SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 19, 1999
ROMTECH, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-27102 23-2694937
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2000 Cabot Blvd. West, Suite 110, Langhorne, PA 19047-1833
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 750-6606
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On January 19, 1999, RomTech, Inc. (the "Company") issued a press release
announcing the Company's unaudited results for the second quarter ended December
31, 1998, as described in the press release attached as Exhibit 99.1 and
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. None.
b. None.
c. Exhibits.
99.1 Press Release dated January 19, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROMTECH, INC.
By: /s/ Gerald W. Klein
---------------------------
Gerald W. Klein, President,
Chief Executive Officer and
Chief Financial Officer
Dated: January 21, 1999
EXHIBIT 99.1
AT ROMTECH: AT FINANCIAL RELATIONS BOARD:
- ----------- -----------------------------
Jerry Klein Glenn Sapadin (212) 661-8030 (General Inquiries)
President and CEO Elisa Mailman (212) 661-8030 (Investor Inquiries)
(215) 750-6606 ext. 118 Deanne Eagle (212) 661-8030 (Media Inquiries)
[email protected]
For Immediate Release
ROMTECH ANNOUNCES EPS GAIN OF 50% ON STRONG REVENUE GROWTH OF
26% IN THE FISCAL 1999 SECOND QUARTER
Earnings For First Six Months of Fiscal 1999 Exceed Full-Year
Fiscal 1998 Results
LANGHORNE, Pa., January 19, 1999 -- RomTech, Inc. (Nasdaq: ROMT), the leading
provider of Family Friendly(TM), value-priced computer software games for
players of all ages, today announced record results for the second fiscal
quarter and six months ended December 31, 1998.
Sales for the quarter ended December 31, 1998 increased 26% to $3,611,000 versus
sales of $2,856,000 for the same quarter a year ago. This increase is primarily
attributable to the continued popularity of the Company's family friendly,
value-priced games and the successful introduction of new titles under the Game
Master(TM) and Galaxy of Arcade(TM) product lines during the current fiscal
year. RomTech is also benefiting from its growing share of the value-priced
gaming software market, the fastest growing segment of the consumer software
market.
Net income for the current quarter rose 41% to $847,000, or $0.09 per diluted
share, versus net income of $601,000, or $0.06 per diluted share, for the three
months ended December 31, 1997. On a per share basis, earnings grew 50%. This
increase is attributable to strong top line revenue growth combined with the
Company's ability to increase its margins. For the second quarter ended December
31, 1998 gross margins and operating margins were 69% and 25%, respectively,
compared to 64% and 22% for the same quarter a year earlier.
SIX MONTH RESULTS
Sales for the six months ended December 31, 1998 increased 39% to $6,117,000,
versus sales of $4,391,000, for the same period a year earlier. Net income for
the current period grew 89% to $1,250,000, or $0.13 per diluted share, versus
net income of $662,000, or $0.07 per diluted share, for the six months ended
December 31, 1997. On a per share basis, earnings increased 86%.
Earnings for the first six months of fiscal 1999 have already exceeded the $0.12
fully diluted per share earnings reported for full year fiscal 1998 reflecting
the effective implementation of the Company's focused business strategy.
During the first half of fiscal 1999, RomTech continued to expand its product
offerings. As of December 31, 1998, the Company offered 42 Galaxy Software games
for sale, up significantly from the 28 titles available at the end of fiscal
1998.
<PAGE>
MANAGEMENT'S COMMENTS
"We are very pleased with our strong sales growth, our significantly increased
profitability and the substantial progress we have made in introducing exciting
new products to the marketplace. We are currently one of the fastest growing
casual gaming software companies both in terms of dollars and units sold, a
position we intend to maintain going forward," said Jerry Klein, President and
CEO of RomTech.
"The cornerstone of our success has been the establishment of the Galaxy
Software brand as one that consumers recognize and remember. Also, we continue
to implement other elements of our business strategy including the expansion of
our domestic and international reach, both through creating new strategic
relationships and aggressively implementing our Internet strategy," stated Mr.
Klein.
"Where our products were only available in five countries at this time last
year, we are now available through retail distribution in more than twenty-one
countries. Importantly, RomTech's international sales grew 400% to $1,259,000
and now represent 21% of overall sales, up from 6% at this time last year," said
Mr. Klein.
"With respect to our on-line capabilities, our eGames2000.com home page and our
accompanying e-commerce strategy make our software products accessible to any
software gaming enthusiast with a computer and a modem. Last week's announced
distribution and marketing agreement with Digital River, the leader in
electronic software delivery (ESD), puts us on the cutting edge of the Internet
revolution. This means that consumers can now purchase any of our games online
and begin playing them within minutes," continued Mr. Klein.
"As a result of our strong first half results and the Company's competitive
strengths going forward, our objective for fiscal 1999 is to increase sales by
50% and to double our earnings from the year ago period," concluded Mr. Klein.
