<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1998.
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition period from to .
Commission File No. 0-18809
________________________________________________________________________________
CE SOFTWARE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1614808
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1801 Industrial Circle, P.O. Box 65580, West Des Moines, Iowa 50265
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (515) 221-1801
Former name, former address and former fiscal year, if changed since last
report: No changes.
________________________________________________________________________________
Indicate by mark (X) 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
April 30, 1998 Common Stock 1,095,900
Class B Common Stock 0
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CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Table of Contents
Part I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets
March 31, 1998 and September 30, 1997 3
Consolidated Statements of Operations
Three and Six Months Ended March 31, 1998 and 1997 5
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 and September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
ASSETS: March 31 September 30
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,676,271 1,454,434
Short-term investments 499,531 490,957
Trade accounts receivable, net 576,543 1,108,062
Recoverable income taxes 24,153 24,153
Inventories 538,374 743,111
Deferred income taxes 95,000 117,200
Other current assets 187,235 165,624
__________ __________
Total current assets 3,597,107 4,103,541
Property, fixtures, and equipment:
Land 316,796 316,796
Building 1,312,016 1,312,016
Fixtures and equipment 2,589,434 2,998,885
__________ __________
4,218,246 4,627,697
Less accumulated depreciation 2,164,706 2,410,190
__________ __________
Net property, fixtures, and equipment 2,053,540 2,217,507
Deferred income taxes 88,000 65,800
Purchased computer software technology, net 77,781 144,447
Other intangible assets, net 108,076 182,265
Other asset 48,963 58,959
__________ __________
Total assets $5,973,467 6,772,519
__________ __________
__________ __________
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 and September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY: March 31 September 30
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 46,021 43,953
Trade accounts payable 226,377 316,845
Accrued payroll and benefits 322,866 317,852
Other accrued expenses 150,528 164,894
Deferred revenue 80,879 100,691
__________ __________
Total current liabilities 826,671 944,235
Long-term debt, net of current portion 810,397 834,253
__________ __________
Total liabilities 1,637,068 1,778,488
Stockholders' equity (note 2):
Common stock, $.10 par value. Authorized 2,000,000
shares; issued and outstanding 1,095,900 and 1,095,900 109,590 109,590
Additional paid-in-capital 5,893,710 5,893,710
Accumulated deficit (1,666,901) (1,009,269)
__________ __________
Total stockholders' equity 4,336,399 4,994,031
__________ __________
Total liabilities and stockholders' equity $5,973,467 6,772,519
__________ __________
__________ __________
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the three and six months ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net revenues $1,288,014 1,668,303 2,510,660 3,674,365
Cost of revenues 273,890 274,950 549,672 604,661
___________ ___________ ___________ ___________
Gross profit 1,014,124 1,393,353 1,960,988 3,069,704
Sales and marketing 505,173 958,044 1,080,559 1,908,991
General and administrative 453,859 644,666 897,375 1,358,575
Research and development 330,584 363,088 655,716 766,975
___________ ___________ ___________ ___________
Operating expenses 1,289,616 1,965,798 2,633,650 4,034,541
___________ ___________ ___________ ___________
Operating loss (275,492) (572,445) (672,662) (964,837)
Other income (expense):
Interest income 31,394 30,739 56,468 76,793
Interest expense (19,746) (20,480) (40,182) (42,097)
___________ ___________ ___________ ___________
Loss before income taxes (263,844) (562,186) (656,376) (930,141)
Income tax expense 1,256 - 1,256 -
___________ ___________ ___________ ___________
Net loss $(265,100) (562,186) (657,632) (930,141)
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Loss per common share, basic
and diluted (note 3) $ (.24) (.50) (.60) (.83)
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average number of
common shares and common
equivalent shares outstanding 1,095,900 1,125,406 1,095,900 1,124,933
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the six months ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $(657,632) (930,141)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization:
Property, fixtures, and equipment 212,656 264,625
Purchased software technology 66,666 157,800
Other 74,189 44,560
Decrease in trade accounts receivable 531,519 293,351
Decrease in recoverable income taxes - 185,586
Decrease (increase) in inventories 204,737 (35,999)
