1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 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 25, 1996
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-10558
ALPHA MICROSYSTEMS
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(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3108178
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2722 S. FAIRVIEW STREET, SANTA ANA, CA 92704
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(Address of principal executive offices)
Registrant's telephone number, including area code: (714) 957-8500
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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 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 October 7, 1996, there were 10,752,192 shares of the registrant's
Common Stock outstanding.
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ALPHA MICROSYSTEMS
INDEX
Page
Number
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PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at August 25, 1996 (Unaudited) and
February 25, 1996 3
Condensed Consolidated Statements of
Operations (Unaudited) for the Three
and Six Months Ended August 25, 1996 and
August 27, 1995 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended August 25,
1996 and August 27, 1995 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II-- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
August 25, February 25,
1996 1996
--------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 8,353 $ 505
Marketable securities 2,088 --
Accounts receivable, net of allowance for
doubtful accounts of $171 and $927 at
August 25, 1996 and February 25, 1996,
respectively 3,056 5,241
Inventories 415 943
Notes receivable 164 159
Prepaid expenses and other current assets 431 351
-------- --------
Total current assets 14,507 7,199
-------- --------
Property and equipment at cost 16,151 16,710
Less accumulated depreciation and
amortization 12,539 12,435
-------- --------
Net property and equipment 3,612 4,275
Service contracts, net 548 793
Software costs, net 751 535
Goodwill, net 17 170
Other assets, net 57 89
-------- --------
$ 19,492 $ 13,061
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ -- $ 500
Accounts payable 1,420 1,694
Deferred revenue 1,780 2,678
Other accrued liabilities 300 837
Accrued salaries and wages 475 476
Current portion of long-term debt 220 192
-------- --------
Total current liabilities 4,195 6,377
Long-term debt 94 201
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized; none issued -- --
Common stock, no par value; 20,000,000 shares
authorized; 10,752,192 and 6,595,453 shares
issued and outstanding at August 25, 1996 and
February 25, 1996, respectively 30,835 21,242
Accumulated deficit (15,689) (14,694)
Unamortized restricted stock plan expense (14) (18)
Foreign currency translation adjustment 71 (47)
-------- --------
Total shareholders' equity 15,203 6,483
-------- --------
$ 19,492 $ 13,061
======== ========
See accompanying notes.
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ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
-------------------------- ----------------------------
August 25, August 27, August 25, August 27,
1996 1995 1996 1995
--------- --------- --------- ---------
Net sales:
Product $ 2,135 $3,905 $ 4,933 $ 7,824
Service 4,013 4,700 8,291 9,326
------- ------ ------- -------
Total net sales 6,148 8,605 13,224 17,150
------- ------ ------- -------
Cost of sales:
Product 1,111 2,181 2,606 4,561
Service 2,942 3,072 6,176 6,159
------- ------ ------- -------
Total cost of sales 4,053 5,253 8,782 10,720
------- ------ ------- -------
Gross Margin 2,095 3,352 4,442 6,430
Selling, general and administrative expense 2,342 2,810 4,541 5,561
Research and development expense 511 538 1,068 1,070
------- ------ ------- -------
Total operating expenses 2,853 3,348 5,609 6,631
------- ------ ------- -------
Income (loss) from operations (758) 4 (1,167) (201)
Interest income (64) (21) (68) (50)
Interest expense 10 17 26 21
Other (income) expense, net (33) (9) (108) (225)
Foreign exchange (gain) loss (19) (25) (26) (40)
------- ------ ------- -------
Total other (income) expenses (106) (38) (176) (294)
------- ------ ------- -------
Income (loss) before taxes (652) 42 (991) 93
(Benefit) provision for income taxes -- -- 5 --
------- ------ ------- -------
Net income (loss) $ (652) $ 42 $ (996) $ 93
======= ====== ======= =======
Net income (loss) per share $ (0.06) $ 0.01 $ (0.11) $ 0.01
======= ====== ======= =======
Number of shares used in the computation
of per share amounts 10,939 6,591 9,183 6,576
======= ====== ====== =======
See accompanying notes.
