-----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, FXTdp30Qt7zW8nvyizlsePLKOpZSMRw+qI/oJvlwh5CKRHZ3itubpy1l7ykXe4L7 ZJD9Xf36MjZ8Im9S0XWfUQ== 0000819005-97-000002.txt : 19970130 0000819005-97-000002.hdr.sgml : 19970130 ACCESSION NUMBER: 0000819005-97-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970129 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: 97513168 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 November 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: 0-24318 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 November 30, 1996 3 Statements of Operations (unaudited) for the three months ended November 30, 1995 and 1996 and (unaudited) for the six months ended November 30, 1995 and 19964 Statements of Cash Flows (unaudited) for the six months ended November 30, 1995 and 19965 Statements of Stockholder's Equity (unaudited) as of November 30, 1995 and 19966 Notes to Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations8 PART II OTHER INFORMATION Item 1 Legal Proceedings11 Item 2 Changes in Securities 11 Item 3 Defaults Upon Senior Securities11 Item 4 Submission of Matters to a Vote of Security Holders11 Item 5 Other Information11 Item 6 Exhibits and Reports11 SIGNATURES12 DIEHL GRAPHSOFT, INC. BALANCE SHEET NOVEMBER 30, 1996 (Unaudited) ASSETS Current assets: Cash$ 669,071 Marketable securities 6,801,613 Accounts receivable 303,212 Inventory 231,601 Due from officers 13,000 Other current assets 103,215 Total current assets8,121,712 Fixed assets: Equipment573,950 Furnishings and fixtures97,734 Leasehold improvements 41,038 712,722 Accumulated depreciation 403,458 Net fixed assets 309,264 Other assets: Unamortized organization expenses 34,027 Software development costs, net of accumulated amortization of $769,781 752,148 Total other assets 786,175 Total assets$9,217,151 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses$ 430,309 Income taxes payable 196,878 Total current liabilities 627,187 Long term liabilities: Deferred income taxes 287,908 Total liabilities 915,095 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 earnings4,123,044 Total stockholders' equity8,302,056 Total liabilities and stockholders' equity$9,217,151 See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. STATEMENTS OF OPERATIONS (Unaudited)
For the three month period For the six month period ended November 30, ended November 30, 1996 1995 1996 1995 Sales $1,571,332 $1,392,462 $3,297,137$2,255,150 Cost of sales 353,276 330,176 724,606 519,272 Gross profit 1,218,056 1,062,286 2,572,5311,735,878 Operating expenses: General and administrative 459,299 407,139 877,691682,983 Selling and marketing 453,256 241,522 864,726459,429 Research and development 51,041 64,905 111,332 126,235 Total operating expenses 963,596 713,566 1,853,7491,268,647 Income from operations 254,460 348,720 718,782 467,231 Interest income 95,984 84,597 187,689 154,167 Income before income taxes 350,444 433,317 906,471 621,398 Provision for corporate income taxes 124,000 168,300 327,050 235,000 Net income $ 226,444 $ 265,017 $ 579,421$ 386,398 Net income per share $ .07 $ .09 $ .18$ .13 Weighted average number of shares outstanding 3,168,525 3,054,042 3,170,4992,989,202
See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. STATEMENTS OF CASH FLOWS (Unaudited)
For the six months ended November 30, 1996 1995 Cash flows from operating activities: Net income $ 579,421 $ 386,398 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes (72,677) 3,311 Amortization of bond premiums and discounts (136,680)(92,638) Depreciation and amortization 323,679202,325 Changes in operating assets and liabilities: Accounts receivable 33,179 41,796 Inventory (96,888) (9,236) Due from officers (8,000) - Other assets 55,313 32,978 Accounts payable and accrued expenses 156,36878,802 Income taxes receivable/payable 324,677 (258,236) Net cash provided by operating activities 1,158,392 385,500 Cash flows from investing activities: Purchases of marketable securities (2,185,008) (410,781) Maturities of marketable securities 1,739,000105,000 Capitalized software costs (322,824)(321,734) Purchases of fixed assets (89,642) (60,616) Organizational expenses (6,125) - Net cash used in investing activities (864,599) (688,131) Cash flows from financing activities: Sale of common stock - 1,671,496 Net cash flow provided by financing activities - 1,671,496 Net increase in cash 293,793 1,368,865 Cash balance beginning of period 375,278 722,116 Cash balance end of period $ 669,071$2,090,981 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 75,050$ 489,925
See accompanying notes to financial statements DIEHL GRAPHSOFT, INC. STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
