UNITED STATES
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
February 1, 2013 (February 1, 2013)
Date of Report (Date of earliest event reported)
MAM SOFTWARE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware | 000-27083 | 84-1108035 |
(State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
Maple Park, Maple Court, Tankersley, Barnsley, UK S75 3DP
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: 011 44 124 431 1794
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Information About Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." MAM Software Group Inc.’s (the “Company”) financial and operational results reflected herein should not be construed by any means as representative of the current or future value of its common stock or bonds. All information set forth in this Current Report on Form 8-K, except historical and factual information, represents forward-looking statements. This includes all statements about the Company’s plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of customer preferences; and other factors set forth in the Company's most recently filed annual report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission (the “SEC”).
Item 2.02. Results of Operations and Financial Condition.
On February 1, 2013, the Company issued a press release announcing its financial and operational results for the fiscal quarter ended December 31, 2012. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(a) | Not applicable. |
(b) | Not applicable. |
(c) | Not applicable. |
(d) | Exhibits |
Exhibit No. | Description |
99.1 | Press Release dated February 1, 2013, entitled “MAM Software Group Reports Second Quarter and Six Month Financial Results” |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: February 1, 2013 | MAM SOFTWARE GROUP, INC. | ||
By: | /s/ Charles F. Trapp | ||
Name: Charles F. Trapp | |||
Title: Chief Financial Officer |
INDEX TO EXHIBITS
Exhibit No. | Description |
99.1 | Press Release dated February 1, 2013, entitled “MAM Software Group Reports Second Quarter and Six Month Financial Results” |
MAM Software Group Reports Second Quarter and Six Month Financial Results
Tankersley Barnsley, England, February 1, 2013 -- MAM Software Group, Inc. (OTC Bulletin Board: MAMS), a leading provider of business automation and ecommerce solutions for the automotive aftermarket, announced the following financial results for its three and six months ended December 31, 2012, through the filing on February 1, 2013 of its Quarterly Report on Form 10-Q with the Securities and Exchange Commission:
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
(In thousands, except share and per share data) | December 31, | December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenues | $ | 6,754 | $ | 6,686 | $ | 13,237 | $ | 12,848 | ||||||||
Gross profit | $ | 3,928 | $ | 4,037 | $ | 7,701 | $ | 7,514 | ||||||||
Operating income | $ | 1,047 | $ | 1,273 | $ | 1,961 | $ | 2,147 | ||||||||
Income before provision for income taxes | $ | 966 | $ | 1,351 | $ | 1,719 | $ | 2,322 | ||||||||
Net income | $ | 784 | $ | 1,079 | $ | 1,408 | $ | 1,810 | ||||||||
Earnings per share attributed to common stockholders - basic | $ | 0.06 | $ | 0.08 | $ | 0.11 | $ | 0.13 | ||||||||
Earnings per share attributed to common stockholders - diluted | $ | 0.06 | $ | 0.07 | $ | 0.11 | $ | 0.12 | ||||||||
Weighted average shares outstanding - basic | 12,762,864 | 14,278,464 | 12,865,765 | 14,245,922 | ||||||||||||
Weighted average shares outstanding - diluted | 12,982,406 | 14,537,439 | 13,048,538 | 14,508,953 |
Six Month Highlights:
· | Continued U.K. growth of Autowork Online subscribers to 2,709; representing a year-over-year subscriber growth of 7.4%. |
· | Successful launch of Autopart Online and Trader Online, our U.K. ‘Cloud’ version of our business management systems. |
· | A 7.3% year-over-year growth in consolidated recurring revenues to $9,380,000 or 71% of total revenue. |
· | U.S. revenue growth of $432,000 or 12% for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. |
· | An increase of $549,000 or 4.2% in Stockholders’ Equity for the six months ended December 31, 2012 after the repurchase of $1,389,000 worth of common stock. |
· | System backlog of $1,705,000, a quarterly increase of $608,000, compared to $1,097,000 from September 30, 2012. |
· | A cash position, net of interest bearing debt, of $1,840,000, after the repurchase of $1,389,000 worth of common stock and $475,000 worth of warrants. |
· | Repurchase of 549,187 shares of common stock for approximately $1,389,000 for the six months ended December 31, 2012. |
Three and Six Month Financial Review:
The Company reported revenues of $6,754,000 for the three months ended December 31, 2012, an increase of $68,000 or 1.0%, compared with revenues of $6,686,000 for the three months ended December 31, 2011. Operating income was $1,047,000 for the three months ended December 31, 2012 compared with operating income of $1,273,000 for the three months ended December 31, 2011, a decrease of $226,000 or 17.8%. Net income before income taxes was $966,000 for the three months ended December 31, 2012, which included $42,000 of expense from the Change in Fair Value of Derivative Liabilities, compared with net income before income taxes of $1,351,000 for the three months ended December 31, 2011, which included $126,000 of income from the Change in Fair Value of Derivative Liabilities. The net income was $784,000 and $1,079,000 for the three month periods ended December 31, 2012 and 2011, respectively.
