-----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, QfMN08eqEymG0o0UWI2A5q3BPDGKnDxLESlhR7jvjucN18Dko5r3jNTU0Yf+ZR/5 c5p0i6IKWVGtM/jTK0WOsw== 0000819005-97-000004.txt : 19970620 0000819005-97-000004.hdr.sgml : 19970620 ACCESSION NUMBER: 0000819005-97-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970619 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: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24318 FILM NUMBER: 97626163 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 February 28, 1997 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 Item 1 Balance Sheet (unaudited) as of February 28, 1997 3 Statements of Operations (unaudited) for the three months ended February 28, 1997 and February 29, 1996 and (unaudited) for the nine months ended February 28, 1997 and February 29, 1996 4 Statements of Cash Flows (unaudited) for the nine months ended February 28, 1997 and February 29, 1996 5 Statements of Stockholders' Equity (unaudited) as of February 28, 1997 and February 29, 1996 6 Note to Condensed Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II OTHER INFORMATION Item 1 Legal Proceedings 11 Item 2 Changes in Securities 11 Item 3 Defaults Upon Senior Securities11 Item 4 Submission of Matters to a Vote of Security Holders 11 Item 5 Other Information 11 Item 6 Exhibits and Reports on Form 8-K11 SIGNATURES 12 DIEHL GRAPHSOFT, INC. BALANCE SHEET FEBRUARY 28, 1997 (Unaudited) ASSETS Current assets: Cash $ 438,058 Marketable securities 6,831,385 Accounts receivable 393,335 Inventory 221,386 Due from Officers 13,000 Other current assets 80,711 Total current assets 7,977,875 Fixed assets: Equipment 594,209 Furnishings and fixtures 99,555 Leasehold improvements 41,038 734,802 Accumulated depreciation 423,014 Net fixed assets 311,788 Other assets: Unamortized organizational expenses 33,131 Software development and licensing costs, net of accumulated amortization of $953,112 774,651 Total other assets 807,782 Total assets $9,097,445 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 408,801 Income taxes payable 39,308 Deferred income taxes 19,721 Total current liabilities 467,830 Long term liabilities: Deferred income taxes 273,657 Total liabilities 741,487 Stockholders' equity: Common stock - $.01 par value; 10,000,000 shares authorized, 3,140,739 shares issued and outstanding 31,407 Additional paid in capital 4,147,605 Retained earnings 4,176,946 Total stockholders' equity 8,355,958 Total liabilities and stockholders' equity $9,097,445 See accompanying note to financial statements. DIEHL GRAPHSOFT, INC. STATEMENT OF OPERATIONS (Unaudited)
For the three months ended For the nine months ended February 28, February 29, February 28, February 29, 1997 1996 1997 1996 Sales $1,405,611 $1,049,988 $4,702,748 $3,305,138 Cost of sales 369,004 345,072 1,093,610 864,344 Gross profit 1,036,607 704,916 3,609,138 2,440,794 Operating expenses: General and administrative 445,078 488,948 1,322,769 1,171,931 Selling and marketing 554,516 249,691 1,419,242 709,120 Research and Development 54,239 42,061 165,571 168,296 Total operating expenses 1,053,833 780,700 2,907,582 2,049,347 Income (loss) from operations (17,226) (75,784) 701,556 391,447 Other income and expenses: Interest income 99,535 90,956 287,224 245,123 Gain (loss) on disposition of equipment (457) (6,753) (457) (6,753) Total other income and expenses 99,078 84,203 286,767 238,370 Income before income taxes 81,852 8,419 988,323 629,817 Provision for income taxes 27,950 - 355,000 235,000 Net Income $ 53,902 $ 8,419 $ 633,323 $ 394,817 Net Income per share $ .02 $ .00 $ .20 $ .13 Weighted average number of shares outstanding 3,160,124 3,159,406 3,167,040 3,039,345
See accompanying note to financial statements. DIEHL GRAPHSOFT, INC. STATEMENT OF CASH FLOWS (Unaudited)
