AMENDED
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Quarter Ended Commission File Number
December 31, 1997 001-11747
THE ASHTON TECHNOLOGY GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-6650372
(State of Incorporation) (I.R.S. Employer Identification Number)
1900 Market Street, Suite 701, Philadelphia, PA 19103
(Address of principal executive offices)
Issuer's telephone number, including area code: 215-751-1900
(Former name, former address and former fiscal
year if changed since last report)
Number of shares of common stock outstanding on December 31, 1997: 7,562,500
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 (of 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 ___
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<PAGE>
THE ASHTON TECHNOLOGY GROUP, INC.
INDEX - FORM 10-QSB
December 31, 1997
<TABLE>
<CAPTION>
Part I - Financial Information Page
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<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1997 and March 31, 1997......... 4
Consolidated Statements of Operations -
For the Three and Nine Months Ended December 31, 1997 and 1996................. 5
Consolidated Statements of Cash Flows -
For the Nine Months Ended December 31, 1997 and 1996........................... 6
Notes to Unaudited Consolidated Financial Statements........................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................................... 8
Part II - Other Information
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Item 1. Legal Proceedings ............................................................. 12
Item 2. Changes in Securities and Use of Proceeds ..................................... 12
Items 3 through 5 have been omitted since the items are either inapplicable or the answer is negative
Item 6. Exhibits and Reports on Form 8-K............................................... 12
Signatures ............................................................................. 16
</TABLE>
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 1997 and March 31, 1997
December 31, March 31,
1997 1997
------------ -------------
(UNAUDITED) (AUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 853,383 $ 60,841
Contracts receivable, net of allowance for
doubtful accounts 36,843 1,483,163
Notes receivable 100,009 --
Prepayments and other current assets 424,025 98,903
------------ ------------
Total Current Assets 1,414,260 1,642,907
Property and equipment, net 711,305 1,041,449
Note receivable - long term 486,090 --
Private placement costs 700,818 --
Development costs 365,640 --
Investment in ECOM, Inc. 105,000 --
Goodwill, net -- 575,581
Other assets 67,605 106,693
------------ ------------
Total Assets $ 3,850,718 $ 3,366,630
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 994,663 $ 1,937,752
Billings in excess of costs -- 52,722
------------ ------------
Total current liabilities 994,663 1,990,474
Long-term debt 38,000 13,000
------------ ------------
Total liabilities 1,032,663 2,003,474
------------ ------------
Minority Interest -- 300,279
------------ ------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock - $.01 par value 5,485 --
Common stock - $.01 par value 75,625 75,625
Additional paid-in capital 16,670,129 10,482,197
Accumulated deficit (13,933,184) (9,494,945)
------------ ------------
Total stockholders' equity 2,818,055 1,062,877
------------ ------------
Total Liabilities and
Stockholders' Equity $ 3,850,718 $ 3,366,630
============ ============
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE>
The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three and Nine Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
----------------------------- -----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 505,310 $ 1,144,977 $ 3,340,367 $ 3,426,992
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenues 431,233 827,121 2,620,896 2,355,816
Development costs 103,018 668,518 306,693 2,643,462
Selling, general and administrative expenses 892,930 695,432 2,813,757 2,331,783
Depreciation and amortization 120,880 120,384 364,834 361,152
----------- ----------- ----------- -----------
Total costs and expenses 1,548,061 2,311,455 6,106,180 7,692,213
----------- ----------- ----------- -----------
Loss from operations (1,042,751) (1,166,478) (2,765,813) (4,265,221)
Other costs and revenues:
Cost of corporate restructuring -- (702,678) -- (702,678)
Interest income (expense), net (55,043) 15,105 (142,070) 113,865
Loss on sale of subsidiary (385,930) -- (385,930) --
Private placement costs (55,003) -- (165,005) --
Minority interest in earnings of subsidiary 10,223 (37,085) (11,464) (118,153)
----------- ----------- ----------- -----------
Loss before provision for income taxes (1,528,504) (1,891,136) (3,470,282) (4,972,187)
Provision for income taxes 27,749 155,800 41,775 227,300
----------- ----------- ----------- -----------
Net loss ($1,556,253) $(2,046,936) $(3,512,057) $(5,199,487)
=========== =========== =========== ===========
Net loss per common share $ (.33)* $ (.27) $ (.59)* $ (.73)
=========== =========== =========== ===========
Weighted average number of common shares outstanding 7,562,500 7,562,500 7,562,500 7,150,416
=========== =========== =========== ===========
</TABLE>
* See Description of Business and Basis of Presentation paragraphs 5, 6 and 7.
