Form 10-Q10Q DOC UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,
DCD.C. 20549----------------------FORM 10-Q
(Mark One)
[X]
Quarterly Report Pursuant to SectionQUARTERLY REPORT PURSUANT TO SECTION 13orOR 15(d)of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended
September 30, 1999March 31, 2000OR
[ ]
Transition Report Pursuant to SectionTRANSITION REPORT PURSUANT TO SECTION 13orOR 15(d)of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from
_______to_______________to _________Commission
File No.file number 0-22292INPUT SOFTWARE,ACTIONPOINT, INC. (Exact name of
registrantRegistrant as specified in itscharter) A Delaware Corporation 77-0104275 ---------------------- ---------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.)Charter)
1299 Parkmoor Ave., Avenue
San Jose, California 95126
(Address of principal executive offices)
Registrant's telephone number,Principal Executive Offices including area code:Zip Code)
(408) 325-3800
(no change)
---------------------------------------------------------------
Former
(Registrant's Telephone Number, Including Area Code)
Input Software, Inc.
(Former name, former address and former fiscal year, if changed since last report.report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d)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 ninety90 days. Yes YES [X] No NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as
of September 30, 1999: 4,089,786
PartMarch 31, 2000: 4,174,493
ACTIONPOINT, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2000
Index
PART I. FINANCIAL INFORMATION | Page No. |
Item 1. Financial Statements | |
Consolidated Balance Sheets at March 31, 2000 and December 31, 1999 | |
Consolidated Statements of Operations for the three month periods ended March 31, 2000 and 1999 | |
Consolidated Statements of Cash Flows for the three month periods ended March 31, 2000 and 1999 | |
Notes to the Financial Statements | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |
PART II. OTHER INFORMATION | |
Item 1. Legal Proceedings | |
Item 2. Changes in Securities and Use of Proceeds | |
Item 3. Defaults Upon Senior Securities | |
Item 4. Submission of Matters to a Vote of Security Holders | |
Item 5. Other Information | |
Item 6. Exhibits and Reports on Form 8-K | |
Signature Page |
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
INPUT SOFTWARE,
ACTIONPOINT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In
(Unaudited, In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................. $572 $514
Deferred revenue.............................. 1,989 1,997
Accrued liabilities........................... 3,120 3,289
----------- -----------
Total current liabilities................... 5,681 5,800
----------- -----------
Stockholders' equity:
Common stock.................................. 42 41
Paid in capital............................... 9,641 8,681
Retained earnings............................. 3,517 8,656
----------- -----------
Stockholders' equity........................ 13,200 17,378
----------- -----------
$18,881 $23,178
=========== ===========
September 30, December 31,
1999 1998
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................... $9,856 $14,447
Accounts receivable........................... 5,331 4,490
Deferred income taxes and
other current assets....................... 5,659 5,613
----------- -----------
Total current assets........................ 20,846 24,550
Property and equipment, net..................... 1,338 1,208
Other assets.................................... 984 943
Net assets related to the
discontinued display division.............. (335) 176
----------- -----------
$22,833 $26,877
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................. $391 $652
Deferred revenue.............................. 1,950 1,694
Accrued liabilities........................... 2,714 3,174
----------- -----------
Total current liabilities................... 5,055 5,520
----------- -----------
Stockholders' equity:
Common stock.................................. 40 48
Paid in capital............................... 8,587 12,512
Retained earnings............................. 9,151 8,797
----------- -----------
Stockholders' equity........................ 17,778 21,357
----------- -----------
$22,833 $26,877
March 31, December 31,
2000 1999
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents .................... $6,394 $9,193
Accounts receivable........................... 3,684 5,300
Deferred income taxes and
other current assets....................... 5,630 5,170
----------- -----------
Total current assets........................ 15,708 19,663
Property and equipment, net..................... 1,637 1,479
Other assets.................................... 1,536 2,036
Net assets related to the
discontinued display division.............. -- --
----------- -----------
$18,881 $23,178
=========== ===========
The accompanying notes are an integral part of these consolidated
condensed financial statements
ACTIONPOINT, INC.