For the nine For the nine months ended months ended February 28, February 29, 1997 1996 Cash flows from operating activities: Net income $ 633,323 $ 394,817 Adjustments to reconcile net income to net cash provided by operating activities: Loss on disposition of equipment 457 6,753 Amortization of bond premiums and discounts (206,787) (154,287) Deferred income taxes (67,207) (47,745) Depreciation and amortization 543,777 312,289 Changes in operating assets and liabilities: Accounts receivable (56,944) 95,048 Inventory (86,673) 36,321 Due from Officers (8,000) - Other current assets 77,818 (93,610) Accounts payable and accrued expenses 134,860 179,502 Income taxes receivable/payable 167,107 (332,206) Net cash provided by operating activities 1,131,731 396,882 Cash flows from investing activities: Purchases of marketable securities (3,724,673) (1,770,635) Maturities of marketable securities 3,319,000 105,000 Capitalized software and licensing costs (528,658) (451,269) Loan repayment from Officer - 230,000 Purchase of fixed assets (128,495) (88,728) Organizational expenses (6,125) (18,807) Net cash used in investing activities (1,068,951) (1,994,439) Cash flows from financing activities: Sale of common stock - 1,671,395 Net cash provided by financing activities - 1,671,395 Net increase in cash 62,780 73,838 Cash balance beginning of period 375,278 722,116 Cash balance end of period $ 438,058 $ 795,954 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 255,100 $ 614,951
See accompanying note 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 $28,931 $2,478,687 $2,874,625 $5,382,243 Sale of Common stock 247,614 2,476 1,668,918 - 1,671,394 Net Income - - - 394,817 394,817 Balance - February 29, 1996 3,140,739 $31,407 $4,147,605 $3,269,442 $7,448,454 Balance - May 31, 1996 3,140,739 $31,407 $4,147,605 $3,543,623 $7,722,635 Net Income - - - 633,323 633,323 Balance - February 28, 1997 3,140,739 $31,407 $4,147,605 $4,176,946 $8,355,958
See accompanying note to financial statements. DIEHL GRAPHSOFT, INC. NOTE TO CONDENSED 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-Q 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 nine month periods ended February 28, 1997 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 nine months ended February 28, 1997 as compared to the three and nine months ended February 29, 1996. Revenues for the three months ended February 28, 1997 were $1,405,611 as compared to $1,049,988 for the three months ended February 29, 1996 representing an increase of 33.9%. Revenues for the nine months ended February 28, 1997 were $4,702,748 as compared to $3,305,138 for the nine months ended February 29, 1996 representing an increase of 42.3%. The increase in revenues reflects increased sales of Minicad for Windows resulting from increased marketing efforts and increased sales through international distributors following localization of the product into native languages. Revenues from sales of Minicad on the Macintosh platform declined in the three months ended February 28, 1997 when compared with the three months ended February 29, 1996. This decline is primarily due to the overall decline in hardware sales by Apple Computer during these periods. The cost of sales for the three months ended February 28, 1997 was $369,004 as compared to $345,072 for the three months ended February 29, 1996 representing an increase of 6.9%. The cost of sales for the nine months ended February 28, 1997 was $1,093,610 as compared to $864,344 for the nine months ended February 28, 1996 representing an increase of 26.5%. The gross profit percentages for the three months ended February 28, 1997 and February 29, 1996 were 73.7% and 67.1% respectively. The gross profit percentages for the nine months ended February 28, 1997 and February 29, 1996 were 76.7% and 73.8% respectively. The increase in gross profit percentages results primarily from the impact of an allowance established for obsolete inventory of $44,012 during the three months ended February 29, 1996. Research and development expenses rose to $54,239 for the three months ended February 28, 1997 when compared to $42,061 for the three months ended February 29, 1996 representing an increase of 28.9%. Research and development expenses declined to $165,571 for the nine months ended February 28, 1997 as compared to $168,296 for the nine months ended February 29, 1996 representing a decrease of 1.6%. The decrease in the nine months ended February 28, 1997 as compared to the nine months ended February 28, 1996 is attributable to bonuses issued to engineers in connection with the successful completion of Minicad 6 as well as investment into books, periodicals and educational training for Minicad for Windows in the nine months ended February 29, 1996. The increase in the three months ended February 28, 1997 as compared to the three months ended February 29, 1996 is due to an increased commitment to this area. Selling and marketing