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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 10/31/02 or
/ / 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
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
New Jersey 22-1831409
_________________________________ _______________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 7528, Princeton, NJ 08543
______________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 799-0071
______________________________________________________________________________
(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 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 whether registrant is an accelerated filer (as defined
by Rule 12b-2 of the Exchange Act).
Yes No X
______ _______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date. Common Stock ($1.00 par
value): As of November 30, 2002, there were 8,530,319 shares outstanding.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dataram Corporation and Subsidiaries
Consolidated Balance Sheets
October 31, 2002 and April 30, 2002
(Unaudited)
October 31, 2002 April 30, 2002
Assets
Current Assets:
Cash and cash equivalents $ 2,591,373 $ 3,656,150
Trade receivables, less allowance
for doubtful accounts and sales
returns of $320,000 6,881,280 11,477,098
Inventories 3,400,343 5,435,069
Income tax receivable 730,000 700,000
Other current assets 757,524 531,680
__________ __________
Total current assets 14,360,520 21,799,997
Property and equipment, at cost:
Land (held for sale) 875,000 875,000
Machinery and equipment 17,368,200 17,150,925
__________ __________
18,243,200 18,025,925
Less: accumulated depreciation
and amortization 10,783,051 8,816,049
__________ __________
Net property and equipment 7,460,149 9,209,876
Other assets 442,626 407,626
Goodwill 11,144,000 11,144,000
__________ __________
$ 33,407,295 $ 42,561,499
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,517,924 $ 6,598,601
Accrued liabilities 1,599,045 1,688,119
__________ __________
Total current liabilities 4,116,969 8,286,720
Deferred income taxes 646,000 647,000
Long-term debt 500,000 3,800,000
__________ __________
Total liabilities 5,262,969 12,733,720
Stockholders' Equity:
Common stock, par value $1.00 per share.
Authorized 54,000,000 shares; issued and
outstanding 8,530,319 at October 31,
2002 8,493,819 at April 30, 2002 8,530,319 8,493,819
Additional paid in capital 4,597,718 4,405,296
Retained earnings 14,531,510 16,829,242
Accumulated other comprehensive income- 484,779 99,422
foreign currency translation
adjustment __________ __________
Total stockholders' equity 28,144,326 29,827,779
__________ __________
$ 33,407,295 $ 42,561,499
========== ==========
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiary
Consolidated Statements of Earnings
Three and Six Months Ended October 31, 2002 and 2001
(Unaudited)
2002 2001
2nd Quarter Six Months 2nd Quarter Six Months
Revenues $ 13,970,422 $ 28,251,500 $ 19,173,245 $ 41,743,526
Costs and expenses:
Cost of sales 9,770,315 20,509,833 12,052,304 27,677,133
Engineering and development 400,293 781,501 413,263 1,007,445
Selling, general and administrative 4,269,290 8,806,290 5,209,747 11,265,866
Restructuring charges 0 740,000 0 1,200,000
Intangible asset amortization 0 0 296,000 593,000
__________ __________ __________ __________
14,439,898 30,837,624 17,971,314 41,743,444
Earnings (loss) from operations (469,476) (2,586,124) 1,201,931 82
Interest income 9,000 21,000 97,638 193,294
Interest expense (18,945) (74,821) (240,544) (490,713)
__________ __________ __________ __________
Income (loss) before income taxes (479,421) (2,639,945) 1,509,025 (297,337)
Income tax provision (benefit) (226,000) (564,000) 899,000 1,304,000
__________ __________ __________ __________
Net income (loss) $ (253,421) $ (2,075,945) $ 160,025 $ (1,601,337)
========== ========== ========== ==========
Net earnings (loss) per share of common stock
Basic $ (.03) $ (.24) $ .02 $ (.19)
========== ========== ========== ==========
Diluted $ (.03) $ (.24) $ .02 $ (.19)
========== ========== ========== ==========
Weighted average number of common
shares outstanding
Basic 8,504,191 8,493,665 8,479,908 8,502,051
========== ========== ========= =========
Diluted 8,504,191 8,493,665 9,291,317 8,502,051
========== ========== ========= =========
See accompanying notes to consolidated financial statements.
