U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 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
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 April 30, 1997
- ------------------------------------ -----------------------------
Common Stock, no par value 6,692,500
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Accelr8 Technology Corporation
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of
April 30, 1997 and July 31, 1996 1
Condensed Statements of Operations
for the three months and nine months
ended April 30, 1997 and 1996 2
Condensed Statements of Cash Flows
for the nine months ended April 30, 1997 and 1996 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Accelr8 Technology Corporation
Condensed Balance Sheets
April 30, July 31,
1997 1996
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ASSETS (Unaudited) (Audited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 7,878,457 $ 1,407,026
Accounts receivable 589,040 431,252
Prepaid expenses and other 106,188 49,695
Deferred tax assets 141,223 123,223
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Total current assets 8,714,908 2,011,196
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PROPERTY AND EQUIPMENT:
Computer equipment 269,489 209,735
Furniture and fixtures 27,065 11,231
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Total property and equipment 296,554 220,966
Less accumulated depreciation (174,636) (150,453)
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Net property and equipment 121,918 70,513
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SOFTWARE DEVELOPMENT COSTS:
Software development cost capitalized 1,162,223 906,581
Less accumulated amortization (825,167) (746,260)
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Net software development costs 337,056 160,321
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OTHER ASSETS 75,000 75,000
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Total assets $ 9,248,882 $ 2,317,030
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 86,892 $ 52,091
Incomes taxes payable - 18,000
Accrued liabilities 56,599 20,316
Product development advance payable - 50,000
Deferred consulting revenue 1,771 91,724
Deferred maintenance revenue 88,761 75,460
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Total current liabilities 234,023 307,591
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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;
6,692,500 and 5,492,500 shares issued and outstanding 8,228,677 1,970,970
Contributed capital 41,449 41,449
Accumulated earnings (deficit) 600,010 (72,703)
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Shareholders' equity - net 8,870,136 1,939,716
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TOTAL $ 9,248,882 $ 2,317,030
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<CAPTION>
Accelr8 Technology Corporation
Condensed Statements of Operations
(Unaudited)
Nine Months Three Months
Ended April 30 Ended April 30
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1997 1996 1997 1996
Revenues:
<S> <C> <C> <C> <C>
Consulting fees $ 508,719 $ 667,968 $ 230,117 $ 268,511
Product license and customer support fees 769,766 454,606 407,188 261,449
Resale of software purchased 309,513 181,265 78,877 62,404
---------- ---------- ---------- ----------
Total revenues 1,587,998 1,303,839 716,182 592,364
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of services 267,408 181,926 89,472 51,869
Cost of software purchased for resale 93,405 73,108 24,074 30,653
General and administrative 325,013 181,710 99,442 57,378
Marketing and advertising 362,330 222,182 170,671 73,048
Research and development 39,493 24,532 18,964 9,263
---------- ---------- ---------- ----------
Total Costs and Expenses 1,087,649 683,458 402,623 222,211
---------- ---------- ---------- ----------
Income from operations 500,349 620,381 313,559 370,153
Interest income 197,365 28,285 98,570 11,907
---------- ---------- ---------- ----------
Income before income taxes 697,714 648,666 412,129 382,060
Income tax provision 25,000 0 25,000 0
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Net income $ 672,714 $ 643,666 $ 387,129 $ 382,060
========== ========== ========== ==========
Weighted average shares outstanding 7,653,341 5,899,456 7,866,552 5,899,456
Net Income per share $ .09 $ .11 $ .05 $ .06
========== ========== ========== ==========
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<CAPTION>
Accelr8 Technology Corporation
Condensed Statements of Cash Flows
(Unaudited)
Nine Months
Ended April 30
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1997 1996
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 672,714 $ 643,666
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 103,090 83,225
Net change in assets and liabilities:
Accounts receivable (157,788) 54,507
Prepaid expenses and other (74,493) 1,170
Accounts payable 34,801 (34,156)
Income taxes payable (18,000) 0
Accrued salaries and other liabilities 61,283 (4,081)
Deferred consulting revenue (89,953) 9,000
Deferred maintenance revenue 13,301 (18,922)
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Net cash provided by operating activities 544,955 734,409
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CASH FLOW FROM INVESTING ACTIVITIES:
Software development costs (255,642) (63,650)
Purchase of computer equipment (59,754) (7,780)
Purchase of office furniture and equipment (15,834) 0
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Net cash used in investing activities (331,231) (71,430)
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CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds provided from sale of common stock 6,257,707 0
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Net increase in cash and cash equivalents 6,471,431 662,979
Cash and equivalents, beginning of year 1,407,026 437,425
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Cash and equivalents, end of year $ 7,878,457 $ 1,100,404
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Accelr8 Technology Corporation
Notes to Condensed Financial Statements
For the nine months ended April 30, 1997 and 1996
Note 1. Accounting Policies
The unaudited financial information provided herein was prepared from the
books and records of the Company. The information furnished reflects all normal
recurring adjustments which, in the opinion of the Company, are necessary for
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 condensed 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 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 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 $6,239,707 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. On April 10, 1997, an additional 50,000 options were exercised by a
former employee for an option price of $.36 per share and a total value of
$18,000. 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
6,692,500 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
Changes in Results of Operations: Nine months ended April 30, 1997 compared to
Nine months ended April 30, 1996
Total revenues for the nine months ended April 30, 1997 were $1,587,998 an
increase of $284,159 or 21.8%, as compared to the nine months ended April 30,
1996. Consulting fees for the nine months ended April 30, 1997, were $508,719 a
decrease of $159,249 or 23.8% as compared to the nine months ended April 30,
1996, and represented 32.0% of total revenues. Product license and customer
support fees for the nine months ended April 30, 1997, were $769,766 an increase
of $315,160 or 69.3%, as compared to the nine months ended April 30, 1996, and
represented 48.5% of total revenues. Revenues from the resale of purchased
software for the nine months ended April 30, 1997, were $309,513, an increase of
$128,248 or 70.8%, as compared to the nine months ended April 30, 1996, and
represented 19.5% of total revenues.
