SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 1O-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30,1998
Commission File Number 0-17977
BOUNDLESS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
13-3469637
(I.R.S. Employer Identification No.)
100 Marcus Blvd.
Hauppauge, NY
(Address of principal executive offices)
11788
(Zip Code)
(516) 342-7400
(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
---- -----
As of October 14, 1998, the Registrant had approximately 4,539,056 shares of
Common Stock, $.01 par value per share outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1998 (unaudited) and
December 31, 1997.................................................... 3
Consolidated Statements of Operations (unaudited)
for the three and nine months ended September 30, 1998 and 1997...... 4
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 1998 and 1997................ 5
Notes to Consolidated Financial Statements (unaudited).................. 6
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BOUNDLESS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
<TABLE>
<CAPTION>
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September 30, September 30,
1998 1997
------------- -------------
(unaudited)
Cash and cash equivalents................................... $ 2,092 $ 2,929
Trade accounts receivable, net.............................. 13,974 14,395
Income tax refund........................................... 800 800
Inventories................................................. 12,656 13,682
Deferred income taxes....................................... 1,561 1,561
Prepaid expenses and other current assets................... 601 711
---------------- ----------------
Total current assets..................................... 31,684 34,078
Property and equipment, net.................................... 10,402 10,614
Goodwill, net.................................................. 7,619 8,428
Other assets................................................... 655 1,428
---------------- ----------------
$ 50,360 $ 54,548
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable............................................... $ 8,500 $ 7,650
Current portion of long-term debt........................... 8,000 3,250
Accounts payable............................................ 6,157 8,840
Accrued expenses............................................ 6,917 5,378
Deferred revenue............................................ 234 180
---------------- ----------------
Total current liabilities................................ 29,808 25,298
Long-term liabilities:
Long-term debt, less current maturities..................... - 8,000
Deferred income taxes....................................... 1,561 1,561
Other ...................................................... 526 727
---------------- ----------------
Total long-term liabilities.............................. 2,087 10,288
---------------- ----------------
Total liabilities........................................ 31,895 35,586
Mandatorily redeemable preferred stock of subsidiary........... 3,555 3,555
Stockholders' equity:
Preferred stock............................................. - -
Common stock................................................ 45 51
Additional paid-in capital.................................. 31,400 34,094
Accumulated deficit......................................... (16,535) (18,738)
---------------- ----------------
Total stockholders' equity............................... 14,910 15,407
---------------- ----------------
$ 50,360 $ 54,548
---------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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BOUNDLESS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
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<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------------ -----------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
(unaudited) (unaudited)
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Revenue......................................... $ 68,349 $ 71,373 $ 23,555 $ 24,262
Cost of revenue................................. 49,184 54,297 16,754 18,009
-------------- -------------- -------------- --------------
Gross margin......................... 19,165 17,076 6,801 6,253
Operating expenses:
Sales and marketing......................... 6,013 5,575 1,728 2,009
General and administrative.................. 4,634 4,631 1,612 1,499
Research and development.................... 2,597 2,004 959 610
Other charges.............................. (111) 71 350 180
-------------- -------------- -------------- ---------------
Total operating expenses................. 13,133 12,281 4,649 4,298
-------------- -------------- -------------- ---------------
Operating income.................... 6,032 4,795 2,152 1,955
Interest expense........................... 2,045 2,675 698 978
-------------- -------------- -------------- ---------------
Income before income taxes 3,987 2,120 1,454 977
Income tax expense............................. 1,411 439 629 313
-------------- -------------- -------------- ---------------
Net income...................................... 2,576 1,681 825 664
Dividend on preferred stock of subsidiary....... 373 373 124 124
-------------- -------------- -------------- ---------------
Earnings available for common shareholders....... $ 2,203 $ 1,308 $ 701 $ 540
============== ============== ============== ===============
Weighted average common shares outstanding....... 4,941 4,893 4,539 4,980
============== ============== ============== ===============
Basic earnings per common share.................. $ 0.45 $ 0.27 $ 0.15 $ 0.11
Weighted average dilutive shares outstanding..... 4,986 5,057 4,539 5,197
-------------- -------------- ============== ===============
Diluted earnings per common share............... $ 0.44 $.0.27 $ 0.15 $ 0.11
