UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number 0-28813
Vertica Software, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Colorado 93-1192725
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5801 Christie Avenue, Suite 390 Emeryville, California 94608
-------------------------------------------------------------
(Address of principal executive offices)
(510) 595-3333
---------------------------
(Issuer's telephone number)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 13,119,941 shares of
Common Stock outstanding on September 30, 2000.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
ITEM I
PART I - FINANCIAL STATEMENTS
TABLE OF CONTENTS
-----------------
FINANCIAL STATEMENTS
Balance Sheets ............................................. F-1
Statements of Operations ................................... F-2
Statement of Changes in Stockholders' Equity ............... F-3
Statements of Cash Flows ................................... F-6
NOTES TO FINANCIAL STATEMENTS .................................. F-7
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
BALANCE SHEETS
--------------
September 30, September 30,
2000 1999
ASSETS (Unaudited) (Unaudited)
------ ------------- -------------
CURRENT ASSETS
Cash and Cash Equivalents (Note 3) $ 22,952 $ 210,493
Prepaid Expenses 2,724 3,436
----------- -----------
TOTAL CURRENT ASSETS 25,676 213,929
EQUIPMENT, less accumulated depreciation
of $47,790, and $18,068, respectively
(Notes 3 and 6) 52,462 32,557
DEPOSITS 10,000 2,305
----------- -----------
TOTAL ASSETS $ 88,138 $ 248,791
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------------------
CURRENT LIABILITIES
Line of Credit $ -- $ 22,781
Current Portion of Capital Lease
Obligations (Note 8) 4,767 4,490
Accounts Payable and Other Accrued
Expenses 243,964 74,563
----------- -----------
TOTAL CURRENT LIABILITIES 248,731 101,834
CAPITAL LEASE OBLIGATIONS (Note 8) 1,106 7,166
CONVERTIBLE PROMISSORY NOTES (Note 9) 750,000 150,000
----------- -----------
TOTAL LIABILITIES 999,837 259,000
----------- -----------
COMMITMENTS (Note 11)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.001 par value,
3,000,000 shares authorized, -0- shares
issued and outstanding -- --
Common Stock, $.0001 par value,
30,000,000 shares authorized;
13,119,941 shares issued and
outstanding at September 30, 2000 1,311 1,206
Advance to Stockholder (Note 5) -- (25,000)
Paid in Capital 1,551,355 1,020,460
Deficit accumulated during development stage (2,464,365) (1,006,875)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (911,699) (10,209)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 88,138 $ 248,791
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-1
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
Cumulative
From
January 1,
1996
(Date of
Three Months Ended Nine Months Ended Inception)
September 30 September 30 to
------------------------ ------------------------ September 30,
2000 1999 2000 1999 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Revenue $ -- $ -- $ 27,063 $ -- $ 27,063
Operating expenses:
Product development 189,314 82,500 495,798 169,216 897,684
General and administrative 244,383 149,332 731,082 367,120 1,465,285
----------- ----------- ----------- ----------- -----------
Total operating expenses 433,697 231,832 1,226,880 536,336 2,362,969
----------- ----------- ----------- ----------- -----------
Loss from operations (433,697) (231,832) (1,199,817) (536,336) (2,335,906)
Interest income -- 1 28 1,197 2,567
Interest expense (21,317) (13,803) (60,210) (16,804) (131,770)
Other income 401 -- 3,208 93 4,945
Bad debt expense -- -- -- -- (201)
----------- ----------- ----------- ----------- -----------
Loss before income taxes (454,613) (245,634) (1,256,791) (551,850) (2,460,365)
Provision for income taxes
(Note 10) -- -- (800) (800) (4,000)
----------- ----------- ----------- ----------- -----------
Net loss $ (454,613) $ (245,634) $(1,257,591) $ (552,650) $(2,464,365)
=========== =========== =========== =========== ===========
Net loss applicable to
common stockholders $ (454,613) $ (245,634) $(1,257,591) $ (552,650) $(2,464,365)
=========== =========== =========== =========== ===========
Net loss per share--basic $ (0.0373) $ (0.0204) $ (0.1033) $ (0.0459) $ (0.2042)
=========== =========== =========== =========== ===========
Weighted average shares
used in per share
calculation--basic 12,179,025 12,028,708 12,179,025 12,028,708 12,065,441
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
Statement of Changes in Stockholders' Equity
--------------------------------------------
From January 1, 1996 (Inception) to September 30, 2000
------------------------------------------------------
<TABLE> Deficit
<CAPTION> Accumulated
Preferred Stock Common Stock During
---------------- ---------------- Advance to Paid-in Development
Shares Amount Shares Amount Stockholder Capital Stage Total
------ ------ ------ ------ ------------ -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 -- $ -- -- $ -- $ -- $ -- $ -- $ --
January 1, 1996 (inception),
shares issued at
incorporation (Note 4) -- -- 9,200,000 920 -- (70) -- 850
Net loss for the year ended
December 31, 1996 -- -- -- -- -- -- (42,285) (42,285)
------ ------ --------- ------ -------- ------- --------- ---------
