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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2001.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___.
Commission file number: 1-8266
DATARAM CORPORATION
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(Exact name of registrant as specified in its charter)
New Jersey 22-1831409
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(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. Box 7528, Princeton, New Jersey 08543-7528
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 799-0071
Securities registered pursuant to section 12(b) of the Act: NONE
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $1.00 Par Value
---------------------------------
(Title of Class)
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
of1934 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in the definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant on July 23, 2001 was $72,375,779.
The number of shares of Common Stock outstanding on July 23, 2001:
8,538,119 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Definitive Proxy Statement for Annual Meeting of Shareholders to be
held on September 12, 2001 (the "Definitive Proxy Statement") to be filed
within 120 days of the end of the fiscal year.
(2) 2001 Annual Report to Security Holders
- 1 -
DATARAM CORPORATION
INDEX
Part I Page
Item 1. Business (including Risk Factors). . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 10
Part II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters. . . . . . . . . 11
Item 6. Selected Financial Data. . . . . . . . . . . . . 11
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . 11
Item 7A. Quantitative and Qualitative Disclosure
About Market Risk . . . . . . . . . . . . . . . 11
Item 8. Financial Statements and Supplementary Data. . . 12
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . 15
Part III
Item 10. Directors and Executive Officers of
the Registrant . . . . . . . . . . . . . . . . . 15
Item 11. Executive Compensation . . . . . . . . . . . . . 15
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . 15
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . 15
Part IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K . . . . . . . 16
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
- 2 -
PART I
Item 1. BUSINESS
(a) General Development of Business.
Dataram develops, manufactures and markets memory products for use with
workstations, network servers, desktop computers, notebooks and non-computer
applications. The Company's computer-related memory products expand the
capacity and extend the economic useful life of the installed base of
computers manufactured by Sun Microsystems, Inc. ("Sun"), Hewlett-Packard
Company ("HP"), Compaq Computer ("Compaq"), Silicon Graphics, Inc. ("SGI"),
International Business Machines Corporation ("IBM") and many PC
manufacturers. The Company also manufactures a line of memory products for
Intel motherboard based servers for sale to original equipment manufacturers
(OEMs)and channel assemblers.
In fiscal 2001, the Company was adversely effected by the worldwide
retrenchment in computer sales. Not only did capital spending on new
equipment decrease, there came to market a substantial quantity of fairly new
used equipment from companies with discontinued operations in the internet
area which created a reduced market for new equipment. In part, the Company
was able to offset this trend by the sale of upgrades to existing equipment.
The Company was also affected by the worldwide collapse in DRAM prices. DRAM
prices represent approximately 80% of the cost of the Company's final
product. For the most part, competitive pressures require the Company to
pass through decreases in prices to customers. As a result, average selling
prices of the Company's products declined in the second half of the fiscal
year by approximately 35% from the first half of the year. This trend has
continued into fiscal 2002. However, in this negative economic environment,
the Company was nevertheless able to maintain and slightly expand its profit
margins and to remain profitable through careful inventory management.
Also in fiscal 2001, the Company acquired certain of the assets of
Memory Card Technology A/S ("MCT"), a Danish manufacturer of memory boards
for notebooks, desktop computers and other applications, which is in
suspension of payments under Danish bankruptcy law. MCT had expanded
capacity rapidly, maintained substantial inventory on hand, and was highly
leveraged. As a consequence, MCT was particularly unprepared for the
worldwide retrenchment and became insolvent. Dataram purchased from the
Supervisor appointed to administer MCT's affairs certain of its assets,
including worldwide sales facilities and production facilities located in
Denmark. The purchase price of these assets consisted of $28,581,000 which
was paid both in cash and by the assumption of certain payables and accrued
expenses of $1,825,000. In addition, Dataram incurred acquisition costs of
approximately $1,600,000 and assumed capital leases of approximately
$5,300,000.
Dataram was incorporated in New Jersey in 1967 and made its initial
public offering in 1968. Its common stock, $1 par value (the "Common Stock")
was listed for trading on the American Stock Exchange in 1981. In 2000 the
Company changed its listing to the NASDAQ National Market where its stock
trades under the symbol "DRAM." The Company's principal executive office is
located at 186 Princeton Road (Route 571), West Windsor, New Jersey 08550,
its telephone number is (609) 799-0071, its fax is (609) 799-6734 and its
website is at http://www.dataram.com.
