<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[ ] 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 000-23119
KOFAX IMAGE PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0114967
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Jenner Street, Irvine, California 92618
(Address of principal executive offices) (Zip Code)
(714) 727-1733
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former
fiscal year, if changed since last report)
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 [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practical date.
Class Outstanding at October 31, 1997
- ----------------------------- -------------------------------
Common Stock, $.001 par value 5,339,121 shares
<PAGE> 2
KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
INDEX
ITEM PAGE
NUMBER NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
Balance Sheets -September 30, 1997 (unaudited), Pro Forma
September 30, 1997 (unaudited) and June 30, 1997............... 3
Statements of Operations (unaudited) - Three Months Ended
September 30, 1997 and 1996.................................... 4
Statements of Cash Flows (unaudited) - Three Months Ended
September 30, 1997 and 1996.................................... 5
Notes to Condensed Consolidated Financial Statements (unaudited)... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings..................................................13
ITEM 6. Exhibits and Reports on Form 8-K...................................13
Signatures.........................................................14
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIALS STATEMENTS
KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
Pro forma
September 30, September 30, June 30,
1997 1997 1997
------------- ------------- ----------
(unaudited) (unaudited)
ASSETS
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 1,028 $ 801
Short-term investments 4,708 4,603
Accounts receivable, net 4,476 4,134
Inventory (Note 2) 2,147 2,012
Prepaid expenses and other current assets 962 771
------- -------
Total current assets 13,321 12,321
Property and equipment, net 1,851 1,965
Deferred income taxes 1,464 1,464
Other assets 480 577
------- -------
Total assets $17,116 $16,327
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 928 $ 772
Current portion of note payable 394 394
Accrued liabilities:
Compensation 730 1,044
Deferred revenue 401 356
Other 1,384 1,080
------- -------
Total current liabilities 3,837 3,646
Long term note payable 329 427
Redeemable Convertible Preferred Stock, $.001 par
value; 5,000,000 shares authorized; 2,667,002
actual shares issued and outstanding at
September 30 and June 30, 1997; no pro
forma shares outstanding 7,230 7,146
Stockholders' equity (Note 5)
Common stock, $.001 par value, 40,000,000 shares
authorized; 1,331,976 and 1,327,256 actual
shares outstanding at September 30 and
June 30, 1997, 3,998,978 pro forma
shares outstanding 211 $ 4,301 172
Retained earnings 5,509 8,649 4,936
------- ------- -------
Total stockholders' equity 5,720 $12,950 5,108
------- ======= -------
Total liabilities and stockholders' equity $17,116 $16,327
======= =======
</TABLE>
The accompanying notes are an integral part
of these condensed consolidated financial statements.
3
<PAGE> 4
KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Operations
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
----------------------------
1997 1996
---------- ---------
(unaudited) (unaudited)
<S> <C> <C>
Net sales $7,851 $6,581
Cost of sales 1,861 1,858
--------- ---------
Gross profit 5,990 4,723
Operating expenses:
Sales and marketing 2,491 2,092
Research and development 1,879 1,600
General and administrative 602 420
--------- ---------
Total operating expenses 4,972 4,112
--------- ---------
Income from operations 1,018 611
Other income, net 50 13
--------- ---------
Income before provision for income taxes 1,068 624
Provision for income taxes 411 240
--------- ---------
Net income $ 657 $ 384
========= =========
Pro forma net income per share (Note 3) $ 0.15 $ 0.09
========= =========
Pro forma weighted average common shares (Note 3) 4,251 4,215
========= =========
</TABLE>
The accompanying notes are an integral part
of these condensed consolidated financial statements.
