SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 1996
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 0-26192
- --------------------------------------------------------------------------------
Coda Music Technology, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Minnesota 41-1716250
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6210 Bury Drive
Eden Prairie, Minnesota 55346-1718
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(612) 937-9611
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
As of November 6, 1996, there were 4,327,035 shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
Part 1. Financial Information
Item 1. Financial Statements
Coda Music Technology, Inc.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and short-term investments $ 1,232,811 $ 3,960,274
Accounts receivable 552,033 405,528
Inventories 999,003 563,741
Prepaid royalties 107,856 91,117
Other current assets 62,067 124,676
----------- -----------
Total current assets 2,953,770 5,145,336
EQUIPMENT, FURNITURE AND FIXTURES 516,137 466,592
REPERTOIRE DEVELOPMENT COSTS 400,006 -
OTHER ASSETS, principally patents and trademarks 213,820 93,526
----------- -----------
$ 4,083,733 $ 5,705,454
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ - $ 3,838
Accounts payable 309,710 339,554
Accrued expenses 480,452 582,398
Deferred revenue 143,630 122,692
----------- -----------
Total current liabilities 933,792 1,048,482
SHAREHOLDERS' EQUITY 3,149,941 4,656,972
----------- -----------
$ 4,083,733 $ 5,705,454
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Coda Music Technology, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
--------------------------------------- --------------------------------------
Quarter Ended September 30, Nine Months Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET REVENUES $ 1,209,440 $ 1,360,966 $ 3,756,532 $ 3,565,615
COST OF SALES 482,817 332,960 1,335,433 837,209
-------------- -------------- ------------- -------------
GROSS PROFIT 726,623 1,028,006 2,421,099 2,728,406
-------------- -------------- ------------- -------------
OPERATING EXPENSES:
Sales and marketing 592,830 578,834 2,071,453 1,676,621
Product development 361,460 364,618 952,745 1,016,743
General and administrative 386,808 397,925 1,116,896 1,124,739
-------------- -------------- ------------- -------------
Total operating expenses 1,341,098 1,341,377 4,141,094 3,818,103
-------------- -------------- ------------- -------------
LOSS FROM OPERATIONS (614,475) (313,371) (1,719,995) (1,089,697)
Interest Income (Expense), net 21,096 55,498 101,400 (3,649)
-------------- -------------- ------------- -------------
NET LOSS $ (593,379) $ (257,873) $ (1,618,595) $ (1,093,346)
============== ============== ============= =============
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT
SHARES OUTSTANDING
4,326,867 4,218,636 4,291,536 3,603,527
============== ============== ============= =============
NET LOSS PER COMMON AND
COMMON EQUIVALENT SHARE $ (0.14) $ (0.06) $ (0.38) $ (0.30)
============== ============== ============= ============
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Coda Music Technology, Inc.
Condensed Statements of Cash Flows
For the Nine Months Ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,618,595) $ (1,093,346)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization 259,462 211,376
Change in current assets and liabilities:
Accounts receivable (146,505) (5,950)
Inventories (435,262) 65,101
Prepaid royalties (16,739) (11,242)
Other current assets 62,609 (41,134)
Accounts payable (29,844) (297,299)
Accrued expenses (101,946) (12,038)
Deferred revenue 20,938 75,579
------------ -------------
Net cash used in operating activities (2,005,882) (1,108,953)
------------ -------------
INVESTING ACTIVITIES:
Purchases of equipment, furniture and fixtures (289,359) (131,893)
Capitalized repertoire development cost (419,654) -
Other assets, principally patents and trademarks (120,294) -
------------ -------------
Net cash used in investing activities (829,307) (131,893)
------------ -------------
FINANCING ACTIVITIES:
Proceeds from initial public offering, net - 5,891,725
Proceeds from exercise of stock options and warrants 111,564 16,000
Proceeds from subordinated debt 700,000
Repayment of subordinated debt - (1,200,000)
Repayment of short-term borrowings - (300,000)
Repayment of long-term debt (3,838) (24,148)
------------ -------------
Net cash provided by financing activities 107,726 5,083,577
------------ -------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS
(2,727,463) 3,842,731
CASH AND SHORT-TERM INVESTMENTS, beginning of period 3,960,274 684,727
------------ -------------
CASH AND SHORT-TERM INVESTMENTS, end of period $ 1,232,811 $ 4,527,458
============ =============
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Coda Music Technology, Inc.