- 3 -
RISK FACTORS
WE MAY HAVE TO SUBSTANTIALLY INCREASE OUR WORKING CAPITAL REQUIREMENTS
IN THE EVENT OF DRAM ALLOCATIONS. Over the past 20 years, availability of
DRAMs has swung back and forth from over supply to shortage. In times of
shortage, Dataram has been forced to invest substantial working capital
resources in building and maintaining inventory. At such times Dataram has
bought DRAMs in excess of its customers' needs in order to ensure future
allocations from DRAM manufacturers. Dataram believes that the market for
DRAMs is presently out of balance and there is an oversupply of DRAMS, but
there can be no assurance that conditions of shortage may not prevail in the
future. In the event of a shortage, Dataram may not be able to obtain
sufficient DRAMs to meet customers' needs in the short term, and Dataram may
have to invest substantial working capital resources in order to meet long
term customer needs.
WE COULD SUFFER LOSSES IF DRAM PRICES DECLINE SUBSTANTIALLY. Dataram is
often required to maintain substantial inventories during periods of shortage
and allocation. During periods of increasing availability of DRAM and
rapidly declining prices, Dataram has been forced to write down inventory.
At the present time, the market is one of over supply, and Dataram seeks to
maintain a minimum inventory while meeting the needs of customers. But there
can be no assurance that Dataram will not suffer losses in the future based
upon high inventories and declining DRAM prices.
OUR MEMORY PRODUCTS MAY VIOLATE OTHERS' PATENTS. Certain of Dataram's
memory products are designed to be used with proprietary computer systems
built by various OEM manufacturers. Dataram often has to comply with
proprietary memory designs which may be patented, now or at some time in the
future. OEMs have, at times, claimed that we have violated their patent
rights by adapting our computer memory products to meet the requirements of
their systems. It is the policy of Dataram to, in unclear cases, either
obtain an opinion of patent counsel prior to marketing, or obtain a license
from the patent holder. Dataram is presently licensed by Sun Microsystems to
sell memory products for their principal products. However, there can be no
assurance that memory designs will not be created in the future which will,
in fact, be patented and which patent holders will require the payment of
substantial royalties as a condition for Dataram's continued presence in the
segment of the market covered by the patent or they may not give us a
license. Nor can there be any assurance that Dataram's existing products do
not violate one or more existing patents.
WE MUST INTEGRATE MCT'S ASSETS INTO OUR OPERATIONS. In March of 2001
the Company purchased certain assets of MCT which have been merged into
Dataram International. The Company faces challenges in integrating Dataram
International's operations into the overall operations of the Company. These
challenges include integration of data processing systems, the supervision of
new personnel, the training of Dataram International's sales force to sell
Dataram's server products and dealing with business in foreign locations from
Colombia to Italy to Singapore. The Company will inevitably incur additional
costs in integrating Dataram International's operations into Dataram's
systems and business. There is no assurance that integration of all of
Dataram International's operations will be successfully completed at
projected costs, nor can there be any assurance that the integrated business
will be profitable, particularly as MCT had suffered operating losses in the
two preceding years.
WE FACE COMPETITION FROM OEMs. Dataram sells its products at a lower
price than OEMs. Customers will often pay some premium for the "name brand"
product when buying additional memory and OEMs seek to exploit this tendency
by having a high profit margin on memory products. However, individual OEMs
could change their policy and price memory products competitively. While
Dataram believes that with its manufacturing efficiency and low overhead it
still will be able to compete favorably with OEMs, in such an event profit
margins and earnings would be adversely affected.
- 4 -
WE MAY LOSE AN IMPORTANT CUSTOMER. During fiscal 2001, no single
customer accounted for 10% of the Company's revenue. However, the largest ten
customers accounted for approximately 35% of the Company's revenue.
Moreover, the Company's international operations are more concentrated on a
few OEM's and distributors. There can be no assurance that one or more of
these customers will cease or materially decrease their business with the
Company in the future and that Dataram's financial performance will not be
adversely affected thereby.
