<PAGE>
1
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 June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from ________ to ________
Commission File Number 0-14793
TEKNOWLEDGE CORPORATION
(Exact Name of small business issuer as specified in its charter)
Delaware 94-2760916
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1810 Embarcadero Road, Palo Alto, California 94303
(Address of principal executive offices)
(415) 424-0500
Issuer's telephone number
State 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at July 15, 1996
---------------------------- -----------------------------
Common Stock, $.01 par value 26,035,520 Shares
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2
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1 Unaudited Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 ............................................ 3
Condensed Consolidated Statements of Operations for the
three months and six months ended June 30, 1996 and 1995 ......... 5
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 .......................... 6
Notes to Unaudited Consolidated Financial Statements ............. 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations .................... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ................................................ 11
Item 4. Submission of Matters to a Vote of Security Holders............... 11
Item 6. Exhibits and Reports on Form 8-K ................................. 12
Signatures ....................................................... 15
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3
PART I. FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1. FINANCIAL STATEMENTS
TEKNOWLEDGE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1996 1995
-------------- ---------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,490,297 $ 962,724
-------------- ---------------
Receivables:
Customer - billed, net of allowance of $10,000 876,704 1,303,581
Customer - unbilled 114,950 17,361
Others 30,650 34,436
-------------- ---------------
Total receivables 1,022,304 1,355,378
-------------- ---------------
Deposits and prepaid expenses 85,209 56,704
-------------- ---------------
Total current assets 2,597,810 2,374,806
-------------- ---------------
Capitalized software, net of accumulated
amortization of $1,093,353
($1,063,733 - December 31, 1995) 198,865 180,974
-------------- ---------------
Equipment and improvements, at cost
Computer and other equipment 2,271,308 2,193,790
Leasehold improvements 755,530 744,315
-------------- ---------------
3,026,838 2,938,105
Less accumulated depreciation and amortization (2,774,055) (2,694,888)
-------------- ---------------
Net equipment and improvements 252,783 243,217
-------------- ---------------
Total assets $ 3,049,458 $ 2,798,997
============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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4
TEKNOWLEDGE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (CONT'D)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1996 1995
-------------- ---------------
Current liabilities:
<S> <C> <C>
Accounts payable $ 176,371 $ 181,507
-------------- ---------------
Accrued liabilities:
Payroll and bonuses 320,642 435,667
Provision for contract charges 108,376 100,567
Provision for discontinued operations 145,413 135,615
Technology purchase 50,000 100,000
Other 331,229 344,414
-------------- ---------------
Total accrued liabilities 955,660 1,116,263
-------------- ---------------
Total current liabilities 1,132,031 1,297,770
-------------- ---------------
Long-term liabilities:
Provision for discontinued operations 54,432 88,704
Restructuring obligations 36,610 36,610
-------------- ---------------
Total long-term liabilities 91,042 125,314
-------------- ---------------
Total liabilities 1,223,073 1,423,084
-------------- ---------------
Commitments and contingencies (Note 3)
Stockholders' equity:
Preferred stock, $.01 par value, shares authorized
2,500,000, Series A, Convertible, none issued - -
Common stock, $.01 par value, shares authorized
50,000,000, issued 26,059,520 and 25,923,674
at June 30, 1996 and December 31, 1995, respectively 260,591 259,232
Additional paid-in capital (after (i) reduction of
$57,962,379 for elimination of accumulated deficit
at December 31, 1992, as a result of quasi-reorganization;
and (ii) increase of $18,306, $105,706 and $1,001,310 in
1995, 1994 and 1993, respectively as a result of reversal
of portions of 1992 loss provisions) 1,972,993 1,968,719
Deferred compensation - (120,173)
Accumulated deficit since January 1, 1993
(following quasi-reorganization) (404,199) (728,865)
-------------- ---------------
1,829,385 1,378,913
Treasury stock, at cost, 24,000 shares (3,000) (3,000)
-------------- ---------------
Total stockholders' equity 1,826,385 1,375,913
-------------- ---------------
Total liabilities and stockholders' equity $ 3,049,458 $ 2,798,997
============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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5
TEKNOWLEDGE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 1,662,054 $ 1,180,627 $ 3,332,833 $ 2,497,653
