UNITED STATES
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 QUARTER ENDED: JUNE 30, 1998
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 0-21511
V-ONE CORPORATION
-----------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 52-1953278
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
20250 CENTURY BLVD., SUITE 300, GERMANTOWN, MARYLAND 20874
----------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(301) 515-5200
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X ] No [ ].
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 4, 1998
----- -----------------------------
COMMON STOCK, $0.001 PAR VALUE PER SHARE 13,915,379
<PAGE>
V-ONE Corporation
Quarterly Report on Form 10-Q
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION 3
Item 1. Condensed Financial Statements 3
Condensed Balance Sheets as of June 3
30, 1998 (unaudited) and December 31,
1997
Condensed Statements of Operations 4
for the Three and Six Months Ended
June 30, 1998 and 1997 (unaudited)
Condensed Statements of Cash Flows 5
for the Six Months Ended June 30,
1998 and 1997 (unaudited)
Notes to the Condensed Financial 6
Statements (unaudited)
Item 2 Management's Discussion and Analysis 8
of Financial Condition and Results of
Operations
Item 3 Quantitative and Qualitative 11
Disclosures About
Market Risk
PART II. OTHER INFORMATION 12
Signatures 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
<TABLE>
<CAPTION>
V-ONE CORPORATION
CONDENSED BALANCE SHEETS
June 30, December 31,
1998 1997
(unaudited)
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,639,439 $ 6,203,525
Accounts receivable, net 5,749,390 2,556,979
Inventory, net 325,528 368,120
Prepaid expenses and other current assets 189,572 328,261
------------ ------------
Total current assets 8,903,929 9,456,885
Property and equipment, net 955,956 1,001,581
Licensing fee, net 396,906 538,434
Other assets 978,458 863,186
------------ ------------
Total assets $ 11,235,249 $ 11,860,086
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,838,145 $ 1,151,589
Deferred income 579,918 412,647
Notes payable - current 11,111 16,667
Capital lease obligations - current 63,487 17,126
------------ ------------
Total current liabilities 2,492,661 1,598,029
Notes payable - noncurrent 2,481 5,555
Deferred rent -- 36,879
Capital lease obligations - noncurrent 221,204 295,306
------------ ------------
Total liabilities 2,716,346 1,935,769
------------ ------------
Commitments and contingencies
Series A convertible preferred stock, $0.001 par value; 13,333,333
shares authorized; 4,000 shares issued; 2,462 and 4,000 shares
outstanding as of June 30, 1998 and December 31,
1997, respectively (liquidation preference of $2,472,258) 2,188,884 3,766,297
------------ ------------
Shareholders' equity:
Common stock, $0.001 par value; 33,333,333 shares authorized; 13,882,046
and 13,070,235 shares issued and outstanding as
of June 30, 1998 and December 31, 1997, respectively 13,882 13,070
Additional paid-in capital 26,576,333 24,649,538
Notes receivable from sales of common stock (50,726) (166,011)
Accumulated deficit (20,209,470) (18,338,577)
------------ ------------
Total shareholders' equity 6,330,019 6,158,020
------------ ------------
Total liabilities and shareholders' equity $ 11,235,249 $ 11,860,086
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
V-ONE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Three months ended Three months ended Six months ended Six months ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
(unaudited) (unaudited) (unaudited) (unaudited)
------------------ ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Products $ 3,195,289 $ 2,013,848 $ 5,609,931 $ 4,290,028
Consulting and services 209,108 120,733 297,346 258,568
------------ ------------ ------------ ------------
Total revenues 3,404,397 2,134,581 5,907,277 4,548,596
------------ ------------ ------------ ------------
Cost of revenues:
Products 340,446 307,899 755,922 847,859
Consulting and services 15,210 10,943 23,060 32,287
------------ ------------ ------------ ------------
Total cost of revenues 355,656 318,842 778,982 880,146
------------ ------------ ------------ ------------
Gross profit 3,048,741 1,815,739 5,128,295 3,668,450
------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing 1,597,245 2,345,044 3,078,428 3,800,435
General and administrative 824,888 1,077,447 2,027,219 1,847,913
Research and development 937,682 840,625 1,877,963 1,453,948
Restructuring charge -- 800,000 -- 800,000
------------ ------------ ------------ ------------
Total operating expenses 3,359,815 5,063,116 6,983,610 7,902,296
Operating loss (311,075) (3,247,377) (1,855,315) (4,233,846)
------------ ------------ ------------ ------------
Other (expense) income:
Interest expense (30,686) (3,714) (43,465) (4,506)
