----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
Commission file number 0-13124
COVER-ALL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2698053
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
18-01 Pollitt Drive, Fair Lawn, New Jersey 07410
(Address of principal executive office) (Zip Code)
(201) 794-4800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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
--- ---
Number of shares outstanding at May 12, 1997:
16,720,297 shares of Common Stock, par value $.01 per share.
---------------------------------------------------------------------------
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
INDEX TO FORM 10-Q FOR THE QUARTER ENDED
March 31, 1997
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996. . . . . . 2 - 3
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996. . . 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996. . . 5 - 6
Notes to Consolidated Financial Statements. . . 7 - 10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . 11 - 12
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . $ 2,465,340 $ 446,672
Accounts receivable, less allowance
for doubtful accounts of $76,969 and
$43,870 . . . . . . . . . . . . . . 1,032,632 1,585,398
Prepaid expenses . . . . . . . . . . 371,799 7,161
----------- -----------
Total current assets . . . . . . . 3,869,771 2,039,231
----------- -----------
Property and equipment, at cost:
Furniture, fixtures and equipment . . 2,623,040 3,072,706
Less accumulated depreciation . . . . (2,273,002) (2,662,713)
----------- -----------
Property and equipment -- net . . . 350,038 409,993
----------- -----------
Software license, less amortization of
$1,000,000 and $750,000 . . . . . . . 4,000,000 4,250,000
----------- -----------
Capitalized software, less amortization
of $1,209,688 and $1,005,964 . . . . . 1,274,226 1,477,950
----------- -----------
Other assets . . . . . . . . . . . . . 63,848 66,181
----------- -----------
$ 9,557,883 $ 8,243,355
=========== ===========
-2-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED) (AUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . $ 779,467 $ 536,172
Accrued liabilities . . . . . . . . . . 1,406,470 1,614,612
Unearned revenue . . . . . . . . . . . 1,033,132 1,181,575
----------- -----------
Total current liabilities . . . . . 3,219,069 3,332,359
----------- -----------
Convertible debentures . . . . . . . . . 3,000,000 --
----------- -----------
Commitments and contingencies (Note 5) .
Stockholders' equity:
Common stock, $.01 par value;
authorized 30,000,000 shares,
issued 17,352,783 and 17,351,883 shares 173,528 173,519
Capital in excess of par value . . . . 27,272,075 27,258,352
Accumulated deficit . . . . . . . . . . (21,539,582) (19,953,668)
Treasury stock at cost -- 633,986
shares . . . . . . . . . . . . . . . . (2,567,207) (2,567,207)
----------- -----------
Total stockholders' equity . . . . . 3,338,814 4,910,996
----------- -----------
$ 9,557,883 $ 8,243,355
=========== ===========
See accompanying notes.
-3-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS ENDED
MARCH 31,
--------------------------
1997 1996
----------- -----------
Revenues:
Licenses . . . . . . . . . . . . . . . $ 73,976 $ 205,001
Maintenance . . . . . . . . . . . . . . 586,860 507,104
Professional services . . . . . . . . . 221,878 407,998
---------- -----------
882,714 1,120,103
---------- -----------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . 1,306,390 461,256
Research and development . . . . . . . -- 789,375
Sales and marketing . . . . . . . . . . 351,929 118,159
General and administrative . . . . . . 810,309 549,319
----------- -----------
2,468,628 1,918,109
----------- -----------
Net loss . . . . . . . . . . . . . . . . $(1,585,914) $ (798,006)
=========== ===========
Net loss per share . . . . . . . . . . . $ (0.09) $ (0.07)
=========== ===========
Weighted average number of common shares
outstanding . . . . . . . . . . . . . . 16,717,994 10,964,669
=========== ===========
See accompanying notes.
