-----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, JxL3XUrWCytfnhOd1h/Fe4PUcpifPnAKD7IIDkQHZIM8TpJbqAcj9/ZY4hzKy+nE JBU9K4H5CnZog0DHr7UohA== 0000940986-96-000005.txt : 19961118 0000940986-96-000005.hdr.sgml : 19961118 ACCESSION NUMBER: 0000940986-96-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUSTANG SOFTWARE INC CENTRAL INDEX KEY: 0000940986 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770204718 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25678 FILM NUMBER: 96666286 BUSINESS ADDRESS: STREET 1: 6200 LAKE MING RD CITY: BAKERSFIELD STATE: CA ZIP: 93306 BUSINESS PHONE: 8058732500 MAIL ADDRESS: STREET 1: 6200 LAKE MING RD CITY: BAKERSFIELD STATE: CA ZIP: 93306 10QSB 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 period ended September 30, 1996 OR [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-25678 MUSTANG SOFTWARE, INC. (Exact name of registrant as specified in its charter) California (State of incorporation) 77-0204718 (I.R.S. employer identification number) 6200 Lake Ming Road Bakersfield, California 93306 (Address of principal executive offices) (805) 873-2500 (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 [ ] As of October 14, 1996, there were 3,362,940 shares of the Registrant's Common Stock outstanding. =============================================================================== 2 MUSTANG SOFTWARE, INC. FORM 10-QSB INDEX Page PART I. Financial Information: Balance Sheets as of September 30, 1996 and December 31, 1995 3 Statements of Operations for the three and nine months ended September 30, 1996 and 1995 4 Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 5 Notes to Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. Other Information: Exhibits and Reports on Form 8-K 9 Signatures 10 ================================================================================ 3 MUSTANG SOFTWARE, INC. BALANCE SHEETS ASSETS
September 30, December 31, 1996 1995 (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 3,384,448 $ 5,615,404 Accounts receivable, net of allowance for doubtful accounts of $425,000 and $400,000 at December 31, 1995 and September 30, 1996, respectively 107,831 352,174 Income taxes receivable 404,340 404,340 Inventories 167,637 230,486 Other 65,652 28,945 - - - ---------------------------------------------------------------------------- Total current assets 4,129,908 6,631,349 - - - ---------------------------------------------------------------------------- PROPERTY AND EQUIPMENT: Property and equipment 1,322,224 1,270,765 Accumulated depreciation (403,092) (278,603) - - - ---------------------------------------------------------------------------- Net property and equipment 919,132 992,162 - - - ---------------------------------------------------------------------------- OTHER ASSETS: Capitalized software development costs, net 9,730 22,483 Other 54,897 30,882 - - - ---------------------------------------------------------------------------- Total other assets 64,627 53,365 = ============================================================================== Total Assets $5,113,667 $7,676,876 = ============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $619,025 $750,124 Accrued payroll and liabilities 174,969 145,077 Accrued warranty and support 45,000 45,000 Deferred revenue 80,000 88,500 - - - ---------------------------------------------------------------------------- Total current liabilities 918,994 1,028,701 - - - ---------------------------------------------------------------------------- CAPITAL LEASE OBLIGATION, NET OF CURRENT PORTION 357,537 399,060 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, no par value: Authorized-10,000,000 shares None issued or outstanding -- -- Common stock, no par value: Authorized-30,000,000 shares Issued and outstanding-- 3,356,000 and 3,362,940 shares at December 31,1995 and September 30, 1996, respectively 6,604,383 6,598,632 Retained earnings (2,767,247) (349,517) - - - ---------------------------------------------------------------------------- Total shareholders' equity 3,837,136 6,249,115 - - - ---------------------------------------------------------------------------- Total Liabilities & Shareholders Equity $5,113,667 $7,676,876 = ============================================================================== The accompanying notes are an integral part of these financial statements.
================================================================================ MUSTANG SOFTWARE, INC. STATEMENTS OF OPERATIONS Three Months Ended Sept 30, Nine Months Ended Sept 30, 1996 1995 1996 1995 REVENUE $ 755,235 $ 2,602,972 $ 3,224,233 $ 4,586,560 COSTS OF REVENUE 114,903 411,396 579,122 780,634 - - - -------------------------------------------------------------------------------------------------- Gross profit 640,332 2,191,576 2,645,111 3,805,926 - - - -------------------------------------------------------------------------------------------------- OPERATING EXPENSES: Research and development 242,096 264,068 733,144 542,811 Selling and marketing 1,028,439 841,688 2,780,308 1,571,150 General and administrative 518,917 542,666 1,716,235 1,364,303 - - - -------------------------------------------------------------------------------------------------- Total operating expenses 1,789,452 1,648,422 5,229,687 3,478,264 - - - -------------------------------------------------------------------------------------------------- Income(loss)from operations (1,149,120) 543,154 (2,584,576) 327,662 - - - -------------------------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest expense (10,424) (11,645) (32,591) (34,857) Interest income 41,377 82,730 197,436 170,250 Gain/loss on sale of asset 0 0 2,000 0 - - - ------------------------------------------------------------------------------------------------- Total other income (exp.) 30,953 71,085 166,845 135,393 - - - -------------------------------------------------------------------------------------------------- Income (loss) before provision for income taxes (1,118,167) 614,239 (2,417,731) 463,055 - - - -------------------------------------------------------------------------------------------------- PROVISION (BENEFIT) FOR INCOME TAXES -- 195,500 -- 150,000 - - - -------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $(1,118,167) $ 418,739 $(2,417,731) $ 313,055 = ==================================================================================================== NET INCOME (LOSS) PER COMMON SHARE $(.33) $ .12 $ (.72) $ .11 = ==================================================================================================== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,362,940 3,390,000 3,360,570 2,965,300 The accompanying notes are an integral part of these financial statements.