WE FACE COMPETITION FROM DRAM MANUFACTURERS. DRAM manufacturers not
only sell their product as discreet devices, but also as finished memory
modules. They primarily sell these modules directly to computer manufacturers
and large distributors and as such compete with the Company on a limited
basis. There can be no assurance that they will not continue to expand their
market and customer base. In such a case, they would become a more direct
competitor to the Company and the Company's profit margins and earnings could
be adversely affected.
THE MARKET FOR OUR PRODUCTS MAY NARROW OVER TIME. The principal market
of Dataram is owners of workstations and servers, classes of machines lying
between large mainframe computers and personal computers. The trend has been
observed that personal computers are increasing in their power and
sophistication and, as a result, are now filling some of the computational
needs traditionally filled by workstations. The competition for the supply
of after-market memory products in the PC industry is very competitive and if
Dataram competes in this market we can be expected to have lower profit
margins. There can be no assurance that this trend will not continue in the
future, and that Dataram's financial performance will not be adversely
affected thereby.
WE MAY MAKE UNPROFITABLE ACQUISITIONS. Dataram has for some time
explored the possibility of acquiring one or more businesses in the
technology sector. While the Company is not currently engaged in discussions
which could lead to an acquisition, the possibility exists that an
acquisition will be made at some time in the future. Uncertainty surrounds
all acquisitions and it is possible that a particular acquisition may not
result in a benefit to shareholders, particularly in the short term.
WE MAY BE SUBJECT TO UNKNOWN LIABILTIES ARISING FROM THE ACQUISITION OF
MCT'S ASSETS. While the Company purchased assets and assumed only a limited
and discrete liability in connection with the MCT transaction, and while the
Company believes that it has conducted adequate due diligence, there can be
no assurance that the Company will not be held liable for liabilities of MCT
which at the present are unknown and unforeseen. The Company believes that
it has made reservations for all known risks that could have a material
impact upon the Company.
A SIGNIFICANT PORTION OF THE COMPANY'S OPERATIONS ARE DESIGNED
PRINCIPALLY TO MEET THE NEEDS OF THE VERY COMPETITIVE PC MARKET. As a result
of the acquisition of certain assets of MCT, the Company, in addition to
server memory, now develops, manufacturers and markets a variety of memory
products for use with notebooks and desktop computers that are mainly IBM
compatible, plus memory products for digital cameras, digital printers, image
processors, print controllers, multi-function centers, routers and video
cards as well as flash memory. Many of these products are sold to OEMs and
incorporated into computers and other equipment. This is an intensely
competitive market.
WE MAY BE ADVERSELY AFFECTED BY EXCHANGE RATE FLUCTUATIONS. A portion
of our accounts receivable and a portion of our expenses are denominated in
foreign currencies. These proportions change over time. As a result, the
Company's revenues and expenses may be adversely affected, from time to time,
by changes in the relationship of the dollar to various foreign currencies on
foreign exchange markets.
- 5 -
OUR STOCK HAS LIMITED LIQUIDITY. Although the stock of Dataram is
publicly traded, it has been observed that this market is "thin." As a
result, Dataram's common stock may trade at a discount to what would be its
value if the stock enjoyed greater liquidity.
DATARAM IS SUBJECT TO THE NEW JERSEY SHAREHOLDERS PROTECTION ACT. This
statute has the effect of prohibiting any "business combination" - a very
broadly defined term - with any "interested shareholder" unless the
transaction is approved by the Board of Directors at a time before the
interested shareholder had acquired a 15% ownership interest. This
prohibition of "business combinations" is for five years and continues after
that time period subject to certain exceptions. A practical consequence of
this statute is that a hostile acquisition of Dataram would be difficult, if
not impossible. As a result, hostile transactions which might be of benefit
to shareholders may not occur because of this statute.
(b) Financial Information about Industry Segments.
The Company operates in one industry segment.
(c) Narrative Description of Business.
Dataram develops, manufactures and markets a variety of memory products
for use with workstations and network servers, including those sold by Sun,
HP, Compaq (including DEC), SGI and IBM. The Company sells memory products
both for new machines and for the installed base of these classes of
computers at prices less than the computer manufacturer. The Company also
develops, manufactures and markets memory boards for desktop computers and
notebooks and other applications, principally based on sales to OEMs and
distributors.
Industry Background
The market for the Company's memory products ranges from desktop and
notebook computers to workstations and network servers. These systems have
been important to the growth of the Internet.
