FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1998
COMMISSION FILE NUMBER 0-17508
TELESCAN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 72-1121748
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5959 CORPORATE DRIVE, SUITE 2000, HOUSTON, TEXAS 77036
(Address of principal executive offices) (Zip Code)
(281) 588-9700
(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 and Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
$.01 par value per share Common Stock: 11,075,256 as of August 11, 1998.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TELESCAN, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
1998 1997
-------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ....................... $ 1,994 $ 1,090
Accounts receivable, net ........................ 2,216 1,650
Receivables from affiliates ..................... 499 155
Prepaid expenses ................................ 448 455
Inventory ....................................... 88 77
Other current assets ............................ 137 198
Discontinued operations ......................... 344 164
-------- --------
TOTAL CURRENT ASSETS ........................ 5,726 3,789
Property and equipment, net ........................ 1,845 2,048
Software development costs, net .................... 4,959 4,469
Software technology rights, net .................... 231 176
Capitalized data costs, net ........................ 195 252
Other assets, net .................................. 59 68
Discontinued operations ............................ 1,384 1,457
-------- --------
TOTAL ASSETS ................................ $ 14,399 $ 12,259
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................ $ 1,654 $ 2,021
Accrued liabilities ............................. 725 402
Accrual for phase out costs of discontinued
operations ......................................... 15 20
Current portion of long-term debt and capital
lease obligations .................................. 520 447
Amounts due to stockholders and affiliates ...... -- 154
-------- --------
TOTAL CURRENT LIABILITIES ................... 2,914 3,044
Long-term debt ..................................... 72 152
Capital lease obligations .......................... 363 314
CONTINGENCIES (NOTE 2) ............................. -- --
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 10,000,000 shares
authorized; 5% Cumulative Convertible Preferred Stock -
120,000 shares issued and outstanding at June 30, 1998 1 --
Common stock; $.01 par value; 15,000,000 shares
authorized;
11,074,742 and 10,924,382 shares issued and
outstanding in 1998 and 1997, respectively ........ 110 109
Additional paid-in capital ..................... 21,335 17,972
Accumulated deficit ............................ (10,396) (9,332)
-------- --------
TOTAL STOCKHOLDERS' EQUITY ................. 11,050 8,749
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.. $ 14,399 $ 12,259
======== ========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TELESCAN, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------- -------------------------
1998 1997 1998 1997
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Service ................... $ 3,314 $ 3,026 $ 5,758 $ 6,011
Products .................. 142 432 380 764
Contract revenue earned
from affiliates ................ 342 445 692 754
-------- -------- -------- --------
Total revenue ........ 3,798 3,903 6,830 7,529
COSTS AND EXPENSES:
Cost of service ........... 1,818 1,890 3,724 3,629
Cost of products .......... 79 228 179 406
Selling and marketing
expenses ....................... 499 407 1,070 906
General and administrative
expenses ....................... 1,465 1,038 2,711 2,005
Interest expense .......... 31 21 52 43
-------- -------- -------- --------
Total costs and
expenses ....................... 3,892 3,584 7,736 6,989
5% Cumulative Preferred Stock
dividends ...................... (19) -- (19) --
Incremental yield dividend ..... (44) -- (44) --
INCOME (LOSS) FROM:
Continuing operations ... (157) 319 (969) 540
Discontinued
operations ..................... (50) (150) (96) (357)
======== ======== ======== ========
Net income (loss) to common
shareholders ................... $ (207) $ 169 $ (1,065) $ 183
======== ======== ======== ========
INCOME (LOSS) PER SHARE:
Income (loss) from
continuing
operations per common
share:
Basic ............... (0.01) 0.03 (0.09) 0.05
Diluted ............. (0.01) 0.03 (0.09) 0.05
Income (loss) from
discontinued operations per
common share:
Basic ............... 0.00 (0.01) (0.01) (0.03)
Diluted ............. 0.00 (0.01) (0.01) (0.03)
NET INCOME (LOSS):