--------------- -------------- -------------- --------------
Costs and expenses:
Cost of revenues 1,014,735 686,530 1,987,721 1,407,050
Selling and marketing 32,040 9,739 58,875 29,390
General and administrative 504,338 442,095 1,058,765 930,039
--------------- -------------- -------------- --------------
Total costs and expenses 1,551,113 1,138,364 3,105,361 2,366,479
--------------- -------------- -------------- --------------
Operating income 110,941 42,263 227,472 131,174
Interest income and expense 11,223 11,002 22,393 15,909
Other income, net 33,180 47,340 80,050 102,804
--------------- -------------- -------------- --------------
Income before tax 155,344 100,605 329,915 249,887
Provision for income tax 2,625 3,200 5,250 3,200
--------------- -------------- -------------- --------------
Net income $ 152,719 $ 97,405 $ 324,665 $ 246,687
=============== ============== ============== ==============
Net income per share $ 0.01 $ 0.00 $ 0.01 $ 0.01
=============== ============== ============== ==============
Weighted average common
and common equivalent
shares outstanding 30,505,030 30,142,882 30,284,171 29,885,386
=============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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6
TEKNOWLEDGE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 324,665 $ 246,687
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of capitalized software 29,620 101,108
Depreciation 79,167 66,759
Stock compensation expense 120,173 120,172
Gain on sale of fixed assets (100) (4,559)
Changes in assets and liabilities:
Receivables 333,074 183,903
Deposits and prepaid expenses (28,505) 25,259
Accounts payable (5,135) (50,811)
Accrued liabilities (191,276) (77,180)
------------- ---------------
Net cash provided by operating activities 661,683 611,338
------------- ---------------
Cash flows from investing activities:
Capitalization of software costs (47,511) (21,628)
Purchase of fixed assets (88,733) (69,355)
Proceeds from sale of fixed assets 100 4,559
------------- ---------------
Net cash used for investing activities (136,144) (86,424)
------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of common stock 5,633 977
Payments of capital lease obligations (3,599) (10,369)
------------- ---------------
Net cash provided by (used for) financing activities 2,034 (9,392)
------------- ---------------
Net increase in cash and cash equivalents 527,573 515,522
Cash and cash equivalents at beginning of period 962,724 809,169
------------- ---------------
Cash and cash equivalents at end of period $ 1,490,297 $ 1,324,691
============= ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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7
TEKNOWLEDGE CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
1. Interim Statements
The interim statements are unaudited and should be read in
conjunction with the statements and notes thereto contained in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995. In the opinion of management, these interim
statements include all adjustments, consisting of normal, recurring
adjustments, which are necessary for a fair presentation of results for
such periods. The results of operations for any interim period are not
necessarily indicative of results which may be achieved for the entire
fiscal year ending December 31, 1996.
2. Net Income Per Share
The number of shares of common stock used in the computation of
per share earnings for the three months and six months ended June 30,
1996 and 1995, respectively, is the weighted average number of shares of
common and common shares equivalent outstanding during the applicable
periods. Common stock options which are common stock equivalents are
included for the three months and six months ended June 30, 1996 and
1995 because they are dilutive. The difference between primary and fully
diluted earnings per share is immaterial, therefore only primary
earnings per share is presented in the financial statements.
3. Contingencies - Patent Litigation
On December 8, 1994, a lawsuit was filed in the United States
District Court for the Northern District of California by Trilogy
Development Group, Inc. ("Trilogy") against the Company. The subject
matter of the case involves a configuration systems patent owned by the
Company (Bennett et al. U.S. Patent 4,591,983) and a sales configuration
product of Trilogy. Trilogy is seeking a judgment against Teknowledge
that it does not infringe any claim of the Bennett et al. patent, and
for actual and punitive damages and attorney fees for alleged unfair
competition under the Lanham Act and common law for misrepresenting
Teknowledge and Trilogy's products. The Company has filed counterclaims
against Trilogy for patent infringement and for unfair competition under
the Lanham Act and common law for alleged false and misleading
statements disparaging the Bennett et al. patent. The court is currently
reviewing a motion for summary judgment asserting that the Bennett et
al. patent is invalid because the invention was allegedly "on sale" more
than one year prior to the filing date of the patent. Teknowledge is
vigorously opposing this motion. A court decision on this motion is
pending.
