Delaware
|
87-0273300
|
(State
of incorporation or organization)
|
(I.R.S.
Employer Identification
No.)
|
PART
I – FINANCIAL INFORMATION
|
||
Item
1 - Financial Statements
|
||
Condensed
Consolidated Balance Sheets
|
1
|
|
Condensed
Consolidated Statements of Income
|
2
|
|
Condensed
Consolidated Statements of Cash Flows
|
3
|
|
Notes
to Condensed Consolidated Financial Statements
|
4
|
|
Item
2 -
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
Item
3 -
|
Quantitative
and Qualitative Disclosures About Market Risk
|
34
|
Item 4T - Controls and Procedures |
35
|
|
PART
II – OTHER INFORMATION
|
||
Item
1 – Legal Proceedings
|
36
|
|
Item
6 – Exhibits
|
37
|
|
SIGNATURES
|
38
|
November 30,2009
|
||||||||
|
(Unaudited)
|
August 31, 2009
|
||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 4,186 | $ | 1,713 | ||||
Receivables:
|
||||||||
Trade,
less allowance for doubtful accounts
|
41,407 | 29,463 | ||||||
Others
|
1,996 | 2,184 | ||||||
Inventories,
net
|
5,983 | 4,410 | ||||||
Prepaid
expenses and other
|
1,698 | 2,184 | ||||||
Deferred
tax asset - current
|
933 | 680 | ||||||
Total
current assets
|
56,203 | 40,634 | ||||||
Property
and equipment, net
|
1,331 | 1,390 | ||||||
Intangible
assets, net
|
10,864 | 11,235 | ||||||
Goodwill
|
11,441 | 11,424 | ||||||
Deferred
tax asset- long term
|
388 | 459 | ||||||
Other
assets
|
113 | 131 | ||||||
Total
assets
|
$ | 80,340 | $ | 65,273 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
Liabilities
|
||||||||
Line
of credit
|
$ | 14,909 | $ | 9,035 | ||||
Accounts
payable
|
33,599 | 25,390 | ||||||
Current
portion of long term debt - related party
|
728 | 1,213 | ||||||
Income
taxes payable
|
1,012 | 590 | ||||||
Accrued
liabilities
|
6,579 | 6,723 | ||||||
Deferred
revenue
|
1,895 | 2,103 | ||||||
Total
current liabilities
|
58,722 | 45,054 | ||||||
Deferred
tax liability- long term
|
2,673 | 2,816 | ||||||
Accrued
liabilities
|
184 | 180 | ||||||
Total
liabilities
|
61,579 | 48,050 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
Equity
|
||||||||
Common
stock $0.01 par value; 25,000,000 shares authorized; 18,169,679 and
18,059,679 shares issued and 15,305,090 and 15,195,090, outstanding
at November 30, 2009 and August 31, 2009,
respectively
|
181 | 181 | ||||||
Additional
paid-in capital
|
20,880 | 20,794 | ||||||
Retained
earnings
|
3,078 | 1,671 | ||||||
Accumulated other
comprehensive income
|
218 | 173 | ||||||
24,357 | 22,819 | |||||||
Less:
treasury stock, at cost, 2,864,589 shares
|
(5,596 | ) | (5,596 | ) | ||||
Total
stockholders' equity
|
18,761 | 17,223 | ||||||
Total
liabilities and stockholders' equity
|
$ | 80,340 | $ | 65,273 |
For the Three Months Ended November 30,
|
||||||||
2009
|
2008
|
|||||||
Revenues
|
||||||||
Procurement
services
|
$ | 59,382 | $ | 56,359 | ||||
Service
and consulting
|
14,195 | 13,660 | ||||||
Total
Revenues
|
73,577 | 70,019 | ||||||
Cost
of Sales
|
||||||||
Cost
of procurement services
|
53,173 | 50,392 | ||||||
Service
and consulting
|
9,860 | 10,833 | ||||||
Total
Cost of Sales
|
63,033 | 61,225 | ||||||
Gross
Profit
|
||||||||
Procurement
services
|
6,209 | 5,967 | ||||||
Service
and consulting
|
4,335 | 2,827 | ||||||
Total
Gross Profit
|
10,544 | 8,794 | ||||||
Operating
expenses:
|
||||||||
Selling,
