U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to __________________
Commission file number 0-11485
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ACCELR8 TECHNOLOGY CORPORATION
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(Exact name of small business issuer as specified in its charter)
COLORADO 84-1072256
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
303 East Seventeenth Avenue, Suite 108, Denver, Colorado 80203
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(Address of principal executive office)
(303) 863-8088
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(Issuer's telephone number)
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(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
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Number of shares outstanding of the issuer's Common Stock:
Class Outstanding at October 31, 1996
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Common Stock, no par value 21,970,000
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Accelr8 Technology Corporation
INDEX
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PART I. FINANCIAL INFORMATION Page
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Item 1. Financial Statements
Condensed Balance Sheets - As of
October 31, 1996 and July 31, 1996 1
Condensed Statements of Operations
for the three months ended October 31, 1996 and 1995 2
Condensed Statements of Cash Flows
for the three months ended October 31, 1996 and 1995 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 6
SIGNATURES 7
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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<TABLE>
<CAPTION>
Accelr8 Technology Corporation
Condensed Balance Sheets
October 31, July 31
1996 1996
ASSETS (Unaudited) (Audited)
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,666,172 $ 1,407,026
Accounts receivable 389,728 431,252
Prepaid expenses and other 155,107 49,695
Deferred tax assets 123,223 123,223
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Total current assets 2,334,230 2,011,196
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PROPERTY AND EQUIPMENT:
Computer equipment 214,614 248,620
Furniture and fixtures 11,231 11,231
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Total property and equipment 225,845 220,966
Less accumulated depreciation (156,858) (150,453)
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Net property and equipment 68,987 70,513
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SOFTWARE DEVELOPMENT COSTS:
Software development cost capitalized 952,745 906,581
Less accumulated amortization (766,260) (746,260)
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Net software development costs 186,485 160,321
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OTHER ASSETS 75,000 75,000
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Total assets $ 2,664,702 $ 2,317,030
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 148,797 $ 52,091
Incomes taxes payable 60,000 18,000
Accrued liabilities 35,739 20,316
Product development advance payable 50,000 50,000
Deferred consulting revenue 5,728 91,724
Deferred maintenance revenue 81,621 75,460
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Total current liabilities 381,885 307,591
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LONG TERM LIABILITIES:
Deferred tax liabilities 69,723 69,723
Other liability 37,500 0
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Total long-term liabilities 107,223 69,723
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SHAREHOLDERS' EQUITY
Common stock, no par value; 11,000,000 shares
authorized; 5,492,500 shares
issued and outstanding 1,970,970 1,970,970
Contributed capital 41,449 41,449
Accumulated earnings (deficit) 163,175 (72,703)
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Shareholders' equity - net 2,175,594 1,939,716
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TOTAL $ 2,664,702 $ 2,217,030
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</TABLE>
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<PAGE>
Accelr8 Technology Corporation
Condensed Statements of Operations
(Unaudited)
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Three Months Ended
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October 31 October 31
1996 1995
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Revenues:
Consulting fees $ 193,704 $ 166,477
Product license and customer support fees 265,630 116,815
Resale of software purchased 153,595 57,154
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Total Revenues 612,929 340,446
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Costs and Expenses:
Cost of services 79,474 63,887
Cost of software purchased for resale 44,160 23,350
General and administrative 115,391 69,504
Marketing and advertising 88,485 76,170
Research and development 9,311 7,782
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Total Expenses 336,821 240,693
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Income from operations 276,108 99,753
Interest income 19,770 7,153
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Income before income taxes 295,878 106,906
Income tax provision 60,000 0
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Net Income $ 235,878 $ 106,906
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Weight average shares outstanding 7,148,673 6,591,000
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Net Income per share $ 0.03 $ 0.02
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<PAGE>
Accelr8 Technology Corporation
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
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Three Months Ended
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October 31 October 31
1996 1995
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 235,878 $ 106,906
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 26,405 30,715
Net change in assets and liabilities:
Accounts receivable 41,524 70,082
Prepaid expenses and other (105,412) 1,170
Accounts payable 96,706 2,669
Income taxes payable 42,000 0
Accrued liabilities 52,923 1,676
Deferred consulting revenue (85,996) 8,350
Deferred maintenance revenue 6,161 (8,083)
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Net cash provided by operating activities $ 310,189 $ 213,485
CASH FLOW FROM INVESTING ACTIVITIES:
Software development costs (46,164) (21,430)
Purchase of computer equipment (4,879) (1,471)
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Net cash used in investing activities (51,043) (22,901)
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Net increase in cash and cash equivalents 259,146 190,584
Cash and equivalents, beginning of period 1,407,026 437,425
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Cash and equivalents, end of period $ 1,666,172 $ 628,009
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</TABLE>
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<PAGE>
Accelr8 Technology Corporation
Notes to Condensed Financial Statement
For the Three Months Ended October 31, 1996 and 1995
Note 1. Accounting Policies
The financial information provided herein was prepared from the books and
records of the Company without audit. The information furnished reflects all
normal recurring adjustments which, in the opinion of the Company, are necessary
for a fair statement of the balance sheets, statements of operations, and
statements of cash flows, as of the dates and for the periods presented. The
Notes to Financial Statements included in the Company's 1996 Annual Report on
Form 10-K should be read in conjunction with these consolidated financial
statements.
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
Note 2. Events Subsequent to Quarter End
Stock Option Plans - The Company has received shareholder approval to
decrease the number of common shares reserved for issuance from 3,900,000 to
1,900,000 under its existing stock option plan for key employees, directors and
others. This reduction was effected on November 8, 1996.