Increase in other assets (11,615) (1,431)
Decrease in accounts payable and accrued
expenses (99,820) (392,822)
Decrease in deferred revenue (19,812) (223,792)
Other (9,654) 35,293
__________ __________
Net cash provided by (used in) operating activities 291,234 (602,970)
Cash flows from investing activities:
Proceeds from sale of property, fixtures, and equipment 4,395 12,816
Purchase of property, fixtures, and equipment (52,004) (65,027)
Purchases of short-term investments - (282,856)
Proceeds from note receivable - 934,000
__________ __________
Net cash (used in) provided by investing activities (47,609) 598,933
Cash flows from financing activities:
Proceeds from issuance for common stock - 14,232
Payment of long-term debt (21,788) (20,676)
__________ __________
Net cash used in financing activities (21,788) (6,444)
__________ __________
Net increase (decrease) in cash and cash equivalents 221,837 (10,481)
Cash and cash equivalents at beginning of period 1,454,434 1,862,703
__________ __________
Cash and cash equivalents at end of period $1,676,271 1,852,222
__________ __________
__________ __________
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 40,130 41,242
Income taxes 1,256 -
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1998
(Unaudited)
1) Accounting policies
During interim periods, CE Software Holdings, Inc. follows the accounting
policies set forth in its Annual Report to Stockholders and its Report on Form
10-KSB filed with the Securities and Exchange Commission. Users of financial
information produced for interim periods are encouraged to refer to the
footnotes contained in the Annual Report to Stockholders when reviewing interim
financial results.
Effect of New Accounting Standards
In October 1997, the AICPA Accounting Standards Executive Committee issued
Statement of Position 97-2, "Software Revenue Recognition"(SOP 97-2), which
is effective for the Company's fiscal year beginning October 1, 1998. SOP 97-2
established new rules for the recognition of software revenue. The effect of
implementing SOP 97-2 is expected to be immaterial to the Company's financial
position and results of operations.
Results of Operations
The results of operations for the interim period reported are not necessarily
indicative of results to be expected for the year. The information reflects all
the adjustments (none of which were other than normal recurring items) which
are, in the opinion of management, necessary to present a fair statement of the
results for the interim period.
2) Stockholders' Equity
At March 31, 1998, options to purchase an aggregate of 123,660 shares at
exercise prices from $2.38 to $46.25 per share were outstanding.
3) Earnings Per Share
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128), is effective for both interim and annual periods ending after
December 15, 1997. Accordingly, the Company has applied the provisions of
SFAS 128 for the period ended March 31, 1998 and has retroactively restated all
earnings per share and weighted average common share amounts to conform with the
provisions. The effect of implementing SFAS 128 was immaterial to the Company's
financial position and results of operations.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following discussion should be read in conjunction with the consolidated
financial statements and related notes included elsewhere herein. Historical
results and percentage relationships are not necessarily indicative of the
operating results for any future period. Within this discussion and analysis
all dollar amounts (except for per share amounts) have been rounded to the
nearest thousand.
The following table sets forth certain data derived from the consolidated
statements of operations, expressed as a percentage of net revenues for the
quarters and six month periods ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
Quarter Ended March 31, Six Months Ended March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Percentage of net revenues:
Net revenues 100% 100% 100% 100%
Cost of revenues 21 16 22 16
___ ___ ___ ___
Gross profit 79 84 78 84
Sales and marketing 39 57 43 52
General and administrative 35 39 36 37
Research and development 26 22 26 21
___ ___ ___ ___
Total operating expenses 100 118 105 110
___ ___ ___ ___
Operating loss (21) (34) (27) (26)
Other income, net 0 0 1 1
___ ___ ___ ___
Loss before income taxes (21) (34) (26) (25)
Income tax expense 0 0 0 0
___ ___ ___ ___
Net loss (21)% (34)% (26)% (25)%
___ ___ ___ ___
___ ___ ___ ___
</TABLE>
Three Month Analysis
Net Revenues
Net revenues for the second quarter of the current year were $1,288,000 compared
to $1,668,000 for the same quarter last year. The 23% decrease in revenues was
due to a $355,000, or 27% decrease in revenues from the Company's Messaging
products, and a $30,000, decrease in revenues from the Company's Calendaring and
Scheduling products. These decreases were slightly offset by a $5,000, or 2%
increase in revenues from the Company's Personal Applications products.
