<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-9925
COPE, Inc.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 87-0427731
- ------------------------------------- ---------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
Grundstrasse 14, 6343 Rotkreuz, Switzerland
- --------------------------------------------------------------------------------
(Address of principal executive offices)
+ 41 41 798 33 44
---------------------------
(Issuer's telephone number)
n/a
----------------------------------------------------
(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 of 1934 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 [_] No [X]
As of May 13, 1999, the Company had 3,595,751 shares of its $.001 par value
common stock issued and outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements PAGE
----
Unaudited Condensed Consolidated Balance Sheets at
March 31, 1999 (unaudited) and December 31, 1998 (audited)............... 2
Unaudited Condensed Consolidated Statements of Operations for the
three month periods ended March 31, 1999 and 1998........................ 3
Unaudited Condensed Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1999 and 1998........................ 4
Notes to Condensed Consolidated Financial Statements....................... 5
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<PAGE>
COPE, INC.
Consolidated Balance Sheets
(Amounts in U.S. Dollars)
<TABLE>
<CAPTION>
Assets
March 31, December 31,
1999 1998
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 600,864 $ 1,303,114
Trade accounts receivable 6,141,256 5,418,777
Inventories (net of provision of
$82,344 and $89,455) 1,951,918 2,433,790
Other current assets 638,043 450,013
----------- -----------
Total current assets 9,332,081 9,605,694
Property, plant and equipment, net 834,699 751,235
Loans receivable 923,655 662,050
Goodwill (net of amortization of
$88,559 and $59,855) 688,448 777,714
Intangible assets 296,393 249,459
Deferred income taxes 512,371 592,495
----------- -----------
TOTAL ASSETS $12,587,647 $12,638,647
=========== ===========
Liabilities
Current liabilities:
Short-term borrowings $ 1,901,584 $ 2,385,303
Trade accounts payable 6,332,450 5,650,422
Customer advances 304,295 216,558
Other current liabilities 523,907 802,384
Current income taxes payable 142,380 179,012
Deferred income taxes 200,079 216,352
----------- -----------
Total current liabilities 9,404,695 9,450,031
----------- -----------
Commitments and contingent liabilities 0 0
Shareholders' Equity
Shareholders' equity:
Share capital 3,153 3,153
Common stock$0.001 par value
Authorized shares 30,000,000
Issued and outstanding shares 3,152,861 (3,152,861)
Additional paid in capital 506,031 506,031
Additional other comprehensive income
Cumulative translation adjustment (134,892) 31,852
Retained earnings 2,808,660 2,647,580
----------- -----------
Total Shareholders' Equity 3,182,952 3,188,616
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,587,647 $12,638,647
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
COPE, INC.
Consolidated Statements of Income
(Amounts in U.S. Dollars)
For the three month periods ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three month
periods ended
-------------------------
March 31, March 31,
1999 1998
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<S> <C> <C>
Net Revenue
Sales of solutions $ 7,255,307 $ 4,145,487
Sales of services 1,282,607 495,348
----------- -----------
Total revenue 8,537,914 4,640,835
Cost of sales (5,673,756) (3,167,524)
----------- -----------
Gross profit 2,864,158 1,473,311
----------- -----------
Operating expenses
Selling, general and administrative expenses (2,437,519) (1,213,242)
Consultancy expenses (59,290) (67,787)
Depreciation and amortization (119,466) (116,056)
----------- -----------
Total operating expenses (2,616,275) (1,397,085)
Operating income 247,883 76,226
Other income (expense):
Interest expense (64,667) (13,058)
Interest income 38,276 0
Other (3,513) 1,145
----------- -----------
(29,904) (11,913)
----------- -----------
Earning before taxes 217,979 64,313
Current income taxes (20,964) (47,297)
Deferred income taxes (35,935) 84,749
----------- -----------
(56,899) 37,452
----------- -----------
Net income $ 161,080 $ 101,765
=========== ===========
Basic earning per share 0.051 0.036
Diluted earning per share 0.049 0.036
Basic average shares outstanding 3,152,861 2,862,000
Dilutive effect of stock options 163,382 0
----------- -----------
Diluted average shares outstanding 3,316,243 2,862,000
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
COPE, INC.
