1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1996
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 0-28660
TRITEAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0548924
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2011 PALOMAR AIRPORT ROAD
CARLSBAD, CA 92008-1431
(Address of principal executive offices)
(619) 930-2077
(Registrant's phone number, including area code)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED 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 / / NO /X/
As of November 7, 1996 there were 9,181,573 shares of $.001 par value common
stock outstanding.
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TRITEAL CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets................................. 3
Consolidated Statements of Operations....................... 4
Consolidated Statements of Cash Flows....................... 5
Notes to Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations............ 8
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ........13
Item 6. Exhibits and Reports on Form 8-K............................14
SIGNATURES..............................................................15
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRITEAL CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, March 31,
1996 1996
------------- -----------
(Unaudited) (Note)
Current assets:
Cash and cash equivalents .............................. $ 15,272,751 $ 301,251
Short-term investments ................................. 9,531,226 --
Accounts receivable, net ............................... 2,265,175 4,872,054
Prepaid expenses and other current assets .............. 861,063 378,485
------------ -----------
Total current assets ................................ 27,930,215 5,551,790
Property and equipment, net .............................. 1,122,100 1,024,040
Other assets, net ........................................ 134,062 60,140
------------ -----------
Total assets ....................................... $ 29,186,377 $ 6,635,970
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit ....................................... $ -- $ 113,542
Accounts payable ..................................... 310,103 784,575
Accrued liabilities .................................. 3,943,131 3,181,761
Deferred revenues .................................... 888,610 922,732
Current portion of long-term debt .................... 11,926 121,388
------------ -----------
Total current liabilities .......................... 5,153,770 5,123,998
Long-term debt ........................................... 17,865 242,776
Stockholders' equity:
Convertible Preferred Stock, $.001 par value
Authorized shares -- 5,000,000
Issued and outstanding -- no shares and
1,527,247 shares, respectively ...................... -- 1,527
Common Stock, $.001 par value
Authorized shares -- 30,000,000
Issued and outstanding -- 9,179,013 shares and
4,186,902 shares, respectively ....................... 9,179 4,187
Additional paid-in capital ............................ 30,196,584 5,869,825
Preferred stock subscriptions ......................... -- 363,129
Notes receivable from stockholders .................... (167,250) (167,250)
Deferred compensation ................................. (126,100) (151,900)
Accumulated deficit ................................... (5,897,671) (4,650,322)
------------ -----------
Total stockholders' equity .......................... 24,014,742 1,269,196
------------ -----------
Total liabilities and stockholders' equity .......... $ 29,186,377 $ 6,635,970
============ ===========
Note: The balance sheet at March 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
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TRITEAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
------------------------------ ------------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Revenues:
License fees ....................... $ 3,066,468 $ 838,203 $ 5,403,360 $ 1,628,136
Maintenance and services ........... 539,229 420,215 1,002,895 948,421
----------- ----------- ----------- -----------
Total revenues .................. 3,605,697 1,258,418 6,406,255 2,576,557
Cost of revenues:
Cost of license fees ............... 519,825 314,570 1,040,063 585,196
Cost of maintenance and services ... 158,927 101,021 266,391 242,990
----------- ----------- ----------- -----------
Total cost of revenues .......... 678,752 415,591 1,306,454 828,186
----------- ----------- ----------- -----------
Gross profit .................... 2,926,945 842,827 5,099,801 1,748,371
Operating expenses:
Research and development ........... 552,045 406,070 1,035,335 694,947
Selling, general and administrative 2,792,826 2,011,340 5,466,532 3,543,810
----------- ----------- ----------- -----------
Total operating expenses ........ 3,344,871 2,417,410 6,501,867 4,238,757
----------- ----------- ----------- -----------
Operating loss ...................... (417,926) (1,574,583) (1,402,066) (2,490,386)
Interest income (expense), net ...... 164,567 (11,271) 154,717 (13,035)
----------- ----------- ----------- -----------
Loss before income tax benefit ..... (253,359) (1,585,854) (1,247,349) (2,503,421)
Income tax benefit ................. -- 31,000 -- 49,000
----------- ----------- ----------- -----------
Net loss ............................ $ (253,359) $(1,554,854) $(1,247,349) $(2,454,421)
=========== =========== =========== ===========
Net loss per share .................. $ (.03) $ (.23) $ (.17) $ (.37)
=========== =========== =========== ===========
Shares used in computing net loss per
share ............................ 7,987,335 6,712,321 7,354,098 6,712,321
=========== =========== =========== ===========
See accompanying notes.