Revenues from Messaging products accounted for 75% of total net revenues.
Historically these revenues were primarily derived from QuickMail LAN, the
Company's Apple Macintosh server based, E-mail solution. In management's
opinion, these revenues have been negatively impacted by the Macintosh's
shrinking market share. Over the past year and a half, the Company has
developed
8
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and begun marketing QuickMail Pro and QuickMail Office. These new
cross-platform, open standards, Messaging products are available for both
Microsoft Windows and Macintosh environments. Revenues from these new products
accounted for 75% of the second quarter's Messaging product revenues, up from
just 21% a year ago. In management's opinion the growth in revenues from these
new products, although substantial, has not been able to offset the reduction
in revenues from QuickMail LAN, primarily due to the recent development of
strong competition within the open standards E-mail market. It is management's
opinion that the prevalence and functionality of inexpensive, and in some cases
free, E-mail software may hinder substantial, long-term growth of this product
group.
Approximately 25% of the Company's second quarter revenues are from Personal
Applications products. Revenues from these products increased by 2%, compared
to the same period a year ago. The vast majority of these revenues are from
sales of QuicKeys. QuicKeys is the Company's productivity enhancing utility
program for Apple Macintosh users. In management's opinion, current development
efforts within this product group, aimed at an even wider market, offer
meaningful growth potential.
Revenues from Calendaring and Scheduling products accounts for 0% and 2% of net
revenues during the second quarter of fiscal 1998 and 1997, respectively. This
product group was discontinued in 1997.
Approximate net revenues by product group for the three-month periods ended
March 31, 1998 and 1997 are as follows:
1998 1997
Messaging $ 965,000 $1,320,000
Personal applications 323,000 318,000
Calendaring and scheduling - 30,000
___________ ___________
Total net revenues 1,288,000 1,668,000
Net revenues from international channels decreased to approximately $365,000 in
the second quarter of fiscal 1998, from $441,000 in the second quarter of the
prior year, representing 28% and 26% of total net revenues, respectively. The
decrease in international net revenues was primarily within the Japanese and
Australian markets. In management's opinion, these decreases were primarily due
to the financial crisis in Asia, and it is not expected that the market for the
Company's products in Japan will be restored to their previous level of sales in
this calendar year.
Cost of Revenues
The Company's cost of revenues is composed of: 1) the costs of product
materials such as manuals, diskettes, and packaging; 2) amortization of
capitalized translation costs; 3) amortization of capitalized manufacturing
expenses; 4) royalties paid to outside developers for the use of certain
software included with some of the Company's products; and 5) amortization of
capitalized purchased software.
Cost of revenues, as a percentage of net revenues, increased from 16% to 21% in
the second quarter of fiscal 1998, compared to the same quarter a year ago. The
increase, on a percentage basis, was
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primarily due to higher amortization expense of capitalized translation costs
associated with the new international versions of QuickMail, and higher
royalties now being paid on the new QuickMail Pro server technologies. These
increases were partially offset by a decrease in amortization expense
associated with capitalized purchased software.
Sales and Marketing
Sales and marketing expenses in the second quarter of fiscal 1998 were reduced
$453,000, or 47% compared to the second quarter of fiscal 1997. This sizeable
decrease was primarily within marketing/advertising expenses, $275,000, and
salaries and benefits, $160,000. The decrease in marketing/advertising expenses
was primarily due to significantly less trade show expenditures and less
advertising due to the Company's focus on fewer products. The decrease in
salaries and benefits was primarily due to substantial workforce reductions.
General and Administrative
General and administrative expenses are composed principally of salaries and
benefits of administrative and technical support personnel, fees for
professional services, amortization of intangible assets and facilities
expenses. These expenses for the second quarter of fiscal 1998 were reduced
$191,000, or 30% compared to the second quarter of fiscal 1997. The largest
of these reductions were in salaries and benefits, $130,000; legal and
accounting, $40,000; and facility overhead expenses, $12,000. These decreases
are primarily associated with ongoing workforce reductions. The decrease in
legal and accounting fees is primarily due to reduced legal fees in the current
year as a result of last year's settlement of a major lawsuit.
