<PAGE>
FORM 10-Q/A AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-15935
ALTRIS SOFTWARE, INC.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3634089
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9339 CARROLL PARK DRIVE, SAN DIEGO, CA 92121
-----------------------------------------------------
(Address of principal executive offices and zip code)
(619) 625-3000
----------------------------------------------------
(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 of Common Stock outstanding at October 31, 1997: 9,613,413
---------------
<PAGE>
In March 1998, Altris Software, Inc. (the "Company") announced that it
was conducting a review of its interim financial information and annual
financial statements for 1996 and the interim information for the first three
quarters of 1997 with a view to determining whether the revenue previously
reported for such periods was recognized in accordance with generally
accepted accounting principles. As a result of this review, the Company has
restated such financial statements. This Amendment to the Company's
Quarterly Report on Form 10-Q sets forth the restated financial statements of
the Company for the three and nine months ended September 30, 1997.
Information in the Quarterly Report on Form 10-Q as originally filed was
presented as of the date of such original filing or earlier, as indicated
therein. Unless otherwise stated, such information has not been updated in
this Amendment. In particular, "Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations" as originally filed discussed
the Company's financial condition and results of operations based on the
financial statements in the Quarterly Report on Form 10-Q as originally filed,
without consideration of the restatement reflected herein, and therefore no
reliance should be placed thereon. Please refer to "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
1
<PAGE>
ALTRIS SOFTWARE, INC.
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
(Restated)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 688,000 $ 2,200,000
Short term investments 1,632,000 90,000
Receivables, net 3,929,000 5,050,000
Inventory, net 429,000 472,000
Other current assets 755,000 683,000
------------- -------------
Total current assets 7,433,000 8,495,000
Property and equipment, net 2,219,000 2,156,000
Computer software, net 2,904,000 2,252,000
Goodwill, net 4,127,000 4,972,000
Other assets 427,000 385,000
------------- -------------
$ 17,110,000 $ 18,260,000
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,901,000 $ 2,487,000
Accrued liabilities 886,000 1,686,000
Notes payable 758,000 710,000
Deferred revenue 1,981,000 1,548,000
------------- -------------
Total current liabilities 6,526,000 6,431,000
Long term notes payable 33,000 1,203,000
Other long term liabilities 205,000 763,000
Subordinated debt 2,444,000 -
------------- -------------
Total liabilities 9,208,000 8,397,000
------------- -------------
Commitments
Mandatorily redeemable convertible preferred
stock, $1,000 par value, 3,000 shares authorized;
3,000 shares issued and outstanding 2,682,000 -
Shareholders' equity:
Common stock, no par value, 20,000,000 shares
authorized; 9,612,663 and 9,559,944 issued and
outstanding, respectively 61,679,000 61,583,000
Common stock warrants 585,000 -
Foreign currency translation adjustment 73,000 3,000
Accumulated deficit (57,117,000) (51,723,000)
------------- -------------
Total shareholders' equity 5,220,000 9,863,000
------------- -------------
$ 17,110,000 $ 18,260,000
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE>
ALTRIS SOFTWARE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(Restated)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
--------------------------- ----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 5,041,000 $ 5,938,000 $ 13,780,000 $ 16,070,000
Cost of revenues 2,097,000 2,228,000 7,042,000 7,003,000
------------- ------------ ------------- -------------
Gross profit 2,944,000 3,710,000 6,738,000 9,067,000
------------- ------------ ------------- -------------
Operating expenses:
Research and development 1,095,000 791,000 3,041,000 2,547,000
Marketing and sales 2,310,000 1,357,000 5,990,000 4,004,000
General and administrative 951,000 758,000 2,656,000 2,323,000
Write-off of certain offering costs - - 270,000 -
------------- ------------ ------------- -------------
Total operating expenses 4,356,000 2,906,000 11,957,000 8,874,000
------------- ------------ ------------- -------------
(Loss) income from operations (1,412,000) 804,000 (5,219,000) 193,000
Interest and other income 41,000 18,000 93,000 64,000
Interest and other expense (159,000) (31,000) (268,000) (78,000)
------------- ------------ ------------- -------------
(Loss) income before income taxes (1,530,000) 791,000 (5,394,000) 179,000
Provision for income taxes - - - -
