<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended June 30, 1998.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from _________ to __________.
Commission file number 0-19817
--------------------------------
IntraNet Solutions, Inc.
- - --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Chapter)
Minnesota 41-1652566
- - -------------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
8091 Wallace Road, Eden Prairie, Minnesota 55344
- - --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(612) 903-2000
- - --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
9625 West 76th Street, Suite 150, Eden Prairie, MN 55344
- - --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
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
----------- ----------
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At August 6, 1998 there
were 8,682,983 shares of common stock, $0.01 par value outstanding.
Page 1 of 14
<PAGE> 2
IntraNet Solutions, Inc.
Form 10-QSB Index
June 30, 1998
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1998 and March 31, 1998 3
Condensed Consolidated Statements of Operations -
for the three months ended June 30, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows -
for the three months ended June 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II: Other Information
Item 6: Exhibits and Reports on Form 8-K 13
Page 2 of 14
<PAGE> 3
INTRANET SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1998 1998
----------------- ------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $2,300,383 $994,526
Accounts receivable, net 5,696,243 4,925,301
Notes receivable 284,782 277,703
Inventories 224,800 233,121
Prepaid expenses and other current assets 554,130 540,472
----------------- ------------------
Total current assets 9,060,338 6,971,123
PROPERTY AND EQUIPMENT, NET 775,013 682,750
INTANGIBLE ASSETS, NET 83,338 93,338
NET ASSETS OF DISCONTINUED OPERATIONS -- 709,128
----------------- ------------------
$9,918,689 $8,456,339
================= ==================
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES:
Revolving credit facility $2,271,359 $2,246,122
Promissory notes payable, net of discount -- 250,965
Current portion of long-term debt 339,164 412,666
Accounts payable 2,791,826 2,906,293
Deferred revenues 233,470 210,110
Accrued expenses 494,825 563,786
----------------- ------------------
Total current liabilities 6,130,644 6,589,942
LONG-TERM DEBT, NET OF CURRENT PORTION 137,500 156,250
OTHER 27,059 42,215
----------------- ------------------
Total liabilities 6,295,203 6,788,407
----------------- ------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series A Preferred stock, $.01 par value, $5.00 stated value,
1,000,000 shares authorized, 430,000 and 450,000 shares
issued and outstanding, respectively 1,914,784 2,003,844
Series B Preferred Stock, $.01 par value, $10,000.00 stated
value, 300 shares authorized, 300 and 0 shares issued and
outstanding, respectively 2,853,028 --
Common stock, $.01 par value, 24,000,000 shares authorized,
8,678,983 and 8,607,445 issued and outstanding, respectively 86,790 86,075
Additional paid-in capital 9,523,412 8,760,980
Accumulated deficit (10,683,016) (9,064,694)
Unearned compensation (71,512) (118,273)
----------------- ------------------
Total stockholders' equity 3,623,486 1,667,932
----------------- ------------------
$9,918,689 $8,456,339
================= ==================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 14
<PAGE> 4
INTRANET SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
----------------------------------------
1998 1997
------------------ -----------------
<S> <C> <C>
REVENUES:
Hardware integration $2,588,561 $2,951,690
Software, technical services and support 1,627,783 1,604,963
-------------- --------------
Total revenues 4,216,344 4,556,653
-------------- --------------
COST OF REVENUES:
Hardware integration 2,184,322 2,434,042
Software, technical services and support 622,139 988,913
-------------- --------------
Total cost of revenues 2,806,461 3,422,955
-------------- --------------
Gross profit 1,409,883 1,133,698
-------------- --------------
OPERATING EXPENSES:
Sales and marketing 937,410 588,310
General and administrative 650,702 563,707
Research and development 284,718 305,366
-------------- --------------
Total operating expenses 1,872,830 1,457,383
-------------- --------------
Loss from operations (462,947) (323,685)
INTEREST EXPENSE, NET 30,877 92,783
-------------- --------------
LOSS FROM CONTINUING OPERATIONS (493,824) (416,468)
DISCONTINUED OPERATIONS
Loss from operations of discontinued distribution group
(net of applicable taxes) (410,361) (435,858)
Loss from sale of discontinued distribution group (net of
applicable taxes) (111,103) --
-------------- --------------
NET LOSS (1,015,288) (852,326)
PREFERRED STOCK DIVIDENDS AND ACCRETION (603,034) --
-------------- --------------
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS ($1,618,322) ($852,326)
============== ==============
LOSS FROM CONTINUING OPERATIONS PER COMMON SHARE - BASIC AND
DILUTED ($0.06) ($0.06)
============== ==============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED ($0.12) ($0.11)
============== ==============
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS PER SHARE - BASIC AND
DILUTED ($0.19) ($0.11)
============== ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,652,868 7,543,451
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 14
<PAGE> 5
INTRANET SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------------------
1998 1997
---------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,015,288) ($852,326)
Adjustments to reconcile net loss