A workstation, like a PC, is designed to provide computer resources to
individual users. A workstation differs from a PC by providing substantially
greater computational performance, input/output capability and graphic
display. Workstations are nearly always networked. As a result of this
networking capability, a new class of computer system, the network server,
has emerged.
Network servers are computer systems on a network which provide
dedicated functions accessible by all workstations and other systems on the
same network. Examples of different types of network servers in use today
are: file servers, communication servers, computation servers, database
servers, print servers and storage servers.
Dataram continues to design, produce and market memory products for
workstations and network servers sold by Sun, HP, Compaq, Silicon Graphics
and IBM. Additionally, the Company produces and markets memory for Intel
processor based motherboards for use by OEMs and channel assemblers.
The "open system" philosophy espoused by most of the general computer
industry has played a part in enlarging the market for third party vendors.
Under the "open system" philosophy, manufacturers adhere to industry design
standards, enabling users to "mix and match" hardware and software products
from a variety of vendors so that a system can be configured for the user's
application in the most economical manner with reduced concern for
compatibility and support. Memory products for desktop and notebook
computers, workstations and network servers have become commodities with
substantial competition from OEMs and a number of independent memory
manufacture suppliers.
- 6 -
Generally, growth in memory markets closely follows both the growth in
unit shipments of system vendors and the growth of memory requirements per
system.
Business Strategy
Market Growth
Generally, growth in the memory market closely follows both the growth
in unit shipments of system vendors and the growth of memory requirements per
system. Management estimates that the long term growth rate measured by
revenue in the market for its products is approximately 20% annually.
Market Penetration
In addition to the growth in the market, management estimates that sales
by system vendors constitute 80% of the memory market in fiscal 2001. Thus,
there is an opportunity for growth through penetration of the system vendor's
market share. To successfully compete with system vendors, Dataram must
continue to respond to customers' needs in a short time frame. To support
customers' needs, the Company has two dedicated and highly automated
manufacturing facilities that are designed to produce and ship customer
orders within twenty-four hours or less.
Geographic Expansion
Approximately 72% of Dataram's fiscal 2001 revenues were derived from
sales in the United States with the remainder principally in Western Europe
and the Asia Pacific region. With the acquisition of certain of MCT's assets,
the Company now has an expanded customer base and sales offices in 16
countries. As part of its integration process, the Company now markets its
server, desktop and notebook memory products to that customer base utilizing
its entire sales force
Products
The Company's principal business is the development, manufacture and
marketing of memory products which can be added to workstations, network
servers, desktop and notebook computers to upgrade or expand the capabilities
of such systems. When vendors produce computer systems adhering to open
system industry standards, the development effort for Dataram and other
independent memory manufacturers is straightforward and allows for the use of
many standard components.
Distribution Channels
Dataram sells its memory products to OEM's, distributors, value-added
resellers and larger end-users. The Company has sales offices in New Jersey,
Denmark, The United Kingdom, Germany, Italy, Colombia, Argentina, Chile,
Mexico, Australia, New Zealand, Japan, Hong Kong, Singapore, Malaysia and
Thailand.
Product Warranty and Service
Management believes that the Company's reputation for the reliability of
its memory products and the confidence of prospective purchasers in Dataram's
ability to provide service over the life of the product are important factors
in making sales. As a consequence, the Company adopted many years ago a
Lifetime Warranty program for its memory products. The economic useful life
of the computer systems to which Dataram's memory equipment is attached is
almost always substantially less than the physical useful life of the
equipment itself. Thus, memory systems are unlikely to "wear out." The
Company's experience is that less than 1% of all the products it sells are
returned under the Lifetime Warranty.
- 7 -
Working Capital Requirements
The memory product business is heavily dependent upon the price of
DRAMs. Producers of DRAM are required to invest substantial capital
resources to produce their end product. Their marginal cost is low as a
percentage of the total cost of the product. As a result, the world-wide
market for DRAMs has swung in the past from periods of substantial over
supply, resulting in falling prices for DRAMs, to wide availability of DRAMs,
rapid delivery of DRAMs and ability of the Company to have minimum
inventories to meet the needs of customers; to periods of shortage, where
DRAMs are allocated and where the Company must invest heavily in inventory in
order to continue to be assured of the supply of DRAMs from vendors. This
volatility in the price and availability of the Company's basic raw material
requires Dataram to maintain substantial cash and credit resources at all
times. At April 30, 2001, the Company had cash and cash equivalents of
$10,236,000 and also had available an unused line of credit in the amount of
$15 million. At the present time, the market for DRAMs is one of over
supply.
