-----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, DSv1A061pt8IsuIRQI32t0kUQTywuKWRhGBgrbtqgukE4TaadLvwO3pqpOZzVN64 DqCssxdNqe1q8eegmghgFQ== 0000948703-00-000005.txt : 20000503 0000948703-00-000005.hdr.sgml : 20000503 ACCESSION NUMBER: 0000948703-00-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000501 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EGAMES INC CENTRAL INDEX KEY: 0000948703 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 232694937 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27102 FILM NUMBER: 616946 BUSINESS ADDRESS: STREET 1: 2000 CABOT BLVD STREET 2: SUITE 110 CITY: LANGHORNE STATE: PA ZIP: 19047-1833 BUSINESS PHONE: 2157506606 MAIL ADDRESS: STREET 1: 2000 CABOT BLVD SUITE 110 CITY: LANGHORNE STATE: PA ZIP: 19047-1833 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 1, 2000 eGames, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 0-27102 23-2694937 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 2000 Cabot Blvd. West, Suite 110, Langhorne, PA 19047-1833 - ----------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (215) 750-6606 ----------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events. On May 1, 2000, eGames, Inc. (the "Company") issued a press release announcing the Company's unaudited results for the third quarter and nine months ended March 31, 2000, as described in the press release attached as Exhibit 99.1 and incorporated herein by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. a. None. b. None. c. Exhibits. 99.1 Press release dated May 1, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. eGames, Inc. By:/s/ Gerald W. Klein ------------------------------ Gerald W. Klein, President and Chief Executive Officer Dated: May 2, 2000 EX-99.1 2 EARNINGS PRESS RELEASE EXHIBIT 99.1 At eGames, Inc. At The Financial Relations Board: - --------------- --------------------------------- Jerry Klein, Glenn Sapadin (212) 661-8030 (General Inquiries) President & CEO Jean Young (212) 661-8030 (Investor Inquiries) (215) 750-6606 (Ext. 118) Deanne Eagle (212) 661-8030 (Media Inquiries) Tom Murphy, Vice President & CFO (215) 750-6606 (Ext. 113) For Immediate Release eGames Announces Fiscal Third Quarter 2000 Financial Results Langhorne, PA - May 1, 2000 -- eGames, Inc. (Nasdaq: EGAM), a leading publisher and developer of Family Friendly(TM), value-priced software games for players of all ages, today announced results for the third fiscal quarter and nine months ended March 31, 2000. These results are consistent with the Company's announcement of April 17th. Net sales for the quarter ended March 31, 2000 were $1.9 million, versus net sales of $2.5 million for the comparable quarter a year earlier, a decrease of 24%. The Company's net loss for the third fiscal quarter was $797,480, or $0.08 per diluted share, versus net income of $75,254, or $0.01 per diluted share, for the third quarter a year earlier. As previously announced, the decline in net sales was a result of higher than expected product returns in the Company's new food and drug distribution channels during the quarter combined with the challenging business conditions in the consumer entertainment software marketplace. At the same time, eGames' entry into new distribution channels resulted in higher selling, general and administrative expenses associated with increased promotional expenses. NINE-MONTH RESULTS - ------------------ Net sales for the nine months ended March 31, 2000 increased 22% to $10.6 million, versus net sales of $8.6 million for the same period a year earlier. Higher net sales reflect strong sell through at traditional retail outlets, both domestically and abroad, as well as the Company's entry into more than 24 new retail chains compared to the number of retail chains at which the Company's products were sold as of March 31, 1999. Net income for the first nine months of fiscal 2000 was $380,467, or $0.04 per diluted share, versus net income of $1,325,589, or $0.13 per diluted share, for the comparable nine-month period of fiscal 1999. Of note, bottom-line results for the first nine months of fiscal 2000 reflect a significant increase in selling, general and administrative expenses as a result of the Company's announced April 1999 transition to a new distribution strategy, which involved establishing direct selling relationships with retailers and working with a network of non-exclusive distributors in the North American markets. According to Jerry Klein, President and CEO of eGames, "The higher than anticipated product returns are primarily the result of entering the non-traditional software markets in food and drug retail stores. With a solid year of experience in these markets, we believe that we now have a more accurate picture of the product needs of these retail partners and will adjust our future shipping volumes and estimates for return provisions accordingly. "We continue to aggressively implement our business strategy as we pursue our long-term growth objectives," continued Mr. Klein. "Two of our key growth initiatives are our branded browser promotional program and our `Store Within A Store' strategies and we continue to focus on bringing these strategies to market in the near term. We look at these initiatives as potential sources of new revenue streams and as terrific branding opportunities, while maintaining our confidence that we have the right product mix and development network to grow our core software gaming business. eGames, Inc., headquartered in Langhorne, PA, develops, publishes and markets a diversified line of personal computer software primarily for consumer entertainment and personal productivity. The Company promotes the eGames(TM), Game Master Series(TM), Multi-Pack