FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of June 30, 1998.
(Translation of registrant's name into English)
PeakSoft Corporation
(Address of principal executive offices)
3614 Meridian, Suite 100
Bellingham, WA 98225
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [X] No
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- 0-24069
Signatures: T. W. Metz
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.
PeakSoft Corporation
(Registrant)
Date Aug 14, 1998
(Signature) By: "T.W. Metz"
T.W. Metz, COO
Letter to the Shareholders:
We have embarked in a new direction over the last few months. Our focus on
Internet and Intranet Productivity Solutions remains unchanged. Our technology
is better than ever. The release of PeakJet 2000 in July is the best product
release the company has ever experienced. Cash flow from sales in July was
117% higher than the entire previous quarter, which is attributable to our
new market strategy.
So what happened last quarter and why am I optimistic about the future?
In the third quarter we faced a number of difficult decisions. Primary among
them was the poor performance of Internet software in general in the traditional
retail channel and the channels somewhat onerous terms of payment for product.
Specifically, PeakJet 1.55 and NetMagnet were moving slowly in this channel and
the cost of maintaining presence has been generating negative cash flow.
The company decided to prioritize electronic commerce, electronic software
distribution, alliance programs and International partnerships. This is a
significant change in strategy that doesnt eliminate retail but changes the
focus of retail to the Internet. In addition, we have strengthened our policy
regarding payment terms and adopted a far more cash flow driven model. Quite
simply we wont do bad business for the sake of top line numbers.
During the quarter, we announced significant enhancements to our e-commerce
capability, created the core alliance program, opened the Peak Store on our
site and commenced negotiations with a number of partners for the joint sale
and distribution of our products. PeakSoft has significantly expanded its sales
force with new agreements signed for both vertical and geographic markets,
while simultaneously reducing sales and marketing expense by 65% over the
comparable quarter for 1997. We elected to discontinue shipment of our
PeakJet 1.55 product to retail in anticipation of the new PeakJet 2000 release
(July 2nd). We have also discontinued shipment of NetMagnet to that channel
and have significantly enhanced the product with a new pricing and sales
strategy to be announced shortly.
Subsequent to the quarter end, the early positive results from these
strategies started to be felt. PeakSoft announced co-marketing and bundling
deals with Symantec, Software Builders and RealNetworks. Our PeakJet 2000
product is now being offered for sale on a standalone basis and in value
added bundles by some of industrys most successful companies.
The second consideration is the development of new value-added solutions that
deliver high per unit margins with on-going royalties and support fees. The
markets for our solutions are becoming more mainstream and growing at a very
high rate. As an early entrant we have paid our dues and look to reap the
gain for our effort and foresight.
The company has a pending listing on the OTC-BB under the symbol "PEAFF" and
was briefly active in March of 1998. Upon filing for reporting status for the
first time in the US the company's listing was halted as a result of new
requirements of the OTC-BB to meet the reporting standards of the United
States Securities and Exchange Commission. The Company has made its initial
filing to the SEC, and the Company and its advisors are actively working on a
timely basis.
