<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 2)
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000.
[ ] 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 00024865
NEWGEN RESULTS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0604378
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12680 HIGH BLUFF DRIVE, SUITE 300
SAN DIEGO, CALIFORNIA 92130
(Address of principal executive offices)
(858) 481-7545
(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 / /
As of August 8, 2000, there were 10,224,908 shares of the Registrant's Common
Stock outstanding.
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<PAGE>
NEWGEN RESULTS CORPORATION
FORM 10-Q/A INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements......................................... 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. *
Item 3. Quantitative and Qualitative Disclosures About Market Risk................ *
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................................... *
Item 2. Changes in Securities and Use of Proceeds................................. *
Item 4. Submission of Matters to a Vote of Security Holders....................... *
Item 6. Exhibits and Reports on Form 8-K.......................................... *
</TABLE>
* Previously provided.
2.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NEWGEN RESULTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................... $ 19,031,904 $ 5,849,906
Short-term investments, available-for-sale ................... 1,495,350 17,417,971
Accounts receivable, net of allowance for doubtful accounts of
$375,000 and $347,000 respectively ...................... 13,025,519 9,471,175
Prepaid expenses and other current assets .................... 2,819,425 972,301
------------ ------------
Total current assets .................................... 36,372,198 33,711,353
PROPERTY AND EQUIPMENT, net ................................... 7,730,076 5,719,542
GOODWILL, net ................................................. 11,213,036 11,444,279
OTHER ASSETS .................................................. 2,255,739 219,337
------------ ------------
Total assets ............................................ $ 57,571,049 $ 51,094,511
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................. $ 4,989,208 $ 4,395,736
Accrued and other current liabilities ........................ 2,718,368 2,059,773
Current portion of capital lease obligations ................. 918,823 976,429
Current portion of equipment loan payable .................... 199,902 --
------------ ------------
Total current liabilities ................................ 8,826,301 7,431,938
LONG-TERM LIABILITIES:
Long-term portion of capital lease obligations ............... 775,298 1,225,032
Long-term portion of equipment loan payable .................. 349,829 --
Deferred rent ................................................ 64,950 90,930
------------ ------------
Total liabilities ....................................... 10,016,378 8,747,900
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 28,000,000 shares authorized;
10,206,399 and 10,032,866 shares issued and outstanding
respectively ............................................... 10,206 10,033
Additional paid-in capital ................................... 52,534,977 52,282,503
Deferred compensation ........................................ (762,967) (1,104,228)
Notes receivable from stockholders ........................... (140,346) (56,250)
Accumulated other comprehensive income (loss) ................ (8,420) 3,885
Retained deficit ............................................. (4,078,779) (8,789,332)
------------ ------------
Total stockholders' equity ................................ 47,554,671 42,346,611
------------ ------------
Total liabilities and stockholders' equity ................ $ 57,571,049 $ 51,094,511
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3.
<PAGE>
NEWGEN RESULTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Database marketing services ...................... $ 19,386,457 $ 11,963,306 $ 38,698,834 $ 22,534,821
Consulting services .............................. 639,726 1,628,612 1,147,895 3,160,748
------------ ------------ ------------ ------------
Total revenues ................................ 20,026,183 13,591,918 39,846,729 25,695,569
------------ ------------ ------------ ------------
COST OF REVENUES:
Cost of database marketing services .............. 9,503,838 6,344,527 20,905,896 12,560,056
Cost of consulting services ...................... 841,327 1,373,634 1,469,838 2,713,604
Installation costs ............................... 398,003 385,959 875,553 749,957
------------ ------------ ------------ ------------
Total cost of revenues ........................ 10,743,168 8,104,120 23,251,287 16,023,617
------------ ------------ ------------ ------------
Gross profit .................................. 9,283,015 5,487,798 16,595,442 9,671,952
------------ ------------ ------------ ------------
OPERATING COSTS:
Selling, general and administrative .............. 5,051,490 3,400,653 9,862,173 6,327,509
Technology and product development ............... 1,145,455 1,025,609 2,202,614 1,652,922
Amortization of goodwill and acquisition - related
costs ........................................ 587,985 -- 1,068,518 --
------------ ------------ ------------ ------------
Total operating costs ......................... 6,784,930 4,426,262 13,133,305 7,980,431
------------ ------------ ------------ ------------
Income from operations ........................ 2,498,085 1,061,536 3,462,137 1,691,521
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest, investment and other income ........... 1,249,240 171,861 1,547,217 174,379
Interest expense ................................ (63,517) (96,422) (120,481) (204,762)
------------ ------------ ------------ ------------
Other income (expense), net ................... 1,185,723 75,439 1,426,736 (30,383)
------------ ------------ ------------ ------------
Income before taxes ........................... 3,683,808 1,136,975 4,888,873 1,661,138
PROVISION FOR INCOME TAXES ......................... 105,050 -- 178,250 --
------------ ------------ ------------ ------------
Net income .................................... 3,578,758 1,136,975 4,710,623 1,661,138
ADJUSTMENT FOR ACCRETION OF REDEEMABLE
CONVERTIBLE PREFERRED STOCK ..................... -- (121,702) -- (486,807)
------------ ------------ ------------ ------------
Income applicable to common stockholders ...... $ 3,578,758 $ 1,015,273 $ 4,710,623 $ 1,174,331
============ ============ ============ ============
Basic income per share ............................. $ 0.35 $ 0.15 $ 0.46 $ 0.23
============ ============ ============ ============
Diluted income per share ........................... $ 0.32 $ 0.12 $ 0.42 $ 0.19
============ ============ ============ ============
Shares used in basic per share calculation ......... 10,191,984 6,568,199 10,161,864 5,199,097
============ ============ ============ ============
Shares used in diluted per share calculation ....... 11,305,715 9,384,239 11,172,081 8,606,391
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4.
