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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): March 5, 1998
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 (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) No.)
One Innovation 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)
Total Number of Sequentially Numbered Pages 8.
Exhibit Index Appears on Page 4.
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ITEM 5. OTHER EVENTS.
On March 5, 1998, 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 March 5, 1998.
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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: March 6, 1998 By: /s/ Paul J. Pedevillano
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Paul J. Pedevillano,
Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION PAGE NO.
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99.1 Press Release of the Company dated March 5, 1998. 5
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
SYSTEMSOFT(R) ANNOUNCES Q4 AND FISCAL 1998 FINANCIAL RESULTS
SystemSoft Also Announces Filing of Securities Class Action Suit
NATICK, Mass., -- March 5, 1998 -- SystemSoft(R) Corp. (NASDAQ: SYSF)
today reported financial results for its 1998 fourth quarter and fiscal year
ended January 31, 1998.
Revenue for the fourth quarter of fiscal 1998 was $4.0 million, a
decrease of 67 percent from $12.0 million in the same period last year. In the
fourth quarter, SystemSoft recorded a charge totaling $12.9 million. This charge
was primarily related to the impaired realizability of certain prepaid financial
obligations and costs related to the write-down of previously acquired and
developed technology. The charge was required due to the significant fourth
quarter revenue shortfall and reduced expectations for certain products.
After accounting for the charge, SystemSoft posted a net loss for the
fourth quarter of $23.4 million or ($0.88) per basic share, compared to a net
loss of $42.1 million or ($1.78) per basic share after accounting for acquired
in-process R&D and other charges primarily in connection with the acquisition of
Radish Communications for the fourth quarter of fiscal 1997. Before the charge
in the fourth quarter of fiscal 1998, SystemSoft posted a loss for the quarter
of $10.5 million or ($0.40) per basic share, compared to income of $2.0 million
or $0.08 per basic share a year ago.
For the fiscal year 1998, total revenue was $42.6 million, an increase
of 7.4 percent over the $39.7 million recorded in the previous fiscal year.
After accounting for the charge, SystemSoft reported a net loss of $19.7 million
or ($0.76) per basic share for the year, compared to a net loss of $37.6 million
or ($1.70) per basic share for the previous fiscal year after accounting for
acquisition costs and other charges. Prior to the charges, SystemSoft reported a
net loss of $6.8 million or ($0.26) per basic share for fiscal 1998, compared to
net income of $6.4 million or $.26 per basic share in the previous fiscal year.
At January 31, 1998, SystemSoft had cash of $10.8 million and working capital of
$14.5 million.
SystemSoft also announced that it, among others, has been named as a
defendant in a securities class action lawsuit filed in the United States
District Court for the District of Massachusetts. The complaint alleges, among
other things, that the defendants made misstatements to the investing public.
SystemSoft believes the allegations in the complaint are without merit and
intends to vigorously contest them.
Several factors contributed to the fourth quarter revenue shortfall.
The principal factors were: reduced purchasing commitments by Asia-Pacific
(APAC) OEMs fueled by recent regional economic issues that also appear to be
slowing industry growth more broadly, significant turnover in the company's US
sales force, and the continued long implementation cycles for the SystemWizard
product family.
In addition, SystemSoft said that upon a further review of its
previously announced preliminary results, certain anticipated tax benefits were
not recorded and previously recorded deferred tax assets were reduced, resulting
in a larger net loss for the quarter.
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"While the fiscal fourth quarter results were obviously disappointing,
we did have several bright spots," said Robert F. Angelo, chairman and CEO of
SystemSoft. "Deb Besemer, formerly of Lotus, joined us on December 1 as our new
president and Chief Operating Officer. We also gained additional market
validation for our SystemWizard technology including a second user survey that
revealed high marks for usability, and recognition in February 1998 as a Call
Center Magazine "Product of the Year."
"We are focused on rebuilding the company to profitability and healthy
revenue growth over the next several quarters," said Besemer. "There are no
quick fixes. The key components of our efforts are to continue rebuilding our US
sales force, ensure the success of our existing customers with the
implementation of our products and investigate new markets and routes to those
markets. We have a strategic and financial plan against which we will measure
our progress and a tactical plan designed to get us there from where we are
today."
