-----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, VPlXNRQs2uktuLT2TZG+oTIAxTITS1i/Gj7ziA7oCEDnW9Q+/7btsCivdO1N3JFC imOvJe8i7VWSrXca0wXeHQ== 0000819005-96-000002.txt : 19961017 0000819005-96-000002.hdr.sgml : 19961017 ACCESSION NUMBER: 0000819005-96-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961016 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIEHL GRAPHSOFT INC CENTRAL INDEX KEY: 0000819005 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 521407016 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24318 FILM NUMBER: 96643974 BUSINESS ADDRESS: STREET 1: 10270 OLD COLUMBIA RD STREET 2: STE 100 CITY: COLUMBIA STATE: MD ZIP: 21046 BUSINESS PHONE: 4102905114 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-QSB (Mark One) [P] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 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: 33-47567-NY DIEHL GRAPHSOFT, INC. (Exact name of registrant as specified in its charter) Maryland 52-1407016 (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 10270 Old Columbia Road, Columbia, Maryland 21046 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 410-290-5114 Former name, former address and former fiscal year, if changed since last report. Indicate by check P 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 P No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ______ No __________ APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 3,140,739 shares of common stock . DIEHL GRAPHSOFT, INC. FORM 10-QSB INDEX NumberPage PART I FINANCIAL INFORMATION Financial Statements: Item 1 Balance Sheet (unaudited) as of August 31, 1996 3 Statements of Operations (unaudited) for the three months ended August 31, 1996 and 19954 Statements of Cash Flows (unaudited) for the three months ended August 31, 1996 and 19955 Statements of Stockholders' Equity (unaudited) as of August 31, 1996 and 19956 Notes to Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations8 PART II OTHER INFORMATION Item 1 Legal Proceedings10 Item 2 Changes in Securities 10 Item 3 Defaults Upon Senior Securities10 Item 4 Submission of Matters to a Vote of Security Holders10 Item 5 Other Information10 Item 6 Exhibits and Reports10 SIGNATURES11 DIEHL GRAPHSOFT, INC. BALANCE SHEET AUGUST 31, 1996 (Unaudited) ASSETS Current assets: Cash$ 599,598 Marketable securities 6,298,107 Accounts receivable 424,844 Inventory 200,972 Due from officer 5,000 Other current assets 125,998 Total current assets7,654,519 Fixed assets: Equipment545,949 Furnishings and fixtures79,418 Leasehold improvements 41,038 666,405 Accumulated depreciation 373,109 Net fixed assets 293,296 Other assets: Unamortized organization expenses 34,922 Software development costs, net of accumulated amortization of $965,807 746,569 Total other assets 781,491 Total assets$8,729,306 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses$ 210,839 Income taxes payable32,585 Deferred income taxes 114,829 Total current liabilities 358,253 Long term liabilities: Deferred income taxes 295,441 Total liabilities 653,694 Stockholders' equity: Common stock - $.01 par value; 10,000,000 shares authorized, 3,140,739 shares issued and outstanding 31,407 Additional paid in capital4,147,605 Retained earnings3,896,600 Total stockholders' equity8,075,612 Total liabilities and stockholders' equity$8,729,306 See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. STATEMENT OF OPERATIONS (Unaudited) For the three months ended August 31, 1996 1995 Sales $1,725,805 $862,688 Cost of sales 371,330189,096 Gross profit 1,354,475 673,592 Operating expenses: General and administrative 418,392275,844 Selling & marketing 411,470217,907 Research and development 60,291 61,330 Total operating expenses 890,153555,081 Income from operations 464,322 118,511 Interest income 91,705 69,570 Income before income taxes 556,027188,081 Provision for income taxes 203,050 66,700 Net income $ 352,977$121,381 Net income per share $.11 $.04 Weighted average number of shares outstanding 3,172,4722,895,810 See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. STATEMENT OF CASH FLOWS (Unaudited) For the three months ended August 31, 1996 1995 Cash flows from operating activities: Net income $ 352,977$121,381 Adjustments: Deferred income taxes 49,685 (166,689) Amortization of bond premiums and discounts (66,635)(44,771) Depreciation and amortization 156,539 86,584 Changes in operating assets and liabilities: Accounts receivable (88,453) 359,066 Inventory (66,259) 38,170 Other assets 27,507 40,227 Accounts payable and accrued expenses (63,102)63,944 Income taxes receivable/payable 153,315 (91,601) Net cash provided by operating activities: 455,574406,311 Cash flows from investing activities: Purchases of marketable securities (1,539,454) (236,862) Maturities of marketable securities 1,539,000 80,000 Capitalized software costs (181,350) (117,693) Purchase of fixed assets (43,325)(24,036) Organizational expenses (6,125) - Net cash used in investing activities (231,254)(298,591) Cash flows from financing activities: Sale of common stock - 54,366 Net cash provided by financing activities - 54,366 Net increase in cash 244,320162,086 Cash balance beginning of period 375,278722,116 Cash balance end of period $ 599,598$884,202 Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $191,590 See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) Additional Common Common Paid in Retained shares stock Capital Earnings Total Balance May 31, 1995 2,893,125 $28,311 $2,479,306 $2,874,625 $5,382,242 Sale of Common Stock 8,054 81 54,285 - 54,366 Net Income - - - 121,381 121,381 Balance August 31, 1995 2,901,179 $28,392 $2,533,591 $2,996,006 $5,557,989 Balance May 31, 1996 3,140,739 $31,407 $4,147,605 $3,543,623 $7,722,635 Net Income - - - 352,977 352,977 Balance August 31, 1996 3,140,739 $31,407 $4,147,605 $3,896,600 $8,075,612 See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. NOTES TO FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all necessary adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended August 31, 1996 are not necessarily indicative of the results that may be expected for the year ended May 31, 1997. DIEHL