SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
F O R M 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period March 31, 1997;
or
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______
Commission file #0-15797
XIOX CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 95-3824750
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No)
incorporation or organization)
577 Airport Blvd, Suite 700,
Burlingame, California 94010
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (415) 375-8188
- --------------------------------------------------------------------------------
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). Yes X No
--- ---
(2) Has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Issuer's number of common shares
outstanding at March 31, 1997 2,372,384 shares
- --------------------------------------------------------------------------------
PAGE 1 of 11
<PAGE>
X I O X C O R P O R A T I O N
INDEX
Page No.
PART I Financial Information
Item 1.
Condensed Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations
Three Months ended March 31, 1997 and March 31, 1996 4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 1997 and March 31, 1996 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II Other Information
Item 6.
Exhibits and Reports on Form 8-K 10
Exhibit 27.
Financial Data Schedule - March 31, 1997
(separate electronic document attached)
Signatures 11
PAGE 2
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
X I O X C O R P O R A T I O N
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, 1997 December 31, 1996
ASSETS: (unaudited) ***
<S> <C> <C>
CURRENT ASSETS
CASH & CASH EQUIVALENTS $ 389,492 291,488
ACCOUNTS RECEIVABLE, NET 853,964 1,062,045
OTHER RECEIVABLES 8,142 66,412
INVENTORIES 424,308 433,769
PREPAID EXPENSES AND OTHER ASSETS 79,489 69,470
------------ ----------
TOTAL CURRENT ASSETS 1,755,395 1,923,184
PROPERTY & EQUIPMENT, NET 350,390 358,118
PURCHASED SOFTWARE, NET 42,133 52,930
NOTES RECEIVABLE 131,138 131,138
DEPOSITS & OTHER ASSETS 19,585 20,319
------------ ----------
$ 2,298,641 2,485,689
============ ==========
LIABILITIES/STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
BANK LINE OF CREDIT $ -- --
ACCOUNTS PAYABLE 102,055 140,627
ACCRUED EXPENSES 90,811 212,081
ACCRUED COMPENSATION 116,052 114,380
PURCHASE DEPOSITS 38,931 41,025
DEFERRED REVENUE 665,549 721,586
------------ ----------
TOTAL CURRENT LIABILITIES $ 1,013,398 1,229,699
COMMITMENTS & CONTINGENCIES
STOCKHOLDERS' EQUITY
COMMON STOCK, $.01 Par, 10,000,000 Authorized, 23,724 23,724
2,372,384 and 2,372,384 issued and outstanding in
1997 and 1996 respectively
PAID-IN CAPITAL 5,492,345 5,492,345
NOTE RECEIVABLE FROM SHAREHOLDER (27,188) (27,188)
ACCUMULATED DEFICIT (4,203,638) (4,232,891)
------------ ----------
TOTAL STOCKHOLDERS' EQUITY 1,285,243 1,255,990
------------ ----------
2,298,641 2,485,689
============ ==========
<FN>
*** Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed financial
statements.
</FN>
</TABLE>
PAGE 3
<PAGE>
PART I - FINANCIAL INFORMATION
XIOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended
March 31, 1997 March 31, 1996
(unaudited) (unaudited)
REVENUES $1,272,934 1,339,525
---------- ---------
PRODUCT COSTS 480,737 600,792
RESEARCH AND DEVELOPMENT 201,370 189,754
MARKETING, SALES AND ADMINISTRATIVE 551,007 643,314
---------- ---------
1,233,114 1,433,860
---------- ---------
INCOME (LOSS) FROM OPERATIONS 39,820 (94,335)
OTHER (LOSS) INCOME, NET (7,742) 1,116
---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 32,078 (93,219)
INCOME TAX PROVISION (2,825) (2,815)
---------- ---------
NET INCOME (LOSS) $ 29,253 (96,034)
========== =========
PER SHARE INFORMATION:
NET INCOME (LOSS) PER SHARE $ 0.01 (0.04)
========== =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE QUARTER 2,402,887 2,362,918
========== =========
The accompanying notes are an integral part of these condensed financial
statements.
