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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 APRIL 25, 1997
[ ] 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 0-21053
PROCOM TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
California 33-0268063
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2181 Dupont Drive, Irvine, CA 92612
(Address of principal executive office) (Zip Code)
(714) 852-1000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
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 in 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
The number of shares of Common Stock, $.01 par value, outstanding on
May 31, 1997, was 11,017,087.
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PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements.
PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
APRIL 25, JULY 26,
1997 1996
--------- --------
(UNAUDITED) (AUDITED)
Current assets:
Cash................................................... $ 1,741,000 $ 793,000
Marketable securities.................................. 11,142,000 --
Accounts receivable, less allowance
for doubtful accounts and sales
returns of $930,000 and
$373,000, respectively................................ 14,918,000 9,234,000
Inventories, net....................................... 9,179,000 9,760,000
Deferred income taxes.................................. 967,000 605,000
Prepaid expenses....................................... 636,000 204,000
Other current assets................................... 30,000 12,000
----------- -----------
Total current assets........................... 38,613,000 20,608,000
Property and equipment, net.............................. 748,000 476,000
Other assets............................................. 30,000 28,000
----------- -----------
Total assets................................... $39,391,000 $21,112,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit......................................... $ -- $ 4,185,000
Accounts payable....................................... 8,556,000 8,254,000
Accrued expenses and other current liabilities......... 553,000 471,000
Accrued compensation................................... 1,502,000 2,596,000
Capital lease obligations.............................. 28,000 34,000
Income taxes payable................................... 1,329,000 436,000
------------ -----------
Total current liabilities...................... 11,968,000 15,976,000
----------- -----------
Total liabilities.............................. 11,968,000 15,976,000
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value;
10,000,000 shares authorized, no
shares issued and outstanding........................ --- ---
Common stock, $.01 par value;
65,000,000 shares authorized,
9,000,000 and 11,010,200 shares
issued and outstanding,
respectively......................................... 110,000 3,000
Additional paid in capital............................. 15,977,000 ---
Retained earnings...................................... 11,336,000 5,133,000
------------ -----------
Total shareholders' equity..................... 27,423,000 5,136,000
------------ -----------
Total liabilities and shareholders' equity............... $ 39,391,000 $21,112,000
============ ===========
The accompanying notes are an integral part of these
consolidated financial statements.
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PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTER ENDED NINE MONTHS ENDED
------------- -----------------
APRIL 25, APRIL 26, APRIL 25, APRIL 26,
1997 1996 1997 1996
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Net sales.................. $ 28,071,000 $ 17,775,000 $ 79,597,000 $ 48,851,000
Cost of sales.............. 18,691,000 12,263,000 53,014,000 34,344,000
------------ ------------ ------------ ------------
Gross profit.......... 9,380,000 5,512,000 26,583,000 14,507,000
Selling, general and
administrative expenses. 4,974,000 3,829,000 13,943,000 10,037,000
Research and development
expenses................ 979,000 459,000 2,513,000 1,137,000
------------ ------------ ------------ ------------
Operating income...... 3,427,000 1,224,000 10,127,000 3,333,000
Other income (expense) ....
