UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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Commission File Number 0-13124
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COVER-ALL TECHNOLOGIES INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-2698053
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18-01 Pollitt Drive
Fair Lawn, New Jersey 07410
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(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code: (201) 794-4800
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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 and 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
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Number of shares outstanding at July 31, 1998:
16,982,672 shares of Common Stock, par value $.01 per share.
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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
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INDEX TO FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998.
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PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1998
[Unaudited] and December 31, 1997 [Audited] . . . . 1
Consolidated Statements of Operations for the
three and six months ended June 30, 1998 and
1997 [Unaudited] . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows for the
three and six months ended June 30, 1998 and
1997 [Unaudited] . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements
[Unaudited] . . . . . . . . . . . . . . . . . . . . 5
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . 9
PART II: OTHER INFORMATION . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 13
. . . . . . . . . . .
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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DECEMBER
JUNE 30, 31,
1998 1997
[UNAUDITED] [AUDITED]
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ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,179,154 $ 2,908,167
Accounts Receivable [Less Allowance for
Doubtful Accounts of $185,610 and
$185,610] 4,187,473 1,234,706
Note Receivable - Related Party 1,000,000 --
Prepaid Expenses 142,655 140,783
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TOTAL CURRENT ASSETS 7,509,282 4,283,656
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PROPERTY AND EQUIPMENT - AT COST:
Furniture, Fixtures and Equipment 2,670,355 2,625,678
Less: Accumulated Depreciation (2,473,992) (2,397,704)
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PROPERTY AND EQUIPMENT - NET 196,363 227,974
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SOFTWARE LICENSE HELD FOR SALE AT
DECEMBER 31, 1997 [LESS ACCUMULATED
AMORTIZATION OF $-0- AND $1,750,000] -- 3,250,000
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CAPITALIZED SOFTWARE [LESS ACCUMULATED
AMORTIZATION OF $2,160,689 AND
$1,820,857] 449,225 663,057
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NOTE RECEIVABLE - RELATED PARTY 2,893,054 --
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OTHER ASSETS 65,735 59,335
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TOTAL ASSETS $11,113,659 $ 8,484,022
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The Accompanying Notes are an Integral Part of These Consolidated
Financial Statements.
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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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DECEMBER
JUNE 30, 31,
1998 1997
[UNAUDITED] [AUDITED]
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LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable $ 541,021 $ 571,309
Accrued Liabilities 1,663,484 1,618,676
Unearned Revenue 718,101 447,133
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TOTAL CURRENT LIABILITIES 2,922,606 2,637,118
CONVERTIBLE DEBENTURES 3,000,000 3,000,000
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TOTAL LIABILITIES 5,922,606 5,637,118
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COMMITMENTS AND CONTINGENCIES -- --
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STOCKHOLDERS' EQUITY:
Common Stock, $.01 Par Value,
Authorized 30,000,000 Shares, Issued
16,977,672 and 16,791,122 Shares,
Respectively 169,777 167,911
Capital in Excess of Par Value 26,712,707 25,273,031
Accumulated Deficit (21,691,431) (22,594,038)
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TOTAL STOCKHOLDERS' EQUITY 5,191,053 2,846,904
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 11,113,659 $ 8,484,022
========== ============
The Accompanying Notes are an Integral Part of These Consolidated
Financial Statements.
