-----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, EFx+28nK5X/x7yV4ol++qYU8Yn+yUXs02njuy3gqL0A90AaDOQnUX+qj2GDvTKPL KHR+yo7UUR7dWKoI1e61aw== 0000927356-98-001865.txt : 19981116 0000927356-98-001865.hdr.sgml : 19981116 ACCESSION NUMBER: 0000927356-98-001865 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPATIAL TECHNOLOGY INC CENTRAL INDEX KEY: 0000852437 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 841035353 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28842 FILM NUMBER: 98747880 BUSINESS ADDRESS: STREET 1: 2425 55TH STREET STREET 2: STE 100 CITY: BOULDER STATE: CO ZIP: 803012 BUSINESS PHONE: 3034490649 MAIL ADDRESS: STREET 1: 2425 55TH STREET STREET 2: STE 100 CITY: BOULDER STATE: CO ZIP: 80301 10QSB 1 FORM 10QSB FOR PERIOD ENDING 09/30/98 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTIES EXCHANGE ACT OF 1934 For the transition period from To Commission file number 0-288-42 SPATIAL TECHNOLOGY INC. (Exact name of registrant as specified in its charter) DELAWARE 84-1035353 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2425 55TH STREET, SUITE 100, BOULDER, COLORADO 80301 (address of principal executive offices) (Zip Code) (303) 544-2900 (Registrant's telephone number, including area code) Indicate by check 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 ------- ------- As of October 1, 1998, there were outstanding 7,838,166 shares of the Registrant's Common Stock (par value $0.01 per share). Transitional Small Business Disclosure Format (check one): Yes No X ------ ------ SPATIAL TECHNOLOGY INC. INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets, December 31, 1997 and September 30, 1998................................................................ 3 Condensed Consolidated Statements of Operations, three and nine months ended September 30, 1997 and 1998.............................................. 4 Condensed Consolidated Statements of Cash Flows, nine months ended September 30, 1997 and 1998.............................................. 5 Notes to Condensed Consolidated Financial Statements.................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations... 7 PART II. OTHER INFORMATION....................................................................... 11 Signatures........................................................................................ 12
2 SPATIAL TECHNOLOGY INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except shares)
ASSETS December 31, September 30, 1997 1998 --------------------- --------------------- (Unaudited) Current Assets: Cash and cash equivalents............................................. $ 5,736 $ 4,513 Accounts receivable, net of allowance of $82 and $80 in 1997 and 1998, respectively................................................... 2,415 3,712 Prepaid expenses and other............................................ 402 451 -------------- -------------- Total current assets............................................... 8,553 8,676 Equipment, net.......................................................... 1,112 1,173 Purchased computer software, net........................................ 670 994 -------------- -------------- $ 10,335 $ 10,843 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable...................................................... $ 209 $ 338 Accrued royalties payable............................................. 317 397 Other accrued expenses................................................ 1,172 861 Deferred revenue...................................................... 1,470 1,751 -------------- -------------- Total current liabilities.......................................... 3,168 3,347 -------------- -------------- Stockholders' Equity: Common stock, $.01 par value; 22,500,000 shares authorized; 7,741,348 and 7,838,166 shares issued in 1997 and 1998, respectively........... 77 78 Additional paid-in capital............................................ 24,057 24,400 Accumulated deficit................................................... (16,852) (16,845) Foreign currency translation adjustment............................... (115) (137) -------------- -------------- Total stockholders' equity......................................... 7,167 7,496 -------------- -------------- $ 10,335 $ 10,843 ============== ==============
See accompanying notes to condensed consolidated financial statements. 3 SPATIAL TECHNOLOGY INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ---------------------------- 1997 1998 1997 1998 ---------- ---------- ---------- ---------- Revenue: License fees........................................ $1,208 $1,464 $ 2,778 $3,465 Royalties........................................... 680 900 1,979 2,804 Maintenance and other............................... 722 840 2,128 2,467 ---------- ---------- ---------- ---------- Total revenue................................... 2,610 3,204 6,885 8,736 ---------- ---------- ---------- ---------- Cost of sales: License fees........................................ 87 91 238 219 Royalties........................................... 31 3 127 14 Maintenance and other............................... 108 60 236 197 ---------- ---------- ---------- ---------- Total cost of sales............................. 226 154 601 430 ---------- ---------- ---------- ---------- Gross profit.................................... 2,384 3,050 6,284 8,306 ---------- ---------- ---------- ---------- Operating expenses: Sales and marketing................................. 978 1,186 2,878 3,442 Research and development............................ 968 1,195 2,972 3,410 General and administrative.......................... 480 507 1,874 1,460 ---------- ---------- ---------- ---------- Total operating expenses........................ 2,426 2,888 7,724 8,312 ---------- ---------- ---------- ---------- Earnings (loss) from operations................. (42) 162 (1,440) (6) Other income (expense): Interest income..................................... 