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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-19813
INFONOW CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-3083360
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3131 So. Vaughn Way, Suite 134, Aurora, CO 80014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-368-4646
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes [ ] No
The number of shares outstanding of the Registrants Common Stock, $.001 par
value, as of October 28, 1996 was 3,743,940.
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INFONOW CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements
Balance Sheets -- September 30, 1996 (Unaudited) and
December 31, 1995. 1
Unaudited Statements of Operations-For the Three Months 2
Ended September 30, 1996 and September 30, 1995 and
For the Three Months and Nine Months Ended
September 30, 1996 and September 30, 1995.
Statement of Stockholders Equity (Deficit) - For the Nine 3
Months Ended September 30, 1996.
Unaudited Statements of Cash Flows--For the Nine Months 4
Ended September 30, 1996 and September 30, 1995.
Notes to Unaudited Condensed Financial Statements 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION 12
SIGNATURES 14
<PAGE>
INFONOW CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
Assets 1996 1995
------------- ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalent $ 187,266 $ 231,781
Accounts receivable, net 258,230 494,91
Other current assets 113,920 34,809
----------- -----------
Total current assets 559,416 761,508
Property and Equipment, net 410,608 336,050
Goodwill, net of accumulated amortization
of $90,728 and $87,820 at September 30,
1996 and December 31, 1995, respectively. 929,967 3,099,955
Software development costs, net of
accumulated amortization of $43,354 at
September 30, 1996. 153,103 -
Other assets and deferred charges 19,717 18,381
----------- -----------
Total assets $ 2,072,811 $ 4,215,894
----------- -----------
----------- -----------
CURRENT LIABILITIES:
Accounts payable and accrued expenses 724,283 435,591
Notes payable-current portion 69,445 43,202
Related party payables 100,000 -
Deferred compensation 58,779 -
Unearned revenue 237,057 123,386
Capital lease obligation-current 3,930 3,514
----------- -----------
Total current liabilities $ 1,193,494 $ 605,693
CAPITAL LEASE OBLIGATION 14,935 14,039
NOTES PAYABLE 139,518 172,440
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDER'S EQUITY
Preferred stock, $.001 par value, 2,000,00
shares authorized, none issued - -
Common stock, $.001 par value; 15,000,000
shares authorized, 3,743,940 and 3,183,567
shares issued and outstanding at September
30, 1996 and December 31, 1995 respectively 3,836 3,184
Treasury stock (92,000 shares at cost) - -
Additional paid-in capital 19,873,707 19,478,118
Accumulated deficit (19,152,679) (16,057,580)
----------- -----------
Total stockholder's equity 724,864 3,423,722
----------- -----------
Total liabilities and stockholder's equity $ 2,072,811 $ 4,215,894
----------- -----------
----------- -----------
The accompanying notes to financial statements
are an integral part of these consolidated balance sheets
3
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INFONOW CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
SALES $ 542,503 $ 635,748 $ 1,765,317 $ 774,875
OPERATING EXPENSES:
Cost of sales 304,056 209,532 838,721 306,740
Selling, general and administrative 563,597 647,927 1,991,719 1,587,587
Research and development - 6,981 - 18,721
Impairment of long lived assets 2,010,599 - 2,010,599 -
----------- --------- ----------- -----------
Total operating expenses 2,878,247 864,430 4,841,039 1,913,048
----------- --------- ----------- -----------
Net loss from operations (2,335,744) (228,682) (3,075,722) (1,138,173)
OTHER INCOME (EXPENSE):
Loss on disposition of assets - 9,606 - (103,816)
Interest income (expense), Net (8,345) (3,017) (19,377) (10,832)
----------- --------- ----------- -----------
Net loss before extraordinary gain
from debt restructuring (2,344,089) (222,093) (3,095,099) (1,252,821)
EXTRAORDINARY GAIN FROM
DEBT RESTRUCTURING - (35,560) - 134,123
----------- --------- ----------- -----------
NET LOSS $(2,344,089) $(257,653) $(3,095,099) $(1,118,698)
----------- --------- ----------- -----------
----------- --------- ----------- -----------
Net loss per common share before
extraordinary gains from debt
restructuring $ (0.65) $ (0.09) $ (0.92) $ (0.91)
Extra ordinary gain from debt
restructuring $ - $ (0.01) $ - $ 0.10
Net loss per common share $ (0.65) $ (0.10) $ (0.92) $ (0.81)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,608,394 2,588,624 3,365,055 1,378,844