4
<PAGE> 5
KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
Three Months Ended September 30
--------------------------------
1997 1996
------------ -------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 657 $ 384
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 379 375
Changes in operating assets and liabilities:
Accounts receivable (342) 475
Inventories (135) 102
Other current assets (191) (185)
Accounts payable 156 80
Other current liabilities 35 205
------- -------
Net cash provided by operating activities 559 1,436
------- -------
Cash flows from investing activities:
Purchases of property and equipment (210) (191)
Decrease (increase) in other assets 42 (5)
Increase in short-term investments (105) (24)
------- -------
Net cash used in investing activities (273) (220)
------- -------
Cash flows from financing activities:
Principal payments on notes payable (98) (33)
Net proceeds from issuance of common stock 39 2
------- -------
Net cash used in financing activities (59) (31)
------- -------
Net increase in cash and cash equivalents 227 1,185
Cash and cash equivalents, beginning of period 801 741
------- -------
Cash and cash equivalents, end of period $ 1,028 $ 1,926
======= =======
Supplemental disclosure of cash flow information:
Interest paid $ 19 $ 27
======= =======
Income taxes paid $ 14 $ 37
======= =======
</TABLE>
NONCASH ACTIVITY - During each of the quarters ended September 30, 1997 and
1996, the Company recorded accretion of $83,500 for the increase in the
liquidation or redemption value of the redeemable convertible preferred
stock.
The accompanying notes are an integral part
of these condensed condolidated financial statements.
5
<PAGE> 6
KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of Kofax Image Products,
Inc. and subsidiary (the "Company") presented herein have been prepared pursuant
to the rules of the Securities and Exchange Commission for quarterly reports on
Form 10-Q and do not include all of the information and note disclosures
required by generally accepted accounting principles. These statements should be
read in conjunction with the audited consolidated financial statements and notes
thereto for the year ended June 30, 1997, included in the Company's Registration
Statement on Form S-1 (333-34531) declared effective by the Securities and
Exchange Commission on October 10, 1997.
The condensed consolidated financial statements and notes herein are
unaudited, but in the opinion of management, include all the adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
the consolidated financial position, results of operations and cash flows of the
Company and its subsidiary. The results of operations for the interim periods
shown herein are not necessarily indicative of the results to be expected for
any future interim period or for the entire year.
2. INVENTORIES
Inventories, which include material, labor and manufacturing overhead,
are stated at the lower of cost (first-in, first-out) or market and consist of
the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 JUNE 30, 1997
------------------ -------------
<S> <C> <C>
Raw materials $ 1,343 $ 1,064
Work-in-process 426 550
Finished goods 378 398
------------------ -------------
$ 2,147 $ 2,012
================== =============
</TABLE>
3. NET INCOME AND PRO FORMA NET INCOME PER SHARE AND STOCKHOLDERS' EQUITY
Pro forma net income per share amounts are based upon the weighted
average number of common shares and dilutive common equivalent shares for each
period presented and the pro forma conversion of preferred stock into common
stock up to the date of such conversion. Pro forma weighted average common and
common equivalent shares include common stock, stock options using the treasury
stock method and the conversion of outstanding shares of preferred stock into
shares of common stock. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin Topic 4D, stock options granted during the twelve months
prior to the date of the initial filing of the Company's Form S-1 Registration
Statement relating to the Company's initial public offering have been included
in the calculation of common equivalent shares using the treasury stock method.
6
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KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. RECENT ACCOUNTING PRONOUNCEMENT
Effective December 27, 1997, the Company will adopt SFAS No. 128,
"Earnings per Share." At that time, the Company will be required to change the
method currently used to calculate earnings per share and to restate all prior
periods. Early adoption is not permitted. The new requirements will include a
calculation of basic earnings per share from which the dilutive effect of stock
options will be excluded. A calculation of diluted earnings per share will also
be required. A pro forma calculation of basic earnings per share and diluted
earnings per share for the quarter ended September 30, 1997 would have been
$0.43 and $0.15 per share, respectively, and for the quarter ended September 30,
1996 would have been $0.36 and $0.09 per share, respectively.
For the years beginning after July 1, 1998, the Company will adopt SFAS
No. 130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information." The Company is reviewing the
impact of such statements on its financial statements.
