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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] For the Quarterly Period Ended: March 31, 2000
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: 333-5753
Exigent International, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 59-3379927
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1830 Penn Street, Melbourne, Florida 32901
(Address of principal executive offices) (Zip code)
321-952-7550
(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 ____
The number of shares outstanding of the registrant's common stock,
$.01 par value, on March 31, 2000 was 5,927,970.
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<PAGE>
EXIGENT INTERNATIONAL, INC.
QUARTER ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements. Page
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999 3
Consolidated Statements of Operations for the Three Months Ended March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 9
Item 3. Quantitative and Qualitative Disclosure of Market Risk 13
PART II - OTHER INFORMATION
Item 5. Other Information. 14
Item 6. Exhibit and Reports on Form 8-K 14
Signatures 15
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
(unaudited)
------------------- ---------------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,066,221 $ 574,368
Accounts receivable, pledged 4,023,696 2,616,727
Costs and estimated earnings in excess of
billings on uncompleted contracts, pledged 4,864,460 4,790,742
Prepaid expenses 29,624 42,492
Income taxes receivable 1,094,239 803,188
Deferred income taxes 336,000 336,000
------------------- ---------------------
TOTAL CURRENT ASSETS 11,414,240 9,163,517
------------------- ---------------------
PROPERTY AND EQUIPMENT
Cost 6,263,227 6,240,397
Accumulated depreciation (4,825,838) (4,699,750)
------------------- ---------------------
PROPERTY AND EQUIPMENT, NET 1,437,389 1,540,647
------------------- ---------------------
OTHER ASSETS
Software development costs, net 4,373,768 4,275,113
Capitalized patent costs, net 110,766 85,116
Goodwill, net 2,776,432 2,848,220
Deposits and other assets 150,355 103,193
------------------- ---------------------
TOTAL OTHER ASSETS 7,411,321 7,311,642
------------------- ---------------------
TOTAL ASSETS $20,262,950 $18,015,806
================== ======================
</TABLE>
See accompanying notes.
<PAGE>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 2000
(unaudited) December 31, 1999
---------------- -------------------
CURRENT LIABILITIES
<S> <C> <C>
Line of credit $ 2,645,834 $ 2,386,734
Accounts payable 216,565 715,976
Accrued payroll and other expenses 3,082,939 2,187,690
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,054,804 891,557
Income taxes payable 22,834 17,827
Current portion, long-term debt 256,817 1,256,817
Current portion, subordinated debt 250,000 250,000
---------------- -------------------
TOTAL CURRENT LIABILITIES 7,529,793 7,706,601
---------------- -------------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 206,845 268,897
Subordinated debt, less current portion 687,500 750,000
Deferred income taxes 505,000 505,000
---------------- -------------------
TOTAL LONG-TERM LIABILITIES 1,399,345 1,523,897
---------------- -------------------
TOTAL LIABILITIES 8,929,138 9,230,498
---------------- -------------------
STOCKHOLDERS' EQUITY
Class A Preferred Shares, $.01 par value, 5,000,000
shares authorized, 15,132 and 68,841 issued and
outstanding at March 31, 2000 and December 31, 1999,
respectively,
at $2.50 per share liquidation/dissolution preference 151 688
Common Shares, $.01 par value, 40,000,000 shares
authorized, 5,927,970 and 4,845,149 issued and
outstanding at March 31, 2000 and December 31, 1999,
respectively 59,280 48,452
Paid in capital 5,593,971 2,646,445
Retained earnings 5,680,410 6,089,723
---------------- -------------------
TOTAL STOCKHOLDERS' EQUITY 11,333,812 8,785,308
---------------- -------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 20,262,950 $ 18,015,806
================ ===================
</TABLE>
See accompanying notes.