BALANCE DECEMBER 31, 1996
(Audited) -- $ -- 9,200,000 $ 920 $ -- $ (70) $ (42,285) $ (41,435)
------ ------ --------- ------ -------- ------- --------- ---------
Net loss for the year ended
December 31, 1997 -- -- -- -- -- -- $(176,605) (176,605)
------ ------ --------- ------ -------- ------- --------- ---------
BALANCE DECEMBER 31, 1997
(Audited) -- $ -- 9,200,000 $ 920 $ -- $ (70) $(218,890) $(218,040)
------ ------ ---------- ------ -------- ------- --------- ---------
December 31, 1998, Issuance
of common stock
pursuant to a reverse
merger acquisition -- -- 1,300,000 130 -- (130) -- --
December 31, 1998, sale of
common stock pursuant to
a confidential subscription
agreement (Note 9) -- -- 50,000 5 -- 49,995 -- 50,000
December 31, 1998, sale of
common stock pursuant to
a confidential subscription
agreement (Note 9) -- -- 50,000 5 -- 49,995 -- 50,000
Advance to Stockholder
(Note 5) -- -- -- -- (25,000) -- -- (25,000)
Net loss for the year
ended December 31, 1998 -- -- -- -- -- -- (235,335) (235,335)
------ ------ ---------- ------ -------- ------- --------- ---------
BALANCE DECEMBER 31, 1998
(Audited) -- $ -- 10,600,000 $1,060 $(25,000) $99,790 $(454,225) $(378,375)
------ ------ ---------- ------ -------- ------- --------- ---------
February 11, 1999, sale of
common stock pursuant to
a confidential subscription
agreement (Note 9) -- -- 40,000 4 -- 39,996 -- 40,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
Statement of Changes in Stockholders' Equity
--------------------------------------------
From January 1, 1996 (Inception) to September 30, 2000
------------------------------------------------------
<TABLE> Deficit
<CAPTION> Accumulated
Preferred Stock Common Stock During
---------------- ---------------- Advance to Paid-in Development
Shares Amount Shares Amount Stockholder Capital Stage Total
------ ------ ------ ------ ------------ -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
February 11, 1999, sale of
common stock in
Private Placement
Transactions, net of
Offering costs of $ 1,876
(Note 9) -- -- 584,500 58 -- 584,442 -- 584,500
February 11, 1999,
conversion of convertible
promissory note to
common stock (Note 9) -- -- 41,433 5 -- 42,653 -- 42,658
February 24, 1999, sale of
common stock
in Private Placement
Transactions, net of
Offering costs of $ 75
(Note 9) -- -- 62,000 6 -- 61,994 -- 62,000
February 24, 1999,
conversion of convertible
promissory notes to
common stock (Note 9) -- -- 32,885 3 -- 34,693 -- 34,696
March 2, 1999, sale of
common stock
in Private Placement
Transactions, net of
Offering costs of $ 15
(Note 9) -- -- 15,000 1 -- 14,999 -- 15,000
March 25, 1999,
conversion of convertible
promissory note to
common stock (Note 9) -- -- 80,802 8 -- 55,045 -- 55,053
March 26, 1999,
conversion of convertible
promissory notes to
common stock (Note 9) -- -- 571,321 57 -- 86,852 -- 86,909
September 23, 1999,
issuance of common
stock for services
(Note 9) -- -- 40,000 4 -- (4) -- --
October 29, 1999,
conversion of convertible
promissory note to
common stock (Note 9) -- -- 10,000 1 -- 9,999 -- 10,000
Net loss for the year
ended December 31, 1999 -- -- -- -- -- -- (752,549) (752,549)
------ ------ ---------- ------ -------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1999
(Audited) -- -- 12,077,941 1,207 (25,000) 1,030,459 (1,206,774) (200,108)
------ ------ ---------- ------ -------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
Statement of Changes in Stockholders' Equity
--------------------------------------------
From January 1, 1996 (Inception) to September 30, 2000
------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Preferred Stock Common Stock During
---------------- ---------------- Advance to Paid-in Development
Shares Amount Shares Amount Stockholder Capital Stage Total
------ ------ ------ ------ ------------ -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Repayment of Stockholder's
Advance (Note 5) -- -- -- -- 25,000 -- -- 25,000
August 11, 2000, sale of
common stock pursuant
to a confidential
subscription agreement
(Note 9) -- -- 400,000 40 -- 199,960 -- 200,000
August 18, 2000, sale of
common stock pursuant
to a confidential
subscription agreement
(Note 9) -- -- 35,000 3 -- 17,497 -- 17,500
August 30, 2000, sale of
common stock pursuant
to a confidential
subscription agreement
(Note 9) -- -- 160,000 16 -- 79,984 -- 80,000
September 20, 2000, sale of
common stock pursuant
to a confidential
subscription agreement
(Note 9) -- -- 120,000 12 -- 59,988 -- 60,000
September 27, 2000,
conversion of convertible
promissory notes to
common stock
(Note 9) -- -- 327,000 33 -- 163,467 -- 163,500
Net loss for the nine
months ended
September 30, 2000
(Unaudited) -- -- -- -- -- -- (1,257,591) (1,257,591)
------ ------ ---------- ------ -------- ---------- ----------- -----------
BALANCE, SEPTEMBER 30, 2000
(Unaudited) -- $ -- 13,119,941 $1,311 $ -- $1,551,355 $(2,464,365) $ (911,699)
====== ====== ========== ====== ======== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Cumulative
From
January 1,
1996
(Date of
Nine Months Ended Inception)
September 30, to
-------------------------- September 30,
2000 1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited) (Unaudited) (Unaudited)