-------------- -------------- ============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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BOUNDLESS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amount in thousands)
For the Nine Months Ended September 30
(unaudited)
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<CAPTION>
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1998 1997
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Cash flows from operating activities:
Net income...................................................... $ 2,576 1,681
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization................................ 2,460 2,629
Loss from disposal of fixed assets........................... 40 -
Deferred revenues............................................ 53 116
Provision for doubtful accounts.............................. 203 148
Provision for excess and obsolete inventory.................. 874 486
Options issued for treasury stock purchase................... 300 -
Changes in assets and liabilities:
Trade accounts receivable.................................... 217 7,420
Inventories.................................................. 152 4,781
Other assets................................................. (35) (977)
Accounts payable and accrued expenses........................ (1,717) (7,001)
--------------- --------------
Net cash provided by operating activities.......................... 5,123 9,283
--------------- --------------
Cash flows from investing activities:
Capital expenditures............................................. (560) (164)
--------------- --------------
Net cash used in investing activities............................... (560) (164)
--------------- --------------
Cash flows from financing activities:
Proceeds from issuance of common stock........................... - 2
Proceeds from debt issuance...................................... - 1,514
Purchase of treasury stock....................................... (3,000) -
Net change in revolving loan payable............................. (2,400) (6,000)
Payments on loans payable........................................ - (7,950)
Payments on capital leases....................................... - (9)
--------------- --------------
Net cash provided by (used in) financing activities................. (5,400) (12,443)
--------------- --------------
Net increase (decrease) in cash and cash equivalents................ (837) (3,324)
Cash and cash equivalents at beginning of period.................... 2,929 5,213
--------------- --------------
Cash and cash equivalents at end of period.......................... $ 2,092 $ 1,889
--------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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1. Condensed Consolidated Financial Statements
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
occurring accruals) considered necessary for a fair presentation have been
included. Certain prior period amounts in these financial statements have been
reclassified to conform to current period presentation. Operating results for
the nine-month period ended September 30, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998. For
further information refer to the consolidated financial statements and footnotes
thereto in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
2. Background
Boundless Corporation (the "Company") is engaged, through its subsidiary,
Boundless Technologies, Inc. ("Boundless"), in designing and manufacturing
computer terminals for business use. The Company's general strategy is to
provide access to corporate computing environments, including mainframes, LANs,
WANs, intranets and the Internet. Boundless principally designs, assembles,
sells and supports (i) General Display Terminals, (ii) Windows(R)-based
Terminals ("WBTs"), sometimes referred to as "thin clients", and (iii) other
terminal products that are used in multi-user, personal computer and
mini-computer-based environments.
3. Inventories
Inventories are stated at the lower of cost or market. Cost is determined on a
first-in first-out basis. The major components of inventories are as follows:
September 30, December 31,
1998 1997
-------------- -----------
Raw materials purchased components......... $ 10,496 $ 10,723
Finished goods............................. 1,770 2,477
Demonstration equipment.................... 54 135
Service parts.............................. 336 347
-------------- -----------
$ 12,656 $ 13,682
-------------- -----------
4. Equity
At Septemver 30, 1998 and December 31, 1997 stockholders' equity consisted of
following:
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September 30, December 31,
1998 1997
-------------- -----------
Preferred stock, $0,01 par value, 1,000,000
shares authorized, none issued...............$ - $ -
Common stock, $0.01 par value, 25,000,000 shares
authorized, 4,539,056 and 5,139,228 shares
issued at September 30, 1998 and December 31,
1997, respectively........................... 45 51
Additional paid-in capital........................ 31,400 34,094
Accumulated deficit............................... (16,535) (18,738)
-------------- ------------
Total stockholders' equity...................$ 14,910 $ 15,407
-------------- ------------
5. Major Customers
The Company markets its terminal products through original equipment
manufacturers ("OEMs") and reseller distribution channels. Customers can buy
Boundless' products from an international network of value-added resellers
(VARs) and regional distributors. Through its sales force, the Company sells
directly to large VARs and regional distributors and also sells to major
national and international distributors. For the third quarter ended September
30, 1998 and 1997, sales to two major OEMs as a percentage of total revenues
were 28% and 18%, respectively.