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<PAGE>
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
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THREE MONTHS ENDED SIX MONTHS ENDED
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JUNE 30, JUNE 30,
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1998 1997 1998 1997
---- ---- ---- ----
REVENUES:
Licenses $2,015,354 $ 412,532 $ 3,424,389 $ 486,508
Maintenance 910,198 628,318 1,805,331 1,215,178
Professional
Services 706,053 297,350 1,272,841 519,228
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3,631,605 1,338,200 6,502,561 2,220,914
TOTAL REVENUES --------- --------- --------- ---------
COST OF REVENUES:
Licenses 1,227,928 453,728 2,124,610 907,451
Maintenance 375,292 509,630 716,617 1,149,130
Professional
Services 190,917 279,317 366,810 492,484
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TOTAL COST OF 1,794,137 1,242,675 3,208,037 2,549,065
REVENUES --------- --------- --------- ---------
1,837,468 95,525 3,294,524 (328,151)
GROSS PROFIT --------- --------- --------- ---------
OPERATING EXPENSES:
Sales and Marketing497,245 456,541 833,428 808,470
General and
Administrative 447,396 572,805 864,425 1,379,103
Research and
Development 278,563 -- 542,841 --
--------- --------- ---------- ---------
TOTAL OPERATING 1,223,204 1,029,346 2,240,694 2,187,573
EXPENSES --------- --------- --------- ---------
OPERATING INCOME
(LOSS) 614,264 (933,821) 1,053,830 (2,515,724)
INTEREST INCOME 19,602 18,084 36,277 19,802
93,750 94,792 187,500 100,521
INTEREST EXPENSE --------- ---------- ---------- ----------
$ 540,116 $(1,010,529) $ 902,607 $(2,596,443)
NET INCOME (LOSS)========= ========== ========== ==========
BASIC EARNINGS $ .03 $ (.06)$ .05 $ (.16)
(LOSS) PER SHARE ========= ========== =========== ===========
DILUTED EARNINGS$ .03 $ (.06)$ .05 $ (.16)
(LOSS) PER SHARE========= ========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES 16,965,719 16,720,297 16,889,886 16,719,146
OUTSTANDING ========== ========== ========== ===========
The Accompanying Notes are an Integral Part of These Consolidated
Financial Statements.
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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
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SIX MONTHS ENDED
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JUNE 30,
------------------
1998 1997
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CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income [Loss] $ 902,607 $(2,596,443)
Adjustments to Reconcile Net
Income [Loss] to Net Cash
Used for Operating Activities:
Depreciation 76,288 104,662
Amortization of Capitalized
Software and Software License 339,832 907,450
Provision for Uncollectible
Accounts -- 33,099
Noncash Compensation Expense
on Granting of Stock Options -- 116,344
Changes in Assets and
Liabilities:
[Increase] Decrease in:
Accounts Receivable (1,952,767) 313,644
Note Receivable - Short Term (1,000,000) --
Prepaid Expenses (1,872) (237,363)
Other Assets (6,400) 6,846
Increase [Decrease] in:
Accounts Payable (30,288) (48,979)
Accrued Liabilities 44,808 (419,110)
Unearned Revenue 270,968 (506,174)
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NET CASH [USED FOR] OPERATING
ACTIVITIES (1,356,824) (2,326,024)
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CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital Expenditures (44,677) (1,202)
Capitalized Software
Expenditures (126,000) --
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NET CASH [USED FOR] PROVIDED
FROM INVESTING ACTIVITIES (170,677) (1,202)
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CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Bridge Financing -- 750,000
Payments on Bridge Financing -- (750,000)
Proceeds from Convertible
Debentures -- 3,000,000
Proceeds from Sale of Software
License 500,000 --
Proceeds from Exercise of Stock
Options 298,488 4,199
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NET CASH PROVIDED FROM FINANCING
ACTIVITIES 798,488 3,004,199
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CHANGE IN CASH AND CASH
EQUIVALENTS (729,013) 676,973
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIODS 2,908,167 446,672
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CASH AND CASH EQUIVALENTS - END
OF PERIODS $ 2,179,154 $ 1,123,645
=========== ===========
The Accompanying Notes are an Integral Part of These Consolidated
Financial Statements.
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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
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[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, 1997. 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 June 30, 1998
and December 31, 1997 and the results of operations for the three
and six month periods ended June 30, 1998 and 1997, and the cash
flows for the six month periods ended June 30, 1998 and 1997. Such
adjustments are of a normal and recurring nature. The results of
operations for the three and six month period ended June 30, 1998
are not necessarily indicative of the results to be expected for a
full year.
[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 principal 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
was used to repay the bridge financing. The remaining net proceeds
were used for working capital purposes.
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COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
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[3] SALE OF STOCK AND WARRANTS, AND PURCHASE AND SALE OF CARE
SOFTWARE LICENSE
On March 31, 1996, the Company was granted by Care Corporation
Limited ["Care"] the exclusive license for the Care software for
use in the workers' compensation claims administration markets in
Canada, Mexico and Central and South America [the "Care Software
License"]. In exchange for this license, the Company issued to
Care 2,500,000 shares of the Company's Common Stock and the Company
recorded a software license for $5,000,000. 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,
or not reached, the Company had the right to repurchase all or a
portion of the shares issued to Care at $.01 per share.
