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 January 31, 1997
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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 January 31, 1997
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Common Stock, no par value 6,642,500
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Accelr8 Technology Corporation
INDEX
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - as of
January 31, 1997 and July 31, 1996 1
Condensed Statements of Operations
for the three months and six months ended
January 31, 1997 and 1996 2
Condensed Statements of Cash Flows
for the six months ended January 31, 1997
and 1996 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
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<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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Accelr8 Technology Corporation
Condensed Balance Sheets
January 31, July 31,
1997 1996
ASSETS (Unaudited) (Audited)
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,980,468 $ 1,407,026
Accounts receivable 332,094 431,252
Prepaid expenses and other 117,850 49,695
Deferred tax assets 141,223 123,223
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Total current assets 8,571,635 2,011,196
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PROPERTY AND EQUIPMENT:
Computer equipment 231,614 209,735
Furniture and fixtures 13,679 11,231
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Total property and equipment 245,293 220,966
Less accumulated depreciation (164,293) (150,453)
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Net property and equipment 81,000 70,513
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SOFTWARE DEVELOPMENT COSTS:
Software development costs 1,001,158 906,581
Less accumulated amortization (787,167) (746,260)
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Net software development costs 213,991 160,321
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OTHER ASSETS 75,000 75,000
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TOTAL $ 8,941,626 $ 2,317,030
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 113,843 $ 52,091
Incomes taxes payable 0 18,000
Accrued liabilities 47,290 20,316
Product development advance payable 50,000 50,000
Deferred consulting revenue 43,082 91,724
Deferred maintenance revenue 82,681 75,460
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Total current liabilities 336,896 307,591
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LONG TERM LIABILITIES:
Deferred tax liabilities 69,723 69,723
Other liability 75,000 0
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Total long-term liabilities 144,723 69,723
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SHAREHOLDERS' EQUITY
Common stock, no par value; 11,000,000 shares authorized;
6,642,500 and 5,492,500 shares issued and outstanding
as of January 31, 1997 and July 31, 1996, respectively 8,205,677 1,970,970
Contributed capital 41,449 41,449
Retained earnings (accumulated deficit) 212,881 (72,703)
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Shareholders' equity - net 8,460,007 1,939,716
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TOTAL $ 8,941,626 $ 2,317,030
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Accelr8 Technology Corporation
Condensed Statements of Operations
(Unaudited)
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Three Months Ended Six Months Ended
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January 31, January 31, January 31, January 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenues:
Consulting fees $ 84,899 $ 232,980 $ 278,602 $ 399,458
Product license and customer support fees 96,948 76,341 362,578 193,156
Resale of software purchased 77,041 61,707 230,636 118,861
----------- ----------- ----------- -----------
Total Revenues 258,888 371,028 871,816 711,475
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of services 98,462 66,170 177,936 130,057
Cost of software purchased for resale 25,172 19,106 69,332 42,456
General and administrative 110,180 54,827 225,570 124,332
Marketing and advertising 103,174 72,963 191,658 149,133
Research and development 11,218 7,487 20,529 15,269
----------- ----------- ----------- -----------
Total Expenses 348,206 220,553 685,025 461,247
----------- ----------- ----------- -----------
Income from operations (89,318) 150,475 186,791 250,228
Interest income 79,024 9,225 98,794 16,378
----------- ----------- ----------- -----------
Income (loss) before income taxes (10,294) 159,700 285,585 266,606
Income tax (provision) benefit 60,000 0 0 0
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Net Income $ 49,706 $ 159,700 $ 285,585 $ 266,606
=========== =========== =========== ===========
Weighted average shares outstanding 7,944,797 6,591,000 7,546,735 6,591,000
=========== =========== =========== ===========
Net income per share $ .01 $ .02 $ .04 $ .04
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<CAPTION>
Accelr8 Technology Corporation
Condensed Statements of Cash Flows
(Unaudited)
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Six Months Ended
January 31, January 31,
1997 1996
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 285,585 $ 266,606
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 54,746 56,410
Net change in assets and liabilities:
Accounts receivable 99,158 195,628
Prepaid expenses and other (86,155) 1,170
Accounts payable 61,752 (21,049)
Income taxes payable (18,000) 0
Accrued liabilities 101,974 0
Deferred consulting revenue (48,642) 0
Deferred maintenance revenue 7,221 (12,876)
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Net cash provided by operating activities 457,639 485,889
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CASH FLOW FROM INVESTING ACTIVITIES:
Software development costs (94,577) (40,603)
Purchase of computer equipment (21,879) (1,431)
Purchase of office furniture and equipment (2,448) 0
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Net cash used in investing activities (118,904) (42,034)
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CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds provided from sale of common stock 6,234,707 0
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Net increase (decrease) in cash and cash equivalents 6,573,442 443,855
Cash and equivalents, beginning of year 1,407,026 437,425
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Cash and equivalents, ending of year $ 7,980,468 $ 881,280
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Accelr8 Technology Corporation
Notes to Condensed Financial Statements
For the six months ended January 31, 1997 and 1996
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 presentation 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 1996 amounts have been reclassified to conform to the 1997
presentation.