----------- --------- ----------- -----------
----------- --------- ----------- -----------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
4
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INFONOW CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the nine months ended September 30, 1996
<TABLE>
Common Stock
------------------ Additional Treasury Accumulated
Shares Amount Paid-in Capital Stock Deficit
--------- ------ --------------- -------- ------------
<S> <C> <C> <C> <C> <C>
BALANCES, December 31, 1995 3,183,567 $3,184 $19,478,118 - (16,057,580)
Issuance of common stock in
conjunction with the exercise
of employee stock options 15,708 15 20,404
Issuance of common stock in
conjunction with the exercise
of warrants 469,554 470 187,352
Return of common stock to treasury
from escrow (92,000) - - -
Common stock issued to three
officers of the Company at $1.12
per share for cash, deferred
salaries and expenses 167,111 167 187,833
Net loss - - - - (3,095,099)
--------- ------ ----------- --- ------------
BALANCES, September 30, 1996 3,743,940 $3,836 $19,873,707 $ - $(19,152,679)
--------- ------ ----------- --- ------------
--------- ------ ----------- --- ------------
</TABLE>
5
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INFONOW CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the Nine Months
Ended September 30,
--------------------------
1996 1995
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss $(3,095,099) $(1,118,698)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 335,519 110,654
Long-lived asset impairment 2,010,599 -
Gain on debt restructuring - (134,123)
Allowance for bad debts 43,785 -
Compensation expense related to
stock options and stock warrant
issuance's - 327,599
Loss on asset dispositions - 122,063
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable 217,067 65,421
Decrease in inventory - 5,969
Increase in other current assets (79,111) 21,575
Increase (decrease) in payables and
accrued liabilities 216,307 115,082
Increase (decrease) in payables to
officers, directors and related parties - 115
Increase in unearned revenue 113,671 922
----------- -----------
Net cash flows used in operating activities (237,262) (483,421)
CASH FLOWS FROM(USED IN)INVESTING ACTIVITIES: - -
Purchase of property and equipment (207,333) (184,986)
Proceeds of net assets of Cimarron - (160,000)
Purchase of net assets of Navigist - (76,261)
Decrease (increase) in other assets (197,794) -
Proceeds from sale of equipment - 18,247
----------- -----------
Net cash flow used in investing activities (405,127) (403,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 95,000 1,315,217
Decrease in restricted cash - 15,000
Proceeds from the exercise of options
and warrants 208,241 -
Payment of capital lease obligation (2,615) (2,243)
Proceeds from notes payable 503,664 292,512
Payment of notes payable (206,416) (280,276)
----------- -----------
Net cash flows from financing activities 597,874 1,340,210
Net increase (decrease) in cash and
cash equivalents (44,515) 453,789
CASH AND CASH EQUIVALENTS, beginning of period 231,781 17,976
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 187,266 $ 471,765
----------- -----------
----------- -----------
Supplemental Information:
Cash paid during period for interest $ 23,458 $ 22,927
The accompanying notes to condensed financial statements are an
integral part of these condensed statements.
6
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INFONOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The financial
statements as of December 31, 1995, have been derived from audited
financial statements, the report on which which included an explanatory
paragraph describing uncertainties concerning the Company's ability to
continue as a going concern. The financial statements should be read in
conjunction with the financial statements and notes thereto contained in
the Company's Form 10-K for the fiscal year ended December 31, 1995. The
results of operations for the three months and nine months ended September
30, 1996 are not necessarily indicative of the results that will be
achieved for the entire fiscal year ending December 31, 1996.
NOTE 2 - SUPPLEMENTAL CASH FLOW DISCLOSURES
During the nine months ended September 30, 1996, the Company completed a
non-cash transaction with Environmental Research Institute, Inc. ("ESRI"),
in which the Company received computer equipment and software licenses from
ESRI in exchange for an obligation of $350,000 to be paid to ESRI which has
been recorded as an accrued expense. The Company also issued 167,111 shares
in exchange for cash and cancellation of $143,000 in current liabilities
(see Note 4).
