SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
GENTIA SOFTWARE PLC
Tuition House
St George's Road
Wimbledon
London SW19 4EU
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82- N.A.
Page 1 of 16 Pages
Exhibit Index Appears on Page 12
<PAGE>
GENTIA SOFTWARE PLC
Form 6-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Information:
Condensed Consolidated Balance Sheets as of June 30, 1998 (Unaudited)
and December 31, 1997 (Audited) 3
Condensed Consolidated Statements of Operations for the three and six months
ended June 30, 1998 and 1997 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Management's Discussion and Analysis of Financial Condition and Results of
Operations. 8
Exhibit Index 12
Exhibit A. Second Quarter Press Release 13
</TABLE>
2
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
---------- ------------
(unaudited) (audited)
(in thousands)
US$ US$
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ............................ $ 13,455 $ 20,332
Accounts receivable, net of allowance $1,338
( Dec 31, 1997 - $1,819) ........................... 11,223 7,758
Prepaid expenses and other current assets ............ 2,358 1,921
Deferred taxes ....................................... 247 285
-------- --------
Total current assets ......................................... $ 27,283 $ 30,296
Property and equipment, net ............................... 2,425 2,037
Goodwill on acquisition, net of amortization of $724
(Dec 31, 1997 - $494) ................................... 5,404 3,602
Deferred taxes ............................................ 459 459
-------- --------
Total assets ................................................. $ 35,571 $ 36,394
======== ========
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations ................. $ 89 $ 105
Accounts payable ..................................... 2,989 1,743
Accrued liabilities .................................. 1,402 1,337
Deferred revenues .................................... 4,710 3,630
Other accounts payable ............................... 1,319 1,337
-------- --------
Total current liabilities $ 10,509 $ 8,152
Non current liabilities:
Deferred taxation .................................... 274 274
Long-term portion of lease obligations ............... 92 109
-------- --------
Total liabilities ............................................ $ 10,875 $ 8,535
Shareholders' equity:
Ordinary shares ...................................... 2,416 2,300
Additional paid-in capital ........................... 28,783 27,406
Retained earnings .................................... (5,789) (1,236)
Cumulative translation adjustment .................... (714) (611)
-------- --------
Total shareholders' equity ................................... $ 24,696 $ 27,859
-------- --------
Total liabilities and shareholders' equity ................... $ 35,571 $ 36,394
======== ========
</TABLE>
3
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
(in thousands, except per share amounts)
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Revenues:
License .......................... $4,779 $5,018 $7,657 $8,974
Services and other ............... 2,960 3,088 5,999 6,133
-------- -------- -------- --------
7,739 8,106 13,656 15,107
Cost of revenues:
License .......................... 472 116 547 283
Services and other ............... 2,045 1,662 3,827 3,177
-------- -------- -------- --------
2,517 1,778 4,374 3,460
Gross profit .......................... 5,222 6,328 9,282 11,647
Operating expenses:
Sales and marketing .............. 4,175 3,591 8,290 6,705
Research and development ......... 2,034 1,005 3,673 2,220
General and administrative ....... 1,021 1,163 2,103 2,280
Goodwill amortization ............ 128 91 230 179
-------- -------- -------- --------
Total operating expenses ..... 7,358 5,850 14,296 11,384
Income (loss) from operations ......... (2,136) 478 (5,014) 263
Other income .......................... (215) (295) (461) (598)
-------- -------- -------- --------
Income (loss) before
provision for taxes ................... (1,921) 773 (4,553) 861
Provision for income taxes ....... -- (229) -- (258)
-------- -------- -------- --------
Net income (loss) ..................... ($1,921) $544 ($4,553) $603
======== ======== ======== ========
Basic income (loss) per share .... ($0.19) $0.06 ($0.47) $0.07
Diluted income (loss) per share .. ($0.19) $0.05 ($0.47) $0.05
Shares used to compute basic EPS . 9,869 9,015 9,753 9,010
Shares used to compute diluted EPS 9,869 10,900 9,753 11,043
</TABLE>
See accompanying notes
4
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
---------------------------------
June 30, June 30,
1998 1997
--------------- --------------
(in thousands)
US$ US$
<S> <C> <C>
Cash flows from operating activities
Net income (loss) ......................................... $(4,553) $603
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation .......................................... 483 388
Goodwill .............................................. 230 179
Changes in operating assets and liabilities:
Accounts receivable ................................. (2,984) (1,611)
Provision for bad debts ............................. (481) (57)
Prepaid expenses and other receivables .............. (437) (1,036)
