SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
(Mark One)
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
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: 000-25590
DATASTREAM SYSTEMS, INC.
Incorporated pursuant to the laws of the State of Delaware
-------------------------------------------
Internal Revenue Service -- Employer Identification No. 57-0813674
50 DATASTREAM PLAZA, GREENVILLE, SC 29605
(864) 422-5001
-------------------------------------------
NOT APPLICABLE
(Former Name, Former Address, if changed since last report)
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 the issuer's common stock as of the latest practicable
date: MARCH 31, 1998 18,822,594 shares, $0.01 par value.
<PAGE>
AMENDED FILING OF FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998
RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION
After methodology changes were set forth by the Staff at the Securities
and Exchange Commission ( the "Staff") in its letter dated September 15,
1998 to the American Institute of Certified Public Accountants,
Datastream Systems, Inc. (the "Company" or "Datastream") voluntarily
adjusted the allocation of the purchase price related to its March 31,
1998 acquisition of Insta Instandhaltung Technischer Anlagen GmbH
("Insta"). Although the Company believes that its original accounting
treatment was in accordance with generally accepted accounting
principles, it has made the adjustments to be consistent with the new
methodology set forth by the Staff. This amended filing contains related
financial information and disclosures as of and for the three months
ended March 31, 1998. See Note 1 to the Consolidated Financial
Statements.
Datastream Systems, Inc.
FORM 10-Q/A
Quarter ended March 31, 1998
Index
Page No.
Part I. Consolidated Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets - December 31, 1997 and
March 31, 1998
Assets 3
Liabilities and Stockholders' Equity 4
Consolidated Statements of Income -
for the Three Months ended March 31, 1997 and 1998 5
Consolidated Statement of Changes in Stockholders' Equity -
for the Three Months ended March 31, 1998 6
Consolidated Statement of Cash Flows -
for the Three Months ended March 31, 1997 and 1998 7
Notes to the Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About 14
Market Risk
Part II. Other Information 15
Signature 16
<PAGE>
PART I. CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Datastream Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
Assets
December 31, March 31,
1997 1998
---- ----
(unaudited and
restated)
Current assets:
Cash and cash equivalents $2,409,387 $4,448,095
Accounts receivable, net of allowance for
doubtful accounts of $1,589,910 and
$1,755,529, respectively 21,968,539 23,676,930
Unbilled receivables 2,271,375 3,043,344
Investments 9,735,585 5,670,266
Prepaid expenses 614,447 1,208,650
Inventories 369,486 385,684
Deferred income taxes 796,000 796,000
Other assets 619,448 1,151,053
---------- ----------
Total current assets 38,784,267 40,380,022
Investments 6,637,286 6,587,975
Property and equipment, net 10,166,101 12,056,294
Goodwill 6,545,747 12,523,263
Capitalized software development costs,
net of accumulated amortization of
$1,197,177 and $2,239,941, respectively 2,963,842 3,160,596
----------- -----------
Total assets $65,097,243 $74,708,150
=========== ===========
See notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Balance Sheets (Continued)
Liabilities and Stockholders' Equity
December 31, March 31,
1997 1998
---- ----
(unaudited and
restated)
Current liabilities:
Accounts payable $2,696,240 $3,355,963
Other accrued liabilities 4,135,258 5,502,627
Income taxes payable 2,816,800 3,799,901
Current portion of long-term debt 346,197 266,894
Unearned revenue 6,499,953 8,784,831
---------- ----------
Total current liabilities 16,494,448 21,710,216
Long-term debt, less current portion 603,098 1,334,041
Deferred income taxes 892,000 892,000
---------- ----------
Total liabilities 17,989,546 23,936,257
Stockholders' equity:
Preferred stock, $1 par value,
1,000,000 shares authorized;
none outstanding - -
Common stock, $.01 par value,
40,000,000 shares authorized;
18,585,518 share issued and
outstanding at December 31, 1997,
18,822,594 shares issued and
outstanding at March 31, 1998 185,855 188,226
Additional paid-in capital 58,049,212 61,235,493
Accumulated deficit (11,375,601) (10,664,338)
Other accumulated comprehensive income 248,231 12,512
---------- ----------
Total stockholders' equity 47,107,697 50,771,893
Total liabilities and stockholders' equity $65,097,243 $74,708,150
=========== ===========
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)
Three months ended March 31, 1997 and 1998
March 31, March 31,
1997 1998
---- ----
(restated)
Revenues:
Product $ 6,148,014 $ 7,365,099
Professional service 5,783,723 8,955,524
