<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
|X| Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended April 4, 1997
|_| Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period
from to
--------------- --------
Commission File Number: 000-21415
WHITE PINE SOFTWARE, INC.
(Name of Small Business Issuer as Specified in Its Charter)
Delaware 04-3151064
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
542 Amherst Street, Nashua, New Hampshire 03063
(Address of Principal Executive Offices)
(603) 886-9050
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
The number of shares outstanding of the Registrant's common stock as of May 7,
1997 was 9,084,315.
Transitional Small Business Disclosure Format (check one):
Yes No x
--- ---
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of April 4, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations for the three months ended April 4, 1997
and March 31, 1996 4
Condensed Consolidated Statements of Cash Flows for the three months ended April 4, 1997
and March 31, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
White Pine Software, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
April 4, December 31,
1997 1996
(Unaudited)
------------------- -------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 20,915 $ 23,298
Accounts receivable, net 1,825 2,553
Inventories 81 113
Prepaid expenses and other current assets 668 450
------------------- -------------------
Total current assets 23,489 26,414
Property and equipment, net 1,174 1,063
Third party licenses, net 752 702
Goodwill, net 855 915
Other long term assets 233 310
------------------- -------------------
Total assets $ 26,503 $ 29,404
=================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 2,629 $ 2,905
Deferred revenue 609 827
Current portion of long-term debt 58 112
------------------- -------------------
Total current liabilities 3,296 3,844
Long term debt, net of current portion 104 113
Long term portion of accrued third-party licenses 155 211
Total stockholders' equity 22,948 25,236
------------------- -------------------
Total liabilities and stockholders' equity $ 26,503 $ 29,404
=================== ===================
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
White Pine Software, Inc. and Subsidiary
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
April 4, 1997 March 31, 1996
----------------------- --------------------
<S> <C> <C>
Revenue:
Software license fees $ 2,263 $ 1,780
Services and other
337 306
----------------------- --------------------
Total revenue 2,600 2,086
Cost of revenue 559 373
----------------------- --------------------
Gross profit 2,041 1,713
Operating expenses:
Sales and marketing 2,003 1,311
Research and development 1,661 824
General and administrative 951 487
----------------------- --------------------
Total operating expenses 4,615 2,622
----------------------- --------------------
Income(Loss) from operations (2,574) (909)
Other income, net 233 (28)
----------------------- --------------------
Income (loss) before provision for income taxes (2,341) (937)
Provision for income taxes - 25
----------------------- --------------------
Net income (loss) $ (2,341) $ (962)
======================= ====================
Net income (loss) per common and common $ (0.26) $ (0.16)
equivalent share ======================= ====================
Weighted average number of common and common
equivalent shares outstanding 9,057,740 5,935,776
======================= ====================
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
White Pine Software, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
April 4, 1997 March 31, 1996
----------------------- ----------------------
<S> <C> <C>
Operating activities
Net income (loss) $ (2,342) $ (962)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation 103 91
Amortization of goodwill and third-party licenses 168 182
Provision of bad debts 24 12
Changes in operating assets and liabilities:
Accounts receivable 686 (343)
Inventories 30 (8)
Prepaid expenses (152) (219)
Other assets (2) (22)
Accounts payable 93 (51)
Accrued expenses and other accrued liabilities (328) 68
Deferred revenue (211) 519
--------------------- ---------------------
Net cash used in operating activities (1,931) (733)
Investing activities
Purchase of property and equipment, net (227) (140)
Purchase of third party licenses, net (158) (45)
--------------------- ---------------------
Net cash used in investing activities (385) (185)
Financing activities
Proceeds from long-term debt 0 20
Principal payments on long-term debt (105) (23)
Proceeds from common stock issued at $5.83 par value
stock redeemable as $.01 par value stock 0 1,979
Proceeds from common stock issued upon exercise of stock options 51
--------------------- ---------------------
Net cash provided by (used in) financing activities (54) 1,976
Currency translation effect on cash and cash equivalents (13) 0
--------------------- ---------------------
Net increase (decrease) in cash and cash equivalents (2,383) 1,058
Cash and cash equivalents at beginning of period 23,298 1,774
--------------------- ---------------------
Cash and cash equivalents at end of period $ 20,915 $ 2,832
===================== =====================
Supplemental Cash Flow Information
Cash paid for interest $ 3 7
===================== =====================
Cash paid for taxes $ 27 12
===================== =====================
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
WHITE PINE SOFTWARE, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 4, 1997
1. Basis of Presentation
The unaudited consolidated financial statements included herein have been
prepared by White Pine Software, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission").