general, and administrative expenses
|
7,278 | 6,178 | ||||||
Rent
expense – related parties
|
154 | 152 | ||||||
Depreciation
and amortization
|
596 | 534 | ||||||
Total
operating expenses
|
8,028 | 6,864 | ||||||
Operating
income
|
2,516 | 1,930 | ||||||
Other
expense (income):
|
||||||||
Interest
income – other
|
(11 | ) | (5 | ) | ||||
Interest
expense
|
145 | 254 | ||||||
Other
expense
|
(8 | ) | 4 | |||||
Income
before income taxes
|
2,390 | 1,676 | ||||||
Provision
for income taxes
|
983 | 670 | ||||||
Net
income
|
$ | 1,407 | $ | 1,006 | ||||
Net
income per common share
|
||||||||
Basic
and Diluted
|
$ | 0.09 | $ | 0.07 | ||||
Weighted
Average Shares Outstanding
|
||||||||
Basic
|
14,914,912 | 14,578,827 | ||||||
Diluted
|
15,112,667 | 14,632,335 |
For the Three Months Ended November 30,
|
||||||||
2009
|
2008
|
|||||||
Cash
Flows From Operating Activities
|
||||||||
Net
income
|
$ | 1,407 | $ | 1,006 | ||||
Adjustments
to Reconcile Net Income to Net
|
||||||||
Cash
Used In Operating Activities
|
||||||||
Depreciation
and amortization
|
188 | 189 | ||||||
Amortization
related to intangible assets
|
408 | 345 | ||||||
Deferred
income taxes (benefit)
|
(338 | ) | (216 | ) | ||||
Stock-based
compensation
|
86 | 42 | ||||||
Indemnification
of professional fees
|
- | (270 | ) | |||||
Changes
In Operating Assets and Liabilities
|
||||||||
Receivables
|
(11,735 | ) | (2,670 | ) | ||||
Inventories
|
(1,573 | ) | (1,814 | ) | ||||
Prepaid
expenses and other assets
|
528 | 189 | ||||||
Accounts
payable
|
8,210 | 2,519 | ||||||
Income
taxes payable
|
422 | 477 | ||||||
Accrued
liabilities
|
(195 | ) | (412 | ) | ||||
Deferred
revenue
|
(235 | ) | (144 | ) | ||||
Net
Cash Used In Operating Activities
|
(2,827 | ) | (759 | ) | ||||
Cash
Flows From Investing Activities
|
||||||||
Purchases
of property and equipment
|
(129 | ) | (78 | ) | ||||
Acquisition
of businesses, net of cash acquired
|
- | (165 | ) | |||||
Net
Cash Used In Investing Activities
|
(129 | ) | (243 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Net
increase in line of credit
|
5,874 | 1,474 | ||||||
Repayment
of debt
|
(497 | ) | (237 | ) | ||||
Net
Cash Provided By Financing Activities
|
5,377 | 1,237 | ||||||
Effect
of rate changes on cash
|
53 | - | ||||||
Net
Increase in Cash
|
2,473 | 235 | ||||||
Beginning
Cash
|
1,713 | 2,025 | ||||||
Ending
Cash
|
$ | 4,186 | $ | 2,260 | ||||
Supplemental
Disclosure of Cash Flow Information
|
||||||||
Cash
paid during the period for:
|
||||||||
Income
taxes
|
$ | 857 | $ | 209 | ||||
Interest
|
$ | 132 | $ | 146 | ||||
Supplemental
Schedule of Non Cash Investing and Financing Activities
|
||||||||
Indemnification
receivable due from former shareholders settled by the
amounts due to former shareholders
|
$ | - | $ | 631 |
Balance
at August 31, 2009
|
$ | 11,424 | ||
Foreign
currency translation effect of Canadian goodwill
|
17 | |||
Balance
at November 30, 2009
|
$ | 11,441 |
November 30, 2009
|
August 31, 2009
|
|||||||
Customer
relationships
|
$ | 14,098 | $ | 14,098 | ||||
Noncompete
agreements
|
398 | 398 | ||||||
Trademarks
|
169 | 169 | ||||||
Foreign
currency translation adjustment
|
41 | - | ||||||
14,706 | 14,665 | |||||||
Accumulated
amortization
|
(3,838 | ) | (3,430 | ) | ||||
Foreign
currency translation adjustment