Dataram Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended October 31,2002 and 2001
(Unaudited)
2002 2001
Cash flows from operating activities:
Net loss $ (2,075,945) $ (1,601,337)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 2,004,002 2,827,200
Bad debt expense 78,237 2,079
Changes in assets and liabilities:
Decrease in trade receivables 4,517,581 8,266,679
Decrease in inventories 2,034,726 2,553,245
Increase in other current assets (301,844) (499,449)
Increase in income tax receivable (30,000) 0
Increase in other assets (35,000) (43,466)
Decrease in accounts payable (4,080,677) (3,540,559)
Decrease in accrued liabilities (89,074) (1,186,668)
Decrease in deferred income taxes 75,000 438,000
__________ __________
Net cash provided by
operating activities 2,097,006 7,215,724
__________ __________
Cash flows from investing activities:
Additions to property and equipment, net (254,275) (868,814)
Proceeds from sale of property and equipment 0 190,000
__________ __________
Net cash used in investing activities (254,275) (678,814)
Cash flows from financing activities:
Payments under revolving credit line (3,300,000) 0
Principal payments on short-term
Portion of debt 0 (1,000,000)
Principal payments under capital
lease obligations 0 (406,000)
Proceeds from sale of common shares under
stock option plan, (including tax benefits) 403,375 206,939
Purchase and subsequent cancellation
of common stock (396,240) (598,733)
__________ __________
Net cash used in financing (3,292,865) (1,797,794)
activities __________ __________
Effect of foreign currency translation
on cash and cash equivalents 385,357 31,422
__________ __________
Net increase (decrease) in cash
and cash equivalents (1,064,777) 4,770,538
Cash and cash equivalents at
beginning of period 3,656,150 10,235,321
__________ __________
Cash and cash equivalents at
end of period $ 2,591,373 $ 15,005,859
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 74,821 $ 490,713
Income taxes $ 64,000 $ 805,000
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
October 31, 2002 and 2001
(Unaudited)
Basis of Presentation
The information for the three and six months ended October 31, 2002 and 2001,
is unaudited but includes all adjustments (consisting only of normal recurring
adjustments) which, in the opinion of management, are necessary to state
fairly the financial information set forth therein in accordance with
accounting principles generally accepted in the United States of America. The
interim results are not necessarily indicative of results to be expected for
the full fiscal year. These financial statements should be read in conjunction
with the audited financial statements for the year ended April 30, 2002
included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
Comprehensive Income (loss)
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("SFAS No. 130") requires that items defined as other comprehensive
income, such as unrealized investment gains and losses and translation gains
and losses, be seperately classified in the consolidated financial statements
and that the accumulated balance of other comprehensive income (loss) be
reported separately from retained earnings and additional paid in capital in
the equity section of the consolidated balance sheet. Comprehensive loss for
the three and six months ended October 31, 2002 was ($248,000) and
($1,691,000) respectively. Comprehensive loss for the three and six months
ended October 31, 2001 was ($85,000) and ($1,932,000), respectively.
Principles of consolidation
The consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America and
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been eliminated.
The Company's foreign subsidiaries' functional currency is the U.S. dollar as
the majority of revenues are received in U.S. dollars and a majority of
expenditures are made in U.S. dollars. The Company and its foreign
subsidiaries report in U.S. dollars. For subsidiaries that maintain their
accounts in currencies other than the U.S. dollar, the Company uses the
current method of translation whereby the statements of earnings are
translated using the average exchange rate and the assets and liabilities are
translated using the period end exchange rate. Foreign currency translation
gains or losses are recorded as a separate component of accumulated other
comprehensive income or loss. Foreign currency translation gains or losses are
included in the consolidated statement of earnings. For the three and six
month periods ended October 31, 2002 and 2001,the Company had no foreign
currency transaction gains or losses.
Restructuring charges
In fiscal 2003's first quarter, the Company initiated a restructuring of its
operations, which resulted in a workforce reduction of approximately 24% and
certain other cost efficiencies. The Company recorded a restructuring charge
of $740,000, in the quarter ended July 31, 2002, which primarily relates to
severance payments. As of October 31, 2002, the Company had paid out
approximately $524,000 of the charges with the majority of the balance
expected to be paid in the Company's current fiscal year.