Interest income 40,436 101,599 107,991 217,641
------------ ------------ ------------ ------------
Total other income 9,750 97,885 64,526 213,135
------------ ------------ ------------ ------------
Net loss (301,325) (3,149,492) (1,790,789) (4,020,711)
Dividend on preferred stock 30,775 -- 80,104 --
------------ ------------ ------------ ------------
Loss attributable to holder
of common stock $ (332,100) $ (3,149,492) $ (1,870,893) $ (4,020,711)
============ ============ ============ ============
Basic and diluted loss per share attributable to holder of
common stock $ (0.02) $ (0.25) $ (0.14) $ (0.32)
============ ============ ============ ============
Weighted average number of
common shares outstanding 13,674,308 12,796,615 13,382,382 12,730,540
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
V-ONE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Six months ended Six months ended
June 30, 1998 June 30, 1997
(unaudited) (unaudited)
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Loss attributable to holder of common stock $ (1,870,893) $ (4,020,711)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 308,107 268,968
Noncash charge related to issuance of warrants 394,000 --
Changes in assets and liabilities:
Accounts receivable, net (3,192,411) (1,029,355)
Inventory, net 42,592 28,077
Prepaid expenses and other 23,417 (437,601)
Accounts payable, accrued expenses and deferrals 810,948 422,049
------------ ------------
Net cash used in operating activities (3,484,240) (4,768,573)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (120,954) (242,625)
Investment in affiliate -- (250,000)
Collection of note receivable -- 92,020
------------ ------------
Net cash used in investing activities (120,954) (400,605)
------------ ------------
Cash flows from financing activities:
Exercise of options and warrants 116,892 700,015
Payment of stock issuance cost (39,413) --
Principal payments on capitalized lease obligations (27,741) (37,364)
Repayment of notes payable (8,630) (8,328)
------------ ------------
Net cash provided by financing activities 41,108 654,323
------------ ------------
Net decrease in cash and cash equivalents (3,564,086) (4,514,855)
Cash and cash equivalents at beginning of period 6,203,525 10,894,375
------------ ------------
Cash and cash equivalents at end of period $ 2,639,439 $ 6,379,520
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
V-ONE CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed financial statements for the three and six months ended June 30,
1998 and June 30, 1997 are unaudited and reflect all adjustments, consisting of
normal recurring adjustments, which are, in the opinion of management, necessary
to present fairly the results for the interim periods. These financial
statements should be read in conjunction with the audited financial statements
as of December 31, 1996 and 1997 and for the three years in the period ended
December 31, 1997, which are included in the Company's 1997 Annual Report on
Form 10-K ("Form 10-K").
The preparation of financial statements to be in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and would
impact future results of operations and cash flows.
The results of operations for the three and six month periods ended June 30,
1998 are not necessarily indicative of the results expected for the full year
ending December 31, 1998.
2. Risks and Uncertainties
The Company invests its cash primarily in money market funds with an
international commercial bank. The Company has not experienced any losses to
date on its invested cash. The Company's cash balances exceed Federal insured
amounts. The Company sells its product to a wide variety of customers in a
variety of industries. The Company performs ongoing credit evaluations of its
customers but does not require collateral or other security to support customer
accounts receivable. In management's opinion, the Company has provided
sufficient provisions to prevent a significant impact of credit losses to the
financial statements.
3. Computation of Net Loss Per Common Share
The Company adopted Statement of Financial Accounting Standards No. 128,
EARNINGS PER SHARE ("SFAS 128") effective December 31, 1997. All prior period
net loss per share amounts have been restated to comply with the provisions of
SFAS 128. Basic earnings (or loss) per share is computed by dividing net income
or (loss) by the weighted average number of shares of common stock outstanding.
Diluted earnings per share is computed by dividing net income by the weighted
average common and potentially dilutive common equivalent shares outstanding.
However, the computation of diluted loss per share was antidilutive in each of
the periods presented; therefore, basic and diluted loss per share are the same
for all periods.