89 59 296 188 Interest expense.................................... (1) (1) (2) (1) Other, net.......................................... 1 (2) (1) (5) ---------- ---------- ---------- ---------- Total other income.............................. 89 56 293 182 ---------- ---------- ---------- ---------- Earnings (loss) before income taxes............. 47 218 (1,147) 176 Income tax expense................................... 37 53 58 169 ---------- ---------- ---------- ---------- Net earnings (loss)............................. $ 10 $ 165 $(1,205) $ 7 ========== ========== ========= ========== Earnings (loss) per common share: Basic.............................................. $ 0.00 $ 0.02 $ (0.16) $ 0.00 Diluted............................................ $ 0.00 $ 0.02 $ (0.16) $ 0.00 Shares outstanding: Basic.............................................. 7,460 7,812 7,435 7,786 Diluted............................................ 7,517 7,906 7,435 7,866
See accompanying notes to consolidated financial statements. 4 SPATIAL TECHNOLOGY INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended September 30, ------------------------------------------------- 1997 1998 ---------------------- ---------------------- Cash flows from operating activities: Net income (loss)...................................................... $(1,205) $ 7 Adjustments to reconcile net income (loss) to net cash used by operating activities: Provision for impairment of purchased computer software............... 200 - Depreciation and amortization......................................... 234 385 Changes in operating assets and liabilities: Accounts receivable.................................................. (1,040) (1,297) Prepaid expenses and other........................................... 69 (49) Accounts payable..................................................... (69) 129 Accrued expenses..................................................... (18) (231) Deferred revenue..................................................... 181 281 --------------- --------------- Net cash used by operating activities.............................. (1,648) (775) --------------- --------------- Cash flows from investing activities: Additions to equipment................................................. (859) (310) Additions to purchased computer software............................... - (296) --------------- --------------- Net cash used by investing activities.............................. (859) (606) --------------- --------------- Cash flows from financing activities: Proceeds from issuance of stock........................................ 303 180 --------------- --------------- Net cash provided by financing activities.......................... 303 180 --------------- --------------- Foreign currency translation adjustment affecting cash.................. (9) (22) --------------- --------------- Net decrease in cash and cash equivalents.......................... (2,213) (1,223) Cash and cash equivalents at beginning of period........................ 8,407 5,736 --------------- --------------- Cash and cash equivalents at end of period.............................. $ 6,194 $ 4,513 =============== =============== Supplemental disclosures: Cash paid for interest................................................. $ 2 $ 1 =============== =============== Cash paid for income taxes............................................. $ 96 $ 139 =============== ===============
See accompanying notes to condensed consolidated financial statements. 5 SPATIAL TECHNOLOGY INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1998 A. FINANCIAL STATEMENT PRESENTATION The accompanying audited and unaudited condensed consolidated financial statements of the Company have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes the disclosures included in the condensed consolidated financial statements, when read in conjunction with the Company's consolidated financial statements and notes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 1997, are adequate to make the information presented not misleading. B. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of potential common stock. For the nine month period ended September 30, 1997, diluted loss per share is the same as basic loss per share, as the effect of potential common stock is antidilutive. The effect of potential common stock for the quarters ended September 30, 1997 and 1998, and the nine month period ended September 30, 1998 is not significant. C. ACCOUNTING PRONOUNCEMENTS Revenue Recognition Effective for the fiscal year beginning January 1, 1998, the Company adopted Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2") which requires that revenue for licensing, selling, leasing, or otherwise marketing computer software be recognized when certain criteria are met. In March 1998, the AICPA issued Statement of Position No. 98-4 ("SOP 98-4"), "Deferral of the Effective Date of a Provision of SOP 97-2." SOP 98-4 defers, for one year, the application of certain passages in SOP 97-2, which limit what is considered vendor-specific objective evidence necessary to recognize revenue for software licenses in multiple-element arrangements when undelivered elements exist. Additional guidance is expected to be provided prior to adoption of any resulting final amendments related to the deferred provisions of SOP 97-2. The Company does not expect that the effect of adopting the remaining provisions of SOP 97-2 will have a material effect on the Company's financial statements given the Company's policy of utilizing standard contracts and allocating revenue to each element in a given contract based on an established price list. Comprehensive Income The Company has adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," effective January 1, 1998. This statement requires the disclosure of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined as net income plus revenues, expenses, gains and losses that, under generally accepted accounting principles, are excluded from net income. The components of comprehensive income, which are excluded from net income, are not significant individually or in aggregate, and therefore, no separate statement of comprehensive income has been presented. 