Consolidated Statements of Cash Flows
(Amounts in U.S. Dollars)
For the three month periods ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three month
periods ended
-------------------------
March 31, March 31,
1999 1998
----------- -----------
<S> <C> <C>
Cash flow provided by operating activities:
Net income $ 161,080 $ 101,765
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 83,868 53,052
Amortization 35,598 63,004
Deferred income taxes 35,935 (84,749)
Effects of changes in operating assets and
liabilities
Accounts receivable 1,125,873 1,236,466
Inventories (310,917) 119,639
Other current assets 230,872 (81,264)
Accounts payable (1,201,913) 459,174
Customer advances (108,242) (543,317)
Other current liabilities 226,964 (60,394)
----------- ----------
Net cash flow provided by operating activities 279,118 345,028
----------- ----------
Cash flow used in investing activities
Purchase of property, plant and equipment (229,512) (171,716)
Loans receivables (322,984) (267,785)
Purchase of intangible assets (68,361) 0
----------- ----------
Net cash flow used in investing activities (620,857) (439,501)
Cash flow used in financing activities:
Decrease of short term borrowings (304,301) (145,010)
----------- ----------
Net cash flow used in financing activities (304,301) (145,010)
Effect of exchange rate changes on cash (56,210) 22,072
Net decrease of cash and cash equivalents (702,250) (217,411)
Cash and cash equivalents at beginning of the period 1,303,114 678,936
----------- ----------
Cash and cash equivalents at end of the period $ 600,864 $ 461,525
=========== ==========
Supplemental cash flow disclosure
Interest paid $ 59,879 $ 12,485
Income taxes paid 22,145 1,141
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
COPE, INC.
Notes to Consolidated Financial Statements
As of March 31, 1999 and for the three month
periods ended March 31, 1999 and 1998
NOTE 1 - BASIS OF PRESENTATION
These condensed consolidated financial statements of COPE, Inc., a Delaware
corporation (the "Company"), do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report Form 10-KSB for the year
ended December 31, 1998. In the opinion of management, the financial information
set forth in the accompanying condensed consolidated financial statements
reflects all adjustments necessary for a fair statement of the periods reported,
and all such adjustments were of a normal and recurring nature. Interim results
are not necessarily indicative of results for a full year.
NOTE 2 - EARNINGS PER SHARE
In 1997, the Finacial Accounting Standards Board issued SFAS No. 128, "Earnings
Per Share". SFAS No. 128 replaced the calculation of primary and fully diluted
earnings per share with basic and diluted earnings per share. Basic earnings per
share is calculated by dividing net income by the weighted average shares
outstanding. The computation of diluted earnings per share is similar to basic
earnings per share except that it assumes that the weighted average shares
outstanding is increased by shares issuable upon exercise of those stock options
for which market price exceeds exercise price. Weighted average shares have been
retroactively restated for the equivalent number of shares received by the COPE
Shareholders as a result of the COPE Reorganization.
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<PAGE>
NOTE 3 - BUSINESS ACQUISITION
On June 25, 1998, COPE Holding AG, a wholly-owned subsidiary of the Company,
acquired all of the capital shares of Forum GmbH ("Forum"), a German data
storage company, for $962,977. The acquisition of Forum has been accounted for
by the purchase method of accounting. Accordingly, the operating results of
Forum have been included in the consolidated operating results from the date of
acquisition. The excess of the purchase price over the fair value of net assets
acquired was $863,546 and has been recorded as goodwill, which is being
amortized on a straight line basis over seven years. The acquisition was
financed through available cash on hand and short term borrowings.
On April 19, 1999, the Company acquired Hicomp Software Systems GmbH (Hicomp), a
German software company, in a stock transaction accounted for as a pooling-of-
interest. The Company issued 420,000 shares in exchange for all outstanding
Hicomp shares. Hicomp, headquartered in Hamburg, Germany, develops back-up and
retrieval software products. It's leading products, Hiback and Hibars, are
multi-platform back-up solutions recognized for performance and flexibility.