Basic ............... (0.02) 0.02 (0.10) 0.02
Diluted ............. (0.02) 0.02 (0.10) 0.02
Weighted average shares -
basic .......................... 11,063 10,747 10,941 10,741
Dilutive effect of options ..... -- 252 -- 268
-------- -------- -------- --------
Adjusted weighted average shares
- - dilutive ..................... 11,063 10,999 10,941 11,009
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TELESCAN, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) applicable to common
shareholders ......................................... $(1,065) $ 183
Adjustments to reconcile net loss to net cash
(used) provided by
operating activities:
Accrued loss on discontinued operations ...... (5) --
Depreciation and amortization ................ 1,192 938
Provision for doubtful accounts .............. 12 32
Changes in current assets and liabilities
Receivables and advances ..................... (922) (108)
Other current assets ......................... 58 (140)
Accounts payable ............................. (367) 59
Other current liabilities .................... 323 162
Discontinued operations .............................. (107) (290)
------- -------
Net cash (used) provided by
operating activities ................................. (881) 836
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property and equipment ...... (32) 20
Additions to software development costs ...... (1,130) (1,025)
Additions to capitalized data costs .......... -- (4)
Other ........................................ -- (5)
------- -------
Net cash used by investing
activities ........................................... (1,162) (1,014)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of 5%
convertible preferred stock .......................... 3,000 --
Proceeds from issuances of common stock ...... 365 121
Proceeds from notes payable ................. -- 110
Payments on notes payable and capital
lease ................................................ (264) (213)
Payments to stockholder ...................... (154) --
------- -------
Net cash provided by financing
activities ........................................... 2,947 18
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..... 904 (160)
CASH AND CASH EQUIVALENTS:
Beginning of period .......................... 1,090 667
------- -------
End of period ................................ $ 1,994 $ 507
======= =======
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
TELESCAN, INC. AND SUBSIDIARY
SUPPLEMENTAL CASH FLOW INFORMATION
The effects of non-cash transactions are excluded from the statements of cash
flow. Supplemental disclosures of cash flow information are as follows:
SIX MONTHS ENDED
JUNE 30,
-------------------------
1998 1997
------------ ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Computer equipment acquired under capital
leases 306 ---
Common stock issued to purchase software
technology ---- 100
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
TELESCAN, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements reflect the accounts of Telescan, Inc. and
its majority owned subsidiary ("Telescan" or the "Company"), and the effect of
discontinued operations. The Company's consolidated statements of operations,
which include the results of Knowledge Express Data Systems, L.C. ("KE"), have
been adjusted to reflect KE in discontinued operations. The discontinued
operations also include Computer Sports Network, entertainment, advertising and
other non-financial operations.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange Commission and
do not include all information and footnotes required by generally accepted
accounting principles. However, in the opinion of management, the information
furnished reflects all adjustments, consisting of normal recurring adjustments,
which are necessary to make a fair presentation of financial position and
operating results for the interim periods.
Amounts in the June 30, 1997 condensed consolidated financial statements have
been reclassified whenever necessary to conform with the current period's
presentation.
The accompanying condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements for the year
ended December 31, 1997. The results of operations for the six-month period
ended June 30, 1998, are not necessarily indicative of the results to be
expected for the full year.
2. CONTINGENCIES
In 1997, Gregory Reagan filed a suit against the Company in the District Court
of Harris County Texas. The plaintiff has asserted a claim under a verbal
agreement to pay a royalty or finder's fee incident to a reciprocal marketing
agreement which Telescan signed with Omega Research, Inc. ("Omega Research").