Research and Development
Research and development expenses decreased to approximately $331,000 in the
second quarter of the current year from $363,000 in the second quarter of the
prior year, representing 26% and 22% of net revenues, respectively. The primary
area that decreased in the second quarter of fiscal 1998 was salaries and
benefits, $34,000. The decrease was predominantly associated with some
workforce reductions.
Income Tax Benefit
The Company recorded no federal income tax benefit for the second quarter of
fiscal 1998. The Company has utilized all available net operating loss
carrybacks and has recorded a valuation allowance for its net operating loss
carryforward. The small tax expense reported in the second quarter represents
some state taxes incurred by the Company.
10
<PAGE>
Six Month Analysis
Net Revenues
Net revenues for the first six months of the current year were $2,511,000
compared to $3,674,000 for the same period last year. The 32% decrease in net
revenues was due to a $956,000, or 34% decrease in revenues from the Company's
Messaging products; a $154,000, or 20% decrease in revenues from the Company's
Personal Applications products; and a $53,000, decrease in revenues from the
Company's Calendaring and Scheduling products.
Revenues from Messaging products accounted for 75% of total net revenues.
Historically these revenues were primarily derived from QuickMail LAN, the
Company's Apple Macintosh server based, E-mail solution. In management's
opinion, these revenues have been negatively impacted by the Macintosh's
shrinking market share. Over the past year and a half, the Company has
developed and begun marketing QuickMail Pro and QuickMail Office. These new
cross-platform, open standards, Messaging products are available for both
Microsoft Windows and Macintosh environments. Revenues from these new products
accounted for 73% of the first six months Messaging product revenues, up from
just 18% a year ago. In management's opinion the growth in revenues from these
new products, although substantial, has not been able to offset the reduction in
revenues from QuickMail LAN, primarily due to the recent development of strong
competition within the open standards E-mail market. It is management's opinion
that the prevalence and functionality of inexpensive, and in some cases free,
E-mail software may hinder substantial, long-term growth of this product group.
Approximately 25% of the revenues for the first six months of the current fiscal
year are from Personal Applications products, which are primarily sales of
QuicKeys. QuicKeys is the Company's productivity enhancing utility program for
Apple Macintosh users. These sales have decreased, when compared to the prior
year, primarily due to strong sales in the first quarter of the prior year,
following the release of a significant upgrade to the product. In management's
opinion, current development efforts within this product group, aimed at an even
wider market, offer meaningful growth potential.
Revenues from Calendaring and Scheduling products accounts for 0% and 1% of net
revenues during the first six months of fiscal 1998 and 1997, respectively.
This product group was discontinued in 1997.
Approximate net revenues by product group for the six-month periods ended
March 31, 1998 and 1997 are as follows:
1998 1997
Messaging $1,884,000 $2,840,000
Personal applications 627,000 781,000
Calendaring and scheduling - 53,000
___________ ____________
Total net revenues 2,511,000 3,674,000
Net revenues from international channels decreased to approximately $712,000 in
the fist six months of the current year, from $1,016,000 in the same period a
year ago, representing 28% of total net
11
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revenues in both periods. The decrease in international net revenues was
primarily within the Japanese and Australian markets. In management's opinion,
these decreases were primarily due to the financial crisis in Asia, and it is
not expected that the market for the Company's products in Japan will be
restored to their previous level of sales in this calendar year.
Cost of Revenues
The Company's cost of revenues is composed of: 1) the costs of product
materials such as manuals, diskettes, and packaging; 2) amortization of
capitalized translation costs; 3) amortization of capitalized manufacturing
expenses; 4) royalties paid to outside developers for the use of certain
software included with some of the Company's products; and 5) amortization of
capitalized purchased software.
Cost of revenues, as a percentage of net revenues, increased from 16% to 22% in
the first six months of fiscal 1998, compared to the same period a year ago.
The increase, on a percentage basis, was primarily due to higher amortization
expense of capitalized translation costs associated with the new international
versions of QuickMail, and higher royalties now being paid on the new QuickMail
Pro server technologies. These increases were partially offset by a decrease in
amortization expense associated with capitalized purchased software.
