UNITED STATES
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 September 30,
2000.
[ ] 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
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LIGHTNING ROD SOFTWARE, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 41-1614808
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5900 Green Oak Drive, Minnetonka, MN 55343
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (952) 837-4000
Former name, former address and former fiscal year, if changed since
last report:
Prior Fiscal Year:
--------------------------------------------------------------------------------
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
October 31, 2000 Common Stock 3,286,882
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
<PAGE>
LIGHTNING ROD SOFTWARE, INC.
Table of Contents
Part I FINANCIAL INFORMATION
Item 1. Financial Statements: Page #
Balance Sheets 3
As of September 30, 2000 and December 31, 1999
Statements of Operations 4
Three Months and Nine Months Ended September 30, 2000 and 1999
Statements of Cash Flows 5
Nine Months Ended September 30, 2000 and 1999
Notes to Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of Financial 8 - 11
Condition and Results of Operations
Part II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12 - 13
SIGNATURES 14
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
Lightning Rod Software, Inc.
As of September 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
9/30/00 12/31/99
------------ ------------
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 4,321,654 $ 121,383
Accounts receivable (net) 72,253 183,643
Prepaid expenses 452,419 103,001
------------ ------------
Total Current Assets 4,846,326 408,027
Property and equipment (net) 522,234 344,394
------------ ------------
Total Assets $ 5,368,560 $ 752,421
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY / (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses $ 963,452 $ 2,379,458
Due to related parties 441,796 66,307
Deferred revenue 67,628 90,791
Notes payable 1,350,000 4,165,980
------------ ------------
Total Current Liabilities $ 2,822,876 $ 6,702,536
Redeemable common stock $ -- $ 500,000
Shareholders' Equity / (Deficit)
Common stock at par (10,000,000 shares authorized,
3,286,882 and 1,673,836 outstanding at September 30, 2000
and December 31, 1999, respectively) $ 32,869 $ 16,738
Additional paid-in capital 21,128,520 6,667,350
Unearned compensation (9,531) (26,687)
Accumulated deficit (18,606,174) (13,107,516)
------------ ------------
Total Shareholders' Equity / (Deficit) $ 2,545,684 $ (6,450,115)
------------ ------------
Total Liabilities and Shareholders' Equity / (Deficit) $ 5,368,560 $ 752,421
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIGHTNING ROD SOFTWARE, INC.
Statements of Operations
For the three and nine months ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
Unaudited Unaudited
------------------------------- -------------------------------
3 Month Period 3 Month Period 9 Month Period 9 Month Period
Ended 9/30/00 Ended 9/30/99 Ended 9/30/00 Ended 9/30/99
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
License $ 231,241 $ 208,811 $ 371,054 $ 1,159,719
Services and other 109,174 281,021 268,396 699,508
----------- ----------- ----------- -----------
Total Revenues $ 340,415 $ 489,832 $ 639,450 $ 1,859,227
COST OF REVENUES
License $ -- $ 18,025 $ 11,255 $ 217,564
Services and other 242,906 336,477 831,870 756,976
----------- ----------- ----------- -----------
Total Cost of Revenues $ 242,906 $ 354,502 $ 843,125 $ 974,540
GROSS PROFIT $ 97,509 $ 135,330 $ (203,675) $ 884,687
OPERATING EXPENSES
Sales and marketing expenses $ 686,090 $ 350,537 $ 1,804,514 $ 1,408,931
Research and development 820,445 290,511 1,675,765 735,174
General and administrative 567,316 449,282 1,770,304 1,373,076
----------- ----------- ----------- -----------
Total Operating Expenses $ 2,073,851 $ 1,090,330 $ 5,250,583 $ 3,517,181
----------- ----------- ----------- -----------
Loss From Operations $(1,976,342) $ (955,000) $(5,454,258) $(2,632,494)
Interest income / (expense) $ 18,668 $ (289,960) $ (44,398) $ (571,944)
----------- ----------- ----------- -----------
Loss before Income Taxes $(1,957,674) $(1,244,960) $(5,498,656) $(3,204,438)
Income taxes -- -- -- --
----------- ----------- ----------- -----------
Net Loss $(1,957,674) $(1,244,960) $(5,498,656) $(3,204,438)
=========== =========== =========== ===========
Earnings Per Share
Net loss per common share
----------- ----------- ----------- -----------
basic and fully diluted $ (0.60) $ (0.78) $ (2.16) $ (2.02)
=========== =========== =========== ===========
Weighted average common shares 3,267,694 1,590,751 2,550,168 1,587,404
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIGHTNING ROD SOFTWARE, INC.