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ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
Six Months Ended
--------------------------
August 25, August 27,
1996 1995
--------- ---------
Cash flow from operating activities:
Net income (loss) $ (996) $ 93
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Gain on sale of subsidiary (45) --
Gain on sale of fixed assets 1 (211)
Depreciation and amortization 1,126 1,033
Provision for losses on accounts receivable 35 (59)
Inventory provision (57) 152
Other changes in operating assets and liabilities:
Accounts receivable 410 (170)
Inventories (106) 361
Prepaid expenses and current assets (253) 76
Accounts payable and other
accrued liabilities 390 (61)
Accrued salaries and wages 22 (441)
Deferred revenue (396) (257)
Other, net (174) (4)
------- -------
Net cash (used in) provided by
operating activities (43) 512
------- -------
Cash flow from investing activities:
Proceeds from sale of fixed assets 9 240
Sale of subsidiary (599) --
Purchases of equipment (245) (1,301)
Capitalization of software costs (290) (541)
Other, net -- (16)
------- -------
Net cash used in investing activities (1,125) (1,618)
------- -------
Cash flows from financing activities:
Issuance of stock 9,510 10
Stock options exercised 87 --
Principal debt repayments (576) (253)
------- -------
Net cash provided by (used in) financing activities 9,021 (243)
------- -------
Effect of exchange rate changes on cash (5) (21)
------- -------
Decrease in cash and cash equivalents 7,848 (1,370)
Cash and cash equivalents at beginning of period 505 3,289
------- -------
Cash and cash equivalents at end of period $ 8,353 $ 1,919
======= =======
See accompanying notes.
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ALPHA MICROSYSTEMS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTORY NOTE
This Quarterly Report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. These forward-looking statements include (i) the
ability of the Company to continue to meet its financial obligations and the
continued availability of financing, (ii) the market acceptance of the
Company's hardware and software products and services, including the recently
announced AlphaCONNECT(TM) family of products, (iii) the continued development
of the Company's technical, manufacturing, sales, marketing and management
capabilities, and (iv) anticipated competition.
Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions, all
of which are difficult or impossible to predict accurately and many of which
are beyond the control of the Company. In addition, the business and operations
of the Company are subject to substantial risks which increase the uncertainty
inherent in the forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company, or any other person, that the objectives or plans of the Company will
be achieved.
1. INTERIM ACCOUNTING POLICY
In the opinion of management of Alpha Microsystems (the "Company" or
"Alpha Micro"), the accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary to fairly present the consolidated
financial position of the Company at August 25, 1996, the consolidated results
of its operations for the three and six month periods ended August 25, 1996 and
August 27, 1995 and its cash flows for the six month periods ended August 25,
1996 and August 27, 1995. These condensed consolidated financial statements do
not include all disclosures normally presented annually under generally accepted
accounting principles and, therefore, they should be read in conjunction with
the Company's annual report on Form 10-K for the year ended February 25, 1996.
The results of operations for the six month period ended August 25,
1996, are not necessarily indicative of the results to be expected for the full
fiscal year.
REVENUE RECOGNITION
The Company recognizes revenue on its hardware and software sales on
delivery, and recognizes revenue on its service sales and post contract customer
support on a straight line basis over the contract period. When significant
obligations remain after a software product has been delivered, revenue is not
recognized until obligations have been completed or are no longer significant.
The costs of any insignificant obligations are accrued when the related revenue
is recognized. Revenue is recognized only when collection of the resulting
receivable is probable.
PER SHARE INFORMATION
Per share information is based upon the weighted average common shares
outstanding during the period ended August 25, 1996 and the weighted average
common and common equivalent shares outstanding during the period ended
August 27, 1995.
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TRANSLATION OF FOREIGN CURRENCIES
The Company's foreign entities use the local currency as the functional
currency. The Company translates all foreign entity assets and liabilities at
quarter-end exchange rates, all income and expense accounts at average rates,
and records adjustments resulting from translation in a separate component of
shareholders' equity.
