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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File Number 0-21041
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EXCELON CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 02-0424252
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 Mall Road, Burlington, MA 01803
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 674-5000
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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
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The number of shares outstanding of the registrant's common stock as of
October 31, 2000 was 29,485,124.
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<PAGE>
EXCELON CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations for the three and nine
months ended September 30, 2000 and September 30, 1999 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and September 30, 1999 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 13
</TABLE>
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
EXCELON CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $12,037 $ 13,847
Marketable securities 9,052 5,327
Accounts receivable, net of allowance for doubtful 14,534 13,902
accounts of $1,075 and $1,232 at September 30, 2000 and
December 31, 1999
Prepaid expenses and other current assets 2,614 946
-------- --------
Total current assets 38,237 34,022
Property and equipment, net 5,848 5,169
Marketable securities 1,395 4,589
Capitalized software, net 2,280 2,503
Other assets 1,101 1,122
-------- --------
Total assets $ 48,861 $ 47,405
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease obligations $ - $ 17
Accounts payable 5,193 3,404
Accrued expenses 4,139 3,898
Accrued compensation 3,087 2,876
Deferred revenue 8,266 7,697
-------- --------
Total current liabilities 20,685 17,892
Stockholders' equity:
Preferred stock, $.01 par value; authorized 5,000,000
shares; no shares issued or outstanding - -
Common stock, $.001 par value; authorized 200,000,000 shares;
29,478,768 and 28,920,730 shares issued and outstanding
30 29
Additional paid-in capital 70,578 66,731
Accumulated deficit (38,682) (35,054)
Accumulated other comprehensive loss (3,177) (1,620)
Advances to stockholders (573) (573)
-------- --------
Total stockholders' equity 28,176 29,513
-------- --------
Total liabilities and stockholders' equity $ 48,861 $ 47,405
======== ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
3
<PAGE>
EXCELON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Software $12,307 $ 9,247 $34,259 $25,858
Services 6,502 6,396 20,623 17,541
------- ------- ------- -------
Total revenues 18,809 15,643 54,882 43,399
Cost of revenues:
Cost of software 587 1,012 1,802 1,899
Cost of services 4,996 3,129 13,408 9,225
------- ------- ------- -------
Total cost of revenues 5,583 4,141 15,210 11,124
Gross profit 13,226 11,502 39,672 32,275
Operating expenses:
Selling and marketing 10,591 9,733 29,859 26,759
Research and development 3,216 2,593 9,530 7,588
General and administrative 1,684 1,641 5,026 4,621
Restructuring charge - 945 - 945
------- ------- ------- -------
Total operating expenses 15,491 14,912 44,415 39,913
Operating loss (2,265) (3,410) (4,743) (7,638)
Other income, net 416 255 1,115 845
------- ------- ------- -------
Loss before income taxes (1,849) (3,155) (3,628) (6,793)
Provision for income taxes - - - 43
------- ------- ------- -------
Net loss $(1,849) $(3,155) $(3,628) $(6,836)
======== ======== ======== ========
Loss per share:
Basic $(0.06) $ (0.11) $(0.12) $ (0.24)
Diluted $(0.06) $ (0.11) $(0.12) $ (0.24)
Weighted average shares outstanding:
Basic 29,423 28,360 29,291 28,228
Diluted 29,423 28,360 29,291 28,228
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
4
<PAGE>
EXCELON CORPORATION.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,628) $(6,836)
Adjustments to reconcile net income to net
cash used for operating activities:
Depreciation and amortization 2,856 2,450
Amortization of deferred compensation 432 69
Bad debt expense 207 904
Other 36 115
Changes in operating assets and liabilities:
Accounts receivable (956) 483
Prepaid expenses and other current assets (1,759) (554)
Other assets (66) (248)
Accounts payable and accrued expenses 1,378 1,302
Deferred revenue 749 1,146
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Net cash used for operating activities (751) (1,169)
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Cash flows from investing activities:
Capital expenditures (2,572) (1,718)
Purchased software (370) (1,151)
Purchases of marketable securities (20,392) (13,048)
Proceeds from maturities and sales of marketable securities 19,878 11,768
-------- -------
Net cash used for investing activities (3,456) (4,149)
-------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options 1,874 565
Purchase of treasury stock - (251)
Repayments of capital lease obligations (17) 8
-------- -------
Net cash provided by financing activities 1,857 322
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Effect of exchange rate changes on cash 540 10
-------- -------
Net change in cash and cash equivalents (1,810) (4,986)
Cash and cash equivalents, beginning of period 13,847 14,846
-------- -------
Cash and cash equivalents, end of period $ 12,037 $ 9,860
======== =======
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of eXcelon
Corporation and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated. In the opinion of management,
the accompanying unaudited consolidated financial statements contain all
adjustments, consisting only of those of a normal recurring nature, necessary
for a fair presentation of our financial position, results of operations, and
cash flows at the dates and for the periods indicated. While we believe that the
disclosures presented are adequate to make the information not misleading, these
financial statements should be read in conjunction with the consolidated
financial statements and related notes included in our Annual Report on Form
10-K for the year ended December 31, 1999. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to Securities and Exchange Commission rules and regulations. Certain
reclassifications have been made for consistent presentation. We operate in a
single industry segment: computer software and related services.