4. Conversion of Series A Convertible Preferred Stock
As of June 30, 1998, holders of Series A Convertible Preferred Stock ("Series A
Stock") have elected to convert a total of 1,538 shares into 720,670 shares of
Common Stock at conversion prices ranging from $2.1038 to $2.2950 per share, and
received warrants to purchase 144,135 shares of Common Stock at an exercise
price of $4.77 per share.
6
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5. New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133 is effective for fiscal years
beginning after June 15, 1999 and cannot be applied retroactively. SFAS 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized currently in earning unless specific hedge accounting
criteria are met. The Company currently plans to adopt SFAS 133 effective
January 1, 2000, and will determine both the method and impact of adoption prior
to that date.
6. Subsequent Events
ELECTION OF DAVID D. DAWSON AS CHAIRMAN OF THE BOARD OF DIRECTORS AND
ELECTION OF A NEW DIRECTOR
The Board of Directors of the Company at its July 22, 1998 meeting elected David
D. Dawson to serve as Chairman. Company founder James F. Chen continues as a
director.
The Board of Directors also elected A. L. "Tom" Giannopoulos, President and
Chief Executive Officer of MICROS Systems, Inc. (Nasdaq: MCRS), as a director
replacing Harry S. Gruner, General Partner of JMI Equity Fund, who resigned.
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934. These statements may differ in a
material way from actual future events. For instance, factors that could cause
results to differ from future events include rapid rates of technological change
and intense competition, among others. The Company's total revenues and
operating results have varied substantially from quarter to quarter and should
not be relied upon as an indication of future results. Several factors may
affect the ability to forecast the Company's quarterly operating results,
including the size and timing of individual software and hardware sales; the
length of the Company's sales cycle; the level of sales and marketing, research
and development and administrative expenses; and general economic conditions.
Operating results for a given period could be disproportionately affected by any
shortfall in expected revenues. In addition, fluctuation in revenues from
quarter to quarter have had and are expected to continue to have a significant
impact on the Company's results of operations. The Company's growth in recent
periods may not be an accurate indication of future results of operations in
light of the Company's short operating history, the evolving nature of the
network security market and the uncertainty of the demand for Internet and
intranet products in general and the Company's products in particular. Because
the Company's operating expenses are based on anticipated revenue levels, the
timing of revenue recognition can cause significant variations in operating
results from quarter to quarter.
Readers are also referred to the documents filed by the Company with the
Securities and Exchange Commission, specifically the Company's last report on
Form 10-K that identifies important risk factors for the Company.
RESULTS OF OPERATIONS
REVENUES
Total revenues increased by 59.4% to approximately $3,404,000 for the second
quarter of 1998 up from $2,135,000 in the same period of 1997. For the six
months ended June 30, 1998, total revenues increased 29.9% to $5,907,000 from
$4,549,000 in the same period of 1997. These increases were principally
attributable to increased sales of the Company's network security products.
Product revenues are derived primarily from software licenses and the sale of
hardware products. Product revenues were $3,195,000 and $5,609,000 for the
quarter and six months ended June 30, 1998, respectively, an increase of 58.6%
and 30.7% over the same periods in 1997, and was principally attributable to
increased sales of the Company's SmartGate network security product. Consulting
and services revenues were $209,000 and $297,000 for the quarter and six months
ended June 30, 1998, respectively, an increase of 73.2% and 15.0% over the same
periods in 1997, and reflect the increase in sales of services complementary to
the Company's products, including consulting, maintenance and training.
COST OF REVENUES
Total cost of revenues as a percentage of total revenues were approximately
14.9% and 10.4% for the three months and approximately 19.3% and 13.4% for the
six months ended June 30, 1997 and 1998, respectively. Total cost of revenues is
composed of cost of product revenues and cost of consulting and services
revenues.
