<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ___________ TO ____________
COMMISSION FILE NUMBER 0-19682
------------------------------
CAYENNE SOFTWARE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2784044
------------------------------ -------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8 NEW ENGLAND EXECUTIVE PARK, BURLINGTON,
-----------------------------------------
MASSACHUSETTS 01803
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(617) 273-9003
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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. Yes X. No . Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:
SHARES OUTSTANDING
TITLE OF CLASS AT AUGUST 7, 1997
---------------------------- ------------------
Common Stock, $.01 par value 18,806,755
<PAGE> 2
CAYENNE SOFTWARE, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
TABLE OF CONTENTS
PAGE
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets-
as of June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 18
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CAYENNE SOFTWARE, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................... $ 4,091 $ 4,150
Trade accounts receivable, less allowance for sales returns and
doubtful accounts of $635 and $820 at June 30, 1997 and
December 31, 1996, respectively ....................................... 12,960 13,320
Prepaid expenses and other current assets ............................... 1,900 1,375
--------- ---------
Total current assets ............................................... 18,951 18,845
Property and equipment, less accumulated depreciation and
amortization ............................................................... 2,657 2,256
Capitalized software costs, less accumulated amortization of $346 and
$266 at June 30, 1997 and December 31, 1996, respectively .................. 454 534
Other assets ................................................................. 634 601
--------- ---------
Total assets ................................................................. $ 22,696 $ 22,236
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short term debt ......................................................... $ 2,820 $ 2,820
Accounts payable ........................................................ 2,543 2,363
Accrued expenses ........................................................ 1,152 1,422
Accrued compensation and benefits ....................................... 2,853 3,415
Accrued restructuring costs ............................................. 728 1,703
Income and other taxes payable .......................................... 1,116 909
Obligations under capital lease ......................................... 531 561
Deferred revenue ........................................................ 9,956 9,592
--------- ---------
Total current liabilities .......................................... 21,699 22,785
Obligations under capital lease .............................................. 324 106
Commitments and contingencies (Note 9)
Stockholders' equity (deficit):
Common stock $.01 par value per share; 52,400 shares authorized;
18,783 and 17,695 shares issued and outstanding at June 30, 1997
and December 31, 1996, respectively ................................... 188 177
Additional paid-in capital .............................................. 106,372 102,935
Accumulated deficit ..................................................... (105,543) (103,706)
Accumulated translation adjustments ..................................... (344) (61)
--------- ---------
Stockholders' equity (deficit) .......................................... 673 (655)
--------- ---------
Total liabilities and stockholders' equity (deficit) ......................... $ 22,696 $ 22,236
--------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 4
CAYENNE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------- ----------------------
1997 1996 1997 1996
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Software license ............................................ $ 3,819 $ 5,031 $ 8,890 $10,331
Consulting and education services ........................... 2,408 3,106 4,911 6,452
Maintenance ................................................. 5,447 6,685 11,270 12,871
------- ------- ------- -------
Total revenues ......................................... 11,674 14,822 25,071 29,654
Costs and expenses:
Cost of revenues
Cost of software licenses ................................... 563 669 1,141 1,758
Cost of consulting and education services and maintenance.... 2,198 2,924 4,317 5,866
Sales and marketing .............................................. 6,150 7,627 12,472 15,636
Research and development ......................................... 2,782 3,220 5,599 6,491
General and administrative ....................................... 1,636 1,908 3,097 4,160
Restructuring and other costs .................................... -- 1,125 (375) 1,125
------- ------- ------- -------
Total costs and expenses ......................................... 13,329 17,473 26,251 35,036
(loss) from operations ........................................... (1,655) (2,651) (1,180) (5,382)
Interest expense, net ............................................ 13 68 275 443
------- ------- ------- -------
(loss) before provision for income taxes ......................... (1,668) (2,719) (1,455) (5,825)
Provision for income taxes ....................................... 205 695 318 720
------- ------- ------- -------
Net (loss) ....................................................... (1,873) (3,414) (1,773) (6,545)
Dividends on Series B Preferred Stock ............................ 26 -- 64 --
------- ------- ------- -------
(loss) applicable to common shares ............................... $(1,899) $(3,414) $(1,837) $(6,545)
------- ------- ------- -------
(loss) per common share:
Net (loss) ............................................. $ (0.11) $ (0.20) $ (0.10) $ (0.39)
Weighted average number of common and common equivalent
shares outstanding ............................................. 18,079 17,254 17,897 16,879
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 5
CAYENNE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1997 1996
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................................. $(1,773) $(6,545)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization ........................................ 947 1,590
Write-down of intangible asset ....................................... -- 986
Changes in operating assets and liabilities
Trade accounts receivable ............................................ 360 5,149
Prepaid expenses and other assets .................................... (525) (598)
Accrued expenses ..................................................... (334) (254)
Accrued restructuring costs .......................................... (975) (934)
Accounts payable ..................................................... 180 (594)
Accrued compensation and benefits .................................... (562) 394
Income and other taxes payable ....................................... 207 429
Deferred revenue ..................................................... 364 635
------- -------
Net cash provided by (used in) operating activities ............................ (2,111) 258
Cash flows from investing activities:
Purchases of property and equipment .................................. (850) (446)
Proceeds from sale of property and equipment ......................... 43 56
------- -------
Net cash used in investing activities .......................................... (807) (390)
Cash flows from financing activities:
Proceeds from issuance of Preferred Stock and warrants, net .......... 2,965 --
Proceeds from issuance of common stock, net .......................... 274 1,029
Proceeds from factoring agreement .................................... -- 9,195
Proceeds from line of credit facility ................................ -- 1,500
Payments under factoring agreement ................................... -- (7,471)
Payments under line of credit facility ............................... -- (2,480)
Payments under capital lease obligations ............................. (179) (85)
------- -------
Net cash provided by financing activities ...................................... 3,060 1,688
Effect of foreign exchange rates on cash and cash equivalents .................. (201) 245
------- -------
Net increase (decrease) in cash and cash equivalents ........................... (59) 1,801
Cash and cash equivalents at beginning of period ............................... 4,150 12,889
------- -------
Cash and cash equivalents at end of period ..................................... $ 4,091 $14,690
------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, and have been prepared by the
Company without audit in accordance with the Company's accounting policies, as
described in its latest annual report filed with the Securities and Exchange
Commission on Form 10-K. In the opinion of management, the accompanying
consolidated financial statements contain all adjustments, consisting only of
those of a normal recurring nature, necessary for a fair presentation of the
Company's financial position, results of operations and cash flows at the dates
and for the periods indicated. While the Company believes that the disclosures
presented are adequate to make the information not misleading, these financial
statements should be read in conjunction with the financial statements and
related notes included in the Company's Annual Report on Form 10-K for the
transition period ended December 31, 1996.