5. SUBSEQUENT EVENT
On October 16, 1997, the Company completed its initial public offering
of 2,000,000 shares of common stock at $11.00 per share. 1,300,000 shares were
sold by the Company resulting in net proceeds of approximately $13.3 million.
The remaining 700,000 shares were sold by certain selling stockholders.
Additional information is contained in the Company's Prospectus dated October
10, 1997 which was part of the Company's Registration Statement on Form S-1
filed with the Securities and Exchange Commission.
7
<PAGE> 8
KOFAX IMAGE PRODUCTS, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion in this Form 10-Q contains trend analysis and other
forward-looking statements regarding the Company, its business, prospects and
results of operations that are subject to certain risks and uncertainties posed
by many factors and events that could cause the Company's actual business,
prospects and results of operations to differ materially from those that may be
anticipated by such forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, (i) uncertainty
of future operating results, (ii) fluctuations in quarterly operating results,
(iii) dependence on a limited number of products for current and future
operating results, (iv) dependence on document image processing market and
component software strategy, (v) rapid technological change, (vi) the impact of
competition, (vii) dependence on intellectual property and proprietary rights,
and (viii) risks associated with international sales, as well as those discussed
under the captions "Risk Factors" in the Company's Prospectus dated October 10,
1997 which was part of the Company's Registration Statement on Form S-1 filed
with the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this report. Readers are urged to carefully review and consider the
various disclosures made by the Company in this report and in the Company's
other reports filed with the Securities and Exchange Commission that attempt to
advise interested parties of the risks and factors that may affect the Company's
business.
OVERVIEW
The Company designs, develops and markets two families of image
processing boards, KIPP and Adrenaline, that can be added to personal computers
to facilitate high-speed scanning and enhancement of paper documents. The
Company also develops and markets two component application software products,
Ascent Capture, which reduces the cost of scanning and indexing documents, and
Ascent Storage, which manages the storage of document images on optical jukebox
libraries. In addition, the Company recently introduced NetScan, a network scan
server for workgroup scanning.
The KIPP and Adrenaline families of products are expected to continue to
account for a majority of the Company's net sales for the next several years.
The Company also expects that its Ascent and NetScan products, together with
other products under development, will contribute an increasing share of the
Company's net sales in the future.
The Company sells its products primarily through a channel of
distributors and resellers. The Company typically ships its products within a
short period after acceptance of purchase orders from distributors and other
customers. Accordingly, the Company typically does not have a material backlog
of unfilled orders at the end of any quarter. Revenue from hardware and software
sales are recognized at the time of shipment in accordance with AICPA Statement
of Position 91-1, Software Revenue Recognition. Distributors have certain rights
8
<PAGE> 9
of return and exchange privileges. The Company's distributors generally do not
stock significant amounts of inventory of the Company's products, as these
products are typically incorporated by resellers into complete imaging and
document management systems which are configured shortly before scheduled
delivery to end-user customers. The Company records estimates for such rights of
return and exchange privileges based on historical experience. The Company
provides a warranty for its products against defects in materials and
workmanship. A provision for estimated warranty costs is recorded at the time of
sale. Payments under maintenance contracts are due at the beginning of the
contract; however, revenue is recognized ratably over the term of the contract
which is typically twelve months.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
The following table sets forth certain income and expense items as a
percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 23.7 28.2
--------- ----------
Gross profit 76.3 71.8
Operating expenses:
Sales and marketing 31.7 31.8
Research and development 23.9 24.3
General and administrative 7.7 6.4
--------- ----------
Total operating expenses 63.3 62.5
--------- ----------
Income from operations 13.0 9.3
Other income, net 0.6 0.2
--------- ----------
Income before provision for income taxes 13.6 9.5
Provision for income taxes 5.2 3.7
--------- ----------
Net income 8.4% 5.8%
========= ==========
</TABLE>
Net Sales. Net Sales represent gross sales less discounts, returns and
adjustments. Net Sales were $7.9 million and $6.6 million in the quarters ended
September 30, 1997 and 1996, respectively, representing an increase of 19.3%.