GRAPHSOFT, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Results of Operations for the three months ended August 31, 1996 as compared to the three months ended August 31, 1995. Revenues for the three months ended August 31, 1996 doubled to $1,725,805 as compared to $862,688 for the three months ended August 31, 1995. The doubling of revenues for the three months ended August 31, 1996 is due to a continuation of strong sales both domestically and internationally of Minicad 6 on the Macintosh platform since March 1996 in addition to sales of Minicad for Windows. The Company officially commenced shipment of Minicad for Windows in July 1996 and generated approximately 19% of total sales for the quarter from the Windows product. The cost of sales for the three months ended August 31, 1996 was $371,330 as compared to $189,096 for the three months ended August 31, 1995 representing a increase of $182,334. The gross profit percentages for the three months ended August 31, 1996 and 1995 were 78.5% and 78.1% respectively. Amortization of software development to cost of sales, which is not directly a function of sales, rose to $127,053 for the three months ended August 31, 1996 from $65,574 for the three months ended August 31, 1995 which is approximately proportional to the increase in sales for the quarter. The increase in amortization expense is due an increase in capitalized costs to software development resulting from an increased commitment to this area and the effect of reducing the amortization period from three years to two years for newly capitalized costs beginning June 1, 1995. General and administrative expenses increase to $418,392 for the three months ended August 31, 1996 as compared to $275,844 for the three months ended August 31, 1995. Legal costs increased to $68,861 for the three months ended August 31, 1996 from $17,929 for the three months ended August 31, 1995. This increase is primarily associated with the defense of a patent infringement claim and a trademark dispute which have been settled during or shortly after the end of the quarter. Other increases in costs are attributable to the overall expansion of the company in preparation for Minicad for Windows. Research and development expenses decreased to $60,291 for the three month period ended August 31, 1996 from $61,330 for the three month period ended August 31, 1995. This decrease is due to $24,000 in externally contracted expenses for the Windows platform during the three months ended August 31, 1995 which concluded with the successful completion of the project shortly after the end of the quarter. Internal development costs rose during the three month period ended August 31, 1996 when compared to the three month period ended August 31, 1995 due to an increased internal commitment to this area. Selling and marketing expenses rose to $411,470 for the three month period ended August 31, 1996 as compared to $217,907 for the three month period ended August 31, 1995. This increase is primarily due to an increased commitment to advertising with the introduction of Minicad for Windows. Net Profit increased by $231,596 to $352,977 for the three months ended August 31, 1996 from $121,381 for the three months ended August 31, 1995. This increase is after giving effect to a provision for income taxes of $203,050 for the three month period ended August 31, 1996 and $66,700 for the three month period ended August 31, 1995. The effective tax rates were 36.5% and 35.5% for the three month periods ended August 31, 1996 and 1995, respectively. The increase in this rate is attributable to operating income increasing at a greater rate than tax-exempt investment income. The overall increase in net profit is primarily a result of sales increasing at a greater rate than operating expenses during the three month period ended August 31, 1996 when compared with the three month period ended August 31, 1995. Liquidity and Capital Resources The Company increased its working capital by $2,254,554 from $5,041,712 for the three months ended August 31, 1995 to $7,296,266 for the three months ended August 31, 1996. Working capital also rose from $6,997,170 at May 31, 1996 to $7,296,266 at August 31, 1996, representing an increase of $299,096. This increase from August 31, 1995 to August 31, 1996 is primarily the result of proceeds of $1,671,395 from the exercise of common stock warrants during the period from August through November 1995. Cash flows from operations over this period have been invested into equipment and software development with any excess placed temporarily into marketable securities. Company marketable securities continue to be in short to intermediate term government instruments. The Company's future capital requirements will depend upon many factors, including the extent, timing and progress of the Company's development of new software. The Company anticipates that its existing capital resources and earning from operations will be adequate to satisfy the capital requirements for the next twelve months. The Company will continue to have working capital needs that will be affected by the progress of the Company's research and development activities and capital expenditures. However, the Company expects that the cash generated from future operations and the proceeds from the initial public offering will satisfy its operating cash needs for the foreseeable future. PART II OTHER INFORMATION Item 1. Legal Proceedings The Company had been a defendant to a patent infringement claim which was dismissed through a summary judgement issued on June 25, 1996 by the U.S. District Court. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports None SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DIEHL GRAPHSOFT, INC. DATE: October 11, 1996 Richard Diehl, President Chief Executive Officer DATE: October 11, 1996 Joseph Schmelzle, Treasurer Chief Financial and Accounting Officer SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DIEHL GRAPHSOFT, INC. DATE: October 11, 1996 s/Richard Diehl Richard Diehl, President Chief Executive Officer DATE: October 11, 1996 s/Joseph Schmelzle Joseph Schmelzle, Treasurer Chief Financial and Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----