Accounts payable .................................... 1,246 (414)
Accrued liabilities and other expenses .............. 85 (703)
Deferred revenues ................................... 1,080 12
-------- --------
Net cash used in operating activities ......................... (5,331) (2,639)
-------- --------
Cash flows from investing activities:
Costs of acquisition .................................. (1,032) (52)
Purchases of assets ................................... (871) (644)
-------- --------
Net cash used in investing activities ......................... (1,903) (696)
-------- --------
Cash flows from financing activities:
Net proceeds on shares issued ......................... 493 124
Repayment of capital lease obligations ................ (33) (94)
-------- --------
Net cash provided by financing activities ..................... 460 30
Effect of exchange rate changes on cash ................... (103) (179)
-------- --------
Net decrease in cash ...................................... (6,877) (3,484)
Cash at beginning of period ............................... 20,332 25,228
-------- --------
Cash at end of period ..................................... $13,455 $21,744
======== ========
</TABLE>
See accompanying notes
5
<PAGE>
GENTIA SOFTWARE PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The Company develops, markets and supports high performance networked business
intelligence software for business planning and decision making. The Company's
software products employ a multidimensional database and a highly flexible end
user environment which empowers business managers throughout a networked
enterprise to perform, report and share complex analyses of business data.
Gentia enables the enterprise-wide integration of structured and unstructured
data contained in operational databases, data warehouses and external data
sources and allows users to perform on-line analytical processing through a
highly integrated, scalable, networked system. Gentia users can also employ
automated agents to analyze, update and monitor key business performance
indicators, rapidly perform scenario analyses and distribute information to
users throughout the enterprise.
On December 19, 1997, the Company signed a joint development and marketing
agreement with Renaissance Solutions, Inc., the originators and leading
practitioners of "Balanced Scorecard" to jointly develop and market a software
product called "Renaissance Balanced Scorecard powered by Gentia". This
application enables the automatic deployment of balanced scorecards throughout
an organization, leveraging the distributed and scalable nature of the
underlying Gentia technology. Because corporate Balanced Scorecards are likely
to be deployed across company Intranets, the Company has produced a web enabled
version of the application which runs on Internet browsers, making extensive use
of emerging HTML and Java based technologies. The Renaissance Agreement
represents an initial step in the Company's shift to `solutions based' product
offerings.
Basis of Presentation
The consolidated financial statements are stated in United States dollars and
are prepared under United States generally accepted accounting principles.
Interim Financial Information
The financial information at June 30, 1998 and for the three and six months
ended June 30, 1998 and 1997 is unaudited but includes all adjustments which the
Company considers necessary for a fair presentation of the financial position at
such date and the operating results and cash flows for those periods. Results
for the three and six months period ended June 30, 1998 are not necessarily
indicative of results that may be expected for the entire year. The condensed
consolidated balance sheet at December 31, 1997 has been derived from the
audited consolidated financial statements at that date. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with United States generally accepted accounting principles have been
condensed or omitted pursuant to the Securities and Exchange Commission Rules
and Regulations. These condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and notes
for the year ended December 31, 1997.
Principles of Consolidation
The accompanying financial statements consolidate the accounts of the Company
and its wholly and majority owned subsidiaries. All significant inter company
accounts and transactions have been eliminated.
6
<PAGE>
GENTIA SOFTWARE PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Foreign Exchange
Transactions in foreign currencies are translated into U.S. dollars at the rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange
ruling at the balance sheet date. All differences are taken to the consolidated
statement of operations.
Results of operations of subsidiaries which have their local currencies as the
functional currency are translated into U.S. dollars at the average rates for
the relevant period, while assets and liabilities are translated using current
rates at each balance sheet date. The resulting exchange gains or losses are
accumulated in the cumulative translation adjustment account included as a
component of shareholders' equity.
Per Share Information
Net income per share information is computed based on the weighted average
number of shares outstanding as prescribed in SFAS128.