|
(4 | ) | - | |||||
Balance,
ending
|
$ | 10,864 | $ | 11,235 |
For the Three Months Ended November 30,
|
||||||||
2009
|
2008
|
|||||||
Net
Income
|
$ | 1,407 | $ | 1,006 | ||||
Cumulative
translation adjustment, net of taxes
|
45 | - | ||||||
Total
comprehensive income
|
$ | 1,452 | $ | 1,006 |
2009
|
2008
|
|||||||
Balance
at September 1
|
$ | 202 | $ | 693 | ||||
Unrecognized
tax positions of prior periods:
|
||||||||
Increase
|
- | - | ||||||
Decrease
|
- | - | ||||||
Unrecognized
tax positions of current year:
|
||||||||
Increase
|
6 | 3 | ||||||
Decrease
|
- | - | ||||||
Decrease
in Unrecognized tax benefits due to settlements
|
- | (547 | ) | |||||
Decrease
in Unrecognized tax benefits due to lapse of statute of
limitations
|
- | - | ||||||
Balance
at November 30
|
$ | 208 | $ | 149 |
For the Three Months Ended,
|
||||||||
November 30, 2009
|
November 30, 2008
|
|||||||
Total
amount of unrecognized tax benefits that, if recognized, would
affect the effective tax rate
|
$ | 94 | $ | 51 | ||||
Accrued
interest and penalties for unrecognized tax benefits
|
$ | 83 | $ | 63 | ||||
Interest
and penalties classified as income tax expense (benefit)
|
$ | 5 | $ | (24 | ) |
Cash
|
$ | 572 | ||
Trade
receivable, net
|
985 | |||
Prepaid
expenses and other current assets
|
583 | |||
Plant
and equipment
|
70 | |||
Customer
relationships
|
1,100 | |||
Trademarks
|
150 | |||
Noncompete
asset
|
25 | |||
Accounts
payable
|
(463 | ) | ||
Income
taxes payable
|
27 | |||
Deferred
tax liabilities
|
(415 | ) | ||
Deferred
revenue
|
(848 | ) | ||
Accrued
expenses
|
(703 | ) | ||
Fair
value of net assets acquired
|
1,083 | |||
Purchase
price
|
1,631 | |||
Excess
purchase price
|
$ | 548 |
For the Three Months EndedNovember 30, 2009
|
Shares
|
Weighted
Average Exercise
Price
|
Weighted Average
Remaining Term
|
Aggregate Intrinsic
Value *
|
|||||||||
Options
Outstanding -September 1, 2009
|
359,500 | $ | 1.15 | ||||||||||
Options
Granted
|
- | - | |||||||||||
Options
Exercised
|
- | - | |||||||||||
Options
Forfeited or Expired
|
- | - | |||||||||||
Options
Outstanding - November 30, 2009
|
359,500 | $ | 1.15 |
5.49
years
|
$ | 25,700 | |||||||
Options
Exercisable - November 30, 2009
|
301,425 | $ | 1.12 |
5.49 years
|
$ | 25,700 |
For the Three Months Ended November 30, 2009
|
Shares
|
Weighted
Average Grant
Date Fair Value
|
Fair Value
|
|||||||||
Nonvested
- September 1, 2009
|
565,859 | $ | 0.72 | |||||||||
Granted
|
110,000 | $ | 0.99 | |||||||||
Vested
|
(285,681 | ) | $ | 0.60 | $ | 278,856 | (a) | |||||
Forfeited
|
- | - | ||||||||||
Nonvested
- November 30, 2009
|
390,178 | $ | 0.89 | $ | 378,473 | (b) |
|
(a)
|
The
fair value of vested restricted stock shares represents the total pre-tax
fair value, based on the closing stock price on the day of vesting, which
would have been received by holders of restricted stock shares had all
such holders sold their underlying shares on that
date.
|
|
(b)
|
The
aggregate fair value of the nonvested restricted stock shares expected to
vest represents the total pre-tax fair value, based on the Company’s
closing stock price as of November 30, 2009 which would have
been received by holders of restricted stock shares had all such holders
sold their underlying shares on that
date.