Also, in the first quarter of the prior fiscal year, the Company initiated a
restructuring of its operations, which resulted in a workforce reduction of
approximately 25%. The Company recorded a restructuring charge of $1,200,000,
in the quarter ended July 31, 2001, which primarily related to severance
payments. All of the payments associated with the restructuring have been
paid.
Cash and cash equivalents
Cash and cash equivalents consist of unrestricted cash, money market preferred
stock and commercial paper with original maturities of three months or less.
Inventory valuation
Inventories are valued at the lower of cost or market, with costs determined
by the first-in, first-out method. Inventories at October 31, 2002 and April
30, 2002 consist of the following categories:
October 31, 2002 April 30, 2002
________________ ______________
Raw material $ 1,911,000 $ 3,118,000
Work in process 205,000 182,000
Finished goods 1,284,000 2,135,000
________________ ______________
$ 3,400,000 $ 5,435,000
================ ==============
Financial information by geographic location
The Company operates in one business segment and develops, manufactures and
markets a variety of memory systems for use with servers, workstations,
desktop and notebook computers which are manufactured by various companies.
Revenues for the three and six month periods ended October 31, 2002 and 2001
by geographic region is as follows:
Three months ended Six months ended
October 31, 2002 October 31, 2002
________________ ________________
United States $ 7,978,000 $ 17,055,000
Europe 3,865,000
7,815,000
Other (prinicipally Asia Pacific Region) 2,127,000 3,381,000
________________ ________________
Consolidated $ 13,970,000 $ 28,251,000
================ ================
Three months ended Six months ended
October 31, 2001 October 31, 2001
________________ ________________
United States $ 9,925,000 $ 20,725,000
Europe 5,005,000 11,960,000
Other (prinicipally Asia Pacific Region) 4,243,000 9,059,000
________________ ________________
Consolidated $ 19,173,000 $ 41,744,000
================ ================
Long-lived assets (which consist of property and equipment, and goodwill) and
total assets by geographic region as of October 31, 2002 and 2001 is as
follows:
October 31, 2002
Long-lived assets Total assets
_________________ ______________
United States $ 4,509,000 $ 12,438,000
Europe 14,017,000 19,667,000
Other 78,000 1,302,000
_________________ ______________
Consolidated $ 18,604,000 $ 33,407,000
================= ==============
October 31, 2001
Long-lived assets Total assets
_________________ ______________
United States $ 5,729,000 $ 20,181,000
Europe 21,923,000 35,652,000
Other 180,000 1,545,000
_________________ ______________
Consolidated $ 27,832,000 $ 57,378,000
================= ==============
Long-term Debt
On April 16, 2001 the Company entered into a $10,000,000 term note ("term
note") and a $15,000,000 revolving credit line ("credit line") with a
commercial bank (together, referred to as the "credit facility"). The credit
facility contains financial covenants as defined in the agreement, which were
amended in January 2002 and which the Company was in compliance with at
October 31, 2002. The term note was due in twenty quarterly installments of
$500,000 until March 31, 2006. The Company repaid the term loan in its
entirety in January, 2002. As of October 31, 2002, the amount borrowed under
the revolving credit line was $500,000. The Company repaid the $500,000 of
borrowings on Novemebr 4, 2002 and $15,000,000 remains available for
borrowing. The revolving credit line is scheduled to expire in April 2004.
Significant Accounting Pronouncements
In June 2001, the FASB issued SFAS No. 143, "Accounting for Retirement
Obligations" (SFAS 143). SFAS 143 establishes accounting standards for the
recognition and measurement of an asset retirement obligation and its
associated asset retirement cost. It also provides accounting guidance for
legal obligations associated with the retirement of tangible long-lived
assets. SFAS 143 is effective for fiscal years beginning after June 15, 2002,
with early adoption permitted. The Company currently is evaluating the
provisions of SFAS 143, but expects that the provisions will not have a
material impact on its operations and financial position upon adoption.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 supersedes SFAS 121,
but retains its fundamental provisions for the (a) recognition and measurement
of impairment of long-lived assets to be held and used, and (b) measurement of
long-lived assets to be disposed of by sale. SFAS 144 also supersedes the
accounting / reporting provisions of APB No. 30 for segments of a business to
be disposed of, but retains the requirement to report discontinued operations
separately from continuing operations and extends that reporting to a
component of an entity that either has been disposed of or is classified as
held for sale. SFAS 144 became effective for us on May 1, 2002. The adoption
of this statement did not have a material impact on our consolidated financial
statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" (SFAS 145). SFAS 145 updates, clarifies and simplifies existing
accounting pronouncements. SFAS 145 rescinds Statement No.4, which required
all gains and losses from extinguishment of debt to be aggregated and, if
material, classified as an extraordinary item, net of related income tax
effect. As a result, the criteria in APB No. 30 will now be used to classify
those gains and losses because Statement No. 4 has been rescinded. Statement
No. 44 was issued to establish accounting requirements for the effects of
transition to provisions of the Motor Carrier Act of 1980. Because the
transition has been completed, Statement No. 44 is no longer necessary.