2 LITIGATION
The Company is involved in one legal action arising in relation to patents in
the United States. While the outcome of this matter is currently not
determinable, the Company is vigorously pursuing its defense and is confident
that it will prevail in the litigation.
3 ACQUISITION
In May 1998, the Company acquired the issued share capital of Technical and
Computer Management Services Ltd, a U.K. Company, and its U.S. subsidiary
Technical and Computer Management Services LLC in consideration of $1.0 million
cash and 166,667 Ordinary Shares valued at approximately $1.0 million. TCMS is a
technical consulting firm with extensive experience in the implementation of
enterprise-wide, web-based analytical applications using Gentia technology. The
acquisition was accounted for under the purchase method and resulted in the
recording of approximately $2.0 million in identified intangibles and goodwill.
It is Company policy to amortize intangible assets and goodwill on a
straight-line basis over their useful lives. The goodwill and intangible assets
acquired in this transaction is being amortized over its useful life of 10
years.
7
<PAGE>
GENTIA SOFTWARE PLC
Management's Discussion and Analysis of Financial Condition and Results of
Operations
for the three and six months ended June 30, 1998 and 1997
Three months ended June 30, 1998 and 1997.
Revenues
Revenues were $7.7 million in the three months ended June 30, 1998, a decrease
of 4.5% compared to revenues of $8.1 million for the three months ended June 30,
1997. License revenues were $4.8 million in the three months ended June 30,
1998, a decrease of 4.8% over license revenues of $5.0 million for the three
months ended June 30, 1997. Services and other revenues were $3.0 million in the
three months ended June 30, 1998, a decrease of 4.1% when compared to $3.1
million for the three months ended June 30, 1997. The year over year decrease in
revenues reflected the Company's continuing transition from being a "purely
technology" led to a "solutions led" software provider. Compared to the three
months ended March 31, 1998, revenues for the three months ended June 30, 1998
increased 30.8% and license revenues increased 66.1%.
Gross Profit
Gross profit was $5.2 million or 67.5% for the three months ended June 30, 1998,
compared to $6.3 million or 78.1% for the three months ended June 30, 1997. The
decrease in gross margin was primarily due to higher commissions paid to third
parties and increased consultancy costs due to the acquisition of TCMS.
Sales and Marketing
Sales and marketing costs were $4.2 million in the three months ended June 30,
1998, an increase of 16.3% compared to $3.6 million in the three months ended
June 30, 1997. The increase in dollar expenditure reflects the Company's
increased investment in its sales and marketing organization. The Company
expects these expenses will continue to increase as a result of its continued
investment in its sales and marketing organization.
Research and Development
Research and development costs were $2.0 million in the three months ended June
30, 1998; an increase of 102.4% compared to $1.0 million in the three months
ended June 30, 1997. The increase is primarily due to further resources being
utilized in the Company's development program, especially the continued
development of the Balanced Scorecard application as well as legal and
investigative costs relating to patents. It is the Company's intention to
accelerate its expenditure on research and development of new products when it
considers it appropriate to do so.
General and Administrative
General and administrative costs were $1.0 million in the three months ended
June 30, 1998; a decrease of 12.2% compared to $1.2 million in the three months
ended June 30, 1997.
Other Income (Expenses)
Other income was $215,000 in the three months ended June 30, 1998 compared to
$295,000 in the three months ended June 30, 1997. Other income arose primarily
due to interest income on funds received from the Company's Initial Public
Offering completed on April 30, 1996.
8
<PAGE>
GENTIA SOFTWARE PLC
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Six months ended June 30, 1998 and 1997
Revenue
Revenues were $13.7 million in the six months ended June 30, 1998, a decrease of
9.6% compared to revenues of $15.1 million for the six months ended June 30,
1997. License revenues were $7.7 million in the six months ended June 30, 1998,
a decrease of 14.7% over license revenues of $9.0 million for the six months
ended June 30, 1997. Services and other revenues were $6.0 million in the six
months ended June 30, 1998, a decrease of 2.2% compared to $6.1 million for the
six months ended June 30, 1997. The decrease in revenues reflected the Company's
transition from being a "purely technology" led to a "solutions" led software
provider.