Statements of Cash Flows
For the nine months ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
Unaudited Unaudited
------------- -------------
Nine Month Nine Month
Period ended Period ended
Sept 30, 2000 Sept 30, 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (5,498,656) $ (3,204,438)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 195,904 121,299
Compensatory stock options 17,156 17,155
Noncash principal shareholder transactions -- 150,000
Warrants issued with Note Payable -- 480,000
Warrants for terminated offering -- 31,250
Changes in operating assets and liabilities:
Account receivable 111,390 (182,654)
Prepaid expenses (349,418) (81,441)
Accounts payable, accrued expenses and deferred revenue (898,774) 1,248,421
------------ ------------
Net cash used in operating activities $ (6,422,398) $ (1,420,408)
------------ ------------
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (442,456) (82,407)
------------ ------------
Net cash used in investing activities $ (442,456) $ (82,407)
------------ ------------
Cash flows from financing activities:
Net advances from affiliates $ -- $ 152,815
Proceeds from issuance of short-term notes 2,573,310 1,350,000
Proceeds from issuance of common stock 8,491,815 --
------------ ------------
Net cash provided by financing activities $ 11,065,125 $ 1,502,815
------------ ------------
Net increase in cash $ 4,200,271 $ --
Cash at beginning of period 121,383 300
------------ ------------
Cash at end of period $ 4,321,654 $ 300
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIGHTNING ROD SOFTWARE, INC.
Notes to Financial Statements
September 30, 2000
(Unaudited)
1) Merger with Atio Corporation USA, Inc.
In accordance with a certain merger agreement dated December 28, 1999, as
amended ("Merger Agreement"), Atio Corporation USA, Inc., a Minnesota
corporation ("Atio") merged (the "Merger") with and into CE Software Holdings,
Inc. (CESH) effective as of April 28, 2000. In conjunction with the Merger, CESH
(the surviving corporation) changed its name to Lightning Rod Software, Inc.
(hereafter "LROD" or "Company" or "Registrant"). Based principally on the fact
that the officers, directors and operating activities of Atio became the
officers, directors and operating activities of LROD after the Merger, the
Merger was accounted for as a reverse acquisition and the financial statements
of Atio became the financial statements of LROD.
Atio was significantly undercapitalized during the year ended December 31, 1999.
As additional sources of capital were being sought, Atio's operations were
significantly scaled back, particularly its sales and marketing activities. The
decline in LROD's operating results for the three and nine month periods ended
September 30, 2000, primarily reflect the continuing negative effects of Atio's
and LROD's diminished sales and marketing activities, which have only recently
returned to a more active level. Atio's operations from October 28, 1999 (the
effective date of a preliminary agreement of merger with CESH) through the
effective date of the Merger were primarily financed with advances from CESH.
Such funding was directed towards rebuilding the necessary resources and
infrastructure to actively market and sell products and to service customers,
the revenue impact of which has not yet been significantly realized.
As a result of the Merger and a private financing completed immediately after
the Merger, LROD has approximately $4.3 million of cash and cash equivalents
available to finance continuing operations at September 30, 2000.
2) Basis of Presentation
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Company's financial position, results of
operations and cash flows for the periods presented. The preparation of
financial statements in conformity with generally accepted accounting principles
in the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
in the United States have been condensed or omitted. These financial statements
should be read in conjunction with the Company's financial statements and notes
thereto for the year ended December 31, 1999, which are contained in the Current
Report on Form 8-K filed on June 9, 2000. The results of operations for the
interim periods presented are not necessarily indicative of results that may be
expected for any other interim period or for the full fiscal year.
3) Earnings Per Share
Net loss per share is computed under SFAS No. 128, "Earnings Per Share." Basic
net loss per share is computed using the weighted-average number of shares of
common stock outstanding. Diluted net loss per share does not differ from basic
net loss per share since potential shares of common stock from the exercise of
stock options and warrants and outstanding shares of common stock are
anti-dilutive for all periods presented. In April 2000, the Company completed a
merger that resulted in the conversion of Atio shares into shares of the
Company. All share data included in the Company's financial statements have been
retroactively restated to reflect the stock conversion.