Notes to Financial Statements
(Unaudited)
Note 1 Accounting Policies. The information furnished in this report is
unaudited but reflects all adjustments which are necessary, in the
opinion of management, for a fair statement of the results for the
interim period. The operating results for the nine months ended
September 30, 1996 are not necessarily indicative of the operating
results to be expected for the full fiscal year. These statements
should be read in conjunction with the Company's most recent Annual
Report on Form 10-KSB.
Note 2 Repertoire Development Costs. During the first six months of 1996,
the Company capitalized $419,654 of costs incurred in the development
of repertoire. Such costs had previously been charged to expense as
incurred due to lack of sales history. These costs are amortized
using the straight line method over the economic lives of the assets,
not to exceed 5 years, beginning when the repertoire products are
released. Accumulated amortization totaled $19,648 as of September
30, 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Company develops and markets proprietary music technology products that
enhance music learning and composition, increase productivity and make
practicing and performing music fun.
Through 1994, the primary business of the Company consisted of enhancing,
marketing and selling Finale(R) products while developing Vivace(R) products. In
June 1994, the first test markets of the Vivace product were launched. After
receiving an encouraging response from music educators and music students, the
Company began the process of building a dealer network commencing in January
1995. The Company anticipates that revenues from the Vivace product will
increase as the dealer network expands and gains experience, as well as with the
introduction of stronger and more focused marketing efforts by the Company. In
December 1995, the Company announced new configurations of the Vivace product at
lower suggested retail prices together with upgraded features which now include
an application for vocalists. The Company began shipment of these configurations
in the second quarter of 1996. With a long-term objective of penetrating the
amateur musician market, the Company intends to continue to adapt its product to
technologies with lower costs and to expand the amount of repertoire available
for use with the Vivace product.
The Company has incurred losses from operations since inception and has an
accumulated deficit of $8,303,526, as of September 30, 1996.
Results of operations
For the periods ended September 30, 1996 compared to the periods ended
September 30, 1995
Net Revenues. Revenues of $1,209,440 for the quarter ended September 30,
1996 were $151,526 less than revenues for the third quarter of 1995. This
decrease is primarily the result of not releasing a new upgrade to the Finale
music notation product during the third quarter of 1996. In the third quarter of
1995, the Company released Finale 3.5, which contributed revenues of $226,718 in
that quarter. The decrease in Finale revenues is partially offset by an increase
in Vivace product revenues. Revenues from Vivace products totaled approximately
$505,000 in the quarter ended September 30, 1996 and included revenue from the
shipment of approximately 478 modular systems and soundcard application units
and 7,566 repertoire cartridges. In the third quarter of 1995, the Company sold
approximately 190 modular systems and 1,119 repertoire cartridges resulting in
total Vivace related revenue in the quarter ended September 30, 1995 of
approximately $329,000.
Revenues for the nine months ended September 30, 1996 were $3,756,532
compared to $3,565,615 for the first nine months of 1995, an increase of 5%.
Vivace product revenues increased $659,057 or 75% in this period while Finale
product revenues decreased 17%. The Company had 90 North American dealers for
Vivace as of September 30, 1996 and distributors in Australia and Japan. At
September 30, 1995 the Company had approximately 40 dealers. The increase in the
number of dealers, the introduction of the soundboard configuration of the
product and the vocal features of the application, together with increased
emphasis on repertoire sales all resulted in the increased sales of Vivace
during 1996.
<PAGE>
Gross profit. The gross profit of $726,623 for the quarter ended September
30, 1996 represented a gross profit margin of 60%. For the third quarter ended
September 30, 1995, the gross profit margin was 76%. The decrease in the gross
margin percentage is primarily attributable to the higher mix of Vivace sales in
the 1996 quarter compared to 1995. During the third quarter of 1996, the Company
offered a special promotion whereby customers who purchased $995 of repertoire
received a soundcard application at no charge. The low margins resulting from
this promotion, as well as the lower margins on Vivace products compared to
Finale products, accounted for the decline in the gross margin during the
quarter.