Additional Common Common Paid in Retained shares stock Capital earnings Total Balance May 31, 1995 2,893,125 $28,931 $2,478,686 $2,874,625$5,382,242 Sale of Common Stock 247,629 2,476 1,669,020 -1,671,496 Net Income - - - 386,398 386,398 Balance November 30, 1995 3,140,754 $31,407 $4,147,706 $3,261,023$7,440,136 Balance May 31, 1996 3,140,739 $31,407 $4,147,605 $3,543,623$7,722,635 Net Income - - - 579,421 579,421 Balance November 30, 1996 3,140,739 $31,407 $4,147,605 $4,123,044$8,302,056
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 instructions to Form 10-QSB as set forth in 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 and six month periods ended November 30, 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 and six months ended November 30, 1996 as compared to the three and six months ended November 30, 1995. Revenues for the three months ended November 30, 1996 were $1,571,332 as compared to $1,392,462 for the three months ended November 30, 1995 representing an increase of 12.8%. Revenues declined $154,473 for the three month period ended November 30, 1996 or 9.0% as compared to the three month period ended August 31, 1996 of $1,725,805. Revenues for the six month period ended November 30, 1996 were $3,297,137 as compared to $2,255,150 for the six months ended November 30, 1995 representing an increase of 46.2%. The increase in revenues for the three and six month period ended November 30, 1996 as compared to the three and six month period ended November 30, 1995 is attributable to a continuation of increased volume both domestically and internationally of Minicad 6 on the Macintosh platform. The increase ia also attributable to sales from Minicad for Windows which commenced in July 1996 and accounted for approximately 18% of sales for both the three and six month period ended November 30, 1996. The cost of sales for the three months ended November 30, 1996 was $353,276 as compared to $330,176 for the three months ended November 30, 1995 representing an increase of 7.0%. The cost of goods sold for the six months ended November 30, 1996 was $724,606 as compared to $519,272 for the six months ended November 30, 1995 representing an increase of 39.5%. The gross profit percentages for the three months ended November 30, 1996 and 1995 were 77.5% and 76.3%, respectively. The gross profit percentages for the six months ended November 30, 1996 and 1995 were 78.0% and 77.0%, respectively. The increase in gross profit percentages is attributable to higher shipments of the upgrade version of Minicad 6 to existing customers in the three and six month period ended November 30, 1995 when compared with the three and six month period ended November 30, 1996. Upgrade versions of Minicad, which are sold substantially below the price of a new version, are as costly to produce and ship as a new product itself. Technical support salaries decreased by $10,881 from $44,978 for the six month period ended November 30, 1995 to $34,097 for the six month period ended November 30, 1996 reflecting a streamlining of technical support operations during this period. Research and development expenses declined to $51,041 for the three month period ended November 30, 1996 as compared to $64,905 for the three month period ended November 30, 1995 representing a decrease of 21.4%. Research and development expenses declined to $111,332 for the six month period ended November 30, 1996 as compared to $126,235 for the six month period ended November 30, 1995 representing a decrease of 11.8%. This decrease in the three and six month periods ended November 30, 1996 when compared with the three and six month periods ended November 30, 1995 is attributable to bonuses issued in fiscal 1995 to engineers in connection with the successful completion of Minicad 6 as well as the investment into books, periodicals and educational training for Minicad for Windows. Selling and marketing expenses rose to $453,256 for the three month period ended November 30, 1996 as compared to $241,522 for the three month period ended November 30, 1995 representing an increase of 87.7%. Selling and marketing expenses rose to $864,726 for the six month period ended November 30, 1996 compared to $459,429 for the six month period ended November 30, 1995 representing an increase of 88.2%. This increase is primarily attributable to increased advertising costs incurred in connection with the introduction of Minicad for Windows in July 1996. The Company expects to continue to advertise at this level in an effort to reach the broader market that the Windows market offers. General