Also See Exhibit 11, Computation of Earnings per Share
The accompanying notes are an integral part of
these consolidated financial statements.
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The Ashton Technology Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
------------------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 3,512,057) ($ 5,199,487)
Adjustments to reconcile net loss to net cash used
by operating activities, net of acquired business in 1996:
Depreciation and amortization 554,081 253,827
Increase in minority interest of subsidiary 11,464 --
Loss on sale of subsidiary 385,930 --
Changes in operating asset and liabilities
Increase in contracts receivable, net (36,843) (229,469)
Increase in prepayments and other assets (273,568) (236,094)
Decrease in accounts payable and accrued expenses (464,036) (250,440)
Increase in billings in excess of costs -- 194,043
------------ ------------
Net cash used by operating activities (3,335,029) (5,467,620)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Note receivable - sale of subsidiary (586,099) --
Purchase of fixed assets (121,797) (1,012,917)
Cash received from sale of subsidiary 600,000 --
Cash paid for acquisition of CSI(R), net of cash acquired -- (512,012)
Investment in ECOM, Inc. (105,000) --
Increase in minority interest -- 118,153
Development costs (365,640) --
Adjustment of net cash for subsidiary sold (45,448) --
------------ ------------
Net cash used in investing activities (623,984) (1,406,776)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance costs for private placement (702,997) (1,960)
Issuance costs for initial public offering -- (282,001)
Proceeds from initial public offering -- 10,394,709
Proceeds from notes payable -- 250,000
Proceeds from private placement 5,500,000 --
Payment of notes payable -- (2,101,341)
------------ ------------
Net cash provided by financing activities 4,797,003 8,259,407
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 837,990 1,385,011
Cash and cash equivalents, beginning of period 15,393 31,021
------------ ------------
Cash and cash equivalents, end of period $ 853,383 $ 1,416,032
============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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THE ASHTON TECHNOLOGY GROUP, INC. AND SUBSIDIARIES NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for the nine
months ended December 31, 1997 include the accounts of The Ashton
Technology Group, Inc. ("Ashton") and its subsidiaries, Universal Trading
Technologies Corporation ("UTTC(TM)"), and Gomez Advisors, Inc. ("Gomez").
Ashton, together with UTTC(TM) and Gomez, is the "Company".
The Company's subsidiary, Computer Science Innovations, Inc. ("CSI(R)"),
was sold on November 6, 1997 (see "Sale of Subsidiary" below). The
financial statements for the nine months ended December 31, 1997 includes
CSI(R) until it was sold. The financial statements for the year ended March
31, 1997 include CSI(R), but did not include Gomez, which was formed by
Ashton as a wholly-owned subsidiary on May 21, 1997.
As originally filed in the Company's Form 10-QSB for the quarter ended
December 31, 1997, the Company reflected a gain on the sale of CSI(R) of
$102,000. The reason for reporting the gain on sale in this manner results
from the Company's accounting for its portion of CSI(R)'s prior years
earnings as an adjustment to additional paid-in capital instead of as an
increase in its investment in CSI(R). Had the Company accounted for this
increase in investment, the sale of CSI(R) would have resulted in a loss of
approximately $386,000 instead of a gain of $102,000. The adjustment of
$488,000 had the effect of increasing the Company's net loss from
$1,068,331 to $1,556,253 for the three-month period ended December 31, 1997
and increasing the Company's net loss from $3,024,135 to $3,512,057 for the
nine-month period ended December 31, 1997.
A corresponding error was also made. As mentioned above, the loss was
charged to additional paid-in capital when it should have been charged to
operations. The revised reporting of this transaction had no effect on cash
or working capital and did not produce a change in stockholders' equity.
In addition, the Company is amending its financial statements to reflect
the accounting of the "beneficial conversion feature" of its Series A
Convertible PIK Preferred Stock ("Series A Preferred Stock"). In accordance
with Topic D-60 described below. Financial Accounting Standard Board
Emerging Issues Task Force Topic No. D-60 ("Topic D-60") addresses the
position of the accounting staff of the Securities and Exchange Commission
regarding conversion features of convertible preferred stock and
convertible debt securities that are "in the money" upon issuance, i.e. the
conversion price is below the market price for the common stock. At the
time of issuance, the conversion rate for the Series A Preferred stock of
$1.00 per share was below the market price. Thus, the Series A Preferred
stock contains a "beneficial conversion feature" within the meaning of
Topic D-60.