<PAGE>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
---------------- -------------------
<S> <C> <C>
REVENUES $ 10,309,995 $ 9,090,881
COST OF SALES 7,550,779 6,698,052
---------------- -------------------
GROSS PROFIT 2,759,216 2,392,829
GENERAL AND ADMINISTRATIVE EXPENSES 2,944,611 2,132,500
RESEARCH AND DEVELOPMENT COSTS 7,343 8,881
RESTRUCTURING COSTS 422,803 -
---------------- -------------------
OPERATING INCOME (LOSS) (615,541) 251,448
---------------- -------------------
OTHER INCOME (EXPENSE)
Interest income 1,687 11,291
Interest expense (58,438) (7,482)
Other, net 1,288 1,461
---------------- -------------------
TOTAL OTHER INCOME (EXPENSE) (55,463) 5,270
---------------- -------------------
INCOME (LOSS) BEFORE INCOME TAXES (671,004) 256,718
INCOME TAX EXPENSE (BENEFIT) (261,691) 102,687
---------------- -------------------
NET INCOME (LOSS) $ (409,313) $ 154,031
================ ===================
EARNINGS (LOSS) PER SHARE - BASIC $ (0.08) $ 0.04
================ ===================
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 5,417,135 4,167,878
================ ===================
EARNINGS (LOSS) PER SHARE - DILUTED $ (0.08) 0.03
================ ===================
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 5,417,135 5,431,675
================ ===================
</TABLE>
See accompanying notes.
<PAGE>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
--------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ (409,313) $ 154,031
--------------- -------------------
Adjustments to reconcile net income (loss) to net cash provided (used) by
operating activities:
Depreciation and amortization
620,291 702,533
Accretion of unearned stock compensation
8,350 -
Changes in operating assets and liabilities:
Accounts receivable (1,406,969) (1,158,573)
Costs and estimated earnings in excess of
billings on uncompleted contracts (73,718) 47,012
Prepaid expenses 12,869 (156,727)
Income taxes receivable (291,052) -
Deposits (47,162) 2,759
Accounts payable (499,411) 35,340
Accrued expenses 895,250 255,341
Billings in excess of costs and estimated earnings
on uncompleted contracts 163,247 570,731
Income taxes payable 5,008 102,687
--------------- -------------------
Total adjustments (613,297) 401,103
--------------- -------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (1,022,610) 555,134
--------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition of capital assets (22,831) (64,302)
Cash paid for capitalized software development (521,070) (844,888)
Cash paid for capitalized patent costs (25,650) -
--------------- -------------------
NET CASH USED BY INVESTING ACTIVITIES (569,551) (909,190)
--------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 259,100 700,000
Principal payments on long-term debt (1,124,553) (54,170)
Proceeds from exercise of stock options and warrants 2,949,467 181,382
--------------- -------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,084,014 827,212
--------------- -------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 491,853 473,156
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 574,368 429,970
--------------- -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,066,221 $ 903,126
=============== ===================
</TABLE>
See accompanying notes.
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information in response to the requirements of Article 10 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The condensed consolidated financial statements for the
three month periods ended March 31, 2000 and 1999 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in Exigent International, Inc.'s ("Exigent's" or the "Company's")
Annual Report on Form 10-K for the fiscal year ended December 31, 1999. The
results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the entire fiscal
year.
NOTE 2 - LINE OF CREDIT
Software Technology, Inc. ("STI"), Exigent's primary subsidiary, had a
$5,000,000 line of credit available from a bank as of March 31, 2000 and
December 31, 1999. The line of credit note bears interest on the unpaid
principal balance at a rate per annum equal to the bank's prime rate or LIBOR
plus 2.5%. As of March 31, 2000 and December 31, 1999, the outstanding draws
against the line were $2,645,834 and $2,386,734, respectively. The interest rate
at March 31, 2000 and December 31, 1999 was 8.62% and 8.29%, respectively. All
accounts receivable, equipment, furniture and fixtures of STI are pledged as
collateral on the line of credit.
The weighted average interest rate on short-term borrowings during the period
ended March 31, 2000 was 8.42%.