Note 2. Shareholders' Equity
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. On November 18, 1996, the Company
effected a one-for-four reverse stock split of its common stock. The financial
statements for all periods presented have been restated to reflect retroactive
application of the decrease in authorized common shares 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 $6,236,000 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
6,642,500 shares of its common stock issued and outstanding.
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Item 2. Management's Discussion and Analysis of Financial Condition and Result
of Operations
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Changes in Results of Operations: Six months ended January 31, 1997 compared to
Six months ended January 31, 1996
Total revenues for the six months ended January 31, 1997, were $871,816 an
increase of $160,341 or 22.5%, as compared to the six months ended January 31,
1996. Consulting fees for the six months ended January 31, 1997, were $278,602 a
decrease of $120,856 or 30.3% as compared to the six months ended January 31,
1996, and represented 32.0% of total revenues. Product license and customer
support fees for the six months ended January 31, 1997, were $362,578 an
increase of $169,422 or 87.7%, as compared to the six months ended January 31,
1996. Revenues from the resale of purchased software for the six months ended
January 31, 1997, were $230,636, an increase of $111,775 or 94.0%, as compared
to the six months ended January 31, 1996. The decrease in consulting fees is the
result of the Company's emphasis on development of software tools for the Year
2000 solution. Both the technical and marketing areas have spent significant
manhours and expense toward this end. A contract to conduct a complete Year 2000
Impact Analysis was awarded to the Company by an insurance company. The Company
is currently performing "pilot studies" for Year 2000 analysis for two New York
City banks which may result in significant future revenue. Management is hopeful
that significant license revenue from its Navig8 Year 2000 tool set will be
realized from hardware vendors and system integrators beginning in the next
quarter; however, there can be no assurance that this objective will be
achieved. Management believes that increased revenues in the other product lines
reflects the markets continued acceptance of the Company's products and
services.
During the six months ended January 31, 1997, sales to the Company's two
largest customers were $91,550 and $87,868 representing 10.5% and 10.1%
respectively of the Company's revenues. In comparison, sales to the Company's
two largest customers were $190,638 and $128,074, representing 26.7% and 18.0%
of total revenues for the six months ended January 31, 1996. 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 six months ended January 31, 1997, was $177,936,
an increase of $47,879 or 36.8%, as compared to the six months ended January 31,
1996. Cost of services as a percentage of revenues from both consulting fees and
product license and customer support fees increased from 21.94% for the six
months ended January 31, 1996, to 27.75% for the six months ended January 31,
1997. This increase resulted from increased employee costs. Three additional
individuals were employed during the current six month period to market and
support the Year 2000 software and prepare for accommodating the increased sales
anticipated in the next quarter.
Cost of software purchased for resale for the six months ended January 31,
1997, was $69,332 an increase of $26,870 or 63.3%, as compared to the six months
ended January 31, 1996. This increase was directly related to the increased
resale of purchased software.
General and administrative expenses for the six months ended January 31,
1997, were $225,570, an increase of $101,238 or 81.4%, as compared to the six
months ended January 31, 1996. This increase was principally due to increased
employee costs.
Marketing and advertising expenses for the six months ended January 31,
1997, were $191,658, an increase of $42,525 or 28.5%, as compared to the six
months ended January 31, 1996. This increase was principally due to increased
employee costs, attendance at several major Year 2000 trade shows, production of
marketing materials, and direct mailing costs.
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Research and development expenses for the six months ended January 31,
1997, were $20,529 an increase of $5,260 or 34.4%, as compared to the six months
ended January 31, 1996. This increase resulted from increased activities to
develop new products.
Interest income for the six months ended January 31, 1997, was $98,794, an
increase of 503.2%, as compared to the six months ended January 31, 1996. This
increase resulted from an investment of the net proceeds of the Company's public
offering that closed on November 22, 1996, in interest bearing instruments.
As a result of these factors, net income for the six months ended January
31, 1997, was $285,585, an increase of $18,979 or 7.1%, as compared to the six
months ended January 31, 1996.
Capital Resources and Liquidity
At January 31, 1997 as compared to at July 31, 1996, the Company's current
assets increased 326.20% from $2,011,196 to $8,571,636 and the Company's
liquidity as measured by cash and cash equivalents, increased by 467.19% from
$1,407,026 to $7,980,468. During the same period, shareholders' equity increased
336.15% from $1,939,716 to $8,460,007 primarily as a result of the completion of
the Company's public offering.