The gross profit for the first nine months of 1996 was 64% compared to 77%
in the first nine months of 1995. The decrease principally relates to lower
Vivace margins associated with price reductions which were announced in December
1995, and promotional pricing in connection with the $995 promotion described in
the previous paragraph. It is expected that the gross profit percentage will be
higher during the fourth quarter of 1996 as the high margin Finale product
upgrades are expected to be released.
Sales and marketing expenses. For the quarter ended September 30, 1996
sales and marketing expenses of $592,830 are $13,996 higher than for the quarter
ended September 30, 1995. Sales and marketing expenses of $2,071,453 for the
first nine months of 1996 increased 24% or $394,832 over the first nine months
of 1995. This increase in spending is attributable to attendance at more trade
shows in 1996 than in 1995 as well as costs incurred to train approximately 70
specialists employed by our dealer network to sell Vivace products.
Product development expenses. Product development expenses of $361,460 for
the quarter ended September 30, 1996 were approximately equal to the amount for
the quarter ended September 30, 1995. The Company capitalized repertoire
development expenses of $143,605 during the quarter ended September 30, 1996.
For the nine months ended September 30, 1996, product development expenses of
$952,745 were $63,998 less than for the nine months ended September 30, 1995. In
addition, the Company capitalized $419,654 of costs incurred in the development
of repertoire in 1996. The total costs related to the development of application
and repertoire products increased as the Company invested in developing new
configurations of the Vivace product with expanded features, including vocal
accompaniment. In addition, the Company has accelerated the development of
repertoire and broadened the types (vocal as well as instrumental) and genres
being offered (classical, jazz, musical theatre and pop).
General and Administrative Expenses. General and administrative expenses
for the third quarter of 1996 were $386,808 compared to $397,925 for the third
quarter of 1995. General and administrative expenses of $1,116,896 for the nine
months ended September 30, 1996 were approximately the same as for the nine
months ended September 30, 1995. The Company intends to limit expense growth
until revenue growth has accelerated.
Interest Income (Expense), Net. The Company had net interest income of
$21,096 for the quarter ended September 30, 1996 compared to $55,498 during the
third quarter of 1995. For the first nine months of 1996, the company had
interest income of $101,400 compared to net interest expense of $3,649 for the
first nine months of 1995. The Company's financing is discussed further under
the caption "Liquidity and Capital Resources".
Net loss. The net loss of $593,379 for the quarter ended September 30, 1996
is a greater loss than reported in the quarter ended September 30, 1995. For the
nine months ended September 30, the Company's loss of $1,618,595 increased
$525,249 over the nine months ended September 30, 1995. The changes in the loss
are attributable to the changes in revenues and costs described above.
<PAGE>
Liquidity and Capital Resources
In July 1995, the Company received net proceeds of $5,891,725 from the
initial public offering of 1,135,000 shares of its common stock. The proceeds
were used to repay subordinated debt and accrued interest totaling $1,262,592,
and the remainder was invested in short-term securities.
The Company has a $500,000 line of credit with a bank which has been used
to finance its working capital requirements and which will expire on February
16, 1997 if not renewed. During 1995, the Company borrowed up to $300,000 under
this line of credit, which balance was repaid in February 1995. Borrowings under
the line of credit bear interest at 1% over the bank's reference rate and are
collateralized by all of the accounts receivable, inventories and general
intangibles of the Company. Among other requirements, the loan agreement
requires the Company to maintain tangible net worth of $3,000,000 as defined in
the agreement. While the agreement is in effect, the Company may not incur
additional indebtedness, liquidate or merge the Company, pay dividends or
acquire any other entity without the prior approval of the lender. Further, a
25% or more change in ownership of the Company constitutes an event of default
under the agreement. As of September 30, 1996 there were no borrowings under the
line of credit.
Net cash used in operating activities totaled $2,005,882 for the nine
months ended September 30, 1996. In addition, the Company made capital
expenditures for furniture, equipment and fixtures of $289,359 in the nine
months ended September 30, 1996. The Company used cash for operating activities
of $1,108,953 and made capital expenditures of $131,893 during the nine months
ended September 30, 1995.
