENTURES
In December 1997, the Company obtained a revolving credit facility from a
lender under which the Company may, at its option, borrow and repay amounts
up to a maximum of $3,432,000, of which $3,123,921 was outstanding at June
30, 1998. Borrowings under this credit facility bear interest at prime plus
3%. The credit facility is collateralized by trade accounts receivable and
inventory and restricts the Company from paying dividends in certain
circumstances. In conjunction with this credit facility, the Company
obtained a term loan in the amount of $568,000 collateralized by certain
machinery and equipment. This term loan bears interest at prime plus 3% and
is payable in equal installments of $15,777 per month through January 1,
2001.
As of June 30, 1998, the Company has outstanding a total of $3,000,000 in
convertible debentures which are convertible at the option of the holders
into common stock of the Company at 90% of the average closing bid price of
the Company's common stock prior to conversion, provided however, that the
conversion price shall not be greater than $6.00 per share nor less than
$3.00 per share. At June 30, 1998, all of the outstanding convertible
debentures are fully eligible for conversion. During the six months ended
June 30, 1998, principal and accrued interest in the amount of $278,625 were
converted into 236,380 shares of common stock.
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On June 15, 1998, the Company entered into an agreement with the holders of
the convertible debentures, under which the holders waived their right of
conversion in exchange for an increase in the coupon interest rate of the
debentures from 10% to 12%. The Company intends to repay the convertible
debentures at the maturity date of February 28, 1999 with the proceeds of a
future debt or equity financing.
NOTE 4 - PREFERRED STOCK
On February 26, 1998, the Company issued 20 shares of Series B Convertible
Redeemable Preferred Stock in a private placement. Proceeds from the
issuance were $900,000, net of issuance costs of $100,000. Dividends are
required to be paid on the preferred shares at a rate of 10% per annum, and
can be paid at the option of the Company in either cash or in the Company's
common stock.
The preferred shares are convertible at the option of the holder into common
stock of the Company pursuant to a conversion schedule as set forth in the
agreement. The holder can convert 25% of its preferred shares on or after
the 90th day after February 26, 1998, and up to a further 25% every 30 days
thereafter. The conversion price is the lesser of $2.38, or a 15% discount
of the five-day average closing bid price prior to the date of conversion.
In the event that the Company's common stock is trading at or below $1.50 at
the conversion date, the Company has the right to redeem the preferred shares
at a premium of 18% over the conversion price. If the Company does not
exercise this right, the holder may convert 10% of its preferred shares, and
up to a further 10% every 20 days thereafter.
As of June 30, 1998, 5 shares of the Series B Convertible Redeemable
Preferred Stock with stated value and accrued dividends of $257,671 had been
converted into 108,265 shares of Common Stock. Subsequent to June 30, 1998,
an additional 5 shares of the Series B Convertible Redeemable Preferred Stock
with stated value and accrued dividends of $259,863 were converted into
109,186 shares of Common Stock.
In conjunction with the issuance of the preferred shares, the Company issued
70,000 warrants to purchase common stock at a purchase price of $2.50 per
share. These warrants expire on February 26, 2000.
NOTE 5 - RESTATEMENTS
The Form 10-QSB/A for the period ended 6/30/98 has been restated to
reflect an accounting treatment related to certain sales of PCMobile
computers in which customers were given PCMobiles with 586 processors (the
"586s") to be used until PCMobiles with Pentium processors (the
"Pentiums") became available. At the time the sales were made, Cycomm was
still in the process of developing the Pentium PCMobile, however the
customers agreed to take 586s until Cycomm was able to deliver Pentiums.
The customers paid the full price for Pentiums at the time of the sale.
When the Pentiums became available, the customers could trade in the 586s
for Pentiums at no additional charge. Cycomm recorded revenue on the
sales at the time the 586s were shipped. There were several delays in the
development of the Pentium PCMobile, which caused these sales to extend
over multiple accounting periods.
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Management has determined that revenue should not have been recognized when the
586s were shipped, but should have been delayed until the Pentiums were shipped
to the customers. The 586s have been reclassified as demonstration units, which
are recorded in inventory, and are now depreciated over a one year period.
Payments received from customers have been recorded as deferred revenue.
For the three months ended June 30, 1998 the effects of the restatements are as
follows. Revenues were reduced by $538,942 with a corresponding reduction in
cost of sales of $361,555. Depreciation expense increased by $197,866. Accounts
receivable decreased by $435,505, inventory increased by $163,689, and the
Company recorded $103,437 in deferred revenue.
For the six months ended June 30, 1998 the effects of the restatements are as
follows. Revenues were reduced by $1,231,172 with a corresponding reduction in
cost of sales of $828,921. Depreciation expense increased by $268,847. Accounts
receivable decreased by $1,034,589, inventory increased by $560,074, and the
Company recorded $196,583 in deferred revenue.
