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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITY
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITY
EXCHANGE ACT OF 1934
Commission File Number: 0-19813
InfoNow Corporation
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(Exact name of registrant as specified in its charter)
Delaware 04-3083360
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(State of incorporation) (I.R.S. Employer Identification No.)
1875 Lawrence Street, Suite 1100, Denver, Colorado, 80202
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(Address of principal executive offices) (Zip Code)
303-293-0212
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
As of August 7, 1998, there were 6,815,243 shares of the Registrant's common
stock outstanding.
Transitional Small Business Disclosure Format Yes No X
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INFONOW CORPORATION
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Balance Sheets - June 30, 1998
and December 31, 1997......................................3
Unaudited Statements of Operations - For the Three
Months and Six Months Ended June 30, 1998 and
June 30, 1997..............................................4
Unaudited Statement of Stockholders Equity (Deficit)
- For the Six Months Ended June 30, 1998...................5
Unaudited Statements of Cash Flows - For the Six Months
Ended June 30, 1998 and June 30, 1997......................6
Notes to Unaudited Consolidated Financial Statements.........7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................8
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................14
SIGNATURES..................................................14
2
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
INFONOW CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(US Dollars in Thousands)
Assets June 30, 1998 December 31, 1997
------------- -----------------
(Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 1,707 $ 325
Accounts receivable, net 274 177
Other current assets 62 20
------------ ------------
Total current assets 2,043 522
Property and Equipment, net 658 647
Software development costs, net of accumulated
amortization of $504 and $384 at June 30, 1998
and December 31, 1997 respectively 26 146
Other assets and deferred charges 12 9
------------ ------------
Total assets $ 2,739 $ 1,324
============ ============
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 493 $ 407
Notes payable-current portion 203 204
Unearned revenue and prepaid service fees 257 263
Capital lease obligation-current 5 5
------------ ------------
Total current liabilities 958 879
CAPITAL LEASE OBLIGATION 3 5
NOTES PAYABLE 20 42
STOCKHOLDER'S EQUITY
Common stock, $.001 par value; 15,000,000
shares authorized, 6,815,243 and
5,364,179 shares issued and outstanding
at June 30, 1998 and December 31, 1997 respectively 7 5
Additional paid-in capital 23,895 21,904
Accumulated deficit (22,144) (21,511)
------------ ------------
Total stockholder's equity 1,758 398
------------ ------------
Total liabilities and stockholder's equity $ 2,739 $ 1,324
============ ============
The accompanying notes are an integral part of these financial statements
3
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<TABLE>
<CAPTION>
INFONOW CORPORATION AND SUBSIDARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
For the Three Months Ended June 30, For the Six Months Ended June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $ 519 $ 162 $ 961 $ 388
OPERATING EXPENSES:
Cost of sales 448 396 854 749
Selling, general and administrative 421 547 759 922
Impairment of long lived assets 0 2 0 (363)
--------- --------- -------- ----------
Total operating expenses 869 945 1,613 1,308
--------- -------- -------- ---------
Net loss from operations (350) (783) (652) (920)
OTHER INCOME (EXPENSE):
Interest income (expense), net 13 5 12 12
Debt forgiveness gain 1 0 2 0
Other non-operating income 0 0 4 0
--------- -------- -------- ---------
Loss from continuing operations (336) (778) (634) (908)
DISCONTINUED OPERATIONS:
Income (loss) from operations
of Cimarron 0 118 0 108
--------- -------- -------- ---------
NET LOSS AND
COMPREHENSIVE LOSS $ (336) $ (660) $ (634) $ (800)
========= ======== ======== =========
Basic and diluted EPS per common share:
Continuing operations $ (.05) $ (.14) $ (.11) $ (.17)
Discontinued operations 0 .02 0 .02
--------- -------- -------- ---------
Net loss $ (.05) $ (.12) $ (.11) $ (.15)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,174,789 5,364,421 5,561,448 5,472,209
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements
4
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<TABLE>
<CAPTION>
INFONOW CORPORATION AND SUBSIDARY
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED) For the six months ended June 30, 1998
(US Dollars in Thousands)
Common Stock Additional Accumulated
Shares Amount Paid-in Capital Deficit
------ ------ --------------- -----------
<S> <C> <C> <C> <C>
BALANCES, December 31, 1997 5,364,179 5 $ 21,904 $ (21,511)
Issuance of common stock
in exchange for note 2,000 - 1 -