Interest income.. 167,000 --- 208,000 ---
Interest (expense) ..... -- (51,000) (131,000) (172,000)
------------ ----------- ------------ ------------
Income before income taxes 3,594,000 1,173,000 10,204,000 3,161,000
Provision for income taxes 1,428,000 457,000 4,001,000 1,231,000
------------ ----------- ------------ ------------
Net income $ 2,166,000 $ 716,000 $ 6,203,000 $ 1,930,000
============ =========== ============ ============
Net income per share $ 0.19 $ 0.08 $ 0.61 $ 0.21
============ =========== ============ ============
Weighted average number of
shares.................. 11,199,000 9,172,000 10,112,000 9,172,000
============ =========== ============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
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PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
APRIL 25, APRIL 26,
1997 1996
--------- ---------
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net income $ 6,203,000 $ 1,930,000
Adjustments to reconcile net
income to net cash
provided by
operating activities:
Depreciation and amortization 225,000 160,000
Changes in assets and
liabilities:
Accounts receivable (5,684,000) (2,948,000)
Inventories 581,000 (7,798,000)
Deferred income taxes (362,000) (185,000)
Prepaid expenses (432,000) (120,000)
Other current assets (18,000) (267,000)
Other assets (2,000) 185,000
Accounts payable 302,000 8,181,000
Accrued expenses 82,000 (109,000)
Accrued compensation (1,094,000) 1,004,000
Income taxes payable 893,000 761,000
----------- -----------
Net cash provided by
operating activities 694,000 794,000
----------- - ----------
Cash flows from investing activities:
Purchase of property and (225,000)
equipment (497,000)
Cash flows from financing activities:
Principal payments for capital
lease obligations (6,000) (6,000)
Public offering of 2,000,000
shares 16,059,000 ---
Exercise of stock options 25,000 ---
Borrowings on line of credit 38,276,000 44,685,000
Payments made on line of credit (42,461,000) (45,561,000)
------------ ------------
Net cash provided by
(used in) financing
activities 11,893,000 (882,000)
Increase (decrease) in cash 12,090,000 (313,000)
------------ ------------
Cash at beginning of period 793,000 212,000
------------ ------------
Cash and marketable commercial paper at end of
period $ 12,883,000 $ (101,000)
============ =============
Supplemental disclosures of cash flow information:
Cash paid during the periods for:
Interest $ 134,000 $ 134,000
Income taxes $ 3,388,000 $ 773,000
The accompanying notes are an integral part of these
consolidated financial statements.
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PROCOM TECHNOLOGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
APRIL 25, 1997 AND APRIL 26, 1996
NOTE 1. GENERAL
The accompanying financial information is unaudited, but in the opinion of
management, reflects all adjustments (which include only normally recurring
adjustments) necessary to present fairly the financial position of Procom
Technology, Inc. and its consolidated subsidiary (the "Company") as of the dates
indicated and the results of operations for the periods then ended. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. While the Company believes that the disclosures are
adequate to make the information presented not misleading, the financial
information should be read in conjunction with the audited financial statements,
and notes thereto for the three years ended July 26, 1996 included in the
Company's Registration Statement on Form S-1 (Securities and Exchange Commission
File No. 333-15109). Results for the interim period are not necessarily
indicative of the results for the entire year.
NOTE 2. SHAREHOLDERS' EQUITY.
On December 23, 1996, the Company completed an offering of 2,000,000 shares of
its common stock at an offering price of $9 per share (the "Offering"). The net
proceeds from the offering were approximately $ 16,059,000 after the payment of
underwriting discounts and various offering expenses. Net proceeds were used to
pay down the Company's short-term line of credit, and the balance remaining has
been invested in commercial paper with short-term maturities. As set forth in
the Registration Statement, shareholders of the Company approved a 3 for 1 stock
split, effective November 13, 1996, and a change in common stock from no par
value to par value of $ .01 per share. During the quarter ended January 24,
1997, $89,700 was transferred to paid-in capital from common stock to reflect
the change in par value.
NOTE 3. NET INCOME PER SHARE.
Net income per share has been computed using the weighted average number of
shares outstanding during the periods presented. Following the principles of APB
25, the Company has included the dilutive value of stock options outstanding in
the calculation of weighted average shares outstanding. Fully diluted net income
per share is not presented because the difference between primary and fully
dilutive net income per share is not material. The Company plans to adopt SFAS
No. 123, "Accounting for Stock Based Compensation", utilizing the disclosure
alternative under the Statement beginning with the Company's fiscal 1997 annual
financial statement.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
OVERVIEW
The Company was formed in 1987. The Company began producing aftermarket
disk drive upgrade products for computer products sold by other manufacturers,
and such upgrade products continue to be an important area of focus of the
Company's business. In fiscal 1994, the Company introduced its CD server and
array product line while continuing to provide a broad line of disk drive
upgrade products. In addition, during fiscal 1994, the Company began utilizing
computer resellers and VARs as its primary sales channel instead of mass
merchants and national distributors and commenced shipment of its first RAID
arrays and fault tolerant, high performance storage servers.