Sincerely yours,
"Douglas H. Foster"
Douglas H. Foster
President and CEO
August 13, 1998
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Consolidated Balance Sheet
(prepared by Management)
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June 30, 1998 1997
(in Canadian dollars)
Assets
Current Assets
Cash $ 33,907 $ 50,597
Accounts receivable 203,851 489,207
Inventories 93,849 75,068
Prepaids and deposits 47,180 78,174
378,787 693,046
Capital assets 138,784 230,094
Acquired research 205,574 1,027,874
& development
Licenses - 18,877
Investment in InfoBuild 284,000 -
$ 1,007,145 $ 1,969,891
Liabilities and Shareholders' Equity
Current Liabilities:
Demand loan - 27,608
Accounts payable and
accrued liabilities 702,320 1,381,732
Interest Payable on
Long-term debt 153,187 -
Deferred revenue - 86,486
Reserve for returns 53,101 -
& allowances
Current portion of - 24,573
long-term debt
Current portion of 29,551 41,064
obligations under
capital leases
938,159 1,536,890
Long-term debt 1,927,802 -
Obligations under 37,867 41,461
capital leases
Shareholders' Equity:
Share capital 6,332,390 5,723,317
Other paid-in capital 173,759 -
6,506,149 5,723,317
Accumulated deficit 8,402,832 5,331,777
(1,896,683) 391,540
$ 1,007,145 $ 1,969,891
</TABLE>
Consolidated Statement of Operations and Deficit
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Quarter ended Quarter ended Nine months Nine months
ended ended
June 30,1998 June 30,1997 June 30,1998 June 30,1997
(in Canadian dollars)
Sales $ 127,796 $ 529,924 $1,027,378 $1,239,308
Cost of goods sold 33,671 135,065 192,511 366,297
94,125 394,859 834,867 873,011
Operating Expenses:
General and 328,058 314,946 1,198,165 787,680
administration
Selling and
marketing 133,259 373,990 829,258 1,522,044
Research and 111,355 129,336 435,365 504,026
development
572,672 818,272 2,462,788 2,813,750
Earnings (loss) (478,547) (423,413) (1,627,921) (1,940,739)
before the undernoted
Amortization** 246,278 532,492 746,971 797,470
Recovery of expenses - - 252,509 -
from settlement
of liabilities
Earnings (loss) $ (724,825) $ (955,905) $(2,122,383) $(2,738,209)
from operations
Gain on sale of - - 134,951 -
contract
Loss from trademark - 269,658 - 269,658
litigation
Net earnings (loss) (724,825) (1,225,563) (1,987,432) (3,007,867)
Accumulated deficit, $(7,678,007) $(4,106,214) $(6,415,400) $(2,323,910)
beginning of period
Accumulated deficit, $(8,402,832) $(5,331,777) $(8,402,832) $(5,331,777)
end of period
Loss per common share (.05) (.10) (.15) (.25)
</TABLE>
**Note: The amortization expense for the quarter and nine months ended
June 30, 1997, is adjusted per 1997 audited financial statements to restate
the accumulated amortization of the acquired research and development.
Statement of Changes in Financial Position
<TABLE>
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Quarter ended Quarter ended Nine months Nine months
ended ended
June 30,1998 June 30,1997 June 30,1998 June 30,1997
(in Canadian dollars)
Cash provided by (used in):
Operations:
Net earnings (loss) $(724,825) $(1,225,563) $(1,987,432) $(3,007,867)
Items not involving cash:
Amortization 246,278 532,492 746,971 797,470
Change in non-cash 140,445 316,481 (355,997) 12,793
operating working
capital
(338,102) (376,590) (1,596,458) (2,197,607)
Financing:
Repayment of long
term debt 304,851 - 531,875 (12,702)
Obligation under
capital leases (4,975) - 1,867 (9,881)
Decrease in obligation
to issue shares - - (399,900) -
Issuance of share
capital 20,055 323,475 532,199 2,207,900
319,931 315,365 666,041 2,185,317
Investments:
Purchase of capital assets (9,006) 1,038 (107,042) 32,921
Increase (decrease) (27,177) (60,187) (1,037,459) 20,634
In cash position
Cash, beginning of period 61,084 110,784 1,071,366 29,963
Cash, end of period $ 33,907 $ 50,597 $ 33,907 $ 50,597
</TABLE>
Third Quarter Review
Net loss for the quarter ended June 30, 1998 decreased from $1,225,563 in
the comparable period in 1997, to $724,825 a decrease of $500,738, or 40.1%
due to managements objective in reducing expenditures of the Company in all
areas, especially in cost of goods sold, research and development, and selling
and marketing. The Company is placing more emphasis on marketing in the next
quarters to capture a higher sales volume. The third quarter revenue decreased
from third quarter 1997 reported revenue of $529,924 to $127,796 a difference
of 75.6% as a result of the implementation of the new market strategy. During
this transition period, the Company has made the decision not to ship new
products into the traditional retail channel.