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TRITEAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
September 30,
--------------------------------
1996 1995
------------- ------------
Cash flows from operating activities:
Net loss .................................................................... $ (1,247,349) $(2,454,421)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization ............................................. 234,952 129,482
Amortization of deferred compensation ..................................... 25,800 --
Issuance of common stock for services ..................................... -- 6,250
Changes in operating assets and liabilities:
Accounts receivable ...................................... 2,606,879 (338,059)
Prepaid expenses and other current assets ................ (482,578) (220,987)
Accounts payable ......................................... (474,472) 286,342
Accrued liabilities ...................................... 761,370 221,063
Deferred revenue ......................................... (34,122) (17,465)
------------ -----------
Net cash provided by (used in) operating activities ......................... 1,390,480 (2,387,795)
Cash flows from investing activities:
Short-term investments ................................................... (9,531,226) --
Purchase of property and equipment ....................................... (333,012) (597,924)
Other assets ............................................................. (73,922) (66,151)
------------ -----------
Net cash used in investing activities ....................................... (9,938,160) (664,075)
Cash flows from financing activities:
Net proceeds from (repayments on) line of credit ......................... (113,542) 113,542
Proceeds from long-term debt ............................................. -- 251,271
Repayments of long-term debt ............................................. (334,373) (14,868)
Net proceeds from issuance of common stock ............................... 20,400,931 --
Net proceeds from issuance of preferred stock ............................ 3,566,164 2,102,526
------------ -----------
Net cash provided by financing activities ................................... 23,519,180 2,452,471
------------ -----------
Increase (decrease) in cash and cash equivalents ............................ 14,971,500 (599,399)
Cash and cash equivalents at beginning of period ............................ 301,251 1,224,636
------------ -----------
Cash and cash equivalents at end of period .................................. $ 15,272,751 $ 625,237
============ ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest .................................................................. $ 27,302 $ 15,278
============ ===========
Taxes ..................................................................... $ -- $ --
============ ===========
Supplemental disclosure of noncash financing activities:
Issuance of common stock for notes receivable ............................. $ -- $ 167,250
============ ===========
See accompanying notes.
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TRITEAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
TriTeal Corporation (the "Company") develops, markets and supports open
systems-based, mission-critical desktop system software and integrated
applications that enable multi-platform deployment of client-server applications
throughout an enterprise organization. Customers consist primarily of large
multinational corporations.
The Consolidated Financial Statements of the Company included in the Company's
Registration Statement on Form SB-2 (No. 333-5052-LA), including the related
Prospectus dated August 6, 1996 (the "Registration Statement"), contain
additional information about the Company, its operations, and its financial
statements and accounting practices, and should be read in conjunction with this
Quarterly Report on Form 10-Q. These unaudited consolidated financial statements
have been prepared in accordance with the instructions on Form 10-Q and,
therefore, certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.
The accompanying unaudited consolidated financial statements of the Company
reflect all adjustments of a normal recurring nature which are, in the opinion
of management, necessary for a fair presentation of the financial position,
results of operations and cash flows for all periods presented. The interim
financial information herein are not necessarily indicative of results for any
future interim periods or for the full fiscal year ending March 31, 1997.
NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS
In June 1996, the American Institute of Certified Public Accountants issued an
Exposure Draft of a proposed Statement of Position (SOP), "Software Revenue
Recognition," that would supercede SOP 91-1 and would be effective for the
Company's fiscal 1998 financial statements. If adopted, the Exposure Draft is
not expected to have a significant impact on the financial position or the
results of operations of the Company.
NOTE 3 - STOCKHOLDERS' EQUITY
On August 6, 1996, the Company completed its initial public offering of
2,500,000 shares of its Common Stock. Net proceeds to the Company aggregated
approximately $17.6 million. As of the closing date of the offering, all of the
Preferred Stock outstanding was converted, on a one-for-one basis, into an
aggregate of 2,093,411 shares of Common Stock.
On August 29, 1996, the underwriters of the offering exercised their
over-allotment option to purchase an additional 375,000 shares of Common Stock.
Net proceeds to the Company aggregated approximately $2.8 million.