-4-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
THREE MONTHS ENDED
MARCH 31,
--------------------------
1997 1996
----------- -----------
Cash flows from operating activities:
Net loss from continuing operations $(1,585,914) $ (798,006)
Adjustments to reconcile net loss
to net cash used for operating
activities:
Depreciation 58,519 67,988
Amortization of capitalized software
and software license 453,724 168,189
Compensation expense related to
issuance of stock options 12,157 --
Accounts receivable 552,765 (2,205,305)
Income taxes receivable -- 2,300,000
Prepaid expenses (364,638) (529,672)
Other assets 2,333 (562,858)
Accounts payable 243,295 279,717
Accrued liabilities (208,142) 222,054
Unearned revenue (148,442) (89,405)
----------- -----------
Net cash used for continuing operating
activities (984,343) (1,147,298)
----------- -----------
Decrease in net liabilities of
discontinued operations -- (1,670,028)
----------- -----------
Net cash used for discontinued operating
activities -- (1,670,028)
----------- -----------
Net cash used for operating activities (984,343) (2,817,326)
----------- -----------
Cash flows from investing activities:
Capital expenditures 1,436 --
Capital software expenditures -- (108,787)
----------- -----------
Net cash provided from (used for)
investing activities 1,436 (108,787)
----------- -----------
Cash flows from financing activities:
Proceeds from the sale of convertible
debentures 3,000,000 --
Net proceeds from issuance of
common stock 1,575 3,098,780
----------- -----------
Net cash provided from financing
activities 3,001,575 3,098,780
----------- -----------
Change in cash and cash equivalents 2,018,668 172,667
Cash and cash equivalents beginning of
period 446,672 1,576,745
----------- -----------
Cash and cash equivalents end of period $ 2,465,340 $ 1,749,412
=========== ===========
-5-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(unaudited)
Supplemental disclosures of noncash investing and financing activities
in 1996:
Financing:
---------
The Company in connection with the discontinuance of ISD issued Common
Stock and Warrants for $6,978,340 as a result of the restructuring
agreement. (See Note 3.)
Investing:
---------
The Company acquired a software license from Care by issuing Common Stock
valued at $5,000,000. (See Note 4.)
See accompanying notes.
-6-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
For a summary of significant accounting policies, refer to Note 1 of Notes
to Consolidated Financial Statements included in Cover-All Technologies
Inc. (the "Company") Annual Report on Form 10-K for the year ended
December 31, 1996. While the Company believes that the disclosures
presented are adequate to make the information not misleading, these
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's latest annual report. Certain amounts for the prior year have
been reclassified to conform with the current period's financial statement
presentation. The financial statements include on a consolidated basis the
results of all subsidiaries. All material intercompany transactions have
been eliminated.
In the opinion of management, the accompanying consolidated financial
statements include all adjustments which are necessary to present
fairly the Company's financial position as of March 31, 1997 and December
31, 1996 and the results of operations for the three-month periods ended
March 31, 1997 and 1996, and the cash flows for the three-month periods
ended March 31, 1997 and 1996. Such adjustments are of a normal and
recurring nature. The results of operations for the three-month period
ended March 31, 1997 are not necessarily indicative of the results to be
expected for a full year.
NOTE 2 - CONVERTIBLE NOTES & DEBENTURES
On March 14, 1997, the Company obtained $750,000 in bridge
financing through the sale of 12 1/2% Convertible Notes to three major
stockholders. The principals and accrued interest on the bridge financing
was repaid in full on March 31, 1997 out of the proceeds from the financing
discussed below.
On March 31, 1997, the Company issued $3,000,000 of 12 1/2%
Convertible Debentures (the "Debentures") to an institutional investor at
face value. The Debentures are immediately convertible, in whole or in
part, into shares of the Company's Common Stock at a conversion price of
$1.25 per share, subject to adjustment, and mature on March 31, 2002.