The Company reported revenues of $13,237,000 for the six months ended December 31, 2012 compared with $12,848,000 for the six months ended December 31, 2011, an increase of $389,000 or 3.0%. Operating income was $1,961,000 for the six months ended December 31, 2012, compared with operating income of $2,147,000 for the six months ended December 31, 2011, a decrease of $186,000 or 8.7%. Net income before income taxes was $1,719,000 for the six months ended December 31, 2012, which included $248,000 of expense from the Change in Fair Value of Derivative Liabilities, compared with net income before income taxes of $2,322,000 for the six months ended December 31, 2011, which included $276,000 of income from the Change in Fair Value of Derivative Liabilities. The net income was $1,408,000 and $1,810,000 for the six month periods ended December 31, 2012 and 2011, respectively.
Gross margins for the three and six months ended December 31, 2012 were 58.2% and 58.2% vs. 60.4% and 58.5% for the three and six months ended December 31, 2011, respectively. The reduction in Gross margins was the result of reduced system sales, which historically have a higher gross profit. In place of the reduced system sales was an increase in SAAS revenue, which has a higher percentage of setup costs but lower ongoing costs to maintain.
Revenue from our U.K. operations were 2,889,000GBP for the three months ended December 31, 2012, a decrease of 32,000GBP or 1.1%, compared with revenues of 2,921,000GBP for the three months ended December 31, 2011. The weaker U.S. dollar resulted in dollar-denominated revenue of $4,639,000 for 2012 as compared to $4,594,000 during 2011, which is an increase of $45,000. For the three months ended December 31, 2012 U.K. recurring revenue increased 128,000GBP or 6.2% to 2,191,000GBP from 2,063,000GBP and system sales decreased 160,000GBP or 18.6% to 698,000GBP from 858,000GBP. The increase in recurring revenue is primarily the result of increased sales of our Autopart Online product, which contributed to the decrease in system sales.
Revenue from our U.K. operations were 5,772,000GBP for the six months ended December 31, 2012, an decrease of 30,000GBP or 0.5%, compared with revenues of 5,802,000GBP for the three months ended December 31, 2011. The weaker U.S. dollar resulted in dollar-denominated revenue of $9,193,000 for 2012 as compared to $9,236,000 during 2011, which is a decrease of $43,000. For the six months ended December 31, 2012 U.K. recurring revenue increased 309,000GBP or 7.6% to 4,376,000GBP from 4,067,000GBP and system sales decreased 339,000GBP or 19.5% from 1,396,000GBP to 1,735,000GBP. The increase in recurring revenue is primarily the result of increased sales of our Autopart Online product, which contributed to the decrease in system sales.
Revenues for our U.S. operations were $2,115,000 for the three months ended December 31, 2012, an increase of $24,000 or 1.1%, compared with revenues of $2,091,000 for the three months ended December 31, 2011. Recurring revenue increased $92,000 or 8.1% from $1,136,000 to $1,228,000 for the three months ended December 31, 2012 when compared with the three months ended December 31, 2011.
Revenues for our U.S. operations were $4,044,000 for the six months ended December 31, 2012 an increase of $432,000 or 12.0% compared with revenues of $3,612,000 for the six months ended December 31, 2011. Recurring revenue increased $145,000 or 6.4% from $2,266,000 to $2,411,000 for the six months ended December 31, 2012 when compared with the six months ended December 31, 2011. Operating income decreased $226,000 to $1,047,000 from $1,273,000 for the three months ended December 31, 2012 compared to the three months ended December 31, 2011. Gross profit was $3,928,000 for the three months ended December 31, 2012 vs. $4,037,000 for the three months ended December 31, 2011, a reduction of $109,000, and operating expenses increased $117,000 from $2,764,000 to $2,881,000. Operating expenses were higher because of the $131,000 increase in Sales and marketing, which resulted from an increase in salesmen and increased attendance at conferences and trade shows. Operating income decreased $186,000 to $1,961,000 from $2,147,000 for the six months ended December 31, 2012 compared to the six months ended December 31, 2011. Gross profit was $7,701,000 for the six months ended December 31, 2012 vs. $7,514,000 for the six months ended December 31, 2011, an increase of $187,000. Operating expenses increased $373,000 from $5,367,000 to $5,740,000 because of a $344,000 increase in Sales and marketing, which resulted from an increase in salesmen and increased attendance at conferences and trade shows.