<PAGE>
4) Fair Value Disclosure of Financial Instruments
The Company's financial instruments consist of short-term trade receivables and
payables for which current carrying amounts are equal to or approximate fair
market value. Additionally, interest rates on outstanding debt are at rates that
approximate market rates for debt with similar terms and maturities.
5) Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The new
statement establishes accounting and reporting standards for derivative
instruments and hedging activities related to those instruments, as well as
other hedging activities. SFAS No. 133, as amended by SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities-Deferral of the Effective Date
of FASB Statement No. 133," is effective for the Company beginning January 1,
2001. The Company does not expect SFAS No. 133 to materially affect its
financial position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, "Revenue Recognition in Financial Statements." SAB 101
summarizes certain of the SEC's views regarding revenue recognition. The
provisions of SAB 101, as amended by SAB 101A, are effective for the year
beginning January 1, 2000. The Company has analyzed the effect of the guidance
outlined in SAB No. 101, as amended by SAB 101A, and does not believe that it
will impact the Company's revenue recognition practices or financial statements.
<PAGE>
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 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
have been rounded to the nearest thousand.
REVENUES
Three Month Periods Ended September 30, 1999 and 2000: Revenues decreased from
$490,000 during the three month period ended September 30, 1999 to $340,000
during the same period in 2000, a 31% decrease. Approximately 68% of total
revenues for the three month period ended September 30, 2000 and 43% of revenues
for the same period in 1999 were from licenses, all of which were from the
Lightning Rod Interaction Manager product. Revenue from licenses for the three
month period ended September 30, 2000 increased by 11% compared to the same
period a year ago. Revenues from services decreased from $281,000 during the
three month period ended September 30, 1999 to $109,000 during the same period
in 2000, a 61% decrease. Approximately 32% of revenues for the three month
period ended September 30, 2000 and 57% of revenues for the same period in 1999
were from services. Revenues in the three month period ended September 30, 2000
were less than anticipated despite the increased financial resources directed
towards sales and marketing. This is due primarily to a longer sales cycle for
the Company's product than originally anticipated.
The Company's lengthening sales cycle has been primarily driven by increasingly
difficult market conditions, including tighter financial markets, negatively
affecting e-commerce companies, including the Company and certain of its
prospective customers. Changing market conditions have caused some prospective
customers to reduce capital expenditures, delaying purchase commitments for the
Company's products and services, and to express concern regarding the Company's
ability to meet future commitments relative to its products and services.
Additionally, a proliferation of software products represented by the Company's
competitors to be similar to the Company's products has caused confusion in the
market that has resulted in a slower adoption of the Company's technology. The
foregoing factors, combined with the significant relative resources and
financial strength of many of the Company's competitors, have contributed to a
significant lengthening of the sales process.
License revenues from resellers accounted for almost all of the licensing
revenue recognized in the period. The absence of direct sales to end users of
the Company's software caused the steep decline in services revenue in the
period.
Nine Month Period Ended September 30, 1999 and 2000: Revenues decreased from
$1,859,000 during the nine month period ended September 30, 1999 to $639,000
during the same period in 2000, a 66% decrease. Approximately 58% of total
revenues for the nine month period ended September 30, 2000 and 62% of revenues
for the same period in 1999 were from licenses, all of which were from the
Lightning Rod Interaction Manager product. Revenue from licenses for the nine
month period ended September 30, 2000 decreased by 68% compared to the same
period a year ago. Revenues from services decreased from $700,000 during the
nine month period ended September 30, 1999 to $268,000 during the same period in
2000, a 62% decrease. Approximately 42% of revenues for the nine month period
ended September 30, 2000 and 38% of revenues for the same period in 1999 were
from services. Despite the increased resources available to the Company since
the completion of the Merger and the private placement discussed above in Note 1
to the Financial Statements, revenues have not increased to the levels
anticipated by management due primarily to the longer sales cycles as more fully
discussed above.
COST OF REVENUES
LROD's cost of revenues is composed primarily of: 1) the costs of product
materials such as manuals, diskettes, CD-ROMS, and packaging; 2) the cost of
servers and related peripheral equipment used by customers to run the Lightning
Rod Interaction Manager product and warehouse data; and 3) the labor required to
install, implement and support the solution for customers.