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that the disclosures made are adequate to make the
information not misleading. It is suggested that these financial statements be
read in conjunction with the consolidated financial statements and notes
thereto, together with the related information set forth under "Management's
Discussion and Analysis or Plan of Operation," contained in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1996, File No.
333-9525, filed with the Commission.
Description of Business
The Company develops, markets and supports multiplatform desktop
multimedia software that facilitates worldwide video and audio communication and
data collaboration across the Internet, intranets and other networks that use
the Internet Protocol ("IP"). The Company's desktop videoconferencing software
products allow users to participate in real-time, multipoint videoconferences
over the Internet and intranets. The Company recently introduced WebTerm
Toolbox, which allows users to access host applications and data/information
from within the browser, as a new suite of products geared to providing Advanced
Intranet Solutions to corporations, educational organizations, and government
agencies. The Company also offers desktop X Windows and terminal emulation
software. The Company's customers include businesses, government organizations,
educational institutions and individual consumers. The Company markets and sells
its products in the United States, Europe, and the Pacific Rim through
distributors, a combination of strategic partners and OEMs, and its direct sales
organization, as well as over the Internet. The Company, formerly known as
Visual International, Inc., was incorporated in April 1992.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned foreign subsidiary, About Software Corporation S.A. (ASC),
and ASC's wholly-owned subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
The condensed consolidated financial statements at April 4, 1997 and
March 31, 1996 are unaudited and include all adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The results of
operations for the quarter ended April 4, 1997 are not necessarily indicative of
results for the entire year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Fiscal Year
Effective April 1, 1994, the Company changed its fiscal year end from
March 31 to December 31. Effective January 1, 1997, the Company changed its
interim fiscal reporting periods from calendar quarters to quarters consisting
of thirteen weeks.
6
<PAGE>
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and investments in high
grade commercial paper having maturities of three months or less when purchased.
Commercial paper qualifying as cash equivalents totaled $20,227,000 and
$22,440,000 at April 4, 1997 and December 31, 1996, respectively. These
investments have been categorized as held to maturity under the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Accordingly, the balances are stated
at amortized cost, which approximates fair value, because of the short maturity
of these instruments.
Revenue Recognition
The Company's revenue is derived from software license fees and fees for
services related to its software products, primarily software maintenance fees.
The Company recognizes revenue in accordance with the provisions of AICPA
Statement of Position No. 91-1, Software Revenue Recognition.
Software license revenue is recognized upon receipt of a firm customer
order and shipment of the software, net of allowances for estimated future
returns, provided that no significant obligations remain on the part of the
Company and collection of the related receivable is deemed probable. Revenue
under certain license agreements is recognized upon execution of a signed
contract and fulfillment of the contractual obligations, provided that no
significant obligations remain on the part of the Company and collection is
deemed probable.
Software maintenance fees, which are generally payable in advance and are
non-refundable, are recognized ratably over the period of the maintenance
contract, typically twelve months. Revenue from training and consulting services
is recognized as services are provided.
Software license fees, consulting fees, and training fees that have been
prepaid or invoiced but that do not yet qualify for recognition as revenue under
the Company's policy, and prepaid maintenance fees not yet recognized as
revenue, are reflected as deferred revenue.
Capitalized Software
Statement of Financial Accounting Standards No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed, requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based upon the Company's product
development process, technological feasibility is established upon completion of
a commercially viable working model. Costs incurred by the Company between
completion of the commercially viable working model and the point at which the
product is ready for general release have been capitalized. Such amounts,
approximating $115,000 as of April 4, 1997, are included in other assets and are
being amortized over a three-year period.