2. SALE OF SUBSIDIARY
On August 19, 1996, the Company sold its UK subsidiary, Alpha
Microsystems Great Britain ("AMGB"), to Sanderson Electronics PLC ("Sanderson"),
for 907,792 ordinary shares of Sanderson. In conjunction with this sale, the
Company and Sanderson signed a three year hardware distribution agreement
allowing Sanderson to sell Alpha Microsystems hardware products in the United
Kingdom and Eire. In addition, as part of the sale agreement, the Company has
agreed to negotiate in good faith toward developing a strategic alliance with
Sanderson, whereby Sanderson would distribute and market the Company's
AlphaCONNECT family of products in the United Kingdom and potentially in
Southeast Asia. The Company recognized a gain of approximately $45,000 from
this sale. On September 17, 1996, the Company sold the Sanderson shares for
approximately Pounds 1,350,000 or $2,100,000.
3. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out
method) or market. Inventories net of reserves for excess and obsolete
inventories of $85,000 and $1,726,000 at August 25, 1996 and February 25, 1996,
respectively, are comprised of the following:
(IN THOUSANDS)
-------------------------------------
AUGUST 25, 1996 FEBRUARY 25, 1996
--------------- -----------------
(UNAUDITED) (AUDITED)
Raw materials $231 $116
Work in process 5 --
Finished goods 179 827
---- ----
$415 $943
==== ====
The reserve for excess and obsolete inventory of the Company's UK subsidiary
AMGB at February 25, 1996 was $1,580,000.
4. DEBT
The Company is negotiating a new line of credit with its bank, since
the existing line of credit expires on October 9, 1996. It is management's
belief that a new facility will be established with covenants that acknowledge
the Company's improved financial resources and liquidity position. At August
25, 1996, the Company had no outstanding bank borrowings.
5. NOTE RECEIVABLE
In April 1995, as part of the consideration for selling the Belgian
subsidiary to a member of local management, the Company received a note for
15,000,000 Belgian francs, payable over a two year period from the date of the
note, of which 6,000,000 Belgian francs has been paid.
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6. COMMON STOCK
On May 14, 1996, the Company filed a Registration Statement to register
4,442,069 shares of Common Stock issuable upon the exercise of warrants issued
by the Company, of which 4,082,069 were issued in connection with its November
29, 1993 Shareholder Rights Offering and subsequent Public Offering, and the
remainder were issued in consideration of services rendered to the Company. The
Company's Redeemable Public Warrants were traded on the Nasdaq National Market
under the symbol "ALMIW."
The Company redeemed its Redeemable Public Warrants on June 17, 1996,
pursuant to its notice of redemption issued on May 14, 1996. Prior to the
redemption date, approximately 3,411,000 or 98.5 percent of the outstanding
Redeemable Public Warrants were exercised, resulting in gross proceeds to the
Company of approximately $8,528,000. Certain other warrants were also exercised
during the period, resulting in the additional issuance of approximately 691,000
shares, and approximately $1,569,000 of additional gross proceeds. Total shares
issued from the exercise of all warrants were 4,102,000 (including 50,000 shares
redeemed by the Company's bank), resulting in total gross proceeds of
approximately $10,097,000.
The Redeemable Public Warrants traded on the Nasdaq National Market
under the symbol "ALMIW" ceased trading at the close of the market on June 17,
1996.
7. TAXES
The Company is currently evaluating the effect from the redemption of
warrants on the change in the Company's ownership and therefore on the potential
utilization of the federal and state net operating loss carryforwards. Section
382 of the Internal Revenue Code restricts the utilization of net loss
carryforwards if the ownership change is greater than 50 percent during any
three year period. The Company had federal net operating loss carryforwards
totaling approximately $17,500,000 at February 25, 1996.
8. GOODWILL AND INTANGIBLES
Management routinely evaluates events or conditions that might diminish
the fair market value of intangible assets. Intangible assets include acquired
service contracts, capitalized computer software costs and goodwill. The book
value of goodwill and acquired service contracts is associated with the
acquisition of companies or assets. Software cost is the accumulation of
capitalized development costs or the assigned value of software associated with
an acquisition.