------------ ----------- ------------
<S> <C> <C> <C>
Net Loss $(1,257,591) $(552,650) $(2,464,365)
Transactions not requiring cash:
Depreciation 24,453 9,628 47,790
Changes in operating assets and liabilities:
(Increase) decrease in advance to stockholder 25,000 -- --
(Increase) decrease in prepaid expenses -- -- (2,724)
(Increase) decrease in deposits -- -- (10,000)
Increase (decrease) in accounts payable
and other accrued expenses 191,100 12,156 254,464
Increase (decrease) in payroll taxes payable -- (6,133) --
----------- --------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES (1,017,038) (536,999) (2,174,835)
----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase/acquisition of equipment (49,627) (11,434) (100,252)
----------- --------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (49,627) (11,434) (100,252)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings/assumption on line of credit -- -- 26,300
Net payments on line of credit -- (2,286) (26,300)
Proceeds/assumption of unsecured notes -- -- 20,700
Net payments on unsecured notes -- (20,700) (20,700)
Proceeds, assumption on convertible debt 725,000 -- 1,081,061
Reduction of convertible promissory notes (188,500) (153,061) (341,561)
Conversion of convertible promissory
notes into common stock (includes $ 13,500
and $ 66,255 of accrued interest, respectively) 163,500 219,316 542,816
Proceeds from stock subscriptions 357,500 -- 357,500
Redemption of stock subscriptions (357,500) (50,000) (507,500)
Issuance of common stock 357,500 701,500 1,159,850
Assumption of capital lease obligation -- 11,656 26,361
Net payments on capital lease obligation (4,373) (6,888) (20,488)
----------- --------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,053,127 699,537 2,298,039
----------- --------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS (13,538) 151,104 22,952
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 36,490 59,389 --
----------- --------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 22,952 $ 210,493 $ 22,952
=========== ========= ===========
Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
Cash paid during the period for:
Interest $ 577 $ 2,717 $ 18,625
Taxes $ 800 $ 800 $ 3,200
NONCASH INVESTING AND FINANCING TRANSACTIONS:
Common stock issued for consulting services $ -- $ 40,000 $ 40,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 1 - LOSSES DURING THE DEVELOPMENT STAGE
--------------------------------------------
Development Stage Company
-------------------------
Vertica Software, Inc. (the "Company") is in the development stage in
accordance with Statement of Financial Accounting Standard (SFAS) No. 7. All
of the costs incurred to date have been related to the development of its
products, development of its proposed Internet website, and the raising of
capital to finance such activities.
The Company, as discussed in Notes 2, 3, and 4 below, has incurred operating
losses since inception, totaling $2,464,365 through September 30, 2000.
This raises substantial doubt about the Company's ability to continue as a
going concern.
Management plans to raise additional capital, primarily through the issuance
of common stock and convertible promissory debt, until successful operations
are obtained and the Company is no longer in the development stage.
In view of these matters, realization of a major portion of the assets in
the accompanying balance sheet is dependent upon the Company's ability to
meet its financing requirements and the success of its future operations.
Management believes that actions presently being taken to underwrite the
Company's development stage through completion will provide the necessary
financial requirements, which in turn will provide the opportunity for the
Company to continue as a going concern. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of the recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.
NOTE 2 - ORGANIZATION AND NATURE OF BUSINESS
--------------------------------------------
Background
----------
Vertica Software, Inc., (the "Company"), formerly "Perfection Development
Corporation," was incorporated in Colorado on April 18, 1997. As further
discussed in Notes 3 and 4, on September 29, 1998, Perfection Development
Corporation entered into an agreement pursuant to which it would acquire
all of the outstanding capital stock of Vertica Software, Inc., a California
corporation ("Vertica California"). On December 31, 1998, Vertica
California merged with and into the Company. The Company was the surviving
corporation in the merger and the separate corporate existence of Vertica
California ceased. Concurrently with the merger, the Company changed its
name from Perfection Development Corporation to Vertica Software, Inc. The
Company is developing Internet/Intranet software products and services and
an Internet web site for the hazardous material and environmental
industries.
Products
--------
The Company's current product development includes an environmental
management computer software system called ICOMPLY and an Internet web site
called HAZWEB.COM. ICOMPLY is planned to be a set of computer software
modules designed to automate environmental regulation compliance and
related activities for common industrial applications.