Foreign Currency Translation
The financial statements of the Company's foreign subsidiary have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards No. 52, Foreign Currency Translation. All balance sheet
amounts have been translated using the exchange rates in effect at the balance
sheet date. Statement of operations amounts have been translated using average
exchange rates. The gains and losses resulting from the changes in exchange
rates from the date of acquisition of ASC to April 4, 1997 have been reported
separately as a component of stockholders' equity.
The aggregate transaction gains and losses were insignificant for all
periods presented.
7
<PAGE>
Net Income (Loss) Per Common and Common Equivalent Share
Net income (loss) per common and common equivalent share is computed using
the weighted average number of shares of common stock and dilutive common
equivalent shares outstanding during the period. All shares, options, and
warrants issued during the 12-month period prior to the Company's initial public
offering consummated on October 17, 1996 have been included in the calculation
as if they were outstanding for the fiscal quarter ended March 31, 1996, using
the treasury stock method. Common equivalent shares consist of the incremental
common shares issuable upon the exercise of stock options and warrants using the
treasury stock method.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, Earnings per Share. SFAS No. 128 addresses the simplification of
calculating earnings per share (EPS) and makes it comparable to international
EPS standards. It is effective for financial statements for periods ended after
December 15, 1997. Early adoption is not permitted; however, prior period EPS
amounts will be required to be restated to conform to the provisions of the
Statement. The Company's adoption of SFAS No. 128 is not expected to have a
material impact on its financial statements.
8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
This Quarterly Report on Form 10-QSB of White Pine Software, Inc. (the
"Company") contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS
CONTEMPLATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, INCLUDING CHANGES IN THE COMPANY'S MANAGEMENT DURING THE LAST YEAR, THE
COMPANY'S DEPENDENCE ON ONE OR MORE CUSTOMERS FOR A SIGNIFICANT PORTION OF ITS
REVENUES, AND SIGNIFICANT AND INCREASING COMPETITION IN THE MARKETS FOR CERTAIN
OF THE COMPANY'S PRODUCTS AND SERVICES. CERTAIN OF THESE FACTORS ARE DESCRIBED
UNDER "ITEM 1A. Risk Factors" IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1996, WHICH IS FILED AS AN EXHIBIT TO THIS
QUARTERLY REPORT AND INCORPORATED HEREIN BY REFERENCE.
EXODUS, WEBTERM, WHITE PINE and 5PM TERM are trademarks of the Company.
CU-SEEME is a registered trademark of Cornell Research Foundation, Inc. All
other trademarks referred to in this Quarterly Report are the property of their
respective owners.
Overview
The Company develops, markets and supports multiplatform desktop
multimedia software that facilitates worldwide video and audio communication and
data collaboration across the Internet, intranets and other networks that use
the Internet Protocol ("IP"). The Company's desktop videoconferencing software
products, Enhanced CU-SeeMe and the White Pine Reflector, create a client-server
solution that allows users to participate in real-time, multipoint
videoconferences over the Internet and intranets. The Company recently
introduced WebTerm Toolbox, which allows users to access host applications from
within the browser, as a new suite of products geared to providing Advanced
Intranet Solutions to corporations, educational organizations and government
agencies. The Company also offers its eXodus line of desktop X Windows software,
which enables seamless interoperability between local and remote environments,
and its 5PM line of terminal emulation software, which provides desktop access
to data and applications residing on enterprise legacy systems.
In June 1995, as a part of its continuing plan to focus on software
connectivity products, the Company entered into the License Agreement with the
Cornell Research Foundation, Inc., which granted to the Company the exclusive
worldwide right to develop, modify, market, distribute and sublicense commercial
versions of Freeware CU-SeeMe and its related software-only multipoint
conferencing server. The Company commenced shipments of the initial commercial
versions of Enhanced CU-SeeMe and the White Pine Reflector in March 1996 and May
1996, respectively. The Company anticipates that its revenue growth, if any,
will depend on increased sales of Enhanced CU-SeeMe and the White Pine Reflector
and on sales of its next generation CU-SeeMe client and MeetingPoint multimedia
server as well as new software connectivity products, such as WebTerm and
WebTerm X, for the Internet and intranets. Accordingly, the Company intends to
devote a substantial portion of its research and development and sales and
marketing resources to technologies related to the Internet and intranets.