Business Update:
Commenting on the quarter ending December 31, 2012 compared with the quarter ending December 31, 2011, MAM's CEO, Michael Jamieson, said, "Revenues were slightly ahead of last year. For the six months ending December 31, 2012, Revenues increased $389,000 or 3%, primarily from the $640,000 increase in recurring revenue." Mr. Jamieson further commented "I was pleased with the results we achieved with our "cloud" based application, Autowork Online in the U.K. Subscribers to Autowork Online have increased each month of this quarter and now total 2,709. Revenues from Autowork Online have increased each month of this fiscal year and totaled $345,000 for the three months and $677,000 for the six months ended December 31, 2012 as compared to $275,000 for the three months and $551,000 for the six months ended December 31, 2011, respectively. MAM Software in the U.S. and Aftersoft Network N.A.'s operations remain consistent with a positive increase in income for both quarters.”
Mr. Jamieson also added, "We continued our strategic development, building on the results achieved in Fiscal 2012. During Fiscal 2012 we commissioned a number of software development projects to support our strategic objectives. A warehouse management software module, a new business intelligence reporting tool and a U.S. version of Autowork Online were some of the major projects that were commissioned. Adding new functionality into our Trader business management software was also a key requirement, as we seek to expand our penetration into other vertical markets. During Fiscal 2013, we plan to continue investing in our business, as shown by the increased spending in Sales and Marketing, and Engineering of $174,000 and $444,000 for the three and six month periods ending December 31, 2013. These investments include hiring additional U.S. and U.K.-based Sales and Marketing staff, broadening our DAAS, SAAS and Cloud-based product offerings, penetrating deeper into the North American market with our DAAS, SAAS and Cloud-based products, continue penetrating into other vertical markets in the U.K., improving our internal IT infrastructure, launching an updated version of our corporate website and increasing the depth of our leadership team to focus on growing our North American market share.” Mr. Jamieson further elaborated that "the Company ended with a cash position of $2,516,000, decreased debt by $366,000 to $676,000, and increased Stockholders' Equity by 4% to $13,690,000 after the repurchase of 549,187 common shares at an approximate cost of $1,389,000.”
About MAM Software Group, Inc.
MAM Software Group, Inc. (OTC Bulletin Board: MAMS) is a supplier of business and ERP supply chain management solutions to automotive parts manufacturers, distributors and retailers. MAM Software Group provides the automotive aftermarket with a combination of business management systems, information products, and online services that together deliver benefits for all parties involved in the timely repair of a vehicle. For further information, please visit http://www.mamsoftwaregroup.com/.
MAM SOFTWARE GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
December 31, 2012 | June 30, 2012 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 2,516 | $ | 3,628 | ||||
Accounts receivable, net of allowance of $113 and $108 | 4,011 | 3,507 | ||||||
Inventories | 226 | 358 | ||||||
Prepaid expenses and other current assets | 1,108 | 957 | ||||||
Total Current Assets | 7,861 | 8,450 | ||||||
Property and Equipment, Net | 650 | 664 | ||||||
Other Assets | ||||||||
Goodwill | 9,390 | 9,158 | ||||||
Amortizable intangible assets, net | 1,018 | 1,361 | ||||||
Software development costs, net | 995 | 1,106 | ||||||
Other long-term assets | 38 | 45 | ||||||
TOTAL ASSETS | $ | 19,952 | $ | 20,784 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,157 | $ | 1,327 | ||||
Accrued expenses and other | 1,629 | 2,011 | ||||||
Payroll and other taxes | 590 | 580 | ||||||
Derivative liabilities | 142 | 442 | ||||||
Current portion of long-term debt | 676 | 759 | ||||||
Current portion of deferred revenue | 426 | 381 | ||||||
Sales tax payable | 749 | 709 | ||||||
Income tax payable | 451 | 567 | ||||||
Total Current Liabilities | 5,820 | 6,776 | ||||||
Long-Term Liabilities | ||||||||
Deferred revenue, net of current portion | 77 | 130 | ||||||
Deferred income taxes | 102 | 169 | ||||||