Authorized Shares and Reverse Stock Split - On November 8, 1996, the
Company received stockholder authorization to decrease the number of authorized
common shares from 55,000,000 to 11,000,000 and to effect a reverse stock split
of its common stock ranging from one-for-three to one-for-seven. The Company
effected a one-for-four reverse stock split of its common stock on November 18,
1996. The financial statements for all periods persented have been restated to
reflect retroactive application of the decrease in authorized Common Stock and
the one-for-four reverse Stock Split.On November 22, 1996, the Company closed a
public offering of 1,000,000 shares of its Common Stock. The 1,000,000 shares
were sold at an offering price of $7.00 per share, and the Company realized net
offering proceeds of $6,360,000 after deducting certain offering expenses. On
December 4, 1996, the Company's underwriter exercised its over-allotment option
and the Company realized $46,800 from the exercise of options and warrants to
acquire 150,000 shares of the Company's Common Stock by employees of the
Company. The Company did not receive any proceeds from the exercise of the
over-allotment option by the Underwriter. Following the reverse stock split, the
public offering, and the exercise of the options and warrants, the Company had
6,642,507 shares of its Common Stock issued and outstanding.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Result
of Operations
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Changes in Result of Operations: October 31, 1996 compared to October 31, 1995
Total revenues for the first quarter ended October 31, 1996 were $612,929,
an increase of $272,483 or 80.0%, as compared to the first quarter ended October
31, 1995. Consulting fees for the first quarter ended October 31, 1996, were
$193,704 an increase of $27,227 or 16.4% as compared to the first quarter ended
October 31, 1995, and represented 31.6% of total revenues. Product license and
customer support fees for the first quarter ended October 31, 1996, were
$265,630 an increase of $148,815 or 127.4%, as compared to the first quarter
ended October 31, 1995. Revenues from the resale of purchased software for the
first quarter ended October 31, 1996, were $153,595, an increase of $96,441 or
168.7%, as compared to the first quarter ended October 31, 1995. Management
believes that these increased revenues in all product lines reflects the markets
increased acceptance of the Company' products and services.
During the first quarter ended October 31, 1996, sales to the Company's two
largest customers were $87,868 and $75,000, representing 14.3% and 12.2% of the
Company's revenues respectively. In comparison, sales to a single customer
represented 31.0% of total revenues for the first quarter ended October 31,
1995. The loss of a major customer could have a significant impact on the
Company's financial performance in any given year.
Cost of services for the first quarter ended October 31, 1996, was $79,474,
an increase of $15,587 or 24.4%, as compared to the first quarter ended October
31, 1995. Cost of services as a percentage of revenues from both consulting fees
and product license and customer support fees decreased from 22.6% for the first
quarter ended October 31, 1995 to 17.3% for the first quarter ended October 31,
1996. This decrease occurred principally because of revenues increasing 80.0%
while cost of services increased by only 24.4%.
Cost of software purchased for resale for the first quarter ended October
31, 1996, was $44,160 an increase of $20,810 or 89.1%, as compared to the first
quarter ended October 31, 1995. This increase was directly related to the
increased resale of purchased software.
General and administrative expenses for the first quarter ended October 31,
1996, were $115,391, an increase of $45,887 or 66%, as compared to the first
quarter ended October 31, 1995. This increase was principally due to increased
employee costs.
Marketing and advertising expenses for the first quarter ended October 31,
1996, were $88,485, an increase of $12,315 or 16.2%, as compared to the first
quarter ended October 31, 1995. This increase was principally due to increased
marketing expenses incurred to support the Company's sales.
Research and development expenses for the quarter ended October 31, 1996,
were $9,311, an increase of $1,529 or 19.6%, as compared to the first quarter
ended October 31, 1995. This increase resulted from increased activities to
develop new products.
Interest income for the quarter ended October 31, 1996, was $19,770, an
increase of 176.4%, as compared to the first quarter ended October 31, 1995.
This increase resulted from increased cash flows from operations, that could be
invested in interest bearing instruments.
As a result of these factors, income before income taxes for the quarter
ended October 31, 1996, was $295,878, an increase of $188,972 or 176.8%, as
compared to the first quarter ended October 31, 1995. Net income for the first
quarter ended October 31, 1996, was $235,878, an increase of $128,972, or
120.6%, as compared to the first quarter ended October 31, 1995.
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<PAGE>
Capital Resources and Liquidity
At quarter end (October 31, 1996) as compared to the Company's most recent
fiscal year end (July 31, 1996), current assets increased 16.1% from $2,011,196
to $2,334,230 and the Company's liquidity as measured by available cash,
increased by 18.4% from $1,407,026 to $1,666,172. During the same period,
shareholders' equity increased 12.2% from $1,939,716 to $2,175,594 as a result
of increased net income for the quarter ended October 31, 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: There are no exhibits for for the three months ended October 31,
1996.
b) Reports on Form 8-K: There were no reports on Form 8-K filed for the three
months ended October 31, 1996.
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<PAGE>
SIGNATURES
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.
Date: December 13, 1996
ACCELR8 TECHNOLOGY CORPORATION
/s/ Harry J. Fleury
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Harry J. Fleury, President
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 1,666,172
<SECURITIES> 0
<RECEIVABLES> 389,728
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,334,230
<PP&E> 68,987
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,664,702
<CURRENT-LIABILITIES> 381,885
<BONDS> 107,223
0
0
<COMMON> 1,970,970
<OTHER-SE> 204,624
<TOTAL-LIABILITY-AND-EQUITY> 2,664,702
<SALES> 612,929
<TOTAL-REVENUES> 612,929
<CGS> 336,821
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 336,821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 295,878
<INCOME-TAX> 60,000
<INCOME-CONTINUING> 276,108
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235,878
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
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