and Galaxy of Home Office Help(TM) brand names in order to generate customer loyalty, encourage repeat purchases and differentiate the eGames Software products to retailers and consumers. Additional information regarding eGames, Inc. can be found on the Company's web site at www.egames.com. This press release contains certain forward-looking statements, including without limitation, statements regarding the anticipated product needs of food and drug retailers and the accuracy of the Company's adjustments to future shipping volumes and product return provisions; the Company's expectation of bringing its branded browser promotional program and `Store Within A Store' strategy to market in the near term and the potential for these programs to result in new revenue streams; and the ability of the Company to grow its core software gaming business. The actual results achieved by eGames and the factors that could cause actual results to differ materially from those indicated by the forward-looking statements are in many ways beyond the Company's control. The Company cautions readers that the following important factors, among others, could cause the Company's actual results to differ materially from those expressed in this press release: successful sell-through results for the Company's products at retail stores and the ability of the Company to accurately estimate sell-through volume when an order is shipped; the amount of unsold product that is returned to the Company by retail stores; the Company's ability to accurately predict the amount of product returns that will occur and the adequacy of the reserves established for such returns; the Company's ability to successfully sell its branded browser program and its "Store within a Store" strategy on commercially acceptable terms; the Company's ability to continue to enter into new distribution and direct sales relationships on commercially acceptable terms as well as the ability to generate continued sales within existing retail relationships; increased selling, general and administrative costs, including increased legal expenses; the allocation of adequate shelf space for the Company's products in major chain retail stores; downward pricing pressure; fluctuating costs of developing, producing and marketing the Company's products; the Company's ability to license or develop quality content for its products; the timeliness and success of developing and selling products; the acceptance by the market of the Company's products; and various other risk factors described in the Company's reports, including Form 10-KSB for the year ended June 30, 1999 and Form 10-QSB for the quarter ended December 31, 1999, filed by eGames with the Securities and Exchange Commission. -financial tables follow- eGames, Inc. Consolidated Statements of Operations (Unaudited)
Three months ended Nine months ended March 31, March 31, -------------------------- ------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Net sales $ 1,923,600 $ 2,521,715 $10,562,565 $ 8,639,041 Cost of sales 832,858 937,492 3,997,803 2,954,800 ----------- ----------- ----------- ----------- Gross profit 1,090,742 1,584,223 6,564,762 5,684,241 Operating expenses: Product development 201,479 260,534 665,071 703,166 Selling, general and administrative 1,848,215 1,165,769 5,429,217 3,464,272 ----------- ----------- ----------- ----------- Total operating expenses 2,049,694 1,426,303 6,094,288 4,167,438 ----------- ----------- ----------- ----------- Operating income (loss) (958,952) 157,920 470,474 1,516,803 Interest expense, net 1,634 8,146 11,711 32,427 ----------- ----------- ----------- ----------- Income (loss) before income taxes (960,586) 149,774 458,763 1,484,376 Provision (benefit) for income taxes (163,106) 74,520 78,296 158,787 ----------- ----------- ----------- ----------- Net income (loss) ($ 797,480) $ 75,254 $ 380,467 $ 1,325,589 =========== =========== =========== =========== Net income (loss) per common share: - basic ( $ 0.08) $ 0.01 $ 0.04 $ 0.14 =========== =========== =========== =========== - diluted ( $ 0.08) $ 0.01 $ 0.04 $ 0.13 =========== =========== =========== =========== Weighted average common shares outstanding - basic 9,745,820 9,467,659 9,692,426 9,459,673 Dilutive effect of common stock equivalents - 0 - 762,102 422,848 427,189 ----------- ----------- ----------- ----------- Weighted average common shares outstanding - diluted 9,745,820 10,229,761 10,115,274 9,886,862 =========== =========== =========== ===========
eGames, Inc. Consolidated Balance Sheet (Unaudited)
As of March 31, ASSETS 2000 ------ ---- Current assets: Cash and cash equivalents $ 601,291 Accounts receivable, net of allowances totaling $2,923,980 3,179,966 Inventory 2,281,456 Prepaid expenses 128,246 ----------- Total current assets 6,190,959 Furniture and equipment, net 379,599 Other assets 347,250 ----------- Total assets $ 6,917,808 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable $ 53,610 Accounts payable 1,646,650 Revolving line of credit 500,000 Accrued expenses 540,231 Capital lease obligations 21,329 ----------- Total current liabilities 2,761,820 Capital lease obligations 6,616 Note payable 134,220 Convertible subordinated debt 150,000 ----------- Total liabilities 3,052,656 Stockholders' equity: Common stock, no par value (40,000,000 shares authorized; 9,981,875 issued and 9,749,975 outstanding) 9,134,234 Additional paid in capital 1,148,550 Accumulated deficit (5,887,701) Treasury stock, at cost - 231,900 shares (501,417) Accumulated other comprehensive loss (28,514) ----------- Total stockholders' equity 3,865,152 ----------- Total liabilities and stockholders' equity $ 6,917,808 ===========
-----END PRIVACY-ENHANCED MESSAGE-----