<PAGE>
NEWGEN RESULTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................. $ 4,710,623 $ 1,661,138
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ........................................ 2,080,186 846,699
Deferred rent ........................................................ (25,980) (17,574)
Deferred compensation ................................................ 204,339 201,025
Changes in assets and liabilities:
Accounts receivable ................................................ (3,554,344) 821,532
Prepaid expenses and other current assets .......................... (1,823,824) (464,448)
Accounts payable ................................................... 593,472 1,016,697
Accrued and other current liabilities .............................. 658,595 952,824
------------ ------------
Net cash provided by operating activities ........................ 2,843,067 5,017,893
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments .................................. (2,081,260) (31,898,470)
Proceeds from matured short-term investments ......................... 18,000,000 23,500,000
Purchases of property and equipment .................................. (3,604,883) (1,740,037)
Proceeds from sale of property and equipment ......................... 22,605 --
Other assets ......................................................... (2,313,601) 271,938
------------ ------------
Net cash provided by (used in) investing activities .............. 10,022,861 (9,866,569)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock transactions ..................................... 144,094 32,109,807
Proceeds from stock options and warrant exercises .................... 129,585 --
Payments on capital lease obligations ................................ (507,340) (607,832)
Payments of related party loans ...................................... -- (800,000)
Proceeds from equipment loan ......................................... 599,706 --
Payments on equipment loan ........................................... (49,975) --
Net proceeds from lines of credit .................................... -- 199,643
------------ ------------
Net cash provided by financing activities ........................ 316,070 30,901,618
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................................. 13,181,998 26,052,942
CASH AND CASH EQUIVALENTS, beginning of period ............................ 5,849,906 816,753
------------ ------------
CASH AND CASH EQUIVALENTS, end of period .................................. $ 19,031,904 $ 26,869,695
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ............................................... $ 120,481 $ 214,762
============ ============
Cash paid for taxes .................................................. $ 178,250 $ --
============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital lease obligations entered into for equipment ................. $ -- $ 1,467,746
============ ============
Accretion of redeemable preferred stock .............................. $ -- $ 486,807
============ ============
Conversion of preferred stock ........................................ $ -- $ 16,536,586
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5.
<PAGE>
NEWGEN RESULTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated interim financial statements included herein have been
prepared by Newgen Results Corporation and subsidiaries (the "Company")
pursuant to the rules and regulations of the Securities and Exchange
Commission (the "Commission") for interim financial information.
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 such
rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. The results of operations for the three and six month
periods ended June 30, 2000, are not necessarily indicative of the
results to be expected for the full year. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1999. In the opinion of management, these interim
consolidated financial statements contain all adjustments (consisting
of normal recurring entries) which are necessary for a fair and
accurate presentation of financial position at June 30, 2000, and the
results of operations and cash flows for the three and six month
periods ended June 30, 2000 and 1999. Certain reclassification have
been made to prior consolidated financial statements to conform with
current presentations.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
2. INVESTMENTS
Investments are accounted for in accordance with Statement of Financial
Accounting Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS
IN DEBT AND EQUITY SECURITIES, which requires that the Company
determine the appropriate classification of investments at the time of
purchase and reevaluate such designation as of each balance sheet date.