The accompanying notes are an integral part of these consolidated
condensed financial statements
ACTIONPOINT, INC.
The accompanying notes are an integral part of these consolidated
condensed financial statements
ACTIONPOINT, INC. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Interim Unaudited Financial Information: The accompanying interim unaudited consolidated condensed financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. The December 31, Recent Pronouncements: In June of 1998, the Financial Accounting Standards Board ("FASB")issued Statement of Financial
Standards No. 133 In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"),
"Revenue Recognition in Financial Statements." SAB 101 provides guidance for revenue recognition under certain
circumstances. The Company is currently evaluating the impact of SAB 101 on its financial statements and related disclosures, but
does not expect that such impact, if any, will be material. The accounting and disclosures prescribed by SAB 101 will be effective
for the Company's fiscal year ending December 31, 2000. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"), "Accounting for Certain
Transactions Involving Stock Compensation, an Interpretation of APB Opinion No. 25." FIN 44 is intended to clarify certain
problems that have arisen in practice since the issuance of APB 25 and provide guidance, some of which is a significant departure
from current practice. FIN 44 generally provides for prospective application for grants or modifications to existing stock options
or awards made after June 30, 2000. 3. INCOME TAXES: The tax benefit related to the 4. STOCK REPURCHASE: Since February 1997 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW: On April 24, 2000, the Company announced a name change from Input Software, Inc. to ActionPoint, Inc. This change
was made to more effectively communicate a new strategic focus on e-commerce interaction management software. The Company helps Global 1000 organizations, dot.com companies and B2B net market makers simplify Web-based and
paper-based business transactions. ActionPoint products are part of the e-commerce infrastructure required to deliver scaleable,
flexible and high performance e-business solutions. ActionPoint Dialog Server™ is designed to replace static Web forms with
personalized, intelligent interactions. The ActionPoint Enterprise Server™ is a delivery and integration mechanism behind the
firewall that integrates all types of information, both paper and web-based, into the enterprise infrastructure. Our award-winning
information capture solution, InputAccel®, has been shipping since late 1995 and intelligently captures mission critical
information -provided as email, paper, and faxes- into formats compatible with enterprise computing systems and the Internet. The Company's also markets software tools, which allow hardware and software developers to save both time and money by offering
stable, supported libraries of software code to drive certain computer peripherals rather than having to develop such software
themselves. Most of these tools are based on the Company's Image & Scanner Interface Specification ("ISIS®"), an
industry standard interface for scanners. ISIS also provides a key component for InputAccel. RESULTS OF OPERATIONS: This Quarterly Report on Form 10-Q may contain forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ materially from the results discussed in any such forward-looking statements. Factors that might cause
such a difference include, but are not limited to those discussed below and in the section captioned RISK FACTORS in the Company's
most recent Annual Report on Form 10-K. Net Revenues The Company's The Company's service revenues increased 31% in the first quarter of 2000 to $1.1 million from $833,000 in the first quarter of
1999. As a percent of revenue, services accounted for 24% and 16% for the first quarter of 2000 and 1999 respectively. The increase
in Gross Profit Gross profit Research and Research and Current R&D staffing levels exceed those of prior periods. The Company believes that continued investment in research and
development is critical to its future growth and will continue to commit substantial resources to this Sales and marketing Sales and marketing expenses increased 36% to $3.3 million in the first quarter of 1999 from $2.5 million in the first quarter of
1999. The Company expects that sales and marketing expenses will increase in the future, in absolute terms, as the Company continues
to expand sales and marketing programs in conjunction with the launch of the ActionPoint product line. Sales and marketing increased
as a percentage of revenue to 72% from 47% for the first quarter of 2000 compared to the first quarter of 1999. General and administrative General and administrative expenses in the As a percentage of revenue, general and administrative expenses Stock Related Bonus Expense The first quarter of 2000 included a one-time charge of $2.6 million related to a
stock-based incentive plan. Minority Equity Investment Based on its assessment of the likelihood to realize value, the Company wrote off its $500,000 minority equity interest in
Cornerstone Peripherals Technology. This investment was made in 1998 Provision for Income Taxes The benefit for tax loss Liquidity and Capital Resources At Net cash used Net cash used in investing activities, exclusively additions to property and equipment, was Net cash provided by financing activities was $556,000 for the The Company believes that its cash and cash equivalents, together with cash flows from operations will be sufficient to meet the
Company's liquidity and capital requirements for the next 12 months. The Company may, however, seek additional equity or debt
financing to fund further expansion. The timing and amount of such capital requirements cannot be precisely determined at this time
and will depend on a number of factors, including demand for the Company's products, product mix and competitive factors.
