UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 0-25612
STARBASE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0567363
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
18872 MacArthur Boulevard
Irvine, California 92612
(Address of principal executive offices) (Zip code)
(714) 442-4400
(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 the registrant was
required to file such reports), and (2) been subject to such filing requirements
for the past 90 days. Yes |X| No |_|
Number of shares outstanding as of July 30, 1997: Common Stock: 15,044,867
Transitional Small Business Disclosure Format: Yes |_| No |X|
<PAGE>
STARBASE CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets at June 30, 1997 (Unaudited) and
March 31, 1997 3
Statements of Operations (Unaudited) for the three month
period ended June 30, 1997 and 1996 4
Statements of Cash Flows (Unaudited) for the three month
period ended June 30, 1997 and 1996 5
Notes to Financial Statements (Unaudited) 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
ITEM 5. Other Information 13
ITEM 6. Exhibits and Reports on Form 8-K 13
2
<PAGE>
PART I
ITEM 1
FINANCIAL STATEMENTS
STARBASE CORPORATION
(a development stage company)
BALANCE SHEETS
(in thousands, except number of shares and par values)
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
--------------- ---------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,296 $ 2,722
Accounts receivable, net of allowances of $51 and $65 157 118
Notes and other receivables 144 83
Prepaid expenses and deferred charges 205 312
Inventories 21 34
--------------- ---------------
Total current assets 1,823 3,269
Property and equipment, net 547 524
Note receivable from officer 76 76
Other non-current assets 19 7
--------------- ---------------
Total assets $ 2,465 $ 3,876
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 753 $ 885
Current portion of capital lease obligation 8 -
--------------- ---------------
Total current liabilities 761 885
Long-term debt 45 -
--------------- ---------------
Total liabilities 806 885
Shareholders' equity:
Preferred stock, $.01 par value; $0 (June 30, 1997) and
$75 (March 31, 1997) liquidation value; authorized
10,000,000; issued and outstanding -0- shares (June 30, 1997)
and 25,000 (March 31, 1997) - -
Common stock, $.01 par value; authorized 50,000,000; issued and
outstanding 15,044,867 (June 30, 1997) and 13,319,487 (March 31, 150 133
1997)
Additional paid-in capital 26,788 26,805
Deficit accumulated during development stage (25,279) (23,947)
--------------- ---------------
Total shareholders' equity 1,659 2,991
--------------- ---------------
Total liabilities and shareholders' equity $ 2,465 $ 3,876
=============== ===============
<FN>
The accompanying notes are an integral part of the financial statements
</FN>
</TABLE>
3
<PAGE>
STARBASE CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Sept. 6, 1991
June 30, through
------------------------ June 30, 1997
1997 1996 (CUMULATIVE)
----------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Consulting services $ - $ - $ 4,430
Consulting services-related party - - 281
Products 268 80 2,226
License and royalty 70 129 748
Other - - 64
------------ ------------ ------------
Total revenues 338 209 7,749
Cost of Sales:
Consulting services - - 4,716
Consulting services-related party - - 289
Products, licenses and other 32 1 459
------------ ------------ ------------
Total cost of sales 32 1 5,464
------------ ------------ ------------
Gross margin 306 208 2,285
Operating Expenses:
Research and development 498 332 9,554
Selling, general and administrative 1,164 1,113 18,372
------------ ------------ ------------
Total operating expenses 1,662 1,445 27,926
------------ ------------ ------------
Operating loss (1,356) (1,237) (25,641)
Interest income 25 42 414
Other income and expense (1) (14) (20)
------------ ------------ ------------
Total interest and other income and expense 24 28 394
Loss before income taxes (1,332) (1,209) (25,247)
Provision for income taxes - 1 11
------------ ------------ ------------
Net loss $ (1,332) $ (1,210) $(25,258)
============ ============ ============
Per share data:
Loss per common share $ (0.11) $ (0.14)
============ ============
Weighted average number of
common shares outstanding 12,002 8,796
============ ============
<FN>
The accompanying notes are an integral part of the financial statements
</FN>
</TABLE>
4
<PAGE>
STARBASE CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended Sept. 6. 1991
June 30, through
------------------------------- June 30, 1997