The Company generally records sales upon product shipment. The Company
presently maintains agreements with many of its computer resellers, VARs and
distributors that allow limited returns (including stock balancing) and price
protection privileges. The Company has in the past experienced high return
rates. The Company maintains reserves for anticipated returns (including stock
balancing) and price protection privileges. These reserves are adjusted at each
financial reporting date to state fairly the anticipated returns (including
stock balancing) and price protection claims relating to each reporting period.
Generally, the reserves will increase as sales and corresponding returns
increase. In addition, under a product evaluation program established by the
Company, computer resellers, VARs, distributors and end users generally are able
to purchase products on a trial basis and return the products within a specified
period if they are not satisfied. Evaluation units are not recorded as sales
until the customer has paid for such units.
All of the Company's sales are denominated in U.S. dollars, and
accordingly, the Company does not believe that fluctuations in foreign exchange
rates have had or will have a material adverse effect on the Company's results
of operations or financial condition, except to the extent that such
fluctuations could cause the Company's products to become relatively more
expensive to end users in a particular country, leading to a reduction of sales
in that country.
Historically, the Company's gross margins have experienced significant
volatility. The Company's gross margins vary significantly by product line, and,
therefore, the Company's overall gross margin varies with the mix of products
sold by the Company. The Company's markets are also characterized by intense
competition and declining average unit selling prices as products mature over
the course of the relatively short life cycle of individual products, which have
often ranged from six to twelve months. In addition, the Company's gross margins
may be adversely affected by availability and price increases associated with
key products and components from the Company's suppliers, some of which have
been in short supply, and inventory obsolescence resulting from older generation
products or the unexpected discontinuance of third party components. Finally,
the Company's margins vary with the mix of its distribution channels and with
general economic conditions.
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IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Management Discussion and Analysis contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 (the "Securities
Act") 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 harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that such forward-looking statements involve risks
and uncertainties, including, without limitation, risks disclosed in this
Management Discussion and Analysis and other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission. The Company's
actual results may differ significantly from the results discussed in the
forward-looking statements.
The forward-looking statements and associated risks may include or relate to:
(a) the continuing increase in the company net sales and gross profits; (b) the
increases in the Company's efforts to expand product lines, sales channels and
existing infrastructure, and the costs of such efforts; (c) the increases in the
Company's efforts to develop new product categories and compatibilities of
existing products with a wide range of operating systems and the costs of such
efforts; and (d) other forward-looking statements included in the "General
Comments" section below and elsewhere herein.
The forward-looking statements are further qualified by important factors
that could cause actual results to differ materially from those in the
forward-looking statements, including, without limitation, the following: (a)
the Company's ability to successfully develop, market and sell its products in
an intensely competitive industry; (b) the Company's ability to manage and
finance the many challenges inherent in rapid growth; (c) the Company's ability
to manage relationships with its customers and vendors, to minimize inventory
levels, return rates and losses due to technological obsolescence; and (d) the
factors and risks included in the "General Comments" section below and
elsewhere herein.
RESULTS OF OPERATIONS
The following table sets forth the Company's statement of operations data as
a percentage of net sales for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
APRIL 25, APRIL 26, APRIL 25, APRIL 26,
1997 1996 1997 1996
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Net sales........................ 100.0% 100.0 100.0 100.0
Cost of sales.................... 66.6 69.0 66.6 70.3
-------- ------- ------- -------
Gross profit................... 33.4 31.0 33.4 29.7
Selling, general and administrative
expenses....................... 17.7 21.5 17.5 20.5
Research and development expenses
3.5 2.6 3.2 2.3
-------- ------- ------- -------
Operating income............... 12.2 6.9 12.7 6.9
Interest income and expense, net. 0.6 (0.3) 0.1 (0.4)
-------- ------- ------- -------
Income before income
taxes........................ 12.8 6.6 12.8 6.5
Provision for income
taxes.......................... 5.1 2.6 5.0 2.5
-------- ------- ------- ------
Net income .................... 7.7 4.0 7.8 4.0
======== ======= ======= ======
QUARTER AND NINE MONTHS ENDED APRIL 25, 1997 COMPARED TO QUARTER AND NINE MONTHS
ENDED APRIL 26, 1996
Net Sales
Net sales increased 57.9% from $17.8 million for the quarter ended
April 26, 1996 to $28.1 million for the quarter ended April 25, 1997. This
increase was primarily due to increases in sales of CD servers and arrays and
sales of disk drive upgrade subsystems for desktop and notebook computers and,
to a lesser extent, increases in net sales of RAID high capacity storage
devices. For the quarter ended April 25, 1997, sales of the Company's Integrated
Network Storage Products, which include CD servers and arrays as well as RAID
Storage Systems, comprised approximately 49% of net sales, while sales of disk
drive upgrade subsystems comprised approximately 51% of net sales. International
sales increased slightly from $6.3 million, or approximately 12.8% of net sales,
in the quarter ended April 26, 1996 to $6.7 million, or approximately 8.4% of
net sales, in the quarter ended April 25, 1997. Net sales for the nine months
ended April 25, 1997 increased approximately 62.9% over net sales for the same
period in fiscal 1996 as a result of increased sales of the Company's Integrated
Network Storage Products as well as increased sales of disk drive upgrade
subsystems.