NOTE 6 - RECENT PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which was required to be adopted on December
31, 1997. Under the new standard, companies are required to report basic
earnings per share (EPS) and diluted EPS, instead of the primary and fully
diluted EPS disclosures which were previously required. Basic EPS is
calculated by dividing net earnings by the weighted average number of common
shares outstanding during the year. Diluted EPS is calculated by dividing
net earnings by the weighted average number of common shares outstanding
during the year plus the incremental shares that would have been outstanding
upon the assumed exercise of eligible stock options, warrants and the
conversion of certain debenture issues. For the periods ended June 30, 1998,
and June 30, 1997, the effect of the exercise of stock options, warrants and
the conversion of debentures would be anti-dilutive, and therefore, diluted
earnings (loss) per share is equal to basic earnings (loss) per share as
disclosed in the consolidated statements of operations.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (Statement 131), which is effective for
years beginning after December 15, 1997. Statement 131 establishes standards
for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers.
Statement 131 is effective for financial statements for fiscal years
beginning December 15, 1997, and therefore the Company will adopt the new
requirements retroactively in 1998. Management has not completed its review
of Statement 131, but does not anticipate that the adoption of this
statement will have a significant effect on the Company's reported segments.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 and June 30, 1997
Revenues for the three months ended June 30, 1998 were $4,363,048 which
represents an increase of 63% over revenues of $3,408,977 for the prior
period. Sales of the Company's PCMobile rugged laptop computers increased to
$4,104,116, as compared to $1,387,115 in the prior period. However, sales of
secure computing products were $1,048,497, a decrease of $404,258 from the
prior period. These two product lines, which comprise the computer products
segment, accounted for 93% of total revenue, as compared to 92% in the prior
period. The remaining revenue of $387,120 is related to the communications
security products segment, and reflects a decrease of $181,987 from the prior
period.
Cost of sales for the three months ended June 30, 1998 were $4,363,048 as
compared to cost of sales of $2,437,669 for the prior period. This increase
is a result of the increased sales volume of PCMobile products, offset by the
decrease in sales volume for secure computing products. Cost of sales for
the computer products segment were $4,134,139, resulting in a gross margin of
20%, as compared to cost of sales of $2,142,743 and gross margin of 25% in
the prior period. The gross margin in the communications security products
segment was 41% in the current period, as compared to 48% in the prior period.
Operating expenses were $2,446,883 for the three months ended June 30, 1998
as compared to $2,261,883 in the prior period. Selling, general and
administrative expenses decreased $158,239 to $1,608,986 for the current
period. Research and development costs were $308,980 as compared to $320,846
in the prior period. The costs in the current period are related to the
engineering of the PCMobile Pentium(TM) computer, and the development of new
products for the Company's secure computing product line. Depreciation and
amortization increased to $528,917 for the three months ended June 30, 1998
as compared to $179,180 in the prior period. This increase is primarily the
result of amortization of goodwill related to the acquisitions of XL
Computing Corporation and XL Canada and the accelerated depreciation of
PCMobile demonstration units ("demos").
Interest expense for the three months ended June 30, 1998 was $201,384 as
compared to $256,450 for the prior period. While there has been increased
debt financing obtained by the Company in the form of convertible debentures
and credit lines, total interest expense has decreased due to reduced
convertible debt interest charges. Included in interest expense for the
three months ended June 30, 1997 are non-recurring, non-cash charges of
$145,833 related to convertible debt financing that give effect to beneficial
conversion features.
The net loss of $1,453,550, or ($0.14) per basic share, for the three months
ended June 30, 1998 represents a decrease from $1,490,784, or ($0.16) per
basic share for the three months ended June 30, 1997. The decrease in net
loss is largely due to the improved performance of the PCMobile product
line, offset by the results of the secure computing product line.
Six Months Ended June 30, 1998 and June 30, 1997
Revenues for the six months ended June 30, 1998 were $10,123,072 which
represents an increase of 44% over revenues of $7,033,684 for the prior
period. Sales of the Company's PCMobile rugged laptop computers increased to
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$7,242,265, as compared to $2,849,433 in the prior period. However, sales of
secure computing products were $2,061,614, a decrease of $1,037,104 from the
prior period. These two product lines, which comprise the computer products
segment, accounted for 92% of total revenue, as compared to 85% in the prior
period. The remaining revenue of $819,193 is related the communications
security products segment, and reflects a decrease of $266,340 from the prior
period.
Cost of sales for the six months ended June 30, 1998 were $7,601,278 as
compared to cost of sales of $4,953,094 for the prior period. This increase
is a result of the increased sales volume of PCMobile products, offset by the
decrease in sales volume for secure computing products. Cost of sales for
the computer products segment were $7,121,265, resulting in a gross margin of
27%, as compared to cost of sales of $4,323,157 and gross margin of 27% in
the prior period. The gross margin in the communications security products
segment was 41% in the current period, as compared to 42% in the prior period.
Operating expenses increased to $5,006,343 for the six months ended June 30,
1998 as compared to $4,208,625 in the prior period. Selling, general and
administrative expenses increased to $3,406,697 for the current period.
