MOMENTUM SOFTWARE CORPORATION
401 South Van Brunt Street
Englewood, NJ 07631
(201) 871-0077
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 0-20216
MOMENTUM SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-2618553
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
401 South Van Brunt Street
Englewood, New Jersey 07631
(Address of principal executive office including zip code)
201-871-0077
(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 Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
As of November 11, 1996 there were issued and outstanding 4,405,698 shares of
the Registrant's Common Stock.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
MOMENTUM SOFTWARE CORPORATION
BALANCE SHEET
(Unaudited)
September 30, December 31,
1996 1995
----------- ----------
ASSETS
Current Assets:
Cash $ 346 $ 904
--------------------------
$ 346 $ 904
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Due to shareholders $ 529,050 $ 506,874
Accrued professional fees 92,506 150,506
Other accrued expenses 13,068 11,708
Due to affiliate 162,810 145,674
----------- -----------
Total current liabilities 797,434 814,762
----------- -----------
Stockholders' deficit:
Common stock, $.001 par value;
6,000,000 shares authorized;
4,405,698 and 4,149,698 shares issued
and outstanding at September 30, 1996
and December 31, 1995, respectively 4,406 4,150
Additional paid-in-capital 165,258 101,514
Accumulated deficit (966,752) (919,522)
----------- -----------
Total stockholders' deficit (797,088) (813,858)
----------- -----------
$ 346 $ 904
=========== ===========
Note: See accompanying Notes to Financial Statements.
<PAGE>
MOMENTUM SOFTWARE CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C>
General and
administrative expenses $ 3,405 $ 4,334 $ 15,918 $ 17,283
------------- ------------- ------------- -------------
Loss from operations (3,405) (4,334) (15,918) (17,283)
Interest expense (10,584) (9,664) (31,312) (28,560)
Net loss $ (13,990) $ (13,998) $ (47,230) $ (45,843)
============= ============= ============= =============
Weighted average shares
outstanding 4,405,698 4,099,698 4,274,416 4,099,698
Net loss per share -- -- $ (0.01) $ (0.01)
------------- ------------- ------------- ------------
</TABLE>
Note: See accompanying Notes to Financial Statements.
<PAGE>
MOMENTUM SOFTWARE CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
-------------- -------------
<S> <C>
Cash flows from operating activities
Net loss $ $ (47,230) $ (45,843)
Adjustments to reconcile net loss to net
cash provided by (used for) operating
activities:
Increase (decrease) in cash flows due to changes in:
Payable to shareholders 22,176 21,000
Accrued professional fees (58,000) 3,000
Other accrued expenses 1,360 0
Payable to affiliate 17,136 21,809
------------ ----------------
Net cash provided by (used for)
operating activities (64,558) (34)
Cash flows from financing activities
Proceeds from issuance of common stock 64,000
------------ ----------------
Net increase (decrease) in cash (558) (34)
Cash at beginning of period 904 1,451
------------ ----------------
Cash at end of period $ 346 $ 1,417
============= ================
</TABLE>
Note: See accompanying Notes to Financial Statements.
<PAGE>
MOMENTUM SOFTWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
The balance sheet as of September 30, 1996 and the statements of operations and
cash flows for all periods presented herein have been prepared by the Company
without audit. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments necessary to present fairly the financial position
as of September 30, 1996 and the results of operations and cash flows for all
periods presented, have been made. Results of the interim periods are not
necessarily indicative of the results for an entire year.
These financial statements should be read in conjunction with the Financial
Statements and Notes thereto for the year ended December 31, 1995 contained in
the Company's Annual Report on Form 10-K, which was filed with the Securities
and Exchange Commission on April 12, 1996.
Due to Affiliate
At September 30, 1996 and December 31, 1995, the Company has recorded $162,810
and $145,674, respectively, due to its affiliate, Momentum Software Corporation,
a Delaware corporation ("MSC"). These unsecured balances began earning interest
at 8%, compounded quarterly, on January 1, 1994. No arrangements have been made
to date as to the settlement of this balance.