The results for the three and nine months ended September 30, 2000 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending December 31, 2000.
B. NET LOSS PER SHARE
Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share is computed by dividing net income by the sum of the
weighted-average number of common shares outstanding for the period plus the
number of common shares issuable upon the assumed exercise of all dilutive
securities, such as stock options. The following is a calculation of earnings
per share ("EPS") for the three and nine months ended September 30, 2000 and
1999:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share amounts) 2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss $ (1,849) $ (3,155) $ (3,628) $ (6,836)
========= ========= ========= =========
Weighted average shares outstanding: 29,423 28,360 29,291 28,228
Stock options (dilutive) - - - -
--------- --------- ---------
Diluted shares 29,423 28,360 29,291 28,228
====== ====== ====== ======
Basic EPS $(0.06) $ (0.11) $(0.12) $ (0.24)
Diluted EPS $(0.06) $ (0.11) $(0.12) $ (0.24)
</TABLE>
Options to purchase 7,446,140 and 1,647,284 shares of common stock outstanding
with weighted-average exercise prices of $4.85 and $1.93 for the three month
periods ended September 30, 2000 and 1999, respectively, and options to purchase
7,146,624 and 3,153,810 shares of common stock outstanding with weighted-average
exercise prices of $4.77 and $2.95 for the nine month periods ended September
2000 and 1999, respectively, were excluded from the calculation of diluted net
loss per share as the effect of their inclusion would have been ANTI-DILUTIVE.
6
<PAGE>
C. COMPREHENSIVE LOSS
The table below sets forth comprehensive loss as defined by Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income," for the
three-month and nine-month periods ended September 30, 2000 and 1999 (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss $ (1,849) $ (3,155) $ (3,628) $ (6,836)
Other comprehensive income, net of tax:
Foreign currency translation adjustments -- 414 (250) (56)
Unrealized holding gain (loss) on securities 29 (15) 35 (68)
-------- -------- -------- --------
Total other comprehensive income (loss) 29 399 (215) (124)
-------- -------- -------- --------
Comprehensive loss $ (1,820) $ (2,756) $ (3,843) $ (6,960)
======== ======== ======== ========
</TABLE>
D. NEW ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), which among other guidance, clarifies certain conditions to be met in
order to recognize revenue. In June 2000, the SEC issued Staff Accounting
Bulletin No. 101B which delayed the implementation of SAB 101 until the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 is not expected to have a material effect on the Company's financial
position or results or operations.
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). This accounting standard which is effective
for all fiscal quarters of fiscal years beginning after June 15, 2000, requires
that all derivatives be recognized as either assets or liabilities at estimated
fair value. In June 2000, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", an amendment to SFAS 133. This
accounting standard amended the accounting and reporting standards of SFAS No.