At June 30, 2000, the Company considered all investments as available
for use in its current operations, and therefore classified them
short-term, available-for-sale investments. Available-for-sale
investments are stated at fair value, with unrealized gains and losses,
if any, net of tax, reported as a separate component of stockholders'
equity. The cost of securities sold is based on the specific
identification method. There were no realized gains or losses for the
three and six months ended June 30, 2000.
6.
<PAGE>
At June 30, 2000, cash, cash equivalents and short-term investments
available-for-sale consisted of the following (unaudited):
<TABLE>
<CAPTION>
ESTIMATED
UNREALIZED FAIR
COST LOSSES VALUES
------------ ------------ ------------
<S> <C> <C> <C>
Cash $ 4,871,905 $ -- $ 4,871,905
Cash equivalents 14,160,619 (620) 14,159,999
------------ ------------ ------------
Total cash and cash equivalents 19,032,524 (620) 19,031,904
------------ ------------ ------------
Short-term investments:
Government securities 1,495,400 (50) 1,495,350
------------ ------------ ------------
Total cash, cash equivalents and
short-term investments $ 20,527,924 $ (670) $ 20,527,254
============ ============ ============
</TABLE>
Investments in government securities as of June 30, 2000, in the amount
of $1,495,350 are scheduled to mature within one year.
3. COMPUTATION OF BASIC AND DILUTED NET INCOME PER SHARE
Net income per share has been calculated under Statement of Financial
Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE. This statement
requires companies to compute earnings per share under two different
methods (basic and diluted). Basic earnings per share are based on the
weighted average number of shares of common stock outstanding during
the period. Diluted earnings per share are based on the weighted
average number of shares of common stock and potentially dilutive
securities (options and warrants) outstanding during the period,
computed using the treasury stock method.
The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET INCOME PER SHARE - BASIC
Income applicable to common
stockholders $ 3,578,758 $ 1,015,273 $ 4,710,623 $ 1,174,331
============ ============ ============ ============
Weighted average number of common shares 10,191,984 6,568,199 10,161,864 5,199,097
============ ============ ============ ============
Net income per share - basic $ 0.35 $ 0.15 $ 0.46 $ 0.23
============ ============ ============ ============
NET INCOME PER SHARE - DILUTED
Net income $ 3,578,758 $ 1,136,975 $ 4,710,623 $ 1,661,138
============ ============ ============ ============
Weighted average number of common shares 10,191,984 6,568,199 10,161,864 5,199,097
Potentially dilutive securities:
Preferred stock -- 1,893,745 -- 2,499,469
Stock options 924,708 823,348 910,866 809,889
Warrants 70,663 98,947 74,336 97,936
------------ ------------ ------------ ------------
Total 11,187,355 9,384,239 11,147,066 8,606,391
============ ============ ============ ============
Net income per share - diluted $ 0.32 $ 0.12 $ 0.42 $ 0.19
============ ============ ============ ============
</TABLE>
7.
<PAGE>
4. SEGMENT INFORMATION
The Company's revenues are substantially derived from two service
segments: database marketing and consulting operations. The database
marketing segment provides outsourced database management, direct
marketing and related customer retention services for the service
department of automobile dealerships and manufacturers. The consulting
segment develops and implements new techniques and programs that enable
automobile dealerships to grow their business, streamline inefficient
processes and more effectively market their services, and includes the
services offered by Newgen Management Services, Inc., a wholly-owned
subsidiary of the Company.