to cash flows from operating activities -
Depreciation and amortization 81,250 53,170
Stock option compensation earned 1,961 17,361
Discount amortization 194 30,420
Discontinued operations 709,128 124,382
Changes in operating assets and liabilities (943,426) (113,552)
---------------- ------------------
Cash flows from operating activities (1,166,181) (740,545)
---------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable -- 248,222
Purchases of fixed assets (163,513) (32,126)
---------------- ------------------
Cash flows from investing activities (163,513) 216,096
---------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net advances from revolving credit facility 25,237 642,740
Payments on long-term debt (340,654) (108,060)
Payments on capital leases (2,757) (1,655)
Payments on other long-term liabilities (15,681) (22,044)
Repurchase of common stock 525 600
Issuance of preferred stock 2,853,028 --
Payment of dividends on preferred stock (33,034) --
Proceeds from stock options and warrants 148,887 2,280
---------------- ------------------
Cash flows from financing activities 2,635,551 513,861
---------------- ------------------
NET INCREASE (DECREASE) IN CASH 1,305,857 (10,588)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 994,526 121,798
---------------- ------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,300,383 $111,210
================ ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest $48,115 $80,626
Cash paid for income taxes $987 $3,531
NONCASH FINANCING AND INVESTING ACTIVITIES:
Conversion of debt to common stock -- $250,000
DETAIL OF CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable ($770,942) ($1,016,310)
Inventories 8,321 63,432
Prepaid expenses and other current assets (20,737) (51,794)
Accounts payable (114,467) 961,704
Accrued expenses and other liabilities (45,601) (70,584)
---------------- ------------------
Net changes in operating assets and liabilities ($943,426) ($113,552)
================ ==================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5 of 14
<PAGE> 6
INTRANET SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(1) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although management believes that the
disclosures are adequate to make the information presented not misleading, it
is suggested that these interim consolidated financial statements be read in
conjunction with the Company's most recent audited consolidated financial
statements and notes thereto. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary for a fair
presentation of the financial position, results of operations and cash flows
for the interim period presented have been made. Operating results for the
three months ended June 30, 1998 are not necessarily indicative of the results
that may be expected for the year ending March 31, 1999.
(2) NET LOSS PER COMMON SHARE
The Company's basic net income (loss) per share amounts have been
computed by dividing net income (loss) by the weighted average number of
outstanding common shares. The Company's diluted net income (loss) per share is
computed by dividing net income (loss) by the weighted average number of
outstanding common shares and common share equivalents relating to stock
options, when dilutive. For each of the quarters ended June 30, 1997 and 1998,
the Company incurred net losses and therefore basic and diluted per share
amounts are the same. Common stock equivalent shares consist of convertible
preferred stock (using the if-converted method) and stock options and warrants
(using the treasury stock method).
(3) SERIES B CONVERTIBLE PREFERRED STOCK
In May, 1998, the Company issued $3,000,000 of Series B 4%
Convertible Preferred Stock. The preferred stock is convertible into the
Company's common stock at a price equal to 84% of market value at the date of
conversion with a maximum conversion price of $7.56 and a minimum conversion
price of $1.81. In connection with this transaction, the Company recognized a
non-cash deemed dividend of $570,000. The deemed dividend was recorded as a
discount to preferred stock with a corresponding credit to additional paid in
capital. The discount was recognized at the date of issue of the preferred
stock, the same date at which the shares were eligible for conversion. The
accretion of the discount is reflected in the statement of operations as an
adjustment to net income (loss), but has no net effect on total stockholders'
equity.
(4) RECENTLY ISSUED ACCOUNTING PRINCIPLES
In October, 1997, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position No. 97-2 ("SOP 97-2"),
"Software Revenue Recognition", which the Company has adopted for transactions
entered into during the fiscal year beginning April 1, 1998. SOP 97-2 provides
guidance for recognizing revenue on software transactions and supersedes SOP
91-1, "Software Revenue Recognition". In March 1998, the AICPA issued Statement
of Position No. 98-4 ("SOP 98-4"), "Deferral of the Effective Date of a
Provision of SOP 97-2, Software Revenue Recognition". SOP 98-4 defers, for one
year, the application of certain passages in SOP 97-2 which limit what is
considered vendor-specific objective evidence ("VSOE") necessary to recognize
revenue for software licenses in multiple-element arrangements when undelivered
elements exist. Additional guidance is expected to be provided prior to adoption
of the deferred provision of SOP 97-2. The Company will determine the impact, if
any, the additional guidance will have on current revenue recognition practices
when issued. Adoption of the remaining provisions of SOP 97-2 did not have a
material impact on revenue recognition during the three months ended June 30,
1998.