Accordingly, the Company may require additional funds to support its working capital requirements or for other purposes and may seek
to raise such additional funds through public or private equity or other sources. There can be no assurance that additional
financing will be available at all or that it, if available, will be obtainable on terms favorable to the Company and would not be
dilutive. RISK FACTORS In addition to the other information in this Report, the following risk factors should be considered carefully in
evaluating the Company and its business. Recent Losses; Future Operating Results Uncertain The Company's During any given period, one or more of the foregoing factors may cause revenue to fluctuate significantly or
operating expenses to be disproportionately high. For the past several quarters the Company has increased spending and has incurred
operating losses. The increased spending has been due in large part to the investment of significant research and development and
marketing resources to the yet-to-be-shipped ActionPoint product family. The Company expects to continue to devote substantial
resources to these areas and as a result will need to achieve significantly increased quarterly revenues to achieve profitability.
In particular, the Company intends to continue to hire additional sales, marketing and engineering personnel in 2000 and beyond,
which the Company believes is required if the Company is to achieve significant revenue growth in the future. While the Company's
revenues generally have increased in recent periods, the revenues for the most recent quarter were below those of the same quarter of
1999. Accordingly there can be no assurance that revenues will increase in future periods, that revenues will grow at past rates or
that the Company will return to profitability in the future. The Company has limited ability to forecast future revenues, and it is likely that in some future period the
Company's operating results will be below the expectations of public securities analysts and investors. In the event that operating
results are below expectations, or in the event that adverse conditions prevail or are perceived to prevail generally or with respect
to the Company's business, the price of the Company's Common Stock would likely be materially adversely affected. Quarterly Operating Results Subject to Fluctuations; Seasonality The Company's quarterly revenues, expenses and operating results have varied significantly in the past and are
likely to vary significantly in the future due to a variety of factors. In addition to those mentioned earlier, these factors include
the size and timing of significant orders, budgeting cycles of its customers, possible delays in recognizing licensing revenues and
the trend within the software industry for a large portion of orders to be booked late in a calendar quarter. The Company operates
with virtually no order backlog because its software products are shipped shortly after orders are received, which makes product
revenues in any quarter substantially dependent on orders booked and shipped throughout that quarter. In addition, the Company
achieves a significant portion of revenues from indirect sales channels over which the Company has little control. Moreover, the
Company's expense levels are based to a significant extent on the Company's expectations of future revenues and therefore are
relatively fixed in the short term. If revenue levels are below expectations, operating results are likely to be adversely and
disproportionately affected because only a small portion of the Company's expenses vary with its revenues. The Company's business has experienced and is expected to continue to experience seasonality, largely due to
customer buying patterns. In most of the recent years, the Company has had relatively stronger demand for its products during the
quarter ending December 31 and demand has been relatively weaker in the quarter ending March 31. The Company has limited ability to forecast future revenues, and it is likely that in some future quarter the
Company's operating results will be below the expectations of public securities analysts and investors. In the event that operating
results are below expectations, or in the event that adverse conditions prevail or are perceived to prevail generally or with respect
to the Company's business, the price of the Company's Common Stock would likely be materially adversely affected. Significant Competition The market for the Company's products is intensely competitive and subject to rapid change. In addition,
because there are relatively low barriers to entry in the software market, the Company may encounter additional competition from
other established and emerging companies. Many of the Company's competitors have longer operating histories, significantly greater