Gross Profit
Gross profit was $9.3 million or 68.0% for the six months ended June 30, 1998,
compared to $11.6 million or 77.1% for the six months ended June 30, 1997. The
decrease in gross profit was primarily due to increased sales commission to
third parties and increased consultancy costs.
Sales and Marketing
Sales and marketing costs were $8.3 million in the six months ended June 30,
1998, an increase of 23.6% compared to $6.7 million in the six months ended June
30, 1997. The Company expects these expenses will continue to increase as a
result of its continued investment in its sales and marketing organization.
Research and Development
Research and development costs were $3.7 million the six months ended June 30,
1998, an increase of 65.4% compared to $2.2 million in the six months ended June
30, 1997. The increase is primarily due to further resources being utilized in
the Company's development program, especially the continued development of the
Balanced Scorecard application as well as legal and investigative costs relating
to patents. It is the Company's intention to accelerate its expenditure on
research and development of new products when it considers it appropriate to do
so.
General and Administrative
General and administrative costs were $2.1 million in the six months ended June
30, 1998, a decrease of 7.8% compared to $2.3 million in the six months ended
June 30, 1997.
Other Income
Other income was $461,000 in the six months ended June 30, 1998 compared to
$598,000 in the six months ended June 30, 1997. Other income arose primarily due
to interest income in funds received from the Company's Initial Public Offering
completed on April 30, 1996.
9
<PAGE>
GENTIA SOFTWARE PLC
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Liquidity and Capital Resources
As of June 30, 1998, the Company had cash and cash equivalents of $13.5 million.
Accounts receivable at June 30, 1998 were $11.2 million, an increase of 44.7%
compared to December 31, 1997 reflecting the renewed growth in sales. In the six
months ended June 30, 1998, the Company's operating activities consumed cash of
$5.3 million compared to a utilization of cash of $2.6 million in the six months
ended June 30, 1997. This was primarily due to the loss for the six months ended
June 30, 1998 and the increase in accounts receivable as described above.
Investing activities consumed cash of $1.9 million in the six months ended June
30, 1998 compared to $696,000 in the six months ended June 30, 1997. In May
1998, the Company acquired the issued share capital of Technical and Computer
Management Services Ltd and its subsidiary Technical and Computer Management
Services LLC in consideration of $1.0 million cash and 166,667 Ordinary Shares
valued at approximately $1.0 million. In the six months ending June 30, 1998 the
company had invested $871,000 in the purchase of assets, predominantly computer
equipment.
Financing activities generated $460,000 in the six months ended June 30, 1998
compared to $30,000 in the six months ended June 30, 1997. During the six months
ended June 30, 1998 the company received $493,000 on the exercise of share
options.
The Company believes that existing cash, cash equivalents and cash generated by
operations will be sufficient to meet the Company's working capital needs and
currently planned capital expenditure requirements for the next twelve months.
10
<PAGE>
The information contained in Exhibit 1 hereto, consisting of the registrant's
unaudited financial statements for the six months ended June 30, 1998, has been
distributed to its security holders and is furnished to the Commission pursuant
to Rule 13a-16 under the Securities Act of 1934, as amended (the "Act"). This
report and the information furnished herewith shall not be deemed to be "filed"
for the purposes of Section 18 of the Act or otherwise subject to the
liabilities of that section.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GENTIA SOFTWARE plc
By:
George F Sprenkle
Chief Financial Officer
Date: 31 July 1998
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Exhibit 99 Second Quarter Press Release - (1998) 12-16
</TABLE>
12
Second Quarter Press Release
GENTIA SOFTWARE
Tuition House, St. George's Road
Wimbledon
London SW19 4EU
(Nasdaq: GNTIY)
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
George Sprenkle For Analyst Info: Julie Creed (312) 640-6724
Chief Financial Officer For General Info: Kelly Lofts (212) 661-8030
44 181 971 4000 For Media Info: Alicia Nieva-Woodgate (212)
661-8030
FOR IMMEDIATE RELEASE
July 23, 1998
GENTIA REPORTS SECOND QUARTER RESULTS
LONDON, July 23, 1998 -- Gentia Software (Nasdaq: GNTIY), developer of
analytical applications for enterprise-wide deployment, today reported second
quarter results. Revenues for the second quarter of 1998 totaled $7.7 million,
compared with revenues of $5.9 million for the first quarter ended March 31,
1998 and $8.1 million for the second quarter ended June 30, 1997. Comparing the
second quarter ended June 30, 1998 with the first quarter ended March 31, 1998;
revenues increased a substantial 31%. The revenue growth was primarily
attributable to a 66% increase in license sales over 1998 first quarter levels.