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TRITEAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 - COMPUTATION OF NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of common
shares and common stock equivalents outstanding. Common equivalent shares from
stock options and warrants are excluded from the computation when their effect
is antidilutive except that, pursuant to the Securities and Exchange Commission
Staff Accounting Bulletins, common shares and common equivalent shares issued
during the twelve months prior to the initial filing of the Registration
Statement with the Securities and Exchange Commission have been included in the
calculation as outstanding for all periods prior to the Company's initial public
offering (using the treasury stock method). The calculation also gives effect to
the conversion of all convertible preferred shares (using the if-converted
method), which automatically converted into common shares upon completion of the
Company's initial public offering.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those risks and uncertainties
discussed below, as well as other risks set forth under the caption "Risk
Factors" in the Registration Statement and elsewhere in the related Prospectus.
The following discussion should be read in conjunction with the consolidated
financial statements and the notes thereto included in Item 1 of this Quarterly
Report on Form 10-Q and the Registration Statement.
OVERVIEW
TriTeal develops, markets and supports open systems-based, mission-critical
desktop system software and integrated applications that enable multi-platform
deployment of client/server applications throughout an enterprise organization.
The Company was founded in January 1993, commenced operations in April 1993 and
released its first product in May 1993. In August 1995, the Company introduced
its current flagship product, TED 4.0. The Company's current suite of products
is based on certain technologies licensed from Hewlett-Packard, Spyglass, Inc.,
SPYRUS and other technology vendors. The Company's revenues are derived
principally from two sources: (i) license fees for the use of the Company's
software products, and (ii) maintenance agreements and software development
contract revenues. Revenues from software licenses are generally recognized upon
shipment of software. Revenues from maintenance agreements are recognized over
the term of each contract, which generally is one year. Software development
contract revenues are recognized using the percentage-of-completion method.
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Revenues
TriTeal's revenues are derived principally from license fees, maintenance
agreements and software development contracts. The Company's total revenues
increased to $3.6 million for the three months ended September 30, 1996 from
$1.3 million for the three months ended September 30, 1995. License fees
increased to $3.1 million for the three months ended September 30, 1996 from
$838,000 for the three months ended September 30, 1995. During the three months
ended September 30, 1996 and 1995, license fees aggregated 85% and 67% of total
revenues, respectively. This increase in license fees was due primarily to
increased market acceptance of the Company's existing products, introduction of
enhanced and new products and expansion of the Company's direct sales force.
Maintenance and services revenues, which also include revenues derived from
software development contracts, increased to $539,000 for the three months ended
September 30, 1996 from $420,000 for the three months ended September 30, 1995.
Maintenance, which consists primarily of technical support, increased to
$427,000 for the three months ended September 30, 1996 from $182,000 for the
three months ended September 30, 1995. The increase in maintenance revenues was
due primarily to additional maintenance agreements associated with a larger
installed base of customers. The Company does not anticipate receiving a
significant amount of revenues from software development contracts in the
future; however, it may enter into such contracts in special situations where
the technology may allow the Company to introduce new products, penetrate new
markets or establish strategic relationships.
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Cost of Revenues
The Company's total cost of revenues increased to $679,000 for the three
months ended September 30, 1996 from $416,000 for the three months ended
September 30, 1995. As a percentage of revenues, gross profit increased to 81%
for the three months ended September 30, 1996 from 67% for the three months
ended September 30, 1995. The increase in gross margin was primarily a result of
the shift in revenue mix to software license revenues, which typically have
higher gross margins, as well as lower average third-party royalty rates. There
can be no assurance that gross margins will remain at this level in the future.
The cost of license fees, which consists primarily of third-party royalties for
licensed technology and media and documentation, increased to $520,000 for the
three months ended September 30, 1996 from $315,000 for the three months ended
September 30, 1995. The increase in the cost of license fees was due principally
to a higher volume of sales of licenses. The cost of maintenance and services,
which consists primarily of labor and services, increased to $159,000 for the
three months ended September 30, 1996 from $101,000 for the three months ended
September 30, 1995. The increase in the cost of maintenance and services was due
primarily to the increase in the number of customer support and development
personnel and related overhead costs necessary to support a larger installed
customer base, product upgrades and development activities, offset in part by
the decrease in revenue from software development contracts.
Research and Development
Research and development expenses include expenses associated with the
development of new products, enhancements of existing products and quality
assurance activities. These expenses consist principally of personnel costs,
overhead costs relating to occupancy, equipment depreciation and supplies. In
accordance with Statement of Financial Accounting Standards No. 86, development
costs incurred in the research and development of new software products and
enhancements to existing software products are expensed as incurred until
technological feasibility in the form of a working model has been established.