Long-term debt, net of current portion | - | 283 | ||||||
Other | 263 | 285 | ||||||
Total Liabilities | 6,262 | 7,643 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity | ||||||||
Preferred stock: Par value $0.0001 per share; 2,000,000 shares authorized, none issued and outstanding | - | - | ||||||
Common stock: Par value $0.0001 per share; 18,000,000 shares authorized, 14,440,185 shares issued and 13,840,132 shares outstanding at December 31, 2012 and 15,492,730 shares issued and 14,296,105 shares issued and outstanding at June 30, 2012 | 1 | 2 | ||||||
Additional paid-in capital | 31,447 | 33,453 | ||||||
Accumulated other comprehensive loss | (635 | ) | (930 | ) | ||||
Accumulated deficit | (15,619 | ) | (17,027 | ) | ||||
Treasury stock at cost, 600,053 shares and 1,196,625 shares at December 31, 2012 and June 30, 2012, respectively | (1,504 | ) | (2,357 | ) | ||||
Total Stockholders' Equity | 13,690 | 13,141 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 19,952 | $ | 20,784 |
MAM SOFTWARE GROUP, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenues | $ | 6,754 | $ | 6,686 | $ | 13,237 | $ | 12,848 | ||||||||
Cost of revenues | 2,826 | 2,649 | 5,536 | 5,334 | ||||||||||||
Gross profit | 3,928 | 4,037 | 7,701 | 7,514 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 844 | 801 | 1,705 | 1,605 | ||||||||||||
Sales and marketing | 821 | 690 | 1,633 | 1,289 | ||||||||||||
General and administrative | 932 | 976 | 1,828 | 1,875 | ||||||||||||
Depreciation and amortization | 284 | 297 | 574 | 598 | ||||||||||||
Total operating expenses | 2,881 | 2,764 | 5,740 | 5,367 | ||||||||||||
Operating income | 1,047 | 1,273 | 1,961 | 2,147 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (39 | ) | (48 | ) | (80 | ) | (101 | ) | ||||||||
Gain on settlement of liabilities | - | - | 13 | - | ||||||||||||
Gain on settlement of derivative liabilities | - | - | 73 | - | ||||||||||||
Change in fair value of derivative liabilities | (42 | ) | 126 | (248 | ) | 276 | ||||||||||
Total other income (expense), net | (81 | ) | 78 | (242 | ) | 175 | ||||||||||
Income before provision for income taxes | 966 | 1,351 | 1,719 | 2,322 | ||||||||||||
Provision for income taxes | 182 | 272 | 311 | 512 | ||||||||||||
Net income | 784 | 1,079 | 1,408 | 1,810 | ||||||||||||
Foreign currency translation income (loss) | 1 | (12 | ) | 296 | (273 | ) | ||||||||||
Total comprehensive income | $ | 785 | $ | 1,067 | $ | 1,704 | $ | 1,537 | ||||||||
Earnings per share attributed to common stockholders: | ||||||||||||||||
Basic | $ | 0.06 | $ | 0.08 | $ | 0.11 | $ | 0.13 | ||||||||
Diluted | $ | 0.06 | $ | 0.07 | $ | 0.11 | $ | 0.12 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 12,762,864 | 14,278,464 | 12,865,765 | 14,245,922 | ||||||||||||
Diluted | 12,982,406 | 14,537,439 | 13,048,538 | 14,508,953 |
MAM SOFTWARE GROUP, INC. |
Calculation of Adjusted Earnings before Interest, Taxes, Depreciation, |
and Amortization (unaudited, includes non-cash compensation and |
change in value of derivative liabilities) |
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Net Income | $ | 784 | $ | 1,079 | $ | 1,408 | $ | 1,810 | ||||||||
Interest Expense | 39 | 48 | 80 | 101 | ||||||||||||
Taxes | 182 | 272 | 311 | 512 | ||||||||||||
Depreciation and amortization | 284 | 297 | 574 | 598 | ||||||||||||
Gain on settlement of liabilities | - | - | (13 | ) | - | |||||||||||
Gain on settlement of derivative liabilities | - | - | (73 | ) | - | |||||||||||
Non-cash equity compensation | 73 | 88 | 185 | 132 | ||||||||||||
Change in fair value of derivative liabilities | 42 | (126 | ) | 248 | (276 | ) | ||||||||||
Adjusted EBITDA | $ | 1,404 | $ | 1,658 | $ | 2,720 | $ | 2,877 |
This press release contains forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the company's business including, increased competition; the ability of the company to expand its operations through either acquisitions or internal growth, to attract and retain qualified professionals, and to expand commercial relationships; technological obsolescence; general economic conditions; and other risks detailed time to time in the Company's filings with the Securities and Exchange Commission.
Contact: Charles F. Trapp, Executive Vice President and Chief Financial Officer 610-336-9045 ext. 240
Maple Park, Maple Court
Tankersley, S75 3DP UK
Tel : +44 (0) 1244 311794