------------- ------------ ------------- -------------
Net (loss) income (1,530,000) 791,000 (5,394,000) 179,000
Preferred stock dividends (90,000) - (90,000) -
------------- ------------ ------------- -------------
Net (loss) income available to
common shareholders $ (1,620,000) $ 791,000 $ (5,484,000) $ 179,000
------------- ------------ ------------- -------------
------------- ------------ ------------- -------------
Net (loss) income per common share $ (.17) $ .08 $ (.57) $ .02
------------- ------------ ------------- -------------
------------- ------------ ------------- -------------
Weighted average shares 9,587,000 9,651,000 9,575,000 9,414,000
outstanding
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
ALTRIS SOFTWARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Restated)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net (loss) income $(5,394,000) $ 179,000
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation and amortization 1,754,000 1,506,000
Changes in assets and liabilities:
Receivables, net 1,121,000 (2,608,000)
Inventory 43,000 (113,000)
Other assets 208,000 (461,000)
Accounts payable 414,000 (2,000)
Accrued liabilities (800,000) (1,136,000)
Deferred revenue 433,000 (137,000)
Other long term liabilities (558,000) (325,000)
------------ -----------
Net cash used in operating activities (2,779,000) (3,097,000)
------------ -----------
Cash flows from investing activities:
Sale or maturity of short term investments 153,000 180,000
Purchases of short term investments (1,499,000) -
Purchases of property and equipment (579,000) (857,000)
Purchases of software (41,000) (20,000)
Computer software capitalized (1,146,000) (791,000)
------------ -----------
Net cash used in investing activities (3,112,000) (1,488,000)
------------ -----------
Cash flows from financing activities:
Principal payment under cash advanced by a bank related
to former Optigraphics shareholder notes payable - (1,634,000)
Repayments under notes payable (2,243,000) (116,000)
Net borrowings under revolving loan and bank agreements 1,121,000 262,000
Proceeds from exercise of stock options 186,000 919,000
Payment of preferred stock dividends (61,000) -
Net proceeds from issuance of preferred stock 2,653,000 1,923,000
Net proceeds from issuance of subordinated debt and warrants 3,000,000 -
Cash payments for debt issuance costs (347,000) -
------------ -----------
Net cash provided by financing activities 4,309,000 1,354,000
------------ -----------
Effect of exchange rate changes on cash 70,000 (2,000)
------------ -----------
Net decrease in cash and cash equivalents (1,512,000) (3,233,000)
Cash and cash equivalents at beginning of period 2,200,000 4,656,000
------------ -----------
Cash and cash equivalents at end of period $ 688,000 $ 1,423,000
------------ -----------
------------ -----------
Supplemental cash flow information:
Interest paid $ 189,000 $ 50,000
------------ -----------
------------ -----------
Schedule of non-cash financing and investing activities:
Conversion of preferred stock and note payable to
common stock $ - $ 6,230,000
------------ -----------
------------ -----------
Accretion of dividends on mandatorily redeemable
convertible preferred stock $ 29,000 $ -
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
ALTRIS SOFTWARE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated balance sheet of Altris Software, Inc. (the
"Company") as of September 30, 1997 and the consolidated statement of
operations and of cash flows for the three and nine month periods ended
September 30, 1997 and 1996 are unaudited. The consolidated financial
statements and related notes have been prepared in accordance with generally
accepted accounting principles applicable to interim periods. In the opinion
of management, the consolidated financial statements reflect all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the consolidated financial position, operating results and cash
flows for the periods presented.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.
The financial statements included herein have been restated from those
previously published to reflect corrections of misapplications of the
Company's revenue recognition policies. The results for the three months and
nine months ended September 30, 1997 and 1996 have been amended to reflect
changes in the timing and amount of revenue recognition for those contracts
where subsequently discovered facts indicate that revenue had initially been
recognized before: (a) there was persuasive evidence of an agreement between
the Company and the customer; (b) the amount of the fee had become fixed; (c)
there was sufficient evidence of the delivery of the product or services; (d)
customer cancellation rights had expired; or (e) a reasonable estimate could
be made of returns from those customers (primarily Value Added Resellers)
having exchange rights.