RomTech's Board of Directors approved a $1 million stock buyback program on
October 26, 1998. To date the Company has repurchased 161,900 shares at an
average price of $1.67 per share.
RomTech, headquartered in Langhorne, Pa., develops, publishes and markets a
diversified line of personal computer software primarily for consumer
entertainment and small office/home office applications. RomTech promotes the
Galaxy of Games(TM), Galaxy of Home Office Help(TM), Game Master Series(TM) and
Galaxy of Arcade(TM) brand names ("Galaxy Software") in order to generate
customer loyalty, encourage repeat purchases and differentiate the Galaxy
Software products to retailers and consumers.
<PAGE>
This press release contains certain forward-looking statements, including
without limitation, statements regarding RomTech's market share in the
value-priced category, RomTech's position as one of the fastest growing casual
gaming software companies, RomTech's business strategy and the success of
RomTech's Galaxy branding strategy and Game Master Series products. The actual
results achieved by RomTech, and the factors that could cause actual results to
differ materially from those indicated by the forward-looking statements, are in
many ways beyond RomTech's control. RomTech cautions readers that the following
important factors, among others, could cause RomTech's actual results to differ
materially from those expressed in this press release: the allocation of
adequate shelf space for RomTech's products in major chain retail stores;
successful sell-through results for RomTech's products at retail stores;
downward pricing pressure; the timeliness and success of developing and selling
products; the acceptance by the market of the Game Master and other Galaxy
products; access to and control over distribution channels; consumers'
continuing demand for value-priced software; competition; the ability to create
successful strategic partnerships and implement its Internet strategy; and
various other factors, many of which are beyond the Company's control, described
in RomTech's reports, including Form 10-KSB, dated June 30, 1998, filed by
RomTech with the Securities and Exchange Commission.
RomTech, Inc.'s press releases are available free-of-charge by fax by calling
1-800-PRO-INFO and entering ticker symbol ROMT or at Company News at
http:/www.prnewswire.com.
<PAGE>
Consolidated Statements of Operations
(Un-audited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
------------------------------ ------------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 3,611,126 $ 2,855,626 $ 6,117,326 $ 4,391,184
Cost of sales 1,136,731 1,022,828 2,017,308 1,636,624
----------- ----------- ----------- -----------
Gross profit 2,474,395 1,832,798 4,100,018 2,754,560
Operating expenses:
Product development 236,965 52,967 442,632 139,538
Selling, general and administrative 1,318,861 1,153,823 2,298,503 1,810,108
----------- ----------- ----------- -----------
Total operating expenses 1,555,826 1,206,790 2,741,135 1,949,646
Operating income 918,569 626,008 1,358,883 804,914
Interest expense, net (13,632) (12,584) (24,281) (24,010)
----------- ----------- ----------- -----------
Income before taxes 904,937 613,424 1,334,602 780,904
Provision for income tax (57,967) -0- (84,267) (1,165)
----------- ----------- ----------- -----------
Net income 846,970 613,424 1,250,335 779,739
Accretion of beneficial conversion
feature on preferred stock -0- (12,550) -0- (117,991)
----------- ----------- ----------- -----------
Net income attributable
to common stock $ 846,970 $ 600,874 $ 1,250,335 $ 661,748
=========== =========== =========== ===========
Net income per common share:
- Basic $ 0.09 $ 0.07 $ 0.13 $ 0.08
- Diluted $ 0.09 $ 0.06 $ 0.13 $ 0.07
Weighted average common shares
outstanding - Basic 9,469,031 8,965,224 9,455,680 8,106,082
Dilutive effect of common stock equivalents 189,156 658,183 171,234 1,401,752
Weighted average common shares
outstanding - diluted 9,658,187 9,623,407 9,626,914 9,507,834
</TABLE>
<PAGE>
Consolidated Balance Sheet
(Un-audited)
As of
December 31,
ASSETS 1998
------------
Current assets:
Cash and cash equivalents $ 282,142
Restricted cash 17,039
Accounts receivable, net of $333,031 in allowances 4,104,277
Inventory 1,241,035
Prepaid expenses 181,692
----------
Total current assets 5,826,185
Furniture and equipment, net 391,356
Other assets 571,885
----------
Total assets $6,789,426
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 234,680
Accounts payable 1,514,472
Accrued expenses 792,788
Capital lease obligations 23,209
----------
Total current liabilities 2,565,149
Capital lease obligations 40,130
Notes payable 222,725
Convertible subordinated debt 150,000
----------
Total liabilities 2,978,004
Stockholders' equity:
Common stock, no par value (40,000,000 shares authorized;
9,361,300 issued, net of 144,900 treasury shares) 8,142,292
Additional paid in capital 1,148,550
Accumulated other comprehensive income 969
Accumulated deficit (5,480,389)
----------
Total stockholders' equity 3,811,422
----------
Total liabilities and stockholders' equity $6,789,426
==========