9. CONTINGENCIES
LITIGATION
The Company's current involvement with litigation is as follows:
Carlos Garralda and Andre Warnier, employees of the Company's former
subsidiary, Alpha Microsystems Belgium, S.A. ("AMB"), filed an action in
November 1995 against AMB and the Company in Orange County Superior Court
alleging that AMB is in breach of its obligations under Belgium employment law
to pay salaries for a notice period of up to two years following termination of
employment. The Plaintiffs allege, among other things, that the Company has
alter ego liability for these obligations. The plaintiffs are claiming
compensatory damages in excess of $780,000 and
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unspecified punitive damages. The Court has continued its temporary stay of
this lawsuit in its entirety until January 16, 1997 in order to await the
outcome of virtually identical litigation instituted by the plaintiffs against
AMB in Belgium. Although no assurances as to the outcome of the litigation can
be given, management believes that its defenses to the litigation are
meritorious.
In December 1995, Phoenix Marketing, Inc. dba Electronic Business
Systems, Inc., in response to the Company's collection efforts for a past due
account, filed an amended cross-complaint alleging damages of $3,200,000 for
defective merchandise, loss of business reputation and loss of future business.
Although no assurances as to the outcome of the litigation can be given,
management believes that the plaintiff's claims are without merit. Trial is
presently set for November 1996.
The Company is currently involved in certain other claims and
litigation. The Company does not consider any of these other claims or
litigation to be material. Management has made provisions in the Company's
financial statements for the settlement of lawsuits for which unfavorable
outcomes are both probable and estimable. In the opinion of management, results
of known existing claims and litigation will not have a material adverse effect
on the Company's consolidated financial position, results of operations or cash
flows.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SUMMARY
The following table was derived from the Condensed Consolidated
Statements of Operations as a percentage of net sales for the three and six
month periods ended August 25, 1996, and August 27, 1995:
RELATIONSHIP TO NET SALES
-------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- ------------------------
AUGUST 25, AUGUST 27, AUGUST 25, AUGUST 27,
1996 1995 1996 1995
--------- --------- --------- ---------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 65.9 61.0 66.4 62.5
----- ----- ----- -----
Gross margin 34.1 39.0 33.6 37.5
Selling, general and administrative expense 38.1 32.7 34.3 32.4
Research and development expense 8.3 6.3 8.1 6.2
Interest income (1.0) (0.2) (0.5) (0.3)
Interest expense 0.1 0.2 0.2 0.1
Other (income) expense, net (0.5) (0.1) (0.8) (1.3)
Foreign exchange (gain) loss (0.3) (0.3) (0.2) (0.2)
----- ---- ----- -----
Income (loss) from operations before taxes (10.6) 0.4 (7.5) 0.6
Provision (benefit) for income taxes -- -- -- --
----- ---- ----- ----
Net income (loss) (10.6)% 0.4% (7.5)% 0.6%
===== ==== ===== ====
GENERAL
On April 3, 1996, the Company released its new internet and Intranet
software, AlphaCONNECT. AlphaCONNECT is a software and communications tool for
selectively mining and harvesting data from internet sites and legacy
applications running on corporate Intranets. Harvested data can be used to
create dynamic self-updating Web pages, or converted and delivered to popular
applications that run under Microsoft Windows, Windows 95 or Windows NT.
AlphaCONNECT Messenger, an add-on E-Mail software system for use with
AlphaCONNECT, was introduced on May 15, 1996. Subsequent to quarter end, the
Company announced a new AlphaCONNECT based product called "StockVue", which
provides automated stock quote, stock price, and trading volume line and alerts,
retrieval of company news and SEC filings.
The Company intends to significantly expand its sales and marketing
resources for internet and Intranet products. While it is unlikely that
revenues for these products will increase sufficiently to offset the additional
investment in the short-term, or that revenues from other operations will
offset such investment, management believes that these products will enhance
the long-term outlook of the Company.
The Company had a net loss of $996,000 or $0.11 per share, during the
six months ended August 25, 1996, compared to a net profit of $93,000, or $0.01
per share, during the same period in the prior fiscal year. The results of the
two periods differed primarily due to increased losses incurred at
AlphaHealthCare, the performance of the UK subsidiary in comparison to the same
period in the previous year, decline in the Company's revenue from traditional
products, and investment in the internet/Intranet family of products.