During the nine months ended September 30, 1995, the Company had the
following non-cash transactions: the Company purchased Cimarron
International, Inc. ("Cimarron") with a combination of cash, notes and
common stock, the Company renegotiated certain accounts and notes payable,
the Company agreed to issue common stock, warrants, and certain other
consideration to certain related party debt holders and preferred
shareholders, and the Company converted a convertible note payable to
common stock.
NOTE 3 - RELATED PARTY TRANSACTIONS
On March 29, 1996, the company executed a promissory note to the Chief
Financial Officer of the Company in the amount of $100,000 secured by all
the receivables of the Company. The note is due in March 1997 bearing
interest at prime plus 2.75%. The note can be converted into common stock
of the Company at $3.00 per share at the option of the note holder at any
time prior to maturity.
In a separate transaction, a vice-president of the Company has advanced
$50,000 to the Company as a short term non-interest bearing loan. On
September 13, 1996 this loan was exchanged for 66,667 shares of common
stock valued at $1.12 per share.
NOTE 4 - EQUITY TRANSACTIONS
On September 13, 1996, the Company completed a private placement of common
shares to three officers of the Company in which the Company issued 167,111
shares of common stock valued at $1.12 and granted warrants to purchase
83,556 shares at $1.12 per share, exercisable until September 13, 1998. In
consideration for these shares, the three officers provided $45,000 in cash
and reduced obligations owed to them including a $50,000 short term advance
and $93,000 in deferred salaries and other expenses.
NOTE 5 - IMPAIRMENT OF GOODWILL
During the third quarter, as a result of its review of long-lived assets as
required by SFAS 121 "Impairment of Long Lived Assets" the Company took a
non-cash charge against operating results in the amount of $2,010,599 as a
write down of all goodwill related to its acquisition of Navigist, Inc.
This write down will reduce future amortization expense by approximately
$144,000 on an annual basis. The recent write down was based on the
evaluation of recent poor financial results in this subsidiary. The
Company is currently considering, among other options, the sale of this
subsidiary.
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company was originally formed to engage in the development and marketing
of an electronic distribution system using CD-ROM technology for software
programs and other products. During 1995, the Company ceased all activities
in this business and shifted its strategy towards providing Internet-based
customer service applications and services to large business and governmental
organizations. As part of this strategy change, the Company acquired Cimarron
International, Inc., a multimedia production company and Navigist, Inc., a
network engineering consulting company in May and August of 1995,
respectively. In addition to these acquisitions, the Company formed a third
business unit, Internet Products, which is pursuing opportunities on the
Internet.
In July 1996, the Company deployed its first Internet offering, called
FindNow-SM-, a locator and mapping service designed to integrate into a
client company's website in order to improve how they respond to location
based inquiries from their customers over the Internet. FindNow-SM- was
integrated into the VISA International web site (http://www.visa.com) in July
1996, and is the first customer for this service. In August of 1996, the
Company implemented the FindNow-SM- system for Compaq Computers
(http://www.compaq.com) and announced on September 26, 1996 that it had
contracted with Nations Banc to provide this service to their web site. In
addition, the Company is currently in the contract negotiation stage with
four other clients that have selected the Company's FindNow-SM- system. The
Company is also in discussions with other customers at the current time and
expects that additional sales of the FindNow-SM- system will occur as the
system continues to gain market acceptance.
The Company's Navigist operations have continued to generate poor financial
results and declining sales when compared to the prior year periods resulting
in negative cash flows from it's operations during the nine months ended
September 30, 1996. In order to reduce these losses, the Company ceased
Navigist's network and communications consulting operations located in Denver
CO during the second quarter. As part of this change, the applications
development group that was previously part of the Denver Navigist operations
was consolidated into the Internet Products Group. Navigist's San Jose
operations have remained unchanged. These actions were taken to better focus
the application development group on Internet Products projects and reduce
recent operating and cash losses due to poor sales in the network
communications engineering business in Denver. However, while the recent
changes have reduced operating losses, they have not resulted in profitable
operations for Navigist. As a result of these developments and a review of
how the operations of Navigist strategically fit into the current operations
of InfoNow, the Company recorded a non-cash charge of $2,010,599 in the third
quarter to reflect the write down of all of the goodwill of Navigist. In
addition, the Company is considering, among other options, the possible sale
of Navigist.
