- -------------------------------------------------------------------------------
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 MARCH 31, 2000
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: 0-27491
DALEEN TECHNOLOGIES, INC.
(Exact name of registrant as specified in Its charter)
<TABLE>
<S> <C>
DELAWARE 65-0944514
(State or other Jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1750 CLINT MOORE ROAD 33487
BOCA RATON, FLORIDA (Zip Code)
(Address of principal executive offices)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 999-8000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of May 8, 2000, there were 21,653,176 shares of registrant's common stock,
$0.01 par value, outstanding.
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Form 10-Q
1
<PAGE>
DALEEN TECHNOLOGIES, INC. AND SUBSIDIARY
FORM 10-Q
QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Condensed Consolidated Balance Sheets as of December 31, 1999 and March
31, 2000 (unaudited) 3
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1999 and 2000 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and 2000 (unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 10
<CAPTION>
PART II
OTHER INFORMATION
<S> <C>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 11
SIGNATURES 12
</TABLE>
Form 10-Q
2
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
DALEEN TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 52,852 37,381
Restricted cash 124 925
Securities available for sale 9,385 8,445
Accounts receivable, less allowance for doubtful accounts of $707 at
December 31, 1999 and $1,280 at March 31, 2000 (unaudited) 3,673 6,706
Costs in excess of billings 3,650 5,707
Other current assets 941 719
--------- --------
Total current assets 70,625 59,883
Property and equipment, net 4,845 6,610
Goodwill and other intangibles, net of accumulated amortization
of $607 at December 31, 1999 and (unaudited) $3,671 at March 31, 2000 57,685 54,503
Other assets 726 542
--------- --------
Total assets $ 133,881 121,538
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,099 743
Accrued payroll and other accrued expenses 12,240 6,621
Billings in excess of costs 769 2,390
Deferred revenue 301 887
Other current liabilities 15 5
--------- --------
Total current liabilities 14,424 10,646
--------- --------
Stockholders' equity:
Common stock $.01 par value. Authorized 70,000,000 shares;
issued and outstanding 21,408,246 shares at December 31, 1999
and 21,565,782 shares at March 31, 2000 214 216
Stockholders notes receivable (202) (82)
Deferred stock compensation (3,031) (2,722)
Additional paid-in capital 160,446 160,610
Accumulated deficit (37,970) (47,130)
--------- --------
Total stockholders' equity 119,457 110,892
--------- --------
Total liabilities and stockholders' equity $ 133,881 121,538
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
DALEEN TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
1999 2000
------- -----
<S> <C> <C>
Revenue:
License fees $ 949 5,702
Professional services and other 830 3,268
------- ------
Total revenue 1,779 8,970
------- ------
Cost of revenue:
License fees 2 158
Professional services and other 1,266 2,932
------- ------
Total cost of revenue 1,268 3,090
------- ------
Gross profit 511 5,880
Operating expenses:
Sales and marketing 485 3,169
Research and development 1,577 4,994
General and administrative 1,465 3,995
Amortization of goodwill and other intangibles -- 3,673
------- ------
Total operating expenses 3,527 15,831
------- ------
Operating loss (3,016) (9,951)
Total interest income and nonoperating income, net 58 798
------- ------
Net loss $(2,958) (9,153)
======= ======
Net loss per share -
basic and diluted $ (0.91) (0.43)
======= ======
Weighted average shares - basic and diluted 3,240 21,445
======= ======
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
DALEEN TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------------
1999 2000
------- ------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,958) (9,153)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 307 4,221
Stock compensation -- 185
Bad debt expense (9) 595
Interest income on shareholder loans -- (4)
Changes in assets and liabilities:
Restricted cash (120) (801)
Accounts receivable 133 (3,632)
Costs in excess of billings (508) (2,192)
Other current assets (171) 212
Other assets (5) 193
Accounts payable 228 (352)
Accrued payroll and other accrued expenses (426) (1,137)
Billings in excess of costs 581 1,620
Deferred revenue -- 887
Other current liabilities -- (312)
------- ------
Net cash used in operating activities (2,948) (9,670)
------- ------
Cash flows used in financing activities:
Proceeds from exercise of stock options and bridge warrant -- 316
Payment to Inlogic stockholders -- (4,800)
Payment of deferred offering costs -- (28)
Repayment of notes receivable -- 120
------- ------
Net cash used in financing activities -- (4,392)
------- ------
Cash flows provided by (used in) investing activities:
Purchase of securities available for sale (7,952) (8,472)
Sales and maturities of securities available for sale 11,665 9,413
Capital expenditures (783) (2,360)
------- ------
Net cash provided by (used in) investing activities 2,930 (1,419)
------- ------
Effect of exchange rates on cash and cash equivalents -- 10
------- ------
Net decrease in cash and cash equivalents (18) (15,471)
Cash and cash equivalents at beginning of period 723 52,852
------- ------
Cash and cash equivalents at end of period $ 705 37,381
======= ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
DALEEN TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation of the results
for the periods presented have been included. The condensed balance sheet at
December 31, 1999 has been derived from the Company's audited consolidated
financial statements at that date. These condensed consolidated financial
statements should be read in connection with the Company's annual report filed
on Form 10-K as of and for the year ended December 31, 1999.