Memory Product Complexity
DRAM memory products for workstations and servers had, for many years,
been undergoing a process of simplification with a corresponding decline in
profit margins as competitors' entry into the market became easier. However,
recent trends in the market have seen the development by OEMs of more complex
memory designs. This has enabled Dataram to increase its margins somewhat.
Memory products for desktop and notebook computers are much simpler, but
gross margins are lower and market competition is more intense.
Engineering and Development
The Company's ability to compete successfully depends upon its ability
to identify new memory needs of its customers. To achieve this goal, the
Company's engineering group continually monitors computer system vendors' new
product developments, and the Company evaluates and tests major components as
they become available. Dataram designs prototype memory products and
subjects them to reliability testing procedures. During its fiscal year
ended April 30, 2001, the Company incurred costs of $1,673,000 for
engineering and product development compared to $1,391,000 in fiscal 2000 and
$1,373,000 in fiscal 1999.
Raw Materials
The Company purchases standard dynamic random access memory ("DRAM")
chips. The costs of such chips is approximately 80% of the total
manufacturing cost of memory products. Fluctuations in the availability or
prices of memory chips can have a significant impact on the Company's profit.
Dataram has created close relationships with a number of primary
suppliers while qualifying and developing alternate sources as a back up.
The qualification program consists of extensive evaluation of process
capabilities, on-time delivery performance and financial stability of each
supplier. Alternative sources are qualified to normally assure supply in the
event of a problem with the primary source or to handle surges in demand.
Manufacturing
The Company assembles its memory boards manufacturing facilities in
Bucks County, Pennsylvania and Aarhus, Denmark.
Backlog
The Company expects that all backlog on hand will be filled during the
current fiscal year. The Company believes that backlog is generally not
material to its business since the Company usually ships its memory products
on the same day an order is received.
- 8 -
Seasonality
The Company's business can be seasonal as the market for desktop and
notebook memory generally is seasonal.
Competition
The intensely competitive computer industry is characterized by rapid
technological change and constant pricing pressures. These characteristics
are equally applicable to the third party memory market, where pricing is a
major consideration in the buying decision. Dataram competes with Sun, HP,
Compaq, Silicon Graphics and IBM, as well as with a number of third party
memory suppliers, including Kingston Technology.
Although many of Dataram's competitors possess significantly greater
financial, marketing and technological resources, the Company competes
favorably based on the buying criteria of price/performance, time-to-market,
product quality, reliability, service/support, breadth of product line and
compatibility with computer system vendors' technology. Dataram's objective
is to continue to remain strong in all of these areas with particular focus
on price/performance and time-to-market, which management believes are two of
the more important criteria in the selection of third party memory product
suppliers. Market research and analysis capability by the Company is
necessary to ensure timely information on new products and technologies
coming from the computer system vendors and from the overall memory market.
Dataram must continue low cost, high volume production while remaining
flexible to satisfy the time-to-market requirement.
The Company believes that its 34-year reputation for providing quality
products is an important factor to its customers when making a purchase
decision. To strengthen this reputation, the Company has a comprehensive
lifetime warranty and service program which provides customers with added
confidence in buying from Dataram. See "Business-Product Warranty and
Service."
Patents, Trademarks and Licenses
The Company believes that its success depends primarily upon the price
and performance of its products rather than on ownership of copyrights or
patents.
Sale of memory products for systems that use proprietary memory design
can from time to time give rise to claims of copyright or patent
infringement. In most such instances the Company has either obtained the
opinion of patent counsel that its products do not violate such patents or
copyrights or obtained a license from the original equipment manufacturer.
To the best of the Company's knowledge and belief, no Company product
infringes any valid copyright or patent. However, because of rapid
technological development in the computer industry with concurrent extensive
patent coverage and the rapid rate of issuance of new patents, questions of
infringement may continue to arise in the future. If such patents or
copyrights are perfected in the future, the Company believes, based upon
industry practice, that any necessary licenses would be obtainable upon the
payment of reasonable royalties.