<PAGE>
In 1999, the Company began requiring customers to provide the necessary servers
needed to run the Company's software rather than bundling that equipment into
the Company's licensing arrangements. The Company still provides a component
board as part of its licensing of new installations at end users sites. As a
result of this change, material costs resulting from servers and related
peripheral equipment have been significantly reduced since the second half of
1999 and will likely continue to remain at nominal levels.
Three and Nine Month Periods Ended September 30, 1999 and 2000: Total cost of
revenues, as a percentage of revenues, declined slightly, from 72% to 71%, for
the three month period ended September 30, 1999 as compared to the same period
in 2000. Total cost of revenues, as a percentage of revenues, increased from 52%
for the nine month period ended September 30, 1999 to 132% for the same period
in 2000. This percentage increase for the comparable nine month periods mainly
reflects increases in the number of customer service staff and travel costs, the
decline in revenues, and the costs of supporting our customer base.
SALES AND MARKETING
Three Month Periods Ended September 30, 1999 and 2000: Sales and marketing
expenses increased from $351,000 for the three month period ended September 30,
1999 to $686,000 for the same period in 2000, a 96% increase. Sales and
marketing expenses as a percentage of revenues increased from 72% for the three
month period ended September 30, 1999 to 202% for the same period in 2000. This
percentage increase is primarily a function of lower revenues, on the one hand,
and increased resources directed at sales and marketing efforts, on the other
hand.
Nine Month Periods Ended September 30, 1999 and 2000: Sales and marketing
expenses increased from $1,409,000 for the nine month period ended September 30,
1999 to $1,805,000 for the same period in 2000, a 28% increase. Sales and
marketing expenses as a percentage of revenues increased from 76% for the nine
month period ended September 30, 1999 to 282% for the same period in 2000. This
percentage increase is, again, primarily a function of lower revenues and
increased resources directed at sales and marketing efforts.
RESEARCH AND DEVELOPMENT
Three Month Periods Ended September 30, 1999 and 2000: Research and development
expense increased from $291,000 for the three month period ended September 30,
1999 to $820,000 for the same period in 2000, a 182% increase. Research and
development expenses as a percentage of revenues increased from 59% for the
three month period ended September 30, 1999 to 241% for the same period in 2000.
This percentage increase is primarily due to management's decision to invest in
development efforts directed at the Lightning Rod Interaction Manager product
and to lower revenues.
Nine Month Periods Ended September 30, 1999 and 2000: Research and development
expense increased from $735,000 for the nine month period ended September 30,
1999 to $1,676,000 for the same period in 2000, a 128% increase. Research and
development expenses as a percentage of revenues increased from 40% for the nine
month period ended September 30, 1999 to 262% for the same period in 2000. This
percentage increase is, again, primarily due to increasing development efforts
directed at the Lightning Rod Interaction Manager product and to lower revenues.
GENERAL AND ADMINISTRATIVE
General and administrative expenses are composed principally of salaries of
administrative and support personnel, fees for legal and accounting services,
depreciation and amortization, and facilities expenses.
Three Month Periods Ended September 30, 2000 and 1999: General and
administrative expenses increased from $449,000 for the three month period ended
September 30, 1999 to $567,000 for the same period in 2000, a 26% increase.
General and administrative expenses in the three month period ended September
30, 2000 included a $31,000 non-recurring charge relating to the relocation of
the Company's offices. Absent this one-time moving expense, general and
administrative expenses increased by 19% in the three month period ended
September 30, 2000 compared to the same period in 1999. As a percentage of
revenues, general and administrative expenses increased from 92% for the three
month period ended September 30, 1999 to 167% for the same period in 2000. This
percentage increase is primarily related to increased costs incurred for hiring
and retaining development, sales and marketing personnel, managing the Company's
financial reporting requirements as a public entity and to lower revenues.
<PAGE>
Nine Month Periods Ended September 30, 2000 and 1999: General and administrative
expenses increased from $1,373,000 for the nine month period ended September 30,
1999 to $1,770,000 for the same period in 2000, a 29% increase. As a percentage
of revenues, general and administrative expenses increased from 74% for the nine
month period ended September 30, 1999 to 277% for the same period in 2000.