The Company anticipates that capital expenditures for 1996 will approximate
$350,000. Management believes existing cash and short-term investments together
with funds generated from the sale of products will be sufficient to fund its
capital expenditure, product development and working capital requirements
through 1996. Management expects that cash in excess of current requirements
will be invested in investment grade interest-bearing securities.
Management believes that additional capital beyond its cash and current
line of credit may be required in 1997 depending upon levels of revenues and
product development expenditures. Additional capital may be sought through a new
line of credit with a bank, asset based lending or the sale of equity. No
assurance can be given that such capital will be available or available on terms
favorable to the Company.
Cautionary Statements
As provided for under the Private Securities Litigation Reform Act of 1995,
the Company wishes to caution investors that the following important factors,
among others, in some cases have affected and in the future could affect the
Company's actual results of operations and cause such results to differ
materially from those anticipated in forward-looking statements made in this
document and elsewhere by or on behalf of the Company.
The Company's initial Vivace product was introduced in 1994 and new Vivace
products were introduced in 1996. The Company thus has a limited operating
history from which investors might judge its ability to market at a profit its
Vivace products. The success of the Company will be highly dependent on market
acceptance of these products and the success of its distribution arrangements.
Investors should also consider: the potential need for additional capital;
additional development work required for new products; dependence on repertoire
sales and development; the Company's dependence on sales to schools and key
customers; fluctuations in operating results related to the introduction of new
products and upgrades; competition; dependence on suppliers; and dependence on
proprietary technology. For a more complete description see "Cautionary
Statements" under Item 1 of the Company's Form 10-KSB for the year ended
December 31, 1995.
<PAGE>
PART 2. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Exhibit Index on page following Signature page.
(b) Reports on Form 8-K: No reports on Form 8-K were filed by the
registrant during the quarter ended September 30, 1996.
<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.
Date: November 6, 1996 CODA MUSIC TECHNOLOGY, INC.
By: /s/ Ronald B. Raup
Ronald B. Raup, President and
Chief Operating Officer
And: /s/ Joan K. Berg
Joan K. Berg, Chief Financial Officer
<PAGE>
EXHIBIT INDEX
FORM 10-QSB
For the Quarter Ended
September 30, 1996
Exhibit
Number Description
10.1 Amendment No. 3 dated 8/28/96 to License Agreement
dated 6/10/92 between the Registrant and
Carnegie Mellon University
11 Statement re: computation of earnings per share
27 Financial Data Schedule
(filed in electronic format only)
Exhibit 10.1
Amendment #3 (August 28, 1996) to
License Agreement between CMU and Coda Music Technology / Vivace
The License Agreement made on June 10, 1992 between Carnegie Mellon University
("CMU") and the LICENSEE Coda Music Technology Inc. ("Coda", formerly known as
Vivace, Inc., the name of which was legally changed to Coda Music Technology,
Inc. on March 17, 1994), having its current principal office at 6210 Bury Drive,
Eden Prairie, MN 55346-1718, as first amended by the letter agreement, dated
November 12, 1993, and further amended by Amendment #2 dated May 12, 1994, is
hereby further amended, (the June 10, 1992 Agreement as modified by the three
amendments is referred to as the "License Agreement") and the parties hereto do
hereby mutually covenant and agree as follows.
A. Intent and Purposes of this Amendment.
The general purposes and intent of this Amendment are :
1. To have the License adjusted to changes and developments in technology and
markets which have occurred since the conception of the original License
Agreement.
2. To encourage and facilitate cooperation between Coda and CMU toward (1) the
success of Coda and (2) the widest possible dissemination and use of the
CMU music technology subject to the License Agreement.
3. To simplify certain provisions of the License Agreement in order to avoid
complicated, time consuming and potentially costly issues and
disagreements, including adaptation of certain definitions and provisions
of the License Agreement; to accomplish these changes while maintaining the
original intent of the parties.
B. Royalties; License Maintenance and Exclusivity Requirements.
Paragraph 4.1 of the License Agreement is hereby amended to read as follows :
LICENSEE agrees to pay CMU Annual Royalties as follows :
* For calendar year 1996 -- $100,000 (one hundred thousand dollars)
* for 1997 -- $100,000 (one hundred thousand dollars);
* for 1998 -- $200,000 (two hundred thousand dollars);
* for each of the following years - 1999, 2000, 2001, 2002, 2003, 2004 -
$300,000 (three hundred thousand dollars) per year;
* for the period from 1/1/2005 through 5/24/2005 -
$150,000 (one hundred and fifty thousand dollars).