Page 6 of 14
<PAGE> 7
On April 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
Comprehensive income includes certain changes in equity that are currently
excluded from net earnings. The adoption of this statement did not impact the
Company's consolidated financial statements; historically there have been no
differences between net earnings and comprehensive income.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures About Segments of An
Enterprise and Related Information"("SFAS 131"). SFAS 131 revises information
regarding the reporting of operating segments. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The Company will adopt SFAS 131 for the fiscal year ending March 31,
1999 and has not yet completed the evaluation of the impact of such adoption
on the notes to its consolidated financial statements.
(5) DISCONTINUED OPERATIONS
In September 1997, the Company formally adopted a plan to dispose of
its on-demand publishing distribution group. The plan of disposal targets a sale
of substantially all of the assets of the distribution subsidiary to an existing
on-demand publishing provider. The Company has restated the prior financial
statements to present the operating results of the distribution group as a
discontinued operation.
During the year ended March 31, 1998, the Company completed the sale of
substantially all the assets of its Minneapolis Distribution Group operations
for approximately $1.6 million. The sale price included cash of $359,000, a
promissory note of $278,000 and assumption of liabilities of $1.0 million.
During the quarter ended June 30, 1998, the Company sold its remaining
distribution group operation in Phoenix, Arizona. The Company incurred a loss of
approximately $100,000 on the sale of the assets of that operation.
(6) RECLASSIFICATIONS
Certain accounts in the prior year financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current year financial statements.
Page 7 of 14
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
IntraNet Solutions, Inc. ("IntraNet" or the "Company") develops and implements
integrated solutions for the management and distribution of critical business
information. IntraNet offers its customers a variety of products including
proprietary intranet document management software, hardware and software
implementation services. The evolution of Web technology as a tool for storing,
managing and distributing information, coupled with the Company's experience in
designing systems and creating custom software applications, has created an
opportunity for the Company to develop a line of document management software
products utilizing Web technology.
The Company's revenues are derived from (i) the sale of proprietary and
non-proprietary software products, (ii) the sale of hardware products, (iii)
the sale of maintenance and support contracts, and (iv) the sale of technical
and other services. Revenue from the sale of software is recognized in
accordance with AICPA Statement of Position 97-2 Software Revenue Recognition.
Accordingly, revenue is recognized at the time of product shipment if no
significant Company obligations remain, fees are fixed and determinable, and
collection of the resulting sale price is probable. In instances where a
significant vendor obligation exists, revenue recognition is deferred until the
obligation has been satisfied. Revenue from maintenance and support contracts
is generally recognized ratably over the term of the contract. Revenue from
contracts with original durations of one year or less is recognized at the time
of sale if the Company does not expect to have material future obligations to
service the contracts. Revenue from technical and other services are recognized
as the related services are performed and collectibility is deemed probable.
Revenue from the sale of all other products and services is recognized at the
time of delivery to the customer.
Page 8 of 14
<PAGE> 9
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1998
COMPARED TO THE QUARTER ENDED JUNE 30, 1997
REVENUES
Total revenues decreased to $4.2 million for the quarter ended June 30,
1998 from $4.5 million for the quarter ended June 30, 1997, or $300,000 (7.5%).
This decrease related to a decrease in the Company's hardware integration
business.
Hardware Integration. Hardware integration revenues decreased a total
of $400,000 or 12.3% for the quarter ended June 30, 1998 compared to the quarter
ended June 30, 1997 ($2.6 million in 1998 compared to $3.0 million in 1997). The
decrease in hardware integration revenue was principally due to an ongoing
emphasis on the Company's proprietary software business.
Software, Technical Services and Support. Software, technical services
and support revenues were $1.6 million for each of the quarters ended June 30,
1998 and 1997. Increases in software revenue of $500,000 were offset by
decreases in support revenue. The growth in software was primarily attributable
to the Company's proprietary software products.
COST OF REVENUES AND GROSS PROFIT
Total cost of revenues decreased to $2.8 million for the quarter ended
June 30, 1998 from $3.4 million for the quarter ended June 30, 1997. Total cost
of revenues as a percent of total revenues was 66.6% in 1998 compared to 75.1%
in 1997. Gross profit increased to $1.4 million for the quarter ended June 30,
1998 compared to $1.1 million for the quarter ended June 30, 1997. Total gross
profit as a percent of total revenues was 33.4% in 1998 compared to 24.9% in
1997. The increase in gross profit was primarily attributable to incremental
revenue contributions from the sale of proprietory software.