Common shares valued at US$1.75
per share for cash in March 27, 1998
private placement, net of financing
costs of $10,000 450,000 1 777 -
Non-cash charges related to the
issuance of options and warrants to
purchase common stock issued to
consultants - - 76 -
Common shares issued upon exercise
of warrants and options at prices
ranging from $0.40 to $1.40
per share 999,064 1 1,137 -
Net loss - - - (633)
--------- ---------- --------- ---------
BALANCES, June 30, 1998 6,815,243 $ 7 $ 23,895 $ (22,144)
========= ========== ========= =========
The accompanying notes are an integral part of these financial statements
5
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<PAGE>
<TABLE>
<CAPTION>
INFONOW CORPORATION AND SUBSIDARY
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(US Dollars in Thousands)
For the Six Months Ended June 30,
---------------------------------
1998 1997
---- ----
CASH FLOWS USED IN OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (634) $ (800)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 303 281
Impairment of long-lived assets -- (363)
Compensation expense recognized in
connection with stock warrant issuance 77 --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (96) (98)
Increase (decrease) in other assets and deferred charges (3) 2
(Increase) decrease in other current assets (41) 5
Increase (decrease) in payables and accrued liabilities 86 9
Increase (decrease) in unearned revenue (5) (25)
------- -------
Net cash flows used in operating activities (313) (989)
CASH FLOWS FROM(USED IN)INVESTING ACTIVITIES:
Purchase of property and equipment (195) (129)
Purchase of data -- (100)
------- -------
Net cash flow used in investing activities (195) (229)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 778 (47)
Proceeds from the exercise of options and warrants 1,138 4
Payment of capital lease obligations -- (2)
Payment of related party obligation -- (100)
Proceeds from notes payable 9 --
Principal payment on debt obligations (35) (58)
------- -------
Net cash flows from financing activities 1,890 (203)
Net increase (decrease) in cash and cash equivalents 1,382 (1,421)
CASH AND CASH EQUIVALENTS, beginning of period 325 2,050
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 1,707 $ 629
======= =======
Supplemental Information:
Cash paid during period for interest $ 8 $ 17
The accompanying notes are an integral part of these financial statements
</TABLE>
6
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INFONOW CORPORATION AND SUBSIDARY
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. Certain amounts for the six months
ending June 30, 1997 have been reclassified to conform with the current year
classifications. Such reclassifications had no effect on net loss.
The financial statements as of December 31, 1997, have been derived from
audited financial statements which contained an explanatory paragraph in the
auditors report 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 accompanying notes contained in
the Company's Form 10-KSB for the fiscal year ended December 31, 1997. The
results of operations for the six months ended June 30, 1998 are not necessarily
indicative of the results that will be achieved for the entire fiscal year
ending December 31, 1998.
Note 2. SUPPLEMENTAL CASH FLOW DISCLOSURES
During the six months ended June 30, 1998, there were no non-cash investing
or financing activities.
Note 3. EQUITY TRANSACTIONS
On March 27, 1998, the Company completed a private placement of 450,000
shares of its common stock at $1.75 per share, which was above the market price
of the Company's common stock at the date of the transaction. Total gross
proceeds from the sale of stock were $787,000. The Company served as its own
placement agent, incurring $10,000 in costs.
During the three months ended June 30, 1998, the Company issued 999,064
shares of common stock in conjunction with the exercise of options and warrants.
The per-share price range of $0.40 to $1.40 resulted in gross proceeds to the
Company of $1,138,000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
General Information and Overview of the First and Second Quarters
The Company develops and markets a suite of referral and prospect
management services under the name FindNow(R) RMS. The services utilize Internet
and GIS technology to help corporations reliably and cost-effectively tell
current and prospective customers where they can find their nearest reseller,
branch, or service center. InfoNow introduced its services in July 1996. The
Company's services can be provided to both a Client's web site and call center.
The services also provide sophisticated reporting capabilities to allow a client
to capture prospect lead information in real time for sales follow-up and sales
promotion. The Company's customers include six of the eight largest banks in
North America, six of the 10 largest global computer and networking firms, as
well as other industry leaders such as American Airlines, FedEx, Goodyear, Shell
and United Healthcare. Additional information about the Company can be viewed on
the World Wide Web at www.infonow.com.