6. Business Segments
The Company's business is concentrated almost entirely in one product area-
computer terminals- which are sold throughout many diverse markets. It is not
possible, therefore, to divide the Company's business into meaningful industry
segments.
The Company's operations are worldwide and can be grouped into several
geographic segments. The Company's manufacturing is conducted at its New York
facility and its sales force operates from six geographically dispersed
locations in the United States and a European office in the Netherlands. During
1997, the Company expanded its marketing efforts to include South America,
Asia-Pacific, Australia and New Zealand.
Pertinent financial data by major geographic segments for the third quarter
ended September 30, 1998 and 1997 are:
September 30, September 30,
1998 1997
-------------- ------------
Net sales to unaffililated customers:
United States.....................................$ 15,763 $ 17,604
Europe............................................ 7,026 5,495
Other foreign areas............................... 766 1,163
----------- -----------
Net sales as reported in the accompanying
income statement.............................$ 23,555 $ 24,262
----------- -----------
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The numbers and percentages contained in this Item 2 are approximate. Dollar
amounts are stated in thousands.
For the Three and Nine month Period Ending September 30, 1998
- -------------------------------------------------------------
Revenue - Revenue for the quarter ended September 30, 1998 was $23,555 as
compared to $24,262 for the quarter ended September 30, 1997. Year-to-date
revenue was $68,349 for 1998 versus $71,373 in 1997.
Sales of the Company's General Display Terminals increased 2% to $20,076 for the
quarter ended September 30, 1998 from $19,721 for the quarter ended September
30, 1997. The increase for the latest quarter is attributable to increased sales
of $2,453 to Digital Equipment Corporation ("Digital") and $462 to customers of
Boundless' ADDS(R)-branded products, offset by a decrease of $2,420 to VT and
Dorio distributors. The VT and Dorio terminals are based on a proprietary
architecture and, as a result, its users requiring flexibility are prone to move
more quickly to alternative platforms. Sales of General Display Terminals for
1998 are not expected to reach the levels achieved in 1997 as competing
technologies, including WBTs, are gaining market share.
Sales of the Company's WBT hardware and software, marketed under the trade names
Viewpoint(R) TC and Viewpoint(R) Administrator, respectively, amounted to $2,382
versus $1,889 for the quarter ended September 30, 1998 and 1997, respectively.
The Company is targeting the approximately 35 million users of General Display
Terminals and Network Graphics Displays many of whom are currently transitioning
or intending to transition to graphical applications that include Windows, the
Intranet and Java. In addition, the Company is targeting the task-oriented users
of older, less capable PCs that are unable to run the latest Windows
applications, including those users in business and education. The Company
believes its unique ability to customize its Viewpoint TC products to meet
specific end-customer needs will give it a sustainable competitive advantage.
Historically, this ability has been of great value to the Company's terminal
customers and the Company believes that this strategy will be equally
advantageous in the corporate thin client marketplace.
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Net revenue from the Company's repairs and spare parts business decreased 28%,
or $211, to $546 for the quarter ended September 30, 1998, from $757 for the
quarter ended September 30, 1997. The decline was due to reduced spare parts
sales to Digital and NCR, resulting primarily from the overall decline in unit
sales to Digital during 1997. For the nine months ended September 30, 1998,
repairs and spare parts sales were $1,852 versus $2,668 in 1997. Due to new
designs and engineering changes resulting in fewer components and increased
reliability, the Company does not anticipate that repair and spare parts revenue
will meet prior period levels.
IBM and Digital were the most significant customers for the Company's products,
accounting for 14% and 13% of revenue respectively, for the quarter ended
September 30, 1998. Although NCR is expected to remain a significant customer
for the Company's products, it is not expected to account for the same level of
revenues (4% of the Company's revenues) as it did in 1997. The loss of IBM,
Digital, or NCR as a customer, and as a distribution channel for the Company's
products, would have a material adverse effect on the Company's results of
operations and liquidity.