SFAS 145 amends Statement No. 13 to require that certain lease modifications
that have economic effects similar to sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions. This amendment is
consistent with FASB's goal of requiring similar accounting treatment for
transactions that have similar economic effects. SFAS 145 also makes technical
corrections to existing pronouncements. While those corrections are not
substantive in nature, in some instances, they may change accounting practice.
The Company adopted SFAS 145 effective May 1, 2002. The adoption of SFAS 145
did not have a material impact on our consolidated financial statements.
In July 2002, the Financial Accounting Standards Board issued SFAS no. 146,
Accounting for Costs Associated with Exit or Disposal Activities ("FAS 146").
FAS 146 reconsiders all of the guidance contained in EITF 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). FAS 146
applies to costs associated with (a) certain termination benefits (so-called
one-time termination benefits), (b) costs to terminate a contract that is not
a capital lease, and (c) other associated costs including costs to consolidate
facilities or relocate employees. FAS 146, which may be adopted early, is
effective for exit and disposal activities initiated after December 31, 2002.
The Company is currently evaluating FAS 146 and is unable, at this time, to
determine the impact, if any, that might exist as a result of adopting this
standard.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentration of
credit risk consist primarily of cash and cash equivalents. The Company
maintains its cash and cash equivalents in financial institutions and
brokerage accounts. To the extent that such deposits exceed the maximum
insurance levels, they are uninsured. The Company performs ongoing evaluations
of its customers' financial condition, as well as general economic conditions
and, generally, requires no collateral from its customers.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and section 21E of
the Securities and Exchange Act of 1934, as amended, such as the development
of new products, the commencement of production or the future financial
performance of the Company. Actual results may differ from such projections
and are subject to certain risks including, without limitation, risks arising
from: changes in the price of memory chips, changes in the demand for memory
systems for workstations and servers, increased competition in the memory
systems industry, delays in developing and commercializing new products and
other factors described in the Company's most recent Annual Report on Form 10-
K filed with the Securities and Exchange Commission which can be reviewed at
http://www.sec.gov.
Liquidity and Capital Resources
The Company's cash and working capital position remain strong. As of
October 31, 2002, cash and equivalents amounted to $2.6 million and working
capital amounted to $10.1 million, reflecting a current ratio of 3.5 compared
to cash and equivalents of $3.7 million and working capital of $13.5 million
and a current ratio of 2.6 as of April 30, 2002.
During the quarter ended October 31, 2002, the Company purchased and
retired 84,900 shares of its common stock under its existing open market
repurchase plan at a total cost of $256,000. During the first quarter of
fiscal year 2003 the Company purchased and retired 38,600 shares at a cost of
$140,000. As of October 31, 2002, the total number of remaining shares
authorized for purchase under the program is 74,250 shares. On December 4,
2002, the Company announced that its Board of Directors authorized an
additional 500,000 share repurchase program. Management expects that the
Company will continue to repurchase shares in fiscal 2003.
On April 16, 2001 the Company entered into a $10,000,000 term note ("term
note") and a $15,000,000 revolving credit line ("credit line") with a
commercial bank (together, referred to as the "credit facility"). On January
21, 2002 the Company amended and restated its credit facility. The credit
facility contains financial covenants as defined in the agreement which the
Company was in compliance with at October 31, 2002. The term note was due in
twenty quarterly installments of $500,000 until March 31, 2006. The Company
repaid the term loan in its entirety in January, 2002. As of October 31, 2002,
the amount borrowed under the revolving credit line was $500,000. The Company
repaid the $500,000 on Novemebr 4, 2002 and $15,000,000 remains available for
borrowing. The revolving credit line is scheduled to expire in April 2004.