NOTE 3 - EARNINGS PER SHARE
The following tables set forth the computation of basic and diluted earnings
(loss) per share for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
For the three months ended
March 31, 2000 March 31, 1999
Numerator: ------------------ ------------------
Net income (loss) (numerator for basic
<S> <C> <C>
and diluted earnings per share) $ (409,313) $ 154,031
================== ==================
Denominator:
Denominator for basic earnings per share-
weighted average common shares 5,417,135 4,167,878
Effect of dilutive securities:
Convertible preferred stock - 609,882
Stock options and warrants - 653,915
------------------ ------------------
Denominator for diluted earnings per share-
adjusted weighted average shares 5,417,135 5,431,675
------------------ ------------------
Basic earnings (loss) per share $ (0.08) $ 0.04
================== ==================
Diluted earnings (loss) per share $ (0.08) $ 0.03
================== ==================
</TABLE>
<PAGE>
In computing diluted earnings (loss) per share for the three months ended March
31, 2000, 781,055 of common share equivalents were excluded from the computation
because their effects would have been antidilutive.
NOTE 4 - STOCKHOLDERS' EQUITY
The consolidated changes in stockholders' equity for the three months ended
March 31, 2000 are as follows:
<TABLE>
<CAPTION>
Class A
Common Stock Preferred Paid in Retained
Shares Amount Shares Amount Capital Earnings Total
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 2000 4,845,149 $48,452 68,841 $ 688 $2,646,445 $6,089,723 $ 8,785,308
Exercise of convertible options 304,486 3,045 - - 772,544 - 775,589
Exercise of convertible stock
warrants 724,626 7,246 - - 2,166,632 - 2,173,878
Class A preferred converted to
common 53,709 537 (53,709) (537) - - -
Accretion of unearned stock
compensation - - - - 8,350 - 8,350
Net loss - - - - - (409,313) (409,313)
--------------------------------------------------------------------------
BALANCE MARCH 31, 2000 5,927,970 $59,280 15,132 $ 151 $5,593,971 $5,680,410 $11,333,812
==========================================================================
</TABLE>
NOTE 5 - STOCK OPTIONS
Stock option activity, during the three months ended March 31, 2000, is as
follows:
Weighted Average
Options Exercise Price
------------------------------------
Outstanding - as of December 31, 1999 2,408,272 $ 3.34
Granted 10,000 3.69
Exercised (298,001) 2.53
Forfeited (46,468) 3.47
----------------
Outstanding - end of period 2,073,803 $ 3.46
====================================
Exercisable at end of period 1,528,614
Weighted-average fair value of
options granted during the
period $ 3.69
At March 31, 2000, the range of exercise prices and remaining contractual life
of outstanding options was $2.25 to $4.38 and 2.24 years to 9.53 years,
respectively, with the weighted average at $3.45 and 4.88 years.
<PAGE>
NOTE 6 - ACQUISITIONS
On December 9, 1999, Exigent completed the acquisition of GEC North America
Corporation, ("GEC"), by exchanging cash and subordinated promissory notes for
all of the voting and non-voting shares of GEC common stock. The acquisition of
the assets and liabilities was accounted for using the purchase method of
accounting whereby the consideration paid of $3,525,694 was allocated based on
the fair values of the assets and liabilities acquired with the excess
consideration over the fair value of tangible assets recorded as intangible
assets (goodwill).
The Company's statement of operations for the quarter ended March 31, 2000
includes the operations of GEC, while the statement of operations for the period
ended March 31, 1999 does not. The following chart represents the unaudited pro
forma results of operations for the three months ended March 31, 1999 assuming
the acquisition of GEC had occurred January 1, 1999. The results are not
necessarily indicative of future operations or what would have occurred had the
acquisition been consummated as of January 1, 1999.
Total revenue $ 10,789,513
Net income 239,927
EPS (diluted) $ 0.04
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following is management's discussion and analysis of (i) the consolidated
financial condition as of March 31, 2000 as compared with the fiscal year ended
December 31, 1999, and (ii) the consolidated results of operations for the three
months ended March 31, 2000 and 1999, of Exigent International, Inc. ("the
Company") and its subsidiaries: Software Technology, Inc. ("STI"), FotoTag, Inc.
("FotoTag") and Exigent Solutions Group ("ESG"). This discussion should be read
together with Exigent's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999.