The reconciliation of previously reported results to restated results for
the three and nine months ended September 30, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
For the three months For the three months
ended September 30,1997 ended September 30, 1996
---------------------------------------- ---------------------------------------
(In thousands except per share data)
Previously As Previously As
Reported Adjustment Restated Reported Adjustment Restated
-------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 5,850 $ (809) $ 5,041 $ 5,806 $ 132 $ 5,938
Gross profit 3,022 (78) 2,944 3,411 299 3,710
Net (loss) income (2,537) 917 (1,620) 492 299 791
Net (loss) income per share (.26) .09 (.17) .05 .03 .08
</TABLE>
<TABLE>
<CAPTION>
For the nine months For the nine months
ended September 30,1997 ended September 30, 1996
---------------------------------------- ---------------------------------------
(In thousands except per share data)
Previously As Previously As
Reported Adjustment Restated Reported Adjustment Restated
-------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 19,541 $ (5,761) $ 13,780 $ 17,973 $ (1,903) $ 16,070
Gross profit 11,162 (4,424) 6,738 10,932 (1,865) 9,067
Net (loss) income (1,453) (4,031) (5,484) 2,044 (1,865) 179
Net (loss) income per share (.15) (.42) (.57) .22 (.20) .02
</TABLE>
5
<PAGE>
NOTE 2 - NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed on the basis of weighted average
shares and common stock equivalent shares outstanding for each period
presented, if dilutive.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share," which establishes standards for computing and
presenting earnings per share ("EPS"). SFAS No. 128 will be adopted by the
Company as required for the interim period and fiscal year ending December 31,
1997. Upon adoption of SFAS No. 128, the Company will present basic EPS as
well as diluted EPS in the period of adoption and restate all prior-period EPS
data presented for comparative purposes. Basic EPS will be computed by
dividing income available to common shareholders by the weighted average number
of shares of common stock outstanding. Diluted EPS will be computed similar to
basic EPS except that the weighted average number of shares of common stock
outstanding will be increased to include the number of additional common shares
that would have been outstanding if the dilutive potential common shares had
been issued. The pro forma EPS calculations based upon SFAS No. 128 are
indicated below:
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
(Restated)
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Net (loss) income per share $ (.17) $ .08 $ (.57) $ .02
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares 9,587,000 9,420,000 9,575,000 8,967,000
DILUTED EARNINGS PER COMMON SHARE
Net (loss) income per share $ (.17) $ .08 $ (.57) $ .02
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares 9,587,000 9,651,000 9,575,000 9,414,000
</TABLE>
NOTE 3 - RECEIVABLES
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited) (Restated)
(Restated)
<S> <C> <C>
Billed receivables $ 3,978,000 $ 4,519,000
Unbilled receivables 106,000 702,000
Less allowance for doubtful accounts (155,000) (171,000)
------------ ------------
$ 3,929,000 $ 5,050,000
------------ ------------
------------ ------------
</TABLE>
6
<PAGE>
SIGNATURE
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.
ALTRIS SOFTWARE, INC.
By: /s/John W. Low
----------------------------------------
John W. Low
Chief Financial Officer
Dated: May 19, 1998
-------------------------------------
7
<PAGE>
EXHIBIT 11
ALTRIS SOFTWARE, INC.
STATEMENT RE COMPUTATION OF NET INCOME PER SHARE
(Unaudited)
(Restated)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
-------------------------- --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net (loss) income available to common
shareholders per consolidated
financial statements $(1,620,000) $ 791,000 $(5,484,000) $ 179,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Primary net (loss) income per share:
Weighted average common shares 9,587,000 9,420,000 9,575,000 8,967,000
Common stock equivalents:
Common stock options - 200,000 - 295,000
Convertible preferred stock and
convertible note - 31,000 - 152,000
Common stock warrants - - - -
----------- ----------- ----------- -----------
Weighted average shares outstanding 9,587,000 9,651,000 9,575,000 9,414,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully diluted net (loss) income per share:
Weighted average common shares 9,587,000 9,420,000 9,575,000 8,967,000
Common stock equivalents:
Common stock options - 200,000 - 295,000
Convertible preferred stock and
convertible note - 31,000 - 152,000
Common stock warrants - - - -
----------- ----------- ----------- -----------
Weighted average shares outstanding 9,587,000 9,651,000 9,575,000 9,414,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net (loss) income per share:
Primary $ (.17) $ .08 $ (.57) $ .02
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully diluted $ (.17) $ .08 $ (.57) $ .02
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS, AS
RESTATED, FOUND ON PAGES 2 AND 3 OF THE COMPANY'S FORM 10-Q FOR THE YEAR TO
DATE SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 688
<SECURITIES> 0
<RECEIVABLES> 3,929
<ALLOWANCES> 0
<INVENTORY> 429
<CURRENT-ASSETS> 7,433
<PP&E> 7,741
<DEPRECIATION> 5,522
<TOTAL-ASSETS> 17,110
<CURRENT-LIABILITIES> 6,526
<BONDS> 0
2,682
0
<COMMON> 61,679
<OTHER-SE> (57,117)
<TOTAL-LIABILITY-AND-EQUITY> 17,110
<SALES> 13,780
<TOTAL-REVENUES> 13,780
<CGS> 7,042
<TOTAL-COSTS> 7,042
<OTHER-EXPENSES> 3,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (268)
<INCOME-PRETAX> (5,394)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,394)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,394)
<EPS-PRIMARY> (.57)
<EPS-DILUTED> (.57)
</TABLE>