NOTE 4 - COMMON STOCK AND STOCK OPTION PLAN
During 1998, the Company adopted the 1998 Stock Option Plan ("1998 Plan") which
provides for the granting of either incentive stock options or non-qualified
stock options to employees, officers, directors, consultants and independent
contractors of the Company. Under the 1998 Plan, the Company is authorized to
grant a maximum of 400,000 stock options for terms of up to ten years (five
years in the case of incentive stock options granted to greater than 10%
stockholders). Options are subject to forfeiture upon termination of employment
or other relationship with the Company and the 1998 Plan terminates in August
2008.
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<PAGE>
In January 1999, the Company granted to employees options to purchase 129,900
shares of the Company's common stock at exercise prices ranging from $20.00 to
$50.00 per share. The options vest in installments commencing in 2000. On April
30, 1999, the company issued 22,390 shares of common stock upon exercise of
outstanding common stock purchase options.
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<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation
OVERVIEW
General. The Company is a Swiss-based provider of data storage and security
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consulting services and solutions. The Company's principal operations consist of
the design and implementation of information systems in the areas of data
storage, data security and data warehousing. The Company presently conducts
business throughout Switzerland, Germany and Austria.
COPE Reorganization. On September 25, 1998, the Company consummated a series of
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transactions (referred to as the "COPE Reorganization") undertaken pursuant to
an Amended and Restated Securities Purchase Agreement and Plan of Reorganization
dated July 24, 1998 ("Reorganization Agreement") by and among the Company, COPE
Holding AG, a Swiss corporation ("COPE"), and the shareholders of COPE Holding
AG ("COPE Shareholders"), pursuant to which, among other things, (i) the Company
effected a 1 for 58 reverse split of its shares of common stock issued and
outstanding immediately prior to the close of the COPE Reorganization, thus
reducing its issued and outstanding shares of common stock to approximately
270,654; (ii) the Company sold a controlling interest in its subsidiary,
Glycosyn Pharmaceuticals, a Delaware corporation ("Glycosyn"), and otherwise
divested itself of substantially all of its assets and liabilities on hand
immediately prior to the close of the COPE Reorganization; and (iii) the Company
issued 2,862,000 shares (post-split) of its common stock in exchange for all of
the outstanding capital shares of COPE Holding AG. See "Note 3 - COPE
Reorganization" to the Company's unaudited condensed consolidated financials
statements for a more complete description of the COPE Reorganization.
Since the COPE Shareholders owned approximately 91.4% of the outstanding shares
of the common stock of the Company after giving effect to the COPE
Reorganization, COPE Holding AG was deemed the accounting acquiror and the
Company's acquisition of COPE Holding AG has been accounted for as a reverse
merger under the purchase method. Accordingly, from an accounting standpoint,
COPE's equity is carried forward as the equity of the combined entity. There has
been no step up in the Company's accounting bases and, as a result, COPE Holding
AG is assumed to have acquired the Company at the Company's book value of $0,
after giving effect to the consummation of the COPE Reorganizations. This
adjustment reflects the elimination of the Company's equity and accumulated
deficit.
Currency Exchange Rates. The Company regularly enters into certain financial
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commitments payable in Swiss Francs, the unit of currency of Switzerland. All
Swiss Franc based amounts are designated by the symbol SFr. As of May 13, 1999,
the Swiss Franc-Dollar exchange rate was 1.49 Swiss Franc to 1 U.S. Dollar.
Although the Company reports its results in US dollars, virtually all of its
sales are denominated in other currencies, including, primarily, Swiss francs
and, to a lesser extent, Deutsche marks and the Austrian schillings. A
significant amount of the Company's cost of sales (i.e., hardware and software
purchases) on the other hand, are denominated in US dollars. Consequently, the
Company's cost of doing business is directly affected by any changes in the
exchange rate between the US dollar, on the one hand, and the Swiss franc and,
to a lesser extent, the Deutsche mark and Austrian schilling, on the other hand.