financial, technical, marketing and other resources than the Company, significantly greater name recognition and a large installed
base of customers. As a result, the Company's competitors may be able to respond more quickly to new or emerging technologies and
changes in customer requirements, or to devote greater resources to the development, promotion and sale of competitive products, than
can the Company. There is also a substantial risk that announcements of competing products by large competitors could result in the
Product Concentration The Company currently expects the sale and license of its InputAccelproducts and software tools to
account for Dependence on The market for Rapid Technological Change and New Products The market for the Company's products is characterized by rapid technological change, frequent new product
introductions and enhancements, uncertain product life cycles, changes in customer demands and evolving industry standards. The
introduction of products, such as ActionPoint, embodying new technologies and the emergence of new industry standards can render
existing products obsolete and unmarketable. The Company's future success will depend upon its ability to continue to enhance its
current products and to develop and introduce new products on a timely basis that keep pace with technological developments and
satisfy increasingly sophisticated customer requirements. As a result of the complexities inherent in Risk of Software Defects Software products as complex as those offered by the Company may contain errors or defects, particularly when
first introduced or when new versions or enhancements are released. The Company has in the past discovered software errors in
certain of its new products after their introduction. There can be no assurance that, despite testing by the Company, defects and
errors will not be found in current versions, new versions or enhancements of its products after commencement of commercial
shipments, resulting in loss of revenues or delay in market acceptance, which could have a material adverse effect on the Company's
business, operating results and financial condition. Risks Associated with International Sales and Operations The Company anticipates that for the foreseeable future a significant portion of its revenues will be derived
from sources outside North America and the Company intends to continue to expand its sales and support operations internationally.
In order to successfully expand international sales, the Company The Company's international operations are generally subject to a number of risks, including costs of customizing
products for foreign countries, protectionist laws and business practices favoring local competition, dependence on local vendors,
compliance with multiple, conflicting and changing government laws and regulations, longer sales cycles, greater difficulty or delay
in accounts receivable collection, import and export restrictions and tariffs, difficulties in staffing and managing foreign
operations, foreign currency exchange rate fluctuations, multiple and conflicting tax laws and regulations and political and economic
instability. To date, a majority of the Company's revenues and costs have been denominated in U.S. dollars. However, the Company
believes that in the future, an increasing portion of the Company's revenues and costs will be denominated in foreign currencies.
Although the Company may from time to time undertake foreign exchange hedging transactions to reduce its foreign currency transaction
exposure, the Company does not currently attempt to eliminate all foreign currency transaction exposure. Dependence on Key Personnel The Company's success depends to a significant extent upon the efforts of its key management, sales and
marketing, technical support and research and development personnel, none of whom are bound by an employment contract. The loss of
key management or technical personnel could adversely affect the Company. The Company believes that its future success will depend
in large part upon its continuing ability to attract and retain highly skilled managerial, sales and marketing, technical support and
research and development personnel. Like other software companies, the Company faces intense competition for such personnel, and the
Company has at times experienced and continues to experience difficulty in recruiting qualified personnel. There can be no assurance
that the Company will be successful in attracting, assimilating and retaining additional qualified personnel in the future. The loss
of the services of one or more of the Company's key individuals, or the failure to attract and retain additional qualified personnel,