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those presented here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section and those discussed in the Company's Form 10-KSB for the year ended December 31, 1997, particularly those contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations". RESULTS OF OPERATIONS Revenue Total revenue for the quarter ended September 30, 1998 increased 23% to $3.2 million from $2.6 million reported for the quarter ended September 30, 1997, reflecting an increase in all revenue categories. License fees increased 21% to $1.5 million for the third quarter of 1998 from $1.2 million reported in the third quarter of 1997. Increased license fees in the third quarter of 1998 as compared to the same prior year quarter were primarily due to new license contracts in Europe and Japan, partially off set by fewer new license contracts in North America. While revenue from the ACIS(R) 3D Toolkit, the Company's principal product, has historically been the largest contributor to total revenue, for the quarter ended September 30, 1998 more than 50% of license fees were generated from products that were first introduced to the market during this fiscal year. Contracts from these products resulted in one materially large license agreement. Royalties increased 32%, to $900,000, for the third quarter of 1998 as compared to $680,000 reported for the same quarter in 1997. Increased royalties for the quarter ended September 30, 1998 as compared to the comparable quarter in 1997 were the result of an increase in the number of the Company's customers shipping ACIS(R)-enabled software applications. Maintenance and other revenue increased 16% to $840,000 for the quarter ended September 30, 1998 as compared to $722,000 reported for the quarter ended September 30, 1997. Total recurring revenue, which is comprised of royalty revenue and maintenance fees, increased 24% from the prior-year period and represented 54% of total revenue during the third quarter of 1998. For the nine month period ended September 30, 1998 total revenue increased 27% to $8.7 million as compared to $6.9 million reported for the same nine month period in 1997, resulting from increases in all three revenue categories. License fees increased 25% to $3.5 million in the nine month period ended September 30, 1998 as compared to $2.8 million reported for the comparable prior year period. The increase in license fees was primarily attributable to an increase in new license contracts in Europe in 1998 as compared to 1997. Royalties increased 42%, growing to $2.8 million for the nine month period ended September 30, 1998 versus $2.0 million reported for the nine month period ended September 30, 1997. Increased royalties for 1998 as compared to 1997 resulted from an increase in the number of the Company's customers shipping ACIS-enabled software applications. Maintenance and other revenue increased 16% to $2.5 million for the nine month period ended September 30, 1998 as compared to $2.1 million reported for the comparable period in 1997 resulting from an increase in renewed maintenance contracts and an increase in the customer base. The increased customer base is evidenced by an increase in the number of new license contracts executed in the first nine months of 1998 as compared to the comparable period in 1997. Geographically, international revenue increased 82% for the quarter ended September 30, 1998 and represented 64% of revenue as compared to 43% for the quarter ended September 30, 1997. For the nine month period ended September 30, 1998 international revenue increased 42% and represented 52% of total revenue as compared to 46% for the comparable prior year period. The increase in the ratio of international revenue for all periods presented is a result of an increase in the number of license contracts in Europe. 7 Cost of Sales Cost of sales consists of support costs, royalty payments by the Company to third party developers, manufacturing costs (primarily media duplication, manuals, and shipping) and amortization of purchased computer software. Total cost of sales decreased 32% to $154,000 for the quarter ended September 30, 1998 from $226,000 reported for the quarter ended September 30, 1997. For the nine month period ended September 30, 1998 cost of sales decreased 28% to $430,000 from $601,000 reported in the comparable prior year period. The decrease in cost of sales for all periods presented was primarily due to a decrease in royalty expenses to third party developers, partially offset by increased amortization of purchased computer software. Decreased royalty expense in 1998 as compared to 1997 was due to the acquisition of certain intellectual property rights in the fourth quarter of 1997, which resulted in the elimination of a royalty obligation of the Company. In connection with the acquisition of these intellectual property rights, the Company capitalized certain assets as purchased computer software and is amortizing these assets over a period of seven years, which resulted in an increase in amortization in 1998 as compared to 1997. The increase in amortization of purchased computer software in 1998 also reflects amortization of technology purchased in 1998. As a percent of total revenue, cost of sales decreased to 5% for the three and nine months ended September 30, 1998, as compared to 9% for the comparable periods in 1997. Operating Expenses Sales and marketing expense increased 21% to $1.2 million for the quarter ended September 30, 1998 as compared to $978,000 reported in the quarter ended September 30, 1997. For the nine month period ended September 30, 1998 sales and marketing