Gross Profit
The Company's gross margins increased from 31.0% and 29.7% of net sales
for the quarter and nine months ended April 26, 1996 compared to 33.4% of net
sales for both the quarter and nine months ended April 25, 1997. These increases
were primarily the result of higher margins on increased sales of CD servers and
arrays. In addition, the Company realized
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higher margins on increased sales of disk drive upgrade subsystems for notebook
computers and RAID storage products, and such increases more than offset the
effect of competition and price erosion typical in the disk drive upgrade
industry.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $3,829,000
for the quarter ended April 26, 1996 to $4,974,000 for the quarter ended April
25, 1997, while such expenses increased from $10,037,000 for the first nine
months of fiscal 1996 to $13,943,000 for the same period in fiscal 1997. These
expenses represented 21.5% and 17.7% of net sales in the quarters ended April
26, 1996 and April 25, 1997, respectively and 20.5% and 17.5% for the nine
months ended April 26, 1996 and April 25, 1997, respectively. The dollar
increase in selling, general and administrative expenses for the first nine
months of fiscal 1997 was primarily a result of increased marketing and
promotional costs and increased personnel and related costs necessary to support
the Company's growth in net sales. The decrease in selling, general and
administrative expenses as a percentage of net sales for the third quarter and
first nine months of fiscal 1997 was due primarily to a decrease in accrued
management bonuses from $ 718,000 and $1,954,000 for the third quarter and first
nine months of fiscal 1996 to $125,000 and $375,000 for the same periods of
fiscal 1997. Bad debt expense for the nine months of fiscal 1997 was
approximately $357,000 or .45% of net sales, compared to approximately $243,000,
or .49% of net sales, for the first nine months of fiscal 1996. The Company
anticipates that the dollar amount of its selling, general and administrative
expenses will increase as the Company continues to expand its efforts to
penetrate certain sales channels and regions and continues to strengthen and
upgrade its existing management information and telecommunications systems.
Research and Development
Research and development expenses increased 113.3% from $459,000 for
the quarter ended April 26, 1996 to $979,000 for the quarter ended April 25,
1997. These expenses represented 2.6% and 3.5% of net sales for each of the
quarters ended April 26, 1996 and April 25, 1997, respectively. Research and
development expenses also increased during the first nine months of fiscal 1996
from $1,137,000, or 2.3% of net sales, to $2,513,000, or 3.2% of net sales, for
the first nine months of fiscal 1997. These increases were primarily due to
continued increases in additional hardware developers and software programmers,
including the use of independent contract programmers and increased related
support costs to develop additional products and enhance existing product
features. The Company anticipates that the dollar amount of its research and
development expenses will continue to increase, and also may increase as a
percentage of net sales, with the addition of dedicated engineering resources to
develop new product categories, to promote the compatibility of the Company's
products with a wide range of hardware platforms and network topologies and to
further develop MESA, the Company's proprietary client/server management storage
architecture. In addition, the Company intends to continue to update software
drivers so that the Company's CD servers and arrays may function with a variety
of hardware platforms and network operating systems. To date, all of the
Company's software development costs have been expensed as incurred, as the
impact of capitalizing software costs under Financial Accounting Standard No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed" would have been immaterial to the Company's financial
statements.