ABOUT SYSTEMSOFT
SystemSoft is a leading worldwide provider of system-level,
connectivity and problem-resolution software. Founded in 1990, SystemSoft
licenses its products primarily to Original Equipment Manufacturers (OEMs). Its
clients include Acer, AST Computer, Compaq (NYSE:CPQ), Dell (NASDAQ:DELL),
Gateway 2000 (NYSE:GTW), Hewlett-Packard (NYSE:HWP), Hitachi, IBM (NYSE:IBM),
Intel (NASDAQ:INTC), Micron Electronics (NASDAQ:MUEI), Packard Bell NEC, Sykes
Enterprises (NASDAQ:SYKE) and Toshiba. Information on SystemSoft products and
services is available on the World Wide Web at http://www.systemsoft.com.
# # #
Any statements that are not historical facts contained in this release
(including statements regarding future plans and goals for the Company) are
forward looking statements that involve risks and uncertainties, including but
not limited to those relating to the successful hiring of additional sales
personnel, product demand, pricing, market acceptance, the effect of economic
conditions particularly in the Asia-Pacific region, 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.
Information on SystemSoft products and services is available on the World Wide
Web at http://www.systemsoft.com.
SystemWizard, CardWizard and CardWorks are trademarks and SystemSoft is a
registered trademark of SystemSoft Corp.
For more information, contact:
John Ambrose/Melissa Crowe Tim Hurley/Sara Buda
SystemSoft Corporation Copithorne & Bellows
508/651-0088 617/450-4300
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SYSTEMSOFT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, TWELVE MONTHS ENDED JANUARY 31,
In Thousands, except per share data 1998 1997 1998 1997
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 3,700 $ 10,590 $ 37,897 $ 31,249
Engineering services 308 1,429 4,725 8,419
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Total revenues 4,008 12,019 42,622 39,668
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Cost of revenues:
Software license fees 1,361 823 6,664 3,405
Engineering services 2,027 1,049 5,749 3,668
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Total cost of revenues 3,388 1,872 12,413 7,073
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Gross profit 620 10,147 30,209 32,595
Operating expenses:
Research and development 3,184 2,580 12,860 8,392
Sales and marketing 5,136 3,828 14,908 11,462
General and administrative 2,285 1,117 7,355 3,499
Restructuring and other charges 12,907 - 12,907 -
In process R&D - 46,456 - 46,456
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Total operating expenses 23,512 53,981 48,030 69,809
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Loss from operations (22,892) (43,834) (17,821) (37,214)
Interest income / (expense), net (7) 84 146 390
Foreign exchange loss (107) (74) (20) (125)
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Loss before provision for income taxes (23,006) (43,824) (17,695) (36,949)
Provision for / (benefit from) income
taxes 434 (1,714) 2,034 692
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Net loss ($23,440) ($42,110) ($19,729) ($37,641)
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Basic and diluted loss per share ($ 0.88) ($ 1.78) ($ 0.76) ($ 1.70)
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Weighted average shares outstanding 26,550 23,675 26,035 22,207
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</TABLE>
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SYSTEMSOFT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31, January 31,
In Thousands 1998 1997
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<S> <C> <C>
ASSETS
Cash and marketable securities $ 10,764 $ 11,909
Accounts receivable, net 6,328 12,353
Receivable from related party - 1,466
Prepaid royalties 2,554 -
Other current assets 2,727 2,444
Deferred income taxes - 2,528
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Total current assets 22,373 30,700
Property and equipment, net 6,807 4,936
Purchased software costs, net 3,012 3,747
Software development costs, net 547 1,368
Other assets 819 -
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Total assets $ 33,558 $ 40,751
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses and
other current liabilities 7,851 5,595
Other long-term liabilities 1,763 -
Deferred income taxes - 1,642
Common stock 268 251
Additional paid-in capital 78,813 68,671
Treasury stock (427) (427)
Warrants 3,771 3,771
Accumulated deficit (58,481) (38,752)
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Total stockholders' equity 23,944 33,514
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Total liabilities and stockholders' equity $ 33,558 $ 40,751
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</TABLE>