Support 2,750,674 3,808,038
---------- ----------
Total revenues 14,682,411 20,128,661
Cost of revenues:
Cost of product revenues 843,963 776,139
Cost of professional service revenues 3,529,973 4,144,932
Cost of support revenues 687,272 929,829
Write off of capitalized software costs - 597,944
--------- ---------
Total cost of revenues 5,061,208 6,448,844
Gross profit 9,621,203 13,679,817
Operating expenses:
Sales and marketing 4,273,471 5,549,360
Product development 834,048 1,521,755
General and administrative 2,235,040 2,029,787
Write off of in process research and development - 2,057,008
---------- ----------
Total operating expenses 7,342,559 11,157,910
Operating income 2,278,644 2,521,907
Other income (expense):
Interest income 262,510 205,790
Interest expense (102,449) (28,266)
Other 47,279 75,988
------- -------
Net other income 207,340 253,512
Income before income taxes 2,485,984 2,775,419
Income taxes 507,787 2,064,156
----------- ----------
Net income $ 1,978,197 $ 711,263
=========== ==========
Basic net income per share $ .11 $ .04
----------- ----------
Diluted net income per share $ .11 $ .03
----------- ----------
Basic weighted average number of common and
common equivalent shares outstanding 18,262,850 18,640,122
========== ==========
Diluted weighted average number of common and
common equivalent shares outstanding 18,767,970 20,246,844
========== ==========
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
Datastream Systems, Inc. And Subsidiaries
Consolidated Statement Of Changes In Stockholders' Equity
(Unaudited and restated)
For the three months ended March 31, 1998
<CAPTION>
Other
Additional Accumulated Accumulated Total
Common Paid-In Earnings Comprehensive Stockholders'
Stock Capital (Deficit) Income Equity
----- ------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 $185,855 $58,049,212 $(11,375,601) $248,231 $47,107,697
Net income - - 711,263 - 711,263
Stock options exercised 962 488,142 - - 489,104
Shares issued for Employee
stock Purchase Plan 105 74,443 - - 74,548
Shares issued for acquisition 1,304 2,623,696 - - 2,625,000
Other accumulated
comprehensive income - - - (235,719) (235,719)
Balance at March 31, 1998 $188,226 $61,235,493 $(10,664,338) $12,512 $50,771,893
======== =========== ============= ======= ===========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Three months ended March 31, 1997 and March 31, 1998
March 31, March 31,
1997 1998
---- ----
(restated)
Cash flows from operating activities:
Net income $ 1,978,198 $ 711,263
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 458,577 683,900
Amortization of capitalized software
development costs 275,203 195,133
Amortization of goodwill 272,750 272,750
Other accumulated comprehensive income 373,672 (323,882)
Loss on disposal of fixed assets 53,420 -
Provision for doubtful accounts - 282,377
Write-off of in-process research and development - 2,057,008
Write-off of capitalized software costs - 597,944
Changes in operating assets and liabilities:
Accounts receivable (2,918,021) (1,837,672)
Accrued interest receivable 135,867 (24,194)
Prepaid expenses (248,611) (582,338)
Inventories 54,665 112,782
Other assets (584,689) (1,209,510)
Accounts payable (1,120,244) 659,629
Other accrued liabilities (2,511,796) 694,499
Income taxes payable 233,467 983,101
Unearned revenue 2,060,701 2,284,878
---------- ----------
Net cash provided by (used in)
operating activities (1,486,841) 5,557,668
Cash flows from investing activities:
Net proceeds from investments 2,045,000 4,420,854
Additions to property and equipment (832,569) (1,212,368)
Proceeds from the sale of equipment - -
Capitalized software development costs (292,076) (806,836)
Cash paid for acquisition, net of cash acquired - (6,467,189)
---------- ----------
Net cash used in investing activities 920,355 (4,065,539)
Cash flows from financing activities:
Proceeds from exercise of stock options 112,627 473,699
Proceeds from issuance of shares under employee
stock purchase plan - 74,547
Principal payments on long-term debt (2,907,269) (1,667)
---------- ------
Net cash provided by (used in)
financing activities (2,794,642) 546,579
Net increase (decrease) in cash and
cash equivalents (3,361,128) 2,038,708
Cash and cash equivalents at beginning of period 6,315,719 2,409,387
------------ ------------
Cash and cash equivalents at end of period $ 2,954,591 $ 4,448,095
============ ============
See Notes to Consolidated Financial Statements
<PAGE>
Datastream Systems, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1) Summary of Significant Accounting Policies
A. Organization and Basis of Presentation
Datastream develops, markets, sells and supports Microsoft and Oracle based
software products for the industrial automation market. These products serve the
desktop, file server, client-server and enterprise-wide networking environments.