Under the Omega Agreement, Omega is given a financial incentive to encourage
Omega's customers to subscribe for Telescan's current stock market data
services. The plaintiff claims a share of the net revenues derived by Telescan
under the Omega Agreement. By letter dated February 28, 1996, Telescan gave
notice of cancellation of the verbal agreement with Gregory Reagan based on the
breaches of Reagan's duties under such verbal agreement. Telescan has made
offers of settlement. Telescan maintains that the verbal agreement was properly
canceled. The trial, which was set to begin March 30, 1998, was postponed and
has been rescheduled for August 17, 1998. Reagan recently amended his petition
to add a fraud claim to the case with a request for punitive damages. Telescan
vigorously denies that there is a proper basis for the fraud claim on the
merits.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
OVERVIEW
Telescan, Inc. ("Telescan" or the "Company") provides state-of-the-art Internet
services, innovative solutions for online technology and sophisticated data
retrieval tools. The Company develops, markets, and operates Internet sites and
major online networks serving the financial industry. The Company's products and
services, which are based upon its proprietary online operating system and user
software, allow its customers to electronically access and analyze information
through their personal computer systems.
The Company's primary product line is a system of Internet and online financial
services and products provided directly to users as well as under private label
agreements with third parties, which allow investors to (1) obtain financial
news and information; (2) perform fundamental and technical analyses; (3) design
and backtest personalized searches using current and historical information on
more than 220,000 equities, indices and currencies; and (4) perform portfolio
management and personal investment planning.
Revenue is generated in the form of Internet and online service fees, fees from
third parties, product sales, and affiliate contract and advertising revenue.
The Company's Internet and online service revenue is composed of individual
subscribers paying recurring monthly usage fees and annual subscription fees,
together with fees from third parties for providing private label versions of
the Company's database applications. Product revenue is generated from the sale
of online system software, software and service enhancements, major product
upgrades and related educational and training products such as books and
videotapes. The Company's software products generally reflect a common base
technology to which additional features can be added to satisfy the various
needs of the sophisticated user. Accordingly, product revenue primarily consists
of revenue from product enhancements and major upgrades. The Company's contract
revenue is generated from providing contract service to related parties. These
contract services include developing, operating and maintaining online database
systems and providing administrative services.
In May 1998, the Company retained NationsBanc Montgomery Securities LLC to
assist the Company in exploring strategic alternatives, including a potential
change in ownership of the Company, in order to maximize shareholder value.
The Company currently operates the following non-financial businesses that have
been classified as discontinued operations as of November 1997: (1) numerous
non-financial third party online and Internet services which are developed and
operated via alliances with third parties in the publishing, entertainment, and
space industries; (2) sports entertainment operations, which offer online
computer sports games to golf and baseball enthusiasts; and (3) Knowledge
Express Data Systems, L.C., an online database system for the commercialization
and transfer of technology which serves corporations, government agencies,
universities, and research institutions. The Company previously announced
spinning-off these discontinued operations in order to concentrate efforts and
resources on its core
7
<PAGE>
financial business. Although the Company is engaged in negotiations with third
parties related to the proposed spin-off, these negotiations may be affected by
the results of the NationsBanc Montgomery Securities LLC engagement. It is
anticipated a decision regarding the status of the discontinued operations will
occur in the third quarter; however, no assurance can be given that this
determination will be made within this time period.
The second quarter produced a loss from continuing operations of $157,000.
However, significant progress was made in finalizing certain third party
Internet projects during the quarter. Although certain types of revenues were
recognized from these parties in the second quarter, continuing revenue streams
from these projects are expected to occur in succeeding quarters. There is no
assurance revenue projections will meet the Company's expectations.
QUARTER ENDED JUNE 30, 1998 COMPARED TO QUARTER ENDED JUNE 30, 1997
Service revenues increased $288,000, or 10%, for the three months ended June 30,
1998 as compared to the three months ended June 30, 1997. Direct Internet-based
revenues increased $562,000, or 56%, in the quarter ended June 30, 1998 as
compared to the quarter ended June 30, 1997. This increase was partially offset
by a $176,000 decrease in private alliance non-Internet revenues for the quarter
ended June 30, 1998 as compared to June 30, 1997. The Company's direct
non-Internet online revenues decreased by $105,000 for the second quarter of
1998 as compared to the same quarter in 1997.