The Company's revenue is derived from software license fees and fees for
services related to its software products, primarily software maintenance fees.
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position No. 91-1, "Software Revenue
Recognition." Software license revenue is recognized upon execution of a
contract or purchase order and shipment of the software, net of allowances for
estimated future returns, provided that no significant obligations on the part
of the Company remain outstanding and collection of the related receivable is
deemed probable by management. An allowance for product returns is recorded by
the Company at the time of sale and is measured periodically to adjust to
changing circumstances, including changes in retail sales. Software maintenance
fees, which are generally payable in advance and are non-refundable, are
recognized ratably over the period of the maintenance contract, typically twelve
months.
9
<PAGE>
Revenue from training and consulting services is recognized as services are
provided. Software license fees, consulting fees and training fees that have
been prepaid or invoiced but that do not yet qualify for recognition as revenue
under the Company's policy, and prepaid maintenance fees not yet recognized as
revenue, are reflected as deferred revenue.
Effective April 1, 1994, the Company changed its fiscal year end from
March 31 to December 31. Effective January 1, 1997, the Company changed its
interim fiscal reporting periods from calendar quarters to quarters consisting
of thirteen weeks.
Results of Operations
The following table sets forth line items from the Company's statement of
operations as percentages of total revenue for the quarters ended April 4, 1997
and March 31, 1996.
<TABLE>
<CAPTION>
Fiscal quarter ended
--------------------
April 4, March 31,
1997 1996
------ ------
<S> <C> <C>
Revenue:
Software license fees............................... 87.0% 85.3%
Services and other.................................. 13.0 14.7
---- ----
Total revenue.................................. 100.0 100.0
Cost of revenue.......................................... 21.5 17.9
Gross profit............................................. 78.5 82.1
---- ----
Operating expenses:
Sales and marketing................................. 77.0 62.7
Research and development............................ 63.9 39.5
General and administrative.......................... 36.6 23.4
---- ----
Total operating expenses....................... 177.5 125.6
----- -----
Loss from operations..................................... (99.0) (43.5)
Interest income and other, net........................... 9.0 (1.3)
Provision for income taxes............................... 0.0 1.2
--- ---
Net loss................................................. (90.0)% (46.1)%
======= =======
</TABLE>
Revenue. Total revenue increased by 25% to $2,600,000 in the quarter ended
April 4, 1997 from $2,086,000 in the quarter ended March 31, 1996. The increase
resulted primarily from revenue generated from Enhanced CU-SeeMe since its
introduction in March 1996, and, to a lesser extent, the introduction of WebTerm
in the fourth quarter of fiscal 1996. These increases were offset in part by a
decrease of approximately $700,000 in sales of the Company's legacy product
lines including eXodus X-servers and certain text emulator products. Total
revenue was adversely affected by a delay in the shipping of CU-SeeMe 3.0, which
is expected to begin shipping over the Internet in the second quarter, as well
as increased competition from other software-only desktop videoconferencing
products. In addition, sales of the newly introduced WebTerm products were lower
than expected, as a result of longer than anticipated sales cycles.
Revenue from sales outside the United States comprised 30% and 33% of
total revenue for the quarters ended April 4, 1997 and March 31, 1996,
respectively. The decrease in the percentage of revenue from sales outside the
United States for the quarter ended April 4, 1997 was principally due to the
increased sales volume within the United States.
Cost of Revenue. Cost of revenue consists principally of costs of product
media, manuals, packaging materials, product localization for international
markets, duplication and shipping, as well as royalties and associated
amortization of paid license fees relating to third-party software included in
the Company's products.