RESULTS OF OPERATIONS
As discussed in the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1995, the Company's business changed substantially in 1995
due to the discontinuance of the CD-ROM software business and the
acquisitions of Navigist and Cimarron. The results of operations for the
quarter ended September 30, 1995 include the results of the operations for
Cimarron and Navigist from May 23, 1995, and August 23, 1995, respectively,
which was the date the Company acquired Cimarron and Navigist. For the nine
months ended September 30, 1995, $107,361 of the Company's revenues related
to the sales of software distributed via CD-ROM. The results for the three
and nine months ended September 30, 1996 reflect the operations of Cimarron
and Navigist, the Company's previous CD-ROM software distribution business as
all operations in this business were discontinued in the third quarter of
1995.
THREE AND NINE MONTHS ENDED SEPTEMBER 30,1996 COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1995
Total sales decreased by 15% for the three months ended September 30, 1996
and increased 79%, for the nine months ended September 30, 1996 when compared
to the same periods in the prior year. The decrease for the three month
period ended September 30, 1996 relates to 29% and 27% declines in revenues
of Cimarron and Navigist, respectively when compared to the same period a
year ago. These declines were due primarily to lower revenues in the
Interactive Media Group of Cimarron and the closure of the Navigist network
communications engineering and
8
<PAGE>
consulting practice in Denver. These decreases were offset somewhat by
increases in revenues from the Internet Products Group which began service of
its FindNow-SM- system in the third quarter and generated approximately $183,000
in revenues from those activities during the three months ended September 30,
1996. The increases for the nine month period ending September 30, 1996 are the
result of the acquisition of the of the operations of Cimarron and Navigist and
revenues generated from the Internet Products Group, which increased by
$396,000, $479,000 and $294,000, respectively. These increases were offset by a
decrease of $107,000 in revenues from the Company's previous business of
selling software distributed via CD-ROM. The Company ceased all activity in this
business during the quarter ending September 30, 1995.
The net loss of the Company increased by approximately 810% and 177% for the
three months and nine months ended September 30, 1996, respectively, compared
to the same periods in the prior year. The results for the current year include
a non-cash charge of $2,010,599 for the impairment of goodwill related to the
acquisition of Navigist. Without this non-cash charge, the net loss of the
Company increased by 29% for the three months ended September 30, 1996 and
decreased by 3% for the nine months ended September 30, 1996 compared to the
nine months ended September 30, 1995. When excluding the non-cash charge for the
impairment of goodwill, the net loss in the quarter ended September 30, 1996,
decreased significantly (40%) compared to the previous quarter ended June 30,
1996 due primarily to the elimination of losses incurred in the Denver Navigist
operations which were closed in the second quarter.
The cost of sales as a percent of revenues increased 24% and 7% for the three
and nine month period ending September 30, 1996, respectively when compared
with the prior year's periods. This increase is primarily related to the
reclassification of production labor in the Navigist operations from selling,
general and administrative to the cost of sales. When adjusting for the
reclassification of these expenses, the gross margins of the business have
significantly improved over the prior year primarily due to the replacement
of revenues generated from the sales of software distributed on CD-ROM with
the sales of the Company's FindNow-SM- system. This change in the source of
business revenues resulted in a reduction of cost of sales as a percent of
revenues from 68% of sales for the nine month period ending September 30,
1995 to 32% of sales for the comparable nine month period in 1996. The
Company anticipates that future revenues from its Internet Products Group may
contain continuing service fees, either on a fixed monthly, or transaction
basis which may cause variances the overall gross margin levels depending on
the structure of the arrangements ultimately consummated with customers.
Selling, general and administrative expenses of the Company decreased as a
percent of sales from 13% for the three month period ending September 30, 1996
and increased by 25% for the nine month period ending September 30, 1996 when
compared to the prior year's periods. Selling, general and administrative
expenses have declined 19% in the quarter ended September 30, 1996, compared
to the quarter ended June 30, 1996 and have declined 24% from the quarter ended
March 31, 1996. The increases in the nine month period compared to the prior
year relate to the added costs of operations from the acquisitions of Navigist
and the formation of the Internet Products Group. The addition of revenues from
these operations resulted in selling general and administrative expenses
declining as a percent of sales from 205% in the nine month period ended
September 30, 1995, to 112% for the nine month period ending September 30, 1996.