1997 1996 (cumulative)
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (1,332) $ (1,210) $ (25,258)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 53 57 857
Provision for doubtful accounts and sales 39 27 266
returns
Loss on disposition of property, equipment and
capital lease - 6 99
Write-down of assets - - 50
Gain on debt restructuring - - (138)
Recognition of deferred income - (66) (370)
Other adjustments - - 87
Common stock to be issued for professional services - 60 -
Changes in assets and liabilities, excluding
the effect of Non-cash transactions:
Accounts receivable (78) (151) (422)
Notes and other receivables (61) (33) (215)
Inventories 13 2 (21)
Prepaid expenses and deferred charges 94 (34) (169)
Other assets 1 11 (30)
Accounts payable and accrued liabilities (132) (755) 1,342
--------------- --------------- ---------------
Net cash used by operations (1,403) (2,086) (23,922)
Cash Flows from Investing Activities:
Proceeds from disposition of property and
equipment - - 7
Capital expenditures (8) (12) (1,377)
--------------- --------------- ---------------
Net cash used by investing activities (8) (12) (1,370)
Cash Flows from Financing Activities:
Proceeds from reverse acquisition - - 1,402
Proceeds from sale of preferred stock - 1,021 7,294
Proceeds from preferred stock subscriptions - - -
Proceeds from issuance of common stock:
From stock purchase plan - - 10
From public offering - - 4,063
From private placements - 6,300 10,698
From exercise of options - 224 548
From exercise of warrants - 1,155 2,654
Proceeds from convertible subordinated notes - - 381
Proceeds from promissory notes - - 1,083
Payments on promissory notes - (107) (274)
Borrowings on line of credit - - 664
Payments on line of credit - - (664)
Payment of financing related costs (14) (938) (1,444)
Payments on capitalized lease obligations (1) - (41)
Loans from officers/directors - - 365
Repayment of loans from officers/directors - - (75)
Repayment of (disbursement of) loan to officer - - (76)
--------------- --------------- ---------------
Net cash provided (used) by financing activities (15) 7,655 26,588
--------------- --------------- ---------------
Net increase (decrease) in cash (1,426) 5,557 1,296
Cash and cash equivalents, beginning of period 2,722 1,252 -
--------------- --------------- ---------------
Cash and cash equivalents, end of period $ 1,296 $ 6,809 $ 1,296
=============== =============== ===============
<FN>
The accompanying notes are an integral part of the financial statements
</FN>
</TABLE>
5
<PAGE>
STARBASE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS
StarBase Corporation (the "Company"), a Delaware corporation, develops, markets
and supports team-oriented product development software that addresses the
evolving needs of personal computer users involved in projects requiring
substantial collaboration. StarBase was founded in 1991 to address the inability
of software development projects to deliver software products on time and within
budget, initially through the improvement of individual programmer productivity
tools. During fiscal 1994, however, The Company determined that a next
generation of individual productivity tools would not be a lasting solution to
the software productivity problem. Based on focus group studies and market
research, StarBase decided to focus entirely on the development and marketing of
software designed to increase team productivity, rather than individual
programmer productivity. The Company was reorganized in fiscal 1996 to reflect
this change in product and market focus. In line with the reorganization, the 26
person Consulting Division was discontinued.
2. BASIS OF PRESENTATION
The unaudited interim financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have not been presented. The accompanying unaudited financial statements should
be read in conjunction with the financial statements and the notes thereto
included in the StarBase Corporation report to the Securities and Exchange
Commission on Form 10-KSB, for the year ended March 31, 1997.
The interim financial statements reflect all normal recurring adjustments which
are, in the opinion of management, necessary for a fair presentation of the
Company's financial position, results of operations and cash flows for the
period presented. Certain prior period balances have been reclassified to
conform to current period classifications. The results of operations for the
three months ended June 30, 1997 are not necessarily indicative of the operating
results for a full year.