Interest Income and Expense
As a result of the initial public offering of 2,000,000 shares of the
Company's common stock completed in December 1996, the Company received net
proceeds, after underwriting discounts and offering costs, of approximately $
16.0 million. As a result of the offering net proceeds, the Company has, in late
December 1996, both reduced amounts outstanding under its line of credit,
thereby reducing interest expense, and invested the remaining proceeds in
short-term investment grade commercial paper, thereby earning interest income of
approximately $ 167,000 for the quarter ended April 25, 1997. Net interest
expense for the first nine months of fiscal 1997 was $131,000, a reduction when
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compared to $172,000 for the first nine months of fiscal 1996 as the Company
reduced amounts understanding under its line of credit.
Income Taxes
The Company's effective tax rates for the two quarters ended April 25,
1997 and April 26, 1996 were approximately 39.7% and 38.9% of pretax income,
respectively, which approximate the federal and state statutory rates with
modest reductions for benefits resulting from the Company's use of its foreign
sales corporation (which benefit was reduced in the current fiscal year due to a
reduced proportion of sales to foreign customers) and benefits accruing from the
increases in research and development activity, causing an increased research
and development credit.
General Comments
The Company's results of operations have in the past varied
significantly and are likely in the future to vary significantly as a result of
a number of factors, including the mix of products sold, the volume and timing
of orders received during the period, the timing of new product introductions by
the Company and its competitors, product line maturation, the impact of price
competition on the Company's average selling prices, the availability and
pricing of components for the Company's products, changes in distribution
channel mix and product returns or price protection charges. Many of these
factors are beyond the Company's control. Although the Company has experienced
growth in sales in recent periods, there can be no assurance that the Company
will experience growth in the future or be profitable on an operating basis in
any future period. In addition, due to the short product life cycles that
characterize the Company's markets, a significant percentage of the Company's
sales each quarter may result from new products or product enhancements
introduced in that quarter. Since the Company relies on new products and product
enhancements for a significant percentage of sales, failure to continue to
develop and introduce new products and product enhancements or failure of these
products or product enhancements to achieve market acceptance could have a
material adverse effect on the Company's business, financial condition and
results of operations. Historically, as the Company has planned and implemented
new products, it has experienced unexpected reductions in sales and gross profit
of older generation products as customers have anticipated new products. These
reductions have in the past given and could continue to give rise to charges for
obsolete or excess inventory, returns of older generation products by computer
resellers, VARs and distributors or substantial price protection charges. From
time to time, the Company has experienced and may in the future experience
inventory obsolescence resulting from the unexpected discontinuance of third
party components, such as disk drives, included in the Company's products. To
the extent the Company is unsuccessful in managing product transitions, it may
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company also has historically capitalized on short-term market
opportunities for volume purchases of certain components at favorable prices.
For example, in the three fiscal quarters ended April 25, 1997, the Company has
capitalized on several opportunities to sell a significant volume of high
capacity disk drive upgrade products purchased at below market prices, which
have resulted in price advantages to the Company that enhanced the Company's
sales and results of operations for those quarters. There can be no assurance
that the Company will be able to capitalize on such opportunities in the future.
In addition, the Company's fiscal fourth quarter sales have historically been
strong, with large increases on a year to year basis. There can be no assurance,
however, that there will be a continuing increase in net sales for the quarter
ended July 31, 1997. See "Reports on Form 8-K" below.
LIQUIDITY AND CAPITAL RESOURCES
In November 1994, the Company instituted a revolving line of credit with
Finova Capital ("Finova"). The facility was amended in November 1996 to provide
the Company with up to $7.0 million in working capital loans, based upon the
Company's accounts receivable and
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inventory levels. The line of credit accrues certain commitment fees, unused
facility fees and interest on outstanding amounts at the lender's prime rate
(8.25% at April 25, 1997) plus 1.5%. Finova also makes available to the Company
various flooring commitments pursuant to which the Company may finance the
purchase of up to $13.0 million in inventory (less any amounts outstanding in
working capital loans) from certain of the Company's vendors who have credit
arrangements with Finova. As of April 25, 1997, there was no balance outstanding
under the credit facility, and $ 4.75 million outstanding under the flooring
arrangements. The agreement governing the credit facility requires the Company
to maintain certain financial covenants (including the maintenance of working
capital of at least $500,000), minimum levels of tangible net worth and minimum
levels of liquidity. As of April 25, 1997, the Company was in material
compliance with the covenants of the Finova line of credit. The line is secured
by substantially all of the assets of the Company. The line of credit expires on
November 29, 1997, but automatically renews for successive one year periods
unless terminated by either party within a specified period in advance of the
automatic renewal date.