Gross Margin - Gross margin for the three and nine months ended September 30,
1998 were $6,801 (29% of revenue) and $19,165 (28% of revenue), respectively, as
compared to gross margins of $6,253 (26% of revenue) and $17,076 (24% of
revenue) for the comparable periods in 1997. The increase in gross margin is
attributable to cost reductions achieved in the Company's General Display
Terminals and WBTs product lines. The increase in gross margin as a percent of
revenue stems primarily from cost reductions and a more favorable revenue mix
resulting from the discontinuation of the low margin X Windows-based Network
Graphics Displays.
In a continuing effort to maintain and improve margins in an industry otherwise
characterized by commodity pricing, management has focused on quality,
flexibility, and product cost reductions. In addition, sales of the Company's
WBTs, which carry margins greater than its General Display Terminals, are
expected to positively impact the Company's gross margins. However, there can be
no assurance, given the recent introduction of this new technology, that sales
of the Company's WBTs will improve overall gross margins.
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From time-to-time margins are adversely affected by industry shortages of key
components. The Company emphasizes product cost reductions in its research and
development activities and frequently reviews its supplier relationships with
the view to obtaining the best component prices available.
Total Operating Expenses - For the quarter ended September 30, 1998, operating
expenses were $4,649 (20% of revenue), compared to expenses for the third
quarter of 1997 of $4,298 (18% of revenue). For the nine months ended September
30, 1998, operating expenses were $13,133 (19% of revenue) compared to expenses
for the comparable period in 1997 of $12,281 (17% of revenue).
Sales and Marketing Expenses - Sales and marketing expenses decreased 14% to
$1,728 (7% of revenue) for the quarter ended September 30, 1998 from $2,009 (8%
of revenue) for the quarter ended September 30, 1997. The decrease was due to
recovery in the amount of $375 on a doubtful customer accounts receivable during
the current quarter, which was fully provided for in the second quarter of 1998.
Expenses for the nine-month period ended September 30 were $6,013 in 1998 versus
$5,575 in 1997. The increase stems from participation in a number of important
tradeshows during 1998 and increases in marketing expenses associated with the
Company's WBTs.
The Company promotes its products using media advertising, direct mail,
telemarketing, public relations and cooperative channel marketing programs. The
Company's installed base of over five million units is the primary target market
for its new line of Viewpoint TC WBTs. The Company's plan to reach this market
is based on direct mail, telemarketing and advertising and an aggressive public
relations campaign, including several domestic and international press tours.
The Company will also participate in several key trade shows during the
remainder of 1998.
General and Administrative Expenses - General and administrative expenses
increased to $1,612 (7% of revenue), from $1,499 (6% of revenue) for the three
months ended September 30, 1998 and 1997, respectively. Expenses for the
nine-month period ended September 30 were $4,634 in 1998 versus $4,631 in 1997.
Research and Development Expenses - Research and development expenses for the
third quarter increased 57% to $959 in 1998 from $610 in 1997. Expenses for the
nine-month period ended September 30, 1998 were $2,597, compared to $2,004 for
the comparable period in 1997. The increase is related to development expenses
associated with the Company's Viewpoint product family.
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Other Charges- During the third quarter of 1998 the Company recorded expenses of
$300 relating to the granting of warrants to purchase 150,000 shares of the
Company's Common Stock to Morgan Kent Group, Inc. The Company granted the
warrants in consideration of Morgan Kent Group's agreement to sell 600,000
shares to the Company, reducing Morgan Kent Group's ownership from 51% to 46%,
and thereby providing shares of Common Stock for planned acquisitions.
Interest Expense - Interest expense for the quarter ended September 30, 1998 was
$698 compared to $978 for the comparable period in 1997. Interest expense for
the nine-month period ended September 30 was $2,045 in 1998 versus $2,675 in
1997. The decline is related to the reduction in the amount of debt outstanding
under the Company's revolving credit facility and a decline in interest rates.
Income Tax Expense - Income tax expense for the quarter ended September 30, 1998
was $629, compared to $313 for the comparable period in 1997.