Product sales decreased from $432,000 for the three months ended June 30, 1997
to $142,000 for the three months ended June 30, 1998. Reduced sales in the
second quarter of 1998 reflect the Company's transition to a greater focus on
the Internet. Additionally, in the second quarter of 1997, the Company launched
a successful campaign for all search products.
Contract revenue from affiliates decreased by $103,000 for the quarter ended
June 30, 1998 as compared to the quarter ended June 30, 1997, due to reduced
revenues from Telebuild.
Cost of service for the quarter ended June 30, 1998 was $1,818,000, or 4%, below
the same period in 1997 representing a $72,000 decrease. Communication expenses
totaled $294,000 for the three months ended June 30, 1998 as compared to
$356,000 for the three months ended June 30, 1997. The reduction is due to lower
minimum charges on two major telephone services. Costs associated with Telebuild
revenue were $97,000 lower in the three months ended June 30, 1998 as compared
to the same period in 1997. Royalty/data costs were lower by $20,000 for the
three months ended June 30, 1998 as compared to the quarter ended June 30, 1997.
These reductions were partially offset by an increase of $95,000 in amortization
expense from the year earlier period.
Selling and marketing expenses increased $92,000, or 23%, from $407,000 to
$499,000 for the quarter ended June 30, 1998 compared to the quarter ended June
30, 1997. Salary and commission expense rose $70,000 for the three months ended
June 30, 1998 as compared to the three months ended June 30, 1997 due partially
to an adjustment made to commissions during the second quarter of 1997.
Advertising/sales promotion expenses increased $11,000 compared to the prior
year quarter.
8
<PAGE>
General and administrative expenses were higher for the three months ended June
30, 1998 over the three months ended June 30, 1997 by $427,000, or 41%. Of the
total increase, $315,000 was attributable to higher salary and benefit expense,
net of amounts capitalized as development. Additional personnel were employed to
support the growing Internet programs. Consulting fees, legal fees and
depreciation/equipment rent increased by $22,000, $33,000 and $23,000,
respectively, for the three months ended June 30, 1998 as compared to the same
time period in 1997.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Service revenues decreased from $6,011,000 to $5,758,000, or 4%, for the six
months ended June 30, 1998 as compared to the six months ended June 30, 1997.
Internet-based revenue totaled $2,124,000 for the six months ended June 30, 1998
as compared to $1,786,000 for the same period in 1997. Alliance non-Internet
revenues decreased $326,000 for the comparable time period. The Company's direct
non-Internet revenues fell $245,000 for the six months ended June 30, 1998 as
compared to the same six months in 1997.
Product sales decreased from $764,000 in the first six months of 1997 to
$380,000 in the first six months of 1998. Product development in the first half
of 1998 has been concentrated in expanding the Company's Internet services.
Contract revenue from affiliates decreased from $754,000 for the six months
ended June 30, 1997 to $692,000 for the same period ended June 30, 1998, due to
reduced revenue from Telebuild.
Cost of service was higher by $95,000, or 3%, for the six months ended June 30,
1998 as compared to the six months ended June 30, 1997. Amortization expense was
$545,000 for this period in 1997 as compared to $734,000 for the same period in
1998. Communication expenses were $114,000 or 15% lower for the period ended
June 30, 1998 versus the same period in 1997 due to a reduction in minimum
charges.
Selling and marketing expenses were $164,000, or 18%, higher for the six months
ended June 30, 1998 as compared to the prior year period. Advertising/sales
promotion increased $114,000 for the first half of 1998 over 1997. Commission
expense was higher by $26,000 and bad debt expense was higher by $15,000 due to
an adjustment in the second quarter of 1997.
General and administrative expenses increased by $706,000, or 35%, for the six
months ended June 30, 1998 as compared to the same period in 1997. Salary and
benefits, net of amounts capitalized to development, was higher by $387,000 for
the first half of 1998 versus 1997. This reflects increased personnel levels and
a lower percentage of salary expense being capitalized as development.