The results of operations for the three months ended March 31, 2000 are not
necessarily indicative of results that may be expected for any other interim
period or for the full fiscal year.
(2) PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
(3) BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share was computed by dividing net loss
applicable to common stockholders by the weighted average number of shares of
common stock outstanding for each period presented. Common stock equivalents
were not considered since their effect would be antidilutive.
Form 10-Q
6
<PAGE>
(4) REVENUE RECOGNITION
In 1997, the American Institute of Certified Public Accountants issued
Statement of Position 97-2, SOFTWARE REVENUE RECOGNITION ("SOP 97-2"). Effective
January 1, 1998, the Company adopted SOP 97-2 for all software transactions
entered into that did not require significant production, modification or
customization. SOP 97-2 generally requires revenue earned on software
arrangements involving multiple elements to be allocated to each element based
on vendor specific objective evidence ("VSOE") of the relative fair values of
the elements. VSOE is determined by the price charged when the element is sold
separately. The revenue allocated generally is recognized when the software has
been delivered and installed, the fee is fixed and determinable and
collectibility is probable. An arrangement fee is generally not presumed to be
fixed or determinable if payment of a significant portion of the licensing fee
is not due until after expiration of the license or more than 12 months after
delivery. Revenue related to arrangements containing extended payment terms
where the fees are not considered fixed and determinable is deferred until
payments are due. Revenue related to customer maintenance agreements is deferred
and recognized ratably on a straight-line basis over the maintenance period of
the agreement. Professional services revenue delivered per time and materials
contract terms are recognized as services are performed.
In March 1999, the Company adopted SOP 98-9, MODIFICATION OF SOP 97-2,
SOFTWARE REVENUE RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS ("SOP 98-9").
SOP 98-9 amends SOP 97-2 to require recognition of revenue using the "residual
method" when (1) there is VSOE of the fair values of all undelivered elements in
a multiple-element arrangement that is not accounted for using long-term
contract accounting, (2) VSOE of fair value does not exist for one or more of
the delivered elements in the arrangement, and (3) all revenue recognition
criteria in SOP 97-2 other than the requirement for VSOE of the fair value of
each delivered element of the arrangement are satisfied. Under the residual
method, the arrangement fee is recognized as follows: (1) the total fair value
of the undelivered elements, as indicated by VSOE, is deferred and subsequently
recognized in accordance with the relevant sections of SOP 97-2 and (2) the
difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
The adoption of SOP 98-9 did not have a material impact on results of
operations.
The Company recognizes revenue from long-term contracts involving
significant production, modification or customization of software under
Statement of Position 81-1 using the percentage of completion method, based on
the ratio of total labor hours incurred to date to total estimated labor hours.
Changes in job performance, job conditions, estimated profitability and final
contract settlement may result in revisions to costs and income and are
recognized in the period in which the revisions are determined. Contract costs
include all direct material and labor costs and those indirect costs related to
contract performance, such as indirect labor and supplies. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Amounts billed in excess of revenue recognized to date
are classified as "Billings in excess of costs," whereas revenue recognized in
excess of amounts billed are classified as "Costs in excess of billings" in the
accompanying consolidated balance sheets.
For license fee revenue sold to end users, the Company recognizes
revenue upon shipment when it has no further obligations under the contract. In
these arrangements a third-party integrator contracts directly with the customer
to perform the installation. Upon shipment, delivery has occurred, persuasive
evidence of an arrangement exists, collectibility is probable and the fee is
fixed and determinable.
