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, 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 of (IRS Employer Identification No.
incorporation or organization)
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, 1997
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Common Stock, no par value 7,832,500
<PAGE>
Accelr8 Technology Corporation
INDEX
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - as of
October 31, 1997 and July 31, 1997 1
Statements of Operations
for the three months ended October 31, 1997 and 1996 2
Statements of Cash Flows
for the three months ended October 31, 1997 and 1996 3
Notes to 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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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Accelr8 Technology Corporation
Balance Sheets
October 31, July 31,
1997 1997
ASSETS (Unaudited) (Audited)
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CURRENT ASSETS:
Cash and cash equivalents $ 8,147,579 $ 7,877,932
Accounts receivable 1,945,889 910,334
Prepaid expenses and other 131,365 26,800
Deferred tax assets 181,400 181,400
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Total current assets 10,406,233 8,996,466
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PROPERTY AND EQUIPMENT:
Computer equipment 243,248 231,254
Furniture and fixtures 41,475 32,476
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Total property and equipment 284,723 263,730
Less accumulated depreciation (111,594) (96,594)
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Net property and equipment 173,129 167,136
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SOFTWARE DEVELOPMENT COSTS:
Software development cost capitalized 1,578,881 1,381,368
Less accumulated amortization (908,046) (875,046)
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Net software development costs 670,835 506,322
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INVESTMENTS 179,020 179,020
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Total assets $ 11,429,217 $ 9,848,944
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 246,274 $ 97,499
Incomes taxes payable 294,394 47,394
Accrued liabilities 41,971 56,360
Deferred consulting revenue -- 46,252
Deferred maintenance revenue 443,322 103,878
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Total current liabilities 1,025,961 351,383
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DEFERRED TAX LIABILITIES 203,400 203,400
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OTHER LONG-TERM LIABILITIES 179,020 141,520
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SHAREHOLDERS' EQUITY
Common stock, no par value;
11,000,000 shares authorized;
7,832,500 shares issued and outstanding 8,218,677 8,218,677
Contributed capital 315,049 41,449
Retained earnings 1,760,711 892,515
Shares held for employee benefit (273,600) --
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Shareholders' equity 10,020,837 9,152,641
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TOTAL $ 11,429,218 $ 9,848,944
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<PAGE>
Accelr8 Technology Corporation
Statements of Operations
(Unaudited)
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Three Months Ended
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October 31 October 31
1997 1996
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Revenues:
Consulting fees $ 153,314 $ 193,704
Product license and customer support fees 1,337,047 265,630
Resale of software purchased 139,528 153,595
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Total Revenues 1,629,889 612,929
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Costs and Expenses:
Cost of services 135,075 79,474
Cost of software purchased for resale 44,232 44,160
General and administrative 221,365 115,391
Marketing and advertising 136,063 88,485
Research and development 35,062 9,311
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Total Expenses 571,797 336,821
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Income from operations 1,058,092 276,108
Interest income 105,104 19,770
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Income before income taxes 1,163,196 295,878
Income tax provision 295,000 60,000
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Net Income $ 868,196 $ 235,878
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Weight average shares outstanding 8,178,333 7,148,673
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Net Income per share $ 0.11 $ 0.03
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<PAGE>
Accelr8 Technology Corporation
Statements of Cash Flows
(Unaudited)
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Three Months Ended
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October 31, October 31,
1997 1996
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CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 868,196 $ 235,878
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 48,000 26,405
Net change in assets and liabilities:
Accounts receivable (1,035,555) 41,524
Prepaid expenses and other (104,565) (105,412)
Accounts payable 148,775 96,706
Income taxes payable 247,000 42,000
Accrued liabilities (14,389) 52,923
Deferred consulting revenue (46,252) (85,996)
Deferred maintenance revenue 339,443 6,161
Other long-term liabilities 37,500 0
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Net cash provided by operating activities 488,153 310,189
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CASH FLOW FROM INVESTING ACTIVITIES:
Software development costs (197,513) (46,164)
Purchase of computer equipment (11,993) (4,879)
Purchase of office furniture and equipment (9,000) --
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Net cash used in investing activities (218,506) (51,043)
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Net increase in cash and cash equivalents 269,647 259,146
Cash and equivalents, beginning of period 7,877,932 1,407,026
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Cash and equivalents, end of period $ 8,147,579 $ 1,666,172
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<PAGE>
Accelr8 Technology Corporation
Notes to Financial Statements
For the three months ended October 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 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 1997 Annual Report on
Form 10-K should be read in conjunction with these consolidated financial
statements.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Result
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of Operations
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Changes in Result of Operations: October 31, 1997 compared to October 31, 1996
Total revenues for the quarter ended October 31, 1997 were $1,629,889, an
increase of $1,016,960 or 166%, as compared to the quarter ended October 31,
1996. Consulting fees for the quarter ended October 31, 1997, were $153,314 a
decrease of $40,389 or 21% as compared to the quarter ended October 31, 1996,
and represented 9% of total revenues. Product license and customer support fees
for the quarter ended October 31, 1997, were $1,337,047 an increase of
$1,071,417 or 403%, as compared to the quarter ended October 31, 1996. Revenues
from the resale of purchased software for the quarter ended October 31, 1997,
were $139,528, a decrease of $14,067 or 9%, as compared to the quarter ended
October 31, 1996. The large increase in revenues from product license and
customer support fees resulted from our customers' increasing need for and
acceptance of the Company's year 2000 tools and services.