<PAGE>
Annual Royalties shall be due and payable on the following Due Dates, in the
following Payment Increments:
<TABLE>
<CAPTION>
March 31 June 30 Sept. 30 Dec. 31 (Annual Total)
-------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
1996 0 0 $50,000 $50,000 $100,000
1997 $15,000 $15,000 $35,000 $35,000 $100,000
1998 $40,000 $40,000 $60,000 $60,000 $200,000
1999 through
2004 $60,000 $60,000 $90,000 $90,000 $300,000
May 31, 2005
2005 $75,000 $75,000 $150,000
</TABLE>
Payment of the above specified Annual Royalty amounts on the specified Due Dates
shall discharge the payment obligations of LICENSEE required to keep the
exclusive licenses in effect as provided in Section 2.1 of the License Agreement
(as amended by Amendment #2, Section III,) subject to the other provisions of
the License Agreement.
Paragraphs 4.2 and 4.3 of the License Agreement and any amendments thereto are
deleted.
Any payments due from LICENSEE to CMU for (1) CMU Sub-license Royalty Splits
(per Section 2.5 of the License Agreement), (2) Future Related CMU Technology
(Section 2.2 of the License Agreement), (3) any new license agreements between
CMU and LICENSEE, (4) Penalty Payments (see Section C below), and/or (5) any
reason other than Annual Royalties, shall be amounts due and payable by LICENSEE
to CMU in addition to the Annual Royalties specified herein.
C. CMU MusicTutor Products and Features.
LICENSEE has presented to CMU its plans to introduce two Assessment Products
and/or Features ("Assessment Products") during 1997 calendar year, tentatively
defined as the Intonation Trainer and The Rhythm Trainer; LICENSEE reserves the
right to change these names in the event that research indicates that another
name would enhance marketability. LICENSEE has requested, and CMU hereby agrees,
that meeting of the following conditions will meet the Due Diligence marketing
and sales performance Requirements of Article III of the License Agreement with
regard to MusicTutor products ("Requirements"):
Starting during the third quarter of 1997, both Assessment Products have been
developed and introduced to the market, are included in LICENSEE's product
brochures and selling programs, and are promoted in LICENSEE's general
promotion programs, including LICENSEE's customer exhibits and presentations.
<PAGE>
LICENSEE and CMU agree that, in the event that LICENSEE should not meet these
Requirements, LICENSEE will pay CMU an annual Penalty Payment of $10,000 for
1997 and/or for each year of the remaining Term of the License Agreement during
which such a deficiency exists; such Payments shall be due at the end of each
such year.
D. Reports
In addition to the reporting requirements of Article V (Reports and Records) of
the License Agreement, LICENSEE will report to CMU, quarterly and for each
calendar year -
(1) total number of Licensed Products sold
(2) number of each Coda / Vivace Assessment product sold - (a) as a
separate unit or module, and/or (b) as a built-in component or
function of other Vivace / Coda products.
Where classification is unclear, LICENSEE will consult with CMU as to proper
method of reporting.
E. Termination.
Paragraph 13.2 of the License Agreement is hereby amended to read as follows :
Should LICENSEE fail to pay amounts due for payment to CMU within fourteen (14
days) after the date when due and payable hereunder, CMU shall have the right to
terminate this Agreement on thirty (30) days' written notice, unless LICENSEE
pays CMU within that thirty (30) day period all such amounts due. Upon the
expiration of the thirty (30) day period, if LICENSEE has not paid such amounts
due, the rights, privileges and License granted to LICENSEE shall thereupon
terminate, except as provided for in paragraph 13.6 of the License Agreement as
amended below.