|
|
§
|
The
First Amendment changed the base rate of interest to the three month (90
day) LIBOR rate from the previous base rate of the “Prime
Rate.”
|
|
§
|
The
First Amendment changed the interest rate for revolving credit loans to
the base rate plus 3.25% from the previous interest rate for revolving
credit loans which was the base rate minus 0.5%, and changed the interest
rate for floorplan loans, if applicable, to 6.25% in excess of the base
rate from the previous interest rate for floorplan loans of 2.5% in excess
of the base rate.
|
|
§
|
The
First Amendment amended the Schedule to provide that the Borrower must pay
the Lender a floorplan annual volume commitment fee if the aggregate
amount of all floorplan loans does not equal or exceed $60.0 million in a
12 month period from December 1st through November 30th. The
floorplan commitment fee is equal to the amount that the floorplan usage
during such 12 month period is less than $60.0 million multiplied by
1%. If the Borrower terminates the Credit Facility during a 12
month period, the Borrower shall be required to pay the Lender a prorated
portion of the annual volume commitment fee. For the period
from December 1, 2008 through November 30, 2009, the Company’s floorplan
volume was approximately $30.0 million. The Company has total accrual of
$300,000 in commitment fees as interest payable on the consolidated
financial statements of which, approximately $280,000 was expensed during
the year ended August 31, 2009 and approximately $20,000 was expensed in
three months ended November 30,
2009.
|
For the Three Months Ended
|
||||||||||||||||
November 30, 2009
|
November 30, 2008
|
|||||||||||||||
Departments
of the U.S. Government
|
$ | 41,400 | 56.3 | % | $ | 40,195 | 57.4 | % | ||||||||
Canada
Government Agencies
|
349 | 0.5 | % | - | 0.0 | % | ||||||||||
State
and Local Governments
|
1,057 | 1.4 | % | 2,996 | 4.3 | % | ||||||||||
Commercial
Companies
|
13,599 | 18.5 | % | 16,759 | 23.9 | % | ||||||||||
Education
and other
|
17,172 | 23.3 | % | 10,069 | 14.4 | % | ||||||||||
Total
Revenues
|
$ | 73,577 | 100.0 | % | $ | 70,019 | 100.0 | % |
November 30,
|
August 31,
|
|||||||
2009
|
2008
|
|||||||
Trade
receivables
|
$ | 41,742 | $ | 29,767 | ||||
Allowance
for doubtful accounts
|
(335 | ) | (304 | ) | ||||
Trade
receivables, net
|
$ | 41,407 | $ | 29,463 |
November 30,
|
August 31,
|
|||||||
2009
|
2009
|
|||||||
Hardware,
software, accessories and parts
|
$ | 6,211 | $ | 4,638 | ||||
Inventory
reserve
|
(228 | ) | (228 | ) | ||||
Net
inventories
|
$ | 5,983 | $ | 4,410 |
November 30,
|
August 31,
|
|||||||
2009
|
2009
|
|||||||
Accrued
payroll
|
$ | 2,706 | $ | 2,559 | ||||
Accrued
commissions
|
679 | 586 | ||||||
Accrued
state sales taxes
|
38 | 74 | ||||||
Accrued
third-party service fees
|
83 | 72 | ||||||
Other
accrued expenses
|
3,073 | 3,432 | ||||||
$ | 6,579 | $ | 6,723 |
November 30,
|
August 31,
|
|||||||
2009
|
2009
|
|||||||
5%
subordinated note payable to DARR Global Holdings, Inc.