Again, this percentage increase is primarily related to increased costs incurred
for hiring and retaining development, sales and marketing personnel, managing
the Company's financial reporting requirements as a public entity and to lower
revenues.
NET INTEREST EXPENSE / INCOME
Three Month Periods Ended September 30, 2000 and 1999: Net interest income
changed from a net expense of $290,000 for the three month period ended
September 30, 1999 to net income of $19,000 for the same period in 2000, a 107%
change. This change is primarily due to decreases in interest expense and
increases in interest income resulting from a significant reduction in debt as a
result of the Company's Merger and the receipt of proceeds resulting from the
Company's Merger and private placement of common stock.
Nine Month Periods Ended September 30, 2000 and 1999: Net interest expense
decreased from $572,000 for the nine month period ended September 30, 1999 to
$44,000 for the same period in 2000, a 92% decrease. This decrease is primarily
due to decreases in interest expense and increases in interest income resulting
from a significant reduction in debt as a result of the Company's Merger, and
the receipt of proceeds resulting from the Company's Merger and private
placement of commom stock.
LIQUIDITY AND CAPITAL RESOURCES
Atio began seeking equity financing from institutional investors in March 1999.
To finance its operations while it was seeking this financing, Atio obtained a
$1,350,000 credit line and issued warrants to the participants of the lender.
Nevertheless, Atio's equity financing efforts were impaired by market conditions
and Atio's deteriorating financial condition. Atio terminated its equity
financing efforts in August 1999. Because Atio was unable to obtain equity
financing, Atio went into default under a credit agreement to which it was a
party. Atio was forced to significantly scale back the scope of its operations
starting in August 1999 because of the unavailability of further financing.
Atio began negotiation of an agreement with CESH in September 1999, and reached
preliminary agreement in October with respect to a proposed business
combination. As part of this preliminary agreement, Atio received short-term
financing of $150,000 from one of its two largest shareholders and a commitment
of its other largest shareholder to continue to fund its development efforts.
Atio also received a limited amount of financing from CESH at this time in the
form of secured promissory notes. Atio also entered into a preliminary
agreement, which was conditioned on the closing of the Merger, to restructure
its credit agreement. As a result of this preliminary agreement, and the closing
of the Merger, the credit agreement's maturity date was extended to June 30,
2001, and LROD issued shares of its common stock to participants in the credit
agreement in exchange for certain of their warrants to purchase Atio common
stock.
Until the completion of the Merger and private placement funding, Atio was
dependent on short-term funding provided principally by CESH. At the closing of
the Merger, however, funds in the amount of approximately $8,300,000 were made
available to Atio, consisting of approximately $1,550,000 from CESH and
$6,440,000 of net proceeds from a private offering of 875,000 shares of common
stock, and $300,000 pursuant to a sale of new shares to an existing shareholder.
In addition to the funds discussed above, as part of the Merger LROD received a
note for approximately $510,000 from Venturian Software, Inc. ("Venturian").
This note represented Venturian's agreement to purchase an additional 78,666
LROD shares. This note was paid in full, and 78,666 LROD shares were accordingly
issued, on June 30, 2000.
Additionally, under the Merger Agreement, LROD is currently holding as
collateral 314,062 LROD shares owned by Atio Pty to secure Atio Pty's commitment
to purchase an additional 314,062 shares of LROD common stock at $6.48 per share
($2,035,000 in the aggregate). Atio Pty's commitment was partially satisfied
through providing financial support to LROD's product development team in South
Africa prior to the team's relocation to the United States in mid 2000. The
balance of the commitment was scheduled to be paid by May 31, 2000. It has not
been paid as of the date of this report. LROD is currently working with Atio Pty
to reconcile the balance of this commitment. The Company's ability to collect
the balance of the commitment is currently uncertain.
<PAGE>
The Company's capital resources at September 30, 2000, consisting primarily of
$4.3 million in cash and cash equivalents, are being used for marketing, sales,
product development, professional services, and expansion of infrastructure.
During the third quarter, changing market conditions negatively affecting the
Company and its customers, including tighter financial markets, impaired the
Company's ability to generate sales at the rate that it originally expected.