expenses rose to $554,516 for the three months ended February 28, 1997 as compared to $249,691 for the three months ended February 29, 1996 representing an increase of 122%. Selling and marketing expenses doubled to $1,419,242 for the nine months ended February 28, 1997 as compared to $709,120 for the nine months ended February 29, 1996. This increase is primarily due 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 declined to $445,078 for the three months ended February 28, 1997 as compared to $488,948 for the three months ended February 29, 1996 representing a decrease of 9.0%. General and administrative expenses rose to $1,322,769 for the nine months ended February 28, 1997 as compared to $1,171,931 for the nine months ended February 29, 1996 representing an increase of 12.9%. The decrease in the three months ended February 28, 1997 is primarily due to a decrease in legal fees to $18,867 for the three months ended February 28, 1997 from $158,065 for the three months ended February 29, 1996. Legal fees also decreased to $136,880 for the nine months ended February 28, 1997 from $237,199 for the nine months ended February 29,1996. This decline results principally from the resolution of a patent infringement claim in June 1996. Other expenses rose principally due to increased staffing needed to meet the demands from research and development operations and sales and marketing operations. These demands rose due to the development and marketing of Minicad for Windows. Net income increased by $45,483 or 640% to $53,902 for the three months ended February 28, 1997 from $8,419 for the three months ended February 29,1996. Net income increased by $238,506 or 60.4% to $633,323 for the nine months ended February 28, 1997 from $394,817 for the nine months ended February 29, 1996. The increase in net income is after giving effect to a provision for income taxes of $27,950 for the three months ended February 28, 1997. The effective tax rate for the three months ended February 28, 1997 was 34.1%. No provision for income taxes was made in the three months ended February 29, 1996 since the net income was exempt investment income. The increase in net income is after giving effect to a provision for income taxes of $355,000 and $235,000 for the nine months ended February 28, 1997 and February 29, 1996 respectively. The effective tax rates were 35.9% and 37.3% for the nine months ended February 28, 1997 and February 29, 1996 respectively. The decrease in effective tax rate for the nine months ended February 28, 1997 is attributable to an increase in tax exempt investment income from municipal bonds. Liquidity and Capital Resources The Company increased its working capital to $7,510,045 at February 28, 1997 from $6,803,868 at February 29, 1996 representing an increase of $706,177 or 10.4%. Working capital also increased by $512,875 or 7.3% from $6,997,170 at May 31, 1996. This increase is principally due to cash flows from operations during this period. Company marketable securities continue to be in short to intermediate term government securities. 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. 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 on Form 8-K Exhibit 11 - Computation of shares outstanding 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: April 8, 1997 Richard Diehl, President Chief Executive Officer DATE: April 8, 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: April 8, 1997 s/Richard Diehl Richard Diehl, President Chief Executive Officer DATE: April 8, 1997 s/Joseph Schmelzle Joseph Schmelzle, Treasurer Chief Financial and Accounting Officer EX-11 2 STATEMENT OF COMPUTATION OF SHARES OUTSTANDING Exhibit 11
Statement of Computation of Shares Outstanding For the three months ended For the nine months ended February 28, February 29, February 28, February 29, 1997 1996 1997 1996 Average outstanding shares 3,140,739 3,140,739 3,140,739 3,020,678 Dilutive effect of stock options and warrants 19,385 18,667 26,301 18,667 Weighted average number of shares outstanding 3,160,124 3,159,406 3,167,040 3,039,345
EX-27 3 ART. 5 FDS FOR 3RD QUARTER 10-QSB
5 1 3-MOS MAY-31-1996 FEB-28-1997 438058 6831385 393335 0 221386 7977875 734802 423014 9097445 467830 0 0 0 31407 8324551 9097445 1405611 1405611 369004 1053833 457 0 0 81852 27950 53902 0 0 0 53902 .02 .02
-----END PRIVACY-ENHANCED MESSAGE-----