|
$ | 257 | $ | 345 | ||||
8%
subordinated note payable to Mr. Siva Natarajan
|
- | 410 | ||||||
6%
subordinated note payable to Former Shareholders of
KOAN-IT
|
471 | 458 | ||||||
Total
debt
|
728 | 1,213 | ||||||
Less
current portion
|
(728 | ) | (1,213 | ) | ||||
Long-term
debt, net of current portion
|
$ | - | $ | - |
(Unaudited)
|
||||||||
November 30,
|
August 31,
|
|||||||
2009
|
2009
|
|||||||
Identifiable Assets:
|
||||||||
EIS
|
$ | 66,455 | $ | 51,586 | ||||
EGS
|
13,885 | 13,687 | ||||||
Total
Assets
|
$ | 80,340 | $ | 65,273 |
For the Three Months Ended
|
||||||||
November 30,
|
||||||||
(Unaudited)
|
||||||||
2009
|
2008
|
|||||||
Revenues
|
||||||||
EIS
|
$ | 65,829 | $ | 59,306 | ||||
EGS
|
7,748 | 10,713 | ||||||
Total
Revenue
|
$ | 73,577 | $ | 70,019 | ||||
Gross Profit
|
||||||||
EIS
|
$ | 9,173 | $ | 6,687 | ||||
EGS
|
1,371 | 2,107 | ||||||
Gross
Profit
|
$ | 10,544 | $ | 8,794 | ||||
Depreciation and
amortization
|
||||||||
EIS
|
$ | 369 | $ | 324 | ||||
EGS
|
227 | 210 | ||||||
Depreciation
and amortization
|
$ | 596 | $ | 534 | ||||
Operating Income
|
||||||||
EIS
|
$ | 2,407 | $ | 1,200 | ||||
EGS
|
109 | 730 | ||||||
Operating
Income
|
$ | 2,516 | $ | 1,930 | ||||
Interest and Other Expense
(Income)
|
||||||||
EIS
|
$ | 70 | $ | 134 | ||||
EGS
|
56 | 119 | ||||||
Interest
and Other Expense (Income)
|
$ | 126 | $ | 253 | ||||
Provision for Income Taxes
|
||||||||
EIS
|
$ | 957 | $ | 416 | ||||
EGS
|
26 | 254 | ||||||
Provision
for Income Taxes
|
$ | 983 | $ | 670 | ||||
Net Income
|
||||||||
EIS
|
$ | 1,380 | $ | 649 | ||||
EGS
|
27 | 357 | ||||||
Net
Income
|
$ | 1,407 | $ | 1,006 | ||||
Capital expenditures
|
||||||||
EIS
|
$ | 89 | $ | 74 | ||||
EGS
|
40 | 4 | ||||||
Capital
expenditures
|
$ | 129 | $ | 78 |
Three
Months Ended November 30,
|
||||||||||||||||
2009
|
2008
|
Change
|
%
|
|||||||||||||
Revenues
|
||||||||||||||||
Procurement
services
|
$ | 59,382 | $ | 56,359 | $ | 3,023 | 5.4 | % | ||||||||
Service
and consulting
|
14,195 | 13,660 | 535 | 3.9 | % | |||||||||||
Total Revenues
|
73,577 | 70,019 | 3,558 | 5.1 | % | |||||||||||
Cost of Sales
|
||||||||||||||||
Cost
of procurement services
|
53,173 | 50,392 | 2,781 | 5.5 | % | |||||||||||
Service
and consulting
|
9,860 | 10,833 | (973 | ) | (9.0 | )% | ||||||||||
Total Cost of Sales
|
63,033 | 61,225 | 1,808 | 3.0 | % | |||||||||||
Gross Profit
|
||||||||||||||||
Procurement
services
|
6,209 | 5,967 | 242 | 4.1 | % | |||||||||||
Procurement
services %
|
10.5 | % | 10.6 | % | ||||||||||||
Service
and consulting
|
4,335 | 2,827 | 1,508 | 53.4 | % | |||||||||||
Service
and consulting %
|
30.5 | % | 20.7 | % | ||||||||||||
Total Gross Profit
|
10,544 | 8,794 | 1,750 | 19.9 | % | |||||||||||
Total Gross Profit %
|
14.3 | % | 12.6 | % | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general, and administrative expenses
|
7,278 | 6,178 | 1,100 | 17.8 | % | |||||||||||
Rent
expense – related party
|
154 | 152 | 2 | 1.0 | % | |||||||||||
Depreciation
and amortization
|
596 | 534 | 62 | 11.6 | % | |||||||||||
Total
operating expenses
|
8,028 | 6,864 | 1,164 | 17.0 | % | |||||||||||
Percent
of revenues
|