General. Exigent is a high-technology company with three core business areas:
command and control; information technology; and digital wireless
communications. In each of these business areas, the Company provides software
products and services business. The Company, through STI, has designed and
deployed satellite command and control and telecommunications systems for more
than twenty years. We have provided ground control solutions for dozens of
commercial and government projects, ranging from a single spacecraft to the
largest satellite constellations. As worldwide demand for satellite-based
applications has increased, the Company has responded by developing a suite of
commercial-off-the-shelf ("COTS") products based on our experience in building
such systems. Our engineers also provide system integration support for
customers throughout the United States. Our projects include some of the world's
largest satellite endeavors, including the Global Positioning Satellite ("GPS")
System, as well as numerous proprietary projects.
Although the recent quarters reflect a weakness in the commercial satellite
business, the Company has continued to invest during these periods in the
advanced features for its OS/COMET(R) basic software product. STI has invested
in excess of $8,000,000 over the last four years in its premier software product
OS/COMET. This investment has facilitated the contract awards that management
believes would have been otherwise unattainable. Continued expenditures for
development of new products is expected to decrease as the Company has recently
completed the newest release of its flagship OS/COMET product and delivered this
to its first customer. The OS/COMET product family is available to address the
command and control business of this diverse market, from single satellites to
large constellations of satellites.
STI's government business continues at a strong pace with orders coming in from
both existing and new customers. The backlog as of March 31, 2000 for commercial
and government contracts was $42,955,659, of which $38,529,818 was unfunded.
<PAGE>
The Company's information technology ("IT") business unit, ESG, has been
organized expressly for exploitation of the IT market in both the commercial and
the government markets. The GEC business, as well as IT development work
currently being performed at the Naval Research Laboratory ("NRL") are included
in the ESG business area. In addition ESG will address distribution of
"shrink-wrapped" middleware software, including ActiveM and certain other
products.
The newest business area is Exigent's Digital Telecom & Wireless ("DTW")
business. As a result of our software-defined radio ("SDR") Domain Manager Tool
Kit being selected by a Raytheon-lead consortium as the backbone for development
of a new generation of digital radio for the U.S. military in the 21st century,
we established a special business unit to pursue opportunities in this
technology. In addition, the DTW business unit is pursuing other opportunities
in digital wireless technologies for this rapidly expanding market.
Liquidity. As of March 31, 2000, Exigent's ratio of current assets to current
liabilities increased to 1.5 from 1.2 at December 31, 1999. This increase was
due largely to an increase in cash and a decrease in the current portion of
long-term debt due to the capital received through the exercise of stock options
and warrants. The sources and uses of cash are explained in detail below.
Exigent's cash portfolio (cash and cash equivalents) increased $491,853 during
the three months ended March 31, 2000. The increase was due to cash provided by
financing activities of $2,084,014, cash used in investing activities of
$569,551 and cash used in operating activities of $1,022,610. The increase in
cash from financing activities from December 31, 1999 to March 31, 2000 was
primarily the result of proceeds from the exercise of stock options and warrants
of $2,949,467. By comparison, Exigent's cash portfolio increased $473,156 for
the three months ended March 31, 1999. That increase was due to cash provided by
operating activities of $555,134, cash used in investing activities of $909,190
and cash provided by financing activities of $827,212.
In the three months ended March 31, 2000, Exigent acquired $22,831 of capital
assets compared to $64,302 in the three months ended March 31, 1999. Capital
needs are expected to continue, but cannot be quantified at this time, as
Exigent intends to remain current with computing technologies. Currently, the
Company has a lease line of credit through Oliver-Allen Corporation to finance
any anticipated capital asset requirements.
During the last three fiscal years, the Company has made substantial investments
in the development of software products. The investments made for the three
months ended March 31, 2000 were significant, but declined significantly from
the prior year as the Company introduced several new products during the
previous fiscal year. In the three months ended March 31, 2000 and 1999, Exigent
spent $521,070 and $844,888, respectively, in capitalized software development
costs primarily related to several products. The decrease in the first three
months of fiscal year 2000 resulted from a reduced effort with only two products
still under development. One of these two products was completed at the end of
March, 2000 while the other is scheduled for completion by mid-year. Investment
in capitalized software development is expected to decline significantly in the
second quarter and beyond as these products are released.
As of March 31, 2000, Exigent had cumulatively borrowed $2,645,834 under a line
of credit to fund its operations. The Company reduced long-term and subordinated
debt by $1,124,553 during the three months ended March 31, 2000 to $894,345.