LOSS PER COMMON SHARE
Earnings per common share is calculated by dividing the net loss by the weighted
average shares of common stock outstanding excluding 1,418,638 outstanding
common shares held in escrow. Common stock equivalents are considered
anti-dilutive and are excluded from this calculation.
In February 1997, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128"). FAS
128 establishes standards for computing and presenting earnings per share
("EPS"). It replaces the presentation of primary EPS with a presentation of
basic EPS. Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. It also requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation. Diluted EPS is computed similarly to fully diluted
EPS pursuant to Accounting Principles Board Opinion No. 15. This statement is
effective for the Company beginning with its quarterly period ended December 31,
1997, earlier adoption is not permitted. Since the Company is considered a
simple capital structure for reporting EPS, the adoption of this principle is
not expected to have a material impact on reported EPS.
6
<PAGE>
STARBASE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
(In thousands)
June 30, March 31,
1997 1997
--------------- -------------
ACCOUNTS RECEIVABLE
Trade accounts receivable $ 208 $ 183
Less allowance for doubtful accounts (51) (65)
--------------- -------------
$ 157 $ 118
=============== =============
PROPERTY AND EQUIPMENT
Computer hardware $ 891 $ 888
Furniture and fixtures 237 164
Computer software 132 132
Leasehold improvements 29 29
-------------- ------------
1,289 1,213
Less accumulated depreciation and
amortization (742) (689)
-------------- ------------
$ 547 $ 524
============== ============
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade accounts payable $ 257 $ 431
Accrued professional fees 214 179
Accrued wages and bonuses 135 139
Other accrued expenses 147 136
------------- ------------
$ 753 $ 885
============= ============
4. EQUITY TRANSACTIONS
PRIVATE PLACEMENTS
The Company has authorized 50,000,000 shares of common stock and 10,000,000
shares of preferred stock with a par value of $0.01 per share. Of the preferred
stock, 2,500,000 shares have been designated as Series B Preferred Stock, of
which no shares are issued and outstanding at June 30, 1997, and 366,666 shares
have been designated as Series C Preferred Stock, of which no shares are
outstanding at June 30, 1997.
7
<PAGE>
STARBASE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
During June 1996, the private placement of Series C Preferred Stock was
completed. In this private placement, 365,496 Units were issued, each Unit
consisting of one share of Series C Preferred Stock and one non-transferable
warrant to purchase one share of common stock. The warrants are exercisable at
$2.50 per share through January 31, 1998, after which date the warrants expire.
The Series C Preferred Stock is not redeemable and has a liquidation preference
of $3.00 per share. The holders of Series C Preferred Stock are not entitled to
receive any dividends nor, except as provided by law, vote upon any matter
relating to the business or affairs of the Company or for any other purpose.
Each share of Series C Preferred Stock is convertible, at the option of the
holder, at any time into the Company's common stock, of which the conversion
rate will be determined by dividing $3.00 by the Conversion Price. The
Conversion Price shall be the lesser of (a) $3.00 per share or (b) 80% of the
average closing bid price of the common stock as reported by Bloomberg, L.P. for
shares traded in the United States for the five consecutive trading days
preceding the conversion date. At June 30, 1997, all 365,496 shares of Series C
Preferred Stock issued had been converted into 572,851 shares of common stock.
WARRANT CONVERSION
In June 1997, the Company offered, to the holders of the Company's outstanding
warrants, to exchange all issued and outstanding warrants for shares of the
Company's common stock. Each warrant holder accepting the offer by midnight,
Pacific Standard Time, on June 30, 1997, the expiration date of the offer, would
receive one share of common stock for every three warrants held. The warrants
which remain unexchanged subsequent to the expiration date of the offer will
continue under the original terms of each warrant. At June 30, 1997, 4,734,534
warrants were converted and 1,581,150 common shares had been issued upon
conversion of such warrants.