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8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited consolidated financial statements and notes thereto.
Forward looking statements made in this section relating to recruiting
of additional employees, increase in demand for new employees, expected growth
and revenues, mix of revenues between government and commercial, competition for
expected new government contracts, and the development and announcement of
commercial products are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. All forward looking statements
involve risks and uncertainties, and actual results could differ materially from
those set forth in the forward looking statements contained herein.
Results of Operations
Revenues
Revenues for the three months and six months ended June 30, 1996 were
$1,662,054 and $3,332,833, an increase of 41% and 33% over the amount reported
in the comparable periods in 1995 of $1,180,627 and $2,497,653, respectively.
These increases in revenues result primarily from the addition of technical
employees who performed on government contracts awarded between 1994 and 1996.
The Company continues to recruit for a number of open positions on existing
contracts and anticipates an increase in demand for new employees in the latter
half of fiscal 1996 if new contracts are awarded as anticipated. Revenues from
government contracts represent 97% and 98%, respectively, of total revenues for
the three months and six months ended June 30, 1996, as compared to 92% and 94%
for the comparable periods in 1995. The Company expects the mix of revenues
between government and commercial services and products to remain about the same
in 1996; however, the Company has increased significantly its software
development program for commercial Internet software.
Profit margins for government contracts continue to be constrained by
government regulations. The Company intends to leverage the knowledge it has
gained and the technology it has developed in DARPA software research programs
into commercial projects, which have a potential for expanding into new business
areas and increasing sales and profit margins significantly. To this end, the
Company has invested resources in the development of commercial Internet
software products and is exploring other opportunities in the commercial arena.
The Company's long-term goal is to increase significantly the mix of commercial
to government revenues.
Costs and Expenses
Costs of revenues were $1,014,735 and $1,987,721 for the three months
and six months ended June 30, 1996, compared to $686,530 and $1,407,050 for the
comparable periods in 1995, respectively. Costs and expenses rose 48% and 41%
for the three months and six months ended June 30, 1996 over the comparable
periods in the previous year primarily due to the aforementioned increase in the
technical workforce. Cost of revenues as a percentage of revenues was 61% and
60%, respectively, for the three months and six months ended June 30, 1996,
compared to 58% and 56% for the three months and six months ended June 30, 1995.
Combined selling and marketing and general and administrative costs for
the three months and six months ended June 30, 1996 were $536,378 and
$1,117,640, compared to $451,834 and $959,429 for 1995. The increase was due to
the addition of two administrative staff and the cost of implementing a
shareholder Rights Agreement in January 1996. Combined selling and marketing and
general and administrative costs as a percentage of revenues was 32% and 34%,
respectively, for the three months and six months ended June 30, 1996, compared
to 38% for both comparable periods in 1995. The increase of direct cost of
revenues as a percentage of revenues discussed in the preceding paragraph and
the decrease of general and administrative costs as a percentage of revenues
reflects the Company's ability to maintain a relatively lean general and
administrative base as it grows its technical staff.
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9
The Company recorded no material charges for research and development
("R&D") in either the three months or six months ended June 30, 1996 or the
comparable periods in 1995. Most of its resources for research and development
were diverted to the litigation matter as discussed in Part II Item 1. Legal
Proceedings. On the other hand, the Company's extensive DARPA-sponsored contract
work on distributed intelligent systems and network associates constitutes a
significant amount of "sponsored R&D." The company retains all patent and
commercial rights to the technology it develops on these contracts.
The Company has capitalized software development costs from the point at
which technological feasibility was determined through general availability of
the product. For the six months ended June 30, 1996, capitalized software
development costs were $47,511 as compared to $21,628 in the same period last
year. The increase reflects an escalating effort by the Company towards building
software for the commercial marketplace.
Interest income was $11,223 and $22,393, respectively, for the three
months and six months ended June 30, 1996 and $11,002 and $15,909 for the
comparable periods in 1995. Other income was $33,180 and $80,050, respectively,
for the three months and six months ended June 30, 1996 and $47,340 and $102,804
for the comparable periods in 1995. The majority of this other income was from
the previous sale of a product line. The product line was sold in exchange for a
note and a royalty agreement in 1990. Because of the uncertainty surrounding the
eventual collection of the note, the Company has elected to recognize the
proceeds as other income only when cash is received.