Nine Month Review
Revenue for the nine months ended June 30, 1998 decreased from $1,239,308 in
the comparable period in 1997, to $1,027,378, a decrease of $211,930 or 17.1%,
and was due primarily to the declining sales of PeakJet 1.5 in anticipation
of the launch of PeakJet 2000, which was released July 2nd. The Companys focus
of the new market strategy is higher gross margin of future sales and overall
costs. Net loss decreased from $3,007,867 to $1,987,432, a difference of
$1,020,435 or 33.9%, due to significantly reduced operating expenses. Beginning
for fiscal year 1998, a new categorization of expenses was adopted for better
reporting of the Companys expenditures. The end result in the reorganization
reflects a reallocation of previously categorized "selling and marketing"
expenses to "general and administrative" expenses. The overall decrease in
expenses reflect a reduction in expenditures, while continuing to keep a minimal
investment in marketing for the Companys Internet products.
The amortization expense of $746,971 includes the amortization on the research
and development that was acquired in 1996 from Chameleon Bridge Technologies
Corp, which is capitalized according to Canadian GAAP. The acquired research
and development will be fully amortized for fiscal year end resulting in an
expected lower amortization for fiscal year 1999 of approximately $200,000.
The Companys cash position decreased from $50,597 in 1997, to $33,907 in 1998
while accounts receivable decreased from $489,207 to $203,851. Cash and
accounts receivable remain an area of critical importance and are being actively
addressed by management. The decrease in accounts reeivable represents the
Companys transition into new markets focusing on sales channels that provide
up front cash flow. In general, the results for the quarter are indicative of
the Companys decreasing trend in its expenditures and execution of its marketing
strategy.
Year 2000
In response to the Year 2000 (Y2K) compliance rule established by the
Board of Governers of the Alberrta Stock Exchange, the Company has
conducted a comprehensive review of its computer systems to identify the
systems that could be affected by the "Year 2000" issue and is developing an
implementation plan to resolve the issue. The Year 2000 problem is the
result of computer programd being written using two digits rather than four
to define the applicable year. Time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
major system failure or miscalculations. The Company presently believes that,
with modifications to existing software and converting to new software, the
Year 2000 problem will not pose significant operational problems for the
Companys computer systems as so modified and converted. The Company has
completed the required modifications and conversions. The Company is in the
process of obtaining Year 2000 compliance statements from vendors, suppliers,
an all other third parties that do business with the Company.
Based upon the foregoing, PeakSoft does not believe it is necessary to
undertake any special measures to cope with the turn of the century.
PeakSoft backs up all critical data as a matter of routine.
PeakSoft does not believe that its computer systems require any further
remediation to render them Y2K compliant.
For the reasons set out above, PeakSoft has not incurred, and does not expect
to incur, any significant costs relating to remediation of Y2K issues.
Although there can be no assurances, PeakSoft does not expect material Y2K
implications to its business operations because its computers and the programs
being run on them are of recent vintage and are being marketed as being Y2K
compliant.
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
PeakSoft Corporation
3614 Meridian, Suite 100
Bellingham, Washington 98225 USA
Tel (360) 752-1100
Fax (360) 752-1110
http://www.peak.com
INVESTOR INFORMATION
(888) 377-7325
http://www.peak.com/investor
STOCK LISTING
PeakSoft Corporations common stock is listed on the Alberta Stock Exchange
under the symbol "C.PKT" and pending application for listing on the OTC
Bulletin Board (OTCBB) under the symbol "PEAFF".
AUDITOR
K P M G
Vancouver, B.C.
LEGAL COUNSEL
Farris, Vaughan, Wills & Murphy
Vancouver, B.C.
TRANSFER AGENT AND REGISTRAR
Montreal Trust
Calgary, Alberta
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DIRECTORS MANAGEMENT
Douglas Foster Douglas Foster
Chairman of the Board President & CEO
Donald McInnes Tim Metz
Chief Operating Officer
Peter Janssen Calvin Patterson
Corporate Counsel
Carl Conti Liam Taylor
Vice President, Engineering
William Baker Claudia Temple
Director of Marketing
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