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RESULTS OF OPERATIONS
Six Months Ended August 25, 1996 and August 27, 1995
Net sales decreased $3,926,000, or 22.9%, to $13,224,000 for the six
month period ended August 25, 1996, from $17,150,000 for the six month period
ended August 27, 1995.
Total product revenues declined $2,891,000, or 37.0% to $4,933,000 from
approximately $7,824,000 for the comparable period. The decrease in product
sales was primarily in the domestic market. The Company's traditional product
revenues declined $2,486,000 due to lower demand, and the sale of the UK
subsidiary. Approximately $160,000 of the decline in product
revenues was due to a decline in hardware revenues from the Company's
subsidiary, AlphaHealthCare.
Total service revenue for the six months ended August 25, 1996,
declined $1,035,000, or 11.1%, to $8,291,000 from $9,326,000 for the same period
in the prior year. The decrease was attributable to the sale of the Company's
UK subsidiary during the past fiscal quarter, reductions in support revenue at
the Company's AlphaHealthCare subsidiary, and from reductions in traditional
Alpha Micro Operating System ("AMOS") based service contracts. The Company has
expanded its base of support services, including field maintenance and
networking, and intends to invest additional resources in this area. In
addition, the Company is expanding its domestic service sales and marketing
efforts to capitalize on its current base and further expand revenues from the
open systems generation market.
Total gross margin for the Company for the six months ended August 25,
1996, decreased to 33.6% compared to 37.5% during the same period last year.
Product gross margin for the first half of fiscal 1997 increased to 47.2%
compared to 41.7% during the same period in the prior year. The increase in
product gross margin was primarily due to a relatively greater proportion of
higher margin AMOS products sold both in the domestic and European markets. In
addition, the move to a smaller corporate headquarters where most of the
manufacturing is housed, a reduction in related manufacturing headcount, and
a continued effort to control costs, also contributed to the improvement in
product gross margin.
Service business gross margin declined to 25.5% during the half year
ended August 25, 1996 from 34.0% during the same period in the prior year. The
decline in gross margin was primarily due to reduced support margins at the
Company's AlphaHealthCare subsidiary associated with lower revenues and
severance expense, lower service margins at the Company's UK subsidiary, and
reductions in cost of goods sold, primarily labor costs, not fully offsetting
the revenue decline in the domestic service operations. However, the service
organization reduced selling, general and administrative expenses which assisted
in partially offsetting the overall impact of the service revenue decline. To
improve revenues, the service organization is focusing on obtaining new
contracts for its networking support services, supporting vertical markets with
services, and increasing third-party services. Revenues from these new areas of
focus generally produce lower margins than the Company's traditional service
business.
Selling, general and administrative expenses decreased $1,020,000 to
$4,541,000 for the six months ended August 25, 1996, from $5,561,000 for the
comparable period in the prior fiscal year. Approximately $1,151,000 of the
reduction in selling, general and administrative expenses was attributable to a
reduction in headcount and a more vigilant approach to expense control in areas
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relating to the traditional business. This was partially offset by increases
in the Company's investment in resources for the internet and Intranet markets,
and the increased expense related to AlphaHealthCare. In addition, the absence
of the UK subsidiary during the last month of the current period contributed to
a decrease of approximately $230,000 in selling, general and administrative
expenses.
Research and development expenses incurred for the six months ended
August 25, 1996 did not materially change from the same period in the prior
fiscal year. Approximately $283,000 of new software development expenses have
been capitalized in the first half of the current fiscal year, as compared to
$541,000 in the comparable period of the prior fiscal year. Research and
development expenses as a percentage of product sales increased to 21.7 percent
in the quarter just ended from 13.7 percent during the comparable period in the
prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended August 25, 1996, the Company's working
capital increased by $9,600,000 to $10,422,000 from $822,000 at February 25,
1996. Net cash and cash equivalents increased during the six month period ended
August 25, 1996 by $7,848,000 to $8,353,000, primarily due to the redemption of
warrants. Net cash used in operating activities during the first half of the
current fiscal year was $43,000 compared to $512,000 net cash provided by the
operations during the same period in the prior fiscal year.