PAGE 4
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
XIOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three months ended Three months ended
March 31, 1997 March 31, 1996
(unaudited) (unaudited)
<S> <C> <C>
CASH FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 29,253 (96,034)
RECONCILING ADJUSTMENTS FROM OPERATING
ACTIVITIES:
DEPRECIATION AND AMORTIZATION 58,403 57,335
DECREASE (INCREASE) IN:
ACCOUNTS RECEIVABLE, NET 208,081 (28,744)
OTHER RECEIVABLES 58,270 10,068
INVENTORIES 9,461 95,944
PREPAID EXPENSES, DEPOSITS AND OTHER ASSETS (9,285) (149,853)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (158,170) (51,874)
PURCHASE DEPOSITS (2,094) 120,481
DEFERRED REVENUE (56,037) 37,943
---------- --------
NET CASH PROVIDED BY (USED IN) OPERATIONS 137,882 (4,734)
CASH FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (36,878) 62
ACQUISITION OF SOFTWARE (3,000) (4,455)
---------- --------
NET CASH (USED IN) INVESTING ACTIVITIES (39,878) (4,393)
CASH FROM FINANCING ACTIVITIES:
BANK LINE OF CREDIT REPAYMENTS -- (100,000)
BORROWINGS FROM BANK LINE -- --
PROCEEDS FROM SALE OF COMMON STOCK -- 163
-- ---
NET CASH USED IN FINANCING ACTIVITIES -- (99,837)
---------- --------
NET INCREASE/(DECREASE) IN
CASH & CASH EQUIVALENTS 98,004 (108,964)
BEGINNING CASH AND CASH EQUIVALENTS 291,488 344,165
---------- --------
ENDING CASH AND CASH EQUIVALENTS $ 389,492 235,201
========== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
INTEREST PAID DURING THE QUARTER $ 0 1,536
INCOME TAXES PAID DURING THE QUARTER 3,650 2,815
NONCASH FINANCING ACTIVITIES
COMMON STOCK ISSUED UPON EXERCISE OF
STOCK OPTIONS IN EXCHANGE FOR NOTE
RECEIVABLE FROM SHAREHOLDER $ 27,188 27,188
========== ========
</TABLE>
PAGE 5
<PAGE>
PART I - FINANCIAL INFORMATION
X I O X C O R P O R A T I O N
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 : BASIS OF PRESENTATION
The financial information included herein relating to December 31, 1996 is
audited, and the financial information relating to the three month periods ended
March 31, 1997 and March 31, 1996 is unaudited, and as such reflects all
adjustments (consisting solely of normal recurring adjustments which are, in the
opinion of management, necessary for a fair statement of results for the interim
periods). Certain information and footnote disclosures normally included in
accordance with generally accepted accounting principles have been condensed
pursuant to Securities and Exchange Commission Rules.
The results of operations for the three month period ended March 31, 1997 are
not necessarily indicative of the results to be expected for the full year. It
is suggested that these interim statements be read in conjunction with the
financial statements and notes included in the Company's Annual Financial Report
filed on Form 10K-SB for the year ended December 31,1996.
NOTE 2 : INVENTORIES
Inventories at March 31, 1997 have been stated at the lower of cost (first-in,
first-out basis) or market. Inventories consist solely of purchased hardware and
software products (finished goods).
NOTE 3 : PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
March 31, 1997 December 31, 1996
-------------- -----------------
Office equipment $ 1,107,855 1,075,298
Furniture and fixtures 309,959 305,638
----------- ----------
1,417,814 1,380,936
Less accumulated depreciation (1,067,424) (1,022,818)
----------- ----------
350,390 358,118
=========== ==========
Purchased Software $ 203,037 200,037
Less accumulated depreciation (160,904) (147,107)
----------- ----------
42,133 52,930
=========== ==========
PAGE 6
<PAGE>
PART I - FINANCIAL INFORMATION
X I O X C O R P O R A T I O N
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 : BANK LINE OF CREDIT
The Company maintains a $1,000,000 line of credit collateralized by eligible
accounts receivable. The line bears interest at prime plus 1.50% and is
renewable in May 1997. At March 31, 1997 the Company had $0 outstanding against
this line.
NOTE 5: RECENT ACCOUNT PRONOUNCEMENTS
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS No. 128 requires
the presentation of basic earnings per share ("EPS") and, for companies with
complex capital structures, diluted EPS. SFAS No. 128 is effective for annual
and interim periods ending after December 31, 1997. Adoption of SFAS No. 128 is
not expected to have a material impact on net income (loss) per common share as
presented in the accompanying consolidated statements of operations.
PAGE 7
<PAGE>
PART I - FINANCIAL INFORMATION
X I O X C O R P O R A T I O N
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The forward-looking statements included in this Quarterly Report filed on Form
10-QSB, which reflect management's best judgment based on factors known, involve
risks and uncertainties. In addition, the Company may from time to time make
oral forward-looking statements. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of a number of factors, including but not limited to those discussed
under "Certain Risk Factors Which May Impact Future Operating Results and Market
Price of Stock on page 9 below. Forward-looking information provided by Xiox
should be evaluated in the context of these factors.
The following is management's discussion and analysis of certain significant
factors which have effected Xiox's financial position and operating results
during the periods included in the accompanying condensed financial statements.
Results of Operations
Revenue for the three months ended March 31, 1997 was $1,272,934, a decrease of
5% versus the $1,339,525 recorded during the three months ended March 31, 1996.
The $66,591 decrease in revenue is attributable to the Company's typical trend
of weaker sales in the first quarter compared to sales for the last quarter of
the previous year.
