-----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, JFsjS7L87JjJj9ePJ/Bf8vKhARzjxJiVk48GVo04/ehJL8rrAi/fZmzlQACEEny5 /XG6JQqYddffUaab5myxzg== 0000940986-98-000003.txt : 19980518 0000940986-98-000003.hdr.sgml : 19980518 ACCESSION NUMBER: 0000940986-98-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: SEC FILE NUMBER: 000-25678 FILM NUMBER: 98623183 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 March 31, 1998. OR Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Commission 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 May 11, 1998, there were 3,425,011 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 March 31, 1998 and December 31, 1997 3 Statements of Operations for the three months ended March 31,1998 and 1997 4 Statements of Cash Flows for the three months ended March 31, 1998 and 1997 5 Notes to Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. Other Information: Report of sales of securities and use of proceeds therefrom FORM SR 9 Signatures 12 ============================================================================ 3 MUSTANG SOFTWARE, INC. BALANCE SHEETS ASSETS
March 31, December 31 1998 1997 (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 992,919 $ 1,403,776 Accounts receivable, net of allowance for doubtful 73,964 6,378 accounts of $160,000 December 31, 1997 and March 31,1998 Income taxes receivable -- 97,004 Inventories 74,868 99,915 Other 27,503 28,215 - ------------------------------------------------------------------------------- Total current assets 1,169,254 1,635,288 - ------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT: Property and equipment 1,245,263 1,238,713 Accumulated depreciation (561,772) (527,279) - ------------------------------------------------------------------------------- Net property and equipment 683,491 711,434 - ------------------------------------------------------------------------------- OTHER ASSETS: Capitalized software development costs, net 3,732 4,083 - ------------------------------------------------------------------------------- Total other assets 3,732 4,083 - ------------------------------------------------------------------------------- $1,856,477 $2,350,805 =============================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $259,646 $242,451 Accrued payroll and liabilities 132,660 217,318 Accrued warranty and support 45,000 45,000 Deferred revenue 80,000 80,000 - ------------------------------------------------------------------------------- Total current liabilities 517,306 584,769 - ------------------------------------------------------------------------------- CAPITAL LEASE OBLIGATION, net of current portion 252,573 269,005 - ------------------------------------------------------------------------------- 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--3,392,728 and 3,417,961 6,673,163 6,640,045 at December 31,1997 and March 31, 1998, respectively Retained earnings (5,586,565) (5,143,014) - ------------------------------------------------------------------------------- Total shareholders' equity 1,086,598 1,497,031 - ------------------------------------------------------------------------------- $1,856,477 $2,350,805 =============================================================================== The accompanying notes are an integral part of these financial statements.
=============================================================================== 4 MUSTANG SOFTWARE, INC. STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1998 1997 REVENUE $ 398,480 $ 799,922 COSTS OF REVENUE 66,409 122,366 - ------------------------------------------------------------------------------- Gross profit 332,071 677,556 - ------------------------------------------------------------------------------- OPERATING EXPENSES: Research and development 174,278 171,207 Selling and marketing 247,018 328,440 General and administrative 360,585 421,863 - ------------------------------------------------------------------------------- Total operating expenses 781,881 921,510 - ------------------------------------------------------------------------------- Income(loss)from operations (449,810) (243,954) - ------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest expense (8,174) (9,711) Interest income 14,433 36,654 - ------------------------------------------------------------------------------- Total other income (exp). 6,259 26,943 - ---------------------------------------------------------------------------- Income (loss) before provision for income taxes (443,551) (217,011) PROVISION (BENEFIT) FOR INCOME TAXES -- -- - ------------------------------------------------------------------------------- NET INCOME (LOSS) $ (443,551) $ (217,011) =============================================================================== NET INCOME (LOSS) PER COMMON SHARE $ (.13) $ (.06) =============================================================================== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,417,961 3,374,967 =============================================================================== The accompanying notes are an integral part of these financial statements.