The Company is negotiating a new line of credit with its bank, since
the existing line of credit expires on October 9, 1996. It is management's
belief that a new facility will be established with covenants that acknowledge
the Company's improved financial resources and liquidity position. At August
25, 1996, the Company had no outstanding bank borrowings.
The Company redeemed its Redeemable Public Warrants on June 17, 1996,
pursuant to its notice of redemption issued on May 14, 1996. Prior to the
redemption date, approximately 3,411,000 or 98.5 percent of the outstanding
Redeemable Public Warrants were exercised, resulting in gross proceeds to the
Company of approximately $8,528,000. Certain other warrants were also exercised
during the period, resulting in the additional issuance of approximately 691,000
shares and approximately $1,569,000 of additional gross proceeds. Total shares
issued from the exercise of all warrants were approximately 4,102,000 (including
50,000 shares redeemed by the Company's bank), resulting in total gross proceeds
of approximately $10,097,000.
The Company believes that its current cash position, augmented by
operating activities, will provide it with sufficient resources to finance its
working capital requirements for the remainder of the fiscal year. The
Company's future capital requirements depend on a variety of factors, including,
but not limited to, the rate of decline in the traditional business; the
success, timing, and amount of investment required to penetrate the
internet/Intranet markets; and service revenue growth or decline.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of Shareholders of Alpha Microsystems was held on
August 13, 1996. At the Annual Meeting, all of management's nominees listed in
the Proxy Statement were elected and there was no solicitation in opposition to
such nominees. Voting was as follows:
WITHHOLD
DIRECTORS FOR AUTHORITY ABSTAIN
--------- --------- --------- -------
Clarke E. Reynolds 9,050,471 844,418 943
Douglas J. Tullio 9,214,557 680,332 943
Rockell N. Hankin 9,054,037 840,852 943
John F. Glade 9,243,282 651,607 943
Richard E. Mahmarian 9,046,487 848,402 943
Additionally, the shareholders approved each additional matter
presented at the meeting. The proposal to approve the Company's 1996
Nonemployee Director Compensation Plan, pursuant to which the directors have the
option to receive stock in lieu of cash compensation, received 4,002,496 votes
for approval and 1,042,487 votes against approval with 168,340 abstentions and
4,682,509 broker non-votes. The proposal to approve the Company's Employee
Stock Purchase Plan received 4,349,076 votes for approval and 745,242 votes
against approval with 118,205 abstentions and 4,683,309 broker non-votes. The
proposal to approve an amendment to the Company's 1993 Employee Stock Option
Plan to increase the number of shares of Common Stock authorized for issuance
under such plan by 375,000 shares to an aggregate of 925,000 shares received
3,709,397 votes for approval and 1,040,053 votes against approval with 143,115
abstentions and 5,003,267 broker non-votes.The proposal to ratify the
appointment of Ernst & Young, LLP, as independent auditors of the Company and
its subsidiaries for the year ending February 23, 1997 received 9,648,785 votes
for approval and 183,043 votes against approval, with 64,061 abstentions.
6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index.
(b) Form 8-K filed on August 23, 1996, reporting the sale of the
entire issued share capital of Alpha Microsystems (Great Britain) Limited to
Sanderson Electronics PLC, including Unaudited Pro Forma Condensed Consolidated
Balance Sheet at May 26, 1996, Unaudited Pro Forma Condensed Consolidated
Statement of Operations for the Year Ended February 25, 1996, and Unaudited Pro
Forma Condensed Consolidated Statement of Operations for the Three Months Ended
May 26, 1996.
Form 8-K filed on September 27, 1996, reporting the divestiture of
Sanderson shares.
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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.
ALPHA MICROSYSTEMS
(Registrant)
Date: October 9, 1996 By: /s/ DOUGLAS J. TULLIO
----------------------------
Douglas J. Tullio
President and Chief
Executive Officer
Date: October 9, 1996 By: /s/ MICHAEL J. LOWELL
----------------------------
Michael J. Lowell
Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Number Description of Documents
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27 Financial Data Schedule.
-15-