The Company recognizes revenue after installation is complete if the
Company sells the license to a third-party integrator. Under these types of
arrangements, the Company's involvement is on an as-needed basis throughout the
integration process. Therefore, the obligation is not complete until the
software has been installed and accepted by the end user.
Form 10-Q
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following should be read in conjunction with our unaudited
condensed consolidated financial statements, and the related notes thereto,
included elsewhere herein. In addition, reference should be made to our audited
consolidated financial statements and notes thereto, and related Management's
Discussion and Analysis of Financial Condition and Results of Operations
included with our Annual Report filed on Form 10-K for the year ended December
31, 1999.
Overview
We are a leading provider of eBusiness software solutions for
integrated communications providers. We provide several products to our target
markets, the most important of which are BillPlex and eCare. Our products,
BillPlex, eCare, SwitchFlow, Voyager, RequestFlow and PicWare, enable our
customers to provide comprehensive, Internet-enabled billing, provisioning, and
customer and partner management for a wide array of communications services that
include local, long distance, and wireless voice, Internet access and other data
services, and application hosting. Our products are designed to enable providers
of multiple communications services, such as voice, data, internet access, video
and application hosting to perform account and service provisioning, subscriber
care and management, rating, billing and payment processing. In addition to our
products, we offer professional consulting services, training, maintenance,
support and third-party software fulfillment all related to the products we
develop.
In December, 1999, we acquired all of the issued and outstanding
capital shares of Inlogic Software, Inc., a Nova Scotia corporation ("Inlogic").
Inlogic provides eBusiness software solutions for customer and partner
relationship management, including Web-enabled customer self-care and electronic
bill presentment and payment (EBPP), as well as business-to-business gateway
solutions that support streamlined workflows and automated processes between
trading partners.
The acquisition resulted in a one-time charge of $6.3 million related
to the write-off of purchased in-process research and development. This related
to the development of numerous Inlogic products which provide web interface and
other operational support system products. The Inlogic products are in the early
stages of their development and are undergoing further development and
integration with BillPlex. The value assigned to in-process research and
development was determined based on management's estimates of the percentage of
completion of the underlying development effort, resulting net cash flows from
Inlogic products and the discounting of such cash flows back to their present
value.
Certain matters discussed in this Quarterly Report on Form 10-Q and any
documents incorporated herein by reference may be considered "forward-looking
statements" within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act
of 1995. Those statements include statements regarding the intent, belief or
current expectations of Daleen Technologies, Inc. and its subsidiaries and
members of its management as well as the assumptions on which such statements
are based. Any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and actual results may differ
materially from those contemplated by such forward-looking statements. Important
factors currently known to management that could cause actual results to differ
materially from those in forward-looking statements include integration of
recently acquired businesses and adverse developments with respect to the
Company's operations. These and additional important factors to be considered
are set forth in our Annual Report on Form 10-K for the year ended December 31,
1999, under "Item 1. Business - Certain Risk Factors and Investment
Considerations," "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in the other sections of the Annual
Report on Form 10-K. We undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results.
Results of Operations
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1999
TOTAL REVENUE. Total revenue, which includes license revenue and
professional services and other revenue, increased $7.2 million, or 404%, to
$9.0 million in the three months ended March 31, 2000 from $1.8 million for the
same period in 1999. Revenue increases from both licenses and services occurred
due to several reasons including increased sales and customer contracts for our
products, increased market acceptance of our products, additional ongoing
product implementations, and product sales associated with our acquisition of
Inlogic Software in December 1999.
LICENSE FEES. Our license fees are derived from licensing our software
products. During the quarter just ended, substantially all of our license
revenue was attributable to our BillPlex and eCare products and related market
packages, a trend which we intend to continue. As part of our ongoing sales and
marketing focus, we may limit our marketing, sales and support activities
associated with certain business-to-business gateway products. License fees
increased $4.8 million, or 501%, in the three months ended March 31, 2000 to
$5.7 million compared to $0.9 million for the same period in 1999. License fees
constituted 63.6% of total revenue in the three months ended March 31, 2000,
compared to 53.3% in the same period in 1999. This increase was due to an
increase in new sales and customer contracts, increased market acceptance of our
products and additional product sales associated with our December 1999
acquisition of Inlogic Software.