In the fourth quarter of 1997, the Company made a strategic
decision to allocate its future resources to its TAS 2000 and
Classic product lines rather than the product line obtained via the
Care Software License. In this regard, on March 31, 1998, the
Company negotiated and consummated a buy back by Care of the Care
Software License.
For the buy back of Care Software License by Care, the Company
received $500,000 on March 31, 1998, and a $4,500,000 non-interest
bearing non-recourse [except as to collateral] note, payable in
semi-annual installments of $500,000 which, when discounted,
results in a principal amount of the note of $3,893,054. The
discounted note is collateralized by unencumbered Cover-All stock
owned by Care. The number of shares required as collateral will
vary, such that the market value of the shares held as collateral
must equal 150% of the outstanding balance. The number of shares
required as collateral will be adjusted at each payment date based
on the market price of the Company's shares and the balance
outstanding on such date. Based on the market price of the
Company's stock on March 30, 1998, approximately 1,700,000 shares
were pledged as collateral. Upon receipt of the first $500,000
payment under the agreement on March 31, 1998, the Company lifted
the aforementioned $.01 per share stock repurchase restriction on
the 2,500,000 shares. Although not required by the agreement, the
calculation of shares pledged as collateral would have been
2,100,000 shares as of June 30, 1998.
In separate but related agreements, Care agreed to grant to the
Company certain non-exclusive re-seller rights to the Care
software, and the Company agreed to grant to Care certain non-
exclusive re-seller rights to the TAS 2000 software and Classic
product lines.
Based on the above, and due to the related party nature of the Care
Software License buy back agreement, the Company recorded the
$1,143,000 difference between the carrying value of the Care
Software License and the discounted $4,393,000 buy back agreement
to capital in excess of par value at March 31, 1998.
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<PAGE>
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
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[4] INCOME TAXES
Pursuant to Statement of Financial Accounting Standards ["SFAS"]
No. 109, "Accounting for Income Taxes," income tax expense [or
benefit] for the period is the sum of deferred tax expense [or
benefit] and income taxes currently payable [or refundable].
Deferred tax expense [or benefit] is the change during the year in
a company's deferred tax liabilities and assets. Deferred tax
liabilities and assets are determined based on differences between
financial reporting and tax basis of assets and liabilities, and
are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse. At December
31, 1997, the Company had approximately $3,000,000, $14,000,000 and
$7,000,000 of operating tax loss carryforwards expiring in 2012,
2011, and 2010, respectively. No provision for income taxes is
reflected in these financial statements as the Company anticipates
utilizing the operating tax loss carryforwards to offset any
taxable income the Company may have.
[5] NET INCOME [LOSS] PER SHARE
The Financial Accounting Standards Board has issued SFAS No. 128,
"Earnings per Share," which is effective for financial statements
issued for periods ending after December 15, 1997. Accordingly,
earnings per share data in the financial statements for the three
and six months ended June 30, 1998 have been calculated in
accordance with SFAS No. 128. Prior periods loss per share data
have been recalculated and it was determined that no adjustment was
necessary to conform with SFAS No. 128.
SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15,
Earnings per Share, and replaces its primary earnings per share
with a new basic earnings per share representing the amount of
earnings for the period available to each share of common stock
outstanding during the reporting period. Basic earnings [loss] per
share is computed by dividing income [loss] available to common
stockholders by the weighted average number of common shares
outstanding during the period. SFAS No. 128 also requires a dual
presentation of basic and diluted earnings per share on the face of
the statement of operations for all companies with complex capital
structures. Diluted earnings per share reflects the amount of
earnings for the period available to each share of common stock
outstanding during the reporting period, while giving effect to all
dilutive potential common shares that were outstanding during the
period, such as common shares that could result from the potential
exercise or conversion of securities into common stock.
