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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported) APRIL 3, 1997
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QCS CORPORATION
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(Exact name of registrant as specified in its character)
DELAWARE 33-18600-D 84-1057621
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
650 CASTRO STREET, SUITE 210, MOUNTAIN VIEW, CALIFORNIA 94041
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 966-1214
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On April 3, 1997, Marcel van Heesewijk, the Registrant's President and
Chief Executive Officer and Chairman of the Board of Directors distributed a
letter to the Registrant's stockholders which provided a briefing on recent
developments concerning the Registrant with a particular focus on a new
product announcement which the Registrant is planning for May, 1997. The new
product, as more fully described in Mr. van Heesewijk's letter, a copy of
which is included as Exhibit 99 to this Form 8-K, is called the "QCS Supplier
Sales Station" and permits suppliers to access, conduct business on and take
full advantage of the graphical interface properties on the Internet's World
Wide Web.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99. Letter to Stockholders dated April 3, 1997 from
Marcel van Heesewijk.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY AUTHORIZED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED HEREUNTO DULY AUTHORIZED.
Dated: April 3, 1997
QCS Corporation
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Registrant
/s/ Marcel van Heesewijk
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Marcel van Heesewijk
Chairman of the Board of Directors
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Exhibit 99
QCS CORPORATION
[LOGO] 650 Castro Street, Suite 210
Mountain View, CA 94041 - USA
Tel: (415) 966.1214 Fax: (415) 966.1025
USA Customer Service Hotline: 800.717.4565
E-mail Address: [email protected]
Web Site: www.qcsnet.com
April 3, 1997
Dear QCS Stockholder:
Prior to holding our Annual Meeting of Stockholders which QCS is planning on
calling for sometime this spring or summer, I would like to provide this update
to inform you of the latest developments concerning QCS with a special focus on
the opportunities that we believe a new product announcement will bring to the
Company.
NEW TECHNOLOGY
In December of last year, we announced a strategic alliance which QCS had made
with IBM. This alliance was borne from the origins of our principle software
development platform, Lotus Notes. Lotus Development Corporation, as you will
recall, is an IBM subsidiary. Lotus has recently introduced a new development
platform, Lotus Domino, which permits Notes-based applications and databases to
be converted to an Internet-based computing environment in an efficient and
cost-effective manner. By porting its current applications to the Internet via
the Lotus Domino platform, QCS has engaged in a significant software development
effort. By doing so, we believe QCS will be one of the first companies applying
this technology in a specialized Retailer Electronic Commerce, business-to-
business environment.
The first product of a suite of products which we plan to introduce this
Spring and Summer, is the "QCS Supplier Sales Station". It is slated for
formal launch in May. The "QCS Supplier Sales Station" permits suppliers to
access, conduct business on and take full advantage of the superior graphical
interface properties of the Internet's World Wide Web. Our product
introduction strategy is to accept pre-registrations by suppliers with the
intention of maximizing the impact on introduction date. The product will
not require on-site installation user training, as is the case with the
Company's present comparable product, which is a generic Supplier
workstation, and will consequently be priced substantially lower. We are
hopeful that the lower cost and enhanced functionality of the new product be
positively received, but there are no assurances that the product will be
widely accepted by the Company's present customer base or prospective
customers.
QCS DEVELOPMENT COMPANY S.A. QCS ASIA PACIFIC LTD.
Immeuble Le Quadra 19/F., Tung Sun Commercial Centre
455, Promenade des Anglais 194-200 Lockhart Road
06299 Nice - France Wanchai - Hong Kong
Tel: (33.4) 93.18.58.58 Tel: (852) 27.39.58.68
Fax (33.4) 93.18.58.50 Fax: (852) 27.39.26.35
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2
ORGANIZATION
On March 3, 1997 I resumed my role as Chief Executive Officer and President
of QCS. Todd Myhre, who had previously performed these functions, resigned in
late February and is now available to serve as a consultant to the Company
from time to time. At this time, we have no plans to hire a permanent
replacement for Mr. Myhre.