According to Topic D-60, an issuer of an equity security containing such a
"beneficial conversion feature" must allocate to additional paid-in capital
an amount equal to the intrinsic value of such conversion feature. The
discount resulting from the allocation of proceeds to the "beneficial
conversion feature" is analogous to a dividend and should be recognized as
a return to the preferred stockholders over the minimum period in which the
preferred shareholders can realize that return.
The net effect of the adjustment made to conform to topic D-60 is an
increase to previously reported additional paid-in capital and accumulated
deficit as of December 31, 1997 of approximately $926,000. In addition, the
effect on loss per common share as previously reported was an increase of
$0.12 and $0.13 for the three months ended December 31, 1997, respectively.
The adjustment had no effect on total stockholders' equity.
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The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial statements and in accordance with the
instructions for Form 10-QSB. Accordingly, they do not contain all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
the accompanying unaudited consolidated financial statements have been
prepared on the same basis as the audited statements and include all
adjustments, consisting only of normal recurring adjustments, which are
necessary for a fair statement of the results of the interim periods
presented. These financial statements should be read in conjunction with
the footnotes contained in the Company's 10-KSB for the fiscal year ended
March 31, 1997.
The preparation of interim financial statements, in conformity with
generally accepted accounting principles, also requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities; the disclosure of contingent assets and liabilities at the
date of the interim statements; and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. SALE OF SUBSIDIARY
On November 6, 1997, Ashton sold CSI(R), to George H. Milligan and Susanne
L. Cavadeas, as Trustees of the Trust Created by The Computer Science
Innovations, Inc. Leveraged ESOP, for $1,723,000, payable as follows: (1)
repayment of $500,000 loan plus interest of $28,875, (2) $600,000 in cash,
and (3) a five year 83% Note of $594,125. The Company recognized an
accounting loss of $385,930; however, on a cash basis, the Company actually
realized a gain on the sale of $101,992. (See the third paragraph above.)
In addition, the Company received cash in the amount of approximately
$340,000 due to a Tax Allocation Agreement.
3. PREPAYMENTS AND OTHER CURRENT ASSETS
Included in prepayments are $413,980 of legal costs incurred by the Company
in connection with a lawsuit with one stockholder. The Company has
submitted a claim in the amount of $413,980 to its insurance carrier. To
the extent such costs are not recoverable from the Company's insurance
carrier, Fredric W. Rittereiser, Chief Executive Officer of Ashton and The
Dover Group, Inc., a stockholder of Ashton, have agreed to pay such costs.
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FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-QSB constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results, performance or achievements of the
Company to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
risks, uncertainties and other important factors include, among others: general
economic and business conditions; industry trends; competition; material costs;
ability to develop markets; changes in business strategy or development plans;
availability, terms and deployment of capital; availability of qualified
personnel; changes in government regulation and other factors referenced in this
Form 10-QSB. Such forward-looking statements speak only as of the date of this
Form 10-QSB. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS OF FISCAL 1998 COMPARED TO NINE MONTHS OF FISCAL 1997.
For fiscal 1997, all of the Company's revenues, and the related "cost of
revenues", were generated by CSI(R) which was sold on November 6, 1997 (see Note
2 to the Financial Statements), and for fiscal 1998, all but $159,750 of
revenues were generated by CSI(R). The sale of CSI(R) has resulted in
substantially lower revenues from continuing operations. Until the SEC approves
the Philadelphia Stock Exchange's ("PHLX") proposed Rule 237 (see "Rule Change"
below) and the UTS(TM) VWAP(TM) trading system ("VTS(TM)") becomes operational,
the Company will not be able to generate significant revenues.
On a consolidated basis, the Company had revenues of $3,340,367 for the nine
months ended December 31, 1997 compared to revenues of $3,426,992 for the nine
months ended December 31, 1996.
During the nine months ended December 31, 1997, the Company incurred a net loss
of $3,512,057 as compared to the nine months ended December 31, 1996, in which
the Company incurred a net loss of $5,199,487.
Development Costs
During the nine months ended December 31, 1997, the Company incurred $672,333 of
development costs of which $306,693 was expensed and $365,640 was capitalized.
