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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000.
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: 0-26170
Eagle Point Software Corporation
(Exact name of registrant as specified in its charter)
Delaware 42-1204819
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4131 Westmark Drive, Dubuque, IA 52002-2627
(address of principal executive offices)
(319) 556-8392
(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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest applicable date.
Common Stock, par value $.01 per share, outstanding as of May 10, 2000:
4,846,482 shares.
- -------------------------------------------------------------------------------
The undersigned registrant hereby amends its Form 10-Q filed with the Securities
and Exchange Commission on May 15, 2000, for the quarter ended March 31, 2000,
to include Note 3 to the Consolidated Financial Statements which was
unintentionally omitted.
Eagle Point Software Corporation
Form 10-Q/A
For the quarter ended March 31, 2000
Index
PART I. Financial Information
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Page
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Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets -
March 31, 2000 and June 30, 1999 3
Consolidated Statements of Operations -
for the three and nine month periods ended March 31, 2000
and 1999 5
Consolidated Statements of Cash Flows -
for the nine months ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 8
SIGNATURES 10
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
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March 31, June 30,
------------------------------------------
2000 1999
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,317,657 $ 5,481,640
Short-term investments 4,007,093 11,040,912
Accounts receivable (net of allowances of $231,781 and $218,309, respectively) 2,652,405 1,654,487
Interest receivable 26,875 83,914
Deferred income taxes 242,927 242,927
Inventories 734,651 120,531
Income taxes receivable 37,179 3,942
Prepaid expenses and other assets 182,415 82,671
--------------- ---------------
Total current assets 18,201,202 18,711,024
PROPERTY & EQUIPMENT, NET 6,447,735 6,555,782
SOFTWARE DEVELOPMENT COSTS (net of accumulated amortization of
$604,441 and $335,941, respectively) 1,086,938 157,967
NON-COMPETE AGREEMENTS (net of accumulated amortization of $345,147
and $276,863, respectively) 79,918 148,202
GOODWILL (net of accumulated amortization of $36,387) 673,444
DEFERRED INCOME TAXES 570,505 570,505
--------------- ---------------
TOTAL ASSETS $ 27,059,742 $ 26,143,480
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 39,656 $ 71,434
Accounts payable 217,902 112,773
Accrued expenses 1,183,219 1,094,578
Deferred revenues 2,648,708 2,403,456
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Total current liabilities 4,089,485 3,682,241
LONG-TERM DEBT
DEFERRED REVENUES 28,571 64,342
214,280 214,692
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Total liabilities 4,332,336 3,961,275
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------------
March 31, June 30,
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2000 1999
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000,000 shares authorized; none issued at
March 31, 2000 and June 30, 1999
Common stock, $.01 par value; 20,000,000 shares authorized, 4,941,730 shares
issued and outstanding at March 31, 2000 and June 30, 1999 49,417 49,417
Additional paid-in capital 17,624,290 17,624,290
Retained earnings 5,530,769 5,058,091
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23,204,476 22,731,798
Treasury stock, at cost; 109,093 shares at March 31, 2000
and 150,276 shares at June 30, 1999 (477,070) (549,593)
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Total stockholders' equity 22,727,406 22,182,205
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,059,742 $ 26,143,480
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------------- ----------------------------------
2000 1999 2000 1999
Net revenues
Product sales $ 3,759,042 $ 2,557,806 $ 9,069,762 $ 7,939,578
Training and support 1,491,860 1,047,262 4,012,110 2,996,967
-------------- -------------- -------------- -------------
Total net revenues 5,250,902 3,605,068 13,081,872 10,936,545
-------------- -------------- -------------- -------------
Cost of revenues
Product sales 1,439,402 606,551 2,974,712 1,690,845
Training and support 218,736 113,089 418,156 306,425
-------------- -------------- -------------- -------------
Total cost of revenues 1,658,138 719,640 3,392,868 1,997,270
-------------- -------------- -------------- -------------
Gross Profit 3,592,764 2,885,428 9,689,004 8,939,275
-------------- -------------- -------------- -------------
Operating expenses:
Selling and marketing 2,009,490 1,126,686 4,782,997 3,435,116
Research and development 922,314 650,931 2,405,545 2,082,924
General and administrative 834,249 620,447 2,188,794 1,904,079
Acquisition related charges 261,136
-------------- -------------- -------------- -------------
Total operating expenses 3,766,053 2,398,064 9,638,472 7,422,118
-------------- -------------- -------------- -------------
Operating income (loss) from continuing
operations (173,289) 487,364 50,532 1,517,157
Other income (expense):
Interest income, net of expense 183,432 180,748 579,748 570,665
Other income (expense) 46,567 548 90,365 1,472
-------------- -------------- -------------- -------------
Income from continuing operations
before income taxes 56,710 668,660 720,645 2,089,294
Income tax expense 25,747 216,827 247,908 693,025
-------------- -------------- -------------- -------------
Net income $ 30,963 $ 451,833 $ 472,737 $ 1,396,269
============== ============== ============== =============
Weighted average common shares outstanding 4,846,495 4,832,570 4,846,482 4,824,844
============== ============== ============== =============
Basic income per share $ 0.01 $ 0.09 $ 0.10 $ 0.29
============== ============== ============== =============
Weighted average common and common
equivalent shares outstanding 4,953,426 4,973,139 4,947,007 4,993,937
============== ============== ============== =============
Diluted income per share $ 0.01 $ 0.09 $ 0.10 $ 0.28