Interest is payable quarterly. The Debentures contain certain covenants
which restrict the Company's ability to incur debt, grant liens, pay
dividends or other restricted payments and make investments and
acquisitions. The Company cannot redeem the Debentures for two years and
thereafter may call the Debentures only if the closing price of the
Company's Common Stock exceeds $1.50 for the twenty days preceding the
redemption date. A portion of the proceeds from the issuance were used
to repay the bridge financing. The remaining net proceeds are being used
for working capital purposes.
NOTE 3 - DISCONTINUED OPERATIONS
In March 1996, the Company entered into a series of agreements
which provided for the transfer and discontinuance of its Insurance
Services Division ("ISD") operations and the issuance of the Company's
Common Stock and Warrants to certain customers of the ISD business in
exchange for the release of the Company from its obligations to provide
insurance services to ISD customers and to The Robert Plan Corporation in
exchange for the settlement and dismissal of two lawsuits with The Robert
Plan Corporation. Effective March 1, 1996 the Company discontinued
providing insurance processing services to the automobile insurance
industry and reflected those activities as discontinued operations in its
Financial Statements.
As part of the restructuring transactions ("the Restructuring"),
the Company transferred certain assets, employees, contracts and leased
premises relating to its ISD business to a subsidiary of The Robert Plan
Corporation, which replaced the Company as the provider of insurance
services to the ISD customers. In exchange for settling the lawsuits,
-7-
<PAGE>
releasing the Company's obligations to provide insurance services under its
contracts and executing mutual release, the Company issued to certain of
the ISD customers and certain parties to the litigation: (a) a total of
3,256,201 shares of the Company's Common Stock, (b) five-year Warrants to
purchase up to an additional aggregate of 1,553,125 shares of the Company's
Common Stock at $2.00 per share and (c) cash of $2.5 million. The holders
of these securities can request the Company to register these securities
with such registration costs to be paid by the Company. The Company had
the option, exercisable for a period of six months, to (i) purchase 50% of
the aforementioned 3,256,201 shares at a cash price equal to the greater of
$3.00 or 50% of the then market price of a share of the Company's Common
Stock and (ii) acquire 50% of the 1,553,125 Warrants at a cash price equal
to $1.00 per Warrant. On March 31, 1996, the Company assigned its
aforementioned repurchase option applicable to the Company's Common Stock
and Warrants to Software Investments Limited ("SIL"). SIL subsequently
exercised all of the options to purchase the Company's Common Stock and
Warrants as discussed in Note 4. As a result of the issuance of shares
described in Note 4, the antidilution provisions of the warrants required
an adjustment of shares to 1,725,694 from 1,553,125 and a price adjustment
to $1.80 from $2.00 per share. Further, as a result of the issuance of
the 12 1/2% Convertible Debentures discussed in Note 2, the Warrants
required an adjustment to the number of shares purchasable to 902,979 and
the exercise price to $1.72 per share.
NOTE 4 - SALE OF STOCK AND WARRANTS
On March 31, 1996, the Company entered into a series of
transactions with Software Investment Limited ("SIL") and Care Corporation
Limited ("Care") whereby the Company:
(A) sold to SIL for total proceeds of $3,022,391: (i) 1,412,758
shares of the Company's Common Stock for $2.00 per share and (ii) five-year
warrants to purchase an aggregate of 196, 875 shares of the Company's
Common Stock exercisable at $2.00 per share for $1.00 per warrant
($196,875).
(B) assigned to SIL the rights it retained in the Restructuring
(see Note 3) to repurchase within six months 1,628,100 shares of the
Company's Common Stock for the greater of $3.00 per share or 50 percent of
the then market price of the Company's Common Stock and its rights to
purchase from the warrant holders for $1.00 per share five-year warrants to
acquire 776,562 shares of the Company's Common Stock at $2.00 per share. As
a result of the issuance of the above mentioned shares, the antidilution
provisions of the Warrants required an adjustment from 776,562 shares at
$2,00 per share to 862,847 shares at $1.80 per share. Further, as a
result of the issuance of the 12 1/2% Convertible Debentures discussed in
Note 2, the Warrants required an adjustment to the number of shares
purchasable to 206,152 and the exercise price to $1.91 per share.