For the nine months ended December 31, 1996, the Company incurred development
costs of $2,643,462 which was expensed. The December 31, 1996 development costs
included $1,618,592 for the Ashton Technology Encryption Device ("ATED") and its
associated cryptoserver. The December 31, 1997 development costs were for
enhancements to the VTS(TM) trading system and the design of future
transactional products.
Rule Change
On April 8, 1997, the Company announced that UTTC(TM) had completed development
of its VTS(TM). Under generally accepted accounting principles, the Company
expenses development costs until the system is ready for commercial use and
thereafter capitalizes any additional development costs. Although the VTS(TM)
trading system has been operationally ready since April of 1997, trading on the
system cannot begin until the Securities and Exchange Commission ("SEC")
approves Rule 237 proposed by the PHLX. An amendment to the proposed rule,
reflecting enhancements made to the system since the SEC first published the
proposed rule in the Federal Register on September 4, 1996, was submitted by the
PHLX to the SEC on October 28, 1997. The SEC approved re-publishing the proposed
rule and amendments in the Federal Register on December 22, 1997, and the
proposed rule and amendments were published in the Federal Register on December
31, 1997. The notification period will be a minimum of 35 days and a maximum of
90 days after publication. There can be no assurance that Rule 237 will be
approved or that, if the SEC approves Rule 237, the Company will be able to
generate positive net revenues.
Capital Equipment
During the nine months ended December 31, 1997, the Company spent $121,797 for
the acquisition of equipment, as compared to $1,012,917 for the nine months
ended December 31, 1996. The reason capital equipment expenditures during the
nine months ended December 31, 1996 were substantially greater than in the
period ended December 31, 1997 was because the primary computers required for
the VTS(TM) trading system were purchased during the nine months ended December
31, 1996. Given the rapid advancements in computer technology, the Company is
continually upgrading its systems.
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<PAGE>
Selling, General and Administrative Expenses
During the nine months ended December 31, 1997, the Company incurred $2,813,757
of Selling, General and Administrative ("SG&A") expenses, as compared to
$2,331,783 for the nine months ended December 31, 1996. On a per company basis,
SG&A costs were $1,591,230 for Ashton, $494,808 for UTTC(TM), $433,083 for
CSI(R) and $294,636 for Gomez. The increase in SG&A expenses is due to the
formation and operation of the new wholly-owned subsidiary of Gomez (which was
formed in April 1997) and to higher legal costs incurred in connection with the
Rosensaft lawsuit, regulatory and listing issues. See "Legal Proceedings."
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Liquidity
At December 31, 1997, the Company had cash and cash equivalents of $853,383. For
a description of an improvement in the Company's liquidity since that date, see
"Subsequent Events" below.
On September 18, 1997 the Company commenced a private offer and exchange offer
pursuant to which it offered to certain investors (i) up to 250,000 shares of
its Series A Convertible PIK Preferred Stock (with a liquidation preference of
$10.00 per share) (the "Series A Preferred"); (ii) up to 250,000 shares of its
Series B Convertible Preferred Stock (with a liquidation preference of $10.00
per share) ("Series B Preferred"); and (iii) to exchange (the "Exchange Offer")
up to 300,000 shares of its Series B Preferred for up to $3,000,000 of
convertible and non-convertible notes (the "UTTC(TM) Notes") issued by UTTC(TM).
The Series A Preferred pays cumulative dividends semi-annually at an annual rate
of $0.50 per share and is payable in additional shares of Series A Preferred
until February 15, 2000. At any time after February 15, 1998, each holder of
shares of Series A Preferred will have the right to convert each share of Series
A Preferred into: (i) ten shares of the Common Stock, par value $0.01 per share,
of Ashton (the "Common Stock"); and (ii) one two-year warrant to purchase three
shares of the Common Stock, par value $0.01 per share, of UTTC(TM) (the
"UTTC(TM) Common Stock"), with an exercise price of $0.75 per share, subject to
adjustment. The Series B Preferred pays cumulative dividends semi-annually at an
annual rate of $0.90 per share. At any time after June 30, 1998, each holder of
shares of Series B Preferred will have the right to convert each share of Series
B Preferred into: (i) six shares of Common Stock; and (ii) one two-year warrant
to purchase two shares of UTTC(TM) Common Stock, with an exercise price of $0.75
per share, subject to adjustment.