WARRANTS
Warrant activity for the three month period ended June 30, 1997 is as follows:
Warrant Price
Shares Per Share
------------------- ------------------
Outstanding at March 31, 1997 4,833,534
Exercised (converted) (4,743,534) CDN$2.51-
US$2.00
Expired -
-------------------
Outstanding at June 30, 1997 90,000
===================
8
<PAGE>
STARBASE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. SUPPLEMENTAL CASH FLOW INFORMATION
Three months
Ended June 30,
----------------------------
(In thousands) 1997 1996
------------- ------------
Interest paid $ 2 $ 17
Income taxes paid - 1
Non-cash investing and financing transactions:
Conversion of Series B Preferred Stock to
common stock - 22
Conversion of Series C Preferred Stock to
common stock (Note 4) 1 -
Conversion of promissory notes to Series C
Preferred Stock - 75
Common Stock issued in 3-for-1 warrant
conversion (Note 4) 16 -
6. COMMITMENTS AND CONTINGENCIES
There have been no other significant subsequent developments relating to the
commitments and contingencies reported on the Company's most recent Form 10-KSB.
9
<PAGE>
PART I
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenue increased in the three month period ended June 30, 1997 $129,000
or 62%, to $338,000, from $209,000 in the same three month period of the
previous year. Product revenue increased $188,000 or 235%, which was offset by
the decrease in license and royalty revenue of $59,000 or 46%. The increase in
product revenue has been favorably affected by the April 1997 release of the
StarTeam 2.1 family of products, which include enhanced security, encryption
capability across the Internet and advanced configuration management. License
and royalty revenue from the Company's Roundtable product decreased from the
same period in the prior year due the timing of royalty revenue earned. Although
the overall royalty revenue earned for the contract years which ended June 30,
1997 and June 30, 1996 remained steady at $325,000, the minimum contract amount,
a greater portion of the royalties were earned during the earlier part of the
contract year which ended June 30, 1997, thus a lesser amount was recognized
during the current quarter to reflect the annual minimum royalty.
Product revenue to date has been limited by a number of factors, including the
introductory cycle for new software development tools such as StarTeam. StarTeam
1.0 was introduced in January 1996, followed by StarTeam 2.0 in late August of
1996. Sufficient working capital was not available to support a major StarTeam
1.0 marketing and sales program. The StarTeam 1.0 marketing strategy was
therefore to sell the product to strategic customers, who, with a successful
initial experience, had the potential to generate significant additional
business. In June 1996, sufficient working capital was raised through a private
placement to support a major marketing and sales program for StarTeam 2.0.
Commercial shipments of StarTeam 2.0 and StarTeam 2.1 began in the final week
of August 1996 and April 1997, respectively. In addition, Versions 2.0 sales
commenced during the final week of December 1996.
StarTeam is a new software product line whose target market consists of
technical software professionals (developers). Marketing to technical
professionals is an educational process. In the typical sales cycle, the product
is purchased as a pilot test program, installed and evaluated on a small scale
(3-10 seats), and, if the evaluation is satisfactory, implemented on a larger
project which may involve 10 to 25 developers. Successful implementation in the
project may lead to broader acceptance within the organization. The time span
from an initial test order to implementation throughout the customer's
organization varies depending on the organization and the level of
standardization within the individual company, but in very large companies, may
take 6 months to a year.
Gross profit increased in the first quarter of fiscal 1998 $98,000 or 47%, to
$306,000, from $208,000 in the same quarter of the previous year chiefly due to
the increase in product sales. Product cost of sales, as a percentage of
revenues, increased from the same period in the prior year due to the higher
percentage of product revenue generated by product sales, as opposed to
maintenance contracts, during the quarter ended June 30, 1997.
Cost of products consists primarily of manufacturing and related costs such as
media, documentation, product assembly and third party royalties. The Company
out-sources manufacturing for all software products, with the exception of the
Company's Roundtable product.