2. INCOME (LOSS) PER COMMON SHARE
Income (loss) per common share is computed based on the weighted average
number of common shares and dilutive common share equivalents outstanding during
each period except in loss periods. Dilutive common equivalent shares consist of
warrants and stock options (calculated using the Treasury Stock Method) and have
been excluded from the primary earnings per share calculation for all periods
presented as they are antidilutive. Fully diluted and primary earnings per share
are the same amounts for the three and six months ended June 30, 1997 and 1996,
respectively.
3. BUSINESS COMBINATIONS
On March 27, 1997, the Company acquired certain assets and liabilities of
Multiquest Corporation ("Multiquest") in a transaction accounted for as a
purchase. The Company acquired such assets and liabilities in exchange for
50,000 shares of the Company's common stock. The purchase price for Multiquest
was approximately $209,000 based upon a stock price of $4.1875 per share (which
approximated the fair market value of a share of the Company's common stock at
the closing of the acquisition). The net tangible assets and liabilities of
Multiquest acquired by the Company were insignificant. The purchase price was
allocated to the fair value of the technology acquired and customer lists, and
is being amortized over three years. The Company's results reflect the
allocation of the purchase price in accordance with generally accepted
accounting principles and the results of operations reflect the impact of the
acquisition since the date of closing. The pro-forma results of Multiquest prior
to the acquisition would be immaterial to the Company's reported results and are
therefore not presented.
4. LINE OF CREDIT
On November 6, 1996, the Company amended and restated its revolving credit
agreement with a bank to borrow up to $5.0 million to extend its term through
October 4, 1997 and to amend certain of the financial and operating covenants
and other provisions thereunder. In connection with the amendment, the Company
issued to the bank a three-year warrant to purchase 25,000 shares of the
Company's common stock at an exercise price of $4.25. The loan is contingent
upon meeting certain financial and operating covenants at the time of any
borrowing and over the life of the loan. The loan is secured by all of the
assets of the Company and any borrowing amounts are tied to a percentage of
qualified accounts receivable outstanding at the time of any borrowing. The
financial covenants, which were further amended on April 1, 1997, include the
attainment of certain specified levels of consolidated net income (loss) at the
end of each quarter including profitability of $250,000 for the quarter ending
June 30, 1997 and each quarter thereafter, and liquidity (generally defined as
cash and cash equivalents plus eligible domestic accounts receivable and
eligible international accounts receivable less any indebtedness to the bank)
at the end of each month. The Company was in compliance with all covenants, as
amended, except for the profitability covenant for which the Company obtained a
waiver, at June 30, 1997. The borrowing base under the revolving credit
agreement was approximately $2.5 million at June 30, 1997. The Company had
approximately $2.8 million outstanding against the line of credit at June 30,
1997 and is currently working to perfect certain international trade
receivables to resolve the short fall.
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL STOCK
On January 2, 1997, the Company raised approximately $3.0 million through
the private placement of 150,000 shares of Series B Convertible Preferred
Stock, designated from its "blank check" preferred stock. Each share of Series
B Convertible Preferred Stock is entitled to earn dividends at a rate of 5% per
annum, payable upon conversion, in cash or stock, at the option of the Company.
Each share of Series B Convertible Preferred Stock is convertible into shares
of Common Stock at a rate determined by the lower of the average quoted market
price of the common stock for either (i) the ten trading days preceding the
date of issuance or (ii) any five trading days during any period of thirty days
before the conversion. In conjunction with the closing of the private
placement, the Company issued warrants to purchase 350,000 shares of the
Company's Common Stock at exercise prices ranging from 120% to 150% of the
price set forth in clause (i) above and having varying expiration dates from
three to five years. The shares of Common Stock underlying the Series B
convertible Preferred stock and Warrants were registered pursuant to the terms
of the registration rights agreement dated January 3, 1997. These shares were
fully converted into 937,500 shares of common stock on June 6, 1997.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128 "Earnings Per Share", which will require adoption during the year ended
December 31, 1997. This statement specifies the computation, presentation and
disclosure requirements of earnings per share. The Company is in the process of
determining the effect of adoption of this statement on its consolidated
financial statements and related disclosures.
7. FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain forward-looking statements.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the Company's actual results
to differ materially from those indicated by such forward-looking statements.
These factors include, without limitation, those set forth in "Management's
Discussion and Analysis of Final Condition and Results of Operations" under the
caption "Factors That May Affect Future Results."
8. SUBSEQUENT EVENTS
On July 18, 1997, the Company raised approximately $2.0 million through the
private placement of 100,000 shares of Series C Convertible Preferred Stock,
designated from its "blank check" preferred stock. Each share of Series C
Convertible Preferred Stock is entitled to earn dividends at a rate of 5% per
annum, payable upon conversion, in cash or stock, at the option of the Company.
Each share of Series C Convertible Preferred Stock is convertible into shares of
Common Stock at a rate determined by the lower of the average quoted market
price of the common stock for either (i) the ten trading days preceding the date
of issuance or (ii) any five trading days during any period of thirty days
before the conversion. In conjunction with the closing of the private placement,
the Company issued warrants to purchase 233,332 shares of the Company's Common
Stock at exercise prices ranging from 125% to 150% of the price set forth in
clause (i) above and having varying expiration dates from three to five years.
The shares of Common Stock underlying the Series C convertible Preferred stock
and Warrants are subject to registration pursuant to the terms of the
registration rights agreement dated July 18, 1997.
9. COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position of the Company.
Cayenne has received correspondence from Esprit Systems Consulting, Inc.
claiming that Cayenne's subsidiary, Cadre Technologies, Inc. is liable to Esprit
for approximately $1.6 million under an extension to a contract for services to
be rendered to Cadre. Cayenne believes that the claim is without merit because,
among other things, the contract in question terminated without extension. The
claim has not been asserted formally in arbitration or litigation, and no
assurance can be given as to its future course or likely result.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Cayenne Software, Inc. is one of the largest global suppliers of analysis
and design solutions for commercial and technical application and database
development. Cayenne offers development teams a scaleable,
workgroup-to-enterprise product family for object-oriented, data driven and
structured application development approaches.
During the three and six months ended June 30, 1997, the Company's results
reflect a continued product mix shift from its mature mainframe and structured
analysis and design products to client/server and object-oriented solutions. As
a result of the product mix shift, reduced sales of third party products and
expense management during the three and six months ended June 30, 1997, gross
margins rose to 76% and 78%, respectively. Worldwide revenues for the three and
six months ended June 30, 1997 declined 21% and 15%, respectively over the
comparable period of the prior year. Additionally, because the Company derives a
significant portion of its business overseas, results were impacted by the rapid
rise of dollar against many foreign currencies including the Italian Lira and
German Mark. The Company remains actively engaged in building alternate channels
such as value-added resellers ("VARs") and systems integrators worldwide to
promote distribution through alternate channels which can leverage its expanded
product offerings.
On March 27, 1997, the Company acquired certain assets and liabilities of
Multiquest Corporation ("Multiquest") in a transaction accounted for as a
purchase. The Company acquired those assets and liabilities from Multiquest in
exchange for 50,000 shares of the Company's common stock. The purchase price for
Multiquest was approximately $209,000 based upon a stock price of $4.1875 (which
approximated the fair market value of a share of the Company's common stock at
the closing of the acquisition). The product acquired by the Company from
Multiquest, Pepperseed (formerly named S-Case) provides users with a low priced,
entry level object-oriented solution that is fully scaleable to its Object-Team
product. The Company intends to market Pepperseed through its direct sales
force, VARs, channel partners and the world wide web.
On March 29, 1997, the Company sold certain of the assets and liabilities of
its French subsidiary, Cayenne Software S.A.R.L., to Case Associates France S.A.
("Case"). Under the terms of the acquisition Case assumed Cayenne S.A.R.L.'s
then remaining maintenance obligations to customers and certain other
liabilities, acquired its customer list and certain personal property and
entered into a distribution agreement with the Company to distribute its
products in France. In connection with the transaction, the Company issued a
warrant to purchase up to 20,000 shares of the Company's common stock at an
exercise price of $4.32 per share to an affiliate of Case. The costs related to
the transaction were immaterial.
As the Company continues to expand its product offerings to provide
customers a more open and flexible set of solutions aimed at the growing
client/server and object-oriented market, it faces many challenges. The Company
has addressed some of these challenges through the acquisition (the "Merger")
of Cadre Technologies Inc. ("Cadre") which provides the Company with broader
product offerings and a larger customer base from which to solicit new and
additional business. Also, the Company has introduced additional products
during the past three years through both internal development and acquisitions
targeted at the client/server and object-oriented markets. The Company plans to
continue to enhance its product offerings through development efforts,
strategic alliances and acquisitions to improve its competitive position. The
actions necessary to expand product offerings and reposition the Company have
had an adverse effect on the Company's operating results during the first six
months of 1997, and may continue to effect operating results throughout the
remainder of 1997.
REVENUES
The Company's revenues are currently derived from three sources: (i) fees
for the perpetual license of the Company's proprietary software products, (ii)
fees from sales of consulting and education services, and (iii) maintenance fees
for maintaining, supporting and providing periodic upgrades of the Company's
software products.
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
The following table sets forth the amount of revenue derived by the Company,
by geographic segment and source, for each period indicated ($000s):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
SOFTWARE LICENSE
United States.......................... $ 1,580 $ 2,680 $ 4,400 $ 4,949
Italy.................................. 1,201 429 1,908 1,578
United Kingdom......................... 286 1,072 519 1,526
Rest of World.......................... 752 850 2,063 2,278
------- ------- ------- -------
3,819 5,031 8,890 10,331
CONSULTING AND EDUCATION SERVICES
United States.......................... 665 1,045 1,371 2,305
Italy.................................. 1,455 1,759 2,854 3,449
United Kingdom......................... 119 207 291 866
Rest of World.......................... 169 95 395 (168)
------- ------- ------- -------
2,408 3,106 4,911 6,452
MAINTENANCE
United States.......................... 2,895 3,718 5,981 7,241
Italy.................................. 661 618 1,336 993
United Kingdom......................... 818 922 1,715 1,865
Rest of World.......................... 1,073 1,427 2,238 2,772
------- ------- ------- -------
5,447 6,685 11,270 12,871
TOTAL............................. $11,674 $14,822 $25,071 $29,654
------- ------- ------- -------
</TABLE>
SOFTWARE LICENSE. Software license revenue for the three and six months
ended June 30, 1997 amounted to $3.8 million and $8.9 million, respectively
compared to $5.0 million and $10.3 million in the comparable periods of 1996, a
decrease of 24% and 14%, respectively. The decrease in license revenues during
the three and six month periods reflect a continued product mix shift from the
Company's mature mainframe and structured analysis and design products to
client/server and object-oriented solutions. To date, growth in newer
client/server and object-oriented product lines has been insufficient to offset
reduced revenues from the Company's more mature Analyst and Teamwork family of
products. Additionally, a reorganization of the Company's sales force during
June 1997 resulted in a longer sales cycle for software licenses adversely
effecting license revenue.
Client/server and object-oriented products accounted for 52% and 58% of new
license revenue for the three and six months ended June 30, 1997 compared to 40%
and 35% for the comparable periods of the prior year. The Company expects this
trend to continue during 1997 as client/server and object-oriented solutions
continue to gain global acceptance and installed customers elect to follow
market trends and migrate from mainframe and structured analysis and design
tools to client/server and object-oriented solutions. License revenues in the
United States declined by 41% and 11% due to the aforementioned product mix
shift and reorganization of the Company's sales force. License revenue in Italy
increased by 180% and 21% primarily due to several large orders received in June
of 1997. License revenues from the Company's United Kingdom subsidiary declined
73% and 66% due to changes in the Company's management team related to the
consolidation of the Company's and Cadre's United Kingdom operations in
connection with the merger, lower demand for mature products and a longer sales
cycle.
