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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 21, 1997
SystemSoft Corporation
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(Exact name of Registrant as specified in Charter)
Delaware 0-24418 04-3121799
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(State or Other Jurisdiction of (Commission File (IRS Employer
Incorporation) Number) Identification No.)
2 Vision Drive, Natick, Massachusetts 01760
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (508) 651-0088
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(Former Name or Former Address, if Changed Since
Last Report)
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Total Number of Sequentially Numbered Pages 11.
Exhibit Index Appears on Page 4.
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ITEM 5. OTHER EVENTS.
On August 21, 1997, the Company issued a press release, a copy of which is
attached as Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Exhibit
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99.1 Press Release of the Company dated August 21, 1997.
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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 hereunto duly authorized.
SYSTEMSOFT CORPORATION
Dated: August 29, 1997 By: /s/ Paul J. Pedevillano
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Paul J. Pedevillano,
Vice President, Finance and
Chief Financial Officer
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<TABLE>
EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description Page No.
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<S> <C> <C>
99.1 Press Release of the Company dated August 21, 1997. 5
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
SYSTEMSOFT(R) ANNOUNCES FINANCIAL RESULTS
FOR SECOND QUARTER OF FISCAL 1998
Revenues Increase 39 Percent Over Previous Year
NATICK, Mass., -- Aug. 21, 1997 -- SystemSoft Corp. (NASDAQ: SYSF) today
reported financial results for its fiscal 1998 second quarter, completed July
31, 1997. The company reported its largest-ever quarterly revenues.
Revenues for the quarter were $12.9 million, an increase of 39 percent
from $9.3 million in the same period last year. Net income for the quarter was
$749,000 or $.03 per share, a decrease of 50 percent from $1.5 million or $.06
per share a year ago.
For the first six months of fiscal year 1998, SystemSoft revenues were
$25.4 million, an increase of 46 percent over $17.3 million in the comparable
period last year. Net income for the first six months of fiscal 1998 was $2.8
million, unchanged from the prior year. Earnings per share for the six-month
period were $.10 per share, versus $.11 in fiscal 1997. Per-share comparisons
are adjusted to reflect the company's two-for-one stock dividend effective July
1996.
"This quarter, SystemSoft experienced 39 percent revenue growth over the
same quarter of the prior year," said Robert F. Angelo, chairman, CEO, and
president of SystemSoft. "Since the company was founded seven and one-half years
ago, we have consistently grown in excess of 50 percent year-over-year. We
continue to have great expectations for our company that are based on our
ability to develop new technologies and license them to PC manufacturers
worldwide."
"We continue to educate ourselves and our clients on how the newest
technologies for call avoidance and call efficiency can be best applied to the
rapidly growing PC
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support cost problem," said Angelo. "During the quarter, we signed agreements
with eight new SystemWizard(TM) technology customers - far greater than the
company's publicly stated goal of one or two per quarter. New PC manufacturers
licensing SystemWizard products and technology include; Acer, Dell, Fujitsu,
Hitachi, RIOS, and Nexar. New third party service providers include CompuCom and
GE Capital.
"As important as these new relationships are, it must be noted that many
of these new contracts are pilot agreements. In these pilot agreements, both the
customer and SystemSoft plan to put forth significant resources and energy to
make the initial SystemWizard installations great successes. Therefore, in the
short term, these will not be revenue or profit producing agreements. While we
are very pleased with the number of new SystemWizard agreements completed this
quarter, the nature of the agreements has had an impact both on short-term
revenue and earnings. We anticipate that the pilot agreements will help
SystemSoft grow the SystemWizard business over the long term."
SYSTEMWIZARD ON TRACK FOR FUTURE GROWTH
"Despite these short-term obstacles, I am pleased with the progress that
we continue to make with SystemWizard," Angelo said. "Our current customers
continue to show strong support for SystemWizard. Micron, according to IDC
Research, the tenth-largest computer shipper in the U.S., confirms that
SystemWizard is having a dramatic and positive effect on customer satisfaction.
