SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the quarterly period ended March 31, 1997
Commission file number 1-10751
OBJECTSOFT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-3091075
(State of incorporation) (IRS Employer ID number)
CONTINENTAL PLAZA III, 433 HACKENSACK AVENUE
HACKENSACK, NJ 07601
(Address of principal executive offices) (Zip Code)
(201)343-9100
(Registrant's telephone number)
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 the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No__.
(Applicable only to Corporate Issuers)
Indicate the number of shares outstanding of each of the
issuer's classes of common equity, as of the last practicable
date.
Class May 15, 1997
Common Stock, $.0001 par value 4,061,676
Redeemable Class A Warrants 1,327,500
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OBJECTSOFT CORPORATION
INDEX
Page #
Part I. Financial Information
Item 1. Financial statements
Condensed Balance Sheets- 1
March 31, 1997 and December 31, 1996
Condensed Statements of Operations
Three Months Ended March 31, 1997
and 1996 2
Condensed Statements of Cash Flows
Three Months Ended March 31, 1997
and 1996 3
Notes to Condensed Financial Statements 4
Item 2 Management's Discussion and Analysis
of Financial Condition and
Results of Operations 6
Part IIOther Information
Item 6.Exhibits and reports on Form 8-K 9
Signatures 10
Exhibit index 11
Exhibit Exhibit 27, Article 5 Financial
Data Schedule 12
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PART I Financial information
<TABLE>
OBJECTSOFT CORPORATION
CONDENSED BALANCE SHEETS -- MARCH 31, 1997 (Unaudited)
AND DECEMBER 31, 1996
<CAPTION>
Mar 31, Dec 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $873,384 $4,039,358
Marketable securities 2,000,000
Accounts receivable 76,590 5,900
Notes and loan receivable-
officer shareholder 637,500
Prepaid expenses and other
current assets 279,450 180,463
------------ ------------
Total current assets 3,866,924 4,225,721
Equipment, at cost, net of
accumulated depreciation 491,395 457,848
Capitalized software and courseware 149,011 168,118
Other assets 115,576 130,474
------------ ------------
T O T A L $4,622,906 $4,982,161
============ ============
LIABILITIES
Current liabilities
Current portion of obligations
under capitalized leases $45,257 $45,740
Accounts payable 200,411 57,309
Accrued liabilities 78,677 101,872
Other current liabilities 13,223 9,785
------------ ------------
Total current liabilities 337,568 214,706
------------ ------------
Obligations under capitalized leases 31,183 38,335
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value; authorized
20,000,000 shares; issued and
outstanding 4,061,676 shares as of
March 31, 1997 and 4,022,676 shares
as of December 31, 1996 406 402
Additional paid-in capital 6,917,864 6,878,868
Accumulated deficit (2,664,115) (2,150,150)
------------ ------------
Total stockholders' equity 4,254,155 4,729,120
------------ ------------
T O T A L $4,622,906 $4,982,161
============ ============
-1-
</TABLE>
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<TABLE>
OBJECTSOFT CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
UNAUDITED
<CAPTION>
1997 1996
____________ ____________
<S> <C> <C>
Revenues:
Consulting $47,529 $91,931
Training 23,398
Rental income 90,270
Interest and dividend income 94,786
------------ ------------
Total revenues 232,585 115,329
------------ ------------
Expenses:
Cost of Services 226,138 35,220
Research and development 98,615
General and administrative 418,077 145,785
Interest expense 3,720 450
------------ ------------
Total expenses 744,750 181,455
------------ ------------
NET (LOSS) ($513,965) ($66,126)
------------ ------------
NET (LOSS) PER SHARE ($0.13) ($0.03)
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 4,036,110 2,538,083
============ ============
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</TABLE>
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<TABLE>
OBJECTSOFT CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
UNAUDITED
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) ($513,965) ($66,126)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Depreciation and amortization 78,366 21,457
Changes in operating assets and liabilities:
liabilities:
(Increase) decrease in:
Accounts receivable (70,690) (15,807)
Other current assets (98,987) (11,181)
Other assets 14,898 15,940
Increase (decrease) in:
Accounts payable 143,102 32,978
Accrued expenses and
other liabilities (19,757) (61,967)
Accrued officer compensation 66,667
------------ ------------
Net cash used in operating activities (467,033) (18,039)
------------ ------------
Cash flow from investing activities:
Capital expenditures (79,026) (43,000)
Capitalized software and courseware (13,780)
Investment in marketable securities (2,000,000)
Increase in notes and loan