Sales and Marketing
Sales and marketing expenses in the first six months of fiscal 1998 were reduced
$828,000, or 43% compared to the first six months of fiscal 1997. This sizeable
decrease was primarily within marketing/advertising expenses, $519,000, and
salaries and benefits, $356,000. The decrease in marketing/advertising expenses
was primarily due to significantly less trade show expenditures and less
advertising due to the Company's focus on fewer products. The decrease in
salaries and benefits was primarily due to substantial workforce reductions.
General and Administrative
General and administrative expenses are composed principally of salaries and
benefits of administrative and technical support personnel, fees for
professional services, amortization of intangible assets and facilities
expenses. These expenses for the first six months of fiscal 1998 were reduced
$461,000, or 34% from the same period a year ago. The largest of these
reductions were in salaries and benefits, $299,000; legal and accounting,
$71,000; facility overhead expenses, $30,000; contract labor and outside
services, $29,000; and travel and entertainment, $27,000. These decreases are
primarily associated with ongoing workforce reductions. The decrease in legal
and accounting fees is primarily due to reduced legal fees in the current year
as a result of last year's settlement of a major lawsuit.
Research and Development
Research and development expenses decreased to approximately $656,000 for the
first six months of the current year from $767,000 in the same period last year,
representing 26% and 21% of net
12
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revenues, respectively. The primary area that decreased in the first six
months of fiscal 1998 was salaries and benefits, $99,000 and contract labor,
$15,000. The decrease was predominantly associated with some workforce
reductions.
Income Tax Benefit
The Company recorded no federal income tax benefit for the second quarter of
fiscal 1998. The Company has utilized all available net operating loss
carrybacks and has recorded a valuation allowance for its net operating loss
carryforward. The small tax expense reported represents some state taxes
incurred.
Liquidity and Capital Resources
Cash and cash equivalents increased by $222,000 from $1,454,000 at the beginning
of the fiscal year, to $1,676,000 as of March 31, 1998. The primary sources of
cash were a $532,000 decrease in the level of trade accounts receivable and a
$205,000 decrease in the level of inventories. The decrease in trade accounts
receivable was due to both effective collection efforts and lower sales levels.
The decrease in inventories was primarily due to the amortization of capitalized
translation costs, which are a component of inventories. Of the $737,000 in
cash generated from these two sources, approximately $304,000 was used to fund
the operating loss adjusted for the non-cash expenses of depreciation and
amortization. Management expects that the Company will have no need to raise
additional funds within the next year. Management believes the Company can fund
its working capital needs from operations, available cash, available
investments, and from its bank line of credit, against which the Company has no
borrowings as of March 31, 1998.
Employees
As of March 31, 1998, the Company employed 40 full-time equivalent employees
(FTE's). Part-time employees in total working an aggregate of a 40-hour work
week make one FTE. As of September 30, 1997 and December 31, 1997, the Company
employed 65 and 56 FTE's, respectively. Over the last few years the Company has
steadily taken steps to reduce its workforce. These steps have included both
normal employee attrition, as well as employee severance. Such reductions
within the areas of development, sales and marketing have been in response to
the Company's focus on a smaller number of products and the outsourcing of some
functions requiring a particular expertise. Within the administrative areas,
reductions have been in response to reduced workloads caused by a smaller volume
of transactions. Looking forward, management currently does not expect any
significant changes in the number of employees.
Risk and Uncertainty
Safe harbor for forward-looking statements
The Company or management may make or may have made certain forward-looking
statements, orally or in writing, such as those within Management's Discussion
and Analysis contained in it's various SEC filings. The Company wished to
ensure that such statements are accompanied by
13
<PAGE>
meaningful cautionary statements, so as to ensure to the fullest extent
possible the protections of the safe harbor established in the Private
Securities Litigation Reform Act of 1995. Such statements are therefore
qualified in their entirety by reference to and are accompanied by the
following discussion of certain important factors that could cause actual
results to differ materially from those described in such forward-looking
statements.
The Company cautions the reader that this list of factors is not intended to be
exhaustive. The Company operates in a continually changing business
environment, and new risk factors emerge from time to time. Management cannot
predict such factors, nor can it assess the impact, if any, of such factors on
the Company's business or the extent to which any factors may cause actual
results to differ materially from those described in any forward-looking
statement. None of the Company's forward-looking statements should be relied
upon as prediction of actual results.