expense increased 20% to $3.4 million from $2.9 million reported for the nine month period ended September 30, 1997. Increased sales and marketing expense in 1998 as compared to 1997 was due to increased commissions and travel related costs associated with increased revenue, as well as increased spending for marketing programs, in particular for tradeshows and public relations. As a percent of total revenue, sales and marketing expense decreased to 36% and 39% for the three and nine month periods ended September 30, 1998, respectively, as compared to 37% and 42% for the comparable periods in 1997, respectively. Research and development expense increased 23% to $1.2 million for the quarter ended September 30, 1998 from $968,000 reported in the same prior year quarter. For the nine month period ended September 30, 1998 research and development expense increased 15% to $3.4 million from $3.0 million reported in the comparable prior year period. Increased research and development expense was due to increased staffing in support of increased development efforts for existing products, as well as for new product offerings, including the ACIS(R) 3D Open Viewer and the ACIS(R) Healing Husk. Further, research and development expense in the second quarter of 1997 included a $200,000 charge for a write- down of purchased computer software, which was due to a change in the Company's development strategy. Excluding this non-recurring charge of $200,000, research and development expense increased 23% for the nine month period ended September 30, 1998, as compared to the comparable period in 1997. As a percent of total revenue, research and development expense decreased slightly to 37% and 39% for the three and nine month periods ended September 30, 1998, respectively, from 37% and 43% for the comparable prior year periods, respectively. The Company accounts for research and development expense in accordance with Statement of Financial Accounting Standards ("SFAS") No. 86, under which the Company is required to capitalize software development costs after technological feasibility is established. Capitalizable software development costs incurred to date have not been significant; therefore, the Company has expensed all of these costs in the periods incurred. General and administrative expense increased 6% to $507,000 for the quarter ended September 30, 1998 from $480,000 reported for the same quarter in 1997. For the nine month period ended September 30, 1998 general and administrative expense decreased 22% to $1.5 million from $1.9 million reported for the comparable prior year period. Decreased general and administrative expense was due to a decrease in staffing and lower professional fees in 1998 as compared to 1997. In addition, general and administrative expense in the second quarter of 1997 included a charge of approximately $198,000 in connection with expenses associated with the resignation of the former president of the Company. Excluding these non-recurring charges, general and administrative expense decreased 13% for the nine month period ended September 30, 1998 as compared to the comparable period in 1997. As a percent of total revenue, general and administrative expense decreased to 16% and 17% for the three and nine month periods ended 8 September 30, 1998, respectively, as compared to 18% and 27% for the comparable prior year periods, respectively. Other Income (Expense), net Other income decreased to $56,000 for the third quarter of 1998 as compared to $89,000 reported for the third quarter of 1997 and to $182,000 for the nine month period ended September 30, 1998 from $293,000 for the comparable prior year period. Decreased other income reflects lower interest income, as a result of lower cash balances in 1998 as compared to 1997. Income Tax Expense Income tax expense increased to $53,000 for the fiscal quarter ended September 30, 1998 as compared to $37,000 reported for the same quarter in 1997. For the nine month period ended September 30, 1998 income tax expense increased to $169,000 from $58,000 for the same period in 1997 due to income tax liabilities and increased withholding tax on sales in Japan. Historically, income tax expense included only withholding taxes on foreign sales. Beginning in 1998, the Company began incurring an income tax liability for its Japanese subsidiary. FLUCTUATIONS IN QUARTERLY RESULTS The Company has experienced in the past and expects to continue to experience in the future significant fluctuations in quarterly operating results due to a number of factors that are difficult to forecast, including, among others, the volume of orders received within a quarter, demand for the Company's products, the product mix purchased by the Company's customers, competing capital budget considerations of the Company's customers, introduction and enhancement of products by the Company and its competitors, market acceptance of new products, reviews in the industry press concerning the products of the Company or its competitors, changes or anticipated changes in pricing by the Company or its competitors and general economic conditions. Due to the foregoing factors, it is possible that the Company's operating results for some future quarters may fall below the expectations of securities analysts and investors. YEAR 2000 CAPABILITY Many currently installed computer systems and software products are coded to accept only two digit entries in the date code field. These date code fields will need to accept four digit entries to distinguish 21st century dates from 20th century dates. As a result, in less than two years, computer systems and/or software used by many companies may need to be upgraded to comply with such "Year 2000" requirements. The Company has evaluated Year 2000 compliance issues and believes that with respect to the Company's products and internal management information systems it will not be materially adversely impacted by such issues. The Company's