F-7
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 2 - ORGANIZATION AND NATURE OF BUSINESS - Continued
--------------------------------------------------------
Products - (Continued)
----------------------
The related activities will include chemical inventory listings and
tracking, transportation manifests, emergency response, permit applications,
waste streams, and occupational training. HAZWEB.COM is an on-line web site
that is intended to serve the hazardous materials community and environmental
concerns of industry. The Company intends to allow ICOMPLY to link to
HAZWEB.COM for additional content information, on-line regulations
compliance and on-demand training and services.
Liquidity
---------
The Company has recurring operating losses since inception that have
continued subsequent to December 31, 1999. The losses are primarily due to
product development costs and administrative infrastructure costs related to
the financing and development of the Company's business.
In January 2000, the Company received an additional $ 250,000 in bridge
financing.
In March 2000, the Company received an additional $ 100,000 in bridge financing.
In April 2000, the Company received an additional $ 300,000 in bridge
financing.
In June 2000, the Company received an additional $ 25,000 in bridge
financing.
In July 2000, the Company received an additional $ 50,000 in bridge
financing.
In August 2000, the Company received proceeds from stock subscriptions of
$ 297,500.
In September 2000, the Company received proceeds from stock subscriptions of
$ 60,000.
The Company is expecting an additional $ 5,000,000 in private placements in
the fourth quarter of 2000. However, there is no assurance that the funding
will be raised, or that it will be sufficient to sustain operations through
the end of the current year, or until the Company begins generating positive
cash flows.
The Company's plan to continue the development of its core products through
the year ending December 31, 2000 is dependent on additional funding through
the sale of equity securities, convertible promissory notes, and sales.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
Basis of Presentation
---------------------
As further discussed in Note 4, the acquisition of Vertica California was
accounted for as a "reverse merger acquisition" whereby, for accounting
purposes, Perfection Development Corporation acquired the Company under the
purchase method of accounting and, due to the lack of significant prior
operations of Perfection Development Corporation, was substantially recorded
as a "recapitalization." Accordingly, the historical financial statements
have been restated after giving effect to the December 31, 1998 acquisition
of the Company. The financial statements have been prepared to give
retroactive effect to January 1, 1996 of the reverse merger acquisition
completed on December 31, 1998 and represent the operations of Vertica
California. Consistent with reverse acquisition accounting: (i) all of
Vertica California's assets, liabilities and accumulated deficit are
reflected at their combined historical cost (as the accounting acquirer)
and (ii) the preexisting outstanding shares of the Company (the
accounting acquiree) are reflected at their net asset value as if issued on
December 31, 1998.
F-8
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
---------------------------------------------------------------
Management Estimates
--------------------
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, liabilities,
retained earnings, income and expenses, and related disclosures for the
reporting period. Actual results could differ from those estimates and such
differences could be material.
Presentation of Interim Information
-----------------------------------
In the opinion of the management of the Company, the accompanying unaudited
financial statements include all material adjustments, including all normal
recurring adjustments, considered necessary to present fairly the financial
position of the Company as of September 30, 2000 and the Company's results
of operations and cash flows for the nine months ended September 30, 2000
and 1999 and cumulative since inception in January 1, 1996 to September 30,
2000. The financial statements and notes are presented as permitted by Form
10-QSB and do not contain certain information included in the Company's last
Audited Financial Statements for the year ended December 31, 1999 included
in Form 10-SB/A. It is the Company's opinion that, when the interim
statements are read in conjunction with the Audited Financial Statements for
the year ended December 31, 1999 included in Form 10-SB/A, the disclosures
are adequate to make the information presented not misleading. Interim
results are not necessarily indicative of results for a full year or any
future period.
Cash and Cash Equivalents
-------------------------
Cash is defined as cash in demand deposit accounts as well as cash on hand.
Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and investments so near their maturity
that the risk of changes in value due to changes in interest rates is
negligible. These are generally investments with maturity dates within six
months of their acquisition date. Not included as cash equivalents are
funds restricted as to their use, regardless of liquidity or the maturity
dates of investments.
Concentrations of Credit Risk
-----------------------------
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of uninsured cash balances. The Company
places its cash deposits with high-credit quality financial institutions.
At times, balances in the Company's cash accounts may exceed the Federal
Deposit Insurance Company (FDIC) limit of $100,000. There were no uninsured
balances at September 30, 2000.
Prepaid Expenses
----------------
Prepaid expenses are charged to the statement of operations in the period
for which the benefit is incurred.
Equipment
---------
As further discussed in Note 6, equipment is carried at cost. Depreciation
is provided using the straight-line method over the estimated useful lives
of the related assets, which is five years. Capitalized equipment leases
are depreciated over the lesser of their estimated useful life or lease term.
F-9
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
---------------------------------------------------------------
Product Development
-------------------
Product development expenditures are charged to operations as incurred.
Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,"
requires the capitalization of certain software development costs
subsequent to the establishment of technological feasibility. The Company
has determined that technological feasibility for its products is generally
achieved upon completion of a working model. Since software development
costs have not been significant, and the working model(s) are not yet
completed, all such costs have been charged to expense for the nine months
ended September 30, 2000.
Income Taxes
------------
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the recorded book basis and
tax basis of assets and liabilities for financial and income tax reporting.
The deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled.
Deferred taxes are also recognized for operating losses that are available to
offset future taxable income and tax credits that are available to offset
future federal income taxes.
Net Loss Per Share
------------------
The Company reports its net loss per share using a dual presentation of
basic and diluted loss per share. Basic loss per share excludes the impact
of common stock equivalents, and is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding for the
period. Diluted loss per share includes the dilutive effect from the
potential exercise or conversion of convertible debt. For the nine months
ended September 30, 2000, the impact of convertible debt was not considered,
as their effect on Net Loss Per Share would be anti-dilutive.
Fair Value of Financial Instruments
-----------------------------------
Cash, advances, prepaid expenses, accounts payable and accrued expenses are
reflected in the accompanying financial statements at fair value due to the
short-term nature of those instruments. The carrying amount of long-term
debt obligations approximate fair value at the balance sheet date.
Recent Accounting Pronouncements
--------------------------------
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 is effective for fiscal
years beginning after December 31, 1997. SFAS No. 130 establishes standards
for the reporting and display of comprehensive income in a set of financial
statements. Comprehensive income is defined as the change in net assets of
a business enterprise during a period from transactions generated from
non-owner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners. The
Company had no comprehensive income items; therefore, the adoption of SFAS
No. 130 had no impact on the financial statements.
F-10
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
----------------------------------------------------------------
Recent Accounting Pronouncements - Continued
--------------------------------------------
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." SFAS
No. 131 applies to all public companies and is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 requires that business
segment financial information be reported in the financial statements
utilizing the management approach. The management approach is defined as
the manner in which management organizes the segments within the enterprise
for making operating decisions and assessing performance. The Company
operates in one business segment; therefore, the adoption of SFAS No. 131
had no impact on the financial statements.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." The Company adopted SOP
98-1 in January 1999.
On April 3, 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued a new SOP 98-5
entitled "Reporting on the Costs of Start-Up Activities." Start-up costs
have been broadly defined as: "those one-time activities related to opening
a new facility, introducing a new product or service, conducting business in
a new territory, commencing business with a new class of customer or
beneficiary, initiating a new process in an existing facility, or
commencing some new operation."
The SOP applies to all non-governmental entities that prepare their
financial statements in conformity with generally accepted accounting
principles. The SOP is effective for financial statements for fiscal years
beginning after December 15, 1998, with earlier application encouraged in
fiscal years for which financial statements previously have not been issued.
F-11
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 4 - ACQUISITION
--------------------
The Company's current business is a continuation of the business formerly
conducted by Vertica Software, Inc., a California corporation ("Vertica
California"). On December 31, 1998, the Company acquired 100% of the
outstanding capital stock of Vertica California in a "reverse merger
acquisition." The purchase price was solely comprised of the issuance of
9,200,000 shares of the Company's common stock, par value $ .0001, to the
shareholders of Vertica California in exchange for all 4,930,000 shares of
Vertica California's common stock, no par value. The Company was the
surviving corporation in the merger and the separate corporate existence of
Vertica California ceased. Concurrently with the merger, the Company
changed its name from Perfection Development Corporation to Vertica
Software, Inc. The merger constituted a tax-free reorganization. The
acquisition of Vertica California was accounted for using the purchase
method of accounting, and due to the lack of significant prior Company
operations, was substantially recorded as a "recapitalization."
NOTE 5 - ADVANCE TO STOCKHOLDER
-------------------------------
Advance to stockholder consisted of an advance to acquire stock in the
Company. In the original merger documents, the stockholder was supposed to
pay the Perfection Development Corporation shareholders $25,000 out of his
own funds. The Company made the $ 25,000 payment. The stockholder paid off
the advance on January 15, 2000.
NOTE 6 - EQUIPMENT
------------------
At September 30, 2000, equipment consisted of the following:
Computer and peripheral equipment $ 74,639
Telephone system 25,613
----------
100,252
Less accumulated depreciation 47,790
----------
$ 52,462
==========
Total depreciation expense for the nine months ended September 30, 2000 was
$ 24,453.
NOTE 7 - SALE AND ISSUANCE OF COMMON STOCK AND SUBSCRIPTIONS
------------------------------------------------------------
Sale and Issuance of Common Stock
---------------------------------
On December 31, 1998, in connection with the reverse merger acquisition, the
Company issued 1,300,000 shares of its $ .0001 par value common stock in a
recapitalization of the Company. The 1,300,000 shares consisted of the
following:
260,000 shares of its $ .0001 par value common stock at $ .25 per share
pursuant to Rule 504 of Regulation D of the Securities Act of 1933, as
amended (the "Act"). The Company received net proceeds of $ 60,500
after deducting offering costs of $ 4,500.