CONSULTING AND EDUCATION SERVICES. Consulting and education revenue for the
three and six months ended June 30, 1997 amounted to $2.4 million and $4.9
million, respectively compared to $3.1 million and $6.5 million for the
comparable periods of the prior year, a decrease of 22% and 24%, respectively.
The decrease in consulting and education services revenue during the three and
six month periods reflects lower demand for these services as revenues tend to
follow the trend of software license revenue. Consulting and education revenue
in United States decreased by 36% and 41% due to lower demand and reduced
staffing in this area. Revenues in Italy decreased by 17% in both periods
primarily due to the expiration of several long term consulting contracts in the
comparable periods of 1996. Consulting and education revenue in the United
Kingdom decreased by 43% and 66% due to lower demand and staffing in these
areas.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
MAINTENANCE. Maintenance revenue for annual maintenance contracts is
deferred and recognized ratably over the term of the agreement. Maintenance
revenue for the three and six months ended June 30, 1997 amounted to $5.4
million and $11.3 million, respectively compared to $6.7 million and $12.9
million for the comparable periods of the prior year, a decrease of 19% and 12%,
respectively. Maintenance revenue in the United States declined by 22% and 17%
due to the aforementioned market place migration to client/server and
object-oriented tools and fewer customers renewing their maintenance contracts
on mainframe and structured analysis and design tools. Maintenance revenue in
Italy increased by 7% and 35% primarily due to increased penetration of
international markets in the prior year combined with an increased portion of
the customer base that renewed maintenance contracts. Maintenance revenue in the
United Kingdom declined by 11% and 8% primarily due to declines in new license
revenue and fewer customers renewing their maintenance contracts on mainframe
and structured analysis and design tools.
COSTS AND EXPENSES
The following table sets forth the amount of expense by category for the
periods indicated ($000s):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cost of revenues:
Cost of software licenses........................... $ 563 $ 669 $ 1,141 $ 1,758
Cost of consulting, education and maintenance....... 2,198 2,924 4,317 5,866
------- ------- ------- -------
Total cost of revenues.............................. 2,761 3,593 5,458 7,624
Sales and marketing................................... 6,150 7,627 12,472 15,636
Research and development.............................. 2,782 3,220 5,599 6,491
General and administrative............................ 1,636 1,908 3,097 4,160
Restructuring and other costs......................... -- 1,125 (375) 1,125
------- ------- ------- -------
Total costs and expenses.............................. $13,329 $17,473 $26,251 $35,036
------- ------- ------- -------
</TABLE>
COST OF REVENUE. The Company's cost of software licenses includes product
packaging, documentation, media and royalties to third parties, as well as the
amortization of capitalized software development costs. Costs of consulting and
education services and maintenance includes personnel, travel and occupancy
costs connected with providing such services.
Cost of software licenses were $0.6 million and $1.1 million or 5% of
revenue for the three and six months ended June 30, 1997 compared with $0.7
million and $1.8 million or 5% and 6% of revenue in the comparable periods of
1996. The decrease in 1997 expenses reflects reduced sales of third party
products for which the Company pays a royalty to resell as well as reduced
manufacturing costs consistent with reduced revenues. Additionally, amortization
related to WindTunnel was $0 during the three and six months ended June 30, 1997
as compared to $0.1 million and $0.2 million in the comparable periods of the
prior year. This reduction is directly related to the Company's determination in
June 1996 that the WindTunnel product was no longer consistent with the
Company's objectives.
Cost of consulting, education and maintenance was $2.2 million and $4.3
million or 19% and 17% of revenue in the three and six months ended June 30,1997
compared with $2.9 million and $5.9 million or 20% of revenue in the comparable
periods of 1996. The decrease in 1997 expenses is primarily attributable to
reduced staffing levels as a result of company efforts to better align staffing
with demand, attrition and the merger.
SALES AND MARKETING. Sales and marketing expenses were $6.2 million and
$12.5 million or 53% and 50% of revenue in the three and six months ended June
30, 1997 compared with $7.6 million and $15.6 million or 51% and 53% of revenue
in the comparable periods of 1996. The decrease in 1997 expenses primarily
reflects reduced staffing in North America and international subsidiary
operations as a result of attrition and the merger.
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RESEARCH AND DEVELOPMENT. Research and development expenses were $2.8
million and $5.6 million or 24% and 22% of revenue in the three and six months
ended June 30, 1997 compared with $3.2 million and $6.5 million or 22% of
revenue in the comparable periods of 1996. The decrease in 1997 expenses
primarily reflects reduced staffing as a result of attrition and the merger.
Additionally, during June of 1996, the Company reviewed its product strategy and
determined that several products including WindTunnel were no longer consistent
with the Company's objectives. These efforts shifted resources toward developing
and or refining core client/server and object oriented products consistent with
the Company's objectives.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were $1.6
million and $3.1 million or 14% and 12% of revenue in the three and six months
ended June 30, 1997 compared with $1.9 million and $4.2 million or 13% and 14%
of revenue in the comparable periods of 1996. The decrease in 1997 expenses
primarily reflects lower levels of staffing which were the result of the merger
and the elimination of redundant positions.
RESTRUCTURING AND OTHER COSTS. During the quarter ended March 31, 1997, the
Company evaluated its restructuring reserve and determined that certain amounts
provided for in previous restructuring actions were no longer required. As a
result, the Company recorded a benefit of approximately $0.4 million. During
June of 1996, in conjunction with the contemplated merger between Cayenne and
Cadre, the Company reviewed its product strategy and determined that several
products including WindTunnel were no longer consistent with the Company's
objectives. Accordingly the company evaluated the net realizable value of the
related intangible assets and recorded a charge of approximately $1.1 million
principally related to the write-off of the intangible assets acquired as part
of its acquisition of WindTunnel Software, Inc.