Cost of product revenues consists principally of the costs of computer hardware,
licensed technology, manuals and labor associated with the distribution and
support of the Company's products. Cost of product revenues as a percentage of
product revenues decreased from 15.3% for the second quarter of 1997 to 10.7% in
the same period of 1998. Cost of product revenues as a percentage of product
revenues also decreased in the six months ended June 30, 1998 to 13.5% from
19.8% in the same period of 1997. Cost of product revenues was approximately
$340,000 for the second quarter of 1998 compared with $308,000 in same period of
1997. Cost of product revenues was approximately $756,000 for the six months
ended June 30, 1998 compared with $848,000 for the same period of 1997. The
dollar increase and percentage decrease for the three month period ended June
30, 1998 were primarily attributable to increased sales combined with an
8
<PAGE>
increase in the proportion of sales from software licenses as compared to
turnkey hardware sales. The dollar and percentage decrease for the six month
period ended June 30, 1998 were primarily attributable to an increase in the
proportion of sales from software licenses as compared to turnkey hardware
sales.
Cost of consulting and services revenues consists principally of personnel and
related costs incurred in providing consulting, support and training services to
customers. Cost of consulting and services revenues as a percentage of
consulting and services revenues decreased from 9.1% for the second quarter of
1997 to 7.3% in the same period of 1998. Cost of consulting and services
revenues as a percentage of consulting and services revenues also decreased in
the six months ended June 30, 1998 to 7.8% from 12.5% in the same period of
1997. Cost of consulting and services revenues were approximately $11,000 for
the second quarter of 1997 compared with $15,000 in the same period of 1998.
Cost of consulting and services revenues was approximately $32,000 for the six
months ended June 30, 1997 compared with $23,000 for the same period of 1998.
The dollar increase and percentage decrease in the second quarter of 1998 were
primarily attributable to increased consulting and service revenues and lower
costs related to software maintenance. The dollar and percentage decrease for
the six months ended June 30, 1998 was primarily attributable to lower costs
related to software maintenance.
OPERATING EXPENSES
Sales and Marketing -- Sales and marketing expenses consist principally of the
costs of sales and marketing personnel, advertising, promotions and trade shows.
Sales and marketing expenses decreased by 31.9% to approximately $1,597,000 in
the second quarter of 1998, down from approximately $2,345,000 in the same
period of 1997. Sales and marketing expenses also decreased in the six month
period ending June 30, 1998 to approximately $3,078,000, down from approximately
$3,800,000 in the same period of 1997. As a percentage of total revenue, sales
and marketing expenses were 46.9% and 52.1%, respectively, for the three month
and six month periods ended June 30, 1998 compared to 109.9% and 83.6%,
respectively, in the comparable periods of 1997. The dollar and percentage
decreases in 1998 were principally due to the charge of approximately $551,000
for bad debt expense that was incurred in the second quarter of 1997. Sales and
marketing expenses are expected remain at current levels but fall as a
percentage of total revenues in the near term as a result of the Company's
continuing sales and marketing efforts. This statement is based on current
expectations. It is forward-looking, and the actual results could differ
materially. For information about factors that could cause the actual results to
differ materially, please refer to Item 1. "Business - Risk Factors That May
Affect Future Results and Market Price of Common Stock" in the Company's Form
10-K.
General and Administrative -- General and administrative expenses consist
principally of the costs of finance, management and administrative personnel and
facilities expenses. General and administrative expenses decreased by 23.4% to
approximately $825,000 in the second quarter of 1998, down from approximately
$1,077,000 in the same period of 1997. General and administrative expenses
increased in the six month period ending June 30, 1998 to approximately
$2,027,000, up from approximately $1,848,000 in the same period of 1997. As a
percentage of revenue, expenses were 24.2% and 34.3% for the three and six month
periods ended June 30, 1998 compared to 50.5% and 40.6% in the comparable
periods of 1997. The dollar and percentage decreases in the second quarter of
1998 were principally due to the inclusion of approximately $250,000 of legal
expenses related to patent, trademark and intellectual property work in the same
period of 1997. The dollar increase and the percentage decrease for the six
months ended June 30, 1998 were primarily due to noncash charges of
approximately $394,000 attributable to anti-dilution adjustments to the terms of
the warrants held by JMI Equity Fund II, L.P., which were triggered by
conversions of Series A Stock during the period, spread over a larger revenue
base. See Note 4 to the Notes to the Condensed Financial Statements. The Company
anticipates that general and administrative expenses, exclusive of noncash
charges, will increase modestly in future periods. This statement is based on
current expectations. It is forward-looking, and the actual results could differ
materially. For information about factors that could cause the actual results to
differ materially, please refer to Item 1. "Business - Risk Factors That May
Affect Future Results and Market Price of Common Stock" in the Company's Form
10-K.
