-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vp9tEQopKaR3cCVOyUCOavocECH61rA5Thr08ACLFFEdtqfEOFHGR7V7NFxSEdfm XRL2SiiootxUv5E5oVVBXA== 0000927016-97-002261.txt : 19970812 0000927016-97-002261.hdr.sgml : 19970812 ACCESSION NUMBER: 0000927016-97-002261 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPACETEC IMC CORP CENTRAL INDEX KEY: 0001002175 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 043116697 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27302 FILM NUMBER: 97655541 BUSINESS ADDRESS: STREET 1: BOOTT MILL STREET 2: 100 FOOT OF JOHN STREET CITY: LOWELL STATE: MA ZIP: 01854 BUSINESS PHONE: 5089700330 10-Q 1 FORM 10-Q FORM 10-Q - --------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (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 or the transition period from ______ to _______ Commission file number 0-27302 SPACETEC IMC CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-3116697 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) The Boott Mill, 100 Foot of John Street, Lowell, Massachusetts 01852 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (508)275-6100 - -------------------------------------------------------------------------------- (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) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- The number of shares outstanding of each of the issuer's classes of common stock as of Class Outstanding at June 30, 1997 ----- ---------------------------- Common Stock, $.01 par value 7,194,208 SPACETEC IMC CORPORATION TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets as of June 30, 1997 and March 31, 1997........................................ 3 Condensed consolidated statements of operations for the three months ended June 30, 1997 and 1996................. 4 Condensed consolidated statements of cash flows for the three months ended June 30, 1997 and 1996................. 5 Notes to consolidated condensed financial statements as of June 30, 1997............................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings-None Item 2. Changes in Securities-None Item 3. Defaults upon Senior Securities-None Item 4. Submission of Matters to a Vote of Security Holders-None Item 5. Other Information-None Item 6. Exhibits and Reports on Form 8-K.......................... 12 SIGNATURES........................................................ 14 2 Item I. Financial Statements Spacetec IMC Corporation Condensed Consolidated Balance Sheets (in thousands, except share and per share data)
June 30 March 31 1997 1997 ----------------- ---------------- (Unaudited) (Note) Assets Current assets: Cash and cash equivalents $ 185 $ 170 Securities available-for-sale 9,864 10,059 Accounts receivable, net 1,814 2,285 Inventories 1,419 1,718 Prepaid expenses 241 275 Due from employees and officer 22 19 Income taxes receivable 353 438 -------- -------- Total current assets 13,898 14,964 Furniture and equipment, net 1,040 964 Intangible assets, net 346 382 Software development costs, net 217 265 Other assets 27 27 -------- -------- 1,630 1,638 -------- -------- Total assets $ 15,528 $ 16,602 ======== ======== Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued expenses $ 1,205 $ 1,267 Deferred revenue 65 75 -------- -------- Total current liabilities 1,270 1,342 Shareholders' equity: Preferred stock, $.01 par value; 1,000,000 shares authorized -- -- Common stock, $.01 par value; 20,000,000 shares authorized; 7,369,208 and 7,366,508 shares issued and outstanding at June 30, 1997 and March 31, 1997, respectively 74 74 Additional paid-in capital 17,976 17,969 Deferred Compensation (40) (40) Unrealized gain on available-for-sale securities 55 46 Accumulated deficit (2,757) (2,033) Treasury stock, at cost; 175,000 shares and 100,000 shares at June 30, 1997 and March 31, 1997, respectively (1,050) (756) -------- -------- Total shareholders' equity 14,258 15,260 -------- -------- Total liabilities and shareholders' equity $ 15,528 $ 16,602 ======== ========
Note: The balance sheet at March 31, 1997 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to condensed consolidated financial statements. 3 Spacetec IMC Corporation Condensed Consolidated Statements of Operations Unaudited (in thousands, except per share data)
Three Months Ended June 30 1997 1996 ------- ------- Revenues $ 2,083 $ 1,852 Cost of revenues 662 561 ------- ------- 1,421 1,291 Operating expenses: Selling and marketing 1,054 735 Research and development 862 530 General and administrative 368 365 ------- ------- Total operating expenses 2,284 1,630 ------- ------- Loss from operations (863) (339) Interest income (139) (196) ------- ------- Loss before income taxes (724) (143) Income tax benefit -- (50) ------- ------- Net loss $ (724) $ (93) ======= ======= Net loss per share $ (0.10) $ (0.01) ======= ======= Weighted average common shares outstanding 7,238 7,277 ======= =======