F-12
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 7 - SALE AND ISSUANCE OF COMMON STOCK AND SUBSCRIPTIONS - Continued
---------------------------------------------------------------------------
1,040,000 shares of $ .0001 par value common stock were issued to
officers for services. These shares are "restricted securities" and
may be sold only in compliance with Rule 144 of the Act.
During the year ended December 31, 1998, the Company issued 100,000 shares
of its $ .0001 par value common stock at $ 1.00 per share pursuant to Rule
504 of Regulation D of the Act for net proceeds of $ 100,000.
During the year ended December 31, 1998, the Company issued 9,200,000 shares
of its $ .0001 par value common stock at $ .0001 per share to its principal
stockholders. The 9,200,000 shares are reflected as issued as of the
recapitalization date of the Company.
During the year ended December 31, 1999, the Company issued 40,000 shares of
its $ .0001 par value common stock at $ 1.00 per share pursuant to Rule 504
of Regulation D of the Act for net proceeds of $ 40,000.
During the year ended December 31, 1999, the Company issued 661,500 shares
of its $ .0001 par value common stock at $ 1.00 per share pursuant to Rule
504 of Regulation D of the Act for net proceeds of $ 661,500.
During the year ended December 31, 1999, the Company converted convertible
promissory notes totaling $ 229,316 (including accrued interest of $ 66,255)
for 736,441 shares of its $ .0001 par value common stock at an average price
of $ .31 per share.
During the year ended December 31, 1999, the Company issued 40,000 shares of
its $ .0001 par value common stock at $ 1.00 per share for outside
consulting services.
During the nine months ending September 30, 2000, the Company converted
convertible promissory notes totaling $ 163,500 (including accrued interest
of $ 13,500) for 327,000 shares of its $ .0001 par value common stock at an
average price of $ .50 per share.
During the period ending September 30, 2000, the Company issued 715,000
shares of its $ .0001 common stock at an average price of $ .50 per share.
F-13
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 8 - CAPITAL LEASE OBLIGATIONS
----------------------------------
At September 30, 2000, capital lease obligations consisted of the following:
Capital lease obligation, secured by equipment,
with an effective interest rate of 14.9% and
approximate monthly payments of $ 360 $ 3,498
Capital lease obligation, secured by equipment,
with an effective interest rate of 14.9% and
approximate monthly payments of $ 250 2,375
--------
5,873
Less current portion 4,767
--------
$ 1,106
========
NOTE 9 - CONVERTIBLE PROMISSORY NOTES
--------------------------------------
Convertible promissory notes consisted
of the following:
At September 30, 2000:
Convertible promissory note, unsecured
with interest at 10%. The agreement stipulates
the conversion rate of $ 1.60 per share of
common stock. The principal note balance
along with all accrued interest is payable
upon demand $ 50,000
Convertible promissory note, unsecured
with interest at 10%. The agreement stipulates
the conversion rate of $ 1.60 per share of
common stock. The principal note balance
along with all accrued interest is payable
upon demand 50,000
Convertible promissory note, unsecured
with interest at 10%. The agreement stipulates
the conversion rate of $ 1.60 per share of
common stock. The principal note balance
along with all accrued interest is payable
upon demand 50,000
F-14
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 9 - CONVERTIBLE PROMISSORY NOTES - Continued
---------------------------------------------------
Convertible promissory note, unsecured
with interest at 12%. The principal plus
accrued interest converts to common
stock at a conversion price equal to 55%
of the closing sale price of the common
stock as reported on the OTCBB on the
date of the election to convert. The
principal note balance along with all
accrued interest payable on demand $ 50,000
Convertible promissory note, unsecured
with interest at 12%. The principal plus
accrued interest converts to common
stock at a conversion price equal to 55%
of the closing sale price of the common
stock as reported on the OTCBB on the
date of the election to convert. The
principal note balance along with all
accrued interest payable on demand 100,000
Convertible promissory note, unsecured
with interest at 12%. The debt and accrued
interest converts at a rate of $ 1.50
per share of common stock. The
principal note balance along with all
accrued interest payable on demand 50,000
Convertible promissory note, unsecured
with interest at 12%. The debt and accrued
interest converts at a rate of $ 1.50
per share of common stock. The
principal note balance along with all
accrued interest payable on demand 50,000
F-15
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 9 - CONVERTIBLE PROMISSORY NOTES - Continued
---------------------------------------------------
Convertible promissory note, unsecured
with interest at 12%. The debt and accrued
interest converts to common stock at a conversion
price equal to 55% of the closing sale price of the
common stock as reported on the OTCBB on the date of the
election to convert. The principal note balance along with all
accrued interest matures on October 21, 2000 100,000
Convertible promissory note, unsecured
with interest at 12%. The debt and accrued
interest converts to common stock at a conversion
price equal to 55% of the closing sale price of the
common stock as reported on the OTCBB on the date of
election to convert. The principal note balance along with all
accrued interest matures on October 24, 2000 100,000
Convertible promissory note, unsecured
with interest at 12%. The debt and accrued
interest converts to common stock at a conversion
price equal to 55% of the closing sale price of the
common stock as reported on the OTCBB on the date of
election to convert. The principal note balance along with
all accrued interest matures on October 25, 2000 100,000
Convertible promissory note, unsecured
with interest at 10%. The debt and accrued
interest converts to common stock at a conversion
price equal to 75% of the closing sale price of the
common stock as reported on the OTCBB on the date of
election to convert. The principal note balance along with
all accrued interest matures on January 28, 2001 50,000
---------
$ 750,000
=========
Future principal maturities on convertible debt
are as follows:
Year Ending:
December 31, 2000 $ 700,000
=========
December 31, 2001 $ 50,000
=========
F-16
<PAGE>
VERTICA SOFTWARE, INC.