Net income for the three months and six months ended June 30, 1996 was
$152,719 and $324,665, or $.01 and $.01 per share, compared to $97,405 and
$246,687, or $.00 and $.01 per share, for the three months and six months ended
June 30, 1995. Net income was 9% and 10% as a percentage of revenues for the
three months and six months ended June 30, 1996 and 8% and 10% for the
comparable periods in 1995, respectively. The Company anticipates some decrease
in net income as a percentage of revenues in the second half of the year because
of cyclical fluctuations in the amount of billable hours. Historically,
employees use most of their earned vacation time during the summer and late
fall. This activity lowers the amount of eligible hours billable to the
government and results in a corresponding decrease in revenues during the
period.
Certain Factors That May Affect Future Results of Operations and/or Stock Price
Currently, agencies of the U.S. Government sponsor most of the Company's
revenues. In recent years, the portion of the Company's revenues attributed to
government business has risen from 95% in fiscal 1995 to 98% for the six months
ended June 30, 1996. Government contracts are potentially more risky than
commercial contracts because they are subject to agency funding limitations,
congressional appropriation, and the political agenda of the current
administration in Washington, D.C.
The typical cost-type government contract performed by the Company has a
negotiated fee limit which inhibits the Company from improving profit margins on
the government contract part of the business beyond what is permitted in
government regulations. Additionally, almost all the Company's contracts contain
termination clauses which permit contract termination upon the Company's default
or at the contracting party's discretion. The Company has not experienced any
material cancellations to date; however there can be no assurance that such
cancellations will not occur in the future.
Generally, the Company's operating results may be affected by a wide
variety of factors, including successful commercialization of the Company's
products, competition from larger companies, staffing and recruiting
competition, general economic conditions, and the possibility of a favorable or
unfavorable outcome in pending litigations (see Part II Item 1. Legal
Proceedings.)
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10
Bookings and Backlog
At June 30, 1996, the expected order backlog was approximately $9
million, which consisted of (i) new orders for which work has not yet begun, and
(ii) revenue remaining to be recognized on work in progress. 100% of the backlog
was from government customers. Approximately 26% of the backlog consists of
government-sponsored programs that are awarded but not yet authorized for
funding. The government normally funds a contract in incremental amounts for the
tasks that are currently in production. The Company's order backlog at December
31, 1995 was approximately $10.5 million.
Liquidity and Capital Resources
As of June 30, 1996, unused sources of liquidity of the Company
consisted of $1,490,297 of cash and cash equivalents, an increase of $527,573
from December 31, 1995. Included in the increase was $661,683 provided by
operating activities, $136,144 used for investing activities, and $2,034
provided by financing activities. Net income for the six months ended June 30,
1996 of $324,665, after adjustments for non-cash items such as depreciation,
amortization and stock compensation expense, provided $553,625 in cash to the
Company. These proceeds coupled with $333,074 from the realization of accounts
receivable were used to pay off a net of $191,276 in accrued liabilities,
finance $47,511 in software development, and purchase $88,733 in machinery and
equipment.
The Company believes that the present level of cash and cash equivalents
is adequate to service the liquidity needs of the Company in 1996. The Company
relies principally on the collection of receivables to generate internal cash
reserves. The government is capable of temporarily disrupting the flow of cash
to the Company at any time, usually as a result of the annual budget process. In
addition, a judgment adverse to the Company in the legal proceedings described
in Part II Item 1 could have a negative material impact on the Company's
short-term liquidity if the Company is subject to penalties or other
assessments.
The Company, however, does not consider this a likely outcome.
The Company has an unsecured line of credit from a financial institution
in the amount of $1,000,000. The Company may borrow up to a maximum of 60% of
the receivable base or $1,000,000, whichever is lower. The line is subject to
certain covenants and maintenance requirements, which have been fulfilled. The
line expires in May 1997 but is expected to be renewed. The Company had not
utilized the credit line through June 30, 1996.
Management believes the Company will be able to operate in 1996 without
additional financing, whether in the form of borrowings or equity capital.
Successful operations in the long term will require growth in revenues and
profitability which may require additional financing.