See accompanying notes to condensed consolidated financial statements. 4 Spacetec IMC Corporation Condensed Consolidated Statements of Cash Flows Unaudited (in thousands)
Three months ended June 30 1997 1996 ----- ----- Operating activities Net loss $(724) $ (93) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 195 186 Changes in operating assets and liabilities: Accounts receivable, net 471 95 Inventories 299 (133) Prepaid expenses and other assets 34 (141) Due from employees and officer (3) -- Income taxes receivable 85 -- Accounts payable and accrued expenses (62) (743) Deferred revenue (10) 18 ----- ----- Net cash provided by (used in) operating activities 285 (811) Investing activities Net sales of securities available-for-sale 204 523 Purchase of furniture and equipment (187) (298) Purchase of intangible assets -- (50) Software development costs -- (114) ----- ----- Net cash provided by investing activities 17 61 Financing activities Proceeds from exercise of stock options 7 338 Stock repurchase (294) -- Additional offering costs -- (5) ----- ----- Net cash provided by (used in) financing activities (287) 333 ----- ----- Net increase in cash and cash equivalents 15 (417) Cash and cash equivalents at beginning of period 170 417 ----- ----- Cash and cash equivalents at end of period $ 185 $ -- ===== ===== Supplemental disclosure of cash flow information: Income taxes paid $ 4 $ 235 ===== ===== Non-cash investing and financing activities: Unrealized gain on available-for-sale securities $ 55 $ -- ===== =====
See accompanying notes to condensed consolidated financial statements. 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED (IN THOUSANDS) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial condition, results of operations, and cash flows for the periods presented have been included. Operating results for the three month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ended March 31, 1998. The Company suggests that these interim consolidated condensed financial statements be read in conjunction with the consolidated financial statements and footnotes thereto, included in the Company's annual report on Form 10-K for the year ended March 31, 1997. 2. INVENTORIES Inventories consist of the following:
JUNE 30 MARCH 31 1997 1997 ------------------- MATERIALS $1,014 $1,133 WORK-IN-PROCESS 28 31 FINISHED GOODS 377 554 ------------------- $1,419 $1,718 ===================
3. LOSS PER COMMON SHARE Net loss per common share is based on the weighted-average number of common shares outstanding during each of the periods. Common equivalent shares from stock options are excluded as their effect is antidilutive. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share (FAS 128), which will be adopted on December 31, 1997. FAS 128 requires companies to change the method currently used to compute earnings per share and to restate all prior periods for comparability. The adoption of FAS 128 is not expected to have any impact on the Company's earnings per share as the Company continues to be in a net loss position and, consequently, common equivalent shares from stock options are excluded as their effect is antidilutive. 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 4. ACQUISITION OF SPATIAL SYSTEMS LTD. On April 19, 1997, the Company initiated a tender offer to purchase all of the outstanding shares of Spatial Systems Ltd. ("SSL") from SSL's stockholders in exchange for shares of Common Stock of the Company. For each fifteen shares of SSL, the SSL shareholders will receive two shares of the Company's Common Stock, and for every option to purchase twelve shares of SSL, the option holder will receive one share of the Company's Common Stock. The tender offer ended on July 18, 1997. As a result of the tender offer, all shares of Common Stock of the Company owned by SSL will be canceled. The tender offer, together with the cancellation of the shares of the Company's Common Stock owned by SSL, will not affect the number of shares outstanding of the Company. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1997 AND 1996 Revenues: Revenues increased 12.5% to $2,083,000 for the three months ended June 30, 1997 (the "current quarter") from $1,852,000 for the three months ended June 30, 1996 (the "prior quarter"). Export sales, all of which are denominated in U.S. dollars, increased 2.0% to $522,000 in the current quarter from $514,000 in the prior quarter. Sales to the industrial market grew by 13.3% to $1,700,000 in the current quarter from $1,500,000 in the prior quarter. While revenues in the industrial market increased slightly compared to the prior quarter, sales expectations were not met as a result of slower than anticipated market penetration in the CAD business. Software and licensing revenues totaled $97,000 for the current quarter, a decrease of 77.3% from the prior quarter revenues of $428,000. These revenues are discrete in nature, and can vary from quarter to quarter. The prior quarter included a one-time non-recurring license fee. Consumer sector revenues of the SpaceOrb 360 