The Company reported a net loss of $1.9 million for the most recent
quarter, or $0.19 cents per share, compared with a net loss of $2.6 million, or
$0.27 per share, in the first quarter of 1998 and a profit of $0.5 million, or
$0.05 per share, in the second quarter of 1997. The most recent quarter results
include approximately $0.7 million in software development expenditures, made
during the quarter to further enhance the Balanced Scorecard application. As was
reported last quarter, this expense is eligible for capitalization under the FAS
86 guidelines. However, the Company elects to expense these costs in the most
recent period rather than amortize them over the product's life.
Paul Rolph, Chairman and Chief Executive Officer of Gentia, said "We made
a great deal of progress during the second quarter in transitioning Gentia to an
analytical applications company. Our recently completed acquisition of Technical
and Computer Management Services has enabled us to significantly strengthen our
management team and support our customers with the addition of 24 consultants
experienced with Gentia's technology. This strategic acquisition enhances our
ability to deliver complete solutions and positions us with the necessary
resources to support the growing number of Balanced Scorecard rollouts. The
integration is complete and we expect to realize increased benefits from the
acquisition beginning in the third quarter.
"Our relationship with Renaissance Worldwide continues to enhance Gentia's
visibility in the market and reinforces our leadership in the Balanced Scorecard
and associated analytical applications space. Recent additions to our growing
customer base for Renaissance Balanced Scorecard include `blue chip' companies
such as Volvo, Heineken, The Principal Financial Group and the Fortis Group.
"We are also very encouraged by our new partnerships with Price Waterhouse
and VantageSource to participate in joint sales opportunities in the analytical
applications market. Gentia's association with these premier organizations will
significantly increase our access to companies that need analytical applications
to manage their business. Our goals are to leverage our market position and
strategic alliances to expand our distribution capacity and strengthen our
ability to deliver additional applications that complement the Scorecard,"
concluded Mr. Rolph.
13
<PAGE>
Second Quarter Highlights
o Acquired Technical and Computer Management Services (TCMS) in a cash and
stock transaction. Based in Mountain View, California and Slough, England,
TCMS is a consulting firm with extensive experience in the implementation
of enterprise-wide, web-based analytical applications using Gentia's
technology.
o Signed reseller agreements with Price Waterhouse and VantageSource LLP, a
member firm of Andersen Worldwide SC, for Gentia's Business Intelligence
(BI) environment and associated analytical applications.
o Formed, with founding supporter Renaissance Worldwide, the Balanced
Scorecard Technology Council, a venue for organizations seeking `best
practices' information on automating the Balanced Scorecard. Over 350
members signed on as participants in the first two weeks of the program.
o Closed major deals during the second quarter with Barclays plc, The
Principal Financial Group, Fortis, Volvo, Popular Club, Heineken,
Australian Wool Test Authority, Swedish Post Office and Stena Line the
majority of which were Balanced Scorecard deals.
o Achieved 100% Pure Java(TM) certification from Sun Microsystems for the
latest version of its Gentia WebSuite tool, Gentia WebSuite 4.0, enabling
thousands of users to interactively access business information, regardless
of where they are located, via a standard, Java(TM) technology-enabled Web
browser.
o Experienced steadily increasing market interest in automated Balanced
Scorecard solutions, as evidenced by our second quarter Balanced Scorecard
workshops. The events drew an average of 50 attendees per location on an
eighteen city tour in the US, Europe, Australia and New Zealand.
About the Company
Gentia Software (NASDAQ: GNTIY) is the leading supplier of analytical
applications that enable clients to maximize their competitive position through
enterprise-wide deployment of strategic management and predictive decision
making solutions. By leveraging the only networked Business Intelligence
environment designed for enterprise-wide deployment, Gentia enables a new class
of analytical applications, such as the Balanced Scorecard, which ensure
information delivery to key decision makers' desktops and browsers throughout an
enterprise. Gentia Software's worldwide client list of more than 480 customers
includes JP Morgan and Company, Volvo, McDonald's Restaurants, Heineken, Fortis,
Swiss Reinsurance and Sun Microsystems. The Company has dual headquarters in
Boston and London and operates in more than 20 countries worldwide.