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11
PART II. OTHER INFORMATION
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Item 1. LEGAL PROCEEDINGS
On or about August 2, 1994, Daniel R. Robusto, a former
executive of the Company, filed a suit in the Court of Common Pleas
of Allegheny County, Pennsylvania, pursuant to Pennsylvania Wage
Payment and Collection Law, alleging breach by the Company of an
employment settlement agreement and the nonpayment of severance wages
of $107,307 plus liquidated damages of $26,827, attorney fees and
other court costs. The Company has responded to the initial complaint
and asserted defenses and certain counterclaims against Mr. Robusto
based upon his actions while in office. The litigation process is
continuing.
On December 8, 1994, a lawsuit was filed in the United States
District Court for the Northern District of California by Trilogy
Development Group, Inc. ("Trilogy") against the Company. The subject
matter of the case involves a configuration systems patent owned by
the Company (Bennett et al. U.S. Patent 4,591,983) and a sales
configuration product of Trilogy. Trilogy is seeking a judgment
against Teknowledge that it does not infringe any claim of the
Bennett et al. patent, and for actual and punitive damages and
attorney fees for alleged unfair competition under the Lanham Act and
common law for misrepresenting Teknowledge and Trilogy's products.
The Company has filed counterclaims against Trilogy for patent
infringement and for unfair competition under the Lanham Act and
common law for alleged false and misleading statements disparaging
the Bennett et al. patent. The court is currently reviewing a motion
for summary judgment asserting that the Bennett et al. patent is
invalid because the invention was allegedly "on sale" more than one
year prior to the filing date of the patent. Teknowledge is
vigorously opposing the motion. A court decision on this motion is
pending.
On September 19, 1995, Trilogy filed a suit in the Delaware
Superior Court alleging breach of contract by the Company in relation
to $125,000 in deferred payments under a 1987 agreement between BMW
Vision Associates Limited Partnership ("BMW") and American Cimflex
Corporation ("ACC"), a predecessor to the Company. The agreement
provided for the sale of technology by BMW to ACC for a consideration
including certain deferred payments. In July 1995, Trilogy acquired
by assignment for $276,786 BMW's right to the remaining deferred
payments and then demanded payment of $525,000 from the Company. In
September 1995, the Company paid Trilogy $400,000 in full
satisfaction of the $525,000, disclaiming the obligation to pay the
balance of $125,000 which the Company believes to be barred by
statute of limitation. Trilogy filed a suit seeking the $125,000,
subsequent deferred payments, interest and attorney fees. The Company
has responded to the initial complaint and the litigation is
proceeding. The Court is currently reviewing Teknowledge's request
for partial summary judgment on the issue of what state law should be
applied to Teknowledge's accord and satisfaction defense.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was held on May 22, 1996.
A proposal to elect two directors of the Company to serve for
a three-year term was approved by stockholders. This proposal
received the following votes:
For Withheld Abstain
Neil A. Jacobstein 17,383,888 51,764 -
William G. Roth 17,389,727 45,925 -
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12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONT'D)
The following directors continue:
Frederick Hayes-Roth
General Robert T. Marsh
James C. Workman
In addition, stockholders ratified selection of Arthur
Andersen LLP as the Company's independent public accountants for the
fiscal year ending December 31, 1996. This proposal received the
following votes:
For Against Abstain
Arthur Andersen 17,341,708 8,944 85,000
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Set forth below is a list of all exhibits filed herewith or
incorporated by reference as part of this Quarterly Report on Form 10-QSB.