Hardware Integration. Cost of hardware integration revenues decreased
to $2.2 million for the quarter ended June 30, 1998 from $2.4 million for the
quarter ended June 30, 1997. Cost of hardware integration revenues as a percent
of hardware integration revenues was 84.4% in 1998 compared to 82.5% in 1997.
Gross profit from hardware integration was 15.6% for the quarter ended June 30,
1998 compared to 17.5% for the quarter ended June 30, 1997.
Software, Technical Services and Support. Cost of software, technical
services and support revenues decreased to $600,000 for the quarter ended June
30, 1998 from $1.0 million for the quarter ended June 30, 1997. Cost of
software, technical services, and support revenues as a percent of software,
technical services, and support revenue was 38.2% in 1998 compared to 61.6% in
1997. Gross profit on software, technical services and support was 61.8% for the
quarter ended June 30, 1998 compared to 38.4% for the quarter ended June 30,
1997. The increase in gross profit was primarily attributable to the increase in
sales of higher margin proprietary software.
Page 9 of 14
<PAGE> 10
OPERATING EXPENSES
Sales and Marketing. Sales and marketing expenses increased to $900,000
for the quarter ended June 30, 1998 compared to $600,000 for the quarter ended
June 30, 1997. Sales and marketing expenses as a percent of total revenues were
22.2% in 1998 compared to 12.9% in 1997. Sales and marketing increased as a
percent of revenues primarily due to expansion of the marketing efforts for the
Company's proprietary software products.
General and Administrative. General and administrative expenses
increased to $700,000 for the quarter ended June 30, 1998 compared to $600,000
for the quarter ended June 30, 1997. General and administrative expenses as a
percent of total revenue were 15.4% in 1998 compared to 12.4% in 1997.
Research and Development. Research and development expenses were
$300,000 for each of the quarters ended June 30, 1998 and June 30, 1997.
Research and development expenses as a percent of total revenue were 6.7% in
1998 and 1997.
DISCONTINUED OPERATIONS
In September 1997, the Company formally adopted a plan to dispose of
its on-demand publishing distribution group. The plan of disposal targets a sale
of substantially all of the assets of the distribution subsidiary to an existing
on-demand publishing provider. The Company has restated the prior financial
statements to present the operating results of the distribution group as a
discontinued operation.
Revenues from discontinued operations were $500,000 and $1.2 million
for the quarters ended June 30, 1998 and 1997, respectively.
Cost of revenues from discontinued operations were $400,000 and $1.0
million for the quarters ended June 30, 1998 and 1997, respectively. Gross
profit from discontinued operations were 6.8% and 17.9% for the quarters ended
June 30, 1998 and 1997, respectively.
Loss from discontinued operations was $400,000 for each of the quarters
ended June 30, 1998 and 1997. The Company also incurred a loss of $100,000 from
the sale of the assets of its distribution group operation in Phoenix, Arizona.
Page 10 of 14
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through revolving working capital and term loans from banking institutions
together with the sale of stock and subordinated debt. In December 1996, the
Company issued $1.0 million of 9% promissory notes. During the fourth quarter of
fiscal 1997, the Company issued an additional $500,000 of 9% promissory notes.
During the year ended March 31, 1998, $250,000 of those notes were converted
into approximately 71,000 shares of common stock, $150,000 were converted into
preferred stock and $850,000 were paid at maturity. Additionally, in April
1998, $250,000 of these notes were paid. In consideration of these borrowings,
the Company issued the lenders warrants to acquire an aggregate of 300,000
shares of Common Stock at an exercise price of $4.00.
During July 1997, the Company issued $4,000,000 of Series A 5%
Convertible Preferred Stock. The Company issued 800,000 units, each consisting
of one share of $.01 par value preferred stock and a warrant to acquire one
share of the Company's common stock at an exercise price of $5.18. The preferred
stock is convertible into the Company's common stock at a price equal to 75% of
market value at the time of conversion, with a maximum conversion price of $3.71
per share and a minimum conversion price of $1.00 per share. During the quarter
ended June 30, 1998, 20,000 shares of Series A Preferred Stock were converted
into 26,936 shares of common stock.