As of April 25, 1997, the Company had cash and marketable securities
totalling $12.9 million and $7.0 million of availability under its line of
credit. The Company believes that its existing cash, marketable securities and
available credit under its existing line of credit, will be sufficient to meet
anticipated cash requirements for at least the next twelve months. As of April
25, 1997, the Company had no material commitments for capital expenditures. The
Company has expended $497,000 during the nine months ended April 25, 1997 for
various fixed assets, including capital equipment to increase production
capacity to support the Company's plans for growth. While the Company has no
present plans, agreements or commitments to make any acquisitions, the Company
may acquire businesses, products and technologies that are complementary to
those of the Company. In the event the Company's plans require more capital than
is presently anticipated, the Company's remaining cash balances and marketable
securities may be consumed and additional sources of liquidity such as debt or
equity financings may be required to meet working capital needs. There can be no
assurance that additional capital beyond the amounts currently forecasted by the
Company will not be required nor that any such required additional capital will
be available on reasonable terms, if at all, at such time or times as required
by the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index. A Statement re Computation of Per Share Earnings
is presented in the Notes to the Consolidated Financial Statements
dated April 25, 1997.
(b) A Report on Form 8-K was filed with the Securities and Exchange
Commission on June 2, 1997 (the "Report") which reported a change
in the Company's fiscal reporting periods. The Report noted that
the Company's fiscal quarters will now end on the last calendar day
of each quarter, and the Company's fiscal year end will be July 31,
which will result in four additional sales days in the quarter and
year ending July 31, 1997. Finally, the Report advised that the
effect of the change will be reflected in a transition report
included in the Company's Report on Form 10-K for the year ended
July 31, 1997. No financial statements or other exhibits were filed
with or included in the Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Irvine, County of
Orange, State of California, on the 9th day of June, 1997.
PROCOM TECHNOLOGY, INC.
By: /s/ Alex Razmjoo
-----------------------------
Alex Razmjoo
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report on Form 10-Q has been signed below by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Alex Razmjoo Chairman of the Board, President and June 9, 1997
------------------------------ Chief Executive Officer (Principal
Alex Razmjoo Executive Officer)
/s/ Alex Aydin Executive Vice President, Finance and June 9, 1997
------------------------------ Administration (Principal Financial
Alex Aydin Officer)
/s/ Frederick Judd Vice President, Finance and General June 9, 1997
------------------------------ Counsel (Principal Accounting Officer)
Frederick Judd
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INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBER
NUMBER DESCRIPTION PAGE
- ------- ----------- -----------
3.1+ Amended and Restated Articles of Incorporation of the Company...............................
3.2+ Amended and Restated Bylaws of the Company..................................................
10.1+ Form of Indemnity Agreement between the Company and each of its executive
officers and directors......................................................................
10.2 Form of Amended and Restated Procom Technology, Inc. 1995 Stock Option
Plan........................................................................................
10.3+ Amended and Restated Executive Employment Agreement, dated as of October
28, 1996, between the Company and Alex Razmjoo..............................................
10.4+ Amended and Restated Executive Employment Agreement, dated as of October
28, 1996, between the Company and Frank Alaghband...........................................
10.5+ Amended and Restated Executive Employment Agreement, dated as of October
28, 1996, between the Company and Alex Aydin................................................
10.6+ Amended and Restated Executive Employment Agreement, dated as of October
28, 1996, between the Company and Nick Shahrestany..........................................
10.7+ Form of Registration Rights Agreement.......................................................
10.8+ Lease, dated February 10, 1992, between 2181 Dupont Associates and the
Company, as amended.........................................................................
10.9+ Loan and Security Agreement, dated November 18, 1994, by and between the
Company and FINOVA Capital Corporation, as amended..........................................
27.1 Financial Data Schedule.....................................................................
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+ Previously filed
13