Although the Company has experienced a significant increase in its backlog
and revenues from sales of its FindNow service, the Company has not experienced
corresponding significant increases in its operating expenses. The Company
believes that most of its infrastructure costs, such as servers, technical
personnel, telecommunications and certain of its data costs are largely fixed
and are not expected to vary significantly with an increase in client contracts
in the near future. In addition, the management of the Company believes that the
majority of the infrastructure is in place to support a sufficient number of
clients for the Company to achieve profitability. The Company's success in
achieving profitability is primarily dependent on market acceptance and future
sales of its FindNow service to additional customers to offset operating costs.
Although significant selling efforts are under way to add new customer
contracts, the limited operating history of the Company makes it difficult or
impossible to predict the exact timing and amount of these future sales.
Results of Operations
The results from continuing operations for the three months and six months
ended June 30, 1998 and 1997 reflect the revenues and expenses of the Company's
FindNow RMS operations. The Company sold all the assets of its Cimarron
subsidiary, which produced interactive media and other business presentations,
on December 11, 1997. The results of Cimarron's business have been classified as
discontinued operations for the three months and six months ended June 30, 1997.
Three Months Ended June 30, 1998 compared to the results for the Three Months
Ended June 30, 1997
Net Revenues. The Company's revenues from continuing operations consist
primarily of setup and monthly service fees from ongoing contracts for its
FindNow service. Total sales increased by $357,000, or 220% for the three months
ended June 30, 1998, compared to the revenues in the prior year. The increased
revenues were generated by additional contracts sold and implemented during the
prior year. The number of active contracts at June 30, 1998 was 65 as compared
with 23 on June 30, 1997.
Cost of Sales. The cost of sales decreased from 244% of sales in the
three-month period ended June 30, 1997, to 86% of sales for the three-month
period ended June 30, 1998. This decrease is primarily due to the increased
revenues generated by additional contracts sold and implemented during the prior
year. The total cost of sales over the same period rose by 13% or $52,000. This
increase is mainly due to an increase in the salaries and related benefits of
additional employees hired during the year.
Selling and Marketing. Selling and marketing expenses, as a percent of
revenues, decreased from 139% for the three months ended June 30, 1997, to 44%
for the three months ended June 30, 1998. This decrease is primarily due to the
increased revenues generated by additional contracts sold and implemented during
the prior year. Total selling and marketing expenses increased by $2,000, or 1%
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for the three months ended June 30, 1998, as compared to the three month period
ended June 30, 1997. Increases in the salaries, commission costs and benefits of
additional sales personnel were offset by the decrease in trade show and
advertising and promotion expenses. Selling and Marketing expenses, especially
sales commission expenses, which are based on a percentage of new contracted
sales, are expected to increase in relation to increases in revenues.
General and Administrative. General and administrative expenses decreased
from 200% of sales for the three months ended June 30, 1997, to 37% of sales for
the three months ended June 30, 1998. This decrease is primarily due to
increased revenues generated by additional contracts sold and implemented during
the prior year while the total amount of general and administrative expenses has
decreased by 40%, or $129,000. This decrease is primarily due to reduced
salaries and related costs compared to the prior year's quarter. These expenses
not expected to increase significantly as additional client contracts and
related revenues are added for the remainder of the current year.
Non-Operating Income (expense). Net non-operating income was $5,000 for the
three months ended June 30, 1997 compared to a net non-operating income of
$14,000 for the three months ended June 30, 1998. The increase is mainly due to
additional interest income on cash and cash equivalents.
Net Loss from Continuing Operations. The reported net loss of the Company
for the three months ended June 30, 1998 decreased by approximately $324,000 or
49%, as compared to the results of the three months ended June 30, 1997. This
decrease is primarily due to increased revenues generated by additional
contracts sold and implemented during the prior year without corresponding
increases in operating expenses.