The following tables summarize segment information for the three and
six months ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------------------
2000 1999
----------------------------------------- ----------------------------------------
(Unaudited) (Unaudited)
DATABASE DATABASE
MARKETING CONSULTING CONSOLIDATED MARKETING CONSULTING CONSOLIDATED
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Segment revenues $ 19,386,457 $ 639,726 $ 20,026,183 $ 11,963,306 $ 1,628,612 $ 13,591,918
Segment cost of revenues 9,901,841 841,327 10,743,168 6,730,486 1,373,634 8,104,120
------------ ------------ ------------ ------------ ------------ ------------
Segment gross profit (loss) $ 9,484,616 $ (201,601) $ 9,283,015 $ 5,232,820 $ 254,978 $ 5,487,798
============ ============ ============ ============ ============ ============
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------------------
2000 1999
----------------------------------------- ----------------------------------------
(Unaudited) (Unaudited)
DATABASE DATABASE
MARKETING CONSULTING CONSOLIDATED MARKETING CONSULTING CONSOLIDATED
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Segment revenues $ 38,698,834 $ 1,147,895 $ 39,846,729 $ 22,534,821 $ 3,160,748 $ 25,695,569
Segment cost of revenues 21,781,449 1,469,838 23,251,287 13,310,013 2,713,604 16,023,617
------------ ------------ ------------ ------------ ------------ ------------
Segment gross profit (loss) $ 16,917,385 $ (321,943) $ 16,595,442 $ 9,224,808 $ 447,144 $ 9,671,952
============ ============ ============ ============ ============ ============
</TABLE>
The following table reconciles the Company's reportable segments' gross profit
to consolidated net income for the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- --------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Gross profit from reportable segments $ 9,283,015 $ 5,487,798 $ 16,595,442 $ 9,671,952
Operating costs 6,784,930 4,426,262 13,133,305 7,980,431
------------ ------------ ------------ ------------
Income from operations 2,498,085 1,061,536 3,462,137 1,691,521
Other income (expense), net 1,185,723 75,439 1,426,736 (30,383)
Provision for income taxes 105,050 -- 178,250 --
------------ ------------ ------------ ------------
Net income $ 3,578,758 $ 1,136,975 $ 4,710,623 $ 1,661,138
============ ============ ============ ============
</TABLE>
8.
<PAGE>
5. COMPREHENSIVE INCOME
Comprehensive income for the three and six months ended June 30, 2000
and 1999 consisted of:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
--------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income $ 3,578,758 $ 1,136,975 $ 4,710,623 $ 1,661,138
Other comprehensive income:
Unrealized gain (loss) 1,416 -- (670) --
Foreign currency translation (4,880) -- (7,750) --
------------ ------------ ------------ ------------
Comprehensive income $ 3,575,294 $ 1,136,975 $ 4,702,203 $ 1,661,138
============ ============ ============ ============
</TABLE>
6. SOFTWARE DEVELOPMENT COSTS
In accordance with the adoption of the American Institute of
Certified Public Accountants' ("AICPA") Statement of Position 98-1, ACCOUNTING
FOR THE COST OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE, the
Company capitalized $1,088,000 and $2,094,000 for the three and six months ended
June 30, 2000, respectively, and is included in Other Assets in the accompanying
consolidated balance sheets.
7. RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Commission issued Staff Accounting Bulletin
("SAB") No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS. This SAB
summarizes the Commission's view in applying generally accepted accounting
principles to revenue recognition in financial statements. This SAB was
amended by SAB 101B, which defers the effective date for all registrants with
fiscal years that begin after December 15, 1999 to allow for the option of
implementing no later than the fourth quarter of fiscal 2000. Management is
currently determining the impact of SAB No. 101 and does not believe that its
adoption will have a material impact on the Company's consolidated financial
statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments and
hedging activities. SFAS 133 requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. This Statement was amended by SFAS No.
137 which defers the effective date to all fiscal quarters of fiscal years
beginning after June 15, 2000. The adoption of SFAS 133 is not expected to have
a material effect on the Company's financial position or results of operations.
8. NOTES RECEIVABLE FROM STOCKHOLDERS
The Company received notes from two executive officers in the aggregate
amount of $140,000 as payment for stock options exercised. The following
table describes the terms of these notes:
<TABLE>
<CAPTION>
EXECUTIVE DATE OF NOTE AMOUNT OF NOTE INTEREST RATE TERM
------------------- ---------------- -------------------- ------------------ --------------
<S> <C> <C> <C> <C>
Gerald Benowitz 1/29/99 $44,950.00 4.64% 4 years
Gerald Benowitz 1/31/00 $44,950.00 6.21% 4 years
</TABLE>
9.
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE DATE OF NOTE AMOUNT OF NOTE INTEREST RATE TERM
------------------- ---------------- -------------------- ------------------ --------------
<S> <C> <C> <C> <C>
Gerald Benowitz 1/31/00 $27,839.81 6.21% 4 years
Samuel Simkin 1/29/99 $11,237.50 4.64% 4 years
Samuel Simkin 1/31/00 $11,237.50 6.21% 4 years
</TABLE>
9. OTHER INCOME
In June 2000, the Company recorded a gain of $1,000,000 related to the
settlement of a vendor dispute in Other Income.
10.
<PAGE>
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.
NEWGEN RESULTS CORPORATION
(Registrant)
Date: November 14, 2000 /s/ Gerald L. Benowitz
---------------------------------
Gerald L. Benowitz
President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 14, 2000 /s/ Samuel Simkin
---------------------------------
Samuel Simkin
Chief Operating Officer
(Principal Financial Officer)
11.