Datastream's software enables users to schedule preventive maintenance, record
equipment maintenance histories, organize and control spare parts inventories,
schedule equipment and parts inventory purchases and deploy maintenance
personnel. In addition to its U.S. operations, the Company has direct sales or
distribution offices in Canada, the United Kingdom, The Netherlands, France,
Germany, Denmark, Sweden, Norway, Portugal, Mexico, Brazil, Argentina,
Venezuela, Peru, Malaysia, Australia and South Africa.
On December 31, 1996, the Company acquired SQL Group, B.V. ("SQL"). The
acquisition has been accounted for using the purchase method. The purchase price
has been allocated to the tangible and intangible assets purchased and the
liabilities assumed based on the fair values on the date of acquisition.
On March 31, 1998, the Company acquired Insta, a German corporation
headquartered in Munich, Germany. The acquisition has been accounted for using
the purchase method. In accordance with Accounting Principles Board ("APB")
Opinion No. 16, "Accounting for Business Combinations," the purchase price was
allocated to the tangible and intangible assets purchased and the liabilities
assumed (including in-process research and development) based on the fair values
using valuation methods appropriate at the time. Subsequently, the Staff set
forth a new methodology for calculating in-process research and development in
its letter dated September 15, 1998 to the American Institute of Certified
Public Accountants. Although the Company believes that its original accounting
treatment was in accordance with generally accepted accounting principles, it
has made the adjustments to be consistent with the new methodology set forth by
the Staff. This resulted in a reduction in the amount allocated to in-process
research and development from $2,531,078 to $2,057,008. This restatement does
not affect previously reported net cash flows for the period. The effect of this
reallocation on the previously reported consolidated financial statements as of
and for the three months ended March 31, 1998 is as follows (unaudited):
Three Months Ended
March 31, March 31,
1997 1998
---- ----
Consolidated Statement of Income: As Reported As Restated
----------- -----------
Write off of in process research and developmen 2,531,078 2,057,008
Operating income 2,047,837 2,521,907
Income before income taxes 2,301,349 2,775,419
Net income 237,193 711,263
Basic net income per share $ .01 $ .04
Diluted net income per share $ .01 $ .03
March 31, 1998
Balance Sheet: As Reported As Restated
----------- -----------
Goodwill 12,049,193 12,523,263
Total Assets 74,234,080 74,708,150
Accumulated deficit (11,138,408) (10,664,338)
Total stockholders' equity 50,297,823 50,771,893
Total liabilities and stockholders' equity 74,234,080 74,708,150
<PAGE>
The interim financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC), although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
contained in the Company's Form 10-K filed with the SEC on March 31, 1998. Other
than as indicated herein, there have been no significant changes from the
financial data published in those reports. In the opinion of management, such
unaudited information reflects all adjustments, consisting only of normal
recurring accruals and other adjustments as disclosed herein, necessary for a
fair presentation of the unaudited information.
Results for interim periods are not necessarily indicative of results expected
for the full year.
B. Accounting Policies
Revenue Recognition
On January 1, 1998, the Company adopted Statement of Position 97-2, "Software
Revenue Recognition" (SOP 97-2). The adoption of SOP 97-2 did not significantly
affect the Company's results of operations.