The financial position and results of operations of the Company and its foreign
subsidiaries are measured using local currency as the functional currency.
Assets and liabilities of the Company and its subsidiaries are translated at the
exchange rate in effect at each year-end. Income statement accounts are
translated at the average rate of exchange prevailing during the year.
Translation adjustments arising from differences in exchange rates from period
to period are included in the cumulative translation adjustment account in
stockholders' equity.
The Company typically enters into forward exchange contracts covering fifty
percent (50%) of its hardware and software purchases for its client contracts in
order to mitigate the adverse effects of currency exchange fluctuations.
However, these actions generally provide only a partial mitigation of the
adverse effects of changes in currency rates and there can be no assurance that
changes in currency rates in the future will not have a material adverse affect
on the Company's business, financial condition and results of operations.
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<PAGE>
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Net Revenue. During the three months ended March 31, 1999, the Company had net
- -----------
revenue of $8,537,914 which amounts to an increase of 84% over the net revenue
of $4,640,835 during the prior year period. The increase in net revenue is due
in part to the Company's acquisition of Forum, which was acquired
by the Company on June 25, 1998 and has been included in the consolidated
quarterly results of the Company for periods subsequent to June 25, 1998. The
Company believes that approximately $3,600,000 of the increase in revenue over
the prior year period is attributable to the Company's acquisition of Forum.
Sales of services (revenue from stand-alone consulting services) increased by
approximately 159% during the three months ended March 31, 1999 over the prior
year period reaching $1,282,607 in 1999, as compared to $495,348 in 1998. This
increase is the result of the Company's decision to emphasize sales of services
because of its potential for higher profit margins.
Cost of Sales. During the three months ended March 31, 1999, cost of sales
- -------------
increased by 79.1% to $5,673,756 compared to $3,167,524 for the prior year
period, representing 78.2% and 76.4%, respectively, of the total revenue from
the sale of solutions. The increase in the cost of sales as a percentage of
total revenue from the sale of solutions is the result of smaller margins for
products sold in Germany and a general margin erosion for hardware products.
Cost of sales consists exclusively of the Company's cost for the hardware and
software acquired for resale as part of its information systems.
Gross Profit. The Company's gross profit margin for the three months ended
- ------------
March 31, 1999 was 33.5% compared to 31.7% for the prior year period. The
increase is primarily attributable to the large internal growth in sales of
services as a percentage of total revenue.
Selling, General, Administrative and Consulting Expenses. The Company's
- --------------------------------------------------------
selling, general, administrative and consulting expenses as a percentage of net
sales was increased from 29.2% for the three months ended March 31, 1999 from
27.6% for the prior year period. The increase is primarily attributable to the
hiring of additional personnel necessary to support the growth in sales of
services.
LIQUIDITY AND FINANCIAL CONDITION
COPE's historical working capital requirements include the financing of all
costs involved in the design, implementation and sale of information systems.
The Company generally contracts to deliver information systems, including all
hardware and software, on a turn-key basis pursuant to fixed price contracts.
Consistent with industry practice, the Company generally is not able to obtain
significant up-front or progress payments on its contracts providing for the
design, implementation and sale of information systems. Accordingly, the Company
is generally required to finance its clients' contracts, including the purchase
of the hardware and software components of the information systems. As of March
31, 1999, the Company had established short-term overdraft facilities under
which the Company and its subsidiaries could borrow up to $2,600,563. Amounts
drawn down under these facilities are due on demand and collateralized by
accounts receivable of the Company and life insurance policies on the major
shareholders, Mr. Adrian Knapp and Mr. Stephan Isenschmid, for $ 342,700 each.
The Company has been successful to date in securing extensions on its lines for
purposes of financing certain client contracts as needed, however there can be
no assurance that the Company will continue to do so in the future.
As of March 31, 1999, the Company had a working capital deficit of
approximately $72,614, compared to a working capital position of $155,663 as of
March 31, 1998. The principal reasons for the decrease in working capital is the
increase in short-term borrowings which were used to purchase Forum and
additional equipment. As of March 31, 1999, the Company had approximately
$700,000 available for borrowing under existing lines of credit.