10.9 | % | 9.8 | % | ||||||||||||
Operating
income
|
2,516 | 1,930 | 586 | 30.4 | % | |||||||||||
Percent
of revenues
|
3.4 | % | 2.8 | % | ||||||||||||
Other
expense (income):
|
||||||||||||||||
Interest
income – other
|
(11 | ) | (5 | ) | (6 | ) | 124.4 | % | ||||||||
Interest
expense
|
145 | 254 | (109 | ) | (42.9 | )% | ||||||||||
Other
|
(8 | ) | 4 | (12 | ) | (292.1 | )% | |||||||||
Income
before income taxes
|
2,390 | 1,676 | 714 | 42.6 | % | |||||||||||
Provision
for income taxes
|
983 | 670 | 313 | 46.6 | % | |||||||||||
Net
income
|
$ | 1,407 | $ | 1,006 | $ | 401 | 39.9 | % | ||||||||
Percent
of revenues
|
1.9 | % | 1.4 | % |
Three
Months Ended November 30,
|
||||||||||||||||
2009
|
2008
|
Change
|
%
|
|||||||||||||
Revenues
|
||||||||||||||||
Procurement
services
|
$ | 59,382 | $ | 56,359 | $ | 3,023 | 5.4 | % | ||||||||
Service
and consulting
|
6,447 | 2,947 | 3,500 | 118.8 | % | |||||||||||
Total Revenues
|
65,829 | 59,306 | 6,523 | 11.0 | % | |||||||||||
Cost of Sales
|
||||||||||||||||
Cost
of procurement services
|
53,173 | 50,392 | 2,781 | 5.5 | % | |||||||||||
Service
and consulting
|
3,484 | 2,227 | 1,257 | 56.4 | % | |||||||||||
Total Cost of Sales
|
56,657 | 52,619 | 4,038 | 7.7 | % | |||||||||||
Gross Profit
|
||||||||||||||||
Procurement
services
|
6,209 | 5,967 | 242 | 4.1 | % | |||||||||||
Procurement
services %
|
10.5 | % | 10.6 | % | ||||||||||||
Service
and consulting
|
2,963 | 720 | 2,243 | 311.5 | % | |||||||||||
Service
and consulting %
|
46.0 | % | 24.4 | % | ||||||||||||
Total Gross Profit
|
9,172 | 6,687 | 2,485 | 37.2 | % | |||||||||||
Total Gross Profit %
|
13.9 | % | 11.3 | % | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general, and administrative expenses
|
6,295 | 5,070 | 1,225 | 24.2 | % | |||||||||||
Rent
expense – related party
|
101 | 92 | 9 | 9.8 | % | |||||||||||
Depreciation
and amortization
|
369 | 324 | 45 | 13.9 | % | |||||||||||
Total
operating expenses
|
6,765 | 5,486 | 1,279 | 23.3 | % | |||||||||||
Percent
of revenues
|
10.3 | % | 9.3 | % | ||||||||||||
Operating
income
|
2,407 | 1,201 | 1,206 | 100.4 | % | |||||||||||
Percent
of revenues
|
3.7 | % | 2.0 | % | ||||||||||||
Other
expense (income):
|
||||||||||||||||
Interest
income – other
|
(11 | ) | (3 | ) | (8 | ) | 266.7 | % | ||||||||
Interest
expense
|
87 | 138 | (51 | ) | -37.0 | % | ||||||||||
Other
|
(6 | ) | - | (6 | ) | N/A | ||||||||||
Income
before income taxes
|
2,337 | 1,066 | 1,271 | 119.2 | % | |||||||||||
Provision
(benefit) for income taxes
|
957 | 416 | 541 | 130.1 | % | |||||||||||
Net
income
|
$ | 1,380 | $ | 650 | $ | 730 | 112.3 | % | ||||||||
Percent
of revenues
|
2.1 | % | 1.1 | % |
For
the Three Months Ended
|
||||||||||||||||
November 30, 2009
|
November 30, 2008
|
|||||||||||||||
Departments
of the U.S. Government
|
$ | 41,400 | 62.9 | % | $ | 40,195 | 67.8 | % | ||||||||
Canada
Government Agencies
|
349 | 0.5 | % | - | 0.0 | % | ||||||||||
State
and Local Governments
|
1,057 | 1.6 | % | 2,996 | 5.1 | % | ||||||||||
Commercial
Companies
|
5,851 | 8.9 | % | 6,046 | 10.2 | % | ||||||||||
Education
and other
|
17,172 | 26.1 | % | 10,069 | 17.0 | % | ||||||||||