could have a material adverse effect on the Company's business, operating results and financial condition. Limited Protection of Proprietary Technology; Risks of Infringement; Use of Licensed Technology The Company relies primarily on a combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect its proprietary rights. The Company licenses its software products primarily under
license agreements. There can be no assurance that others will not develop technologies that are similar or superior to the
Company's technology or design around the copyrights and trade secrets owned by the Company. Despite the Company's efforts to
protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or to obtain and use
information that the Company regards as proprietary. Policing unauthorized use of the Company's products is difficult, and although
the Company is unable to determine the extent to which piracy of its software products exists, software piracy can be expected to be
a persistent problem. In addition, the laws of some foreign countries do not protect the Company's proprietary rights as fully as do
the laws of the U.S. The Company is not aware that it is infringing any proprietary rights of third-parties. There can be no
assurance, however, that third-parties will not claim infringement by the Company of their intellectual property rights. The Company
expects that software product developers increasingly will be subject to infringement claims as the number of products and
competitors in the Company's industry segment grows and the functionality of products in different industry segments overlaps. Any
such claims, with or without merit, could be time consuming to defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays or require the Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to the Company, if at all. In the event of a successful
claim of product infringement against the Company and failure or inability of the Company to either license the infringed or similar
technology or develop alternative technology on a timely basis, the Company's business, operating results and financial condition
could be materially adversely affected. The Company relies upon certain software that it licenses from third-parties, including software that is
integrated with the Company's internally developed software and used in its products to perform key functions. There can be no
assurance that these third-party software licenses will continue to be available to the Company on commercially reasonable terms, if
at all. The loss of or inability to maintain any such software licenses could result in shipment delays or reductions until
equivalent software could be developed, identified, licensed and integrated such delays would materially adversely affect the
Company's business, operating results and financial condition. Product Liability Although the Company's license agreements with its customers typically contain provisions designed to limit
the Company's exposure to potential product liability claims, it is possible that such limitation of liability provisions may not be
effective as a result of existing or future laws or unfavorable judicial decisions. The Company has not experienced any material
product liability claims to date; however, the sale and support of the Company's products may entail the risks of such claims, which
may be substantial in light of the use of the Company's products in business-critical applications. Item 3- Quantitative and Qualitative Disclosures About Market Risk. The Company's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio. The Company maintains an investment
policy which is intended to ensure the safety and preservation of its invested funds by limiting default risk, market risk and
reinvestment risk. The Company does not currently use, nor has it historically used, derivative financial instruments to manage or
reduce market risk. The Company mitigates default risk by investing in high credit quality securities such as debt instruments of the
United States government and its agencies and high quality corporate issuers, as well as money market funds. The portfolio includes
only marketable securities with active secondary or resale markets to ensure portfolio liquidity and maintains a prudent amount of
diversification. As of March 31, 2000, the Company had $6,4 million of cash and cash equivalents. The Company does not currently transact any significant portion of its business in functional currencies other than the United
States dollar. To the extent that it continues to transact its business using the United State dollar as its functional currency, the Company
does not believe that the fluctuations in foreign currency exchange rates will have a material adverse effect on the Company's
results of operations. PART II - OTHER INFORMATION
Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11.1 Statement of Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K Not Applicable
ACTIONPOINT, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
ACTIONPOINT, INC.