receivable officer shareholder (637,500)
------------ ------------
Net cash (used in) investing activities (2,730,306) (43,000)
------------ ------------
Cash flow from financing activities
Dividends (3,125)
Proceeds from exercise of warrants
and issuance of 39,000 shares 39,000
Principal payments on obligations
under capital leases (7,635) 225
------------ ------------
Net cash provided by financing activities 31,365 (2,900)
------------ ------------
NET (DECREASE) IN CASH (3,165,974) (63,939)
Cash, beginning of period 4,039,358 63,995
------------ ------------
Cash, end of period $873,384 $56
============ ============
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest expense paid 3,720 450
============ ============
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</TABLE>
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OBJECTSOFT CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information, the
instructions to Form 10-QSB and item 310 (b) of Regulation
SB. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair
presentation have been included. For further information,
refer to the Financial Statements and footnotes thereto
included in the Company's Registration Statement and
Prospectus and Form 10-KSB (for the year ended December 31,
1996) as filed with the Securities and Exchange Commission.
NOTE B -- LOSS PER SHARE
The loss per share amounts in the statement of operations
have been computed in accordance with a Staff Accounting
Bulletin (SAB) of the Securities and Exchange Commission.
According to the SAB, common stock and common stock warrants
issued are to be treated as common stock equivalents
outstanding for all periods presented if such common stock
was issued or such common stock warrants may be exercised,
at a price substantially below the public offering price.
Net loss per share was computed based on the weighted
average number of shares of common stock outstanding during
the period and the net loss for the period ending March 31,
1996 was increased by dividends accruing on the cumulative
preferred stock. Prior to November 13, 1996, certain shares
of common stock and common stock equivalents were issued and
in accordance with certain rules of the Securities and
Exchange Commission all such shares of common stock and
common stock equivalents were considered outstanding through
March 31, 1996. Fully diluted net loss per share is not
shown since it would be anti-dilutive.
-4-
<PAGE>
NOTE C -- NOTES AND LOAN RECEIVABLE OFFICER SHAREHOLDER
In January 1997, with the approval of the board of
directors, the Company loaned $440,000 to the Company's
chairman of the board. The loan which is unsecured, bears
interest at 8% per annum and is due in November 1997. The
chairman of the board used the proceeds for a block purchase
of 80,000 shares of the Company's common stock from the
market maker, who was also the underwriter of the Company's
IPO, in an open market transaction. In February 1997, the
Company loaned the chairman of the board an additional
$197,500 under similar terms.
-5-
<PAGE>
OBJECTSOFT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Three Months Ended March 31, 1997 Compared With Three Months
Ended March 31, 1996
Special Note Regarding Forward-Looking Statements
A number of statements contained in this filing are forward-
looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied in the applicable
statements. These risks and uncertainties include but are
not limited to the recent establishment of new business
divisions; dependence on new untested product; risks
associated with the marketing of kiosks and expansion of
services; risks related to technological factors; potential
manufacturing difficulties; dependence on certain third
parties and on the Internet; limited customer base; risk of
system failure, security risks and liability risks; and
other risks described in the Company's Prospectus dated
November 12, 1996.
The results of operations for the three months ended March
31, 1997 are not necessarily indicative of the results that
may be expected for any other interim period or for the
fiscal year ending December 31, 1997.
Net revenue for the three months ended March 31, 1997
increased by 101.7% over the three months ended March 31,
1996 (from $115,329 to $232,585). Revenue for the three
months increased due to interest and dividend income earned
on short term investments and revenue received from the New
York City Kiosk Demonstration Program. This was offset by a
reduction in consulting and training revenue as the Company
continued its shift away from fee-based consulting, training
and custom development activities and redirected its
resources towards the development of transactional, fee-
based and advertising-supported products and services.
Revenue changes were not a result of increases or decreases
in prices.