The decrease in consulting fees is the direct result of the Company's focus
on marketing its software tool solution for the Year 2000 problem. This is in
contrast to its previous emphasis on selling migration and conversion services.
The Company believes that most enterprises are concerned about resolution of
their Year 2000 date exposure and are, therefore, postponing migration projects
until a defined millenium strategy (i.e., Year 2000 strategy) is in place. While
focusing on the development of NAVIG8-2000 since September 1996, the Company
found that customers wanted more functionality than release #1 of NAVIG8-2000
originally contemplated. In addition to analysis and date identification, the
end-user wanted a "repository" or data base from which he could manipulate
findings and partition the process of date remediation. To this end, the Company
has developed and completed a Java-based Graphical User Interface (GUI) that
drives the data base and planning module, thus enabling the user to become more
self reliant in achieving internal solutions.
The Company believes that the Year 2000 issue is an opportunity to
establish a long-term relationship with the end-user that will ultimately lead
to a migration engagement following the delivery of Year 2000 compliance
services. The Company's core business of migrating VAX/VMS users to open client
server environments featuring UNIX and NT is still the principal long-term
growth strategy of the Company. During the quarter, the Company sold two factory
licenses, one in New York City to Comtex Information Systems, Inc., the other in
Toronto to Compu-Design Group, Inc., representing $115,000 and $100,000
respectively. These licensees will focus on their prospective markets by
offering Year 2000 remediation services while using the Company's NAVIG8-2000
tool for identification and planning date fixes. Management believes that
increased revenues in the other product lines reflects the market's continued
acceptance of the Company's products and services.
During the nine months ended April 30, 1997, sales to a single customer did
not exceed 10% of total sales. In comparison, sales to the Company's two largest
customers were $278,075 and $208,759, representing 21.3% and 16.0% of total
revenues for the nine months ended April 30, 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 nine months ended April 30, 1997, was $267,408, an
increase of $85,482 or 47.0%, as compared to the nine months ended April 30,
1996. Cost of services as a percentage of revenues from both consulting fees and
product license and customer support fees increased from 14.0% for the nine
months ended April 30, 1996, to 16.8% for the nine months ended April 30, 1997.
This increase was caused by the hiring of additional employees for completion of
consulting contracts, additional and increased technical support capability in
the marketing of the Year 2000 product and the costs of training new employees.
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Cost of software purchased for resale for the nine months ended April 30,
1997, was $93,405, an increase of $20,297 or 27.8% as compared to the nine
months ended April 30, 1996. This increase was directly related to the increased
resale of purchased software.
General and administrative expenses for the nine months ended April 30,
1997, were $325,013, an increase of $143,303 or 78.9%, as compared to the nine
months ended April 30, 1996. This increase was principally due to increased
employee costs.
Marketing and advertising expenses for the nine months ended April 30,
1997, were $362,330, an increase of $140,147 or 63.1%, as compared to the nine
months ended April 30, 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 nine months ended April 30, 1997,
were $39,493, an increase of $14,961 or 60.1% as compared to the nine months
ended April 30, 1996. This increase resulted from increased computer costs and
depreciation relating to research and development activities.
Interest income for the nine months ended April 30, 1997, was $197,365, an
increase of $169,080, or 597.8%, as compared to the nine months ended April 30,
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, income before income taxes for the nine
months ended April 30, 1997, was $697,714, an increase of $49,048 or 7.6%, as
compared to the nine months ended April 30, 1996. Net income for the nine months
ended April 30, 1997, was $672,714, an increase of $29,048 or 4.6%, as compared
to the nine months ended April 30, 1996.
Capital Resources and Liquidity
At April 30, 1997 as compared to July 31, 1996, the Company's current
assets increased 333.3% from $2,011,196 to $8,714,908 and the Company's
liquidity as measured by cash and cash equivalents, increased by 459.9% from
$1,407,026 to $7,878,457. During the same period, shareholders' equity increased
357.3% from $1,939,716 to $8,870,136 primarily as a result of the completion of
the Company's public offering.