Employees
As of April 30, 2001, the Company had 385 full-time employees. The
Company believes it has satisfactory relationships with its employees. None
of the Company's employees are covered by a collective bargaining agreement.
- 9 -
Environment
Compliance with federal, state and local provisions which have been
enacted or adopted to regulate the protection of the environment does not
have a material effect upon the capital expenditures, earnings and
competitive position of the Company. The Company does not expect to make any
material expenditures for environmental control facilities in either the
current fiscal year (fiscal 2002) or the succeeding fiscal year (fiscal
2003).
(d) Financial Information about Foreign and Domestic Operations
and Export Sales.
REVENUES (000's)
Export
Fiscal U.S. Europe Other Consolidated
2001 93,557 24,273 12,747 130,577
2000 85,832 14,865 8,455 109,152
1999 56,292 13,960 5,601 75,853
PERCENTAGES
Export
Fiscal U.S. Europe Other Consolidated
2001 71.6% 18.6% 9.8% 100.0%
2000 78.6% 13.6% 7.8% 100.0%
1999 74.2% 18.4% 7.4% 100.0%
The Company's acquisition of MCT's assets will result in significantly
more of Dataram's revenue in future periods arising from sources outside of
the United States and the above table is not representative of future
operations.
Item 2. Properties
The Company occupies approximately 24,000 square feet of space for
administrative, sales, research and development and manufacturing support in
West Windsor Township, New Jersey under a lease expiring on June 30, 2006.
The Company leases a 90,000 square foot office and assembly plant in
Aarhus, Denmark. The lease expires on July 1, 2009.
The Company leases a 32,000 square foot assembly plant in Bucks County,
Pennsylvania. The lease expires on January 31, 2006 and the Company has a
two-year renewal option.
The Company also leases marketing facilities in The United Kingdom,
Germany, Italy, Mexico, Colombia, Argentina, Chile, Australia, New Zealand,
Japan, Singapore, Malaysia, Hong Kong and Thailand.
On September 29, 1980, the Company purchased approximately 81 acres of
undeveloped property in West Windsor Township, New Jersey. The purchase
price of $875,000 was paid in cash. This property is approximately five
miles from the Company's current leased facilities.
Item 3. Legal Proceedings
The Company is not engaged in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of Security Holders in the fourth
quarter of the fiscal year covered by this report.
- 10 -
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Incorporated by reference herein is the information set forth in the
Company's 2001 Annual Report to Security Holders under the caption "Common
Stock Information" at page 9.
Item 6. Selected Financial Data
Incorporated by reference herein is the information set forth in the
2001 Annual Report to Security Holders under the caption "Selected Financial
Data" at page 20.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Incorporated by reference herein is the information set forth in the
2001 Annual Report to Security Holders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" at
page 6 through page 8.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Incorporated by reference herein is the information set forth in the
2001 Annual Report to Security Holders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" at
page 8.
- 11 -
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements and Schedule Page in
Annual
Report*
Consolidated Financial Statements:
Consolidated Balance Sheets as of April 30, 2001 and 2000. 9
Consolidated Statements of Earnings - Years ended
April 30, 2001, 2000 and 1999. . . . . . . . . . . . . 10
Consolidated Statements of Cash Flows -
Years ended April 30, 2001, 2000 and 1999. . . . . . . 11
Consolidated Statements of Stockholders' Equity
and Comprehensive Income -
Years ended April 30, 2001, 2000 and 1999. . . . . . . 12
Notes to Consolidated Financial Statements -
April 30, 2001, 2000 and 1999. . . . . . . . . . . .13-18
Independent Auditors' Report on Consolidated
Financial Statements. . . . . . . . . . . . . . . . 19
Page in
Financial Statement Schedule: 10-K
Valuation and Qualifying Accounts -
Years ended April 30, 2001, 2000 and 1999 . . . . . . 13
Independent Auditors' Report on
Financial Statement Schedule . . . . . . . . . . . . 14
All other schedules are omitted as the required information
is not applicable or because the required information is included in
the consolidated financial statements or notes thereto.
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*Incorporated herein by reference.