As of December 31, 1997, the Company had received signed Subscription Agreements
for all of the shares of the Series A Preferred offered (250,000 shares) and
5,000 of the shares of Series B Preferred offered. This Series A transaction was
closed on January 15, 1998.
As of December 31, 1997, the Company had received signed Subscription Agreements
for the tender of $2,975,000 of UTTC(TM) Notes for which the Company issued
297,500 shares of Series B Preferred Stock. This Exchange transaction was closed
on January 15, 1998.
The Company has extended its private offer to institutional and accredited
investors of Series B Preferred until May 15, 1998. Such offering of Series B
Preferred will not be registered under Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent registration thereunder
or an applicable exemption from the registration requirements thereunder.
If and when the SEC approves the PHLX's proposed Rule 237 (see "Rule Change",
above), the Company expects to be able to commence the operation of its VTS(TM)
system with the PHLX within a month thereafter.
In addition to the $1,000,000 which the Company raised on January 27, 1998 (see
"Subsequent Events" below), the Company expects to raise additional capital from
future private placements and/or other sources by the end of March, 1998. There
can be no assurances, however, that the Company will be able to raise capital on
a timely basis or on terms acceptable to the Company, if at all.
There can be no assurance that the Company's actual cash requirements will not
exceed its anticipated cash requirements or that additional cash requirements or
additional financing will not be required. The Company may require additional
funds to provide working capital and to sustain its operations until it
generates positive cash flow from its operations.
Subsequent Events
On January 27, 1998, the Company completed the sale of 100,000 shares of the
Series "C" Convertible Preferred Stock to a group of foreign investors (the
"Investors"), with a liquidation preference of $10.00 per
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share (the "Series C Preferred"), for an aggregate purchase price of $1,000,000
("Series C Shares"). Holders of the Series C Shares will have the right to
convert each Series C Share into one share of Common Stock at the conversion
price which shall be equal to the following: (i) if the Market Price (as
hereinafter defined) on the Conversion Date (as hereinafter defined) is less
than $1.8774, the conversion price is equal to the lesser of 75% of the Market
Price at the Conversion Date or $1.2516; or (ii) if the Market Price at the
Conversion Date is equal to or greater than $1.8774, the conversion price is
equal to $1.2516 plus 50% of the difference between the Market Price at the
Conversion Date and $1.8774. The "Market Price" shall mean the average of the
closing bid prices per share of the Common Stock over the five consecutive
trading days ending on the trading day immediately preceding the date the holder
elects to have the shares of Series C Preferred Stock converted (the "Conversion
Date"). In addition, the Investors will receive warrants exercisable into an
aggregate of 100,000 shares of Common Stock at an exercise price of 105% of the
Market Price for a period of 5 years. In connection with the sale, the Company
has agreed to pay a placement fee to the placement agent of $50,000 and to
transfer to it 5,000 Shares of the Series C Convertible Preferred Stock and a
warrant to purchase 100,000 shares of Common Stock at an exercise price of 105%
of Market Price for a period of 5 years.
The Company has used a substantial portion of the $1,000,000 to reduce its
accounts payable and accrued expenses.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See previous reports in the Company's Form 10-KSB for the fiscal year ended
March 31, 1997 and Form 10-QSB for the quarterly period ended September 30,
1997.
On December 3, 1997, Judge Shira A. Scheindlin entered her decision and order in
Rosensaft v. The Ashton Group, Inc. et al, No. 97 CIV. 3138 (SAS) 1997 U.S.
Dist. 1998 WL 749384 (SDNY) granting plaintiff's Motion for Partial Summary
Judgment under plaintiff's Tenth Claim for Relief against defendants The Dover
Group, Inc. and Fredric W. Rittereiser. Neither Ashton nor UTTC(TM) were parties
to, or affected by, this decision.
Alliant Techsystems, Inc. ("Alliant") has notified Ashton of its claim of
approximately $280,000 as the balance allegedly due under its contract with the
Company for the production of certain ATED systems. On October 22, 1997, Ashton
filed a complaint against Alliant in the Court of Common Pleas, County of
Philadelphia, Pennsylvania for damages for failure of Alliant to perform its
obligations under its contract with Ashton. On December 15, 1997, Alliant filed
its answer and counterclaims seeking damages in an amount "in excess of
$50,000."