133 for certain derivative instruments and hedging activities. The adoption of
SFAS 133 as amended is not expected to have a material effect on the Company's
financial position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements, which reflect the current views
of management with respect to future events that will have an effect on our
future financial performance, including without limitation statements regarding
future revenue (including revenue from our B2B business) and expense levels, the
impact of changes in accounting standards, the hiring of additional personnel
and adequate liquidity to meet our capital and operating requirements for the
next twelve months. These statements include the words "expect," "believe,"
"anticipate," "estimate," and similar expressions. Such statements are not
guarantees of future performance, and involve substantial risks, uncertainties
and assumptions that could cause our future results to differ materially from
those expressed in any forward-looking statements. We disclaim any intent or
obligation to update publicly any forward-looking statements whether in response
to new information, future events or otherwise. Information about the basis for
those assumptions and important factors that could cause our actual results to
differ materially from these forward-looking statements is contained in "Certain
Factors That May Affect Future Results" included in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in our 1999
Annual Report on Form 10-K, which section is incorporated herein by reference.
7
<PAGE>
RESULTS OF OPERATIONS
The following table shows certain consolidated financial data as a percentage of
our total revenue for the three and nine months ended September 30, 2000 and
1999:
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Total revenues: 100% 100% 100% 100%
Cost of revenues:
Software 3 6 3 5
Services 27 20 25 21
---- ---- ---- ----
Total cost of revenues 30 26 28 26
Gross profit 70 74 72 74
Operating expenses:
Selling and marketing 56 62 55 62
Research and development 17 17 17 17
General and administrative 9 11 9 11
Restructuring charge - 6 - 2
---- ---- ---- ----
Total operating expenses 82 96 81 92
Operating loss (12) (22) (9) (18)
Other income, net 2 2 2 2
---- ---- ---- ----
Loss before income taxes (10) (20) (7) (16)
Provision for income taxes - - - -
---- ---- ---- ----
Net loss (10)% (20)% (7)% (16)%
===== ===== ===== =====
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
TOTAL REVENUES. Our total revenues increased 20.2% to $18.8 million for the
three months ended September 30, 2000 from $15.6 million for the three-month
period ended September 30, 1999. Total revenues for the nine months ended
September 30, 2000 increased 26.5% to $54.9 million from $43.4 million for the
nine-month period ended September 30, 1999. These increases were primarily due
to increased demand for our expanded line of business-to-business ("B2B")
products and services.
SOFTWARE REVENUES. Software revenues increased 33.1% to $12.3 million for the
three months ended September 30, 2000 from $9.2 million for the three-month
period ended September 30, 1999. For the nine-month period ended September 30,
2000 software revenues increased 32.5% to $34.3 million from $25.9 million for
the nine-month period ended September 30, 1999. These increases were primarily
due to increased sales of B2B software, including our B2B Integration Server. We
expect software license revenues from our B2B business to increase in future
periods. As we continue to place greater focus on our B2B product line, our Data
Management software license revenues may stabilize or decline in future periods.
The timing of closing large-sized software deals could result in fluctuations of
future software license revenues in any given quarter.
8
<PAGE>
SERVICES REVENUES. Service revenues increased 1.7% to $6.5 million for the
three-month period ended September 30, 2000 from $6.4 million for the
three-month period ended September 30, 1999. For the nine months ended September
30, 2000 service revenues increased 17.6% to $20.6 million from $17.5 million
for the nine-month period ended September 30, 1999. Service revenues grew at a
slower rate than software license revenue, mainly because of reduced
productivity of our services organization as we repositioned it from a Data
Management consulting practice to a B2B consulting practice. We expect this
transition to continue through at least the end of the fourth quarter.
REVENUES FROM INTERNATIONAL OPERATIONS. Revenues from operations of our
international subsidiaries as a percentage of our total revenues increased to
61.0% for the three months ended September 30, 2000 compared with 41.0% for the
three-month period ended September 30, 1999. Revenues from international
operations as a percentage of total revenues for the nine-month periods ended
September 30, 2000 and 1999 were 50.5% and 40.6% respectively. The increase in
international revenues as a percent of total revenues was due to growth in the
Asia Pacific and European regions.
COST OF SOFTWARE. Cost of software decreased 42.0% to $587,000 for the
three-month period ended September 30, 2000 from $1,012,000 for the three-month
period ended September 30, 1999 and decreased as a percent of software revenues
to 4.8% from 10.9% for the three-month periods ended September 30, 2000 and
September 30, 1999, respectively. For the nine months ended September 30, 2000,
cost of software decreased 5.1%, to $1,802,000 from $1,899,000 for the
nine-month period ended September 30, 1999, and decreased as a percent of
software revenues to 5.3% from 7.3% for the nine-month periods ended September
30, 2000 and September 30, 1999, respectively. The decrease in costs is
primarily attributable to a one time write off of technology purchased in the
nine-month period ending September 30, 1999 as compared to the nine-month period
ending September 30, 2000.