Total
Revenues
|
$ | 65,829 | 100.0 | % | $ | 59,306 | 100.0 | % |
Three
Months Ended November 30,
|
||||||||||||||||
2009
|
2008
|
Change
|
%
|
|||||||||||||
Revenues
|
||||||||||||||||
Service
and consulting
|
$ | 7,748 | $ | 10,713 | $ | (2,965 | ) | -27.7 | % | |||||||
Total Revenues
|
7,748 | 10,713 | (2,965 | ) | -27.7 | % | ||||||||||
Cost of Sales
|
||||||||||||||||
Service
and consulting
|
6,376 | 8,606 | (2,230 | ) | -25.9 | % | ||||||||||
Total Cost of Sales
|
6,376 | 8,606 | (2,230 | ) | -25.9 | % | ||||||||||
Gross Profit
|
||||||||||||||||
Service
and consulting
|
1,372 | 2,107 | (735 | ) | -34.9 | % | ||||||||||
Service
and consulting %
|
17.7 | % | 19.7 | % | ||||||||||||
Total Gross Profit
|
1,372 | 2,107 | (735 | ) | -34.9 | % | ||||||||||
Total Gross Profit %
|
17.7 | % | 19.7 | % | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general, and administrative expenses
|
983 | 1,108 | (125 | ) | -11.3 | % | ||||||||||
Rent
expense – related party
|
53 | 60 | (7 | ) | -11.7 | % | ||||||||||
Depreciation
and amortization
|
227 | 210 | 17 | 8.1 | % | |||||||||||
Total
operating expenses
|
1,263 | 1,378 | (115 | ) | -8.3 | % | ||||||||||
Percent
of revenues
|
16.3 | % | 12.9 | % | ||||||||||||
Operating
income
|
109 | 729 | (620 | ) | -85.0 | % | ||||||||||
Percent
of revenues
|
1.4 | % | 6.8 | % | ||||||||||||
Other
expense (income):
|
||||||||||||||||
Interest
income – other
|
- | (2 | ) | 2 | -100.0 | % | ||||||||||
Interest
expense
|
58 | 116 | (58 | ) | -50.0 | % | ||||||||||
Other
|
(2 | ) | 4 | (6 | ) | -146.2 | % | |||||||||
Income
before income taxes
|
53 | 611 | (558 | ) | -91.3 | % | ||||||||||
Provision
(benefit) for income taxes
|
26 | 254 | (228 | ) | -89.8 | % | ||||||||||
Net
income
|
$ | 27 | $ | 357 | $ | (330 | ) | -92.4 | % | |||||||
Percent
of revenues
|
0.3 | % | 3.3 | % |
|
§
|
In
some instances, the “set-up” service is performed after date of
delivery. We recognize revenue for the “hardware” component at
date of delivery when the amount of revenue allocable to this component is
not contingent upon the completion of “set-up” services and, therefore,
our client has agreed that the transaction is complete as to the
“hardware” component. In instances where our client does not
accept delivery until “set-up” services are completed, we defer all
revenue in the transaction until client acceptance
occurs.
|
|
§
|
There
are occasions when a client requests a transaction on a “bill & hold”
basis. We follow the SAB 104 criteria and recognize revenue
from these sales prior to date of physical delivery only when all the
criteria of SAB 104 are met. We do not modify our normal billing and
credit terms for these clients. The client is invoiced at the date of
revenue recognition when all of the criteria have been met. As of November
30, 2009 and 2008, we did not have any bill & hold
transactions.
|
EMTEC,
INC.
|
|
By:
|
/s/ DINESH R.
DESAI
|
Dinesh
R. Desai
|
|
Chairman
and Chief
|
|
Executive
Officer
|
|
(Principal
Executive Officer)
|
|
By:
|
/s/ GREGORY P.
CHANDLER
|
Gregory
P. Chandler
|
|
Chief
Financial Officer
|
|
(Principal
Financial
Officer)
|