There was no consulting service revenue or cost of service revenue during the
three months ended June 30, 1997 or for the same period in the previous year due
to the discontinuation of the Company's Consulting Division.
10
<PAGE>
Operating expenses increased by approximately $217,000 or 15% from the same
quarter in the previous year. This increase was primarily due to increased
research & development efforts, as well as increased product sales efforts
related to the market introduction of the StarTeam 2.1 family of products (the
ITE product line). Early in the fiscal year that ended March 31, 1997, the
Company was focused on strengthening its sales and marketing efforts, which
included filling key marketing and sales positions as well as increased
promotional activities. At June 30, 1996, the Company had 32 employees, which
consisted of eight in sales & marketing, 16 in research & development and eight
in general & administrative. At June 30, 1997, the Company had 44 employees,
which consisted of 13 in sales & marketing, 23 in research & development and
eight in general & administrative.
RESEARCH AND DEVELOPMENT EXPENSES. StarBase continues to make significant
investments in research and development intended to bring its products to market
and to support existing products. Overall research and development expenses
increased over the same period in the prior year $166,000 or 50% as a result of
the increase in development staff. Research & development staff increased from
16 at June 30, 1996 to 23 at June 30, 1997. As a result, compensation related
expenses and recruiting costs increased approximately $127,000 and $35,000,
respectively, from the three month period ended June 30, 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the three month period ended
June 30, 1997, selling, general & administrative expenses increased
approximately $51,000 or 5% over the same period in the prior year, mainly the
result of the increase in sales and marketing personnel coupled with commissions
paid on increased product sales. Sales and marketing expenses remained
relatively stable from the same period in the previous year. Sales & marketing
expenses include advertising, trade shows and other promotional expenses,
compensation and sales commissions, public relations, travel, and certain
facilities expenses.
INTEREST INCOME
Interest income for the quarter that ended June 30, 1997 decreased by $17,000
or 40% from the quarter that ended June 30, 1996 due to a decrease in the amount
of cash available for investment.
OTHER INCOME AND EXPENSE
Other income and expense consisted primarily of interest paid on a capital lease
obligation during the current quarter and interest on outstanding payables
during the quarter that ended June 30, 1996.
INCOME TAXES
The Company incurred minimal income taxes in the last two fiscal years due to
its cumulative losses. The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") in fiscal 1994.
SFAS 109 requires that deferred taxes be calculated using an asset and liability
approach at currently enacted tax rates. SFAS 109 also requires the
establishment of a valuation allowance to reflect the likelihood of realization
of deferred tax assets. Upon adoption of SFAS 109, the Company did not record a
net benefit from income taxes resulting from net operating loss carryforwards; a
valuation allowance of equal amount was provided for the deferred tax asset
which would have been otherwise recorded.
FORWARD LOOKING STATEMENTS AND FACTORS THAT MAY EFFECT FUTURE RESULTS
The following discussion contains forward-looking statements within the meaning
of Sections 21E and 27A of the Securities Exchange Act of 1934. These forward
looking statements are subject to risks and uncertainties. There are several
important factors that could cause actual results to differ materially from
those anticipated by the forward-looking statements contained in the following
discussion. Such factors include, but are not limited to, the growth rates of
certain market segments, the timing of software product introductions, market
acceptance of product introductions, the positioning of the Company's products
in those segments, price pressures and the rapidly changing competitive
environment in the software industry, success in technological advances and
their implementation, business conditions and the general economy, the Company's
ability to manage its business in its evolution from a development stage
company, and the Company's ability to establish strategic alliances. Additional
information on these and other risk factors which could affect the Company's
financial results is included in the Company's Annual Report for the fiscal year
ended March 31, 1997 on Form 10-KSB, on file with the Securities and Exchange
Commission.
11
<PAGE>
The Company continues its efforts to gain broad market exposure and, in turn,
revenue opportunities through, among others, OEM bundling agreements, licensing
agreements, and value added reseller ("VAR") and distribution agreements.