EFFECT OF INTERNATIONAL OPERATIONS ON INCOME (LOSS) FROM OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income (loss) from operations:
United States..................... $ 1,408 $ 1,273 $ 4,156 $ (189)
Italy............................ (540) (1,161) (473) (981)
United Kingdom................... (547) (292) (1,162) (615)
Rest of World.................... (1,976) (2,471) (3,701) (3,597)
-------- -------- -------- --------
$(1,655) $(2,651) $(1,180) $(5,382)
</TABLE>
In addition to factors listed above, the operations of the Company's
international subsidiaries significantly affected results of operations in the
three and six months ended June 30, 1997 and 1996.
The income (loss) from operations -- United States and Rest of World --
improved to $(0.6) million and $0.5 million during the three and six months
ended June 30, 1997 from $(1.2) million and $(3.8) million in the corresponding
periods of the prior year. The improved results are primarily attributable to
actions taken by the Company in previous quarters to better align expenses with
revenues and improved efficiencies gained in the merger with Cadre.
The Company's Italian subsidiary reported a loss from operations of $(0.5)
million for the three and six months ended June 30, 1997 compared to losses of
$(1.2) million and $(1.0) million in the corresponding periods in the prior year
principally due several large orders received in June 1997.
The loss from operations in the Company's United Kingdom subsidiary
increased to $(0.5) million and $(1.2) million for the three and six months
ended June 30, 1997 from $(0.3) million and $(0.6) million in the corresponding
periods in the prior year. The increase was principally due to lower license
revenues associated with the aforementioned marketplace migration to
client/server and object-oriented tools and changes in the Company's management
team related to the consolidation of the Company's and Cadre's United Kingdom
operations in connection with the merger.
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
INTEREST EXPENSE, NET. Interest expense for the three and six months ended
June 30, 1997 decreased by $0.1 million and $0.2 million compared to the same
period of the prior fiscal year primarily due to lower interest rates on
outstanding balances.
PROVISION FOR INCOME TAXES. Due to the Company's recent history of operating
losses and the existence of significant net operating loss carryforwards, the
tax provision for the three and six months ended June 30, 1997 and 1996 is
primarily composed of foreign income and withholding taxes.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128 "Earnings Per Share", which will require adoption during the year ended
December 31, 1997. This statement specifies the computation, presentation and
disclosure requirements of earnings per share. The Company is in the process of
determining the effect of adoption of this statement on its consolidated
financial statements and related disclosures.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company's principal sources of liquidity included
cash and cash equivalents aggregating $4.1 million and a secured bank line of
credit in the amount of $5.0 million discussed below. Cash and cash equivalents
were principally unchanged compared to December 31, 1996. For the six months
ended June 30, 1997, cash flows were principally affected by the loss from
operations and capital spending related to the implementation of a new worldwide
information system. This spending was offset by the private placement of Series
B Preferred Stock, discussed below. The Company's principal long-term cash
commitments are for office space and operating leases. The lease for the
Company's executive offices, principal research and development facilities, and
headquarter operations expires on October 31, 1997. The Company is actively
engaged in negotiations to secure suitable space.
On June 30, 1997, the Company had a commitment of approximately $1.0 million
related to the implementation of a new worldwide information system. The Company
plans to introduce the system in phases commencing in August of 1997 and
scheduled for completion in early 1998. The Company has no other material
commitments for capital expenditures.
On January 2, 1997, the Company raised approximately $3.0 million through
the private placement of 150,000 shares of Series B Convertible Preferred Stock,
designated from its "blank check" preferred stock. Each share of Series B
Convertible Preferred Stock is entitled to earn dividends at a rate of 5% per
annum, payable upon conversion, in cash or stock, at the option of the Company.
Each share of Series B Convertible Preferred Stock is convertible into shares of
Common Stock at a rate determined by the lower of the average quoted market
price of the common stock for either (i) the ten trading days preceding the date
of issuance or (ii) any five trading days during any period of thirty days
before the conversion. In conjunction with the closing of the private placement,
the Company issued warrants to purchase 350,000 shares of the Company's Common
Stock at exercise prices ranging from 120% to 150% of the price set forth in
clause (i) above and having varying expiration dates from three to five years.
The shares of Common Stock underlying the Series B convertible Preferred stock
and Warrants were registered pursuant to the terms of the registration rights
agreement dated January 3, 1997. These shares were fully converted into 937,500
shares of Common Stock on June 6, 1997.
On July 18, 1997, the Company raised approximately $2.0 million through the
private placement of 100,000 shares of Series C Convertible Preferred Stock,
designated from its "blank check" preferred stock. Each share of Series C
Convertible Preferred Stock is entitled to earn dividends at a rate of 5% per
annum, payable upon conversion, in cash or stock, at the option of the Company.
Each share of Series C Convertible Preferred Stock is convertible into shares of
Common Stock at a rate determined by the lower of the average quoted market
price of the common stock for either (i) the ten trading days preceding the date
of issuance or (ii) any five trading days during any period of thirty days
before the conversion. In conjunction with the closing of the private placement,
the Company issued warrants to purchase 233,332 shares of the Company's Common
Stock at exercise prices ranging from 125% to 150% of the price set forth in
clause (i) above and having varying expiration dates from three to five years.
The shares of Common Stock underlying the Series C convertible Preferred stock
and Warrants are subject to registration pursuant to the terms of the
registration rights agreement dated July 18, 1997.
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
On November 6, 1996, the Company amended and restated its revolving credit
agreement with a bank to borrow up to $5.0 million, to extend its term through
October 4, 1997 and to amend certain of the financial and operating covenants
and other provisions thereunder. In connection with the amendment, the Company
issued to the bank a three year warrant to purchase 25,000 shares of the
Company's common stock at an exercise price of $4.25 per share. The loan is
contingent upon meeting certain financial and operating covenants at the time of
any borrowing and over the life of the loan. The loan is secured by all of the
assets of the Company and any borrowing amounts are tied to a percentage of
qualified accounts receivable outstanding at the time of any borrowing. The
financial covenants, which were further amended on April 1, 1997, include the
attainment of certain specified levels of consolidated net income (loss) at the
end of each quarter, including profitability of $250,000 for the quarter ending
June 30, 1997 and each quarter thereafter, and liquidity (generally defined as
cash and cash equivalents plus eligible domestic accounts receivable and
eligible international accounts receivable less any indebtedness to the bank)
at the end of each month. The Company was in compliance with all covenants, as
amended, except for the profitability covenant for which the Company obtained a
waiver, at June 30, 1997. At June 30, 1997, the borrowing base under the
revolving credit agreement was approximately $2.5 million. The Company had
approximately $2.8 million outstanding against the line of credit at June 30,
1997 and is currently working to perfect certain international trade
receivables to resolve the shortfall.