Net Income - For the quarter ended September 30, 1998, net income was $825 (4%
of revenue), compared to $664 (3% of revenue) for the comparable period in 1997.
Net income for the nine-month period ended September 30 was $2,576 (4% of
revenue) in 1998 versus $1,681 (2% of revenue) in 1997.
Impact of Inflation - The Company has not been adversely affected by inflation
because technological advances and competition within the microcomputer industry
have generally caused prices of products sold by the Company to decline. The
Company has flexibility in its pricing and could, if necessary, pass along price
changes to most of its customers.
LIQUIDITY AND CAPITAL RESOURCES
The discussion below regarding liquidity and capital resources should be read
together with the information included in the Notes to Consolidated Financial
Statements.
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As of September 30, 1998, the Company had working capital of $1,876 as compared
to $8,780 at December 31, 1997. The decline stems from the reclassification of
an $8,000 note, due January 31, 1999, from long-term debt to short-term debt as
well as $2,400 in additional short-term borrowing used to purchase shares of the
Company's common stock. Historically, the Company has relied on cashflow from
operations, bank borrowings and sales of its common stock to finance its working
capital, capital expenditures and acquisitions. As a result of positive cash
flows, the Company has reduced its total liabilities by $3,691 since December
1997.
The Company is highly leveraged. As of September 30, 1998, the Company had
tangible net worth of $6,788 and total liabilities of $31,895. The Company's
cash requirements at September 30, 1998, included repayment of a revolving loan
of $8,500, plus interest, due December 1998; payment of an $8,000 note, plus
interest, payable to NCR on January 31, 1999; payment of $3,555 to NCR if it
exercises a put option at any time in 1999; and annual payments to NCR, until
such put option is exercised, of $498 in cash or the Company's Common Stock.
Borrowing under the revolving loan is based on a borrowing base formula of up to
80% of eligible receivables, plus 50% of delineated eligible inventory, plus 30%
of non-delineated eligible inventory. Up to $7,500 is available under the
revolving loan for letters of credit. As a result of the borrowing base formula,
the credit available to the Company could be adversely restricted in the event
of further declines in the Company's sales and increases in orders may not be
able to be financed under the Company's revolving credit line.
With the exception of the $3,555 put option and $8,000 NCR note, which is
secured by a mortgage on the Company's Hauppauge facility and which the Company
believes will have to be refinanced before its January 31, 1999 due date, the
Company believes that cash generated from operations and available under the
Company's revolving credit line will be sufficient to pay its obligations as
they become due. The Company anticipates that it will negotiate an extension of
its current revolving credit line which expires in December 1998. In the event
there is a decline in the Company's sales and earnings and/or a decrease in
availability under the credit line, the Company's cash flow would be adversely
affected. Accordingly, the Company may not have the necessary cash to fund all
of its obligations.
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Net cash provided by operating activities for the nine months ended September
30, 1998 was $5,123 due principally to net income of $2,576 and non-cash
expenses (principally depreciation) of $3,877. These increases in cash provided
by operating activities were partially offset by a decrease in payables and
accrued expenses of $1,717. Net cash used in investing activities was comprised
of capital expenditures of $560. Net cash used in financing activities was
comprised of $3,000 used to purchase treasury stock and $2,400 to reduce the
balance of the Company's term and revolving loans.
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This Form 10-Q contains forward-looking statements and information that are
based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this document, the words
"anticipate," "believe," "estimate," "expect," and, depending on the context,
"will," and similar expressions are intended to identify forward-looking
statements. Such statements reflect the Company's current views with respect to
future events and are subject to certain risks, uncertainties and assumptions,
including the specific risk factors described in the Company's Form 10-K for the
year ended December 31, 1997. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, believed, estimated or expected. The
Company does not intend to update these forward-looking statements and
information.
COMPLIANCE WITH YEAR 2000 ISSUE
In the next two years, most companies could face a potentially serious
information systems problem because many software applications and operational
programs written in the past were designed to handle date formats with two-digit
years and thus may not properly recognize calendar dates beginning in the Year
2000. This problem could result in computers either outputting incorrect data or
shutting down altogether when attempting to process a date such as "01/01/00."