=============================================================================== 5 MUSTANG SOFTWARE, INC. STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income(loss) $ (443,551) $ (217,011) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,842 37,670 1 Net changes in assets and liabilities (12,289) (233,374) - ------------------------------------------------------------------------------- Net cash provided (used) by operating activities (420,998) (412,715) - ------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITES: Purchase of property and equipment (6,545) - - ------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of stock 33,118 Payments on capital lease obligation (16,432) (14,895) - ------------------------------------------------------------------------------- Net Cash provided (used) by financing activities 16,686 (14,895) - ------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH (410,857) (427,610) CASH BALANCE, beginning of period 1,403,776 2,920,231 - ------------------------------------------------------------------------------- CASH BALANCE, end of period $ 992,919 $ 2,492,621 =============================================================================== SUPPLEMENTAL DISCLOSURES: Interest paid 8,174 9,711 Taxes paid -- -- 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, 1997, included in the 1997 Form 10KSB. The condensed Balance Sheet at December 31, 1997 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, 1997. Results of Operations: Three Months Ended March 31, 1998 and 1997 Revenues for the three months ended March 31, 1998 were $398,480, a decrease of $401,442 or 50.2% under revenues for the same period in 1997. As a percentage of revenues by product category for the first quarter 1998 vs. 1997 showed the QmodemPro line at 8% and 15%, the Wildcat! line at 52% and 82%, Web Essentials at 32% and 0% and other products at 8% and 3%, respectively. Sales were higher in first quarter of 1997 than in the first quarter of 1998 due to the release of three add-on products for the Wildcat Line to an established customer base. First quarter of 1998 did not benefit from any new releases to an established customer base. However, first quarter of 1998 did have the release of IMC Enterprise edition which is a positive move towards the company goal of building a new customer base for the Web Essentials product line. Gross profit for the quarter decreased from $677,556 in 1997 to $332,071 in 1998, and increased as a percentage of revenues from 84.7% in 1997 to 83.3% in 1998. Gross profit percentage has averaged between 80-84% over the last three calendar years. Research and development expenses increased $3,071 in the first quarter of 1998 from 1997, and increased as a percentage of revenues from 21.4% in 1997 to 43.7% in 1998. The decline in revenues accounted for the increase as a percentage of revenues. In an effort to improve its competitive position, the Company expects to invest a significant amount of its resources for the development of new products and product enhancements. Selling and marketing expenses for the quarter were $247,018, a decrease of $81,422 under the same quarter the previous year, and they increased as a percentage of revenues from 41.1% in 1997 to 62.0% in 1998. The items primarily attributing to the decrease was a reduction of advertising and promotional costs for existing products. The decrease in headcount from 9 in 1997 to 8 in 1998, also contributed to the decrease. General and administrative expenses decreased for the quarter compared to the previous year, from $421,863 in 1997 to $360,585 in 1998, but increased as a percentage of revenues, from 52.7% in 1997 to 90.5% in 1998. The items primarily accounting for the decrease were salaries and costs associated with employee benefits. The General and administrative headcount decreased 29% from the prior year. =============================================================================== 8 Liquidity and Capital Resources Cash and cash equivalents balance at March 31, 1998 were approximately $992,919, a decrease of approximately $410,859 from December 31, 1997. Accounts receivable increased approximately $67,586 and Accounts Payable increased approximately $17,195 in 1998. Accounts receivable average days to collect for the quarter ended March 31, 1997 and 1998 were 64 and 52 days, respectively. Average days to collect in 1997 was 64 days. Management's goal is to maintain receivable collection days at or below 65 for 1998. Inventory levels have decreased $25,047 in 1998 from December 31, 1997. 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, and 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