A Micron survey of their users published today by SystemSoft shows a much higher
percentage of users employing SystemWizard and a problem-resolution success rate
of more than 50 percent - more than doubling our target design objectives for
the product. We are very pleased that Micron has expanded their SystemWizard
offering and plans to ship on all platforms beginning in September."
"During the quarter, Packard Bell NEC, the second-largest shipper in the
U.S., began shipping SystemWizard on additional models, and they have licensed
our latest release of SystemWizard at a higher per-unit royalty than in their
original agreement.
"The new SystemWizard technology agreements with Acer, according to IDC
the number-six worldwide portable shipper; Dell, the number-seven worldwide
portable
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shipper; Fujitsu, the number-five worldwide portable shipper; and Hitachi, the
number-seven U.S. shipper, will bring SystemWizard to the mobile-computing
platform. According to IDC Research, these customers account for more than 15
percent of worldwide mobile PC shipments.
"SystemSoft will continue with the pilot program strategy in an
effort to position the technology and the company for its greatest long-term
potential. We expect the short-term impact on quarter to quarter revenue and
earnings from this pilot program to continue for the next two quarters."
PLATFORM PRODUCTS CONTINUE TO EXCEL
The company reported continued strength in its platform-products
business. "Our core system software business - PC Card software, BIOS, and power
management continues to grow," Angelo said. "This is the company's core business
- - system software for notebook manufacturers - and we continue to be strong in
this segment. We continue to anticipate significant royalty streams from this
business." Highlights for the quarter included:
- CardWorks(TM) for Windows(R) 95 and CardWizard(TM) for Windows NT 4.0
begin shipping on IBM ThinkPad 380 series of notebook PCs.
- MiTAC International's MiTAC 5027 notebook computer - equipped with
SystemSoft's BIOS, power-management, hot docking, and PC Card
software - won BYTE Magazine's "Best Portable" award at the Computex
trade show in Taipei.
- Hitachi PC Corporation, the world's fastest-growing notebook
manufacturer, began shipping SystemSoft's BIOS, power-management,
and other system-level software with its acclaimed VisionBook Plus
computers.
- Record number of new design wins in the Asia/Pacific region following
the company's early support for new Intel chipsets and advanced
Microsoft software standards.
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UNIVERSAL SERIAL BUS (USB) BUSINESS GROWING RAPIDLY
During the quarter, SystemSoft expanded its market-leading USB product
family with integrated suites for manufacturers of USB-compatible scanners and
un-interruptible power supplies (UPS). These are comprehensive firmware/software
solutions that improve time-to-market for peripheral manufacturers.
In addition, Texas Instruments agreed to bundle SystemSoft's USB Monitor
Software Suite with its TUSB2140 hub controller evaluation kit. The agreement
enables monitor manufacturers to procure a single hardware/firmware package that
provides full USB compatibility at a low cost.
"We're pleased with the breadth of our USB products," said Angelo.
"According to Dataquest, the market for USB-compliant peripherals is expected to
grow rapidly. In fact, Dataquest predicts that virtually 40 percent of PCs
shipped this year and virtually all PCs shipped next year will support USB
peripherals. Our offerings in this area leave us well positioned to capitalize
on this market."
ABOUT SYSTEMSOFT
SystemSoft is the pioneer in system-level software, connectivity, and
problem-resolution technologies and the maker of SystemWizard call-avoidance
software and CardWizard PC Card troubleshooting and configuration software.
Other products include a family of Universal Serial Bus firmware, ACPI firmware,
Plug-and-Play software, power-management software, and BIOS. SystemSoft licenses
its products primarily to Original Equipment Manufacturers (OEMs), including
manufacturers of PCs, and independent software and hardware vendors. Its
customers include Acer, Apple Computer, AST Computer, Compaq, Digital Equipment
Corporation, Gateway 2000, Hewlett-Packard, Hitachi, IBM, Intel, Microsoft,
Motorola, NEC, and Toshiba.