Six Months Ended June 30, 1998 compared to the results for the Six Months Ended
June 30, 1997
Net Revenues. The Company's revenues from continuing operations consist
primarily of setup and monthly service fees from ongoing contracts for its
FindNow service. Total sales increased by $573,000, or 148% for the six months
ended June 30, 1998, compared to the revenues in the prior year. The increased
revenues were generated by additional contracts sold and implemented during the
prior year. The number of active contracts at June 30, 1998 was 65 as compared
with 23 on June 30, 1997.
Cost of Sales. The cost of sales decreased from 193% of sales in the six
month period ended June 30, 1997 to 89% of sales for the six month period ended
June 30, 1998. This decrease is primarily due to the increased revenues
generated by additional contracts sold and implemented during the prior year.
The total cost of sales over the same period rose by 14% or $105,000. This
increase is mainly due to an increase in depreciation expense on equipment put
into service and an increase in the salaries and related benefits of additional
employees during the prior year.
Selling and Marketing. Selling and marketing expenses, as a percent of
revenues, decreased from 93% for the six months ended June 30, 1997, to 37% for
the six months ended June 30, 1998. This decrease is primarily due to the
increased revenues generated by additional contracts sold and implemented during
the prior year. Total selling and marketing expenses decreased by $3,000, or 1%
for the six months ended June 30, 1998, as compared to the six month period
ended June 30, 1997. Increases in the salaries, commission costs and benefits of
additional sales personnel were offset by the decrease in trade show and
advertising and promotion expenses. Selling and Marketing expenses, especially
sales commission expenses, which are based on a percentage of new contracted
sales, are expected to increase in relation to increases in revenues.
General and Administrative. General and administrative expenses decreased
from 136% of sales for the six months ended June 30, 1997, to 42% of sales for
the six months ended June 30, 1998. This decrease is primarily due to increased
revenues generated by additional contracts sold and implemented during the prior
year while the total amount of general and administrative expenses has decreased
by 31%, or $125,000. This decrease is primarily due to reduced salaries and
9
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related costs compared to the first six months of the prior year. These expenses
not expected to increase significantly as additional client contracts and
related revenues are added for the remainder of the current year.
Non-Operating Income (expense). Net non-operating income was $12,000 for
the six months ended June 30, 1997 compared to a net non-operating income of
$18,000 for the six months ended June 30, 1998. The increase is mainly due to
increased interest income on cash and cash equivalents and small gains due to
sales of assets and gains from debt extinguishment.
Net Loss from Continuing Operations. The reported net loss of the Company
for the six months ended June 30, 1998 decreased by approximately $274,000 or
30%, as compared to the results of the six months ended June 30, 1997. The
results of the six months ended June 30, 1997 include a non-cash gain of
$364,710 related to the retirement of common shares originally issued in
conjunction with the acquisition of Navigist. Without the non-cash gain in the
six months ended June 30, 1997, the net loss of the Company for the six months
ended June 30, 1998 decreased by 70% or $639,000 compared to the first six
months of the prior year. This decrease is primarily due to increased revenues
generated by additional contracts sold and implemented during the prior year
without corresponding increases in operating expenses.
Liquidity and Capital Resources
The Company had cash and equivalents of $1,707,000 at June 30, 1998,
compared to $325,000 at December 31, 1997, or a net increase of $1,382,000. This
increase was primarily due to a private equity financing on March 27, 1998 which
resulted in gross proceeds of $788,000, and the exercise of stock options and
warrants during the second quarter which resulted in gross proceeds of
$1,128,000. This increase was offset by $310,000 of cash utilized in the
operations of the Company, $198,000 used to purchase of data and computer
equipment and $26,000 net debt service costs.
The Company has made significant progress in commercializing its FindNow
service with 65 contracts in backlog as of June 30, 1998. Cash utilized in
operations was $310,000 for the six months ended June 30, 1998 compared to
$989,000 used for operations in the six months ended June 30, 1997. This
improvement is due to additional sales of its FindNow RMS without corresponding
increases in operating expenses of the Company.
The Company currently projects that available cash balances together with
projected cash flow from operations will be sufficient to fund the Company's
operations for the next twelve months without additional external financing.
These projections assume that the Company does not substantially increase cash
used in its current operations and that overall operating costs of the Company
will not change significantly as new client contracts are added.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of certain computer programs being
written using two digits rather than four to indicate the applicable year. As a
result, computer programs with date-sensitive software may incorrectly recognize
a date using "00" as the year 1900 rather than the year 2000. Such an error
could result in a system failure or miscalculations resulting in disruptions of
operations, including a temporary inability to process normal business
transactions.