The decline of selling, general and administrative expenses in the third quarter
of 1996 compared to the first and second quarter of 1996 is the result of the
effect of further management cost reductions in several areas, elimination of
certain operating expenses related to the closure of the Navigist Denver
operations, and reclassification of production labor in the Navigist operations
from selling, general and administrative to cost of sales.
LIQUIDITY AND CAPITAL RESOURCES; NEED FOR ADDITIONAL FINANCING
The Company had cash and equivalents of $187,266 at September 30, 1996,
compared to $182,854 at June 30, 1996 and $231,781 as of December 31 , 1995.
Although the Company has made progress in commercializing its FindNow-SM-
service with the implementation of two clients and the addition of five other
clients as of the date of this report, the Company continued to sustain
continued operating losses during the third quarter. In addition, the Company
expects that the implementation of these new clients and the planned addition
of new customers in the fourth quarter will not generate sufficient cash to
sustain operations in the fourth quarter and make investments that the
Company believes are necessary to successfully commercialize its FindNow-SM-
service that include, but are not
9
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limited to, hiring of additional sales personnel, the purchase of approximately
$350,000 in hardware and software to implement additional server capacity, and
the hiring of additional technical personnel to continue development and
enhancement of the FindNow-SM- service. The Company used cash of $201,554 and
$237,199 in its operations during the quarters ended June 30, 1996 and September
30, 1996 respectively.
The Company has a working capital deficit of $634,078 as of September 30,
1996 compared to a working capital deficit of $646,836 at June 30, 1996 and a
working capital surplus of $155,815 at January 1, 1996. This change in
working capital from the beginning of the year relates to short term
financing from an officer of the Company in the amount of $100,000. This
loan is intended to provide "bridge" capital until the Company is able to
obtain permanent equity capital. In addition, the Company also recorded a
short term obligation of $350,000 related to computer hardware and software
licenses obtained from ESRI in connection with the initial development of the
Company s FindNow-SM- system. Cash payments of $150,000 have been made
towards this obligation during the nine months ended September 30, 1996. The
reductions of accounts payables and short term notes during the quarter ended
September 30, 1996 have been offset by an increase in unearned revenues
related to FindNow-SM- projects currently in process which have increased by
approximately $167,000 since June 30, 1996. These three transactions
increased net current liabilities by approximately $500,000 during the nine
months ending September 30, 1996. During the same period, current assets were
reduced by approximately $178,000 primarily due to the reduction in
receivables related to the closure of the Navigist Denver operations, and
collection of receivables in the normal course of the Company's operations.
During the quarter ended June 30, 1996, the Company received approximately
$208,000 in proceeds from the exercise of warrants to purchase common stock of
the Company. In addition, in the quarter ended September 30, 1996 the Company
completed a small private placement which provided $45,000 in additional cash
and reduced current liabilities of the Company by $143,000. The Company believes
that it will require additional cash to fund operations for the remainder of
1996 in order to continue operations as currently planned. The Company is in
discussion with several parties regarding an equity financing which is intended
to raise gross proceeds sufficient to meet the Company s capital needs for
the next 12 months. The proceeds will be used to continue development of the
FindNow-SM- system, increase sales and customer support resources in the
Internet Products Group, purchase computer hardware and software to expand
server capacity and provide for general corporate working capital. No assurance
can be given that this financing will be completed.
The Company is currently in discussions with a number of potential clients
for its FindNow-SM- service. As of November 8, 1996, three customers had
contracted with the Company to utilize the FindNow-SM- service. An additional
four customers have selected the FindNow-SM- service and are currently
negotiating contracts with the Company for the service. The Company believes
that it has a viable commercial market for its FindNow-SM- service based on
the results achieved to date and the contacts and inquiries from prospective
customers received since the deployment of FindNow-SM-. However, there can be
no assurance that the Company will be able to generate sufficient cash flow
from anticipated sales of FindNow-SM- service to cover operating costs of the
Internet Products group or related corporate administrative costs.
