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, 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 November 11, 1997 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
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
September 30, December 31,
1997 1996
------------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 163 $ 346
------------ -----------
Total current assets $ 163 $ 346
============ ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Due to shareholders(including accrued $ 559,089 $ 536,442
interest of $172,269 and $149,622 at
September 30, 1997 and December 31,1996)
Accrued professional fees 108,097 103,897
Other accrued expenses 8,207 8,818
Due to affiliate 208,340 179,851
----------- -----------
Total current liabilities 883,733 829,008
----------- -----------
Stockholders' deficit:
Common stock, $.001 par value; 6,000,000 shares authorized; 4,405,698 and
4,405,525 shares issued and outstanding at September 30, 1997
and December 31, 1996, respectively 4,406 4,406
Additional paid-in-capital 165,258 165,258
Accumulated deficit (1,053,234) (998,326)
----------- -----------
Total stockholders' deficit (883,570) (828,662)
----------- -----------
$ 163 $ 346
=========== ===========
</TABLE>
Note: See accompanying Notes to Financial Statements.
2
<PAGE>
MOMENTUM SOFTWARE CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
--------- ----------- ------------- --------
<S> <C> <C> <C> <C>
General and
administrative expenses $ 7,246 $ 3,405 $ 21,479 $ 15,918
----------- ----------- ----------- -----------
Loss from operations (7,246) (3,405) (21,479) (15,918)
Interest expense (10,946) (10,584) (33,429) (31,312)
Net loss $ (18,192) $ (13,989) $ (54,908) $ (47,230)
=========== =========== =========== ===========
Weighted average shares
outstanding 4,405,695 4,405,698 4,405,695 4,275,416
Net loss per share -- -- $ (0.01) $ (0.01)
----------- ----------- ----------- -----------
</TABLE>
Note: See accompanying Notes to Financial Statements.
3
<PAGE>
MOMENTUM SOFTWARE CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
1997 1996
-------- --------
Cash flows from operating activities
Net loss $(54,908) $(47,230)
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 22,647 22,176
Accrued professional fees 4,200 (58,000)
Other accrued expenses (612) 1,360
Payable to affiliate 28,490 17,136
-------- --------
Net cash provided by (used for)
operating activities (183) (64,558)
Cash flows from financing activities
Proceeds from issuance of common stock 0 64,000
-------- --------
Net increase (decrease) in cash (183) (558)
Cash at beginning of period 346 904
-------- --------
Cash at end of period $ 163 346
======== ========
Note: See accompanying Notes to Financial Statements.
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<PAGE>
MOMENTUM SOFTWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
The balance sheet as of September 30, 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 September 30, 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 September 30, 1997 and December 31, 1996, the Company has recorded $208,341
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 September 30,
1997 and 1996 respectively, is 4,405,698 and 4,405,698. The weighted average
number of shares outstanding for the Nine months ended September 30, 1997 and
1996 respectively, is 4,405,698 and 4,274,416.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
LIQUIDITY AND CAPITAL RESOURCES:
As of September 30, 1997, the Company had a working capital deficit of
$883,570, 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
5
<PAGE>
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, 1997 the Company owed its Directors, Ely Eshel, Sol
Menche and Daniel Schwartz an aggregate of $559,089. 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, 1997, as compared to Three Months Ended
September 30, 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
September 30, 1997 or the three months ended September 30, 1996. The Company
incurred total costs and expenses of $7,246 and $3,405, for the three months
ended September 30, 1997 and September 30, 1996, respectively, and interest
expenses of $10,947 and $10,584, for such periods, respectively. Accordingly,
the Company incurred a net loss of $18,192 for the three months ended September
30, 1997, as compared to a net loss of $13,989 for the three months ended
September 30, 1996.
Nine Months Ended September 30, 1997, as compared to Nine Months Ended
September 30, 1996
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, 1997 or the nine months ended September 30, 1996. The Company incurred total
costs and expenses of $21,479 and $15,918 for the nine months ended September
30, 1997 and September 30, 1996, respectively, and interest expenses of $33,429
and $31,312, for such periods, respectively. Accordingly, the Company incurred a
net loss of $54,908 for the nine months ended September 30, 1997, as compared to
a net loss of $47,230 for the nine months ended September 30, 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27.1 Financial Data Schedule.
6
<PAGE>
(b) No reports on Form 8-K were filed by the Registrant for the quarter
ended September 30, 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: September 11, 1997
By: /s/ Daniel Schwartz
--------------------------------------
Daniel Schwartz, Secretary, Treasurer
and Principal Financial Officer
Dated: September 11, 1997
EXHIBIT INDEX
EXHIBIT NOS. DESCRIPTION
27.1 Financial Data Schedule.
7
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 163
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 163
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 163
<CURRENT-LIABILITIES> 883,733
<BONDS> 0
0
0
<COMMON> 4,406
<OTHER-SE> (887,976)
<TOTAL-LIABILITY-AND-EQUITY> 163
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,246
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,946
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,192)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