Real Life 3D game controller and other consumer related revenue totaled $251,000 for the first quarter of fiscal 1998. As part of the corporate strategy, partnerships and Original Equipment Manufacturer ("OEM") relationships with a number of companies are being aggressively pursued. In the coming quarters, the Company will continue to place an emphasis on attracting potential partners to assist in capitalizing on its technology. However, there is no assurance that these relationships will be able to generate substantial revenue. Gross Profit: Gross profit, representing revenues less cost of revenues (including costs of materials, costs of manufacturing overhead, royalties, and amortization of capitalized software) increased 10.1% to $1,421,000 in the current quarter from $1,291,000 in the prior quarter, and represented 68.2% of current quarter revenues versus 69.7% of prior quarter revenues. As the Company continues to shift its sales mix from direct to OEM channels for industrial products, and increases the percentage of sales derived from consumer products, it is expected that the gross profit percentage will continue to be below the Company's traditional levels. The Company's expectations regarding the decline in gross profit percentage is a forward looking statement. There can be no assurance that such decreases in profit will not be greater than anticipated. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Selling and Marketing Expenses: Selling and marketing expenses, which include personnel costs, advertising and marketing costs, sales commissions and trade show expenses, increased 43.4% to $1,054,000 in the current quarter from $735,000 in the prior quarter, and represented 50.6% of current quarter revenues up from 39.7% of prior quarter revenues. The increase is primarily due to expenses related to the Company's entry into the consumer market, and the opening of additional sales offices in Germany and North America. Going forward, the Company expects the change in selling and marketing expenses to be more closely aligned with the change in revenues. General and Administrative Expenses: General and administrative expenses, which include the costs of the Company's finance, human resources and administrative functions increased less than 1% to $368,000 in the current quarter from $365,000 in the prior quarter, and represented 17.7% of current quarter revenues and 19.7% of prior quarter revenues. Management anticipates that these costs will remain stable in future quarters. Research and Development Expenses: Research and development expenses, which consist primarily of personnel and equipment costs required to conduct the Company's software and hardware development and engineering efforts, increased 62.6% to $862,000 for the current quarter from $530,000 in the prior quarter, and represented 41.4% of current quarter revenues and 28.6% of prior quarter revenues. The increase reflects significant investments in personnel necessary to expand the software product development efforts, particularly in developing software for stand-alone revenue generation, as well as engineering efforts designed to lower the cost of manufacturing the Company's hardware components. The Company expects a slight increase in its research and development expense throughout the next quarter, and stabilization thereafter. Provision for Income Taxes: As the Company has recognized losses, it has not recorded a provision for income taxes. The benefit attributable to carryback of losses to prior years was fully utilized during the fiscal year ended March 31, 1997. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1997, the Company had cash and cash equivalents and securities available for sale of $10,049,000 and working capital of $12,628,000 versus $10,229,000 and $13,622,000, respectively, at March 31, 1997. Operating activities provided the Company with $285,000 in cash in the current quarter, as compared to using $811,000 in the prior quarter. This increase in cash was primarily due to a reduction in accounts receivable of $471,000, as well as a $299,000 reduction in inventories. Additionally, $85,000 of income tax refunds was also received in the current quarter. Net cash provided to the Company in the current quarter from investing activities totaled $17,000 versus $61,000 in the prior year. The primary reason for the decrease was a decrease in proceeds from securities available for sale. The decrease was offset by reduced expenditures for furniture and equipment ($187,000 in the current quarter versus $298,000 in the prior quarter), and the absence of additions to intangible assets and any capitalization of software development costs. Financing activities used $287,000 of net cash in the current quarter primarily as a result of the Company repurchasing its stock. The amount paid for the repurchase of stock was partially offset by the proceeds from the exercise of employee stock options. The Company believes that its existing cash