Research and Development -- Research and development expenses consist
principally of the costs of research and development personnel and other
expenses associated with the development of new products and enhancement of
existing products. Research and development increased by 11.5% to approximately
$938,000 in the second quarter of 1998, up from approximately $841,000 in the
9
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same period of 1997. Research and development also increased in the six month
period ending June 30, 1998 to approximately $1,878,000, up from approximately
$1,454,000 in the same period of 1997. As a percentage of total revenue,
expenses were 27.5% and 31.8% for the three month and six month periods ended
June 30, 1998 compared to 39.4% and 32.0% in 1997. The dollar increases and
percentage decreases were primarily due to increases in the number of personnel
associated with the Company's product development efforts. The Company believes
that a continuing commitment to research and development is required to remain
competitive. Accordingly, the Company intends to allocate substantial resources
to research and development, but research and development expenses may vary as a
percentage of total revenues. This statement is based on current expectations.
It is forward-looking, and the actual results could differ materially. For
information about factors that could cause the actual results to differ
materially, please refer to Item 1. "Business - Risk Factors That May Affect
Future Results and Market Price of Common Stock" in the Company's Form 10-K.
Restructuring Charge -- Restructuring charge expense in the second quarter of
1997 consisted of the costs associated with the Company's shift in its sales and
marketing efforts toward a channel distribution strategy. Accordingly, the
Company recognized a restructuring charge of $800,000, comprised of $400,000
relating to certain marketing expenses and $400,000 relating to the reductions
in the Company's workforce in 1997. No restructuring charge was incurred for the
second quarter of 1998 or for the six months ended June 30, 1998.
Interest Income and Expenses -- Interest income represents interest earned on
cash and cash equivalents. Interest income decreased from approximately $102,000
and $218,000 for the three and six month periods ended June 30, 1997,
respectively, to approximately $40,000 and $108,000 for the three and six month
periods ended June 30, 1998, respectively. The decreases were attributable to
reduced levels of cash and cash equivalents. Interest expense represents
interest payable or accreted on promissory notes and capitalized lease
obligations. Interest expense increased from approximately $4,000 and $5,000 for
the three and six month periods ended June 30, 1997, respectively, to
approximately $31,000 and $43,000 for the three and six month periods ended June
30, 1998, respectively. The increases were due to capitalized lease obligations.
Income Taxes -- The Company did not incur income tax expenses in December 31,
1995, 1996 and 1997 as a result of the net loss incurred during these periods.
As of June 30, 1998, the Company has significant net operating loss carry
forwards as a result of net losses incurred since inception.
Dividend on Preferred Stock -- The Company provided approximately $31,000 for a
dividend on the Series A Stock for the three month period ended June 30, 1998
and approximately $80,000 for the six month period ended June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used cash of approximately $4,769,000 and
$3,484,000 for the six months ended June 30, 1997 and 1998, respectively. Cash
used in operating activities for the six months ended June 30, 1998 resulted
principally from net losses and increases in accounts receivable, partially
offset by an increase in accounts payable, the noncash charge related to the
issuance of warrants and depreciation.
Capital expenditures for property and equipment were approximately $243,000 and
$121,000 for the six months ended June 30, 1997 and 1998, respectively. These
expenditures have generally been for computer workstations and personal
computers, office furniture and equipment, and leasehold additions and
improvements. The Company expects to purchase additional computer equipment in
1998. In the six months ended June 30, 1997, the Company made an investment of
$250,000 in Network Flight Recorder, Inc.
The Company believes that its current cash and cash equivalents and funds that
may be generated from on-going operations will be sufficient to finance the
Company's operations at least through June 30, 1999.
As of June 30, 1998, the Company had an accumulated deficit of approximately
$20,205,000. The Company currently expects to incur net losses over the next
several quarters.
10
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
11
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Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On May 14, 1998, the following items were voted on at the Annual Meeting of
stockholders:
Broker
Proposal For Against Abstain Non-Votes
-------- --- ------- ------- ---------
1. Proposal One:
Election of:
Charles C. Chen 10,826,662 45,675 669,139 N/A
David D. Dawson 10,763,809 108,528 669,139 N/A
as a director for a term ending
2001.
The following director terms
continued following the Annual
Meeting: James F. Chen, Harry S.