Based in Natick, Mass., SystemSoft employs more than 250 at its
headquarters and in offices in Boulder, Colo.; Santa Clara, Calif.; Oxnard,
Calif.; Yokohama, Japan; and Taipei, Taiwan.
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# # #
Any statements concerning, among other things, future revenues and earnings,
plans and objectives of management for future operations, and future economic
performance that are not historical facts contained in this release are forward
looking statements. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from expectations, including but
not limited to those relating to variances between actual and estimated costs
and expenses, product demand, pricing, market acceptance, the effect of economic
conditions, intellectual property rights and litigation and the outcome of
governmental proceedings, competitive products, risks in product and technology
development, the results of financing efforts, the ability to complete
transactions, and other risks identified in the Company's Securities and
Exchange Commission filings including those risks identified in the Company's
annual report on SEC form 10-k for the fiscal year ended January 31, 1996.
SystemWizard, CardWizard and CardWorks are trademarks and SystemSoft is a
registered trademark of SystemSoft Corp. Other product names used in this
publication are for identification purposes only and may be trademarks of their
respective companies.
Information on SystemSoft products and services is available on the World Wide
Web at http://www.systemsoft.com.
For more information, contact:
SystemSoft Corporation Copithorne & Bellows
Paul Sereiko/Paul Pedevillano Sara Buda/Tim Hurley
508/651-0088 617/450-4300
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<TABLE>
SYSTEMSOFT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended July 31, Six Months Ended July 31,
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In Thousands, except per share data 1997 1996 1997 1996
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(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Software license fees $10,414 $ 5,454 $21,073 $10,809
Engineering services 2,101 3,155 3,347 5,390
Related party 375 682 815 1,140
Other 15 0 146 2
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Total revenues 12,905 9,291 25,381 17,341
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Cost of revenues:
Software license fees 1,351 577 2,322 980
Engineering services 1,110 951 2,256 1,704
Related party 362 208 676 423
Other 8 0 9 0
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Total cost of 2,831 1,736 5,263 3,107
revenues
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Gross profit 10,074 7,555 20,111 4,234
Operating
expenses:
Research and development 3,208 1,933 6,343 3,619
Sales and marketing 3,619 2,670 6,525 5,085
General and administrative 2,238 745 3,224 1,434
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Total operating 9,065 5,348 16,092 10,138
expenses
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Income from operations 1,009 2,207 4,026 4,096
Interest income, 75 106 104 204
net
Foreign exchange gain (loss) 34 (23) 2 (44)
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Income before provision for income 1,118 2,290 4,132 4,256
taxes
Provision for income taxes 369 801 1,364 1,489
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Net income $ 749 $ 1,489 $ 2,768 $ 2,767
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Net income per common share (1) $ 0.03 $ 0.06 $ 0.10 $ 0.11
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Weighted average number of common and
common equivalent shares outstanding (1) 27,149 25,031 27,003 24,098
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(1) Per share data has been retroactively adjusted for 2:1 stock dividend that
was issued on July 17, 1996
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<TABLE>
SYSTEMSOFT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
July 31, January 31,
In Thousands 1997 1997
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(unaudited)
<S> <C> <C>
ASSETS
Cash and marketable securities $ 12,449 $ 11,909
Accounts receivable, net 14,679 12,353
Receivable from related party 1,642 1,466
Prepaid royalties 7,273 -
Prepaid and other current assets 3,412 2,444
Deferred income taxes 2,528 2,528
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Total current assets 41,983 30,700
Property and equipment, net 5,961 4,936
Purchased software costs, net 5,507 3,747
Software development costs, net 1,340 1,368
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Total assets $ 54,791 $ 40,751
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses and
other current liabilities 7,292 5,595
Deferred income taxes 1,642 1,642
Common stock 255 251
Additional paid-in capital 78,242 68,671
Warrants 3,771 3,771
Treasury stock (427) (427)
Accumulated earnings (deficit) (35,984) (38,752)
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Total stockholders' equity 45,857 33,514
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Total liabilities and stockholders' equity $ 54,791 $ 40,751
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