On July 18, 1996, the Company completed its merger with Cadre of Providence,
Rhode Island. In connection with the merger, the Company issued 4,716,442 shares
of Cayenne common stock for all of the outstanding capital stock of Cadre. The
transaction was accounted for as a pooling-of-interests for accounting purposes
beginning in the transition period. The Company incurred a $6.3 million charge
to operations during the transition period to reflect costs associated with
combining the operations of the two companies, transaction fees, and other costs
incident to the merger.
Cash expenditures for restructuring activities were approximately $0.2
million and $0.6 million during the three and six months ended June 30, 1997.
The Company currently estimates that cash expenditures for restructuring actions
for the remainder of 1997 will be approximately $0.4 million. The Company
believes that it has adequately provided for all restructuring actions taken to
date.
The Company anticipates that existing cash balances combined with funds
generated from operations and the previously discussed private placement which
closed on July 18, 1997, will provide sufficient cash resources to finance its
current operations and projected capital expenditures through 1997. The Company
expects to renew or renegotiate its revolving credit agreement that expires on
October 4, 1997. In addition, the Company is currently seeking additional
sources of funding. Thereafter, the Company's cash requirements will depend
upon the results of future operations, including the impact of the Cadre
acquisition, which cannot be foreseen. There can be no assurance that the
Company will be able to meet its loan covenants, secure additional funding,
achieve its operating plan and sustain profitability, and failure to do so may
have a material adverse impact on the Company's business and operations.
The Company has been notified by The Nasdaq Stock Market, Inc. that it is
not in compliance with the net tangible asset requirement for continued listing
on the Nasdaq National Market. The Company has been given terms which include
raising additional equity, with which it must comply. If the Company is not
successful, its stock will be listed under the Nasdaq SmallCap Market. The
Company intends to meet this requirement by raising additional equity.
FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company or statements made by
its employees may contain "forward-looking" information, as that term is defined
in the Private Securities Litigation Reform Act of 1995 (the "Act"). The Company
cautions investors that there can be no assurance that actual results or
business conditions will not differ materially from those projected or suggested
in such forward-looking statements as a result of various factors including but
not limited to the following:
The Company's future operating results are dependent on its ability to
develop, produce, and market new and innovative products and services internally
or through acquisitions including, without limitation, achieving product market
acceptance of its client/server and object oriented products and services and
maintaining relationships with software and hardware vendors and consultants.
There are numerous risks inherent in this complex process, including rapid
technological change the requirements that the Company bring to market in a
timely fashion new products and services which meet customers' changing needs
and the successful integration of products and services as a result of
acquisitions.
Historically the Company has generated a disproportionate amount of its
operating revenues toward the end of each quarter, making precise prediction of
revenues and earnings particularly difficult and resulting in risk of variance
of actual results from those forecast an any time. In addition, the company's
operating results historically have varied from fiscal period to fiscal period;
accordingly, the Company's financial results in any particular fiscal period are
not necessarily indicative of results for future periods.
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
The Company operates in a highly competitive environment and in a highly
competitive industry, which include significant pricing pressures and intense
competition for skilled employees. From time to time, the Company may experience
unanticipated intense competitive pressure, possibly causing operating results
to vary from those expected.
The Company offers its products and services directly and through indirect
distribution channels. Changes in the financial condition of, or the Company's
relationship with, distributors and other indirect channel partners could cause
actual operating results to vary from those expected.
The Company does business worldwide. Global and/or regional economic factors
and potential changes in laws and regulations affecting the Company's business,
including without limitation, currency fluctuation, changes in monetary policy
and tariffs, and federal, state and international laws could impact the
Company's financial condition or future results of operations.
The market price of the Company's securities could be subject to fluctuation
in response to quarter to quarter variations in operating results, changes in
analysts' earnings estimates, market conditions in the information technology
industry, as well as general economic conditions and other factors external to
the Company.
<PAGE> 15
PART II. OTHER INFORMATION (CONTINUED)
ITEM 1. LEGAL PROCEEDINGS
Cayenne has received correspondence from Esprit Systems Consulting, Inc.
claiming that Cayenne's subsidiary, Cadre Technologies, Inc. is liable to
Esprit for approximately $1.6 million under an extension to a contract for
services to be rendered to Cadre. Cayenne believes that the claim is without
merit because, among other things, the contract in question terminated
without extension. The claim has not been asserted formally in arbitration
or litigation, and no assurance can be given as to its future course or
likely result.
The Company is not aware of any other material litigation or claim pending
or threatened against the Company or any of its subsidiaries.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Documents listed below, except for documents identified by footnotes, are being
filed as exhibits herewith. Documents identified by asterisks are not being
filed herewith and, pursuant to Rule 12b-32 of the General Rules and Regulations
promulgated by the Commission under the Securities Exchange Act of 1934 (the
"Act") reference is made to such documents as previously filed as exhibits with
the Commission. The Company's file number under the Act is 0-19682.
2.1(4) Asset Purchase Agreement among CSI Acquisition Corporation,
Cayenne and Cooperative Solutions, Inc. dated November 16,
1993
2.2(5) Agreement and Plan of Merger by and among Cayenne, BI
Acquisition Corp. and WindTunnel Software, Inc. dated April
27, 1993
2.3(11) Agreement and Plan of Merger among Cayenne, B.C. Acquisition
Corp. and Cadre Technologies Inc. dated as of March 25, 1996
3.1(1)2 Amendment to Restated Articles of Organization of Cayenne
3.2(2) Restated Articles of Organization of Cayenne
3.3(1) Amended and Restated By-Laws of Cayenne
3.4(14) Statement of Rights and Preferences of Series B Convertible
Preferred Stock
4.1(1) Specimen Certificate for Common Stock of Cayenne
4.2(8) Statement of Rights and Preferences of Series A Convertible
Preferred Stock
4.3(8) Form of Warrant Agreement dated as of November 21, 1994 by and
among Cayenne and purchasers of Series A Convertible Preferred
Stock
4.4(7) Warrant Agreement dated as of October 28, 1994 by and between
Cayenne and Silicon Valley Bank
4.5(14) Convertible Preferred Stock Purchase Agreement dated as of
January 2, 1997 between the Company and Southbrook
International Investments, Ltd.
