-----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, MXSyYvyJOBtnyKyKlpv2mSLCbyYcU/go+cnDYH1LdKAy34SW1VNrP0EY7V3FedpE wZ0mCDTBvRdrHdoHUNAT5A== 0000950134-97-008189.txt : 19971114 0000950134-97-008189.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950134-97-008189 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD 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: 97712497 BUSINESS ADDRESS: STREET 1: 2425 55TH STREET BLDG A CITY: BOULDER STATE: CO ZIP: 803012 BUSINESS PHONE: 3034490649 MAIL ADDRESS: STREET 1: 2425 55TH STREET STREET 2: BUILDING A CITY: BOULDER STATE: CO ZIP: 80301 10QSB 1 FORM 10-QSB FOR QUARTER ENDED SEPTEMBER 30, 1997 1 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 SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 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 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) 449-0649 (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, 1997, there were outstanding 7,491,348 shares of the Registrant's Common Stock (par value $0.01 per share). Transitional Small Business Disclosure Format (check one): Yes No X --- --- 2 SPATIAL TECHNOLOGY INC. INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets, December 31, 1996 and September 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Statements of Operations, three and nine months ended September 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows, three and nine months ended September 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . . . 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 3 SPATIAL TECHNOLOGY INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except shares)
ASSETS December 31, September 30, 1996 1997 ------------ ------------ (Unaudited) Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 8,407 $ 6,194 Accounts receivable, net of allowance of $50 and $96 in 1996 and 1997, respectively . . . . . . . . . . . . . . . . . . . . . . . 1,542 2,582 Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . 341 272 ------------ ------------ Total current assets . . . . . . . . . . . . . . . . . . . . . . 10,290 9,048 Equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 1,119 Purchased computer software, net . . . . . . . . . . . . . . . . . . . 358 87 ------------ ------------ $ 11,071 $ 10,254 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 314 $ 245 Accrued royalties payable. . . . . . . . . . . . . . . . . . . . . . . 366 388 Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 755 715 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,325 1,506 ------------ ------------ Total current liabilities . . . . . . . . . . . . . . . . . . . . . 2,760 2,854 ============ ============ Stockholders' Equity: Common stock, $.01 par value; 22,500,000 shares authorized; 7,369,888 and 7,491,348 shares issued in 1996 and 1997, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 75 Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . 23,351 23,653 Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (15,034) (16,239) Foreign currency translation adjustment . . . . . . . . . . . . . . . . (80) (89) ------------ ------------ Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . 8,311 7,400 ------------ ------------ $ 11,071 $ 10,254 ============ ============
See accompanying notes to consolidated financial statements. 3 4 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, 1996 1997 1996 1997 Revenue: --------- --------- --------- --------- License fees . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,462 $ 1,208 $ 3,810 $ 2,778 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . 400 680 1,628 1,979 Maintenance and other . . . . . . . . . . . . . . . . . . . . 745 722 2,206 2,128 --------- --------- --------- --------- Total revenue . . . . . . . . . . . . . . . . . . . . . . 2,607 2,610 7,644 6,885 --------- --------- --------- --------- Cost of sales: License fees . . . . . . . . . . . . . . . . . . . . . . . 122 87 267 238 Royalties . . . . . . . . . . . . . . . . . . . . . . . . 39 31 152 127 Maintenance and other . . . . . . . . . . . . . . . . . . 62 108 365 236 --------- --------- --------- --------- Total cost of sales . . . . . . . . . . . . . . . . . . 223 226 784 601 --------- --------- --------- --------- Gross profit . . . . . . . . . . . . . . . . . . . . . . 2,384 2,384 6,860 6,284 --------- --------- --------- --------- Operating expenses: Sales and marketing . . . . . . . . . . . . . . . . . . . . 899 978 2,573 2,878 Research and development . . . . . . . . . . . . . . . . . . 949 968 2,704 2,972 General and administrative . . . . . . . . . . . . . . . . . 329 480 1,096 1,874 --------- --------- --------- --------- Total operating expenses . . . . . . . . . . . . . . . . 2,177 2,426 6,373 7,724 --------- --------- --------- --------- Earnings (loss) from operations . . . . . . . . . . . . 207 (42) 487 (1,440) Other income (expense) Interest income . . . . . . . . . . . . . . . . . . . . . 6 89 18 296 Interest expense . . . . . . . . . . . . . . . . . . . . . (13) (1) (77) (2) Other, net . . . . . . . . . . . . . . . . . . . . . . . . 10 1 11 (1) --------- --------- --------- --------- Total other income (expense) . . . . . . . . . . . . . . 3 89 (48) 293 --------- --------- --------- --------- Earnings (loss) before income taxes . . . . . . . . . . 210 47 439 (1,147) Income tax expense . . . . . . . . . . . . . . . . . . . . . . 46 37 91 58 --------- --------- --------- --------- Net earnings (loss) . . . . . . . . . . . . . . . . . . . . $ 164 $ 10 $ 348 $ (1,205) ========= ========= ========= ========= Earnings (loss) per common share . . . . . . . . . . . . . . . $ 0.03 $ 0.00 $ 0.07 $ (0.16) ========= ========= ========= ========= Weighted average number of common shares and common equivalent shares outstanding . . . . . . . . . . . 5,346 7,517 5,317 7,492 ========= ========= ========= =========