- 12 -
Schedule II
DATARAM CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended April 30, 2001, 2000 and 1999
Additions
charged Deduc-
Balance at to costs tions Balance
beginning and from at close
Description of period expenses reserves of period
___________ _________ ________ _________ _________
Year ended April 30, 2001:
Allowance for doubtful accounts
and sales returns $ 450,000 144,000 144,000 450,000
Year ended April 30, 2000:
Allowance for doubtful accounts
and sales returns $ 450,000 58,000 58,000* 450,000
Reserve for inventory obsolescence $ 25,000 -- 25,000 --
Year ended April 30, 1999:
Allowance for doubtful accounts
and sales returns $ 450,000 125,000 125,000* 450,000
Reserve for inventory obsolescence $ 50,000 -- 25,000 25,000
___________________________
*Represents write-offs and recoveries of accounts receivable.
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Dataram Corporation:
Under date of June 6, 2001, we reported on the consolidated balance
sheets of Dataram Corporation and subsidiaries as of April 30, 2001
and 2000, and the related consolidated statements of earnings,
stockholders' equity and comprehensive income, and cash flows for each
of the years in the three-year period ended April 30, 2001, as
contained in the April 30, 2001 Annual Report to Security Holders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the
year ended April 30, 2001. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statement schedule based on our
audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
KPMG LLP
Short Hills, New Jersey
June 6, 2001
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Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated by reference herein is the information set forth in
the Definitive Proxy Statement under the captions "Executive Officers of the
Company," "Nominees for Director" and "Section 16 Compliance."
Item 11. Executive Compensation
Incorporated by reference herein is the information set forth in
the Definitive Proxy Statement under the caption "Executive Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated by reference herein is the information set forth in
the Definitive Proxy Statement under the caption "Security Ownership of
Certain Beneficial Owners and Management."
Item 13. Certain Relationships and Related Transactions
Incorporated by reference herein is the information set forth in
the Definitive Proxy Statement under the captions "Executive Compensation"
and "Board of Directors."
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PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on
Form 8-K
(a) The following documents are filed as part of this
report:
1. Financial Statements incorporated by
reference into Part II of this Report.
2. Financial Statement Schedule included in
Part II of this Report.
(b) Reports on Form 8-K:
1. Current Report on Form 8-K to report under Item 2 an
acquisition of certain assets of Memory Card
Technology on March 23, 2001.
2. First Amendment to such Current Report to amend the Item 2
description of the purchase consideration and to furnish
financial statements of the business acquired and pro
forma financial information.
(c) Exhibits:
The Exhibit Index appears on page 18.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DATARAM CORPORATION
(Registrant)
Date: July 20, 2001 By: ROBERT V. TARANTINO
________________________________
Robert V. Tarantino, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Date: July 20, 2001 By: ROBERT V. TARANTINO
________________________________
Robert V. Tarantino, President
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
Date: July 20, 2001 By: RICHARD HOLZMAN
________________________________
Richard Holzman, Director
Date: July 20, 2001 By: THOMAS A. MAJEWSKI
________________________________
Thomas A. Majewski,
Director
Date: July 20, 2001 By: BERNARD L. RILEY
________________________________
Bernard L. Riley, Director
Date: July 20, 2001 By: ROGER C. CADY
________________________________
Roger C. Cady, Director
Date: July 20, 2001 By: MARK E. MADDOCKS
________________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial & Accounting Officer)
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EXHIBIT INDEX
3(a) Certificate of Incorporation*
3(b) By-Laws*
4(a) Credit Agreement with First Union National Bank
4(b) First Amendment to Credit Agreement with First Union National Bank
10(a) 1992 Incentive and Non-Statutory Stock Option Plan*
10(b) Lease
10(d) Savings and Investment Retirement Plan*
10(e) Employment Agreement of Robert V. Tarantino*
10(h) Asset Purchase Agreement with Memory Card Technology A/S**
13(a) 2001 Annual Report to Shareholders
24(a) KPMG LLP Independent Accountant's Consent for S-8 Registration
No. 33-56282
99(a) Earnings Press Release
99(b) Acquisition Press Release
99(c) Consummation of the Acquisition Press Release
* Incorporated by reference from an Annual Report on Form 10-K for the fiscal
year ended April 30, 1994.
**Incorporated by reference from a Current Report on Form 8-K with respect to
an event which occurred on March 23, 2001
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