============== ============== ============== =============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
March 31,
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2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 472,737 $ 1,396,269
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 984,238 840,965
Amortization of software development costs 268,497 183,253
Charge for purchased research and development 78,600
Changes in assets and liabilities:
Accounts receivable (997,918) 257,649
Interest receivable 57,039 (10,872)
Income taxes payable/receivable (33,237) 82,414
Inventories (334,108) (3,903)
Prepaid expenses (99,745) (64,320)
Accounts payable 105,129 84,627
Deferred revenues 244,840 (853,086)
Accrued expenses 88,641 121,027
Other 94 (79,008)
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Net cash provided by operating activities 834,807 1,955,015
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (722,151) (425,743)
Software development costs
Capitalized software costs (225,468) (105,401)
Payment to acquire company (2,089,812)
Purchases of investments (2,012,575) (13,075,110)
Proceeds from maturities of investments 9,046,394 10,028,311
---------------- ---------------
Net cash provided by (used in) investing activities 3,996,388 (3,577,943)
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (67,549) (180,654)
Purchases of treasury stock (245,064)
Proceeds from issuance of treasury stock 72,371 281,860
---------------- ---------------
Net cash provided by (used in) financing activities 4,822 (143,858)
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NET CHANGE IN CASH AND CASH EQUIVALENTS 4,836,017 (1,766,786)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 5,481,640 4,662,570
---------------- ---------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 10,317,657 $ 2,895,784
================ ===============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) for:
Interest $ 1,492 $ 9,594
================ ===============
Income taxes $ 321,425 $ 519,008
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
EAGLE POINT SOFTWARE CORPORATION AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
March 31,
-----------------------------------------
2000 1999
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payment to acquire company:
Inventories 280,012 0
Property and equipment 49,369 0
Purchased research and development 78,600 0
Development product technology 972,000 0
Goodwill 709,831 0
----------------- ---------------
$ 2,089,812 $ 0
================= ===============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
1. Interim Financial Statements
The accompanying consolidated financial statements of Eagle Point Software
Corporation and its subsidiary (collectively the "Company" or "Eagle Point") are
unaudited. In the opinion of the Company's management, the financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to state fairly the financial position of the Company as of March 31,
2000 and June 30, 1999, and the results of operations and cash flows for the
nine-month period ended March 31, 2000.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this quarterly report on Form 10-Q.
Accordingly, these financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the year ended June 30, 1999.
2. Deferred Revenues and Revenue Recognition
The Company derives substantially all of its product revenues from the license
of its software products. Revenue is recognized upon shipment of the product,
provided that no significant vendor, post-contract support, or product upgrade
obligations remain outstanding and collection of the resulting receivable is
deemed probable. The Company has no significant vendor and post-contract support
obligations associated with its product sales. Dependent upon the timing of
future product upgrade releases and market conditions, the Company may extend
promotions where product upgrade obligations are associated with the shipment of
software products. Based upon the terms of the promotions extended, a portion or
all of the product revenues may be deferred until the promotional product
upgrade is released and subsequently shipped. The Company recognizes its service
revenues from maintenance and support contracts ratably over the period of the
arrangements. These contracts generally have terms of one year or less. The
Company recognizes its service revenues from training arrangements in the period
in which the training occurs. The Company's product returns historically have
been insignificant.
3. Business Combination
On December 1, 1999, the Company purchased substantially all of the assets of
Surveyors, Module International, LLC, a Tennessee limited liability company
("SMI"). The purchase price was approximately $2,000,000 in cash. Additionally,
the Company is obligated to make contingent cash payments during each of the
next two years equal to (1) 70% of the gross profits attributable to the
acquired business, after making specific adjustments, for adjusted annual gross
profits of between $1,650,000 and $2,500,000, plus (2) 85% of the adjusted gross
profits above $2,500,000. SMI, located in Church Hill, Tennessee, is a software
developer for the surveying hand-held data collection marketplace.
8
The results of operations for SMI are included in the Company's consolidated
operating results from December 1, 1999. Pro forma results of operations for the
nine month period ended March 31, 2000 and 1999 as if the acquisition had
occurred at the beginning of each period are as follows:
Nine months ended
March 31,
Consolidated 2000 1999
------------ ----------- -----------
Total Revenues $14,869,894 $13,035,810
Net income $ 711,240 $ 1,742,774
Earnings per share:
Basic $ 0.15 $ 0.36
Diluted $ 0.14 $ 0.35
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
EAGLE POINT SOFTWARE CORPORATION
--------------------------------
(Registrant)
Date: May 26, 2000 BY: /s/ Rodney L. Blum
- ------------------- --------------------------------------
Rodney L. Blum
Chairman, President and Chief
Executive Officer
Date: May 26, 2000 BY: /s/ Dennis J. George
- ------------------- --------------------------------------
Dennis J. George
Vice President, Chief Financial
Officer, Treasurer and Secretary
(Principal Financial and Accounting
Officer)
10