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<PAGE>
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
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[5] NET INCOME [LOSS] PER SHARE [CONTINUED]
The computation of diluted earnings per share does not assume
conversion, exercise, or contingent issuance of securities that
would have an antidilutive effect on per share amounts [i.e.,
increasing earnings per share or reducing loss per share]. The
dilutive effect of outstanding options and warrants and their
equivalents are reflected in dilutive earnings per share by the
application of the treasury stock method which recognizes the use
of proceeds that could be obtained upon exercise of options and
warrants in computing diluted earnings per share. It assumes that
any proceeds would be used to purchase common stock at the average
market price during the period. Options and warrants will have a
dilutive effect only when the average market price of the common
stock during the period exceeds the exercise price of the options
or warrants. The Company's options and warrants were not included
in the computation of loss per share for the three and six months
ended June 30, 1997 because to do so would have been antidilutive
for that period. However, although such options and warrants did
dilute earnings per share for the three and six months ended June
30, 1998, the effect was not material.
The dilutive effect of convertible debt is reflected in diluted
earnings per share by the application of the if-converted method.
While the Company's convertible debt had a dilutive effect on
earnings per share for the three and six months ended June 30,
1998, its effect was not material. The Company's convertible debt
did not affect the loss per share calculation for the three and six
months ended June 30, 1997 because its inclusion would have been
antidilutive.
. . . . . . . . . .
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<PAGE>
ITEM 2:
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Total revenues for the three months ended June 30, 1998 were
$3,632,000 as compared to $1,338,000 for the same period in 1997,
an increase of 171%. Licenses fees were $2,015,000 for the three
months ended June 30, 1998 compared to $413,000 in the same period
in 1997 as a result of sales of TAS 2000 product modules. For the
three months ended June 30, 1998, maintenance revenues were
$910,000 compared to $628,000 in the same period of the prior year
due to an increased customer base. Professional services revenue
contributed $706,000 in the three months ended June 30, 1998
compared to $297,000 in the first quarter of 1997 as a result of
additional TAS 2000 work. Total Classic revenues were $1,515,000
for the three months ended June 30, 1998 as compared to $988,000
for the three months ended June 30, 1997. Total TAS 2000 revenues
were $2,117,000 for the three months ended June 30, 1998 as
compared to $350,000 for the three months ended June 30, 1997. For
the six months ended June 30, 1998, total revenues were $6,503,000
compared to $2,221,000 in the same period of the prior year, an
increase of 193%. Total Classic revenues were $3,259,000 for the
six months ended June 30, 1998 as compared to $1,821,000 in the
same period in 1997. Total TAS 2000 revenues were $3,244,000 for
the first six months of 1998 as compared to $400,000 in the same
period in 1997.
Cost of sales increased to $1,794,000 and $3,208,000 for the three
and six months ended June 30, 1998 as compared to $1,243,000 and
$2,549,000 for the same periods in 1997 as a result of higher sales
volume. Non-cash capitalized software and license fee amortization
decreased to $168,000 and $340,000 for the three and six months
ended June 30, 1998 as compared to $454,000 and $908,000 in the
same periods in 1997, because there was no license fee amortization
for the three and six months ended June 30, 1998 due to the sale of
the Care license back to the Care Corporation Limited.
Research and development expenses were $279,000 and $543,000 for
the three and six months ended June 30, 1998 compared to none for
the same periods in 1997 as a result of work on the TAS 2000
product line.
Sales and marketing expenses were $497,000 and $833,000 for the
three and six months ended June 30, 1998 as compared to $456,000
and $808,000 in the same periods of 1997 due to an increased
marketing and sales effort to improve the market share of both of
the Company's product lines.
General and administrative expenses decreased to $447,000 and
$864,000 in the three and six months ended June 30, 1998 as
compared to $573,000 and $1,379,000 in the same periods in 1997 due
to continued efforts to reduce overhead costs.
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<PAGE>
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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The Company is gearing up for continued growth in 1998. In the
Classic line, the Company is completing the release later this year
of a 32 bit full graphical user interface [GUI] version.
The TAS 2000 product line offers a complete policy and claims
administration system to property and casualty insurance companies.
The newly developed billing module was released to two customers in
June 1998. The TAS 2000 products are being marketed in both the
domestic marketplace and in the United Kingdom.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
In 1996, the Company was granted by Care, the Care Software
License. In exchange for this license, the Company issued to Care
2,500,000 shares of the Company's common stock using a $2.00 per
share price to value the license as $5,000,000 at March 31, 1996.