Cost of services for the three months ended March 31, 1997
increased by 542.1% over the three months ended March 31,
1996 (from $35,220 to $226,138) due to higher personnel
expenses and kiosk expenses.
Research and development expenses for the three months ended
March 31, 1997 compared to the three months ended March 31,
1996 increased to $98,615 from zero due to the expensed
development costs for the SmartStreet(TM) operations.
-6-
<PAGE>
General and administrative expenses for the three months
ended March 31, 1997 increased by 186.8% over the three
months ended March 31, 1996 (from $145,785 to $418,077) due
principally to increases in salaries and personnel related
expenses, professional fees and insurance for directors and
officers.
The net loss for the three months ended March 31, 1997
compared to the three months ended March 31, 1996 increased
to $513,965 from $66,126. This change is primarily due to
increases in costs associated with the Company's newer
emphasis on transactional and advertising-supported products
and services, an increase in research and development
expenses and an increase in general and administrative
expenses due to higher costs associated with being a public
company, and to support the redirection in revenue sources.
Liquidity and Capital Resources
For the three months ended March 31, 1997 the Company
incurred a net loss of $513,965. The accumulated deficit
increased to $2,664,115 as the Company continues to incur
operating losses as expenses exceed revenue. The Company
had working capital of $3,529,356 as of March 31, 1997 as
compared to $4,011,015 as of December 31, 1996, or a
decrease of $481,659. Capital expenditures and capitalized
software amounted to $92,806.
In November 1996, the Company completed the sale in a public
offering of 1,366,050 Units, from which it received net
proceeds of approximately $5,465,000. Of such amount,
approximately $1,583,000 was applied to the repayment of
certain bridge loans and redemption of Preferred Stock. The
Company expects to fund the deployment of additional
SmartStreet(TM) kiosks in New York City, and make kiosk
related acquisitions from available working capital
and from funds that will be derived from future operating
revenues. However, there can be no assurance that future
revenues will be generated in sufficient amounts
or that additional funds will not be required for the expansion
of operations. The Company intends to lease equipment whenever
possible on acceptable terms.
On May 5, 1997, the Company and InteractiVisions, Inc.
("InteractiVisions") signed a letter of intent which
contemplates the acquisition of all the outstanding stock of
InteractiVisions in exchange for the issuance of 600,000
shares of the Company's Common Stock, subject to certain
adjustments. Simultaneous with the signing of the letter of
intent, the Company loaned InteractVisions $250,000, payable
60 days after the termination of the letter of intent,
together with interest at the prime rate plus 3 points.
-7-
<PAGE>
The rate of inflation was insignificant during the quarter
ended March 31, 1997. In the past, the effects of inflation
on personnel costs have been offset by the Company's ability
to increase its charges for services rendered. The Company
anticipates that it will be able to continue to do so in the
near future. The Company continualy reviews its costs in
relation to the pricing of its products and services.
The Company anticipates that its existing working capital
will be sufficient to fund its operations at least through
the end of 1997.
-8-
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit 27- Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K
during the quarter ended March 31, 1997.
-9-
<PAGE>
SIGNATURE
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.
OBJECTSOFT CORPORATION
BY /s/ David E. Y. Sarna
David E. Y. Sarna, Co-Chief
Executive Officer and
Secretary
Date: May 15, 1997
-10-
<PAGE>
OBJECTSOFT CORPORATION
Exhibit Index
Exhibit Number Page #
27 Financial Data Schedule 9
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 873,384
<SECURITIES> 2,000,000
<RECEIVABLES> 76,590
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,866,924
<PP&E> 665,480
<DEPRECIATION> 174,085
<TOTAL-ASSETS> 4,622,906
<CURRENT-LIABILITIES> 337,568
<BONDS> 0
0
0
<COMMON> 406
<OTHER-SE> 6,917,864
<TOTAL-LIABILITY-AND-EQUITY> 4,622,906
<SALES> 232,585
<TOTAL-REVENUES> 232,585
<CGS> 0
<TOTAL-COSTS> 744,750
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (513,965)
<INCOME-TAX> (513,965)
<INCOME-CONTINUING> (513,965)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (513,965)
<EPS-PRIMARY> (.013)
<EPS-DILUTED> (.013)
</TABLE>