Management has initiated a Company-wide program to prepare the Company's
computer systems and applications for Year 2000 compliance. The Company expects
to incur internal staff costs as well as other expenses necessary to prepare its
systems for the year 2000. The Company expects to both replace some systems and
upgrade others. Maintenance or modification costs will be expensed as incurred.
The total cost of this effort is still being evaluated, but is not expected to
be material to the Company.
The Company also could be exposed to a potential adverse impact resulting from
the failure of financial institutions and other third parties to adequately
address the Year 2000 problem. The Company intends to devote necessary resources
to identify and resolve Year 2000 issues that may exist with third parties.
However, the Company cannot estimate the cost of this effort at this time, nor
can any assurance be given that the Year 2000 problem will not have a material
adverse effect on the Company's business, operating results or financial
condition.
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NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 129, "Disclosure of Information
about Capital Structure" ("SFAS No. 129") is effective for financial statements
ending after December 15, 1997. The new standard reinstates various securities
disclosure requirements previously in effect under Accounting Principles Board
Opinion No. 15, which has been superseded by SFAS No. 128. The Company does not
expect adoption of SFAS No. 129 to have a material effect, if any, on its
consolidated financial position or results of operations.
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130") is effective for financial statements with fiscal years
beginning after December 15, 1997. Earlier application is permitted. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. The
Company does not expect adoption of SFAS No. 130 to have a material effect, if
any, on its consolidated financial position or results of operations.
Statement of Financial Accounting Standard No. 131, "Disclosure about Segments
of an Enterprise and Related Information" ("SFAS No. 131") is effective for
financial statements beginning after December 15, 1997. The new standard
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the enterprise
and in condensed financial statements of interim periods issued to stockholders.
It also requires that public business enterprises report certain information
about their products and services, the geographic areas in which they operate
and their major customers. The Company will include information required by SFAS
No. 131 in the Notes to Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
None.
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PART II - OTHER INFORMATION
Item 5. Other Information
In September 1998, the Company's Board of Directors elected Stephen
Maysonave to be an additional member of the Board of Directors increased the
Company's full Board of Directors to five members and elected Kenneth East the
Chief Operating Officer of Boundless Technologies, Inc.
Mr. Maysonave, who is also a strategy consultant for the Company, played a
key role in the turnaround and sale of Digital Research to Novell in 1994. From
1994 to 1997, he held senior management positions with Informix Software
(NASDAQ.IFMX). As Vice President of Global Partners for Informix Software, he
was responsible for working with partners including SAP, PeopleSoft, Baan, HP,
Sun, IBM, Compaq, Dell, Andersen Consulting and EDS. Prior to joining Informix
Software, Mr. Maysonave spent six years with Intel where he was responsible for
developing direct sales and distribution networks throughout Europe and
Asia/Pacific. Additionally, Mr. Maysonave serves as an Internet and
Communication Strategist with Nichimen Corporation, a $30-billion Japanese
trading company.
Mr. East, who joined Boundless Technologies in February 1998 as Chief
Technology Officer, served as Director of Software Development-Integrated
Network Management Systems at NEC America, Inc. from 1990 to 1998. In this role,
Mr. East was responsible for development of software to monitor and control
large-scale national and international telecommunication networks. Prior to his
tenure with NEC, Mr. East conducted artificial intelligence and network
management research for AT&T Bell Laboratories. The resulting expert system was
used to predict and diagnose problems in AT&T customer networks.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11: Statement Concerning Computation of Per Share Earnings is hereby
incorporated by reference to "Condensed Consolidated Statements of Operations"
of Part I- Financial Information, Item 1- Financial Statements, contained in
this Form 10-Q.
Exhibit 27: Financial Data Schedule for the nine months ended September 30,
1998.
(b) Reports on Form 8-K - None
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SIGNATURES
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.
Dated: November 13, 1998
Boundless Corporation
By: /s/Joseph Gardner
- ----------------------------------------
Joseph Gardner
Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFOMRATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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3,555
0
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</TABLE>