INDEX
INPUT SOFTWARE,
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Basic and diluted EPS:
Net income (loss)................ ($1.24) $0.03
========= =========
Shares used in EPS calculations:
Basic ......................... 4,134 4,710
Diluted........................ 4,134 4,723
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Net revenues ..................... $5,461 $4,599 $16,577 $12,146
Cost of revenues.................. 769 401 2,333 1,217
--------- --------- --------- ---------
Gross profit 4,692 4,198 14,244 10,929
Sales and marketing............... 2,768 2,070 8,020 5,478
Research and development.......... 1,324 982 3,841 3,101
General and administrative........ 733 790 2,345 1,924
--------- --------- --------- ---------
Operating income ............... (133) 356 38 426
Interest and other income......... 196 166 495 459
--------- --------- --------- ---------
Income before provision
for income taxes............. 63 522 533 885
Provision for income taxes........ 21 168 179 277
--------- --------- --------- ---------
Net income from continuing
operations........ 42 354 354 608
Discontinued operations:
Net loss from operations
of Discontinued Display
Division........................ -- -- -- (361)
Estimated net loss on sale of
Display Division................ -- -- -- (2,284)
--------- --------- --------- ---------
Net income (loss) from
discontinued operations....... -- 0 -- (2,645)
--------- --------- --------- ---------
Net income (loss)............... $42 $354 $354 ($2,037)
========= ========= ========= =========
Basic and diluted EPS:
For continuing operations........ $0.01 $0.07 $0.08 $0.10
For discontinued operations...... 0.00 0.00 0.00 (0.45)
--------- --------- --------- ---------
Net income (loss)............... $0.01 $0.07 $0.08 ($0.35)
========= ========= ========= =========
Shares used in EPS calculations:
Basic ......................... 4,255 5,352 4,478 5,890
Diluted........................ 4,257 5,440 4,486 5,995
========= =========
(In thousands, except per share amounts)
Three Months Ended
March 31,
-------------------
2000 1999
--------- ---------
Net revenues:
License......................... $3,518 $4,427
Service......................... 1,095 833
--------- ---------
Total revenues.................... 4,613 5,260
Cost of revenues:
License......................... 83 213
Service (exclusive of stock
related bonus expense of
$138k in 2000)................ 745 501
--------- ---------
Cost of revenues.................. 828 714
--------- ---------
Gross profit 3,785 4,546
--------- ---------
Research and development
(exclusive of stock related
bonus expense of $710k in 2000.. 1,747 1,229
Sales and marketing
(exclusive of stock related
bonus expense of $638k in 2000.. 3,328 2,450
General and administrative
(exclusive of stock related
bonus expense of $1,090k in 2000 872 853
--------- ---------
Operating income (loss) before
stock related bonus expense..... (2,162) 14
Stock related bonus expense....... 2,576 --
--------- ---------
Operating income (loss)........... (4,738) 14
Interest income/other............. 106 175
Write-off of minority equity
investment...................... (500) --
--------- ---------
Income (loss) before provision
for income taxes............... (5,132) 189
Provision for income taxes........ 7 62
--------- ---------
Net income (loss)................. ($5,139) $127
========= =========
INPUT SOFTWARE,
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
Nine Months Ended
September 30,
-------------------
1999 1998
--------- ---------
Cash flows from continuing operations:
Net income (loss)...................................... $354 ($2,037)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization........................ 398 731
Discontinued operations 511 11,705
(Increase) decrease in assets and liabilities:
Accounts receivable................................. (841) (1,334)
Deferred income taxes and other assets.............. (87) 117
Accounts payable.................................... (261) (155)
Accrued liabilities and deferred revenue............ (204) 168
--------- ---------
Net cash provided by operating activities........... (130) 9,195
--------- ---------
Cash flows from investing activities:
Property and equipment additions....................... (528) (440)
--------- ---------
Net cash used in investing activities............... (528) (440)
--------- ---------
Cash flows from financing activities:
Repurchase of common stock............................. (4,210) (10,477)
Net proceeds from issuance of common stock............. 277 193
--------- ---------
Net cash used in financing activities............... (3,933) (10,284)
--------- ---------
Net decrease in cash and cash equivalents.... (4,591) (1,529)
Cash and cash equivalents at beginning of period........ 14,447 12,284
--------- ---------
Cash and cash equivalents at end of period.............. $9,856 $10,755
Three Months Ended
March 31
-------------------
2000 1999
--------- ---------
Cash flows from continuing operations:
Net income (loss)...................................... ($5,139) $127
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization........................ 182 118
Stock compensation charge............................ 59 --
Write-off of minority equity investment.............. 500 --