Recently Issued Accounting Standards
Earnings per share for the nine months and three months ended April 30,
1997 and 1996, respectively, is computed by dividing net income by the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. Common Stock equivalents, in the form of stock
options, have been included in the calculation of weighted average shares
outstanding under the treasury stock method.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," which is
effective for financial statements for both interim and annual periods ending
after December 15, 1997 and will be adopted by the Company for the year ending
July 31, 1998. SFAS No. 128 requires the presentation and disclosure regarding
both basic earnings per share and primary earnings per share. The Company
believes that the adoption of this pronouncement will not have a material effect
on earnings per share.
Changes in Results of Operations: Three months ended April 30, 1997 compared to
April 30, 1996
Total revenues for the three months ended April 30, 1997 were $716,182, an
increase of $123,818 or 20.9%, as compared to the three months ended April 30,
1996. Consulting fees for the three months ended April 30, 1997, were $230,117 a
decrease of $38,394 or 14.3% as compared to the three months ended April 30,
1996, and represented 32.1% of total revenues. Product license and customer
support fees for the three months ended April 30, 1997, were $407,188 an
increase of $145,739 or 55.7%, as compared to the three months ended April 30,
1996, and represented 56.9% of total revenues. Revenues from the resale of
purchased software for the three months ended April 30, 1997, were $78,877, an
increase of $16,473 or 26.4%, as compared to the three months ended April 30,
1996, and represented 11.0% of total revenues.
During the three months ended April 30, 1997, sales to the Company's two
largest customers were $147,160 and $100,000, representing 20.5% and 14.0% of
the Company's revenues respectively. In comparison, sales to a single customer
represented 25.3% of total revenues for the three months ended April 30, 1996.
The loss of a major customer could have a significant impact on the Company's
financial performance in any given year.
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<PAGE>
Cost of services for the three months ended April 30, 1997 was $89,472, an
increase of $37,603 or 72.5%, as compared to the three months ended April 30,
1996. Cost of services as a percentage of revenues from both consulting fees and
product license and customer support fees increased from 5.1% for the three
months ended April 30, 1996 to 12.5% for the three months ended April 30, 1997.
This increase resulted from increased employee costs, caused by the hiring of
additional employees for completion of consulting contracts, additional and
increased technical support capability in the marketing of the Year 2000 product
and the costs of training new employees.
Cost of software purchased for resale for the three months ended April 30,
1997, was $24,074, a decrease of $6,579 or 21.5% as compared to the three months
ended April 30, 1996.
General and administrative expenses for the three months ended April 30,
1997, were $99,442, an increase of $42,064 or 73.3%, as compared to the three
months ended April 30, 1996. This increase was principally due to increased
employee costs.
Marketing and advertising expenses for the three months ended April 30,
1997, were $170,671, an increase of $97,623 or 133.6%, as compared to the three
months ended April 30, 1996. This increase was principally due to increased
marketing and employee expenses incurred to support the Company's sales.
Research and development expenses for the quarter ended April 30, 1997,
were $18,964, an increase of $9,701 or 104.7%, as compared to the three months
ended April 30, 1996. This increase resulted from increased computer costs and
depreciation relating to expenses associated with research and development
activities.
Interest income for the quarter ended April 30, 1997, was $98,570, an
increase of 727.8%, as compared to the three months ended April 30, 1996. This
increase resulted from an 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 a net income before taxes for
the three months ended April 30, 1997, of $412,129 an increase of $30,069 or
7.9%, as compared to the three months ended April 30, 1996. Net income for the
three months ended April 30, 1997 was $387,129, an increase of $5,069 or 1.3%,
as compared to the three months ended April 30, 1996.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: There are no exhibits for the nine months ended April 30, 1997.
b) Reports on Form 8-K: No reports on Form 8-K were filed for the nine months
ended April 30, 1997.
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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: June 18, 1997
ACCELR8 TECHNOLOGY CORPORATION
/s/ Harry J. Fleury
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Harry J. Fleury, President
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> JUL-31-1996 JUL-31-1996
<PERIOD-END> APR-30-1997 APR-30-1997
<CASH> 7,878,457 0
<SECURITIES> 0 0
<RECEIVABLES> 589,040 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 8,714,908 0
<PP&E> 296,554 0
<DEPRECIATION> 174,636 0
<TOTAL-ASSETS> 9,248,882 0
<CURRENT-LIABILITIES> 234,023 0
<BONDS> 144,723 0
0 0
0 0
<COMMON> 8,228,677 0
<OTHER-SE> 641,449 0
<TOTAL-LIABILITY-AND-EQUITY> 9,248,882 0
<SALES> 1,587,998 716,812
<TOTAL-REVENUES> 1,587,998 716,812
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,087,649 402,623
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 697,714 412,129
<INCOME-TAX> 25,000 25,000
<INCOME-CONTINUING> 500,349 313,559
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 672,714 345,585
<EPS-PRIMARY> 0 0
<EPS-DILUTED> .09 .05
</TABLE>
