-----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, HwLW2OZeBQv67V8F1QYPBAWtbu+FfKddGvn6UBSQuLNLVKOc+uIKbiTkvKamKNu9 CxT6hfTTv1sCFl0OsI7SjQ== 0000948703-99-000004.txt : 19990422 0000948703-99-000004.hdr.sgml : 19990422 ACCESSION NUMBER: 0000948703-99-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990421 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: 99598167 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): April 20, 1999 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 April 20, 1999, eGames, Inc. (the "Company") issued a press release announcing the Company's unaudited results for the third quarter ended March 31, 1999, 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 April 20, 1999. 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, Chief Executive Officer and Chief Financial Officer Dated: April 21, 1999 EX-99.1 2 PRESS RELEASE EXHIBIT 99.1 At eGames: AT FINANCIAL RELATIONS BOARD: - ---------- ----------------------------- Jerry Klein Glenn Sapadin (212) 661-8030 (General Inquiries) President and CEO Elisa Mailman (212) 661-8030 (Investor Inquiries) (215) 750-6606 ext. 118 Deanne Eagle (212) 661-8030 (Media Inquiries) jklein@egames.com For Immediate Release eGames Inc. Announces Results For Third Quarter And First Nine Months of Fiscal 1999 Key 3Q Operating Highlights: - ---------------------------- o Company Changes Name From RomTech to eGames o Company enters into new distribution and marketing agreement with Digital River for Electronic Software Delivery (ESD) o Hits to www.eGames.com web page increase online sales by 240% o Company repurchases 201,900 shares of eGames' stock at an average price of $1.94 LANGHORNE, Pa., April 20, 1999 -- eGames, Inc. (Nasdaq:EGAM), the leading provider of Family Friendly(TM), value-priced computer software games for players of all ages, today announced results for the third fiscal quarter and nine months ended March 31, 1999. These results are consistent with the Company's announcement of April 5th. Net sales for the quarter ended March 31, 1999 were $2,521,715 versus sales of $2,953,543 for the comparable quarter a year earlier, a decrease of 14.6%. Net income for the third fiscal quarter was $75,254, or $0.01 per diluted share versus $607,318, or $0.06 per diluted share for the third quarter a year earlier. The Company's results for its third fiscal quarter of 1999 reflect a reduction in sales stemming from the transition associated with the launch of eGames' new sales strategy. This strategy is primarily designed to increase the Company's sales directly to retailers and is expected to improve the Company's operating margins and expand its North American retail distribution going forward. NINE MONTH RESULTS - ------------------ Sales for the nine months ended March 31, 1999 increased 17.6% to $8,639,041, versus sales of $7,344,727 for the same period a year earlier. Net income for the first nine-months of fiscal 1999 was $1,325,589, or $0.13 per diluted share, versus net income of $1,269,067, or $0.13 per diluted share, for the comparable nine month period of fiscal 1998. Of note, bottom-line results for the first nine months of fiscal 1999 reflect a significantly increased tax rate over that of the first nine months of fiscal 1998. Diluted earnings per share for the first nine months of fiscal 1999 have already exceeded the $0.12 diluted per share earnings reported for full-year fiscal 1998, reflecting the effective implementation of the Company's focused business strategy. Management remains comfortable with its previously revised earnings' goal of between $0.18 and $0.20 for the 1999 fiscal year. As of March 31, 1999, the Company's balance sheet remained strong with $1.8 million in cash and cash equivalents and $367,000 in long-term debt. Long-term debt is down slightly from approximately $415,000 at March 31, 1998. As of March 31, 1999, the Company's long-term debt to equity ratio was 8.6%. REVISED SALES STRATEGY - ---------------------- On April 5, eGames announced that it had revised its exclusive North American distribution relationship with GT Interactive Software Corporation's Value Products Division ("GT Value Products," a division of GT Interactive Software Corporation, Nasdaq: GTIS). Under the revised distribution relationship, GT Value Products will continue to serve as the Company's exclusive distributor for WalMart, Target and Kmart stores. The former distribution agreement between the Company and GT Value Products, which had required that all of the Company's products in North America be distributed to retail outlets through GT Value Products, has been terminated. As a result of the change in the Company's relationship with GT Value Products, the Company will be able to pursue relationships with other distribution partners as well as direct sales to retailers. MANAGEMENT'S COMMENTS - --------------------- "We are optimistic regarding the Company's new sales strategy and the anticipated effect it will have on our ability to continue to grow both our top and bottom line going forward. We expect that our new distribution strategy will enable us to increase our operating margins while maintaining our low price points. Since a large percentage of our margins traditionally went to our distribution partner, we expect that we will begin realizing a significant portion of the benefits of this new arrangement in the near future," stated Jerry Klein, President and Chief Executive Officer of eGames. "Our commitment to the value-priced, family-friendly software gaming market combined with the increasing popularity of our Galaxy Software brand are key elements of our focused, long-term business strategy. Going forward, we seek to expand our domestic and international reach, both by creating new strategic relationships and aggressively implementing our e-commerce strategy," continued Mr. Klein. "With respect to the progress of our e-commerce strategy, the number of hits registered to our egames.com web site has significantly increased since last quarter, resulting in a 240% increase in online sales over the past three months. In January we announced a distribution and marketing agreement with Digital River, the leader in electronic software delivery (ESD), which has greatly enhanced our presence on the Internet. This means that consumers can now purchase any of our games online and begin playing them within minutes," concluded Mr. Klein. Also during the third fiscal quarter, in February the Company changed its name from RomTech to eGames, Inc. and officially launched its www.eGames.com