----------------------
(FORMERLY PERFECTION DEVELOPMENT CORPORATION)
---------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------------
(Unaudited)
-----------
NOTE 10 - INCOME TAXES
----------------------
A reconciliation of the U.S. statutory federal income tax rate to the
effective tax rate is as follows:
Nine months ended September 30, 2000:
U.S. federal statutory graduated rate 39%
State income tax rates net of federal benefits:
Colorado 4%
California 7%
Net operating loss for which no tax
benefit is currently available (50%)
-----
(0%)
=====
The Company conducts its operations in California, which has a minimum
tax of $800.
At September 30, 2000, deferred taxes consisted of a net tax asset due
to operating loss carry forwards of $2,464,365, which was fully
allowed for, in the valuation allowance of $ 2,464,365. The valuation
allowance offsets the net deferred tax asset for which there is no
assurance of recovery. The change in valuation allowance for the nine
months ended September 30, 2000 was $ 293,372. Net operating loss
carry forwards will expire in 2011, 2012, 2013, 2014, and 2015.
NOTE 11 - Commitments
---------------------
The Company has operating leases on its office space and some of its
equipment. Future minimum lease payments under such noncancelable
operating leases are summarized as follows:
Office
Space Equipment
------ ---------
Year ending
December 31,
------------
2000 $ 29,615 $1,612
2001 121,106 4,261
2002 124,739 0
2003 128,481 0
2004 121,011 0
-------- ------
$524,952 $5,873
======== ======
Total rent expense for the nine months ended September 30, 2000
was $ 69,380.
The Company also made two non-cancelable commitments to an investor
relations firm and media content firm. Future minimum payments are
$44,400 for the year ended December 31, 2000, and $ 7,320 for the year
ended December 31, 2001.
F-17
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation
Certain statements contained in the following Plan of Operation,
including, without limitation, statements containing the words "believe,"
"anticipate," "estimate," "expect" and words of similar meaning, constitute
forward-looking statements that involve risks and uncertainties. Actual
results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that may cause actual
results to differ materially from those in the forward-looking statements
are in the Company's Annual Report on Form 10-SB12G for the year ended
December 31, 1999 and in the Company's other filings 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 hereof.
The Company assumes no obligation to update any forward-looking statements
or comments or the reasons why actual results may differ. Our actual
results could differ materially from those anticipated in these forward
looking statements as a result of certain factors set forth in other parts
of this document.
Vertica Software, Inc. is a development-stage company that is
developing Internet-based software products, e-commerce, and online
information services intended to serve industries that are impacted by
government regulation of hazardous materials and other environmental laws
and regulations. We are developing software products designed to assist
companies with their environmental regulation compliance and related
activities for common industrial applications.
In July, 2000, we released our wireless application "iComply Tracker"
for beta-testing. iComply Tracker works with today's wireless communication
technologies and personal digital assistance devices to track product
shipment and delivery information and transmit customer invoicing data.
The application will allow field input of detailed customer information,
freighting, and product delivery information. Automated multi-stop route
and single-stop delivery forms will allow users to track instantly product
deliveries, calculate freight, and submit shipping documents directly to
their customer's invoicing system.
iComply Tracker will extend the previously released iComply
Transporter product, which includes paperwork with regulatory compliance
assistance for manufacturers and transporters of materials with hazardous
and non-hazardous ingredients.
<PAGE>
Results of Operations:
The Company realized a net loss from operations of $454,613 for the
three months ended September 30, 2000,compared to a realized net loss from
operations of $ 245,634 for the three months ended September 30, 1999. The
Company for the nine months ended September 30, 2000 realized a net loss
from operations of $ 1,257,591, compared to a realized net loss from
operations of $ 552,650 for the nine months ended September 30, 1999. The
Company has realized, since January 1, 1996 (inception) to June 30, 2000, a
cumulative net loss from operations of $ 2,464,365. The Company had $ 0 in
sales from operations for the quarter ended September 30, 2000, and $ 27,063
in sales from operations for the period January 1, 1996 (Date of Inception)
through June 30, 2000.