Management believes that the Company's operating cash flows and availability
under borrowings will be sufficient to meet short term liquidity needs
including contractual obligations as the Company does not expect any
unforeseen demands beyond general operating requirements for cash. Management
further believes that its working capital together with internally generated
funds from its operations and its bank line of credit are adequate to finance
the Company's long term operating needs and future capital requirements.
On July 29, 2002, the Company entered into an agreement to sell its
undeveloped land for a price of $3.0 million. The agreement provides for
closing to occur no later than 30 months from the date of the contract.
Additionally, the agreement is subject to certain contingencies and as such
may be terminated prior to closing. The land is carried at cost on the
Company's balance sheet at a value of $875,000 and is shown as an asset held
for sale. The resulting gain on the sale will be recorded upon consumation of
the transaction and when all contingencies have been satisfied.
Future minimum lease payments under noncancellable operating leases (with
initial or remaining lease terms in excess of one year) as of April 30, 2002
are as follows:
Operating leases
Year ending April 30: ________________
2003 $ 1,312
2004 1,108
2005 1,127
2006 1,113
2007 855
Therafter 2,214
Total minimum lease payments $ 7,729
The Company has no other material commitments.
Results of Operations
Revenues for the three month period ending October 31, 2002 were
$13,970,000 compared to revenues of $19,173,000 for the comparable prior year
period. Fiscal 2003 six month revenues totaled $28,252,000 versus six month
revenues of $41,744,000 in the prior year. The decrease in revenues was the
result of decreased demand for our memory products, driven by the economic
slow down. Volume measured as gigabytes shipped decreased 29% for the second
quarter of fiscal 2003 as compared to the same prior year quarter. Six month
volume decreased 42% in fiscal 2003 as compared to the same prior year period.
There was also a decrease in average selling prices caused by the decline in
price of Dynamic Random Access Memory (DRAM) chips, the primary raw material
used in the Company's product. As a result of this decline, average selling
prices for the Company's products in this year's first six months have
declined by approximately 5% from the comparable prior year period, which has
unfavorably impacted revenues.
Cost of sales for the second quarter and six months were 70% and 73% of
revenues, respectively versus 63% and 66% for the same prior year periods. The
increase in cost of sales as a percentage of revenues is primarily the result
of manufacturing capacity that is not being fully utilized, therefore all
fixed cost are not being absorbed at current production levels.
Engineering and development costs in fiscal 2003's second quarter and six
months were $400,000 and $782,000, respectively, versus $413,000 and
$1,007,000 for the same prior year periods. The decrease in expense is
primarily attributable to the reduced number of employees as a result of the
restructurings. The Company intends to maintain its commitment to the timely
introduction of new memory products as new computers are introduced.
Selling, general and administrative costs in fiscal 2003's second quarter
and six months increased to 31% of revenues from 27% for the same prior year
periods. Second quarter and six month total expenditures decreased by $940,000
and $2,460,000 from the comparable prior year periods. The reduction of total
expenses is mainly the result of the aforementioned reduction in workforce.
The majority of selling, general and administrative costs are fixed, therefore
as revenue decreases the percent to revenue of these cost increases.
In fiscal 2002's first quarter and again in fiscal 2003's first quarter,
the Company initiated restructurings of its operations which resulted in
workforce reductions of approximately 25% and 24%, respectively as well as
certain other cost efficiencies. The Company recorded a restructuring charge
of $740,000 in the quarter ended July 31, 2002, which primarily relates to
severance payments. As of October 31, 2002, the Company had paid out
approximately $524,000 of the charges with the majority of the balance
expected to be paid in the Company's current fiscal year. In fiscal 2002's
first quarter, the Company recorded a restructuring charge of $1,200,000,
which primarily related to severance payments. All of the payments associated
with that restructuring have been paid.