While the Company believes that its available working capital, including
presently available credit lines, is adequate for its current working capital
requirements, the Company believes that it will require significant additional
working capital in order to finance continued growth. The Company believes that
the proceeds from this offering, together with its existing capital resources,
will be sufficient to meet its capital requirements and finance its continued
growth for at least the next twelve months. However, if its capital requirements
vary materially from
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<PAGE>
those currently planned, the Company may require additional financing sooner
than anticipated. Additional financing may not be available when needed on terms
favorable to the Company or at all.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs, microprocessors, and
embedded date reliant systems using two digits rather than four to define the
applicable year. If such programs are not corrected, date data concerning the
Year 2000 could cause many systems to fail, lock up or generate erroneous
results. The Company considers a product to be "Year 2000 compliant" if the
product's performance and functionality are unaffected by processing of dates
prior to, during and after the Year 2000, but only if all products (for example
hardware, software and firmware) used with the product properly exchange
accurate date data with it).
The Company believes that it may be possible that litigation may be brought
against vendors, including the Company, of all component products of systems
that are unable to properly manage data related to the Year 2000. The Company's
agreements with customers and end users typically contain provisions designed to
limit the Company's liability for such claims. It is possible, however, that
these measures will not provide protection from liability claims, as a result of
existing or future federal, state or local laws or ordinances or unfavorable
judicial decisions. Any such claims, with or without merit, could result in a
material adverse effect on the Company's business, financial condition and
results of operations, customer satisfaction issues and potential lawsuits.
The Company is identifying Year 2000 dependencies in its accounting software
in Germany and other systems, equipment, and processes and is implementing
changes to such systems, updating or replacing such equipment, and modifying
such processes to make them Year 2000 compliant. The Company is continuing to
assess its internal Year 2000 issues and is in the process of remediation of the
critical systems. While management believes the Company's current accounting
software systems in the other countries of operations appear to be Year 2000
compliant, the Company intends to upgrade all those systems during fiscal 1999,
and will insure that Year 2000 compliance is a major factor in the selection of
the appropriate accounting software package. The Company has also initiated
formal communications with many of its significant suppliers and financial
institutions to evaluate their Year 2000 compliance plans and state of readiness
and to determine whether any Year 2000 issues will impede the ability of such
suppliers to continue to provide goods and services to the Company. As a
general matter, the Company is vulnerable to any failure by its key suppliers to
remedy their own Year 2000 issues, which could delay shipments of essential
components, thereby disrupting or halting the Company's manufacturing
operations. Further, the Company also relies, both domestically and
internationally, upon governmental agencies, utility companies,
telecommunication service companies and other service providers outside of the
Company's control. There is no assurance that such suppliers, governmental
agencies, financial institutions, or other third parties will not suffer
business disruption caused by a Year 2000 issue, and there is little practical
opportunity for the Company to test or require Year 2000 compliance from many of
those large agencies, companies or providers. Such failures could have a
material adverse effect on the Company's business, financial condition and
results of operations. Additionally, the Company is communicating with its
large customers to determine the extent to which the Company is vulnerable to
those third parties' failure to remedy their own Year 2000 issues.
The Company anticipates that its internal systems, equipment and processes
will be substantially Year 2000 compliant by the end of October 1999. A formal
budget has not been established, and the cost to the Company of achieving Year
2000 compliance is evolving; however, it is not currently expected to have a
material effect on the Company's financial condition or results of operations.