See accompanying notes to consolidated financial statements. 4 5 SPATIAL TECHNOLOGY INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended September 30, -------------------------- 1996 1997 Cash flows from operating activities: -------- -------- Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ 348 $ (1,205) Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: Provision for impairment of purchased software . . . . . . . . . . . -- 200 Depreciation and amortization . . . . . . . . . . . . . . . . . . . 176 234 Common stock issued for services . . . . . . . . . . . . . . . . . . 20 -- Changes in operating assets and liabilities: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . (18) (1,040) Prepaid expenses and other . . . . . . . . . . . . . . . . . . . 5 69 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . (52) (69) Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 167 (18) Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . 261 181 -------- -------- Net cash provided (used) by operating activities . . . . . . . . 907 (1,648) -------- -------- Cash flows from investing activities: Additions to equipment . . . . . . . . . . . . . . . . . . . . . . . . . (161) (859) Additions to purchased computer software . . . . . . . . . . . . . . . . (200) -- -------- -------- Net cash used by investing activities . . . . . . . . . . . . . . . . (361) (859) -------- -------- Cash flows from financing activities: Principal payments on notes payable . . . . . . . . . . . . . . . . . . (522) -- Proceeds from notes payable . . . . . . . . . . . . . . . . . . . . . . 250 -- Proceeds from issuance of stock . . . . . . . . . . . . . . . . . . . . 392 303 Prepaid stock offering expenses . . . . . . . . . . . . . . . . . . . . (315) -- -------- -------- Net cash provided (used) by financing activities. . . . . . . . . . . (195) 303 -------- -------- Foreign currency translation adjustment affecting cash. . . . . . . . . . . (29) (9) -------- -------- Net increase (decrease) in cash and cash equivalents . . . . . . . . . . 322 (2,213) Cash and cash equivalents at beginning of period . . . . . . . . . . . . . 153 8,407 -------- -------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . $ 475 $ 6,194 ======== ======== Supplemental disclosures: Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 34 $ 2 ======== ======== Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . $ 91 $ 96 ======== ========
See accompanying notes to consolidated financial statements. 5 6 SPATIAL TECHNOLOGY INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1997 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, 1996, are adequate to make the information presented not misleading. Certain prior year financial statement balances have been reclassified to conform to the 1997 presentations. B. EARNINGS (LOSS) PER SHARE Earnings (loss) per share is computed using the weighted average number of shares of common and common equivalent shares resulting from outstanding options and warrants. Fully diluted earnings per share are the same as primary earnings per share. 6 7 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, 1996, particularly those contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations". RESULTS OF OPERATIONS Revenue Total revenue reported for the quarter ended September 30, 1997 was unchanged at $2.6 million as compared to the quarter ended September 30, 1996. Increased royalties were offset by lower license fees and maintenance and other revenue. License fees decreased 17% to $1.2 million in the third quarter of 1997 from $1.5 million reported in the third quarter of 1996, primarily due to fewer license contracts executed in Europe in 1997 as compared to 1996. Royalties increased 70%, growing to $680,000 in the third quarter of 1997 from $400,000 reported for the comparable quarter in 1996. Two factors contributed to increased royalties in the third quarter of 1997 as compared to the third quarter of 1996: 1) one customer shipped a product release update resulting in approximately $150,000 of royalties, and 2) a license and distribution agreement was signed with an existing customer which included non-refundable prepaid royalties in the amount of $93,000. Maintenance and other revenue decreased 3% to $722,000 for the quarter ended September 30, 1997 as compared to $745,000 reported for the quarter ended September 30, 1996. International revenue represented 44% of total revenue for the third quarter of 1997 as compared to 57% for the third quarter of 1996. For the nine month period ended September 30, 1997, total revenue decreased 10% to $6.9 million as compared to $7.6 million reported for the nine month period ended September 30, 1996. This decrease is primarily due to decreased license fees, and to a lesser extent decreased maintenance and other revenue. License fees decreased 27% to $2.8 million in the nine month period ended September 30, 1997 as compared to $3.8 million reported for the comparable prior year period, primarily due to fewer license contracts executed in all sales regions. Maintenance and other revenue decreased 4% to $2.1 million for the nine month period ended September 30, 1997 as compared to $2.2 million reported for the same period in 1996. This decrease was primarily due to a decline in the number of annual maintenance contracts renewed. Royalties increased 22%, growing to $2.0 million for the nine month period ended September 30, 1997 from $1.6 million reported for the same prior year period. Increased royalties reflect revenue received from the shipment of a product release update by one customer and recognition of non-refundable prepaid royalties, as well as an increase in the number of the Company's customers shipping ACIS-based software applications. International