From an operation perspective, we have readjusted our organizational structure
to capitalize on what we anticipate to be lower fixed costs from the new
technology and our IBM relationship.
The Field Engineering resources dedicated to installing suppliers has been
reduced as well as some related administrative and supplier sales support.
Largely as a result of the organizational changes mentioned above, QCS
forecasts a reduction in SG&A expenses, the positive effects of which we
believe will begin to be reflected in the Company's FY 1997 4th quarter
financial results. The Company plans a restructuring charge in the 3rd
quarter in connection with these changes in an amount that can not be
reasonably estimated at this time. We are hopeful that these organizational
changes will result in improved financial results, but there are no
assurances that improved results will, in fact, occur.
COST OF SERVICES SOLD/GROSS MARGINS
QCS anticipates that the reduced expenditures associated with bringing new
suppliers onto the QCS Network using the new technology will result in
improved gross margins for the Company. Beginning in May, 1997, new supplier
connections via the Internet will greatly reduce, and may eventually
eliminate, backbone communications costs to QCS. Furthermore, direct labor
expenses related to these supplier installations and support will also no
longer be incurred. The overall effect is an anticipated reduction in cost
of services sold.
REVENUES
The sales activity in the 4th Quarter will be focused on gaining new
supplier-subscribers to the new QCS Internet based service as well as
maintaining QCS' current Retailer generated business. As of today some of
our current Retailer Partners have already indicated that they will actively
recommend the new system to their suppliers. Management however cannot
guarantee that the response of suppliers will translate to significant
numbers of new subscriptions, if any.
COLLECTIONS
In the past, QCS has experienced difficulties in collecting its receivables.
This receivables exposure has been primarily in our supplier-based business.
Although management expects to report considerable progress in this area for
the 3rd quarter, we still believe that there is room for improvement in our
collection procedures which may result in less write-offs for bad debts.
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3
Our new Internet-based service will incorporate an on-line registration
procedure which will be activated after an automatic payment by credit card or
bank transfer has been authorized by the new subscriber. We believe that this
will bring about further improvements in our receivable management.
Further, as a result of both the SG&A measures discussed previously, as well as
the improved receivable management, we expect the Company to be able to narrow
its quarterly cash shortfall or negative cash flow over the next 2 fiscal
quarters.
SHORT TERM OBJECTIVES
Finally, I would like to summarize management's 2 major short term objectives.
1. ACHIEVE GENERAL MARKET ACCEPTANCE FROM THE RETAILER TRADING COMMUNITY.
Our sales and marketing focus will be to attempt to induce a large number of
suppliers to subscribe to and participate in the QCS Network with a goal of
creating a compelling electronic trading community.
2. REACH CRITICAL MASS AND PROFITABILITY.
The use of Internet enabled electronic commerce technology may permit the
Company to lower the entry barriers for all of the participants in the Retail
trading community. If our projections are realized, this new technology may
allow QCS to reach critical mass, revenue growth, cost optimization and
ultimately profitability.
This concludes my interim summary of where QCS stands and what management's
outlook is for the near future. We believe that we are on the verge of the
first major product campaign in the history of the company and we have just
readjusted our organization to attempt to capitalize on the opportunity. We
believe it is important to keep you, the QCS stockholder, as informed as
possible.
We look forward to reporting more to you on the Company's progress in the coming
months.
Yours sincerely,
Marcel van Heesewijk
Chairman and CEO
This letter contains certain forward-looking statements relating to future
events and/or future financial performance of the Company. The forward
looking statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company's actual
results could differ materially from those discussed in this letter.
Reference is made to the Company's filings with the Securities and Exchange
Commission for further discussion of the risks and uncertainties regarding
the Company's business; in particular the Company's Annual Report on Form
10KSB for the fiscal year ended June 30, 1996.