To date, the Company's software development has been completed concurrent with
the establishment of technological feasibility and, accordingly, no costs have
been capitalized. Research and development expenses increased to $552,000 for
the three months ended September 30, 1996 from $406,000 for the three months
ended September 30, 1995. The increase in research and development expenses was
attributable to the development of the Company's research and development
organization and reflects the increased costs associated with both additional
headcount as well as expanded research and development efforts. The Company
believes that a significant level of investment for product development is
required to remain competitive and, accordingly, the Company anticipates that,
for the foreseeable future, these expenses will continue to increase in absolute
dollars.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of salaries,
commissions and bonuses, promotional expenses and occupancy costs. Selling,
general and administrative expenses increased to $2.8 million for the three
months ended September 30, 1996 from $2.0 million for the three months ended
September 30, 1995. The increase in selling, general and administrative expenses
was due primarily to the hiring of additional sales and marketing personnel,
sales commissions and bonuses associated with increased sales volume, additional
promotional activities and increased administrative personnel and occupancy
costs. The Company believes that selling, general and administrative expenses
will increase in absolute dollar amounts as the Company expands its sales and
administrative staff, adds infrastructure and incurs additional costs related to
being a public company.
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Interest Income (Expense), Net
Interest income (expense), net, represents interest earned on the Company's
cash, cash equivalents and short-term investments, offset in part by interest
expense on the Company's borrowings, principally its equipment loan. Interest
income was $165,000 for the three months ended September 30, 1996, compared to
interest expense of $11,000 for the three months ended September 30, 1995. This
increase is attributed to earnings on the proceeds from the Company's initial
public offering.
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Revenues
The Company's total revenues increased to $6.4 million for the six months
ended September 30, 1996 from $2.6 million for the six months ended September
30, 1995. License fees increased to $5.4 million for the six months ended
September 30, 1996 from $1.6 million for the six months ended September 30,
1995. During the six months ended September 30, 1996 and 1995, license fees
aggregated 84% and 63% of total revenues, respectively. This increase in license
fees was due primarily to increased market acceptance of the Company's existing
products, introduction of enhanced and new products and expansion of the
Company's direct sales force. Maintenance and services revenues, which also
include revenues derived from software development contracts, increased to $1.0
million for the six months ended September 30, 1996 from $948,000 for the six
months ended September 30, 1995. Maintenance, which consists primarily of
technical support, increased to $765,000 for the six months ended September 30,
1996 from $304,000 for the six months ended September 30, 1995. The increase in
maintenance revenues was due primarily to additional maintenance agreements
associated with a larger installed base of customers.
Cost of Revenues
The Company's total cost of revenues increased to $1.3 million for the six
months ended September 30, 1996 from $828,000 for the six months ended September
30, 1995. As a percentage of revenues, gross profit increased to 80% for the six
months ended September 30, 1996 from 68% for the six months ended September 30,
1995. The increase in gross margin was a result of the shift in revenue mix to
software license revenues, which typically have higher gross margins, as well as
lower average third-party royalty rates. The cost of license fees increased to
$1.0 million for the six months ended September 30, 1996 from $585,000 for the
six months ended September 30, 1995. The increase in the cost of license fees
was due principally to a higher volume of sales of licenses. The cost of
maintenance and services increased to $266,000 for the six months ended
September 30, 1996 from $243,000 for the six months ended September 30, 1995.
The increase in the cost of maintenance and services was due primarily to the
increase in the number of customer support and development personnel and related
overhead costs necessary to support a larger installed customer base, product
upgrades and development activities, offset in part by the decrease in revenue
from software development contracts.
Research and Development
Research and development expenses increased to $1.0 million for the six months
ended September 30, 1996 from $695,000 for the six months ended September 30,
1995. The increase in research and development expenses was attributable to the
development of the Company's research and development organization and reflects
the increased costs associated with both additional headcount as well as
expanded research and development efforts.
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Selling, General and Administrative
Selling, general and administrative expenses increased to $5.5 million for the
six months ended September 30, 1996 from $3.5 million for the six months ended
September 30, 1995. The increase in selling, general and administrative expenses
was due primarily to the hiring of additional sales and marketing personnel,
sales commissions and bonuses associated with increased sales volume, additional
promotional activities and increased administrative personnel and occupancy
costs.