Management believes existing cash, funds generated by operations, and the
available line of credit will be sufficient to fund Exigent's current operating
requirements at least through the fiscal year ending December 31, 2000.
Additional funds may, however, be required to finance any acquisitions. The
Company is currently in discussions with several institutions to finance the
Company's strategic plan and the associated acquisitions. There can be no
assurance that definitive arrangements relating to this funding will be entered
into on acceptable terms. Should such financing not be available, the Company
will be required to prioritize its future acquisitions accordingly.
<PAGE>
Results of Operations for the three months ended March 31, 2000 and 1999. Sales
for the three months ended March 31, 2000 were $10,309,995, compared with
$9,090,881 for the three months ended March 31, 1999, an increase of 13.4%, with
the mix of government and commercial sales having remained relatively the same.
The breakdown between government and commercial sales for each of the
three-month periods is as follows:
March 31, 2000 March 31, 1999
------------------------- -------------------------
Government $ 8,692,792 84% $ 7,564,444 83%
Commercial 1,617,203 16% 1,526,437 17%
---------------- -------- -------------- ----------
$ 10,309,995 100% $ 9,090,881 100%
================ ======== ============== ==========
The future revenue mix is expected to consist of a higher percentage of
commercial sales with the deployment of our new digital wireless product, Domain
Manager Tool Kit ("DMTK"), as well as the increase in the commercial information
technology business.
Cost of sales as a percentage of revenue for the three months ended March 31,
2000, at 73%, was consistent with the percentage for the three months ended
March 31, 1999, at 74%. General and administrative ("G&A") expenses for the
three months ended March 31, 2000 were $3,367,414, 58% or $1,234,914 greater
than expenses of $2,132,500 for the three months ended 1999. This increase was
primarily the result of the acquisition of GEC and its associated expenses
equaling approximately $490,000, as well as increased staffing and efforts in
sales and business development totaling approximately $200,000. In addition, the
recently announced restructuring resulted in one-time, nonrecurring termination
charges of $422,803. The G&A expenses are expected to decrease in the upcoming
quarters as the positive effects of the restructuring are realized.
The Company posted a net loss of $409,313 (4.0% of revenue) for the three months
ended March 31, 2000 as compared to income of $154,031 (1.7% of revenue) for the
three months ended March 31, 1999. This loss was anticipated as a result of the
continued delay in the commercial satellite business and the aforementioned
restructuring charges. The loss before the expenses incurred for the
restructuring was $155,630 of which the amortization of intangibles contributed
$247,065. Taking these two items into consideration, the cash income from
ongoing operations was $91,435.
OUTLOOK
General and administrative ("G&A") expenses are expected to decline from the
levels experienced in recent quarters as the effects of the recent restructuring
are realized. The current staffing, in addition to the mutiplexing required of
such staff, positions the Company for the positive growth anticipated in the
next twelve to eighteen months. With the increased emphasis on the deployment of
new products, customer focus and sales and business development, the Company is
positioned to address the market needs of its diverse customer base.
Management believes that the benefit package offered by Exigent remains very
competitive and should help to retain existing employees and attract new
employees. Company management also believes that it is important to maintain the
benefits at a competitive level, but to do so and hold costs stable in the face
of the increasing cost of health care will be a management challenge.
The Company's current long-term business plan is to seek opportunities for
growth and diversification of its product and service offerings through internal
growth and acquisitions. To implement its long-term growth strategy, the Company
may need to raise additional capital through private or public debt and/or
equity financing(s). There can be no assurances that financing will be
attainable at a competitive rate. Should the financing be unattainable, the
Company will prioritize its opportunities in order to implement the business
plan representing the best interests of its shareholders.