Management believes that in doing so, the Company will be provided the
opportunity to leverage off the market strength of its partners at both the
entry level and high end of the market, while selling to the rest of the market
through its direct and existing channel sales organizations. During the current
quarter the Company signed bundling agreements for Versions 2.0, its entry level
product, with Symantec, Aonix, Softquad, Metrowerks, Visix and Penumbra as well
as VAR and sales referral agreements.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents on hand as of June 30, 1997 totaled $1.3 million and
$2.7 million as of June 30, 1996. At June 30, 1997 the Company had positive
working capital of $1.1 million, compared to $2.4 million at June 30, 1996.
During the quarter, the Company used $1.4 million for operations, a decrease of
approximately $0.7 million over the amount used for operations in the prior
year. The decrease was primarily due to the pay down of accounts payable during
the quarter ended June 30, 1996, which had accumulated in the prior year due to
a cash shortage. Capital expenditures during the quarter ended June 30, 1997 and
June 30, 1996 were not significant.
StarBase's distributors and direct purchasers are generally permitted a 30-day
right to return the software purchased by them. The Company may, on occasion,
grant more liberal rights of return to its distributors, particularly where new
products or major upgrades are introduced and sales do not meet expectations.
Although such returns are generally exchanged for other products or credited
against future orders, StarBase may be required to accept major product returns
for cash or a credit against accounts receivable. The Company has reserved
approximately $51,000 at June 30, 1997 for future returns and other collection
issues.
The Company is currently in the process of negotiating approximately $2.5
million of financing and anticipates raising an additional $2.5 million in the
third quarter of the fiscal year that ends March 31, 1998, through a combination
of debt and equity securities. The Company believes that proceeds from the sale
of debt and equity securities during fiscal 1998, combined with operating
revenues, will be sufficient to allow the Company to conduct its operations
during the fiscal year that ends March 31, 1998. Continuing operations
thereafter will depend on cash flow from operations or the Company's ability to
raise additional funds through equity, debt, or other financing. There can be no
assurance, however, that such funds will be available.
12
<PAGE>
PART II
ITEM 5
OTHER INFORMATION
On November 4, 1996, a registration statement on Form S-3 filed by the Company
was declared effective by the Securities and Exchange Commission. The
registration statement covered 9,853,295 shares of common stock of the Company
(including 3,800,945 shares issuable under outstanding warrants held by the
investors) which were issued to investors in eligible private placements. The
Company did not receive any of the proceeds from the sale of the shares of
common stock by the investors.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
Exhibit Ref./
Number Description Of Document Page
- ------------ ---------------------------------------------------------------------------------------- ----------
<S> <C> <C>
1.1 Underwriting Agreement between the Company and Dabney/ Resnick, Inc. (F)
3.1 Amended and Restated Certificate of Incorporation of the Company. (B)
3.2 Amended and Restated Bylaws of the Company. (A)
3.3 Certificate of Designation, Series C Preferred Stock. (F)
3.4 Certificate of Amendment of Certificate of Designation, Series C Preferred Stock. (F)
4.1 Investor's Rights Agreement date September 16, 1994 among the Company and
certain investors. (B)
4.2 Registration Rights Agreement dated December 15, 1994. (B)
4.3 Registration Rights Agreement dated December 1995. (E)
4.4 Registration Rights Agreement dated May 1996. (D)
4.5 Registration Rights Agreement dated June 1996. (F)
10.1 Form of Indemnity Agreement for Directors. (A)
10.2 Form of Indemnity Agreement for Officers. (A)
10.3 Performance Share Escrow Agreement, as amended, among the Company, Montreal Trust
Company of Canada as Escrow Agent, and certain of the Company's stockholders. (A)