and administrative expenses rose to $459,299 for the three month period ended November 30, 1996 as compared to $407,139 for the three month period ended November 30, 1995 representing an increase of 12.8%. General and administrative expenses rose to $877,691 for the six month period ended November 30, 1996 as compared to $682,983 for the six month period ended November 30, 1995 representing an increase of 28.5%. The increase is principally attributable to an increase in staffing as the company prepared for the release of the Minicad for Windows. Expenses for payroll and related benefits rose to $228,972 for the three month period ended November 30, 1996 as compared to $174,768 for the three month period ended November 30, 1995. This increase is partly offset by a reduction in legal fees to $41,271 for the three month period ended November 30, 1996 compared to 61,205 for the three month period ended November 30, 1995 resulting from the settlement of a patent infringement claim against the Company in June 1996. Expenses for payroll and related benefits rose to $419,233 for the six month period ended November 30, 1996 as compared to $324,974 for the six month period ended November 30, 1995. Legal expenses rose to $118,013 for the six month period ended November 30, 1996 as compared with $79,134 for the six month period ended November 30, 1995 resulting from legal costs incurred in connection with the aforementioned patent infringement claim. Net profit decreased by $38,573 or 14.6% to $226,444 for the three months ended November 30, 1996 from $265,017 for the three months ended November 30, 1995. Net profits increased by $193,023 or 50.0% to $579,421 for the six month ended November 30, 1996 from $386,398 for the six months ended November 30, 1995. The decrease in net profit for the three month period ended November 30, 1996 when compared to the three month period ended November 30, 1995 is after giving effect to a provision for income taxes of $124,000 and $168,300 for the three month period ended November 30, 1996 and 1995 respectively. The effective tax rates were 35.4% and 38.8% for the three month periods ended November 30, 1996 and 1995 respectively. The increase in net profits for the six month period ended November 30, 1996 when compared to the six month period ended November 30, 1995 is after giving effect to a provision for income taxes of $327,050 and $235,000 for the six month period ended November 30, 1996 and 1995 respectively. The effective tax rates were 36.1% and 37.8% for the six month periods ended November 30, 1996. The decrease in effective tax rates is attributable to increases in tax exempt income associated with investment in municipal bonds. The overall decrease in profit for the three month period ended November 30, 1996 when compare with the three month period ended November 30, 1995 is attributable primarily to increases in marketing expense at a rate greater than the increase in revenues as the company increase it efforts to market Minicad 6 for Windows. The overall increase in profit for the six month period ended November 30, 1996 when compare to the six month period ended November 30, 1995 is attributable to the increase in sales, especially in the three month period ended August 31, 1996, which more than offsets the increase in expenses for the same periods. Liquidity and Capital Resources The Company increased its working capital by $651,548 or 9.5% to $7,494,525 at November 30, 1996 from $6,843,977 at November 30, 1995. Working capital also increased by $497,355 or 7.1% from $6,997,170 at May 31, 1996 due primarily to cash flows from operations. 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 earnings 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 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 None 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 Exhibit 27 - Financial Data Schedule 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: January 9, 1997 Richard Diehl, President Chief Executive Officer DATE: January 9, 1997 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: January 9, 1997 s/Richard Diehl Richard Diehl, President Chief Executive Officer DATE: January 9, 1997 s/Joseph Schmelzle Joseph Schmelzle, Treasurer Chief Financial and Accounting Officer EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-QSB WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 3-MOS MAY-31-1996 NOV-30-1996 669071 6801613 303212 0 231601 8121712 712722 403458 9217151 627187 0 0 0 31407 8270649 9217151 1571332 1571332 353276 963596 0 0 0 350444 124000 226444 0 0 0 226444 .07 .07
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