For additional information about Gentia, visit the Company's Web site at
www.gentia.com or call 1-888-4GENTIA or 1-781-224-0750. To receive additional
information via fax at no charge, dial 1-800-PRO-INFO and enter code GNTIY.
This news release contains statements of a forward-looking nature relating
to the financial performance of Gentia Software. Such statements are based upon
the information available to management at this time, and they necessarily
involve risk because actual results could differ materially from current
expectations. Among the many factors that could cause actual results to differ
from those set forth in the Company's forward-looking statements are changes in
general economic conditions, actions taken by customers or competitors, and the
receipt of more or fewer orders than expected.
(Tables to Follow)
14
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
(in thousands, except per share amounts)
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Revenues:
License ........................... $4,779 $5,018 $7,657 $8,974
Services and other ................ 2,960 3,088 5,999 6,133
-------- -------- -------- --------
7,739 8,106 13,656 15,107
Cost of revenues:
License ........................... 472 116 547 283
Services and other ................ 2,045 1,662 3,827 3,177
-------- -------- -------- --------
2,517 1,778 4,374 3,460
Gross profit ........................... 5,222 6,328 9,282 11,647
Operating expenses:
Sales and marketing ............... 4,175 3,591 8,290 6,705
Research and development .......... 2,034 1,005 3,673 2,220
General and administrative ........ 1,021 1,163 2,103 2,280
Goodwill amortization ............. 128 91 230 179
-------- -------- -------- --------
Total operating expenses ....... 7,358 5,850 14,296 11,384
Income (loss) from operations .......... (2,136) 478 (5,014) 263
Other income ........................... (215) (295) (461) (598)
-------- -------- -------- --------
Income (loss) before provision for taxes (1,921) 773 (4,553) 861
Provision for income taxes ........ -- (229) -- (258)
-------- -------- -------- --------
Net income (loss) ...................... ($1,921) $544 ($4,553) $603
======== ======== ======== ========
Basic income (loss) per share ..... ($0.19) $0.06 ($0.47) $0.07
Diluted income (loss) per share ... ($0.19) $0.05 ($0.47) $0.05
Shares used to compute basic EPS .. 9,869 9,015 9,753 9,010
Shares used to compute diluted EPS. 9,869 10,900 9,753 11,043
</TABLE>
15
<PAGE>
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
---------- ------------
(unaudited) (audited)
(in thousands)
US$ US$
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ...................... $13,455 $20,332
Accounts receivable, net of allowance $ 1,338
(Dec 31, 1997 - $1,819) ...................... 11,223 7,758
Prepaid expenses and other current assets ...... 2,358 1,921
Deferred taxes ................................. 247 285
-------- --------
Total current assets ................................... $27,283 $30,296
Property and equipment, net ......................... 2,425 2,037
Goodwill on acquisition, net of amortization of $ 724
(Dec 31, 1997 - $494) ............................. 5,404 3,602
Deferred taxes ...................................... 459 459
======== ========
Total assets ........................................... $35,571 $36,394
======== ========
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations ........... $89 $105
Accounts payable ............................... 2,989 1,743
Accrued liabilities ............................ 1,402 1,337
Deferred revenues .............................. 4,710 3,630
Other accounts payable ......................... 1,319 1,337
-------- --------
Total current liabilities .............................. $10,509 $8,152
Non current liabilities:
Deferred taxation .............................. 274 274
Long-term portion of lease obligations ......... 92 109
-------- --------
Total liabilities ...................................... $10,875 $8,535
Shareholders' equity:
Ordinary shares ................................ 2,416 2,300
Additional paid-in capital ..................... 28,783 27,406
Retained earnings .............................. (5,789) (1,236)
Cumulative translation adjustment .............. (714) (611)
-------- --------
Total shareholders' equity ............................. $24,696 $27,859
-------- --------
Total liabilities and shareholders' equity ............. $35,571 $36,394
======== ========
</TABLE>
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