<PAGE>
FORWARD-LOOKING STATEMENTS; RISKS AND UNCERTAINTIES
This Quarterly Report on Form 10-Q includes and incorporates forward-looking
statements that are subject to a number of risks and uncertainties. All
statements, other than statements of historical facts included or incorporated
in this report, regarding our strategy, future operations, financial position,
estimated revenues, projected costs, prospects, plans and objectives of
management are forward-looking statements. Our forward-looking statements relate
to matters regarding our management, technology, governmental factors, economic
conditions, retention of employees, integration of acquisitions, Y2K issues and
our competition. When used herein, the words "will", "believe", "anticipate",
"intend", "estimate", "expect", "project" and similar expressions are intended
to identify forward-looking statements, although not all forward-looking
statements contain these identifying words. We cannot guarantee future results,
levels of activity, performance or achievements and investors should not place
undue reliance on our forward-looking statements. Our forward-looking statements
do not reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or strategic investments. Actual results could
differ materially from those anticipated in these forward-looking statements as
a result of various factors, including the risks described in "Risk Factors" and
elsewhere. We do not assume any obligation to update any of the forward-looking
statements we make.
RISK FACTORS
The following is a summary of certain factors that could cause future results to
differ materially from those expressed in these forward looking statements:
o A significant portion of our revenue is derived from contracts or
subcontracts funded by the U.S. government;
o Our contracts that are funded by the U.S. government are subject to
termination without cause by the
government;
o Our contracts and subcontracts that are funded by the U.S. government are
subject to a competitive bidding process;
o Our contracts that are funded by the U.S. government are subject to the
Congressional budget and funding process;
o The estimated backlog under our government contracts is not necessarily
indicative of future revenues;
o Intense competition in the satellite ground system industry could harm our
financial performance;
o Our major products may not be accepted by the market;
o Hiring and retaining qualified technical personnel is difficult and
expensive;
o We depend upon attracting and retaining a highly skilled professional
staff;
o We may not be able to adjust our fixed operating costs if our revenues
decline;
o Our success is dependent on the continued growth of the space industry; and
o Our operating results may suffer as a result of our dependence on a limited
number of client projects.
Please refer to the Company's Annual Report on Form 10-K, for the fiscal year
ended December 31, 1999 that was filed with the Securities and Exchange
Commission for a more detailed discussion of these and other factors that could
impact future results.
<PAGE>
IMPACT OF YEAR 2000
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 compliant. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The costs related
to the Year 2000 compliance efforts were funded with cash flows from operations.
In total, these costs were not substantially different from the Company's
normal, recurring system development and implementation costs. The Company is
not aware of any material problems resulting from Year 2000 issues, either with
its products, its internal systems, or the products and services of third
parties. The Company will continue to monitor its mission critical computer
applications and those of its suppliers and vendors throughout the year 2000 to
ensure that any latent Year 2000 matters that may arise are addressed promptly.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
Not applicable.
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
1. Exigent Warrants previously traded on the Chicago Stock Exchange as
XNTWS and on the NASDAQ SmallCap as XGNTW. Each expired on January 30, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Exhibit
27 Financial Data Schedule
(b) The Company's Current Reports on Form 8-K:
A current report on Form 8-K was filed on February 28, 2000 announcing
it had reevaluated its intangible assets and as a result would take a
one-time, non-cash charge totaling approximately $1.4M for the 4th
Quarter and full-year ended December 31, 1999.
A current report on Form 8-K was filed on March 27, 2000 announcing a
corporate restructuring.
<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.
Exigent International, Inc.
May 5, 2000 By: /s/ B.R. Smedley
- ----------- --------------------------------------------------------
Date B.R. "Bernie" Smedley, Chief Executive Officer
May 5, 2000 By: /s/ Sally Ball
- ----------- --------------------------------------------------------
Date Sally Ball, Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,066
<SECURITIES> 0
<RECEIVABLES> 8,888
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,414
<PP&E> 6,263
<DEPRECIATION> 4,826
<TOTAL-ASSETS> 20,263
<CURRENT-LIABILITIES> 7,530
<BONDS> 207
0
0
<COMMON> 59
<OTHER-SE> 11,274
<TOTAL-LIABILITY-AND-EQUITY> 20,263
<SALES> 0
<TOTAL-REVENUES> 10,310
<CGS> 0
<TOTAL-COSTS> 7,551
<OTHER-EXPENSES> 3,375
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> (671)
<INCOME-TAX> (262)
<INCOME-CONTINUING> (409)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (409)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