Loss per Share
Loss per share is determined by dividing the net loss for the period by the
weighted average number of shares of common stock outstanding. The weighted
average number of shares outstanding for the Three months ended September 30,
1996 and 1995 respectively, is 4,405,698 and 4,099,698. The weighted average
number of shares outstanding for the Nine months ended September 30, 1996 and
1995 respectively, is 4,274,416 and 4,099,698.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
LIQUIDITY AND CAPITAL RESOURCES:
As of September 30, 1996, the Company had a working capital deficit of
$797,088, as compared to a working capital deficit of $813,858 as of December
31, 1995. The decrease in the Company's working capital, attributable to the
lack of revenues generated to date, as described below, was offset by the
issuance of stock to the Company's legal counsel in payment of $64,000 in
accrued legal fees. As of the date hereof, the only operations engaged in by the
Company are those operations being conducted by its affiliate, Momentum Software
Corporation, a Delaware corporation ("MSC"). Apart from revenues generated by
MSC and the ability of the Company to receive such revenues, the Company has no
independent source of revenue. The Company will require additional financing in
the short term to sustain any operations, apart from the operations of MSC. In
addition, and depending upon whether the Company is then engaged in any
operations, apart from MSC, the Company will require additional financing to
sustain its operations in the long term. No assurance can be given that the
<PAGE>
Company will be able to procure such financing, or if available, that such
financing would be on terms deemed favorable by the Company. In the event the
Company is unable to obtain such financing, the Company will be unable to
conduct any operating activities, apart from MSC.
As of September 30, 1996 the Company owed its Directors, Ely Eshel, Sol
Menche and Daniel Schwartz an aggregate of $529,050. The payment of principal
and accrued interest to such persons is to be made upon demand by such
individuals. The Company is not currently in a position to be able to pay such
persons the amounts owed and does not anticipate making payments to them with
respect to such obligation in the short term.
The Company is not currently in default with respect to any outstanding
loan obligations.
The Company's operations have not been significantly affected by
inflation to date, and the Company does not anticipate inflation to
significantly affect its results of operations in the near term.
RESULTS OF OPERATIONS:
Three Months Ended September 30, 1996, as compared to Three Months Ended
September 30, 1995
Commencing in June 1990, all the Company's operations were conducted
through its affiliate, MSC. Exclusive of the results of operations of MSC, the
Company did not generate any revenues for either the Three months ended
September 30, 1996 or the Three months ended September 30, 1995. The Company
incurred total costs and expenses of $3,405 and $4,334, for the Three months
ended September 30, 1996 and September 30, 1995, respectively, and interest
expenses of $10,584 and $9,664, for such periods, respectively. Accordingly, the
Company incurred a net loss of $13,990 for the Three months ended September 30,
1996, as compared to a net loss of $13,998 for the Three months ended September
30, 1995.
Nine Months Ended September 30, 1996, as compared to Nine Months Ended September
30, 1995
Commencing in June 1990, all the Company's operations were conducted
through its affiliate, MSC. Exclusive of the results of operations of MSC, the
Company did not generate any revenues for either the Nine months ended September
30, 1996 or the Nine months ended September 30, 1995. The Company incurred total
costs and expenses of $15,918 and $17,283, for the Nine months ended September
30, 1996 and September 30, 1995, respectively, and interest expenses of $31,312
and $28,560, for such periods, respectively. Accordingly, the Company incurred a
net loss of $47,230 for the Nine months ended September 30, 1996, as compared to
a net loss of $45,843 for the Nine months ended September 30, 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed by the Registrant for the
quarter ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOMENTUM SOFTWARE CORPORATION
By: /s/ Ely Eshel
-------------------------
Ely Eshel, President and Chief
Executive Officer
Dated: November 11, 1996
By: /s/ Daniel Schwartz
-------------------------------
Daniel Schwartz, Secretary,
Treasurer and Principal
Financial Officer
Dated: November 11, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JAN-30-1996 SEP-30-1996
<CASH> 346 346
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 346 346
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 346 346
<CURRENT-LIABILITIES> 797,434 797,834
<BONDS> 0 0
0 0
0 0
<COMMON> 4,046 4,406
<OTHER-SE> (801,494) (801,494)
<TOTAL-LIABILITY-AND-EQUITY> 346 346
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 3,405 15,918
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 10,584 31,312
<INCOME-PRETAX> (13,990) (47,230)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (13,990) (47,230)
<EPS-PRIMARY> 0 (.01)
<EPS-DILUTED> 0 (.01)
</TABLE>