In May, 1998, the Company issued $3,000,000 of Series B 4% Convertible
Preferred Stock. The preferred stock is convertible into the Company's current
stock at a price equal to 84% of market value at the date of conversion with a
maximum conversion price of $7.56 and a minimum conversion price of $1.81. In
connection with this transaction, the Company recognized a non-cash deemed
dividend of $570,000. The deemed dividend was recorded as a discount to
preferred stock with a corresponding credit to additional paid in capital. The
discount was recognized at the date of issue of the preferred stock, the same
date at which the shares were eligible for conversion. The accretion of the
discount is reflected in the statement of operations as an adjustment to net
loss. During the quarter ended June 30, 1998, none of the Series B
Preferred Stock had been converted.
The Company's revolving working capital line of credit allows
for borrowings of up to $3.85 million based on available collateral at the
bank's base lending rate plus 2.5%. At June 30, 1998, the Company had advances
of $2.3 million, which are due on demand. At June 30, 1998, the Company also had
term loans outstanding in the amount of $317,300. The term loans require monthly
principal payments of $27,100 plus interest at the bank's base lending rate plus
2.5%. At June 30, 1998 the Company also had a demand note payable to its
principal stockholder in the amount of $27,500 which accrues interest at a rate
of 12%.
As of June 30, 1998 the Company had cash of approximately $2.3 million.
Capital expenditures for the quarters ended June 30, 1998 and 1997, including
equipment financed with capital lease obligations, were $163,500 and $32,100
respectively.
The Company has entered into certain operating leases for facilities
and equipment. These leases require total monthly payments, net of related
sublease arrangements, of $32,300. The Company also has a long-term consulting
agreement with a former stockholder that requires monthly payments of $10,300
through July 2000.
Page 11 of 14
<PAGE> 12
The Company's capital requirements in connection with its development
and marketing activities have been and will continue to be significant. The
Company will continue to evaluate future financing needs. Future financings, if
necessary, may be dilutive to shareholders or may contain restrictive terms or
covenants. There can be no assurance that additional financings will be
available to the Company on commercially reasonable terms, or at all.
YEAR 2000 COMPLIANCE
The Company has studied its computer hardware and software to determine
its exposure to the change of century date problem. The Year 2000 date problem
consists of a date format shortcoming where the Year is represented by two
digits causing programs that perform arithmetic operations, comparisons, or
sorting of date fields to yield incorrect results. Based on the Company's study,
the Company does not believe that the costs to become Year 2000 compliant will
be material. Costs as incurred will be charged to operating expenses.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-QSB and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contain statements that are forward-looking, such as statements relating to
plans for future expansion, product development, market acceptance of new
products, and other business development activities as well as other capital
spending, financing sources and the effects of regulation and competition. Such
forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and, accordingly,
such results may differ from those expressed in any forward-looking statements
made by or on behalf of the Company. These risks and uncertainties include, but
are not limited to, those relating to product development and market acceptance
of new products, dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates), domestic or global
economic conditions, changes in federal or state tax laws or the administration
of such laws.
Page 12 of 14
<PAGE> 13
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings.
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, its properties are
not the subject of any such proceedings.
ITEM 2. Changes in Securities.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security-Holders.
None
ITEM 5. Other Information.
None
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule (filed herewith)
(b) Report on Form 8-K
For the quarter ended June 30, 1998, the Company did
not file any reports on Form 8-K.
Page 13 of 14
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTRANET SOLUTIONS, INC.
(the "Registrant" or "Company")
Dated August 14, 1998 By: /s/ Robert F. Olson
-----------------------------------
Robert F. Olson
Its: Chief Executive Officer
-----------------------------------
(Principal Executive Officer)
Dated August 14, 1998 By: /s/ Jeffrey J. Sjobeck
-----------------------------------
Jeffrey J. Sjobeck
Its: Chief Financial Officer
-----------------------------------
(Principal Financial Officer)
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 2,300,383
<SECURITIES> 0
<RECEIVABLES> 6,526,990
<ALLOWANCES> 545,965
<INVENTORY> 224,800
<CURRENT-ASSETS> 9,060,338
<PP&E> 1,541,434
<DEPRECIATION> 766,421
<TOTAL-ASSETS> 9,918,689
<CURRENT-LIABILITIES> 6,130,644
<BONDS> 0
0
4,767,812
<COMMON> 86,790
<OTHER-SE> (1,231,116)
<TOTAL-LIABILITY-AND-EQUITY> 9,918,689
<SALES> 4,216,344
<TOTAL-REVENUES> 4,216,344
<CGS> 2,806,461
<TOTAL-COSTS> 2,806,461
<OTHER-EXPENSES> 1,872,830
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,877
<INCOME-PRETAX> (493,824)
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</TABLE>