This increase was primarily attributable to increased sales of the Company's
Ascent component application software products.
International sales (primarily to Western European countries) accounted
for 32.4% and 34.0% of net sales in the quarters ended September 30, 1997 and
1996, respectively. Management expects that the Company's international
operations will continue to provide a significant portion of total net sales;
however, international sales could be adversely affected if the U.S. dollar
strengthens against international currencies.
9
<PAGE> 10
Gross Profit. Cost of sales primarily consist of the costs of
components and subassemblies, labor and manufacturing overhead and, with respect
to the Company's software products, software duplication and royalty expenses.
The Company believes that its gross margins reflect the high content of
proprietary firmware in the Company's hardware accelerator boards as well as the
increasing percentage of total software revenue in the Company's product mix.
Gross profit represented 76.3% and 71.8% of net sales in the quarters ended
September 30, 1997 and 1996, respectively. Approximately half of this increase
in gross profit percentage was attributable to increased sales of the Company's
Ascent software products, which have higher gross margins, and the balance was
attributable to changes in accelerator board product mix and the declining costs
of DRAM components used in the Company's accelerator boards.
Sales and Marketing. Sales and marketing expenses, which consist
primarily of salaries and commissions, customer support, trade shows,
advertising and other promotional expenses, were $2.5 million and $2.1 million,
and 31.7% and 31.8% of net sales, in the quarters ended September 30, 1997 and
1996, respectively. The increase in fiscal 1998 was primarily attributable to
increased sales personnel, increased salaries and commissions, and increased
overhead expenses relating to occupancy. The Company expects that sales and
marketing expenses will continue to increase in absolute dollar amounts and will
fluctuate as a percentage of net sales.
Research and Development. Research and development expenses, which
consist primarily of personnel costs and overhead costs relating to occupancy,
were $1.9 million and $1.6 million, and 23.9% and 24.3% of net sales, in the
quarters ended September 30, 1997 and 1996, respectively. The increase in fiscal
1998 was primarily attributable to increased engineering staffing and increased
contract labor costs. The Company expects that research and development expenses
will continue to increase in absolute amounts and will fluctuate as a percentage
of net sales, depending upon the timing of material research and product
development projects.
Despite the fact that the Company's net sales have increased, research
and development expenses as a percentage of net sales have remained relatively
high because of the high software content of the Company's KIPP and Adrenaline
family of products and the development of its Ascent application software
products.
General and Administrative. General and administrative expenses consist
of personnel costs for administration, finance, information systems, human
resources and general management, as well as professional services. General and
administrative expenses were $0.6 million and $0.4 million, and 7.7% and 6.4% of
net sales, in the quarters ended September 30, 1997 and 1996, respectively. The
increase in fiscal 1998 was attributable to increased staffing in information
systems and other increases in overhead spending. The Company anticipates that
it will incur increased general and administrative costs in the future related
to the additional insurance and administrative requirements of a public
company, and expects general and administrative expenses to fluctuate as a
percentage of net sales.
10
<PAGE> 11
Other Income, net. Other Income, net consists primarily of interest
income earned on the Company's cash and cash equivalents and short-term
investments less interest expense on the Company's note payable.
Provision for Income Taxes. The Company's effective tax rate was 38.5%
for the quarters ended September 30, 1997 and 1996. The Company expects the
effective tax rate in future periods to approximate the statutory rate.
The Company's past operating results have been, and its future operating
results will be, subject to fluctuations due to a number of factors, including,
but not limited to, the timing of orders from, and shipments to, major
customers; the timing of new product introductions by the Company or its
competitors; variations in the mix of products sold by the Company; changes in
pricing policies by the Company, its competitors or suppliers, including
possible decreases in average selling prices of the Company's products in
response to competitive pressures; product returns or price protection charges
from customers; market acceptance of new and enhanced versions of the Company's
products; the availability and cost of key components; the availability of
manufacturing capacity; delays in the introduction of new products or product
enhancements by the Company, the Company's competitors or other providers of
hardware, software and components for the document imaging market; dependence
upon capital spending budgets; and fluctuations in general economic conditions.