Shares issued for stock related bonnus............... 346 --
Discontinued operations.............................. -- 382
(Increase) decrease in assets and liabilities:
Accounts receivable................................. 1,616 (277)
Other assets........................................ (460) (12)
Accounts payable.................................... 58 (368)
Deferred revenue.................................... (8) 83
Accrued liabilities................................. (169) (507)
--------- ---------
Net cash provided by operating activities........... (3,015) (454)
--------- ---------
Cash flows from investing activities:
Property and equipment additions....................... (340) (199)
--------- ---------
Net cash used in investing activities............... (340) (199)
--------- ---------
Cash flows from financing activities:
Repurchase of common stock............................. -- (1,164)
Net proceeds from issuance of common stock............. 556 --
--------- ---------
Net cash used in financing activities............... 556 (1,164)
--------- ---------
Net decrease in cash and cash equivalents............... (2,799) (1,817)
Cash and cash equivalents at beginning of period........ 9,193 14,447
--------- ---------
Cash and cash equivalents at end of period.............. $6,394 $12,630
========= =========
INPUT SOFTWARE,
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
19981999 balance sheet data was derived from audited financial
statements contained in the Company's 19981999 Annual Report on Form 10-K10-k but does not include all disclosures required by generally
accepted accounting principles. On
September 8, 1998 the Company sold its display division. Accordingly,
the operating results of the display division for 1998 have been
segregated from continuing operations and reported separately on the
statements of income. The unaudited financial statements for the ninethree month periods ended September 30,March 31, 2000 and 1999 and 1998
include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the
financial information set herein. The results of operations for the interim periods are not necessarily indicative of the results to
be expected for an entire year and should not be relied on as such.
As of January 1, 1998 the Company has adopted the provisions of
Statement of Position 97-2, ("SOP 97-2"), "Software Revenue
Recognition." This statement establishes requirements for revenue
recognition for software companies. Under SOP 97-2, the Company
recognizes product revenues and license fees upon shipment if a signed
contract exists, the fee is fixed and determinable, collection of
resulting receivables is probable and product returns are reasonably
estimable. In addition, for contracts with multiple obligations (e.g.
deliverable and undeliverable products, service, and maintenance),
revenue must be allocated to each component of the contract based on
evidence of its fair value. Revenue allocated to undelivered products is
recognized when the criteria for product and license revenue set forth
above are met. Revenue allocated to maintenance fees for ongoing
customer support and updates is recognized ratably over the period of
the maintenance contract. Payments for maintenance fees are generally
made in advance and are non-refundable. Revenue related to other
services is recognized as the related services are performed. Royalty
revenues that are contingent upon sale to an end user by OEMs are
recognized upon receipt of a report of sale by the Company for the OEM.
In March 1998, The AICPA issued Statement of Position No. 98-4
("SOP 98-4"), "Deferral of the Effective Date of a Provision of SOP 97-
2, Software Revenue Recognition." SOP 98-4 defers, for one year, the
application of certain passages in SOP 97-2, which limit what is
considered vendor-specific objective evidence ("VSOE") necessary to
recognize revenue for software licenses in multiple-element arrangements
when undelivered elements exist. The adoption of SOP 97-2, as amended by
SOP 98-4, in the first quarter of 1998 did not have a material effect on
the Company's revenue recognition practices. The Company has evaluated
the amendments expected to be issued under SOP 98-4 and does not expect
their adoption will have a material effect on its revenue recognition
practices.
In December 1998, the AICPA issued Statement of Position No. 98-9
("SOP 98-9"), "Modification of SOP 97-2, Software Revenue Recognition,
With Respect to Certain Transactions," which clarifies guidance
regarding VSOE and multiple element arrangements. SOP 98-9 amends SOP
98-4 to extend the deferral of guidance in SOP 97-2 as it relates to
these matters through fiscal years beginning after March 15, 1999.
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-1 ("SOP 98-1"),
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." This Statement of Position (SOP) provides guidance on
accounting for the costs of computer software developed or obtained for
internal use. The SOP applies to all nongovernmental entities and is
effective for financial statements for fiscal years beginning after
December 15, 1998. The Company has not yet determined the impact, if
any, of the adoption of this statement on the financial statements of
the Company.