COST OF SERVICES. Cost of services increased 59.7% to $5.0 million for the
three-month period ended September 30, 2000 from $3.1 million for the
three-month period ended September 30, 1999 and increased as a percent of
service revenues to 76.8% from 48.9% for the three-month periods ended September
30, 2000 and September 30, 1999, respectively. For the nine months ended
September 30, 2000, cost of services increased 45.3% to $13.4 million from $9.2
million for the nine-month period ended September 30, 1999 and increased as a
percent of service revenues to 65.0% from 52.6% for the nine-month periods ended
September 30, 2000 and September 30, 1999, respectively. The increase in cost of
services in absolute dollar terms and as a percent of service revenues reflects
expenses related to the growth in staffing necessary to generate and support
increased worldwide service revenues and to provide customer support to our
installed base, accompanied by a lower utilization of the staff because of the
transition from a Data Management consulting practice to a B2B consulting
practice.
SELLING AND MARKETING. Selling and marketing expenses increased 8.8% to $10.6
million for the three months ended September 30, 2000 from $9.7 million for the
three months ended September 30, 1999 and decreased as a percentage of total
revenues to 56.3% from 62.2% for the three-month periods ended September 30,
2000 and September 19, 1999, respectively. Selling and marketing expenses
increased 11.6% to $29.9 million for the nine months ended September 30, 2000
from $26.8 million for the nine months ended September 30, 1999 and decreased to
54.4% from 61.7% of total revenues for the nine-month periods ended September
30, 2000 and September 30, 1999, respectively. The increase in dollar amount
primarily reflects the cost of hiring additional sales and marketing personnel,
the development of expanded sales and distribution channels, and an increase in
promotional activities and marketing programs, primarily relating to our B2B
products and services. We expect selling and marketing expenses to continue to
increase in absolute dollars in future periods, but to decline as a percentage
of revenues over the next several quarters.
RESEARCH AND DEVELOPMENT. Research and development expenses increased 24.0% to
$3.2 million for the three months ended September 30, 2000 from $2.6 million for
the three months ended September 30, 1999 and increased as a percentage of total
revenues to 17.1% from 16.6% for the three months ended September 30, 2000 and
September 30, 1999, respectively. Research and development expenses increased
25.6% to $9.5 million for the nine months ended September 30, 2000 from $7.6
million for the nine months ended September 30, 1999 and decreased to 17.4% from
17.5% of total revenues for the nine months ended September 30, 2000 and
September 30, 1999, respectively. The increase in dollar amount was primarily
due to increased staffing associated with the development of our B2B products
and services. We expect research and development expenses to continue to
increase in absolute dollars in future periods, but to continue to decline as a
percentage of revenues for the next several quarters.
9
<PAGE>
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 2.6%
to $1.7 million for the three months ended September 30, 2000 from $1.6 million
for the three months ended September 30, 1999 and decreased as a percentage of
revenue to 9.0% from 10.5% for the three months ended September 30, 2000 and
September 30, 1999, respectively. General and administrative expenses increased
8.8% to $5.0 million for the nine months ended September 30, 2000 from $4.6
million for the nine months ended September 30, 1999 and decreased to 9.2% from
10.6% of total revenues for the nine months ended September 30, 2000 and
September 30, 1999, respectively. The increase is primarily due to the
additional professional services required to support the overall operations of
the business. We expect general and administrative expenses to continue to
increase in absolute dollars in future periods, but to continue to decline as a
percentage of revenues for the next several quarters.
OTHER INCOME. Other income increased 63.1% to $416,000 for the three-month
period ended September 30, 2000 from $255,000 for the three-month period ended
September 30, 1999. Other income increased 31.8% to $1.1 million for the
nine-month period ended September 30, 2000 from $845,000 for the nine-month
period ended September 30, 1999. The increase was largely the result of
increased cash balances and higher rates of return on our cash and investments.