Plan of Operation:
Loss on operations for the Company for the three and nine months
ended September 30, 2000 increased 187% and 229%, respectively, from the
prior year for the same periods. These losses are attributed to the
Company's development, marketing and general expenses. The Company will,
over the next 12 months, rely on additional funding through the sale of
promissory notes convertible to common stock, the sale of common stock, and
sales from Company products.
Liquidity and Capital Resources:
To date our activities have been financed primarily through the
sale of our common stock and promissory notes convertible into our common
stock. We currently estimate that we will need approximately $3,000,000 in
funds, in addition to our present cash reserves of approximately $22,500
and estimated revenues of $150,000 from the sale of our initial products, in
order to satisfy our estimated cash requirements over the next twelve
months. We cannot assure you however, that we will be able to reach this
revenue amount. Operating revenues are expected to be generated, but such
revenues may not be substantial or in the amounts we expect. We anticipate
that we will need these additional funds to complete the development of the
remainder of our initial product line and to establish strategic alliances
with other companies. We intend to raise such funds primarily through the
sale of our equity or debt securities. There can be no assurance that we
will be able to obtain such additional financing, or whether the terms of
such financing will be favorable to us. Failure to obtain such financing or
our failure to generate sufficient operating revenues from the sale of our
initial products would have a material adverse affect on our business,
financial condition and results of operations.
During the nine months ended September 30, 2000, we received funds
totaling $ 725,000 in the form of convertible promissory notes, of which
$ 150,000 was converted at an average price of $ .50 per common share. These
notes bear interest at 10% and 12% and mature six months from the date of
issuance. Conversion to common stock must occur before the maturity date.
We also received funds totaling $ 357,000 in stock subscriptions which were
all exercised as of September 30, 2000.
<PAGE>
In the event future equity capital cannot be raised in a timely
manner to fund our products to completion, development will be suspended at
that time for all unfinished products and services. We would be forced to
reduce the current staff level to five and pursue additional bridge
financing to fund the Company until such time as permanent equity funding is
obtained. In the meantime, we would focus our efforts on the marketing and
sales of the Communicator, Transporter and e-commerce services.
Research and Development:
We have released the following products and modules, which are
available for licensing to potential customers:
iCOMPLY Inventory module (released for licensing February 1, 2000)
iCOMPLY Communicator (released for licensing February 2000)
iCOMPLY Transporter (released for licensing July 17, 2000)
During the next 12 months, we plan to complete development of the
remainder of our Internet-based products. Provided that we obtain the
required funding, release of our remaining core products is projected to be
as follows:
By March 31, 2001:
iCOMPLY Processor
By June 30, 2001:
iCOMPLY Permitter
By June 30, 2001:
iCOMPLY HazOSHA
While completing these products, we will also be developing
community strategic alliances within our industry through target marketing
opportunities, advertising and other related e-business. Product
development and web site maintenance expenses for the next twelve months
are expected to be approximately $1,200,000.
<PAGE>
Purchase of Significant Equipment
Depending on the number of new employees we hire over the next
twelve months, we intend to purchase twenty-five to thirty additional
desktop computers, two servers, and related peripheral equipment. The total
cost for the acquisition of this equipment is estimated at approximately
$86,500. We entered into an office lease agreement in December 1999 for new
office space totaling approximately 4,350 square feet. In connection with
this lease, we acquired the predecessor tenant's workstation modules,
telephone system and other related telephone and network equipment. The
total purchase price for the furniture and equipment was $3,000. Office
lease payments for the next twelve months will be approximately $125,000.
Significant Change in Number of Employees
If we are successful in obtaining additional funding, we intend to
hire over the next twelve months six to eight software and Web content
engineers, and approximately ten to twelve additional sales, marketing and
administrative employees. Total projected personnel costs for the next
twelve months are estimated to be approximately $2,100,000, of which
approximately $1,200,000 is included above under projected research and
development costs.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities
In July 2000, the Company completed financing pursuant to which the
Company issued a short-term convertible promissory note in the aggregate
principal amount of $50,000. Interest on this note accrues at the rate of
10% per annum. The principal amount of the note plus accrued interest is
convertible at the option of the holder into shares of common stock of the
Company's common stock at a conversion price equal to 75% of the closing
sale price of the Company's common stock as reported on the OTCBB on the
date of the election. In August 2000, the Company received proceeds from
stock subscriptions of $297,500. In September 2000, the Company received
proceeds from stock subscriptions of $60,000. The Company claimed an
exemption from registration for such issuances under Section 4(2) of the
Securities Act of 1933.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit No. Exhibit Description
----------- -------------------
3.1 Articles of Incorporation of Registrant.*
3.2 Articles of Amendment to Articles of Incorporation
of Registrant.*
3.3 Bylaws of Registrant.*
10.1 Convertible Promissory Note.
27.1 Financial Data Schedule.
*Filed with Amendment No. 1 to the Form 10-SB of the Registrant on
February 28, 2000.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
VERTICA SOFTWARE, INC.
Dated: November 14, 2000
By: /s/ Hans Nehme
--------------------------------------
Hans Nehme, President and
Chief Executive Officer (and principal
financial officer)