The Company has recently examined its production and internal
administrative systems for year 2000 issues. As a result of that review, the
Company has determined that no significant modifications will be required to
make their systems year 2000 compliant and does not expect that any
modifications required will have a material impact on its business, operations
or financial condition. The Company has not completed its assessment of the year
2000 compliance of its principal vendors. The Company expects to complete this
review by the end of 1998.
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Forward Looking Statements
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 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 service, (ii) market acceptance of the FindNow service, (iii)
success of the Company in forecasting and meeting the demand of the customers of
the FindNow service, including maintaining technical performance of the system
as new FindNow customers are added, (iv) ability to obtain financing to purchase
equipment needed to provide service to additional FindNow customers, (v) ability
to maintain pricing and adequate profit margins on its products and services
(vi) ability to retain qualified technical personnel (vii) ability to control
development costs of FindNow service within current budgeted levels, (viii) and
the ability of the Company to raise additional capital, if needed.
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 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. Additional disclosure
of factors that could cause actual results to differ materially from those in
the forward-looking statements may be found in the Company's documents on file
with the Commission, including its Form 10-KSB for the year ended December 31,
1997 and its registration statement on Form SB-2.
11
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) The Company sold the following unregistered securities during the
quarter ended June 30, 1998:
(1) On March 2, 1998, the Company issued 2,000 shares of Common Stock
with an aggregate value of $1,660 to a non-U.S. resident in
connection with a loan to the Company.
The Company believes this transaction was private in nature and
was exempt from the registration requirements of Section 5 of the
Securities Act by virtue of the exemptions provided by Regulation
S of the Securities Act.
(2) Between April 6, 1998 and June 6, 1998, the company sold an
aggregate of 997,897 shares of Common Stock to various investors
for an aggregate purchase price of $1,137,033. The transactions
were due to the exercise of stock warrants. The per-share price
ranged from $0.40 to $1.40.
The Company believes these transactions were private in nature
and were exempt from the registration requirements of Section 5
of the Securities Act by virtue of the exemption contained in
Section 4(2) of the Securities Act.
(3) On May 22, 1998, the Company issued 224,517 shares of Common
Stock to existing shareholders upon exercise of warrants to
purchase Common Stock, in consideration for payment of an
aggregate price of $89,807, the exercise price of the warrants.
The Company believes this transaction was private in nature and
was exempt from the registration requirements of Section 5 of the
Securities Act by virtue of the exemption contained in Section
4(2) of the Securities Act.
(4) On May 22, 1998, the Company issued 50,000 shares of Common Stock
to an existing shareholder upon exercise of warrants to purchase
Common Stock, in consideration for payment of an aggregate price
of $65,000, the exercise price of the warrants.
The Company believes this transaction was private in nature and
was exempt from the registration requirements of Section 5 of the
Securities Act by virtue of the exemptions provided by Regulation
S of the Securities Act.
(5) On June 5, 1998, the Company issued 551,630 shares of Common
Stock to existing shareholders upon exercise of warrants to
purchase Common Stock, in consideration for payment of an
aggregate price of $772,281, the exercise price of the warrants.
The Company believes this transaction was private in nature and
was exempt from the registration requirements of Section 5 of the
Securities Act by virtue of the exemptions contained in Section
4(2) of the Securities Act.
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(6) On June 5, 1998, the Company issued 134,250 shares of Common
Stock to existing shareholders upon exercise of warrants to
purchase Common Stock, in consideration for payment of an
aggregate price of $188,949, the exercise price of the warrants.
The Company believes this transaction was private in nature and
was exempt from the registration requirements of Section 5 of the
Securities Act by virtue of the exemptions contained in Section
4(2) of the Securities Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of stockholders on May 8, 1998. The
following incumbent directors were re-elected to their positions to serve
until the next annual meeting or their successor is elected. The following
votes were cast with respect to the election of directors:
For Withhold
Michael Basch 3,531,701 490
Donald Cohen 3,531,661 530
Michael Johnson 3,531,701 490
Duane Wentworth 3,531,365 826
Nahum Rand 3,531,701 490
The Company also submitted three additional proposals for shareholder
consideration:
Proposal #2.