web site. This name change reflects the Company's commitment to the PC gaming market and its new Internet strategy as a means of complementing retail sales. eGames' Board of Directors approved a $1 million stock buyback program on October 26, 1998. To date the Company has repurchased 201,900 shares at an average price of $1.94 per share. eGames, Inc., headquartered in Langhorne, Pa., develops, publishes and markets a diversified line of personal computer software primarily for consumer entertainment and small office/home office applications. eGames promotes the Galaxy of Games(TM), Galaxy of Home Office Help(TM), Game Master Series(TM) and Galaxy of Arcade(TM) brand names ("Galaxy Software") in order to generate customer loyalty, encourage repeat purchases and differentiate the Galaxy Software products to retailers and consumers. eGames, Inc.'s press releases are available free-of-charge by fax by calling 1-800-PRO-INFO and entering ticker symbol EGAM or at Company News at http:/www.prnewswire.com. This press release contains certain forward-looking statements, including without limitation, statements regarding eGames' business strategy, the success of eGames' Galaxy branding strategy and Game Master Series product, eGames' revised sales strategy and anticipated sales and earnings' growth in 1999 and beyond. 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 eGames' control. eGames 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: the allocation of adequate shelf space for eGames' products in major chain retail stores; successful sell-through results for eGames' products at retail stores; downward pricing pressure; the timeliness and success of developing and selling products; the acceptance by the market of the Game Master and other Galaxy products; access to and control over distribution channels; consumers' continuing demand for value-priced software; competition; the ability to create successful strategic partnerships and implement its Internet strategy; and various other factors described in eGames' reports, including Form 10-KSB, dated June 30, 1998, and Form 10-QSB dated December 31, 1998, filed by eGames (formerly RomTech) with the Securities and Exchange Commission. -Financial Tables Follow- eGames, Inc. Consolidated Statements of Operations (Un-audited)
Three months ended Nine months ended March 31, March 31, ------------------------- ------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net sales ........................................... $ 2,521,715 $ 2,953,543 $ 8,639,041 $ 7,344,727 Cost of sales ....................................... 937,492 1,115,977 2,954,800 2,752,600 ----------- ----------- ----------- ----------- Gross profit ........................................ 1,584,223 1,837,566 5,684,241 4,592,127 Operating expenses: Product development ............................. 260,534 99,553 703,166 239,833 Selling, general and administrative ............. 1,165,769 1,115,183 3,464,272 2,924,550 ----------- ----------- ----------- ----------- Total operating expenses .................. 1,426,303 1,214,736 4,167,438 3,164,383 Operating income .................................... 157,920 622,830 1,516,803 1,427,744 Interest expense, net ............................... 8,146 13,608 32,427 37,617 ----------- ----------- ---------- ----------- Income before taxes ................................. 149,774 609,222 1,484,376 1,390,127 Provision for income tax ............................ 74,520 1,904 158,787 3,069 ----------- ----------- ----------- ----------- Net income .......................................... 75,254 607,318 1,325,589 1,387,058 Accretion of beneficial conversion feature on preferred stock ...................... - 0 - - 0 - - 0 - (117,991) ----------- ----------- ----------- ----------- Net income attributable to common stock ................................. $ 75,254 $ 607,318 $ 1,325,589 $ 1,269,067 =========== =========== =========== =========== Net income per common share: - Basic ................................. $ 0.01 $ 0.07 $ 0.14 $ 0.15 - Diluted ............................... $ 0.01 $ 0.06 $ 0.13 $ 0.13 Weighted average common shares outstanding - Basic ............................ 9,467,659 9,283,659 9,459,673 8,498,607 Dilutive effect of common stock equivalents ......... 762,102 550,280 427,189 1,119,945 Weighted average common shares outstanding - diluted ........................ 10,229,761 9,833,939 9,886,862 9,618,552
eGames, Inc. Consolidated Balance Sheet (Un-audited)
As of March 31, ASSETS 1999 ----------- Current assets: Cash and cash equivalents ................................... $ 1,761,414 Restricted cash ............................................. 17,296 Accounts receivable, net of allowances - $915,262 ........... 2,825,503 Inventory ................................................... 1,105,675 Prepaid expenses ............................................ 101,178 ----------- Total current assets ................................. 5,811,066 Furniture and equipment, net ................................... 399,493 Other assets ................................................... 547,413 ----------- Total assets ......................................... $ 6,757,972 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable ............................................... $ 169,572 Accounts payable ............................................ 1,126,238 Accrued expenses ............................................ 837,215 Capital lease obligations ................................... 13,791 ----------- Total current liabilities ............................ 2,146,816 Capital lease obligations ...................................... 28,507 Notes payable .................................................. 188,408 Convertible subordinated debt .................................. 150,000 ----------- Total liabilities .................................... 2,513,731 Stockholders' equity: Common stock, no par value (40,000,000 shares authorized; 9,791,508 issued) .................................... 8,796,889 Additional paid in capital .................................. 1,148,550 Accumulated deficit ......................................... (5,405,135) Treasury stock, at cost - 161,900 shares .................... (277,928) Accumulated other comprehensive income/(loss) ............... (18,135) ----------- Total stockholders' equity ........................... 4,244,241 ----------- Total liabilities and stockholders' equity ........... $ 6,757,972 ===========
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