Net income per share
The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." Basic net income
(loss) per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding. Diluted net income (loss) per share
is computed by dividing net income (loss) by the weighted average number of
common and potential common shares outstanding. Diluted weighted average common
and potential common shares include common shares and stock options using the
treasury stock method. The reconciliation of basic and diluted income per share
is as follows:
Per Share
Income Shares Amount
------ ------ ------
March 31, 1998:
Basic income per share $ 711,263 18,640,122 .04
===
Effect of dilutive securities:
Stock options - 1,606,722
----------- ----------
Diluted income per share $ 711,263 20,246,844 .03
=========== ========== ===
March 31, 1997:
Basic income per share $ 1,978,197 18,262,850 .11
===
Effect of dilutive securities:
Stock options - 505,120
----------- ----------
Diluted income per share $ 1,978,197 18,767,970 .11
=========== ========== ===
On March 31, 1998, the Company issued 130,435 shares of stock as partial
consideration in the Insta acquisition. See Liquidity and Capital Resources.
Comprehensive Income
On January 1, 1998, the Company adopted Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." As required by the Statement, the Company
displays the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of the
Consolidated Balance Sheet. Items considered to be other comprehensive income
include adjustments made for foreign currency translation (under Statement 52)
and unrealized holding gains and losses on available-for-sale securities (under
Statement 115). Comprehensive income for the three months ended March 31, 1998
and 1997 is as follows:
March 31, 1998:
Net income $ 711,263
Foreign currency translation adjustment (204,763)
Unrealized loss on securities available-for-sale (30,956)
-----------
Comprehensive income $ 475,544
===========
March 31, 1997:
Net income $ 1,978,197
Foreign currency translation adjustment 372,672
-----------
Comprehensive income $ 2,350,869
===========
<PAGE>
C. Stock Split
Effective January 30, 1998, the Company's Board of Directors declared a
two-for-one stock split effected in the form of a stock dividend. All share, per
share and conversion amounts relating to the common stock, warrants and stock
options included in the accompany financial statements have been restated to
reflect this stock split.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This report contains certain forward-looking statements with respect to the
Company's operations, industry, financial condition and liquidity. These
statements reflect the Company's assessment of a number of risks and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth in this report.
Overview
The Company offers a complete family of "computerized maintenance management
systems" ("CMMS") / "enterprise asset management software" ("EAMS") to the
maintenance, repair and operations ("MRO") industry. Generally these products
consists of 5 major categories based on price and functionality. Maintainit and
Maintainit Pro are off-the-shelf, entry-level solutions for small to medium
businesses. MP2 Professional is a full featured integrated maintenance system
for small to mid-size companies. MP2 Enterprise combines the benefits of PC
servers and PC networks with a Windows graphical user interface and SQL
relational database. MP5 (formally R5 CAMMS) is a high-end client-server EAMS
product. Datastream supports its software products through professional
services, including installation, consulting, integration, custom programming
and training. Ongoing technical support services are supplied pursuant to
renewable annual technical support contracts.
On March 31, 1998, the Company completed the acquisition of all of the
outstanding shares of Insta, a German based CMMS provider. The acquisition was
accounted for as a purchase in accordance with APB Opinion No. 16, "Accounting
for Business Combinations." Under the purchase method of accounting, the
purchase price is allocated to the assets acquired and liabilities assumed based
on their estimated fair value at the date of the acquisition. Using valuation
methods appropriate at the time, the purchase price allocation included
in-process research and development of $2,531,078. Subsequently, the Staff set
forth a new methodology to be used for calculating in-process research and
development in its letter dated September 15, 1998 to the American Institute of
Certified Public Accountants. Although the Company believes that its original
accounting treatment was in accordance with generally accepted accounting
principles, it has made the adjustment to be consistent with the new methodology
set forth by the Staff. As a result, Datastream has voluntarily decreased the
amount previously expensed as in-process research and development to $2,057,008.
Results of Operations
Total Revenues. The Company reported higher revenues for the first quarter
of 1998. Total revenues increased 37% to $20,128,661 in the first quarter of
1998 from $14,682,411 in the first quarter of 1997 due to the continued
acceptance of the Company's products in the industrial automation market and the
expansion of the Company's sales, professional service and technical support
service organizations.
Product revenues increased 20% to $7,365,099 (37% of total revenues) in the
first quarter of 1998 from $6,148,014 (42% of total revenues) in the first
quarter of 1997, as a result of the growth in new product sales, including MP2
Enterprise and MP2 Professional - Access, and the growth in international sales.