As a result, the Company believes that period-to-period comparisons of its
results of operations should not be relied upon as indications of future
performance.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, combined cash, cash equivalents, and
short-term investments totaled $5.7 million, an increase of $0.3 million from
June 30, 1997. Net Cash provided by operating activities was $0.6 million, and
was generated primarily from net income. Net cash used in investing activities
was $0.3 million, primarily due to purchases of property and equipment.
The Company financed its operations and capital requirements from 1986
through 1989 from the sale of approximately $4.0 million of preferred stock and,
thereafter, through cash flow from operations. In October 1997, the Company
completed its initial public offering selling 1,300,000 shares of its common
stock, and received net proceeds of approximately $13.3 million.
The Company has an unsecured $2.0 million revolving credit line with
Silicon Valley Bank (the "Bank") and as of September 30, 1997 had no outstanding
balance under the revolving line of credit. The revolving line of credit expires
in January 1998 and the Company intends to enter into negotiations with the
Bank for the renewal of the line of credit. The line of credit agreement
requires the Company to maintain its primary banking relationship with the Bank
while any obligations to the Bank remain outstanding, prohibits the incurrence
of additional debt from sources other than the Bank, except for purchases or
leases of equipment up to $700,000, requires the Company to maintain certain
tangible net worth levels, current ratio percentages and profitability levels
and restricts the payment of dividends without the Bank's prior approval. In
January 1996, the Company entered into a three-year, $1,150,000 term loan. The
balance was approximately $723,000 at September 30, 1997 and was paid off in
October 1997 using proceeds from the initial public offering.
11
<PAGE> 12
The Company currently has no significant capital spending or purchase
commitments other than normal purchase commitments and commitments under
facilities leases.
The Company believes that the net proceeds from the initial public
offering together with cash flow from operations, if any, existing cash balances
and credit available under the Company's existing credit facility, will be
sufficient to meet its cash requirements for at least the next 12 months.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 26, 1997, VisionShape, Inc. ("VisionShape") filed suit
against the Company in the Superior Court of Orange County, California.
VisionShape claims that the Company's Adrenaline accelerator boards prevent the
use of software other than the Company's software, which, the complaint alleges,
creates a monopoly or otherwise constitutes a tying arrangement in violation of
state and federal antitrust laws. VisionShape seeks unspecified monetary damages
and costs as well as equitable remedies, including an order enjoining the
Company from selling its Adrenaline accelerator boards. VisionShape also seeks
treble damages and attorneys' fees. Based upon information currently available
to the Company, the Company believes VisionShape's claims are without merit and
intends to contest vigorously any action against the Company. However, it is too
early to determine the outcome of such suit and there can be no assurance as to
the eventual outcome of such actions. Any determination against the Company in
the litigation or the settlement of such claims could have a material adverse
effect on the Company's business, results of operation, cash flows and financial
condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Silicon Valley Bank Amendment to Loan and Security Agreement (dated
September 18, 1997)
11.1 Computation of pro forma net income per share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1997.
Items 2, 3, 4, and 5 are not applicable and have been omitted.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KOFAX IMAGE PRODUCTS, INC.
/s/ RONALD J. FIKERT
---------------------------------------
Ronald J. Fikert
Chief Financial Officer
(principal financial officer and
duly authorized officer)
14
<PAGE> 15
EXHIBIT INDEX
Exhibit Description
- ------- -----------
10.1 Silicon Valley Bank Amendment to Loan and Security
Agreement (dated September 18, 1997)
11.1 Computation of pro forma net income per share
27.1 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
[LOGO] SILICON VALLEY BANK
AMENDMENT TO LOAN AND SECURITY
AGREEMENT
BORROWER: KOFAX IMAGE PRODUCTS, INC.