These difficult market conditions caused a number of the Company's most
significant sales prospects to reduce capital expenditures and to delay purchase
commitments for the Company's products and services. These difficult market
conditions have also caused some of the Company's sales prospects to question
the Company's ability to meet future commitments relative to its products and
services. Additionally, a proliferation of software products represented by the
Company's competitors to be similar to the Company's products has caused
confusion in the market that has resulted in a slower adoption of the Company's
technology. The foregoing factors, combined with the significant relative
resources and financial strength of many of the Company's competitors, have
contributed to a significant lengthening of the sales process.
If the factors negatively impacting the Company's sales efforts continue, or if
the Company is otherwise unable to significantly accelerate and increase its
sales, the Company will need to obtain additional financing, restructure,
consolidate or seek other strategic alternatives no later than the early part of
2001. The Company is considering all such alternatives at this time.
RISK AND UNCERTAINTY
Certain statements contained on this Form 10-QSB and other written and oral
statements made from time to time by the Company do not relate strictly to
historical or current facts. As such, they are considered "forward-looking
statements" which provide current expectations or forecasts of future events.
Such statements can be identified by the use of terminology such as
"anticipate," "believe," "estimate," "expect," "intend," "may," "could,"
"possible," "plan," "project," "will," "forecast," and similar words or
expressions. LROD's forward-looking statements generally relate to its growth
strategy, product development and financial results. Forward-looking statements
involve a variety of risks and uncertainties, known and unknown, including, but
not limited to, the risk that new products may not achieve market acceptance,
and the risk that LROD would not be able to fund its working capital needs from
cash flows. Consequently, no forward-looking statement can be guaranteed and
actual results may vary materially.
The Company undertakes no obligation to update any forward-looking statement,
but investors are advised to consult any further disclosures by the Company on
this subject in its filings with the Securities and Exchange Commission,
especially on Forms 10-KSB, 10-QSB and 8-K (if any), in which the Company
discusses in more detail various important factors that could cause actual
results to differ from expected or historic results. The Company notes these
factors as permitted by the Private Securities Litigation Reform Act of 1995. It
is not possible to foresee or identify all such factors. As such, investors
should not consider any list of such factors to be an exhaustive statement of
all risks, uncertainties or potentially inaccurate assumptions.
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
On July 25, 2000, LROD filed an amended report on Form 8-K, amending an 8-K
report filed on May 15, 2000, as amended on June 9, 2000, reporting (i) the
completion of its Merger with Atio and describing the business of LROD
subsequent to the Merger, (ii) the change in its certifying accountants, (iii)
changes in its directors and officers, (iv) the closing of its private placement
and (v) the change in its fiscal year, and filing the following financial
statements of businesses acquired:
(a) Financial statements of Atio Corporation USA, Inc.:
- Balance Sheets as of December 31, 1999 and December 31, 1998
- Statements of Operations for the years ended December 31,
1999 and December 31, 1998
- Statement of Changes in Stockholders' Equity for the years
ended December 31, 1999 and December 31, 1998
- Notes to Financial Statements
- Report of Independent Accountants
(b) Financial statements of Atio Corporation USA, Inc.:
- Unaudited Balance Sheets as of March 31, 2000 and March 31,
1999
- Unaudited Statements of Operations for the three months
ended March 31, 2000 and March 31, 1999
- Unaudited Statements of Cash Flows for the three months
ended March 31, 2000 and March 31, 1999
(c) Pro Forma Financial Information:
- Unaudited Pro Forma Combined Balance Sheet at December 31,
1999
- Unaudited Pro Forma Combined Summaries of Operations for the
three months ended December 31, 1999 and the year ended
September 30, 1999
- Notes to Unaudited Pro Forma Combined Balance Sheet and
Summaries of Operations
- Unaudited Pro Forma Combined Balance Sheet as of March 31,
2000
- Unaudited Pro Forma Combined Summary of Operations for the
three months ended March 31, 2000
- Notes to Unaudited Pro Forma Combined Balance Sheet and
Summaries of Operations
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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.
LIGHTNING ROD SOFTWARE, INC.
(Registrant)
Signature Title Date
/s/ Willem J. Ellis November 3, 2000
_________________________ President, Chief Executive ______________
(Willem J. Ellis) Officer, and Director
/s/ Jeffrey D. Skie November 3, 2000
_________________________ Executive Vice President ______________
(Jeffrey D. Skie) and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