Interest Income (Expense), Net
Interest income (expense), net, represents interest earned on the Company's
cash, cash equivalents and short-term investments, offset in part by interest
expense on the Company's borrowings, principally its equipment loan. Interest
income was $155,000 for the six months ended September 30, 1996, compared to
interest expense of $13,000 for the six months ended September 30, 1995. This
increase is attributed to earnings on the proceeds from the Company's initial
public offering.
FACTORS AFFECTING OPERATING RESULTS
The Company has experienced significant fluctuations in its revenues and
operating results from quarter to quarter and anticipates that it will continue
to experience such quarterly fluctuations. The Company's revenues and operating
results have generally been higher in the fourth fiscal quarter than in any
preceding quarter of each fiscal year and lower in the first fiscal quarter, due
largely, the Company believes, to the effect of the Company's incentive sales
compensation plans. There can be no assurance, however, that such patterns of
operating results will be repeated in the future. In addition, the Company's
sales are made predominantly in the third month of each fiscal quarter and tend
to be concentrated in the latter half of that third month. Moreover, the
Company's sales generally reflect a relatively high average of revenues per
order. Accordingly, the Company's quarterly results of operations are difficult
to predict, and delays in product delivery or in closings of sales near the end
of a quarter, or the loss of individual orders, could cause quarterly revenues
to fall substantially short of anticipated levels and, to a greater degree,
adversely affect profitability. Factors that may contribute to such
fluctuations, in addition to incentive compensation plans, include seasonal
factors, such as the fiscal year ends of the government and other customers and
reduction in the European business during summer months; the number of new
orders and product shipments; the size and timing of individual orders; the
timing of introduction of products or product enhancements by the Company, the
Company's competitors or other providers of hardware, software and components
for the Company's market; competition and pricing in the software industry;
market acceptance of new products; reduction in demand for existing products and
shortening of product life cycles as a result of new product introductions by
competitors; product quality problems; customer order deferrals in anticipation
of new products; changes in customer budgets; changes in operating expenses;
changes in Company strategy; personnel changes; changes in foreign currency
exchange rates; changes in mix of products sold; and changes in general economic
conditions.
The Company's software products generally are shipped as orders are received,
and revenues are recognized upon shipment of the products, provided no
significant vendor obligations exist and collection of the related receivable is
deemed probable. The Company typically enters each fiscal quarter with a low
backlog and, as a result, software license revenues in any quarter are
substantially dependent on orders booked and shipped in that quarter. Because
the Company's operating expenses are based on anticipated revenue trends and
because a high percentage of the Company's expenses are relatively fixed, a
delay in the recognition of revenue from a limited number of license
transactions could cause significant variations in operating results from
quarter to quarter and could result in losses substantially in excess of
anticipated amounts. To the extent such expenses precede, or are not
subsequently followed by, increased revenues, the Company's
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operating results would be materially and adversely affected. As a result of the
foregoing factors, among others, revenues for any quarter are subject to
significant variation, and the Company believes that period-to-period
comparisons of its results of operations should not be relied upon as
indications of future performance. Fluctuations in operating results may also
result in volatility in the price of the Company's Common Stock in the public
market. Due to allof the foregoing factors, among others, it is likely that,
from time to time in the future, the Company's results of operations would be
below the expectations of public market analysts and investors.
The Company's business is subject to a number of other significant risks
including, but not limited to, its limited operating history and history of
operating losses (including an accumulated deficit of $5.9 million at September
30, 1996); its dependence on certain strategic relationships and third-party
technology licenses; the concentration of the Company's customers among
enterprises supporting UNIX operating systems; its dependence on the growth of
the desktop and client/server market and the continuation of heterogeneous
operating environments; the relatively small number of customers that have
historically accounted for a significant percentage of the Company's revenues;
the Company's dependence on indirect channel partners; the concentration of its
product line on the TED family of products and services; the risks associated
with rapidly changing technology and evolving standards, international
operations and sales to departments and agencies of the U.S. Government;
substantial competition in the Company's markets (including competitors and
potential competitors with significantly greater resources than the Company);
the Company's dependence on proprietary technology and other risks common to
emerging growth, high technology software companies as well as other factors
discussed herein.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had $24.8 million in cash and investments,
representing 85% of total assets. Cash and investments are due primarily to the
Company's initial public offering and the underwriters' exercise of the
overallotment option, which generated net proceeds totaling approximately $20.4
million.
As of September 30, 1996, the Company's principal commitments consisted of
obligations under operating leases. There were no material commitments for
capital expenditures.