To amend the Company's 1990 stock option plan to (a) allow the Company
to grant non-statutory stock options to consultants to the Company,
and (b) increase the number of shares of Common Stock available for
purchase from 1,700,000 to 2,200,000 shares.
For Against Abstain
3,469,525 62,390 276
Proposal #3.
To ratify the sale of assets of the Company's subsidiary, Cimarron
International, Inc.
For Against Abstain
3,530,535 1,320 336
Proposal #4.
To ratify the selection of Hein+Associates, LLP as the Company's
independent accountants for 1998.
For Against Abstain
3,530,091 2,100 0
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits- Included, as exhibits are the items listed on the Exhibit
Index. The Registrant will furnish a copy of any of the exhibits listed
upon payment of $5.00 per exhibit to cover the costs to the Registrant
of furnishing such exhibit.
(b) Reports on Form 8-K
No reports were filed on form 8-K during the six months ended June 30,
1998
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: August 7, 1998
INFONOW CORPORATION
(Registrant)
/s/ Michael W. Johnson
------------------------------------
Michael W. Johnson
Chief Executive Officer, President
and Director (Principal Executive
Officer)
/s/ Kevin D. Andrew
------------------------------------
Kevin D. Andrew
Chief Financial Officer, Treasurer
and Secretary (Principal Financial
and Accounting Officer)
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
3.1 Certificate of Incorporation of the Company, as Amended.(A)
3.3 Bylaws of the Company, as Amended.(B)
4.1 Form of Common Stock Certificate for the Registrant's Common Stock,
$.001 par value per share.(B)
4.4 Form of Class C Warrant.(C)
10.3 Conversion Agreement by and between the Registrant and Gilman
Securities Corporation dated as of August 19, 1993.
10.14 InfoNow Corporation 1990 Stock Plan as amended.(A)
10.27 Opus Agreements to Provide Financial Advisory Services dated May 23,
1995, July 17, 1995, August 2, 1995 and October 10, 1995.(E)
10.29 Employment Agreement between the Company and W. Brad Browning dated
January 9, 1996.(E) 10.30 Employment Agreement between the Company and
Kevin Andrew dated March 1, 1996.(E)
10.32 Agreement between the Company and Environmental Systems Research
Institute, Inc. ("ESRI") dated March 6, 1996.(E)
10.33 Stock Purchase and Sale Agreement by and among VDC Paradigms, Inc.,
Craig Michaelis, David Wertzberger and InfoNow Corporation dated
December 13, 1996.(A)
10.34 Employment Agreement between the Company and Donald E. Cohen dated May
22, 1995, as amended.(A)
10.35 Asset Sale Agreement for sale of assets to Cimarron Dog and Pony
Company, Inc. dated December 11, 1997.(F)
10.36 Michael W. Johnson employment agreement dated January 1, 1998.(F)
10.37 Agreement dated October 23, 1997 between the Company and Michael W.
Johnson regarding sale of the Company.(F)
27.1 Financial Data Schedule
- ----------------------
(A) Incorporated by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
(B) Incorporated by reference from
Registration Statement No. 33-43035 on Form S-1 dated February 14, 1992.
(C) Incorporated by reference from Post-Effective Amendment No. 2 to
Registration Statement No. 33-43035 on Form S-1 dated July 13, 1993.
(D) Incorporated by reference from Post-Effective Amendment No. 3 to
Registration Statement No. 33-43035 on Form S-1 dated September 30, 1996.
(E) Incorporated by reference from the Company's Annual Report on Form 10-K for
year ended December 31, 1995.
(F) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from InfoNow's
Quarterly report to stockholders for the six months ended June 30, 1998, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1707
<SECURITIES> 0
<RECEIVABLES> 274
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2043
<PP&E> 1392
<DEPRECIATION> 733
<TOTAL-ASSETS> 2739
<CURRENT-LIABILITIES> 958
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> 1751
<TOTAL-LIABILITY-AND-EQUITY> 2739
<SALES> 961
<TOTAL-REVENUES> 961
<CGS> 854
<TOTAL-COSTS> 1613
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8)
<INCOME-PRETAX> (634)
<INCOME-TAX> 0
<INCOME-CONTINUING> (634)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (634)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