Total operating expenses for the three months ended March 31, 1997 were
$1,233,114, a decrease of 14% or $200,746 versus the $1,433,860 of operating
expenses incurred during the three months ended March 31, 1996. Total product
costs as a percentage of revenue decreased to 38% in the first quarter of 1997
from 45% in the first quarter in 1996, primarily due to variations in product
mix and inventory variance.
Research and development expenses increased by 6% or $11,616 to $201,370 in the
first quarter of 1997 compared to $189,754 in the first quarter of 1996 due to
an increased investment in new product development.
Marketing, Sales and General and Administrative expenses in the first quarter of
1997 decreased by 14% or $92,307 compared to the first quarter of 1996 due to
discretionary spending controls offset by increased spending in new products.
Other income decreased by $8,858 from the first quarter of 1996 primarily due to
a $10,883 profit sharing distribution in the first quarter of 1997. This
decrease was offset by a moderate increase in interest income from short-term
securities in the first three months of 1997 to $3,142 versus $2,653 in the
first three months of 1996. In addition, no debt was outstanding in the first
quarter of 1997 explaining the decrease in interest expense to $0 versus $1,536
in the first quarter of 1996.
The Company earned $39,820 from operations during the first quarter of 1997 and
reported a net income after taxes of $29,253 versus a loss of $94,335 from
operations and a net loss after taxes of $96,034 in the comparable quarter of
1996. The Company attributed this to its management of expenses, product mix and
efforts to streamline operations.
PAGE 8
<PAGE>
PART I - FINANCIAL INFORMATION
X I O X C O R P O R A T I O N
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital
At March 31, 1997, Xiox held cash and cash equivalents totaling $389,492 and had
working capital of $741,997 versus cash equivalents of $291,488 and working
capital of $693,485 at December 31, 1996. The Company anticipates investing
approximatedly $100,000 in capital equipment during 1997, consisting primarily
of computer hardware and software and office equipment. Since December 31, 1996,
capital equipment procurements have totaled $39,878.
In December, 1996, the Company had a bank line of credit of $1,000,000. The bank
line, when utilized, is collateralized by certain current assets and property
and equipment. The line carries a variable interest rate based upon prime plus
1.50. At March 31, 1997, the Company had $0 outstanding against this line.
Certain Risk Factors Which May Impact Future Operating Results and Market Price
of Stock
Xiox operates in a rapidly changing environment that involves a number of risks
and uncertainties, some of which are beyond the Company's control and any of
which may have an adverse effect on the Company's business, financial condition
and results of operations. These uncertainties include, but are not limited to,
the Company's reliance on the sale of few products; the Company's dependence on
the ability of its distribution channels to market the Company's products; the
fluctuations in the Company's quarterly results and the effect of these results
on the Company's ability to maintain its listed status on the Nasdaq Small Cap
Market; the ability of the Company's product developers to design products and
software that do not contain defects and "bugs" which render the products or
software inoperable or susceptible to breakdown, software viruses or "hacking";
and the outcome of any litigation the Company may be involved in. In addition,
the Company typically experiences weaker sales in the first quarter of each
calendar year compared to sales for the last quarter of the previous year.
PAGE 9
<PAGE>
PART II - OTHER INFORMATION
XIOX CORPORATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
The following amendment was made in the first quarter of 1997 and filed under
Form 8-K/A:
Amendment #2 to Form 8-K was filed February 28, 1997 which provided Exhibit
5.2.i Customer Agreement relating the Company's sale of certain assets of
Seller's Gemini Telemanagment Systems on October 14, 1995.
PAGE 10
<PAGE>
********************************************************************************
X I O X C O R P O R A T I O N
SIGNATURES
In accordance with 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 duly authorized officers of the registrant.
XIOX CORPORATION
Registrant
Date: May 15, 1997
/s/ William H. Welling
--------------------------------------
(Duly Authorized Officer)
Date: May 15, 1997
/s/ Melanie D. Reid
--------------------------------------
Melanie D. Reid, VP Finance/CFO/Secretary
(Duly Authorized Officer)
PAGE 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the Company's
Condensed Consolidated Balance Sheets and Statements of Operations AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000782995
<NAME> XIOX CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 389,492
<SECURITIES> 0
<RECEIVABLES> 1,031,535
<ALLOWANCES> 177,571
<INVENTORY> 424,308
<CURRENT-ASSETS> 1,755,395
<PP&E> 1,620,851
<DEPRECIATION> 1,228,328
<TOTAL-ASSETS> 2,298,641
<CURRENT-LIABILITIES> 1,013,398
<BONDS> 0
0
0
<COMMON> 23,724
<OTHER-SE> 1,261,519
<TOTAL-LIABILITY-AND-EQUITY> 2,298,641
<SALES> 1,272,934
<TOTAL-REVENUES> 1,272,934
<CGS> 480,737
<TOTAL-COSTS> 1,233,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 32,078
<INCOME-TAX> 2,825
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,253
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0
</TABLE>