Changes in Results of Operations: Three months ended January 31, 1997 compared
to January 31, 1996
Total revenues for the three months ended January 31, 1997 were $258,888, a
decrease of $112,140 or 30.2%, as compared to the three months ended January 31,
1996. Consulting fees for the three months ended January 31, 1997, were $84,899,
a decrease of $148,081 or 63.6% as compared to the three months ended January
31, 1996, and represented 32.8% of total revenues. Product license and customer
support fees for the three months ended January 31, 1997, were $96,948 an
increase of $20,607 or 27%, as compared to the three months ended January 31,
1996. Revenues from the resale of purchased software for the three months ended
January 31, 1997, were $77,041, an increase of $15,334 or 24.8%, as compared to
the three months ended January 31, 1996. The decrease in consulting fees is the
result of the Company's emphasis on development of software tools for the Year
2000 solution. Both the technical and marketing areas have spent significant
manhours and expense toward this end. A contract to conduct a complete Year 2000
Impact Analysis was awarded to the Company by an insurance company. The Company
is currently performing "pilot studies" for Year 2000 analysis for two New York
City banks which may result in significant future revenue. Management is hopeful
that significant license revenue from its Navig8 Year 2000 tool set will be
realized from hardware vendors and system integrators beginning in the next
quarter; however, there can be no assurance that this objective will be
achieved. Management believes that increased revenues in the other product lines
reflects the markets continued acceptance of the Company's products and
services.
During the three months ended January 31, 1997, sales to the Company's
largest customer was $42,800, representing 16.5% of the Company's revenues
respectively. In comparison, sales to a single customer represented 27.0% of
total revenues for the three months ended January 31, 1996. 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 three months ended January 31, 1997, was $98,462
an increase of $32,292 or 48.8%, as compared to the three months ended January
31, 1996. Cost of services as a percentage of revenues from both consulting fees
and product license and customer support fees increased from 21.39% for the
three months ended January 31, 1996 to 54.145% for the three months ended
January 31, 1997. This increase resulted from increased employee costs. Three
additional individuals were employed during the current six month period to
market and support the Year 2000 software and prepare for accommodating the
increased sales anticipated in the next quarter.
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Cost of software purchased for resale for the three months ended January
31, 1997, was $25,172 an increase of $6,066 or 31.7%, as compared to the three
months ended January 31, 1996. This increase was directly related to the
increased resale of purchased software.
General and administrative expenses for the three months ended January 31,
1997, were $110,180, an increase of $55,353 or 100.96%, as compared to the three
months ended January 31, 1996. This increase was principally due to increased
employee costs.
Marketing and advertising expenses for the three months ended January 31,
1997, were $103,174, an increase of $30,211 or 41.4%, as compared to the three
months ended January 31, 1996. This increase was principally due to increased
employee costs, attendance at several major Year 2000 trade shows, production of
marketing materials, and direct mailing costs.
Research and development expenses for the quarter ended January 31, 1997,
were $11,218, an increase of $3,731 or 49.83%, as compared to the three months
ended January 31, 1996. This increase resulted from increased activities to
develop new products.
Interest income for the quarter ended January 31, 1997, was $79,024, an
increase of 756.6%, as compared to the three months ended January 31, 1996. This
increase resulted from both increased cash flows from operations and investment
of the net proceeds of the Company's public offering that was closed on November
22, 1996, in interest bearing instruments.
As a result of these factors, the Company had net income for the three
months ended January 31, 1997, of $49,706, a decrease of $109,994 or 68.88%, as
compared to the three months ended January 31, 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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a) Exhibits: There are no exhibits for the six months ended January 31, 1997.
b) Reports on Form 8-K: There were no reports on Form 8-K filed for the six
months ended January 31, 1997.
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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: March 14, 1997
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ACCELR8 TECHNOLOGY CORPORATION
/s/ Harry J. Fleury
-----------------------------------------
Harry J. Fleury, President
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> JUL-31-1996 JUL-31-1996
<PERIOD-END> JAN-31-1997 JAN-31-1997
<CASH> 7,980,468 0
<SECURITIES> 0 0
<RECEIVABLES> 332,094 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 8,571,635 0
<PP&E> 81,000 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 8,941,626 0
<CURRENT-LIABILITIES> 336,896 0
<BONDS> 144,723 0
0 0
0 0
<COMMON> 8,247,126 0
<OTHER-SE> 212,881 0
<TOTAL-LIABILITY-AND-EQUITY> 8,941,626 0
<SALES> 871,816 258,888
<TOTAL-REVENUES> 871,816 258,888
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 685,025 348,206
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 285,585 (10,294)
<INCOME-TAX> 0 60,000
<INCOME-CONTINUING> 186,791 (89,318)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 285,585 49,706
<EPS-PRIMARY> .04 .01
<EPS-DILUTED> .04 .01
</TABLE>