Professional service revenues increased 55% to $8,955,524 (45% of total
revenues) in the first quarter of 1998 from $5,783,723 (39% of total revenues)
in the first quarter 1997. The increase resulted from the addition of
professional service personnel to service expansion of the Company's installed
base of systems.
Technical support services revenues for the first quarter 1998 increased
38% to $3,808,038 (19% of total revenues) from $2,750,674 (19% of total
revenues) in the first quarter of 1997, primarily due to the expansion of the
Company's installed base of systems.
Cost of Revenues. Cost of revenues increased 27% to $6,448,844 (32% of
total revenues) in the first quarter of 1998, as compared to $5,061,208 (34% of
total revenues) in the comparable quarter of 1997. The increase in cost of
revenues is attributed to increased expenses incurred in the Professional
Services and Support Departments related to salaries and customer reimbursed
travel and the write off of capitalized software rendered obsolete or redundant
by the acquisition of Insta on March 31, 1998.
Cost of product revenues was 4% of total revenues in the first quarter of
1998, and 6% of total revenues during the same period of 1997. The decrease as a
percent of total revenues is due to lower rate of capitalized software
amortization and decreased costs of shipping and packaging related items.
Cost of professional service revenues was 21% of total revenues during the
first quarter of 1998, and 24% of total revenues during the same period in 1997.
The decrease as a percentage of total revenues was due to increased efficiencies
realized in the restructuring of the European operations during 1997 and higher
utilization rates of consulting personnel.
<PAGE>
Cost of technical support service revenues was 5% of total revenues during
the first quarter of 1998 and 5% of total revenues during the same period in
1997.
Cost of revenue includes a $597,944 write-off of capitalized software (3%
of total revenues) which became obsolete as a result of the acquisition of
Insta.
Sales and Marketing Expenses. Sales and marketing expenses increased 30% to
$5,549,360 (28% of total revenues) during the first quarter of 1998 from
$4,273,471 (29% of total revenues) during the first quarter in 1997, as a result
of an increased number of sales personnel and commissions associated with the
increase in sales revenue and increased marketing expenses associated with new
product introductions and one time charges for the Plant Engineering trade show.
Product Development Expenses. Total product development expenditures
increased 107% to $2,328,591 (12% of total revenues) during the first quarter of
1998 from $1,126,123 (7% of total revenues) during the same period in 1997. The
capitalized portion of these amounts were $806,836 and $292,075, respectively.
Giving effect to amounts capitalized, product development expense increased 83%
to $1,521,755 (8% of total revenues) in the first quarter of 1998 from $834,048
(6% of total revenues) during the same period in 1997. The increase in total
product development expense resulted from increasing the number of development
personnel to support continued development of MP5, the increased use of outside
contractors for development work, foreign language development and other new
products.
General and Administrative Expenses. General and administrative expenses
decreased 9% to $2,029,787 (10% of total revenues) during the first quarter of
1998 from $2,235,040 (15% of total revenues) in the first quarter of 1997,
primarily due to efficiencies realized during the restructuring of the European
operations.
Write-off of in-process research and development costs. The Company
expensed $2,057,008, as restated, of in-process research and development
acquired as part of the acquisition of Insta.
Miscellaneous Income. Miscellaneous income increased to $75,988 in the
first quarter of 1998 from $47,279 in the first quarter of 1997. The increase
was due to increased rental income generated from leasing a greater portion of
the Company's building in Greenville, South Carolina.
Interest Income/(Expense). Interest income decreased to $205,790 in the
first quarter of 1998 from $262,510 in the first quarter of 1997, due to lower
investment balances realized upon completion of the SQL acquisition in December
1997. Interest expense decreased to $28,266 in the first quarter of 1998 from
$102,449 in the first quarter of 1997, due to lower debt balances in 1998.
Tax Rate. The Company's effective tax rate before non-deductible items
associated with the acquisition of INSTA was 38% for the first quarter of 1998
as compared to 20% for the first quarter of 1997.
Net Income. Net income decreased 64% to $711,263 (4% of total revenues) in
the first quarter of 1998 from $1,978,197 (13% of total revenues) in the first
quarter of 1997. This decrease is directly attributed to the charges for the
acquisition of INSTA on March 31, 1998. Without the acquisition related charges
net income would have increased 70% to $3,366,215 (17% of total revenues).