PROVISION FOR INCOME TAXES. No provision for income taxes were made in the
three-month and nine-month periods ending September 30, 2000, due to the net
losses we incurred in both periods.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, our principal sources of liquidity included $21.1 million
of cash and cash equivalents and short-term investments. We are currently
negotiating to renew our $2.0 million revolving line of credit with Silicon
Valley Bank which expired on September 29, 2000. While we expect to have this
renewal of our $2.0 million revolving line of credit in place by January 2001,
there can be no assurance that this will occur. A separate letter of credit
issued by Silicon Valley Bank in the amount of $325,000 was outstanding as of
September 30, 2000.
Net cash used for operating activities was $0.7 million for the nine months
ended September 30, 2000 compared to $1.2 million used for the nine months ended
September 30, 1999. The reduction of the net use of cash is primarily attributed
to a decrease in the Company's net loss, offset by an increase in cash used for
working capital needs.
Our investing activities used $3.5 million of cash for the nine months ended
September 30, 2000, as compared to $4.2 million used by investing activities for
the nine-month period ended September 30, 1999. The decline in the use of cash
is mainly due to a decrease in the amount of net investments purchased. The use
of cash from investment activities was primarily attributable to investments in
capital assets of $2.6 million for the nine months ended September 30, 2000, as
compared to investments of $1.7 million in capital assets for the nine months
ended September 30, 1999.
Our financing activities provided net cash of $1.9 million for the nine months
ended September 30, 2000, as compared to $0.3 million of cash provided by
financing activities in the same period in 1999. The increase in cash provided
was due to $1.9 million in cash from stock option exercises during the nine
months ended September 30, 2000 compared to $0.6 million of the same period in
1999.
We believe that our current cash, cash equivalents, marketable securities and
funds generated from operations, if any, will provide adequate liquidity to meet
our capital and operating requirements for the next twelve months.
EURO CONVERSION
On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing sovereign currencies
and the Euro, making the Euro their common legal currency on that date. The
legacy currencies will remain legal tender in the participating countries as
denominations of the Euro between January 1, 1999 and January 1, 2002 (the
"transition period").
10
<PAGE>
During the transition period, public and private parties may pay for goods and
services using either the Euro or the participating country's legacy currency on
a "no compulsion, no prohibition" basis. However, conversion rates no longer
will be computed directly from one legacy currency to another. Instead, a
triangular process will apply whereby an amount denominated in one legacy
currency will first be converted into the Euro. The resultant Euro-denominated
amount will then be converted into the second legacy currency.
We have evaluated the business implications of conversion to the Euro, including
technical adaptation of information technology and other systems to accommodate
Euro-denominated transactions, long-term competitive implications of the
conversions and the effect on market risk with respect to financial instruments
and do not expect a material impact on our operations.
NEW ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), which among other guidance, clarifies certain conditions to be met in
order to recognize revenue. In June 2000, the SEC issued Staff Accounting
Bulletin No. 101B which delayed the implementation of SAB 101 until the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 is not expected to have a material effect on the Company's financial
position or results or operations.
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). This accounting standard which is effective
for all fiscal quarters of fiscal years beginning after June 15, 2000, requires
that all derivatives be recognized as either assets or liabilities at estimated
fair value. In June 2000, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", an amendment to SFAS 133. This
accounting standard amended the accounting and reporting standards of SFAS No.
133 for certain derivative instruments and hedging activities. The adoption of
SFAS 133 as amended is not expected to have a material effect on the Company's
financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in our market risk exposure as described
in Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our 1999 Annual Report on Form 10-K which description is
incorporated herein by reference.
Part II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the three months
ended September 30, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NUMBER DESCRIPTION
*3.3 Amended and Restated Certificate of Incorporation
*3.5 Amended and Restated By-laws of the Company
27.1 Financial Data Schedule (filed herewith)
* This exhibit is incorporated by reference to the similarly numbered exhibit
filed as part of the Company's Registration Statement on Form S-1, Securities
and Exchange Commission File No. 333-05241.
11
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September 30, 2000.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, eXcelon
Corporation has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.
EXCELON CORPORATION
(Registrant)
November 13, 2000 By: /s/ Robert N. Goldman
--------------------------------------
President and Chief Executive Officer
November 13, 2000 By: /s/ Lacey P. Brandt
--------------------------------------
Chief Financial Officer
13