<PAGE> 16
PART II. OTHER INFORMATION (CONTINUED)
4.6(14) Registration Rights Agreement dated as of January 2, 1997
4.7(14) Form of Warrant Agreement dated as of January 2, 1997
4.8(14) Warrant Agreement dated as of December 20, 1996 between the
Company and Silicon Valley Bank
10.1(1) General License and Maintenance Agreement dated January 30,
1987 between Cayenne and American Telephone & Telegraph
Communications, Inc.
10.2(1) Lease with New England Mutual Life Insurance Company
10.3(3) Lease dated August 12, 1992 between Cayenne and Spaulding
Investment Co.
10.4(2) Agreement for Partial Sale of Going Concern dated as of
October 25, 1992 between Pro Systems and Cayenne France
10.5(2) Sale and Purchase Agreement relating to Cayenne Information
Systems Limited, dated November 16, 1991, among Abacus
Trustees (Jersey) Limited, Cayenne and others, as amended by
Amendment Consent dated February 18, 1992
10.6(2) Agreement dated as of November 1, 1991, between Cayenne and
Cayenne Italia S.r.1., as amended by letter dated December 9,
1991 and as further amended by amendment dated December 31,
1991
10.7(3) Fiscal Year 1993 Bonus Pool Plan
10.8(1) Amended and Restated 1986 Incentive and Nonqualified Stock
Option Plan of Cayenne 10.92 1992 Employee Stock Purchase Plan
10.10(1) Savings/Retirement Plan and Trust of Cayenne
10.11(6) Employment agreement dated as of January 1, 1994 by and
between Cayenne and Charles W. Bachman
10.12(6) Employment Agreement dated as of August 4, 1993 by and between
Cayenne and Peter J. Boni
10.13(6) 1994 Bonus Pool Plan of Cayenne, as amended
10.14(7) 1995 Bonus Pool Plan of Cayenne, as amended.
10.15(7) Revolving Credit Agreement and Warrant Agreement dated as of
October 28, 1994 by and between Cayenne and Silicon Valley
Bank
10.16(8) Series A Convertible Preferred Stock Purchase Agreement dated
as of November 21, 1994 by and among Cayenne and purchasers of
Series A Convertible Preferred Stock
10.17(8) Registration Rights Agreement dated as of November 21, 1994 by
and among Cayenne and purchasers of Series A Convertible
Preferred Stock
10.18(9) Form of Common Stock Purchase Agreement dated as of September
15, 1995 by and among Cayenne and certain purchasers of Common
Stock
10.19(9) Form of Registration Rights Agreement dated as of September
15, 1995 by and among Cayenne and certain purchasers of Common
Stock
10.20(10) 1996 Bonus Pool Plan of Cayenne
10.21(12) Amendment No. 1 to Employment Agreement dated as of August 4,
1993 by and between Cayenne and Peter J. Boni
10.22(12) Amended and Restated Revolving Credit Agreement dated as of
June 6, 1996 by and between Cayenne and Silicon Valley Bank
10.23(14) 1997 Bonus Plan of Cayenne
10.24(13) Amended 1996 Incentive and Nonqualified Stock Option Plan
10.25 Calendar Year 1997 Bonus Pool of Cayenne
27.1 Financial Data Schedules
<PAGE> 17
PART II. OTHER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
1) Incorporated by reference to the exhibits filed with Cayenne's
Registration Statement on Form S-1, File No. 33-43401, as amended.
2) Incorporated by reference to the exhibits filed with Cayenne's
Registration Statement on Form S-1, File No. 33-45841, as amended.
3) Incorporated by reference to the exhibits filed with Cayenne's Annual
Report on Form 10-K for the year ended June 30, 1992, File No.
0-19682.
4) Incorporated by reference to the exhibit filed with Cayenne's Current
Report on Form 8-K dated November 16, 1993, as amended.
5) Incorporated by reference to Cayenne's Registration Statement on Form
S-4, File No. 33-62650, as amended.
6) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated May 13, 1994.
7) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated November 11, 1994.
8) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated February 13, 1995, as amended.
9) Incorporated by reference to the exhibits filed with Cayenne's Annual
Report on Form 10-K, as amended, for the year ended June 30, 1995,
File No. 0-19682.
10) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated February 13, 1996.
11) Incorporated by reference to exhibits filed with Cayenne's
Registration Statement on Form S-4, File No. 333-6087, as amended.
12) Incorporated by reference to exhibits filed with Cayenne's Annual
Report on Form 10-K dated September 27, 1996.
13) Incorporated by reference to Cayenne's Proxy Statement dated November
20, 1996.
14) Incorporated by reference to Cayenne's Annual Report on Form 10-K
dated March 29, 1997.
(a) REPORTS ON FORM 8-K:
None.
<PAGE> 18
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.
CAYENNE SOFTWARE, INC.
DATED: August 14, 1997 BY: /S/ Frederick H. Phillips
----------------------------------------
Frederick H. Phillips
Vice President, Finance and
Administration, Treasurer
and Chief Financial Officer (Principal
Financial and Accounting Officer)
<PAGE> 19
---------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
EXHIBITS
TO
QUARTERLY REPORT ON FORM 10-Q
-------------------------------
CAYENNE SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------------------------------------
<PAGE> 20
(a) REPORTS ON FORM 8-K:
None.
EXHIBIT
- -------
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
2.1(4) Asset Purchase Agreement among CSI Acquisition
Corporation, Cayenne and Cooperative Solutions, Inc.
dated November 16, 1993
2.2(5) Agreement and Plan of Merger by and among Cayenne, BI
Acquisition Corp. and WindTunnel Software, Inc. dated
April 27, 1993
2.3(11) Agreement and Plan of Merger among Cayenne, B.C.