software products do not incorporate date-sensitive algorithms. Any date codes contained in the Company's software do not affect the functionality of the products. The Company also incorporates third party software with its core product. The Company has concluded that any date codes contained in such third party software will not materially adversely impact the Company's products. In addition, the Company has evaluated whether its management information systems are Year 2000 compliant and has concluded that they are substantially compliant and that the Company's business will not be materially adversely affected. Moreover, the number of transactions that the Company manages is relatively low because it depends on low volume, high value orders. As a result, the Company believes that any date-sensitive material contained in its software would not have a material adverse effect on the Company's management information systems software. However, to the extent that any of the Company's foregoing assessments are incorrect, there can be no assurance that the cost necessary to update the performance of software will not have a material adverse effect on the Company's business, financial condition and results of operations. 9 Moreover, there can be no assurance that Year 2000 compliance issues affecting the Company's customers products and internal management information systems will not have a material adverse effect on the Company's business, financial condition and results of operations. As an OEM provider the Company's products may be incorporated directly into its customers' products, which may contain date-sensitive processes that may affect the ability of the Company's customers to sell end-user products. INTERNATIONAL EXPANSION The Company believes that international sales will continue to represent a significant portion of its total revenue, and that it will be subject to the inherent risks of conducting business internationally. Such risks include, but are not limited to, problems and delays in collecting accounts receivable, fluctuations in currency exchange rates and other uncertainties relative to regional economic circumstances (such as the current economic turbulence in Asia). Sales of products by the Company currently are denominated principally in U.S. dollars. Accordingly, any increase in the value of the U.S. dollar as compared to currencies in the Company's principal overseas markets would increase the foreign currency-denominated cost of the Company's products, which may negatively affect the Company's sales in those markets, or could delay collection of current or future accounts receivables. The Company has not engaged in any currency exchange hedging practices. As of September 30, 1998, the Company believes it has adequately reserved for risks associated with foreign currency transactions. However, there can be no assurance that one or more of such factors will not have a material adverse effect on the Company's business, operating results and financial condition. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1998, the Company had $4.5 million in cash and cash equivalents. Cash and cash equivalents decreased $1.2 million for the nine months ended September 30, 1998, as compared to $2.2 million for the comparable prior year period. Net cash used by operating activities was $775,000 for the nine month period ended September 30, 1998 as compared to $1.6 million for the comparable prior year period. Net cash used by operations in 1998 was primarily the result of increased accounts receivable, partially offset by increased deferred revenue. Cash used by operations in 1997 was primarily due a net loss, combined with an increase in accounts receivable, partially offset by the non-cash write-down of purchased computer software. Net cash used by investing activities totaling $606,000 for the nine month period ended September 30, 1998 reflected $310,000 used for equipment purchases and $296,000 used for purchased computer software, including technology included in products first introduced to the market during this fiscal year. Cash used for the comparable period in 1997 totaling $859,000 reflects furniture and equipment purchases. Net cash provided by financing activities was $180,000 for the nine months ended September 30, 1998, due to proceeds in connection with the Company's employee stock purchase plan. Net cash provided by financing activities in the comparable prior year period was $303,000 reflecting the issuance of stock in connection with the exercise of stock options, as well as the Company's employee stock purchase plan. In August 1998 the Company amended its revolving line of credit with a bank. The amended line of credit provides for maximum borrowings of $1,500,000 through August 2, 1999. The line of credit bears interest at the bank's prime rate. The Company currently has no borrowings under the line of credit. The Company believes that cash generated from operations, together with existing cash, will be sufficient to meet the Company's operating and capital requirements for the foreseeable future including at least the next twelve months. 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults on Senior Securities: Not Applicable Item 4. Submission of Matters to Vote of Security Holders: None Item 5. Other Information: None Item 6. Exhibits and Reports on Form 8-K: a) Exhibits 27 Financial Data Schedule b) Reports on Form 8-K None 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SPATIAL TECHNOLOGY INC. Date November 13, 1998 /s/ R. Bruce Morgan ----------------- --------------------------------------------------- R. Bruce Morgan President, Chief Executive Officer, and Director (Principal Financial and Accounting Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 4,513 0 3,792 (80) 0 8,676 3,408 (2,235) 10,843 3,347 0 0 0 78 7,418 10,843 0 8,736 0 430 8,247 65 182 176 169 7 0 0 0 7 0.00 0.00
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