On May 1, 1996, SIL acquired 1,628,100 shares of the Company's
Common Stock at $3,00 per share, and at $1.00 per Warrant, 862,847 Warrants
to acquire 862,847 shares of the Company's Common Stock at $1.80 per share.
SIL exercised these Warrants on May 6, 1996, resulting in the Company
receiving $1,553,124 in additional equity.
In addition, on March 31, 1996, the Company was granted by Care
the exclusive license for the Care software for use in the workers'
compensation and group health claims administration markets in Canada,
Mexico and Central South America. In exchange for this license, the
Company issued to Care 2,500,000 shares of the Company's Common Stock. The
agreement was revised on March 14, 1997 and the Company engaged Care as its
exclusive sales agent for a monthly fee of $10,000 against commissions of
20%. Depending upon the level of revenue reached, the Company will have
the right to repurchase portions of the shares issued to Care at $.01 per
share based upon the level of revenues actually achieved. Under certain
circumstances, based upon aggregate net sales in excess of $10 million from
a maximum of two separate sales during such three-year period, the Company
may be required to grant Care five-year warrants to buy an additional
1,000,000 shares of the Company's Common Stock at $2.00 per share.
-8-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LITIGATION
In March 1994, Material Damage Adjustment Corporation ("MDA"), a
subsidiary of The Robert Plan Corporation and a subcontractor for the
Company performing claims processing work, instituted an action in the
Superior Court of New Jersey seeking injunctive relief requiring that the
Company turn over to MDA in excess of $1 million that the Company had
withheld from certain claims fees allegedly owed to MDA. This action arose
out of the Company's servicing contract with the Market Transition Facility
of New Jersey ("MTF"). The Company had withheld the funds as a set off to
cover unpaid invoices for data processing services rendered by the Company
for MDA. MDA also added a claim for approximately $2.5 million of surcharge
fees paid to the Company by the MTF. The MTF was brought into the case to
resolve disputes between MTF and MDA over refunds of claims fees paid on
claims later closed without payment ("CWP's). The Company vigorously
contested MDA's claims and asserted counterclaims against MDA to establish
the Company's entitlement to the disputed sums.
In May 1994, the Company filed an action in the Superior Court of
New Jersey against Lion Insurance Company, National Consumer Insurance
Corporation and The Robert Plan Corporation seeking payment of unsatisfied
invoices under an April 1991 agreement totalling approximately $2.7
million. Under the agreement, the Company agreed to provide data
processing services for a three-year term in support of Lion Insurance
Company's "depopulation pool" automobile insurance business in New Jersey.
Lion Insurance Company is a subsidiary of The Robert Plan Corporation whose
affiliate, National Consumer Insurance Corporation, has taken over the
"depopulation pool" business. The Robert Plan Corporation guaranteed
Lion's performance and payment.
On March 1, 1996, the two lawsuits described above were settled
as part of the overall settlement with certain of the Company's insurance
services customers. (See Note 3.)
On February 2, 1995, Sol M. Seltzer commenced an action in the
Supreme Court of New York against Mr. Krieger, the then Chairman of the
Board and former President of the Company, and each of the other then
members of the Board of Directors. The plaintiff, Sol M. Seltzer, who
purported to sue derivatively on behalf of the Company and COVER-ALL,
sought among other things, compensatory damages in an amount to be
determined at trial and punitive damages in an aggregate amount of $12
million. Sol M. Seltzer was a vice-president of the Company and a director
of COVER-ALL until he resigned from such positions in late 1994. The
plaintiff alleged, among other things, breach of fiduciary duty, waste and
mismanagement, as well as alleged wrongful acts by the Board and the former
President, including among other things, self-dealing and misuse of
corporate funds by the former President. The Company, and the other
defendants, contested Mr. Seltzer's claims and on July 23, 1996 won a
motion to dismiss the case. Mr. Seltzer attempted to file a notice of
appeal from the order of dismissal, but failed to do so in a timely manner.