10
<PAGE>
Cost of revenue as a percentage of total revenue increased to 22% for the
quarter ended April 4, 1997 as compared to 18% for the quarter ended March 31,
1996. The percentage increase resulted primarily from the higher cost of revenue
attributable to the Enhanced CU-SeeMe product line as compared to the Company's
other products. Certain third-party software incorporated within Enhanced
CU-SeeMe bears higher royalty rates than the software incorporated in the
Company's other product lines and also requires payment of upfront fees that are
amortized over the respective periods of the software licenses. The Company
intends to continue its strategy of improving the features and functionality of
its products, particularly Enhanced CU-SeeMe, through the incorporation of
third-party software and industry standards and, as a result, the cost of
revenue as a percentage of total revenue may continue to fluctuate.
Sales and Marketing. Sales and marketing expense consists primarily of
costs associated with sales and marketing personnel, sales commissions, trade
shows, advertising and promotional materials. Sales and marketing expense
increased by 53% to $2,003,000 in the quarter ended April 4, 1997 from
$1,310,000 in the quarter ended March 31, 1996, and increased as a percentage of
total revenue to 77% in the quarter ended April 4, 1997 from 63% in the quarter
ended March 31, 1996.
The dollar and percentage increases in sales and marketing expense for the
quarter ended April 4, 1997 were attributable primarily to the strengthening of
the Company's sales and marketing organization through the hiring of additional
personnel in channel development, marketing communication, technical support and
sales.
Research and Development. Research and development expense consists
primarily of costs of personnel and equipment. Research and development expense
increased by 102% to $1,661,000 in the quarter ended April 4, 1997 from $824,000
in the quarter ended March 31, 1996; research and development expense
represented 64% and 40% of total revenue for the quarters ended April 4, 1997
and March 31, 1996, respectively.
The dollar and percentage increases in research and development expenses
for the quarter ended April 4, 1997 were predominantly due to the hiring of
additional personnel for the MeetingPoint product development team and, to a
lesser extent, expenses associated with the utilization of contracted
engineering services.
General and Administrative. General and administrative expense consists of
administrative, financial and general management activities, including legal,
accounting and other professional fees. General and administrative expense
increased by 95% to $951,000 in the quarter ended April 4, 1997 from $487,000 in
the quarter ended March 31, 1996 and increased as a percentage of total revenue
to 37% in the quarter ended April 4, 1997 from 23% in the same quarter in the
prior year.
The dollar and percentage increases in general and administrative expenses
for the quarter ended April 4, 1997 were attributable primarily to the Company's
transition from a private to a publicly held company, including (i) increases in
outside legal, audit, and investor relations fees, and (ii) headcount additions
required to strengthen and support the Company's infrastructure, including its
internal finance organization.
Provision for Income Taxes. The Company's provision for income taxes
consists of federal alternative minimum taxes and state and foreign income
taxes. The Company expects that its effective tax rate for the foreseeable
future will be lower than the combined federal and state statutory rate
primarily as a result of the realization of net operating loss carryforwards.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in 10 lawsuits pending in New York federal and
state courts (the "RSI Suits") in which the plaintiffs claim to suffer from
carpal tunnel syndrome, or "repetitive stress injuries," as a result of having
used computer keyboards (the "Keyboards") that are alleged to have been
defectively designed. The Keyboards were supplied, and possibly designed and
manufactured, by Ontel Corporation. The assets of Ontel Corporation were
purchased in 1982 by Visual Technology, Inc. ("Visual"), a predecessor of Visual
T.I., Inc. ("VTI"), which in turn is a predecessor of the Company. The RSI
Suits, which seek money damages, were brought from February 1992 to June 1996 by
employees of New York Telephone, which purchased the Keyboards from Lockheed
Electronics Corporation. One or more of Visual, Ontel Corporation, Lockheed
Electronics Corporation and Key Tronics Corporation, a subcontractor for certain
of the Keyboards, are named as co-defendants in certain of the RSI Suits. New
York Telephone employees have also commenced 38 suits that name as defendants
only Visual and/or Ontel Corporation. The Company could be named as a defendant
in these cases. None of the RSI Suits has reached trial and additional
information detrimental to the Company could be developed in the course of
discovery.