The Company's operations to date have required substantial amounts of capital.
The Company expects to spend substantial funds to support the growth of its
products, to add enhancements and additional applications to its products and to
expand internationally. The Company's capital requirements will depend on
numerous factors, including the progress of the Company's research and
development programs, the commercial acceptance of its products, the resources
the Company devotes to advanced technologies and the demand for its products.
The Company believes that the its existing cash and investments, together with
its available credit facilities, will be sufficient to meet its anticipated cash
needs for working capital, capital expenditures and business expansion for at
least the next 12 months. The estimate of the period for which the Company
expects its available cash balances and credit facilities to be sufficient to
meet its capital requirements is a forward-looking statement that involves risks
and uncertainties as set forth herein and under the caption "Risk Factors" in
the Registration Statement.
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PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on July 26, 1996
(the "Annual Meeting"). At the Annual Meeting, the Company's stockholders
elected the Company's Board of Directors and approved the proposals as more
fully described below.
As of July 12, 1996, the record date for the Annual Meeting,
4,148,902 shares out of a total of 4,189,568 issued and outstanding shares of
Common Stock were represented in person or by proxy at the meeting, and
1,991,126 shares out of 2,093,411 issued and outstanding shares of Preferred
Stock were represented in person or by proxy at the meeting, for a total of
6,140,028 shares out of 6,282,979 issued and outstanding shares of Common and
Preferred Stock.
The proposals considered at the Annual Meeting were voted on as
follows:
1. Election of Directors
---------------------
Proposal to elect four directors of the Company, each to serve until
the next Annual Meeting of Stockholders and until his successor is
duly elected and qualified or until his earlier resignation or
removal.
Nominees Votes For Votes Withheld
-------- --------- --------------
Jeffrey D. Witous 6,140,028 None
Arthur S. Budman 6,140,028 None
Terry A. Straeter 6,140,028 None
Gary A. Wetsel 6,140,028 None
2. Approval of Reincorporation in Delaware
---------------------------------------
Proposal to approve the Company's reincorporation in the State of
Delaware was approved by a vote of 6,097,878 shares in favor, 7,150
shares against, and 37,666 shares abstaining.
3. Amendment and Restatement of the Company's Certificate of Incorporation
-----------------------------------------------------------------------
Proposal to approve the Company's Amended and Restated Certificate of
Incorporation was approved by a vote of 6,069,858 shares in favor,
28,020 shares against, and 42,150 shares abstaining.
4. Amendment of the Company's 1995 Stock Option Plan
-------------------------------------------------
Proposal to approve the amendment to the Company's 1995 Stock Option
Plan ("the Plan"), which increases the number of authorized shares of
Common Stock reserved for issuance under the Plan from 600,000 to
1,350,000, was approved by a vote of 6,025,743 shares in favor,
114,285 shares against, and no shares abstaining.
5. Adoption of the Company's 1996 Employee Stock Purchase Plan
-----------------------------------------------------------
Proposal to approve the adoption of the Company's 1996 Employee Stock
Purchase Plan was approved by a vote of 6,140,028 shares in favor, no
shares against, and no shares abstaining.
6. Form of Indemnity Agreement
---------------------------
Proposal to approve the form of Indemnity Agreement and to authorize
the Company to enter into individual Indemnity Agreements with its
directors and officers was approved by a vote of 5,889,593 shares in
favor, 167,935 shares against, and 82,500 shares abstaining.
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7. Appointment of Independent Auditors
-----------------------------------
Proposal to ratify the appointment of Ernst & Young LLP as auditors
for the fiscal year ending March 31, 1997 was approved by a vote of
6,105,028 shares in favor, no shares against, and 35,000 shares
abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS:
1.1 Underwriting Agreement
3.1 Registrant's Amended and Restated Certificate of Incorporation
11.1 Statement Regarding Calculation of Net Loss Per Share
27.1 Financial Data Schedule
B) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by the Company during the three
months ended September 30, 1996.
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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 thereunto duly authorized.
TRITEAL CORPORATION
Date: November 12, 1996 /s/ Jeffrey D. Witous
------------------ -------------------------------
Jeffrey D. Witous
President, Chief Executive Officer and
Chairman of the Board
Date: November 12 , 1996 /s/ Arthur S. Budman
------------------- ------------------------------
Arthur S. Budman
Chief Financial Officer and Director
(Principal financial and accounting officer)
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