Liquidity and Capital Resources
The Company has funded its activities entirely from cash generated from
operations. The Company ended its first quarter of 1998 with $ 4,448,095 in cash
and cash equivalents defined as securities maturing in less than 90 days. The
Company intends to re-invest the proceeds of maturing U.S. Government securities
in similar U.S. Government securities.
The Company completed renovating and assumed occupancy of its new offices at 50
Datastream Plaza, Greenville, SC 29605 during April 1997.
The acquisition of SQL was completed for $31 million, consisting of $17 million
in cash and $14 million in common stock issued pursuant to Regulation S. In
connection with the acquisition, the Company also deposited into escrow an
additional $3 million in common stock, and assumed certain of SQL's outstanding
liabilities. Following the acquisition, SQL's long-term debt totaling
approximately $2.7 million was repaid by the Company and additional working
capital infusions of approximately $2.5 million were required to sustain SQL's
operations and pay current liabilities
<PAGE>
In July 1997, the Company made a $2 million investment in Distinction Software,
Inc. ("Distinction") This investment represents less than 20% of the outstanding
equity interests of Distinction and is included in long term investments on the
balance sheet.
The acquisition of Insta was completed on March 31, 1998 for $7 million,
consisting of $4,375,000 in cash and $2,625,000 (130,435 shares) in common stock
issued pursuant to Regulation S. In connection with the acquisition, the Company
deposited into escrow 34,783 shares of common stock, and assumed certain of
Insta's outstanding liabilities.
The Company's principal commitments as of March 31, 1998, consisted primarily of
long term debt assumed in the acquisition of SQL, and there were no material
commitments for capital expenditures. The Company believes that its current cash
balances, availability under its line of credit, cash flow from operations and
available for sale investments will be sufficient to meet its working capital
and capital expenditure needs for at least the next 12 months.
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Pursuant to the general instructions to Rule 305 to SEC Regulation S-K,
quantitative and qualitative disclosures called for by this Item 7A and by Rule
305 of SEC Regulation S-K are inapplicable to the Company at this time.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Stockholders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The company filed a Current Report on Form 8-K on April 14,1998
to report the Company's acquisition of all of the capital stock
and equity interests of Insta on March 31, 1998.
<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.
Datastream Systems, Inc.
/s/ Daniel H. Christie
Date: 02/26/99 ______________________
Daniel H. Christie
Chief Financial Officer (principal
financial and accounting officer)
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated (unaudited) statements of income for the three months ended March
31, 1998 and the consolidated balance sheet as of March 31, 1998 contained in
the Company's Quarterly Report on Form 10 Q/A for the Quarter Ended March 31,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 4,448,095 2,954,591
<SECURITIES> 5,670,266 10,981,553
<RECEIVABLES> 23,676,930 15,478,949
<ALLOWANCES> (1,755,529) (835,000)
<INVENTORY> 385,684 269,353
<CURRENT-ASSETS> 40,380,022 32,711,849
<PP&E> 16,451,976 11,233,754
<DEPRECIATION> (4,395,682) (2,228,284)
<TOTAL-ASSETS> 74,708,150 55,796,573
<CURRENT-LIABILITIES> 21,710,216 18,327,542
<BONDS> 1,334,041 1,229,331
0 0
0 0
<COMMON> 188,226 182,812
<OTHER-SE> 50,583,667 35,406,888
<TOTAL-LIABILITY-AND-EQUITY> 74,708,150 55,796,573
<SALES> 7,365,099 6,148,014
<TOTAL-REVENUES> 20,128,661 14,682,411
<CGS> 776,139 843,963
<TOTAL-COSTS> 6,448,844 5,061,208
<OTHER-EXPENSES> 11,157,910 7,342,559
<LOSS-PROVISION> 282,377 0
<INTEREST-EXPENSE> 28,266 102,449
<INCOME-PRETAX> 2,775,719 2,485,984
<INCOME-TAX> 2,064,156 507,787
<INCOME-CONTINUING> 711,263 1,978,197
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 711,263 1,978,197
<EPS-PRIMARY> 0.04 0.11
<EPS-DILUTED> 0.03 0.11
</TABLE>