Part II. Other Information Item 2. Changes in Securities and Use of Proceeds (d) (1) The effective date of the Securities Act registration statement for which this use of proceeds information is being disclosed and the Commission file number assigned to the registration statement is April 5, 1995 and 2-89900-LA, respectively. (2) The offering date was April 5, 1995. (3) The offering did not terminate before any securities were sold. (i) The offering has terminated but not before the sale of all securities registered. (ii) The name(s) of the managing underwriter(s) is Cruttenden Roth, Incorporated. (iii) The title of each class of securities registered is Common Stock, no par value and Warrants to purchase Common Stock. (iv) For each class of securities the following table provides information for the account of the registrant and the selling security holders with respect to the amount of the securities registered, the aggregate price of the offering amount registered, the amount sold and the aggregate offering price of the amount sold to date: For the account of the registrant For the account(s)of any selling security holder(s) Title Amount Aggregate Amount Aggregate Amount Aggregate Amount Aggregate of registered price of sold offering registered price of Sold offering Security offering price of offering price of amount amount amount amount registered sold registered sold Common 1,250,000 $8,125,000 1,125,000 $8,125,000 187,500 $1,109,063 187,500 $1,109,063 Stock Warrants 125,000 125 125,000 $125 Total 1,375,000 $8,125,125 1,375,000 $8,125,125 187,500 $1,109,063 187,500 $1,109,063 (v) From April 5, 1995 (the effective date of the Securities Act registration statement) to March 31, 1998 the following table provides information as to the amount of expenses incurred for the registrant's account in connection with the issuance and distribution of the securities registered for underwriting discounts and commissions, finders fees, expenses paid to or for underwriters, other expenses and total expenses were as follows:
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Direct or indirect Direct or indirect payments to directors payment to others officers, general partners of the registrant or their associated; to persons owning ten percent or more of any class of equity securities of the registrant; and to affiliates of the registrant. (A) (B) (01)Underwriting discounts and [ ]$ [ ]$ 731,250 commissions (02)Finder's Fees [ ] [ ] (03)Expenses paid to or for underwriters [ ] [ ] 243,750 (04)Other expenses [ ] [ ] 565,315 (05)Total Expenses [ ] [ ]$ 1,540,315 (vi) The net offering proceeds to the registrant after deducting the total expenses described in paragraph (f)(4)(v) of this Item was $6,584,810.
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(vii) From April 5, 1995 (the effective date of the Securities Act registration statement) to March 31, 1998 the following table provides information with respect to the amount of net offering proceeds to the registrant used for construction of plant, building and facilities; purchase and installation of machinery and equipment; purchases of real estate; acquisition of other business(es); repayment of indebtedness; working capital; temporary investments; and any other purposes for which at least five (5) percent of the registrant's total offering proceeds or $100,000 (whichever is less) has been used: Direct or indirect Direct or indirect payments to directors payment to others officers, general partners of the registrant or their associated; to persons owning ten percent or more of any class of equity securities of the registrant; and to affiliates of the registrant. (A) (B) (01)Construction of plant, building and [ ]$ [ ]$ facilities (02)Purchase and installation of [ ] [ ] machinery and equipment (03)Purchase of real [ ] [ ] estate (04)Acquisition of other business(es) [ ] [ ] (05)Repayment of indebtedness [ ] [ ] (06)Working capital [ ] 39,500 [ ] 669,822 Temporary investment (specify) (07) [ ]$ [ ]$ (08) [ ] [ ] (09) [ ] [ ] (10) [ ] [ ] Other purposes (specify) (11)Advertising [ ]$ [ ]$ 859,940 (12)Marketing & Trade [ ] [ ] 2,908,855 (13)Research & [ ] [ ] 1,738,494 Development (14) [ ] [ ] (viii) The use of proceeds disclosed in paragraph (d)(3)(vii) of this Item did not represent a material change in the use of proceeds described in the prospectus.
=============================================================================== 12 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 ____________________ James A. Harrer President and Chief Executive May 14, 1998 Officer (Principal Executive Officer) and a Director ____________________ Donald M. Leonard Vice President and Chief May 14, 1998 Financial Officer (Principal Financial and Accounting Officer) and a Director EX-11 2 1 EXHIBIT 11. MUSTANG SOFTWARE, INC. COMPUTATION OF EARNINGS PER SHARE (In thousands, except earnings per share) (Unaudited) - - ----------------------------------------------------------------------------- Three Months Ended March 31, 1998 1997 - - ----------------------------------------------------------------------------- Weighted average number of common shares outstanding 3,418 3,375 Common stock equivlents from outstanding stock options 0 0 - - ----------------------------------------------------------------------------- Average common and common stock equivalents outstanding 3,418 3,375 =============================================================================== Net Income $(444) $ (217) =============================================================================== Earnings per share (1) $(.13) $ (.06) ===============================================================================
(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 STATEMENTS. 3-MOS DEC-31-1998 MAR-31-1998 $ 992,919 0 233,964 160,000 74,868 1,169,254 1,245,263 561,772 1,856,477 517,306 252,573 0 0 6,673,163 (5,586,565) 1,856,477 398,480 398,480 66,409 66,409 781,881 0 8,174 ( 443,551) ( 443,551) ( 443,551) 0 0 0 ( 443,551) (.13) (.13)
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