============================================================================= 5 MUSTANG SOFTWARE, INC. STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income(loss) $(2,417,731) $ 313,055 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 145,044 108,600 Net changes in assets and liabilities 128,962 (615,048) - - - ------------------------------------------------------------------------- Net cash used by operating activities (2,143,725) (193,393) - - - ------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITES: Purchase of property and equipment (51,459) (233,022) - - - ------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of stock 5,751 6,584,538 Payments on capital lease obligation (41,523) (39,000) - - - ------------------------------------------------------------------------- Net Cash provided (used) by financing activities (35,772) 6,545,538 - - - ------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH (2,230,956) 6,119,123 CASH BALANCE, beginning of period 5,615,404 209,799 - - - ------------------------------------------------------------------------- CASH BALANCE, end of period $ 3,384,448 $ 6,328,922 = =========================================================================== SUPPLEMENTAL DISCLOSURES: Interest paid 32,591 34,857 Taxes paid 0 230,000 The accompanying notes are an integral part of these financial statements.
============================================================================= 6 MUSTANG SOFTWARE, INC. NOTES TO FINANCIAL STATEMENTS Note 1. Accounting Policies The accompanying unaudited Condensed Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have either been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations and cash flows for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. For further information, refer to the financial statements and notes thereto for the year ended December 31, 1995, included in the 1995 Form 10KSB. The condensed Balance Sheet at December 31, 1995 has been taken from the audited financial statements at that date and condensed. ============================================================================ 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In addition to the comments that follow, further information can be obtained by referring to the management's discussion and analysis of financial condition and results of operations section included in the Form 10KSB, filed for the year ended December 31, 1995. Results of Operations: Three Months Ended September 30, 1996 and 1995 - - --------------------------------------------- Revenues for the three months ended September 30, 1996 were $755,235 a decrease of $1,847,737 or 71% under revenues for the same period in 1995. As a percentage of revenues by product category for the third quarter 1996 vs. 1995 showed the QmodemPro line at 9% and 86%, the Wildcat! line at 88% and 12%, and other products at 2% and 2%, respectively. The large percentage of Wildcat! revenues was directly related to the launch of Wildcat! v.5 for Win95/NT in the first quarter of 1996, while the large QmodemPro percentage in 1995 was due to the launch of QmodemPro for Windows 95 in August 1995. Gross profit for the quarter decreased from $2,191,576 in 1995 to $640,332 in 1996, and increased slightly as a percentage of revenues from 84.2% in 1995 to 84.8% in 1996. Gross profit percentage has averaged approximately 80-84% over the last three calendar years. Research and development expenses decreased $21,972 in the third quarter of 1996 from 1995, but increased as a percentage of revenues from 10.1% in 1995 to 32.1% in 1996. Research and development is concentrated in Windows NT and Windows 95 and directly targets the expanded use of international networks, including the Internet. The headcount in this department decreased from 14 to 13 in 1995 to 1996, respectively. Selling and marketing expenses for the quarter were $1,028,439, an increase of $186,751 over the same quarter the previous year, and they increased as a percentage of revenues from 32.3% in 1995 to 136.2% in 1996. The items primarily attributing to the increase were advertising and promotional costs of existing products and the launch of Wildcat! version 5 in March 1996. The increase in headcount from 7 in 1995 to 10 in 1996, also contributed to the increase. General and administrative expenses decreased for the quarter over the previous year, from $542,666 in 1995 to $518,917 in 1996, but increased as a percentage of revenues, from 20.8% in 1995 to 68.7% in 1996. The General and administrative headcount remained the same from the prior year. ============================================================================== 8 Nine Months Ended September 30, 1996 and 1995 - - -------------------------------------------- Revenues for the nine months ended September 30, 1996 were $3,224,233, a decrease of $1,362,327 or 29.7% over revenues for the same period in the prior year. As a percentage of revenues by product category showed the QmodemPro line at 3% and 61%, the Wildcat! line at 95% and 35%, and other at 2% and 4% for the first nine months of 1996 and 1995, respectively. The large percentage of revenues attributed to the Wildcat! line in the nine months ended September 30, 1996 was due to the launch of Wildcat! v.5 for Windows95/NT in March 1996, while the large percentage of revenue attributed to the QmodemPro line in 1995 came from the launch of QmodemPro for Windows 95 in August 1995. Gross profit for the first nine