During the quarter ended October 31, 1997, sales to the Company's two
largest customers were $575,000 and $425,440, representing 35% and 26% of the
Company's revenues respectively. In comparison, sales to the Company's two
largest customers were $87,868 and $75,000 representing 14% and 12% of the
Company's revenues respectfully for the quarter ended October 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 quarter ended October 31, 1997, was $135,075 an
increase of $55,601 or 70%, as compared to the quarter ended October 31, 1996.
Cost of services as a percentage of revenues from both consulting fees and
product license and customer support fees decreased from 17% for the quarter
ended October 31, 1996 to 9% for the quarter ended October 31, 1997. This
increase occurred principally because of revenues increasing 256% while cost of
services increased by only 70%.
Cost of software purchased for resale for the quarter ended October 31,
1997, was $44,232 as compared to $44,160 for the quarter ended October 31, 1996.
General and administrative expenses for the quarter ended October 31, 1997,
were $221,365, an increase of $105,974 or 92%, as compared to the quarter ended
October 31, 1996. This increase was principally due to increased costs in all
catagories due to the increased size and scope of the Company.
Marketing and advertising expenses for the quarter ended October 31, 1997,
were $136,063, an increase of $47,578 or 54%, as compared to the quarter ended
October 31, 1996. This increase was due to increased costs of personnel,
advertising, and trade shows as related to the Company's Year 2000 tools and
services.
Research and development expenses for the quarter ended October 31, 1997,
were $35,062, an increase of $25,751 or 277%, as compared to the quarter ended
October 31, 1996. This increase resulted from increased computer costs including
depreciation.
Interest income for the quarter ended October 31, 1997, was $105,104 an
increase of 432%, as compared to the quarter ended October 31, 1996. This
increase resulted from an investment of net proceeds of the Company's public
offering that was closed on November 22, 1996, in interest bearing instruments.
Income tax provision for the quarter ended October 31, 1997, was $295,000
an increase of $235,000 or 392% as compared to the quarter ended October 31,
1996. This increase resulted from increased income before taxes plus an
increased effective tax rate due to less tax credits being available in the
fiscal quarter ended October 31, 1997.
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<PAGE>
As a result of these factors, income before income taxes for the quarter
ended October 31, 1997, was $1,163,196, an increase of $867,318 or 293%, as
compared to the quarter ended October 31, 1996. Net income for the quarter ended
October 31, 1997, was $868,196, an increase of $632,318, or 268%, as compared to
the quarter ended October 31, 1996.
Capital Resources and Liquidity
At October 31, 1997 as compared to the Company's most recent fiscal year
end, current assets increased 16% from $8,996,466 to $10,406,233 and the
Company's liquidity as measured by available cash, increased by 3% from
$7,877,932 to $8,147,579. During the same period, shareholders' equity increased
9% from $9,152,641 to $10,020,837 as a result of net income for the quarter
ended October 31, 1997.
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 three months ended October 31, 1997
b) Reports on Form 8-K: There were no reports on Form 8-K filed for the three
months ended October 31, 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: December 11, 1997
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ACCELR8 TECHNOLOGY CORPORATION
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Harry J. Fleury, President
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