10.4 Sublease dated December 2, 1993 between McDonnell Douglas Travel Company and StarBase
Corporation, for the Company's Irvine, California facilities. (B)
10.5 1996 Stock Option Plan, as amended. (*) (G)
10.6 Form of Restricted Stock Issuance Agreement. (A)
10.7 Form of Restricted Stock Purchase Agreement. (A)
10.8 Forms of Common Stock Subscription Agreements and Warrants used from time to time
between the Company and certain of its stockholders in connection with certain equity
financings, together with a list of equity investors. (A)
10.9 Forms of Common Stock Subscription Agreement and Warrants used in November 1994
Private Placement. (B)
10.10 Forms of Common Stock Subscription Agreement and Warrants used in March 1995 Private
Placement. (C)
10.11 Regional Prototype Defined Contribution Plan and Trust of the Company. (*) (A)
10.12 Fiscal Agency Agreement between the Company and Canaccord Capital Corporation. (B)
10.13 Form of Agents' Warrant. (B)
10.14 Silicon Valley Bank Warrant dated December 15, 1994. (B)
10.15 Secured Promissory Note dated July 1, 1995 from William R. Stow III. (E)
10.16 Forms of Preferred Stock Subscription Agreements and Warrants used in January 1996
Private Placement, together with a list of equity investors. (E)
13
<PAGE>
10.17 Forms of Common Stock Subscription Agreement and Warrants used in July 1995 Private
Placement, together with a list of equity investors. (E)
10.18 Form of Warrant used in the May 13, 1996 Private Placement. (D)
10.19 Form of Subscription Agreement used in the May 13, 1996 Private Placement. (D)
10.20 Form of Preferred Stock Subscription Agreement and Warrant used in the June 1996
Private Placement, together with a list of equity investors and
placement agent. (F)
10.21 Lease dated November 22, 1996 between The Provider Fund and StarBase Corporation,
for the Company's Irvine, California facilities. (H)
27 Financial data schedule
- -------------------------
<FN>
(A) Incorporated herein by reference to the Company's Registration
Statement on Form SB-2 (file number 33-68228) filed with the
Commission on November 2, 1993.
(B) Incorporated herein by reference to the Company's Registration
Statement on Form 10 (file number 0-25612) filed with the
Commission on February 23, 1995.
(C) Incorporated herein by reference to the Company's Form 10-K (file
number 0-25612) filed with the Commission on July 14, 1995.
(D) Incorporated herein by reference to the Company's Form 8-K (file
number 0-25612) filed with the Commission on May 16, 1996.
(E) Incorporated herein by reference to the Company's Form 10-K, as
amended, (file number 0-25612) filed with the Commission on July
1, 1996.
(F) Incorporated herein by reference to the Company's Form 10-QSB
(file number 0-25612) filed with the Commission on August 14,
1996.
(G) Incorporated herein by reference to the Company's Definitive
Proxy Statement (file number 0-25612) filed with the Commission
on July 29, 1996.
(H) Incorporated herein by reference to the Company's Form 10-KSB
(file number 0-25612) filed with the Commission on June 30, 1997.
* Denotes a management contract or compensatory plan or arrangement.
</FN>
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter.
14
<PAGE>
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.
STARBASE CORPORATION
(Registrant)
AUGUST 14, 1997 /S/ DONALD R. FARROW
__________________ _______________________
Date Donald R. Farrow
President and
Chief Operating Officer
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
STARBASE CORPORATION'S CONSOLIDATED FINANCIAL STATEMENTS AT AND FOR THE
THREE MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 1,296
<SECURITIES> 0
<RECEIVABLES> 208
<ALLOWANCES> (51)
<INVENTORY> 21
<CURRENT-ASSETS> 1,823
<PP&E> 1,289
<DEPRECIATION> (742)
<TOTAL-ASSETS> 547
<CURRENT-LIABILITIES> 761
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> 1,509
<TOTAL-LIABILITY-AND-EQUITY> 2,465
<SALES> 268
<TOTAL-REVENUES> 338
<CGS> 32
<TOTAL-COSTS> 32
<OTHER-EXPENSES> 1,662
<LOSS-PROVISION> 9
<INTEREST-EXPENSE> (2)
<INCOME-PRETAX> (1,332)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,332)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,332)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