In addition to its activities with respect to additional equity financing, the
Company has also taken steps to minimize its operating cash needs including
reductions in operating expenses. In addition, voluntary salary deferrals for
certain of its officers amounted to $136,779 for the nine months ended September
30, 1996. Approximately $78,000 of these deferrals were eliminated in
conjunction the completion of a small private placement in which two officers of
the Company forgave this indebtedness in exchange for common shares and warrants
of the Company. Without additional financing, sales of FindNow-SM- service or
additional changes in the Company's operations, the Company believes that it
does not have sufficient working capital to continue operations through the end
of 1996. In the event that the Company can not obtain additional funding, the
Company believes that it can make additional changes in its operations to
further reduce the Company's cash requirements. However, the Company believes
that these changes would significantly reduce its chances of successfully
marketing its FindNow-SM- service and there can be no assurance that the Company
could continue as a going concern even with additional cost reduction measures.
There is an explanatory paragraph in the auditors report describing
uncertainties concerning the Company's ability to continue as a going concern
included in the Company s audited financial statements dated December 31, 1995.
FORWARD LOOKING STATEMENTS AND RELATED BUSINESS RISKS AND ASSUMPTIONS
The Company's actual results may vary materially from the forward looking
statements made above. The Company intends that such statements be subject to
the safe harbor provision of the Securities Act. The Company's
10
<PAGE>
forward-looking statements include the plans and objectives of management for
future operations and relate to: (i) the ability of the Company to generate
future sales of the Company's FindNow-SM- service, (ii) market acceptance of
the FindNow-SM- service, (iii) success of the Company in forecasting and
meeting the demand of the customers of the FindNow-SM- service, including
maintaining technical performance of the system as new FindNow-SM- customers
are added, (iv) ability to obtain financing to purchase equipment needed to
provide service to additional FindNow-SM- customers, (v) ability to maintain
pricing and there by maintain adequate profit margins on its products and
services (vi) ability to retain qualified technical personnel (vii) ability
of the company to maintain current pricing and sales volume in its operations
of Cimarron and Navigist (viii) ability to control development costs of
FindNow-SM- service with in current budgeted levels, (ix) and the ability of
the Company to raise additional capital.
The foregoing assumptions are based on judgments with respect to, among other
things, future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond the Company's ability to control. There are also other
risks which could cause the Company's revenues or costs to vary markedly from
the forward-looking statements made above, such as the risk that the market
demand for the FindNow-SM- may not develop as expected or if it does develop,
that the Company will be able to generate sufficient sales to fund its
operations. Accordingly, although the Company believes that the assumptions
underlying the forward-looking statements are reasonable, any such assumption
could prove to be inaccurate and therefore there can be no assurance that the
results contemplated in forward-looking statements will be realized and any
statements should not be regarded as are presentation by the Company or any
other person that the Company's objectives or plans will be achieved.
11
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
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) Reports on Form 8-K
None
12
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b. Exhibits-Included as exhibits are the items listed on the Exhibit Index. The
Registrant will furnish a copy of any of the exhibits listed below upon payment
of $5.00 per exhibit to cover the costs to the Registrant of furnishing such
exhibit.
Sequentially
Exhibit Numbered
Number Exhibit Page
------- ------- -------------
27.1* Financial Data Schedule
3.1-- Certificate of Incorporation of InfoNow
Corporation. (Incorporated by Reference
to Exhibit 3.1 of Registration
No.33-43035 on Form S-1).
By-Laws of InfoNow Corporation (Incorporated
by Reference to Exhibit 3.3 of Registration
No.33-43035 on Form S-1).
3.3--
Form of Common Stock Certificate for the
Registrant's common stock, $0.01 par value
per share (Incorporated by Reference to
Exhibit 4.1 of Registration No.33-43035
on Form S-1).
4.1--
* FILED HEREWITH
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1996
INFONOW CORPORATION
(Registrant)
/s/ Michael W. Johnson
----------------------------------
Michael W. Johnson
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Kevin D. Andrew
----------------------------------
Kevin D. Andrew
Chief Financial Officer, Treasurer
and Secretary
(Principal Financial and Accounting
Officer)
14
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