Risk factors that may affect future results
The Company may experience material fluctuations in future revenues and
operating results on a quarterly or annual basis resulting from a number of
factors, including: The risk that new products and product upgrades may not be
effected on a timely basis; the risk that such products may not achieve market
acceptance within the Microsoft Windows or Apple Macintosh markets; the risk
that the prevalence and functionality of available free E-mail software will
increase and further erode revenues; and the risk associated with domestic and
international general economic conditions. The Company's products are sold in
markets that change rapidly and the Company must continually anticipate and
adapt its products to emerging computer technologies and capabilities. The
Company may not be able to successfully adapt to these changing markets.
For a more complete discussion of these risk factors, see the Company's Form
10-KSB, filed December 23, 1997.
Trademarks
Quickmail and TimeVision NS are trademarks and QuicKeys, WebArranger, and
Network Scheduler are registered trademarks of CE Software, Inc. All other
brand or product names are trademarks or registered trademarks of their
respective holders.
14
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PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting on February 27, 1998, all Directors were
re-elected as follows:
For Withheld
Sheldon T. Fleck 984,156 9,085
Christian F. Gurney 985,456 7,785
John S. Kirk 984,746 8,495
David J. Lundquist 984,336 8,905
Richard A. Skeie 984,116 9,125
Proposal to approve the stock purchase agreement with Christian F. Gurney.
Abstained or
For Against Broker non-vote
_________ _________ _______________
969,761 11,744 11,736
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See index on page 17
11 Computation of Earnings per Common Share
27 Financial Data Schedule - for SEC filing only
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended March 31, 1998.
15
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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.
CE SOFTWARE HOLDINGS, INC.
(Registrant)
Signature Title Date
/s/ Richard A. Skeie May 1, 1998
_________________________ President, Chief Executive ______________
(Richard A. Skeie) Officer and Director
/s/ John S. Kirk May 1, 1998
_________________________ Secretary and Treasurer, ______________
(John S. Kirk) and Director
/s/ Daniel E. McCann May 1, 1998
_________________________ Chief Financial Officer ______________
(Daniel E. McCann)
16
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EXHIBIT INDEX
Exhibit
Number Description
11 Computation of Earnings per Common Share Page 18
27 Financial Data Schedule - for SEC filing only
17
<PAGE>
EXHIBIT 11
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(given effect, pro forma, to the Reverse Stock Split)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic Earnings
per Share Information:
Weighted average number of
shares outstanding during
the quarter 1,095,900 1,125,406 1,095,900 1,124,933
Annualized additional shares
due to stock options - - - -
__________ __________ __________ __________
1,095,900 1,125,406 1,095,900 1,124,933
__________ __________ __________ __________
__________ __________ __________ __________
Net loss $(265,100) $(562,186) $(657,632) $(930,141)
Basic loss per share $ (.24) $ (.50) $ (.60) $ (.83)
Diluted Earnings
per Share Information:
Weighted average number of
shares outstanding during
the quarter 1,095,900 1,125,406 1,095,900 1,124,933
Annualized additional shares
due to stock options - - - -
__________ __________ __________ __________
1,095,900 1,125,406 1,095,900 1,124,933
__________ __________ __________ __________
__________ __________ __________ __________
Net loss $(265,100) $(562,186) $(657,632) $(930,141)
Diluted loss per share $ (.24) $ (.50) $ (.60) $ (.83)
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,676,271
<SECURITIES> 499,531
<RECEIVABLES> 576,543
<ALLOWANCES> 0
<INVENTORY> 538,374
<CURRENT-ASSETS> 3,597,107
<PP&E> 4,218,246
<DEPRECIATION> 2,164,706
<TOTAL-ASSETS> 5,973,467
<CURRENT-LIABILITIES> 826,671
<BONDS> 810,397
0
0
<COMMON> 109,590
<OTHER-SE> 4,226,809
<TOTAL-LIABILITY-AND-EQUITY> 5,973,467
<SALES> 1,288,014
<TOTAL-REVENUES> 1,288,014
<CGS> 273,890
<TOTAL-COSTS> 273,890
<OTHER-EXPENSES> 1,289,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19,746)
<INCOME-PRETAX> (263,844)
<INCOME-TAX> 0
<INCOME-CONTINUING> (265,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (265,100)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