Paragraph 13.5 of the License Agreement, is hereby amended to read as follows :
LICENSEE may initiate or cause the Termination of the License Agreement only as
of the end of a calendar year during the remaining Term of the license (with the
exception of the last period, ending 5/24/2005) ("Permitted Effective
Termination Dates"), with minimum required written Termination Notice to CMU to
be in accordance with the following schedule :
<TABLE>
<CAPTION>
Latest date when Termination Notice must
be received by CMU, as related to Permitted Effective Dates for
Permitted Effective Termination Dates Termination initiated or caused by LICENSEE
<S> <C>
12/20/1996 12/31/1997
12/20/1997 12/31/1998
12/20/1998 12/31/1999
12/20/1999 12/31/2000
6/30/2000 12/31/2001
6/30/2001 12/31/2002
6/30/2002 12/31/2003
11/24/2003 5/24/2005
</TABLE>
<PAGE>
Paragraph 13.6 of the License Agreement is hereby amended to read as follows :
Upon Termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that has matured prior to
the Effective Date of the Termination. LICENSEE and any sub-licensee thereof
may, however, after the Effective Date of such Termination, sell all Licensed
Products and complete the manufacture and sale of all Licensed Products which
were in LICENSEE's or sub-licensee's physical inventory or were in the process
of manufacture at the time of such Termination, provided that LICENSEE shall (1)
report to CMU a complete listing of any such products with within 30 days after
such Termination, (2) pay to CMU any Annual Royalties specified in this
Amendment for any calendar year during which such sales occurred until all such
products have been sold, (3) pay to CMU any remaining CMU Sub-license Royalty
Split amounts as provided for in Section 2.5 of the License Agreement, and (4)
submit to CMU the reports required under the License Agreement until all such
sales have been completed.
F. Notices (General)
Article XIV is amended as follows :
The designated name and address for CMU shall be
Benno A. Bernt, Director of Technology Transfer
Carnegie Mellon University, Warner Hall 407
5000 Forbes Avenue,
Pittsburgh, PA 15213-3890
Fax 412-268-7395
G. Other Provisions
Except as amended hereby, the License Agreement shall continue in full force and
effect.
(Balance of this page intentionally left blank).
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement, with the intention
of being legally bound, as of August 28, 1996.
Accepted and agreed to :
For Carnegie Mellon University For Coda Music Technology, Inc.
/s/ Benno A. Bernt /s/ Ron Raup
Benno A. Bernt, Ron Raup,
Director of Technology Transfer President
9/22/96 9/9/96
Date Date
/s/ Susan Burkett
Susan Burkett,
Associate Provost
9/23/96
Date
Exhibit 11
CODA MUSIC TECHNOLOGY, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Quarter Ended September 30, Nine Months Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET LOSS $ (593,379) $ (257,873) $ (1,618,595) $ (1,093,346)
========== ========== ============ ============
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING:
Common Shares Outstanding(1) 4,326,867 4,218,636 4,291,536 3,488,738
Common Stock Equivalents calculated
pursuant to Securities and Exchange
Commission Staff Bulletin No. 83(2) - - - 114,789
---------- ---------- ------------ ------------
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 4,326,867 4,218,636 4,291,536 3,603,527
========== ========== ============ ============
NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE $ (0.14) $ (0.06) $ (0.38) $ (0.30)
========== ========== ============ ============
</TABLE>
1 Reflects the effect of conversion of Series A and Series B Convertible
Preferred Stock to common stock and a 1-for-2 reverse stock split for all
periods presented.
2 Reflects the issuance of Series B Convertible Preferred Stock, issuance of
common stock for services, stock options granted, warrants issued to
purchase Series B Convertible Preferred Stock and warrants issued to
purchase common stock within the twelve month period prior to the Company's
initial public offering at a price less than the public offering price.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 920707
<NAME> CODA MUSIC TECHNOLOGY, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,232,811
<SECURITIES> 0
<RECEIVABLES> 552,033
<ALLOWANCES> 0
<INVENTORY> 999,003
<CURRENT-ASSETS> 2,953,770
<PP&E> 516,137
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,083,733
<CURRENT-LIABILITIES> 933,792
<BONDS> 0
0
0
<COMMON> 11,453,467
<OTHER-SE> (8,303,526)
<TOTAL-LIABILITY-AND-EQUITY> 4,083,733
<SALES> 3,756,532
<TOTAL-REVENUES> 3,756,532
<CGS> 1,335,433
<TOTAL-COSTS> 1,335,433
<OTHER-EXPENSES> 4,141,094
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,618,595)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,618,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,618,595)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> (.38)
</TABLE>