months decreased from $3,805,926 in 1995 to $2,645,111 in 1996, and decreased slightly as a percentage of revenues from 83% in 1995 to 82% in 1996. Gross profit percentage has averaged approximately 80-84% over the last three calendar years. Research and development expenses increased $190,333 in the first nine months of 1996 from 1995, and increased as a percentage of revenues from 11.8% in 1995 to 22.7% in 1996. Absolute spending increased 35% due in large part to the hiring of additional engineers by the Company and increases in engineers' salaries. To maintain its competitive market position, the Company expects to invest a significant amount of its resources for the development of new products and product enhancements and to continue recruiting and hiring experienced software developers, while at the same time considering the acquisition of software businesses and technologies. Selling and marketing expenses for the first nine months of 1996 increased $1,209,158 over the same period the previous year, from $1,571,150 to $2,780,308. As a percentage of revenues selling and marketing expenses increased from 34.3% in 1995 to 86.2% in 1996. The items primarily accounting for the increase were advertising and promotional costs for existing products and the launch of Wildcat! v.5 for Windows 95/NT in March 1996 as well as the release of 9 add-on products to the Wildcat! line. General and administrative expenses increased $351,932 in the first nine months of 1996 from $1,364,303 in 1995 to $1,716,235 in 1996, and as a percentage of revenues increased from 29.7% in 1995 to 53.2% in 1996. The items primarily accounting for the increase were higher personnel and facility costs associated with increased operations and expenditures to support the Company's infrastructure and additional cost associated with the Company going public in April 1995. Liquidity and Capital Resources - - ------------------------------- Cash and cash equivalents balance at September 30, 1996 were approximately $3,384,000, a decrease of approximately $2,231,000 from December 31, 1995. Accounts receivable decreased approximately $244,000 in 1996. Accounts receivable average days to collect for the quarter ended September 30, 1995 and 1996 were both 48 days. Average days to collect for the year 1995 was 50 days. Management's goal is to maintain receivable collection days at or below 50 for 1996. Inventory levels have decreased approximately $63,000 in 1996 from December 31, 1995 amounts. Longer term cash requirements, other than normal operating expenses, are anticipated for development of new software products and enhancements of existing products, launching new products and enhancements, financing anticipated growth and the possible acquisition of businesses, software products or technologies complementary to the Company's business. The Company believes that its existing cash, cash equivalents, marketable securities, cash generated from operations and available line of credit, will be sufficient to meet the Company's working capital and capital expenditure requirements for at least the next 12 months. =============================================================================== 9 Item 6. Exhibits and Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended September 30, 1996. There are no exhibits to this report. =============================================================================== 10 SIGNATURES In accordance with the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Signature Title Date _____________________ President and Chief Executive James A. Harrer Officer (Principal Executive Officer) and a Director November 14, 1996 _____________________ Donald M. Leonard Vice President Finance and Chief Financial Officer (Principal Financial and Accounting Officer) November 14, 1996 EX-11 2 1 EXHIBIT 11. MUSTANG SOFTWARE, INC. COMPUTATION OF EARNINGS PER SHARE (In thousands, except earnings per share) (Unaudited) - - -----------------------------------------------------------------------------
Three Months Ended Nine Months Ended Sept. 30, Sept. 30, 1995 1996 1995 1996 - - ------------------------------------------------------------------------------------------------- Weighted average number of common shares outstanding 3,356 3,363 2,939 3,361 Common stock equivlents from outstanding stock options 34 0 26 0 - - ------------------------------------------------------------------------------------------------ Average common and common stock equivalents outstanding 3,390 3,363 2,965 3,361 ================================================================================================== Net Income $ 419 $(1,118) $ 313 $(2,417) ================================================================================================== Earnings per share (1) $ .12 $ (.33) $ .11 $ (.72) ==================================================================================================
(1) Fully diluted earnings per share have not been presented because the effects are not material. - - ----------------------------------------------------------------------------- EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMETENTS. 1 9-MOS DEC-31-1996 SEP-30-1996 $3,384,448 0 507,831 400,000 167,637 4,129,908 1,322,224 403,092 5,113,667 918,994 357,537 0 0 6,604,383 (2,767,247) 5,113,667 3,224,233 3,224,233 579,122 579,122 5,229,687 0 32,591 (2,417,731) (2,417,731) (2,417,731) 0 0 0 (2,417,731) (.72) (.72)
-----END PRIVACY-ENHANCED MESSAGE-----