and investment securities together with future anticipated funds from operations, will satisfy its projected working capital and other cash requirements through the end of its fiscal year ending March 31, 1998. Substantial funds will be required to continue software and hardware development, as well as to develop the sales and marketing infrastructure, distribution channels and market awareness in the PC multimedia and consumer marketplaces. The Company believes the level of financial resources available to it is an important competitive factor in its industry and may seek additional capital prior to the end of that period. In addition, the Company may consider potential acquisitions of technologies and businesses complementary to the Company's business. There are not at present any agreements or commitments other than the transaction disclosed in Note 4 to the condensed consolidated financial statements with respect to any such additional acquisitions; however, any such transaction may affect the Company's future capital needs. The Company's capital requirements will depend on many factors, including the rate at which the Company can develop its products, the market acceptance of such products, the levels of promotion and advertising required to launch such products and attain a competitive position in the marketplace, and the amount of capital necessary for potential acquisitions. Changes in technology or growth in revenues beyond currently established capabilities will also require further investment. To the extent that the Company's current financial resources are insufficient to fund the Company's operating requirements, it may be necessary for the Company to seek additional funding through public or private financing. There can be no assurance that additional financing will be available on acceptable terms or at all. If additional funds are raised by issuing equity securities, further dilution to the existing stockholders may result. If adequate funds are not available, the Company's business would be materially adversely affected, and, as a result, the Company may be required to curtail its operations significantly. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) SAFE HARBOR STATEMENT Statements which are not historical facts, including statements about our confidence and strategies and our expectations about new and existing products, technologies and opportunities, market and industry segment growth, demand and acceptance of new and existing products, and return on investments in products and markets are forward looking statements that involve risks and uncertainties. These uncertainties include, but are not limited to, product demand and market acceptance risks; the impact of competitive products and pricing; product development, commercialization and technological delays or difficulties, including delays or difficulties in developing, producing, testing and selling new products and technologies; capacity and supply constraints or difficulties; trade, legal, social, and economic risks, such as import, licensing, and trade restrictions, including those affecting international trade; and other risks detailed in the Company's Securities and Exchange Commission filings, including the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997. 11 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. Spacetec IMC Corporation - ----------------------------------------- (Registrant) By /s/ Neil Rossen August 11, 1997 ------------------------------------- --------------- Neil Rossen-Chief Financial Officer, Date Senior Vice President of Finance 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K During the quarter ended June 30,1997, the Company filed with the Commission on May 15, 1997 a report on Form 8-K which reported that the Company's Board of Directors authorized the repurchase of up to 1,000,000 shares of the Company's common stock on the open market or in negotiated transactions, depending upon market conditions and other factors. The following exhibits are included herein: (11) Statement re: computation of earnings per share (27) Financial Data Schedule 13 EX-11 2 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE Exhibit (11)-Statement Re: Computation of Loss Per Share
Three months ended June 30 1997 1996 ------- ------- (in thousands, except per share data) Primary and Fully Diluted: Average shares outstanding 7,267 7,277 Average treasury shares outstanding (29) -- Net effect of dilutive stock options-based on the treasury stock method using average market price -- -- ------- ------- Totals 7,238 7,277 ======= ======= Net loss $ (724) $ (93) ======= ======= Per share amount $ (0.10) $ (0.01) ======= =======
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAR-31-1998 APR-01-1997 JUN-30-1997 185 9,864 2,017 203 1,419 13,898 1,720 680 15,528 1,270 0 0 0 74 14,184 15,528 2,083 2,083 662 662 2,284 0 0 (724) 0 (724) 0 0 0 (724) (0.10) (0.10)
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