Depreciation/equipment rental rose by $69,000 from the first six months of 1997
to the same time period in 1998. The increase was due to additional lease
expense incurred with new capital leases. Accruals for property/franchise tax
and vacation expense increased by $53,000 due to adjustments in the second
quarter of 1997 and higher accruals in 1998. Consulting fees were higher by
$41,000 for the six months ended June 30, 1998 as compared to June 30, 1997 and
investor relations/shareholders expense was higher by $34,000 for the same time
period. Compensation expense associated with non-qualified stock options issued
in 1998 totaled $25,000.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998 the Company had cash and cash equivalents of $1,994,000
representing an increase of $1,487,000 since June 30,1997. Net cash used by
operating activities was $881,000 for the six months ended June 30, 1998,
compared to cash generated from operations of $836,000 for the six months ended
June 30, 1997. The $1,717,000 increase in cash used by operations primarily
reflects the operating loss of $1,065,000 for the six months ended June 30, 1998
and the $922,000 increase in accounts receivable.
The Company's primary capital needs are for the continued investment in
technology through software development activities and the purchase of computer
equipment. During the six months ended June 30, 1998 the Company invested
$1,130,000 in software development costs and financed $305,000 in equipment
through capital leases. The Company expects to invest approximately $1,000,000
in computer equipment over the next twelve months.
During the second quarter of 1998 the Company issued 120,000 shares of 5%
Convertible Preferred Stock in exchange for $3,000,000. The Company believes
that existing cash on hand and cash generated from expected improvements in
operations will be adequate to fund its working capital and other cash
requirements over the next twelve months.
In connection with the issuance of the preferred stock, there is an incremental
yield that arises from the conversion discount from fair value that is
considered a dividend to preferred shareholders. The amount is determined as the
fixed discount from market (5%) based on the closing price at May 15, 1998.
Aggregate revenue from the Company's Internet and online services, including
advertising revenue and related product sales accounted for approximately 59% of
the Company's total revenue for the six months ended June 30, 1998. A downturn
in the equity markets could cause a reduction in this revenue, which could have
an adverse effect on the Company's financial position and results of operations.
However, the Company believes that development fees earned from private party
agreements would lessen the effect of such adverse market conditions. The
Company is continuing its efforts to broaden and diversify its revenue base
through alliances with third parties.
In accordance with the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company notes that certain statements in this
Form 10-Q which are forward-looking involve risks and uncertainties that may
impact the Company's results of operations. When used herein, the words
"believe", "anticipate", "estimate", "expect", "should" and similar expressions
are intended to identify such forward-looking statements. While these
forward-looking statements are made in good faith, no statement should be relied
upon as predictions of future events. Certain revenue projections are based upon
marketing efforts by third parties which are not controllable by the Company. In
addition, future operating markets, the ability to obtain new
licensing/development fees, competition, legal and other conditions could cause
actual results to differ materially from those in the forward-looking
statements.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
In May 1998, the Company sold 120,000 shares of Convertible Preferred Stock
pursuant to Section 4(2) of the Securities Act of 1933. Each share of
Convertible Preferred Stock is convertible at any time through May 15, 2001,
into shares of Common Stock at 95% of the lowest trade price as recorded on the
Nasdaq Small-Cap Market during a prescribed period prior to the conversion date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its Annual Meeting of Stockholders ("Annual Meeting") on June
17, 1998. The purpose of the Annual Meeting was to elect its directors for the
ensuing year and to ratify Hein + Associates LLP as auditors for 1998.
At the Annual Meeting, David L. Brown, Dr. Richard K. Carlin, Roger C.
Wadsworth, Dr. Ronald W. Hart, Burt H. Keenan, Russell I. Pillar, William D.
Savoy, and Stephen C. Wood were elected as directors of the Company. The
number of votes for and withheld are detailed below for each director.