He has since motioned the court to recognize his notice of appeal and it is
anticipated that the court will rule on such motion in the near future.
On February 6, 1995, the Company commenced an action in the
Superior Court of New Jersey against Sol M. Seltzer, a former vice
president of the Company and a director of COVER-ALL, alleging fraud,
mismanagement, negligent misrepresentation and breach of fiduciary duty
with respect to the development and implementation of COVER-ALL'S TAS 2000
software product. The Company claimed compensatory and punitive damages in
an amount to be determined at trial. The case was largely inactive pending
the motion to dismiss Seltzer's New York action. After the dismissal of
the New York case brought by Seltzer, the Company voluntarily dismissed the
New Jersey case without prejudice.
In addition to the above lawsuits, the Company is named as
defendant in a number of legal actions arising from its operations. All of
these actions have been considered in establishing liabilities. Management
and its legal counsel are of the opinion that these actions will not have a
material adverse effect on the Company's financial position or results of
operations.
-9-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
For 1997 and 1996, no income tax benefit relative to the
Company's operating losses has been reflected in the Statement of
Operations. A valuation allowance was provided equal to the tax benefit
that the loss generated, since the realization of such benefit would be
dependent upon achieving future operating profits which cannot be
reasonably assured.
NOTE 7 - NET LOSS PER SHARE
Net loss per share is based on the weighted average number of
common shares and, where applicable, common share equivalents outstanding
during the period. In February 1997, the Financial Accounting Standards
Board issued Statement No. 128, "Earnings per Share." The Statement is
designed to simplify the computation of earnings per share and is effective
for year ends after December 15, 1997. Due to the Company's operating
losses, the inclusion of certain shares from options, warrants and
Debentures have had an antidilutive effect on the calculation of loss per
share and thus have been excluded. As a result, the impact of the new
pronouncement on the loss per share calculation is not expected to be
material when it is implemented.
-10-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Total revenues for the three months ended March 31, 1997 were
$882,714 as compared to $1,120,103 for the same period in 1996. Licenses
fees were $73,976 for the three months ended March 31, 1997 compared to
$205,001 in the same period in 1996 as a result of fewer new contracts
being signed in the first quarter of 1997. For the three months ended
March 31, 1997, maintenance revenues were $586,860 compared to $507,104 in
the same period of the prior year due to increased fees to customers and an
increased customer base. Professional services revenue contributed
$221,878 in the three months ended March 31, 1997 compared to $407,998 in
the first quarter of 1996 as a result of the completion of modifications
for the one major TAS 2000 customer in 1996. Total Classic revenues were
$832,713 for the three months ended March 31, 1997 as compared to $735,003
for the three months ended March 31, 1996. Total TAS 2000 revenues were
$50,001 for the three months ended March 31, 1997 as compared to $385,100
for the three months ended March 31, 1996.
Cost of sales increased to $1,306,390 for the three months ended
March 31, 997 as compared to $461,256 for the same period in 1996 as a
result of significant increases in capitalized software and license fees
amortization, and compensation expense relating to the dedication of staff
to maintenance and professional services.
No research and development expenses were recorded for the three
months ended March 31, 1997 compared to $789,375 for the same period in
1996 as a result of completion of several modules of the TAS 2000 product
line and significant staff reductions in the development group. Future
development of additional TAS 2000 modules will be customer driven.
Sales and marketing expense increased to $351,929 in the three
months ended March 31, 1997 as compared to $118,159 in the same period of
1996 due to an increased marketing and sales effort to improve the market
share of all the Company's product lines. The Company is now utilizing
distributors and outside consultants to market its products.
General and administrative expenses increased to $810,309 in the
first quarter of 1997 from $549,319 for the three months ended March 31,
1996 due to costs in connection with the securing of the Convertible Notes
and Convertible Debentures, and additional corporate related issues.