Gruner and William E. Odom
2. Proposal Two:
Ratification of the adoption of
the 1998 Incentive Stock Plan. 7,236,691 269,362 927,179 3,209,939
3. Proposal Three:
Ratification, pursuant to Nasdaq
Rule 4460 (i), of the issuance
of (a) shares of the Company's
Series A Convertible Preferred
Stock ("Series A Stock") to
Advantage Fund II Ltd.
("Advantage"), (b) warrants
("Consultant Warrants") to
purchase Common Stock issued to
Wharton Capital Partners, Ltd.
("Wharton") and other persons
pursuant to the Company's
engagement letter with Wharton
dated October 22, 1997
("Engagement Letter"), and (c)
the shares of Common Stock
issuable in connection with the
Series A Stock, the warrants
issuable on conversion of the
Series A Stock and the
Consultant Warrants. 1,885,948 5,688,455 858,829 3,209,939
12
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Broker
Proposal For Against Abstain Non-Votes
-------- --- ------- ------- ---------
4. Proposal Four:
Approval, pursuant to Nasdaq
Rule 4460(i), of the issuance
pursuant to the terms of the
Commitment Letter dated December
8, 1997 between the Company and
Advantage of (a) shares of a new
series of the Company's
preferred stock ("New Preferred
Stock") to Advantage, (b)
warrants ("New Warrants") to
purchase Common Stock to be
issued to Wharton and other
persons pursuant to the
Engagement Letter and (c) the
shares of Common Stock issuable
in connection with the New
Preferred Stock, the warrants
issuable on conversion of the
New Preferred Stock and the New
Warrants. 1,887,948 5,686,905 858,379 3,209,939
5. Proposal Five:
Ratification of the election of
Coopers & Lybrand L.L.P. as
independent auditors for fiscal
year ending December 31, 1998. 10,401,101 206,146 934,229 N/A
Item 5. Other Information
The Board of Directors of the Company at its July 22, 1998 meeting elected David
D. Dawson to serve as Chairman. Company founder James F. Chen continues as a
director.
The Board of Directors also elected A. L. "Tom" Giannopoulos, President and
Chief Executive Officer of MICROS Systems, Inc. (Nasdaq: MCRS), as a director
replacing Harry S. Gruner, General Partner of JMI Equity Fund, who resigned.
A. L. Giannopoulos was elected a director of MICROS Systems, Inc. ("MICROS") in
March 1992 and was elected President and Chief Executive Officer of MICROS in
May 1993. Effective as of June 1, 1995, Mr. Giannopoulos resigned as General
Manager of the Westinghouse Information and Security Systems Divisions, having
been with Westinghouse for approximately 30 years. In prior assignments at
Westinghouse, Mr. Giannopoulos was General Manager of the Automation Division
and National Industrial Systems Sales Force, Industries Group. Mr. Giannopoulos
is a graduate of Lamar University with a Bachelor of Science degree in
Electrical Engineering.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this quarterly report on Form 10-Q
for the quarter period ended June 30, 1998.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
13
<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.
V-ONE CORPORATION
Registrant
Date: August 6, 1998 By: /s/ Charles B. Griffis
----------------------
Name: Charles B. Griffis
Title: Senior Vice President, Chief
Financial Officer and Treasurer
(Duly authorized officer and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-Q FOR THE
THREE MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,639,439
<SECURITIES> 0
<RECEIVABLES> 7,290,434
<ALLOWANCES> 1,541,044
<INVENTORY> 325,528
<CURRENT-ASSETS> 8,903,929
<PP&E> 1,538,192
<DEPRECIATION> 582,236
<TOTAL-ASSETS> 11,235,249
<CURRENT-LIABILITIES> 2,492,661
<BONDS> 0
2,188,884
0
<COMMON> 13,882
<OTHER-SE> 6,316,137
<TOTAL-LIABILITY-AND-EQUITY> 11,235,249
<SALES> 3,404,397
<TOTAL-REVENUES> 3,404,397
<CGS> 355,656
<TOTAL-COSTS> 3,359,815
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (9,750)
<INCOME-PRETAX> (301,325)
<INCOME-TAX> 0
<INCOME-CONTINUING> (301,325)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (30,775)
<NET-INCOME> (332,100)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