The product has been successfully deployed in Australia and the
United States in Third Party Administration ["TPA"] and self
insured environments, including city and state government
operations as well as with major private corporations. In the
fourth quarter of 1997, the Company made a strategic decision to
allocate its future resources to its TAS 2000 and Classic product
lines rather than the product line obtained via the Care Software
License. In this regard, on March 31, 1998, the Company negotiated
a buy back by Care of the Care Software License, while acquiring
worldwide reseller rights, excluding Australia, New Zealand, and
the United States to the Care Software.
In consideration for the buy back of the Care Software License by
Care, the Company received $500,000 on March 31, 1998, and a
$4,500,000 non-interest bearing non-recourse [except as to
collateral] note, payable in semi-annual installments of $500,000
which, when discounted, results in a principal amount of the note
of $3,893,000. The discounted note is collateralized by
unencumbered Cover-All stock owned by Care. The number of shares
required as collateral will vary, such that the market value of the
shares held as collateral must equal 150% of the outstanding
balance. The number of shares required as collateral will be
adjusted at each payment date based on the market price of the
Company's shares and the balance outstanding on the date. Based on
the market price of the Company's stock on March 30, 1998,
approximately 1,700,000 shares were pledged as collateral.
Although not required by the agreement, the calculation of shares
pledged as collateral would have been 2,100,000 shares as of June
30, 1998.
Based on the above, and due to the related party nature of the Care
Software License buy back agreement, the Company recorded
$1,143,000, the difference between the carrying value of the Care
Software License of $3,250,000 at December 31, 1997, and the
discounted $4,393,000 buy back agreement, to capital in excess of
par value at March 31, 1998.
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<PAGE>
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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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 were used for working
capital purposes.
At June 30, 1998, the Company had working capital of $4,587,000, as
compared to working capital of $1,647,000 at December 31, 1997 and
$249,000 at June 30, 1997. The improvement in working capital was
due to the payments received on new contracts signed and the
recording of $500,000 cash received as a result of the buy back of
the Care Software License by Care.
The Company believes that its current cash balances and anticipated
cash flows from operations will be sufficient to meet normal
operating needs for the Company in 1998.
Statements in this Form 10Q, other than statements of historical
information are forward-looking statements that are made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve known and
unknown risks which may cause the Company's actual results in
future periods to differ materially from expected results. Those
risks include, among others, risk associated with increased
competition, customer decisions, delays in productivity programs
and new product introductions, and other business factors beyond
the Company's control. Those and other risks are described in the
Company's filings with the Securities and Exchange Commission
["SEC"] over the last 12 months, copies of which are available from
the SEC or may be obtained upon request from the Company.
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<PAGE>
COVER-ALL TECHNOLOGIES INC. AND SUBSIDIARIES
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PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of Cover-All Technologies
Inc. was held on June 18, 1998 [the "Meeting"]. At the
Meeting, the stockholders of the Company elected two directors
to serve for three-year terms and until their successors have
been duly elected and qualified.
Indicated below are the total votes cast in favor of each
director nominee and the total votes withheld:
Director Votes For Votes Withheld
-------- --------- --------------
James R. Stallard 14,724,606 43,357
Ian J. Meredith 14,242,709 525,254
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
---------
27. Financial Data Schedule.
(b) Reports on Form 8-K.
-------------------
None.
-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.
Date: August 12, 1998 By: /s/ Brian Magowan
----------------------------------
Brian Magowan, Chairman and Chief
Executive Officer
Date: August 12, 1998 By: /s/ John R. Nobel
----------------------------------
John R. Nobel, Chief Financial
Officer
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 JUNE 30, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,179,154
<SECURITIES> 0
<RECEIVABLES> 5,373,083
<ALLOWANCES> 185,610
<INVENTORY> 0
<CURRENT-ASSETS> 7,509,282
<PP&E> 2,670,355
<DEPRECIATION> 2,473,992
<TOTAL-ASSETS> 11,113,659
<CURRENT-LIABILITIES> 2,922,606
<BONDS> 0
169,777
0
<COMMON> 0
<OTHER-SE> 5,021,276
<TOTAL-LIABILITY-AND-EQUITY> 11,113,659
<SALES> 0
<TOTAL-REVENUES> 6,502,561
<CGS> 0
<TOTAL-COSTS> 3,208,037
<OTHER-EXPENSES> 2,240,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 151,222
<INCOME-PRETAX> 902,607
<INCOME-TAX> 0
<INCOME-CONTINUING> 902,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 902,607
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