The Company has to date spent approximately $30,000 to upgrade computer software
and hardware to insure Year 2000 compliance. The Company anticipates that the
cost of Year 2000 compliant software (including the upgraded accounting software
noted above) is not likely to exceed $50,000, (excluding the costs of the Year
2000 compliance problems associated with the Company's vendors, customers,
financial institutions and government agencies noted above) although the Company
believes that a significant amount of the total expenditures would be
capitalized and depreciated over the useful life of the applicable asset, such
as computer hardware or software replaced to keep pace with technological
advances. The Company estimates that Year 2000 compliance charges will be paid
from existing working capital, and that the total Year 2000 compliance budget is
approximately 50% of the Company's total IT expenditures. While the Company
currently expects that the Year 2000 issue will not pose significant internal
operational problems, delays in the Company's remediation efforts, or a failure
to fully identify all Year 2000 dependencies in the systems, equipment
-10-
<PAGE>
or processes of the Company or its vendors, customers or financial institutions
could have material adverse consequences, including delays in the manufacture,
delivery or sale of products. Therefore, the Company is considering the
development of contingency plans along with its remediation efforts for
continuing operations in the event such problems arise.
Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of the European Union
("EU") established fixed conversion rates between their existing sovereign
currencies and the Euro, and adopted the Euro as their common legal currency. A
significant portion of the Company's transactions will be denominated in Euros.
The Company has successfully adapted its information systems and practices to
accommodate the Euro in those EU member countries in which it offers its
services. Euro conversion is expected to generally increase cross-border price
transparency among the participating countries and result in a more competitive
European market. The Company is uncertain as to the effect, if any, that Euro
conversion will have on its ability to sell its products and services in the
European market. Euro conversion could potentially impact pricing strategies and
demand for the Company's services in the European market, lead to increased
competition within the European market for the specific types of services sold
by the Company, or impact the Company's relationships with vendors and
licensors. There can be no assurance that Euro conversion will not have a
material, adverse effect on the Company's business, financial condition and
results of operation.
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements that are based on
the Company's beliefs as well as assumptions made by and information currently
available to the Company. When used herein, the words "believe," "expect,"
"anticipate," "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions, including (i) the intense competition in the
Company's industry; (ii) future developments and changes in prevailing
technologies and standards in the data storage industry; (iii) availability of
additional capital as required; and (iv) general economic conditions. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. The Company caution shareholders of the
Company and potential investors not to place undue reliance on any such forward-
looking statements, all of which speak only as of the date made.
-11-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
Inapplicable.
Item 2. Changes in Securities.
---------------------
Inapplicable.
Item 3. Defaults Upon Senior Securities.
-------------------------------
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Inapplicable.
Item 5. Other Information.
-----------------
Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
27.1 Financial Data Schedule
Inapplicable.
(b) Reports on Form 8-K
-------------------
On March 24, 1999, the Company filed a Form 8-K to report the appointment of
ATAG Ernst & Young, a member of Ernst & Young International, as the Company's
independent auditors for the fiscal year ending December 31,1998.
-12-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COPE, Inc.
(Registrant)
Dated: May 14, 1999 By: /s/ MARKUS BERNHARD
-------------------
Markus Bernhard
Chief Financial Officer
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 600,864 1,303,114
<SECURITIES> 0 0
<RECEIVABLES> 6,779,299 5,868,790
<ALLOWANCES> 0 0
<INVENTORY> 1,951,918 2,433,290
<CURRENT-ASSETS> 9,332,081 4,605,694
<PP&E> 834,699 751,235
<DEPRECIATION> 119,466 116,056
<TOTAL-ASSETS> 12,587,647 12,688,647
<CURRENT-LIABILITIES> 9,404,695 9,450,031
<BONDS> 0 0
0 0
0 0
<COMMON> 3,153 3,153
<OTHER-SE> 3,179,799 3,185,463
<TOTAL-LIABILITY-AND-EQUITY> 12,587,647 12,638,647
<SALES> 8,537,914 4,640,835
<TOTAL-REVENUES> 8,537,914 4,640,835
<CGS> (5,673,756) (3,167,524)
<TOTAL-COSTS> (8,290,031) (4,564,609)
<OTHER-EXPENSES> (3,513) 1,145
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (64,661) (13,058)
<INCOME-PRETAX> 217,979 64,313
<INCOME-TAX> (56,899) 37,052
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 161,080 107,765
<EPS-PRIMARY> 0.051 0.036
<EPS-DILUTED> 0.049 0.036
</TABLE>