PROFESSIONAL SERVICES AND OTHER. Our professional services and other
consists of revenue from professional
Form 10-Q
8
<PAGE>
consulting services, training, maintenance and support, and third party software
fulfillment. Consulting services are offered on a price established "bundled"
basis and on a time and materials basis. Third party software fulfillment is
offered on a "cost plus" basis. Professional services and other revenue
increased $2.4 million, or 294%, in the three months ended March 31, 2000 to
$3.3 million, compared to $0.8 million in the same period in 1999. The increase
was due to several reasons including increased sales and customer contracts as
well as additional ongoing product implementations and product sales associated
with our acquisition of Inlogic Software in December 1999.
Professional services and other revenue constituted 36.4% of total
revenue in the three months ended March 31, 2000, compared to 46.7% for the same
period in 1999. The decrease as a percentage of total revenue is due to sales in
2000 consisting of a higher component of license revenue in accordance with our
strategy, which is the use of market packages to facilitate implementation, more
utilization by customers of outside system integrators and more rapid setup and
installation of our products.
TOTAL COST OF REVENUE. Total cost of revenues increased $1.8 million,
or 144%, to $3.1 million in the three months ended March 31, 2000 from $1.3
million in the same period in 1999. Total cost of revenue includes the cost of
direct labor, benefits, overhead and materials associated with the fulfillment
and delivery of the license materials and professional services to customers.
These costs increased as we deployed more resources to support the greater
number of implementations that we performed as well as increased costs
associated with the development of services packages for eCare and other
products acquired from Inlogic Software. Overall, cost of revenue as a
percentage of revenue decreased to 34.4% in the three months ended March 31,
2000, from 71.3% in the same period in 1999.
COST OF LICENSE FEES Cost of license fees includes commissions for
referrals, direct cost of labor, benefits and packaging material for fulfillment
and shipment of our software products and related documentation. Cost of license
fees increased to $158,000, or 7,800%, in the three months ended March 31, 2000,
from $2,000 in the same period in 1999 due to the increased number of software
contracts and commissions paid for referrals.
COST OF PROFESSIONAL SERVICES AND OTHER. Cost of professional
services and other includes direct cost of labor, benefits, materials and
related corporate overhead costs to provide professional services to customers.
Cost of professional services and other increased $1.7 million, or 132%, to $2.9
million in the three months ended March 31, 2000, from $1.3 million in the same
period in 1999. These costs increased as we deployed more resources to support
the greater number of implementations that we performed as well as other costs
associated with the development of services packages associated with eCare and
other products acquired from Inlogic Software. Cost of professional services and
other decreased to 32.7% of professional services and other revenue in 2000,
compared to 71.2% in 1999.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses earned by sales and marketing personnel,
travel and entertainment, promotional and related corporate overhead costs.
These expenses increased $2.7 million or 553.4%, to $3.2 million in the three
months ended March 31, 2000, from $485,000 for the same period in 1999. The
overall increase was due to the increase in the number of personnel in sales and
marketing from 1999 to 2000 and associated commissions. As a percentage of
revenue, these expenses increased from 27.3% in 1999 to 35.3% in 2000.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and benefits for software developers, product testing and
benchmarking, management, quality assurance personnel and related corporate
overhead costs. Our research and development expenses increased $3.4 million, or
216.7%, to $5.0 million in the three months ended March 31, 2000, from $1.6
million for the same period in 1999. The overall increase was primarily the
result of additional software developers, additional resources from Inlogic
Software, product testing and benchmarking, managers, and quality assurance
personnel in the three months ended March 31, 2000, compared to the same period
in 1999. As a percentage of revenue, these expenses decreased from 88.6% in 1999
to 55.7% in 2000.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries, benefits and related costs for our executive, finance,
administrative, human resources, information systems personnel and related
corporate overhead costs. Our general and administrative expenses increased $2.5
million, or 160% to $4.0 million in the three months ended March 31, 2000, from
$1.5 in the same period in 1999. This increase was primarily the
Form 10-Q
9
<PAGE>
result of additional finance, executive, information systems and human resources
personnel, including recruiting costs, and additional resources from the
acquisition of Inlogic Software in December, 1999, to support the growth of our
business. As a percentage of revenue, general and administrative expenses
decreased to 42.5% in the three months ended March 31, 2000 from 82.3% in the
same period in 1999.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Goodwill and other
intangibles are the result of the Inlogic acquisition dated December 16, 1999.