Intangible asset amortization recorded in fiscal 2003's first and second
quarter was nil versus $297,000 and $296,000, respectively. The Company
conducted an evaluation of its intangible assets in the third quarter of
fiscal 2002. The evaluation resulted in a one-time charge of $5,300,000, which
reduced the carrying value of its intangible assets to zero.
Other income (expense), net for the second quarter and six months totaled
($9,000) and ($54,000) for fiscal 2003 and ($143,000) and ($297,000) for the
same periods in fiscal 2002. Other income (expense), net in fiscal 2003's
three and six months consisted of interest expense of ($18,000) and ($75,000)
offset by interest income of $9,000 and $21,000. Fiscal 2002's three and six
months consisted of interest expense of ($241,000) and ($491,000) offset by
interest income of $98,000 and $193,000. Interest expense has decreased due to
the reduction of debt.
Income tax expense (benefit) for the three and six months ended October
31, 2002 was ($226,000) and ($564,000), respectively versus $899,000 and
$1,304,000 in the comparable prior year periods. In both fiscal years, income
tax expense (benefit) was recognized in the United States at an effective rate
of 38%. No tax benefit has been recognized on losses incurred in international
subsidiaries.
Critical Accounting Policies
The Company's accounting policies are described in Note 1 to the notes to
the April 30, 2002 Consolidated Financial Statements filed on the Company's
most recent Form 10-K and there have been no material changes to such
policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company does not invest in market risk sensitive instruments. The
Company's investments during the past fiscal year have consisted of overnight
deposits with banks. The Company's rate of return on its investment portfolio
changes with short-term interest rates, although such changes will not effect
the value of its portfolio. The Company's objectives in connection with its
investment strategy is to maintain the security of its cash reserves without
taking market risk with principal.
The Company purchases and sells primarily in U.S. dollars. The Company
sells in foreign currency to a limited number of customers and as such incurs
some foreign currency risk. At any given time, approximately 15 to 20 percent
of the Company's accounts receivable are denominated in currencies other than
U.S. dollars. The Company also incurs expenses in these same currencies,
primarily payroll and facilities costs which hedge these assets. At present,
the Company does not purchase forward contracts as hedging instruments, but
intends to do so as circumstances warrant.
ITEM 4. CONTROLS AND PROCEDURES
During the period covered by this interim report, the Company's chief
executive officer and its chief financial officer have evaluated the
effectiveness of the Company's internal controls and procedures and the
Company's disclosure controls and procedures and have determined that they are
adequate to insure a fair presentation, in all material respects, of the
financial position, results of operations and statements of cash flows of the
Company and there have been no material changes to such controls and
procedures.
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 18, 2002 the Company held its Annual Meeting of
Shareholders. The Company solicited proxies pursuant to Regulation 14 under
the Securities Exchange Act of 1934, as amended. The matters voted upon were
the election of directors and the ratification of the selection of KPMG, LLP
as the independent certified public accountant of the Company fo the fiscal
year ending April 30, 2003. The results of the voting were:
On the vote for directors:
Nominee For Withheld
_______ ___ ________
Tarrantino 7,408,073 120,967
Holzman 7,449,673 79,367
Majewski 7,484,363 44,677
Riley 7,480,577 48,463
Cady 7,483,382 45,658
On the vote for ratification of the selection of accountants:
For Against Abstain
_______ _______ _______
7,442,148 68,953 17,939
ITEM 5. OTHER INFORMATION
After the close of the quarter, the Board of Directors authorized the
repurchase of an additional 500,000 shares of common stock as described in the
attached press release.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 (a). Press Release reporting results of Second Quarter, Fiscal Year
2003 (Attached).
27 (b). Press Release announcing Open Market Stock Repurchase Plan.
B. Reports on Form 8-K
No reports on Form 8-K have been filed during the current quarter.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATARAM CORPORATION
MARK E. MADDOCKS
Date: December 10, 2002 By: ___________________________
Mark E. Maddocks
Vice President, Finance
(Principal Financial Officer)
CERTIFICATIONS
I, Robert Tarantino, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Dataram Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: December 10, 2002
ROBERT TARANTINO
_______________________
Robert Tarantino
President and Chief Executive Officer
I, Mark Maddocks, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Dataram Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: December 10, 2002
MARK MADDOCKS
_______________________
Mark Maddocks
Vice President, Finance
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