revenue represented 47% of total revenue for the nine months ended September 30, 1997 as compared to 49% for the same period in 1996. Cost of Sales Cost of sales consists of royalty payments by the Company to third party developers, customer support costs, manufacturing costs (primarily media duplication, manuals, and shipping) and amortization of purchased computer software. Total cost of sales of $226,000 for the quarter ended September 30, 1997 was relatively unchanged from the $223,000 reported for the quarter ended September 30, 1996. Increased manufacturing costs in the third quarter of 1997 as compared to the third quarter of 1996 were offset by lower royalty expenses. Manufacturing costs increased $25,000 for the third quarter of 1997 as compared to the third quarter of 1996 due to a product release update shipped in August 1997, whereas no update was shipped in the third quarter of 1996. Royalty expense decreased $32,000 in the quarter ended September 30, 1997 as compared to the comparable prior year quarter due to a change in the product mix toward lower royalty bearing products. For the nine month period ended September 30, 1997, total cost of sales decreased 23% to $601,000 from $784,000 reported in the comparable prior year period. Total cost of sales decreased due to lower customer support, royalty and other manufacturing costs. Customer support costs decreased $67,000 in the nine month period ended September 30, 1997, as compared to the comparable prior year period primarily due to organization changes; management of customer support has been combined with other research and development functions. Royalty expense decreased $64,000 in the nine month period ended September 30, 7 8 1997 as compared to the comparable prior year period due to a change in the product mix toward lower royalty bearing products, as well as the Company's efforts to reduce the amount of third party technology incorporated in its products. Manufacturing costs decreased $60,000 in the nine month period ended September 30, 1997 as compared to the comparable prior year period, reflecting cost savings derived from the Company's transition to CD-ROM based media as its primary media format and to the use of on-line documentation. As a percent of total revenue, cost of sales was 9% for the third quarter of 1997 and 1996, and decreased to 9% for the nine month period ended September 30, 1997 as compared to 10% for the comparable prior year period. Operating Expenses Sales and marketing expense increased 9% to $978,000 for the quarter ended September 30, 1997 as compared to $899,000 reported for the quarter ended September 30, 1996. For the nine month period ended September 30, 1997, sales and marketing expense increased 12% to $2.9 million from $2.6 million reported for the same prior year period. For the three and nine month periods ended September 30, 1997 as compared to the comparable prior year periods, increased sales and marketing expense reflected lower commission expense offset by higher spending on marketing. Commission expense decreased as a result of lower license fees in both the three and nine month periods ended September 30, 1997 as compared to the same prior year periods. The increase in marketing expense was due to increased staffing in support of increased marketing activities on the part of the Company in 1997 as compared to 1996. Marketing program expenses also increased in 1997 as compared to 1996 for public relations, advertising campaigns, and sales collateral. As a percent of total revenue, sales and marketing expense increased to 37% for the quarter ended September 30, 1997 as compared to 34% for same quarter in 1996, and increased to 42% for the nine month period ended September 30, 1997 from 34% reported for the comparable prior year period. Research and development expense increased slightly to $968,000 for the quarter ended September 30, 1997 from $949,000 reported in the same prior year quarter. For the nine month period ended September 30, 1997 research and development expense increased 10% to $3.0 million as compared to $2.7 million reported for the comparable prior year period, primarily due to a $200,000 provision for impairment of purchased software. As a percent of total revenue, research and development expense was 37% for the third quarter of 1997 as compared to 36% for the same quarter in 1996. For the nine month period ended September 30, 1997 research and development expense as a percent of total revenue increased to 43% from 35% reported for the same prior year period. 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 46% to $480,000 for the quarter ended September 30, 1997 from $329,000 reported for the quarter ended September 30, 1996. For the nine month period ended September 30, 1997 general and administrative expense increased 71% to $1.9 million from $1.1 million reported for the same period in 1996. This increase includes a charge in June 1997 of approximately $150,000 for severance costs in connection with the Separation and Release Agreement with the former president of the Company. Increased general and administrative expense for the three and nine month periods ended September 30, 1997 as compared to the comparable prior year periods was also attributable to increased spending on insurance, professional fees and other costs associated with the Company's reporting obligations as a public company. Additionally, legal expense increased in 1997 as compared to 1996 due to costs associated with ongoing litigation as described in "Legal Proceedings". As a percent of total revenue, general and administrative expense increased to 18% for the third quarter of 1997 as compared to 13% for the third quarter of 1996 and 27% for the nine month period ended September 30, 1997 as compared to 14% for the comparable prior year period. 