FOR WITHHELD
--- --------
David L. Brown 9,427,125 17,905
Dr. Richard K. Carlin 9,427,125 17,905
Roger C. Wadsworth 9,427,125 17,905
Dr. Ronald W. Hart 9,427,125 17,905
Burt H. Keenan 9,427,125 17,905
Russell I. Pillar 9,427,125 17,905
William D. Savoy 9,427,125 17,905
Stephen C. Wood 9,427,125 17,905
The Board of Directors recommended that the stockholders ratify their action in
appointing their existing certified public accountants, Hein + Associates LLP,
independent auditors of the Company for the fiscal year ending December 31,
1998. The stockholders voted 9,431,955 shares for the ratification of Hein +
Associates LLP as auditors for 1998. There were 2,200 abstentions and 10,875
votes cast against such ratification.
11
<PAGE>
ITEM 5. OTHER INFORMATION.
DISCRETIONARY PROXY VOTING AUTHORITY. With respect to any proposal of a holder
of the Company's common stock to be submitted to the Company's shareholders at
its next annual meeting outside the processes of Rule 14a-8 promulgated under
the Securities Exchange Act of 1934, as amended, (that is, where a shareholder
has not sought inclusion of the proposal in the Company's proxy statement), the
proxies solicited by the Company's Board of Directors for use at such annual
meeting may confer discretionary authority to the proxies named herein to vote
on any such proposal, unless the Company receives notice of such shareholder
proposal by March 24, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) Exhibits:
11* Statement regarding computation of earnings per share.
27* Financial Data Schedule.
-------------------------------------------------------------------
* Indicates documents filed herewith.
(B) Reports on Form 8-K:
None.
Pursuant to the requirements of the Securities Exchanges Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TELESCAN, INC.
By: /s/ RONALD WARREN
-------------------------
Ronald Warren
Chief Financial Officer
a duly authorized officer of the
Registrant
Date: August 11, 1998
12
EXHIBIT 11
PAGE 1 OF 2
TELESCAN, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
DAYS WEIGHTED
SHARES OUTSTANDING SHARES
------------- ------------- ------------
QUARTER ENDED JUNE 30, 1998
Balance March 31, 1998 ......... 11,044,568 91 11,044,568
Common stock issuances ......... 30,174 55.3 18,351
---------- ---------- ----------
Balance June 30, 1998 .......... 11,074,742 11,062,919
========== ========== ==========
SIX MONTHS ENDED JUNE 30,
1998:
Balance December 31, 1997 ...... 10,924,382 181 10,924,382
Common stock issuances ......... 150,360 19.7 16,404
---------- ---------- ----------
Balance June 30, 1998 .......... 11,074,742 10,940,786
========== ========== ==========
<PAGE>
TELESCAN, INC. & SUBSIDIARY
CALCULATION OF EARNINGS PER SHARE
EXHIBIT 11
PAGE 2 OF 2
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ------------------------------
1998 1997 1998 1997
---------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
BASIC:
Weighted average number of
shares of common stock .... 11,062,919 10,746,687 10,940,786 10,741,257
Assumed exercise of certain
stock options ......... -- -- -- --
================ ============== ================ ==============
11,062,919 10,746,687 10,940,786 10,741,257
================ ============== ================ ==============
Net income (loss) ......... $ (206,934) $ 169,293 $ (1,064,706) $ 183,038
================ ============== ================ ==============
BASIC EARNINGS PER SHARE:
Net income (loss) ......... $ (0.02) $ 0.02 $ (0.10) $ 0.02
================ ============== ================ ==============
DILUTED:
Weighted average number of
shares of common stock .... 11,062,919 10,746,687 10,940,786 10,741,257
Assumed exercise of certain
stock options ......... -- 251,855 -- 267,525
================ ============== ================ ==============
11,062,919 10,998,542 10,940,786 11,008,782
================ ============== ================ ==============
Net income (loss) ......... $ (206,934) $ 169,293 $ (1,064,706) $ 183,038
================ ============== ================ ==============
DILUTED EARNINGS PER SHARE: $ (0.02) $ 0.02 $ (0.10) $ 0.02
================ ============== ================ ==============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,994
<SECURITIES> 0
<RECEIVABLES> 2,331
<ALLOWANCES> 115
<INVENTORY> 88
<CURRENT-ASSETS> 5,726
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0
1
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