In May 1993, VTI's product liability coverage terminated. Certain of the
RSI Suits appear to be based on claims that allegedly arose after May 1993, and
therefore may be uninsured. The insurers for VTI, the Company and others (the
"Insurers") are defending the RSI Suits under a reservation of rights. To date,
the Company's proportionate share of the defense costs of the RSI Suits has not
been material. There can be no assurance, however, that the Company will not
incur material legal expenses defending the RSI Suits. The Company has a reserve
of approximately $291,000 in connection with the RSI Suits, based upon the
Company's belief that (i) certain of the RSI Suits are covered by product
liability insurance, (ii) the Company is contractually indemnified by Lockheed
Electronics Corporation and/or Key Tronics Corporation against all or a portion
of the damages to which the Company may be subject and (iii) the Company has
defenses to substantially all of the claims under the RSI Suits. Although the
Company believes that its reserve for the RSI Suits is adequate, there can be no
assurance that the Company's liabilities under the RSI Suits will not
substantially exceed that reserve. New York Telephone and others may continue to
use certain of the Keyboards and, accordingly, there can be no assurance that
additional product liability claims will not be asserted against the Company in
the future.
From time to time, the Company has received and may receive in the future
notice of claims of infringement of other parties' proprietary rights. Although
the Company believes that its products and technology do not infringe the
proprietary rights of others, there can be no assurance that additional third
parties will not assert infringement and other claims against the Company or
that any infringement claims will not be successful.
From time to time, the Company may be exposed to litigation arising out of
its products, services and operations. As of the date of filing of this
Quarterly Report on Form 10-QSB, the Company is not engaged in any legal
proceedings of a material nature, other than the RSI Suits.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
------------ -----------------------------------------------------------------
<S> <C>
11.1 Statement re computation of per share earnings
27.1 Financial Data Schedule for fiscal quarter ended April 4, 1997
99.1 Risk Factors as excerpted from pages 17 to 28 of the Company's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996
</TABLE>
(b) Reports on Form 8-K
None.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, as of May 16, 1997.
WHITE PINE SOFTWARE, INC.
By: /s/ HOWARD R. BERKE
-------------------------------------
Howard R. Berke
President and Chief Executive Officer
By: /s/ CHRISTINE J. COX
-------------------------------------
Christine J. Cox
Corporate Controller
(Principal Financial and Accounting Officer)
14
<PAGE>
Statement Re: Computation of Earnings Per Share Exhibit 11.1
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------
April 4, 1997 March 31, 1996
------------- --------------
<S> <C> <C>
Weighted average shares outstanding 9,057,740 5,589,764
Effect of common and common
equivalent shares issued by the
Company during the twelve month
period immediately preceding the
Company's registration for initial
public offering on August 2, 1996,
as if they were outstanding for
all periods presented prior to the
registration for initial public
offering, using the treasury stock
method 346,012
----------------- ------------------
Total shares 9,057,740 5,935,776
================= ==================
Net income (loss) $ (2,341,691) $ (962,004)
================= ==================
Net income (loss) per common and
common share equivalent $ (0.26) $ (0.16)
================= ==================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001006591
<NAME> WHITE PINE SOFTWARE, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> APR-04-1997
<CASH> 20,915,154
<SECURITIES> 0
<RECEIVABLES> 1,983,160
<ALLOWANCES> 158,464
<INVENTORY> 81,219
<CURRENT-ASSETS> 667,987
<PP&E> 3,160,380
<DEPRECIATION> 1,986,499
<TOTAL-ASSETS> 26,502,834
<CURRENT-LIABILITIES> 3,295,237
<BONDS> 0
0
0
<COMMON> 90,843
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 26,502,834
<SALES> 0
<TOTAL-REVENUES> 2,599,887
<CGS> 0
<TOTAL-COSTS> 559,281
<OTHER-EXPENSES> 4,615,303
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