Acquisition Corp. and Cadre Technologies Inc. dated
as of March 25, 1996
3.1(1)2 Amendment to Restated Articles of Organization of
Cayenne
3.2(2) Restated Articles of Organization of Cayenne
3.3(1) Amended and Restated By-Laws of Cayenne
3.4(14) Statement of Rights and Preferences of Series B
Convertible Preferred Stock
4.1(1) Specimen Certificate for Common Stock of Cayenne
4.2(8) Statement of Rights and Preferences of Series A
Convertible Preferred Stock
4.3(8) Form of Warrant Agreement dated as of November 21,
1994 by and among Cayenne and purchasers of Series A
Convertible Preferred Stock
4.4(7) Warrant Agreement dated as of October 28, 1994 by and
between Cayenne and Silicon Valley Bank
4.5(14) Convertible Preferred Stock Purchase Agreement dated
as of January 2, 1997 between the Company and
Southbrook International Investments, Ltd.
4.6(14) Registration Rights Agreement dated as of January 2,
1997
4.7(14) Form of Warrant Agreement dated as of January 2, 1997
4.8(14) Warrant Agreement dated as of December 20, 1996
between the Company and Silicon Valley Bank
10.1(1) General License and Maintenance Agreement dated
January 30, 1987 between Cayenne and American
Telephone & Telegraph Communications, Inc.
10.2(1) Lease with New England Mutual Life Insurance Company
10.3(3) Lease dated August 12, 1992 between Cayenne and
Spaulding Investment Co.
10.4(2) Agreement for Partial Sale of Going Concern dated as
of October 25, 1992 between Pro Systems and Cayenne
France
10.5(2) Sale and Purchase Agreement relating to Cayenne
Information Information Systems Limited, dated
November 16, 1991, among Abacus Trustees (Jersey)
Limited, Cayenne and others, as amended by Amendment
Consent dated February 18, 1992
10.6(2) Agreement dated as of November 1, 1991, between
Cayenne and Cayenne Italia S.r.1., as amended by
letter dated December 9, 1991 and as further amended
by amendment dated December 31, 1991
10.7(3) Fiscal Year 1993 Bonus Pool Plan
10.8(1) Amended and Restated 1986 Incentive and Nonqualified
Stock Option Plan of Cayenne 10.92 1992 Employee
Stock Purchase Plan
10.10(1) Savings/Retirement Plan and Trust of Cayenne
10.11(6) Employment Agreement dated as of January 1, 1994 by
and between Cayenne and Charles W. Bachman
10.12(6) Employment Agreement dated as of August 4, 1993 by
and between Cayenne and Peter J. Boni
10.13(6) 1994 Bonus Pool Plan of Cayenne, as amended
10.14(7) 1995 Bonus Pool Plan of Cayenne, as amended.
10.15(7) Revolving Credit Agreement and Warrant Agreement
dated as of October 28, 1994 by and between Cayenne
and Silicon Valley Bank
10.16(8) Series A Convertible Preferred Stock Purchase
Agreement dated as of November 21, 1994 by and among
Cayenne and purchasers of Series A Convertible
Preferred Stock
10.17(8) Registration Rights Agreement dated as of November
21, 1994 by and among Cayenne and purchasers of
Series A Convertible Preferred Stock
<PAGE> 21
10.18(9) Form of Common Stock Purchase Agreement dated as of
September 15, 1995 by and among Cayenne and certain
purchasers of Common Stock
10.19(9) Form of Registration Rights Agreement dated as of
September 15, 1995 by and among Cayenne and certain
purchasers of Common Stock
10.20(10) 1996 Bonus Pool Plan of Cayenne
10.21(12) Amendment No. 1 to Employment Agreement dated as of
August 4, 1993 by and between Cayenne and Peter J.
Boni
10.22(12) Amended and Restated Revolving Credit Agreement dated
as of June 6, 1996 by and between Cayenne and Silicon
Valley Bank
10.23(14) 1997 Bonus Plan of Cayenne
10.24(13) Amended 1996 Incentive and Nonqualified Stock Option
Plan
10.25 Calendar Year 1997 Bonus Pool of Cayenne
27.1 Financial Data Schedules
- -------------
1) Incorporated by reference to the exhibits filed with Cayenne's
Registration Statement on Form S-1, File No. 33-43401, as amended.
2) Incorporated by reference to the exhibits filed with Cayenne's
Registration Statement on Form S-1, File No. 33-45841, as amended.
3) Incorporated by reference to the exhibits filed with Cayenne's Annual
Report on Form 10-K for the year ended June 30, 1992, File No.
0-19682.
4) Incorporated by reference to the exhibit filed with Cayenne's Current
Report on Form 8-K dated November 16, 1993, as amended.
5) Incorporated by reference to Cayenne's Registration Statement on Form
S-4, File No. 33-62650, as amended.
6) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated May 13, 1994.
7) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated November 11, 1994.
8) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated February 13, 1995, as amended.
9) Incorporated by reference to the exhibits filed with Cayenne's Annual
Report on Form 10-K, as amended, for the year ended June 30, 1995,
File No. 0-19682.
10) Incorporated by reference to the exhibits filed with Cayenne's
Quarterly Report on Form 10-Q dated February 13, 1996.
11) Incorporated by reference to exhibits filed with Cayenne's
Registration Statement on Form S-4, File No. 333-6087, as amended.
12) Incorporated by reference to exhibits filed with Cayenne's Annual
Report on Form 10-K dated September 27, 1996.
13) Incorporated by reference to Cayenne's Proxy Statement dated
November 20, 1996.
14) Incorporated by reference to Cayenne's Annual Report on Form 10-K
dated March 29, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS OF CAYENNE SOFTWARE, INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORMS 10-K, 10-KA AND
10-Q.
</LEGEND>
<CIK> 0000880229
<NAME> CAYENNE SOFTWARE, INC.
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
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<CGS> 1,141
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<INCOME-TAX> 318
<INCOME-CONTINUING> (1,773)
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<CHANGES> 0
<NET-INCOME> (1,773)
<EPS-PRIMARY> (.10)
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</TABLE>