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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 March 31, 1997
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)
777 Terrace Avenue
Hasbrouck Heights, New Jersey 07604
(Address of principal executive office including zip code)
201-288-5373
(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 May 12, 1997 there were issued and outstanding 4,405,698 shares of the
Registrant's Common Stock.
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PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
MOMENTUM SOFTWARE CORPORATION
BALANCE SHEET
(Unaudited)
March 31, December 31,
1997 1996
------------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 641 $ 346
------------------ ------------------
$ 641 $ 346
================== ==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Due to shareholders(including accrued $ 543,991 $ 536,442
interest of $175,171 and $149,622 at
March 31, 1997 and December 31,1996)
Accrued professional fees 105,097 103,897
Other accrued expenses 9,885 8,818
Due to affiliate 189,348 179,851
------------------ ------------------
Total current liabilities 848,321 829,008
------------------ ------------------
Stockholders' deficit:
Common stock, $.001 par value; 6,000,000 shares authorized; 4,405,698 and
4,405,525 shares issued and outstanding at March 31, 1997
and December 31, 1996, respectively 4,406 4,406
Additional paid-in-capital 165,258 165,258
Accumulated deficit (1,017,344) (998,326)
------------------- ------------------
Total stockholders' deficit (847,680) (828,662)
------------------ ------------------
$ 641 $ 346
================== ==================
</TABLE>
Note: See accompanying Notes to Financial Statements.
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MOMENTUM SOFTWARE CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------------- ----------------
<S> <C> <C>
General and administrative expenses $ 7,872 $ 6,393
--------------- ----------------
Loss from operations (7,872) (6,393)
Interest expense (11,146) (10,304)
Net loss $ (19,018) $ (16,697)
=============== ================
Net loss per share -- --
Average number of common shares outstanding 4,405,698 4,149,698
</TABLE>
Note: See accompanying Notes to Financial Statements.
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MOMENTUM SOFTWARE CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
--------------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (19,018) $ (16,697)
Adjustments to reconcile net loss to net
cash provided by (used for) operating
activities: - -
Increase (decrease) in cash flows due to
changes in:
Interest payable to shareholders 7,549 7,392
Accrued professional fees 1,200 2,000
Other accrued expenses 1,067 500
Payable to affiliate 9,497 6,412
--------------- ----------------
Net cash provided by (used for)
operating activities 295 (393)
Cash at beginning of period 346 904
--------------- ----------------
Cash at end of period $641 $511
=============== ================
</TABLE>
Note: See accompanying Notes to Financial Statements.
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MOMENTUM SOFTWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
The balance sheet as of March 31, 1997 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
March 31, 1997 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, 1996 contained in
the Company's Annual Report on Form 10-K, which was filed with the Securities
and Exchange Commission on March 31, 1997.
Due to Affiliate
At March 31, 1997 and December 31, 1996, the Company has recorded $189,348 and
$179.851, 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 March 31, 1997
and March 31, 1996 respectively, is 4,405,698 and 4,149,698.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
LIQUIDITY AND CAPITAL RESOURCES:
As of March 31, 1997, the Company had a working capital deficit of
$847,680, as compared to a working capital deficit of $828,662 as of December
31, 1996. The decrease in the Company's working capital is attributable to the
lack of revenues generated to date, as described below. 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 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.
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As of March 31, 1997 the Company owed its Directors, Ely Eshel, Sol
Menche and Daniel Schwartz an aggregate of $543,991. 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 March 31, 1997, as compared to Three Months Ended March 31,
1996
Commencing in June 1990, all the Company's operations have been
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
March 31, 1997 or the three months ended March 31, 1996. The Company incurred
total costs and expenses of $7,872 and $6,393, for the three months ended March
31, 1997 and March 31, 1996, respectively, and interest expenses of $11,146 and
$10,304, for such periods, respectively. Accordingly, the Company incurred a net
loss of $19,018 for the three months ended March 31, 1997, as compared to a net
loss of $16,697 for the three months ended March 31, 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27.1 Financial Data Schedule.
(b) No reports on Form 8-K were filed by the Registrant for the
quarter ended March 31, 1997.
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: May 13, 1997
By: /s/ Daniel Schwartz
Daniel Schwartz, Secretary,
Treasurer and Principal
Financial Officer
Dated: May 13, 1997
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EXHIBIT INDEX
EXHIBIT NOS. DESCRIPTION
27.1 Financial Data Schedule.
7
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 641
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 641
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 641
<CURRENT-LIABILITIES> 848,321
<BONDS> 0
0
0
<COMMON> 4,406
<OTHER-SE> (8,52,086)
<TOTAL-LIABILITY-AND-EQUITY> 641
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,872
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,146
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,018)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