8 9 Other Income (Expense), net Other income increased to $89,000 for the quarter ended September 30, 1997 as compared to $3,000 reported for the same quarter in 1996. For the nine month period ended September 30, 1997 other income increased to $293,000 as compared to an expense of $48,000 reported for the nine month period ended September 30, 1996. Increased other income reflects higher interest income resulting from the investment of proceeds from the Company's initial public offering which was completed in October 1996. Income Tax Expense Income tax expense was $37,000 in the quarter ended September 30, 1997 as compared to $46,000 for the quarter ended September 30, 1996. For the nine month period ended September 30, 1997 income tax expense decreased to $58,000 as compared to $91,000 reported in the comparable prior year period. Income tax expense for these periods included only withholding taxes on foreign sales. FLUCTUATIONS IN QUARTERLY RESULTS The Company has experienced in the past and expects to continue to experience 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. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1997, the Company had $6.2 million in cash and cash equivalents. Cash and cash equivalents decreased $2.2 million for the nine month period ended September 30, 1997, as compared to an increase in cash and cash equivalents of $322,000 for the comparable prior year period. Net cash used by operating activities was $1.6 million for the nine month period ended September 30, 1997 as compared to cash provided by operations of $907,000 for the nine month period ended September 30, 1996. Net cash used for operations in 1997 was primarily the result of the net loss for the nine month period ended September 30, 1997 totaling $1.2 million, combined with an increase in accounts receivable of $1.0 million, partially offset by the non- cash write off of acquired in-process research and development and increased deferred revenue. Cash provided by operations in the nine month period ended September 30, 1996 was primarily due to net income, and an increase in deferred revenue and accrued expenses. Net cash used by investing activities for the nine month period ended September 30, 1997 totaling $859,000 reflects cash used for capital equipment purchases including, furniture, personal computers and networking equipment to upgrade the Company's infrastructure. For the nine month period ended September 30, 1996 net cash used by investing activities of $361,000 included $161,000 for capital equipment purchases and $200,000 for additions to purchased computer software. Net cash provided by financing activities was $303,000 for the nine month period ended September 30, 1997, reflecting the issuance of stock in connection with the exercise of stock options and the Company's employee stock purchase plan. Net cash used by financing activities in the nine month period ended September 30, 1996 of $195,000 reflects cash used for principal payments on notes payable and prepaid offering expenses, partially offset by cash provided by the issuance of stock in connection with the exercise of stock warrants and options. 9 10 The Company maintains a revolving line of credit with a bank that provides for maximum borrowings of $1,000,000 through May 1998 and bears interest at the bank's prime rate plus 0.25%. The line of credit also includes an equipment financing line of credit providing for maximum borrowings of $500,000. The equipment financing line of credit bears interest at the bank's prime rate plus 0.75% and is payable in thirty-six equal monthly installments beginning on March 31, 1998. As of September 30, 1997, the Company had no borrowings under either line of credit The Company believes existing cash, together with existing credit facilities and cash generated from operations, will be sufficient to meet the Company's operating and capital requirements for the foreseeable future including at least the next twelve months. 10 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings: On April 30, 1997, the Company filed a Complaint for Damages and Injunctive Relief and Jury Demand in the District Court of Boulder County, Colorado against Rolf Fischer, Ronald E. Davidson and Hyper Tree Technologies, L.L.C. On June 9, 1997, Hyper Tree Technologies, L.L.C. removed the action to the United States District Court for the District of Colorado. Both Mr. Fischer and Mr. Davidson were employees of the Company until their resignations effective on March 31, 1997. Additionally, Mr. Davidson served as an executive officer of the Company as Vice President, Pacific Rim Sales. In the Complaint, the Company alleges that Messrs. Fischer and Davidson have acted to deprive the Company of its rights to a technology known as "Lean Design". The Company is seeking relief against the defendants for breach of contract and employment duties, unfair competition, fraud, misappropriation of trade secrets and conspiracy, among other items, and has requested a jury trial to resolve the issues in dispute. Although no counterclaims have been filed, the Company expects the litigation to be contentious. The Company states no opinion as to the likelihood that any counterclaims will be filed or as to the degree of exposure the Company may face from any counterclaims. 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 12 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 10, 1997 /s/ R. Bruce Morgan -------------------------------- R. Bruce Morgan President, Chief Operating Officer and Director 12 13 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 6,194 0 2,678 (96) 0 9,048 3,011 (1,892) 10,254 2,854 0 0 0 75 7,325 10,254 0 6,885 0 601 7,580 144 293 (1,147) 58 (1,205) 0 0 0 (1,205) (0.16) (0.16)
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