Exhibit
No. Description
--- -----------
3.1 Amended and Restated Certificate of Incorporation of
Teknowledge Corporation (6)
3.2 Amended and Restated Bylaws of Teknowledge Corporation (10)
3.3 Certificate of Designation, Preferences and Rights of the
Terms of the Series A Preferred Stock (8)
4.1 Rights Agreement dated January 29, 1996 between the Company
and Registrar and Transfer Company as Rights Agent (8)
10.1 Teknowledge Corporation 1989 Stock Option Plan (9)
10.2 Development Agreement Amendment, dated December 22, 1987,
between American Cimflex Corporation and Ford Motor Company (1)
10.3 License Agreement, dated February 11, 1987, between American
Cimflex Corporation and BMW Technologies, Inc. (1)
10.4 Technology Sale and Stock Purchase Agreement, dated February
11, 1987, between American Cimflex Corporation and BMW Vision Associates
Limited Partnership (1)
10.5 Stock Option Agreement, effective as of September 1, 1988,
between American Cimflex Corporation and Romesh T. Wadhwani (1)
10.6 Amendment to Stock Option Agreement, dated November 30, 1988,
between American Cimflex Corporation and Romesh T. Wadhwani (1)
10.7 Lease, dated March 30, 1989, between American Automated
Factories, Inc. and Third Copley-Franklin Trust (2)
<PAGE>
13
Exhibit
No. Description
--- -----------
10.8 Purchase and Sales Agreement, dated September 13, 1990,
between Cimflex Teknowledge Corporation, PaineWebber R&D Partners L.P. and
Applied Diagnostics, Inc. (3)
10.9 Employment Agreement, dated as of December 13, 1990, between
Cimflex Teknowledge Corporation and Daniel R. Robusto (3)
10.10 Asset Purchase Agreement, dated December 14, 1990, between
American Automated Factories, Inc. and Control Automation, Inc. (3)
10.11 Lease, dated June 10, 1991, between Cimflex Teknowledge
Corporation and Pittsburgh Great Southern Company (3)
10.12 Amended Employment Agreement, dated as of January 21, 1992,
between Cimflex Teknowledge Corporation and Daniel R. Robusto (3)
10.13 Settlement Agreement, General Release, and Waiver of Claims,
dated November 21, 1992, between Daniel R. Robusto and Cimflex Teknowledge
Corporation (4)
10.14 Settlement Agreement, dated May 21, 1993, between Cimflex
Teknowledge Corporation and Third Copley-Franklin Trust (5)
10.15 Settlement Agreement, dated September 1, 1993, between
Cimflex Teknowledge Corporation and Pittsburgh Great Southern Company (5)
10.16 Settlement Agreement, dated December 15, 1993, between
Cimflex Teknowledge Corporation and Heitman Michigan Trustee I Corporation
(5)
10.17 Change of Control Agreement, dated November 21, 1994,
between Teknowledge Corporation and Frederick Hayes-Roth and Neil Jacobstein (7)
10.18 Executive Incentive Compensation Plan, dated January 16,
1996, between Teknowledge Corporation and Frederick Hayes- Roth and Neil
Jacobstein (9)
27 Financial Data Schedule
References
----------
(1) Filed as an Exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989.
(2) Filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990.
(3) Filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991.
(4) Filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992.
(5) Filed as an Exhibit to the Company's Annual Report on Form
10-KSB, as amended, for the fiscal year ended December 31, 1993.
<PAGE>
14
(6) Filed as an Exhibit to the Company's Quarterly Report on Form
10-QSB for the quarter ended June 30, 1994.
(7) Filed as an Exhibit to the Company's Annual Report on Form
10-KSB, for the fiscal year ended December 31, 1994.
(8) Filed as an Exhibit to the Company's Current Report on Form 8-K
dated February 12, 1996, related to the adoption of a 12(g) Shareholder Rights
Agreement dated January 29, 1996.
(9) Filed as an Exhibit to the Company's Annual Report on Form
10-KSB, for the fiscal year ended December 31, 1995.
(10) Filed as an Exhibit to the Company's Quarterly Report on Form
10-QSB for the quarter ended March 31, 1996.
b) The registrant did not file a report on Form 8-K during the quarter
ended June 30, 1996.
<PAGE>
15
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TEKNOWLEDGE CORPORATION
-----------------------
(Registrant)
/s/ Frederick Hayes-Roth Chairman of the Board July 16, 1996
- ------------------------ of Directors and Chief
Frederick Hayes-Roth Executive Officer
(Principal Executive
Officer)
/s/ Neil A. Jacobstein President and Chief July 16, 1996
- ------------------------ Operating Officer
Neil A. Jacobstein
/s/ Dennis A. Bugbee Director of Finance, July 16, 1996
- ------------------------ Treasurer and Secretary
Dennis A. Bugbee (Principal Financial and
Accounting Officer)
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<S> <C>
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<PERIOD-END> JUN-30-1996
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0
0
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