ADDRESS: 3 JENNER STREET
IRVINE, CALIFORNIA 92718
DATE: SEPTEMBER 18, 1997
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower"). The Parties
agree to amend the Loan and Security Agreement between them, dated February 28,
1992, as amended by that certain Amendment to Loan Agreement dated March 9,
1993, as amended by that certain Amendment to Loan Agreement dated October 10,
1994, as amended by that certain Amendment to Loan Agreement dated October 5,
1995, as amended by that certain Amendment to Loan Agreement dated January 20,
1996, and as amended by that certain Amendment to Loan Agreement dated October
__, 1996 (as so amended and as otherwise amended from time to time, the "Loan
Agreement"), as follows, effective on the date hereof. (Capitalized terms used
but not defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.)
1. AMENDED MATURITY DATE. Section 5.1 of The Maturity Date as set forth
in the Schedule to Loan Agreement is amended effective as of the date hereof,
to read as set forth on the Amended Schedule to Loan and Security Agreement
attached hereto.
"MATURITY DATE (Section 5.1): JANUARY 5, 1998, other than with respect to
the Term Loan Facility. The Term Loan
Facility shall be due and payable in
accordance with the provisions set forth in
Section 1.1 above."
2. FACILITY FEE. The Borrower shall pay Silicon concurrently herewith a
facility fee in the amount of $1,250, which shall be in addition to all
interest and all other fees payable to Silicon and shall be non-refundable.
3. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct as of the date hereof.
4. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms
-1-
<PAGE> 2
SILICON VALLEY BANK AMENDMENT TO LOAN AND SECURITY AGREEMENT
- ------------------------------------------------------------------------------
and provisions of the Loan Agreement, and all other documents and agreements
between Silicon and the Borrower shall continue in full force and effect and
the same are hereby ratified and confirmed.
BORROWER: SILICON:
KOFAX IMAGE PRODUCTS, INC. SILICON VALLEY BANK
By By
------------------------------- --------------------------------
President or Vice President Title
-----------------------------
By
-------------------------------
Secretary or Ass't Secretary
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF PRO FORMA NET INCOME PER SHARE
<TABLE>
<S> <C>
Weighted average common shares 1,331,976
Conversion of Preferred Stock to Common Stock 2,667,002
Options issued within one year of the initial filing date
of the S-1 Registration Statement using the treasury
stock method 75,682(1)
All other options outstanding using the treasury stock method 176,524(2)
---------
Total weighted average shares outstanding 4,251,184
Net income 656,945
---------
Pro forma net income per share $ .15
=========
</TABLE>
- ------------
<TABLE>
<S> <C>
(1) Options issued in one year window: 138,750(a)
Exercise price x$5.00
--------
Gross proceeds $ 693,750
Repurchase price +$11.00
--------
Shares repurchased 63,068(b)
========
Net shares (a)-(b) 75,682
========
(2) All other options: 236,512
Weighted average exercise price x 2.79
--------
Gross proceeds $659,868
Repurchase price $ 11
--------
Shares repurchased 59,988(b)
========
Net shares (a)-(b) 176,524
========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,028
<SECURITIES> 4,708
<RECEIVABLES> 4,902
<ALLOWANCES> 426
<INVENTORY> 2,147
<CURRENT-ASSETS> 13,321
<PP&E> 6,167
<DEPRECIATION> 4,315
<TOTAL-ASSETS> 17,116
<CURRENT-LIABILITIES> 3,837
<BONDS> 329
7,230
0
<COMMON> 211
<OTHER-SE> 5,509
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<TOTAL-REVENUES> 7,851
<CGS> 0
<TOTAL-COSTS> 1,861
<OTHER-EXPENSES> 4,972
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<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 1,068
<INCOME-TAX> 411
<INCOME-CONTINUING> 657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 657
<EPS-PRIMARY> 0
<EPS-DILUTED> 0.15
</TABLE>