In a letter to the Company dated November 17, 1997, The NASDAQ Stock Market,
Inc. ("Nasdaq") informed the Company that the Nasdaq Listing Qualifications
Panel (the "Panel") granted the Company a conditional exception to Nasdaq's
minimum capital and surplus listing requirement. The Panel required, however,
that the Company make a public filing on or before December 31, 1997 with the
SEC and Nasdaq containing a balance sheet and corresponding statement of
operations no older than November 30, 1997 with pro forma adjustments for any
significant events or transactions occurring on or before the filing date, and
evidencing a minimum of $4,000,000 in capital and surplus. On January 9, 1998,
in response to the December 30, 1997 request of the Company, the Panel extended
the conditional exception to January 16, 1998, and on January 22, 1998, the
Panel further extended the conditional exception to January 27, 1998, on which
date the Company filed a Form 8-K with the SEC and Nasdaq which contained a
November 30, 1997 balance sheet with pro forma adjustments evidencing compliance
with the $4,000,000 capital and surplus requirement set forth in the Panel's
decision dated January 9, 1998. By letter dated January 29, 1998, Nasdaq advised
the Company that the Company was found to be in compliance with the terms of its
qualifications exception and with all requirements for continued listing on
Nasdaq, and that the hearing file was closed.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
See "Liquidity" and "Subsequent Events" in Item 2 of Part I above.
(Items 3 through 5 have been omitted since the items are either inapplicable or
the answer is negative)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
Exhibit 10.1 - Partial Summary Judgment, Rosensaft v. The Ashton
Group, Inc. et al. (Incorporated by reference to
(i) Report on Form 10Q-SB for the period ended
December 31, 1996 and (ii) Amendment No. 1 to Form
10-QSB for the period ended December 31, 1996,
filed April 18, 1997)
Exhibit 11 - Computation of Earnings Per Share.
Exhibit 27 - Financial Data Schedule.
Exhibit 99.1 - Stock Purchase Agreement, effective as of the 1st
day of November, 1997, by and among The Ashton
Technology Group, Inc., George K. Milligan and
Susan L. Cavadeas, as Trustees of the Trust created
by the
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Computer Science Innovations, Inc., Leveraged ESOP
and Computer Science Innovations, Inc.
(Incorporated by reference to Report on Form
10-QSB/A for period ended December 31, 1997, filed
February 18, 1998)
(B) Reports on Form 8-K
Form 8-K dated November 6, 1997 was filed pursuant to Item 2
(Disposition of Assets)
Form 8-K dated November 12, 1997 was filed pursuant to Item 5
(Other Events)
Form 8-K dated January 27, 1998 was filed pursuant to Item 5
(Other Events)
-15-
<PAGE>
EXHIBIT INDEX
Page
----
Ex-11 Computation of Earnings Per Share .................................. 16
Ex-27 Financial Data Schedule ............................................ 17
-16-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
The Ashton Technology Group, Inc.
---------------------------------
(Registrant)
Date: June 26, 1998 By: /s/ Robert Eprile
---------------------------------
Robert Eprile
Chairman
-18-
Computation of Earnings Per Share
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss $(1,556,253) $(2,046,936) $(3,512,057) $(5,199,487)
Less recognition of beneficial conversion
feature of preferred stock (926,282) -- (926,282) --
----------- ----------- ----------- -----------
Net loss available to common stockholders $(2,482,535) $ 2,046,936) $(4,438,339) $(5,199,487)
=========== =========== =========== ===========
Weighted-average shares used in computing net
loss per common share 7,562,500 7,562,500 7,562,500 7.562,500
=========== =========== =========== ===========
Net loss per common share $ (.33) $ (.27) $ (.59) $ (.73)
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 853,383
<SECURITIES> 0
<RECEIVABLES> 136,852
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,414,260
<PP&E> 711,305
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,850,718
<CURRENT-LIABILITIES> 994,663
<BONDS> 38,000
0
5,485
<COMMON> 75,625
<OTHER-SE> 2,736,945
<TOTAL-LIABILITY-AND-EQUITY> 3,850,718
<SALES> 3,340,367
<TOTAL-REVENUES> 3,340,367
<CGS> 2,620,896
<TOTAL-COSTS> 6,106,180
<OTHER-EXPENSES> 216,547
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142,070
<INCOME-PRETAX> (3,470,282)
<INCOME-TAX> 41,775
<INCOME-CONTINUING> (3,512,057)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,512,057)
<EPS-PRIMARY> (.59)
<EPS-DILUTED> (.59)
</TABLE>