Goodwill and other intangibles are being amortized over a four year period and
the stock compensation is amortized over ten years.
NONOPERATING INCOME. Nonoperating income is comprised primarily of
interest income, net of interest expense. Nonoperating income increased
$740,000, or 1,275.9%, to $798,000 in the three months ended March 31, 2000 from
$58,000 for the same period in 1999. This was primarily attributable to the
investment earnings of the proceeds of our initial public offering received
during 1999.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, our liquidity was $46.7 million and consisted of
cash and cash equivalents totaling $38.3 million and securities available for
sale of $8.4 million. We generated these funds primarily through our initial
public offering in October 1999. Beyond our capital expenditures, the funds we
have raised have been applied to support our working capital needs. Our working
capital needs have expanded significantly as our client base has grown and due
to the acquisition of Inlogic Software in December 1999.
Net cash used in operating activities was $9.7 million for the three
months ended March 31, 2000, compared to $2.9 million for the three months ended
March 31, 1999. The principal use of cash for both periods was to fund our
losses from operations which increased in the three months ended March 31, 2000
as we have expanded our workforce and facilities.
Net cash used in investing activities was $1.4 million for the three
months ended March 31, 2000 and net cash provided by investing activities was
$2.9 million for the three months ended March 31, 1999. The cash was principally
used for capital expenditures in the ordinary course of business. The Company
did not need as much cash for capital expenditures for the three months ended
March 31, 1999.
Net cash used by financing activities was $4.4 million for the three
months ended March 31, 2000 and $0 for the three months ended March 31, 1999.
Cash used by financing activities was primarily used to pay dividends to
shareholders of the former Inlogic Software which were declared prior to the
acquisition of Inlogic Software by the Company.
We believe that the net proceeds from our initial public offering in
October, 1999, together with our current cash and cash equivalents, will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for at least the next 18 months. We may require additional funds to
support our working capital requirements or for other purposes and we may seek
to raise additional funds through public or private equity financing or from
other sources. There can be no assurance that additional financing will be
available at all or that, if available, the financing will be obtainable on
terms favorable to us or that any additional financing would not be dilutive.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our financial instruments consist of cash that is invested in
institutional money market accounts and short -term securities invested in
corporate fixed income bonds. At March 31, 2000, the carrying value of our
financial instruments approximated their fair values based on current market
prices and rates. We do not use derivative financial instruments in our
operations or investments and do not have significant operations subject to
fluctuations in commodities prices or foreign currency exchange rates.
Form 10-Q
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Effective December 16, 1999, we acquired all of the issued and
outstanding capital shares of Inlogic Software Inc., a Nova Scotia corporation
("Inlogic"). We acquired the capital shares of Inlogic in exchange for an
aggregate of 2,160,239 exchangeable shares (the "Exchangeable Shares") and
57,435 shares of the Company's Common Stock. The Exchangeable Shares were issued
by our wholly owned subsidiary, Daleen Canada Corporation, but are exchangeable
at any time into shares of our Common Stock on a one-for-one basis. As of March
31, 2000, an aggregate of 2,145,471 Exchangeable Shares had been converted into
shares of our Common Stock. We also issued options to acquire an aggregate of
167,326 shares of our Common Stock in exchange for all of the outstanding
options to acquire capital shares of Inlogic. The terms of the transaction are
set forth in a Share Purchase Agreement as well as certain other transaction
documents which are filed as Exhibits to our Current Report on Form 8-K filed on
December 30, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
Report on Form 8-K/A filed February 29, 2000 with respect to the filing
of the consolidated financial statements of Inlogic Software, Inc. and
its subsidiary, a business acquired by the Company.
Form 10-Q
11
<PAGE>
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.
<TABLE>
<S> <C>
DALEEN TECHNOLOGIES, INC.
Date: May 15 , 2000 /s/
--------------- -------------------------------------------------
JAMES DALEEN
Chairman of the Board of Directors and Chief
Executive Officer
(Principal Executive Officer)
Date: May 15 , 2000 /s/
---------------- --------------------------------------------------
RICHARD A. SCHELL
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
Form 10-Q
12
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF DALEEN TECHNOLOGIES, INC. AND
SUBSIDIARY AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-1999
<CASH> 38,306
<SECURITIES> 8,445
<RECEIVABLES> 7,986
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0
0
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</TABLE>