Research and development costs increased to $680,894 as compared to $548,300
in the prior period. These costs are related to the engineering of the
PCMobile Pentium (TM) computer, and the development of new products for the
Company's secure computing product line. Depreciation and amortization
increased to $918,752 for the six months ended June 30, 1998 as compared to
$370,003 in the prior period. This increase is primarily the result of
amortization of goodwill related to the acquisitions of XL Computing
Corporation and XL Canada and the accelerated depreciation of PCMobile
demonstration units ("demos").
Interest expense for the six months ended June 30, 1998 was $390,009 as
compared to $583,122 for the prior period. While there has been increased
debt financing obtained by the Company in the form of convertible debentures
and credit lines, total interest expense has decreased due to reduced
convertible debt interest charges. Included in interest expense are charges
of $13,889 and $362,978 for the six months ended June 30, 1998 and June 30,
1997, respectively. These are non-recurring, non-cash charges related to
convertible debt financing that give effect to beneficial conversion features.
The net loss of $2,841,859, or ($0.28) per basic share, for the six months
ended June 30, 1998 represents an increase from $2,643,099, or ($0.30) per
basic share for the six months ended June 30, 1997. The increase in net loss
is due to increased losses inthe secure computing product line, offset by the
improved performance of the PCMobile product line.
LIQUIDITY AND CAPITAL RESOURCES
The Company has satisfied working capital requirements through cash on hand,
available lines of credit and various equity related financings. At June 30,
1998, the Company had cash and cash equivalents of $847,077.
In the six months ended June 30, 1998, cash used in operations amounted to
$2,294,700. Cash used in investing activities during the six months ended
June 30, 1998 totaled $366,922. Cash provided by financing activities was
$2,891,063 for the six months ended June 30, 1998.
Included in the cash provided by financing activities are two private equity
placements. In February 1998, the Company issued 20 shares of Series B
Convertible Redeemable Preferred Stock for net proceeds of $900,000 (See Note
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4). Additionally, in May 1998 the Company issued 900,000 shares of Common
Stock for net proceeds of $1,620,000.
The Company increased the amounts drawn on its bank credit lines in an amount
of $494,613 during the six months ended June 30, 1998.
The Company's net working capital decreased to ($5,518) at June 30, 1998,
from $3,000,654 at December 31, 1997. The decrease in net working capital is
a result of $3,000,000 of convertible debentures being reclassified from long
term to current obligations of the Company.
The Company anticipates that its computer products segment will be able to
fund operations from working capital, secured lines of credit and funding
from the parent company. The operations of the communications products
segment have improved through the results of certain restructurings;
accordingly, this business segment will require only minimal financing
through funding from the parent company. As compared to prior periods, the
Company has shown revenue growth while narrowing losses. The Company
anticipates continued revenue and gross margin improvements to achieve
profitability in the near term. The Company believes that it has the capital
resources available through additional debt and equity financings to develop
and market its products and to make acquisitions. The Company believes that
it will be able to meet its obligations in the near term. There can,
however, be no assurance that the above will be successfully accomplished, or
will be possible on terms acceptable to the Company.
IMPACT OF YEAR 2000
The Company is currently in the process of assessing the impact of the Year
2000 on its information systems and on its business. Management does not
anticipate that the Year 2000 will have a significant impact on its
information systems or result in a significant commitment of resources to
resolve potential problems associated with this event.
There can be no assurance that the Company will be unaffected by Year 2000
issues affecting its customers and vendors. However, based on discussions
with the Company's major customers and vendors, the Company does not believe
that the Year 2000 readiness of its customers and vendors will have a
material negative impact on the Company's business or financial statements.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 5, 1998, the Company held its Annual Meeting of Stockholders in
McLean, Virginia pursuant to the Notice of Annual Meeting and related Proxy
Statement dated May 1, 1998. As follows are the actions that were taken at
the meeting:
1. To elect Albert I. Hawk, Hubert Marleau and Thomas Stafford as directors
for a one-year term expiring in 1999. The results of the voting were as
follows:
Nominee For Withheld
------- --- --------
Albert I. Hawk 7,427,066 125,678
Hubert Marleau 7,427,066 125,678
Thomas Stafford 7,427,066 125,678
Rick E. Mandrell declined to stand for re-election as a director.
2. To approve the selection of Ernst & Young, LLP., as independent certified
public accountants for the 1998 fiscal year. The results of the voting
were as follows:
For Against Withheld
--- ------- --------
7,303,917 -- 15,537
ITEM 5. OTHER INFORMATION.
None.
14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
None.
15
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.
CYCOMM INTERNATIONAL INC.
Date: August 11, 1998 /s/ Albert I. Hawk
----------------------------
Albert I. Hawk
President and
Chief Executive Officer
Date: August 11, 1998 /s/ Michael R. Skoff
----------------------------
Michael R. Skoff
Chief Financial Officer
16