The Company is working toward continued growth in 1997 and
beyond. In the Classic line, the Company is positioned to increased market
share as a result of completion of the project making it Windows 95
compliant and maintaining the strengths upon which its current market
acceptance is based. A nationwide sales force is being recruited to market
the Classic product line.
The TAS 2000 product line offers a complete set of policy
administration applications development products. The TAS 2000 products
are being marketed in both the domestic marketplace and in the United
Kingdom, through systems integrators.
The Company is also marketing the Care software in Canada.
The preceding forward-looking statements (as such term is defined
in the Private Securities Litigation Reform Act) are subject to the
occurrence of certain contingencies which may not occur in the time frames
anticipated or otherwise, and, as a result, could cause actual results to
differ materially from such statements. The Company's outlook for fiscal
1997, including expected changes in revenues, earnings, margins, and sales
mix, is based on recent buying trends, continued improvements in operations
and the anticipation of new products being introduced on schedule. All of
these factors might be affected by increased competition, customer
decisions, delays in productivity programs and new product introductions,
and other business factors beyond the Company's control.
-11-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
-------------------------------
On March 31, 1997, the Company sold $3,000,000 of 12 1/2%
Convertible Debentures due March 2002 (the "Debentures") to an
institutional investor. The Debentures were sold at face value, pay
interest quarterly and are convertible, in whole or in part, into shares of
Common Stock of the Company at $1.25 per share, subject to adjustment. The
Debentures contain certain covenants which restrict the Company's ability
to incur indebtedness, grant liens, pay dividends or other defined
restricted payments and make investments and acquisitions. The Company
cannot redeem the Debentures for two years and thereafter may only call the
Debentures if the closing price of the Company's Common Stock for the
twenty business days preceding the redemption date exceeds $1.50. The net
proceeds from this financing will be used for working capital purposes.
At March 31, 1997, the Company had working capital of $650,705 as
compared to working capital of $208,690 at March 31, 1996. The improvement
in working capital was due to the payment of certain liabilities related to
the discontinued operations and securing the Debentures discussed above.
At this time the Company does not anticipate having to make any
significant investment in software development. The Company believes that
the proceeds from the sale of the Debentures, its current cash balances and
anticipated cash flows from continuing operations will be sufficient to
meet normal operating needs for the continuing COVER-ALL business in 1997.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
--------
27. Financial Data Schedule.
(b) Reports on Form 8-K.
-------------------
The Company filed a Form 8-K on January 7, 1997 under Item 5 to
reflect the resignation of Harvey Krieger as a director of the
Company effective as of December 31, 1996. The Company filed a
Form 8-K on March 24, 1997 under Item 5 to reflect the
announcement of the closing of a $750,000 bridge financing, the
appointment of a new Chief Executive Officer, the election of two
new directors and the amendment of the terms of certain software
licensing and related agreements. The Company also filed a Form
8-K on April 14, 1997 under Item 5 to reflect the closing of $3
million of permanent financing through the sale of its 12 1/2%
Convertible Debentures, due March 31, 2002 to Tandem Capital,
Inc. and the resignation of four directors and the appointment of
one new director.
-12-
<PAGE>
COVER-ALL TECHNOLOGIES INC.
AND SUBSIDIARIES
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.
COVER-ALL TECHNOLOGIES INC.
May 20, 1997 By: /s/ Brian Magowan
-----------------------
Brian Magowan
Chairman and Chief
Executive Officer
May 20, 1997 By: /s/ Mark D. Johnston
-----------------------
Mark D. Johnston
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
COVER-ALL TECHNOLOGIES INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,465,340
<SECURITIES> 0
<RECEIVABLES> 1,109,601
<ALLOWANCES> 76,969
<INVENTORY> 0
<CURRENT-ASSETS> 3,869,771
<PP&E> 2,623,040
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0
0
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</TABLE>