("("SFAS 133"133"), "Accounting"Accounting for Derivative Instruments and Hedging Activities."Activities," which is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In
July of 1999, the FASB issued Statement of Financial Standards No. 137 ("SFAS 137"), "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," which defers the effective date
to all fiscal quarters of fiscal years beginning after June 15, 2000. The Company has not yet evaluated the effects of this change
on its operations. The Company will adopt SFAS 133 as required for its first quarterly filing of the fiscal year 2001.2. DISCONTINUED OPERATIONS:
On September 8,However, for certain transactions the guidance is effective after December 15, 1998 and January
12, 2000. The Company believes the Company sold its display divisionadoption of this pronouncement will not have a material impact on the Company's financial position
and results of operations.current management team. This business now operates asoperating loss for the quarter ended March 31, 2000 has been offset by a private
company named Cornerstone Peripherals Technology, Inc. Undervaluation reserve
placed against the terms
of the sale the Company sold certain assets and transferred certain
liabilities associated with the display division.resulting deferred tax assets. The Company retained
certain assets, primarily accounts receivable and certain inventory,
which were substantially converted to cash by December 31, 1998. The
Company holds a minority equity interest in Cornerstone Peripherals
Technology, Inc.
3. INCOME TAXES:
The Company'sremaining provision for income taxes reflects the Company's
estimated 1999 annualized effective tax rate of 34%.
foreign taxes. through February 1999, the Company's Board of Directors has authorized the use of up to $25 million to
repurchase the Company's common stock. During the nine months ended September 30,Through December 31, 1999 the Company repurchased 755,1003.8 million shares for a total of $4.2$23.6
million. Since inception ofNo repurchases were made in the program a total of 3.7 million shares have been
repurchased for a total of $23.3 million.quarter ending March 31, 2000. The repurchased stock is expected to bebeing held by the Company as
treasury stock to be used to meet the Company's obligations under its stock plans and for other corporate purposes. Purchases have
been and willmay continue to be made from time-
to-timetime-to-time on the open market or in privately negotiated transactions. The timing and volume
of purchases will be dependent upon market conditions and other factors. - ------------------------------------------------------------------------
The Company intends to use cash on hand to fund its
purchases.RESULTS OF OPERATIONS:
Input Software, Inc. (the "Company") develops and markets software
products that intelligently capture customer, supplier, and business
partner information - provided as Web input, data, paper, and faxes -
into formats compatible with enterprise computing systems and the
Internet. Its flagship product, InputAccelT, is an open integration
platform that has become the de facto standard for information capture
software. newest product, DynamicInputT, is an XML-based
software product scheduled to ship to Beta customerslicense revenues decreased 21% in the first quarter of 2000 that will allow organizations to personalize real time,
two-way communications with their customers over the Web.
The Company also markets software tools under its Pixel Translations
brand which allow hardware and software developers to save both time and
money by offering stable, supported libraries of software code to drive
certain computer peripherals rather than having to develop such software
themselves. Most of these tools are based on the Company's Image &
Scanner Interface Specification ("ISISr"), an industry standard
interface for scanners. ISIS also provides a key component for
InputAccel.
Net Revenues
The Company's revenues increased 19% in the third quarter of 1999 to
$5.5$3.5 million from $4.6 million in the third quarter of 1998. For the
nine months ending September 30, 1999, revenues increased 36% to 16.6
million from revenues of $12.1$4.4 million in the first nine monthsquarter
of 1998.1999. As a percent of revenue, licenses accounted for 76% and 84% for the first quarter of 2000 and 1999 respectively. The
decrease in revenue is due in large part to a shift in buying patterns from our Global 1000 customer base as they begin to move away
from traditional paper based applications in order to focus on e-commerce solutions.revenue growth from 1999 comparedservice revenues both in absolute and percentage terms was primarily attributable to 1998 is due
primarily to an increased customera larger installed base as well as add-on revenues from
our InputAccel product line.
of customers
purchasing annual software maintenance.increased 12% indecreased 17% for the thirdfirst quarter of 19992000 to $4.7$3.8 million from $4.2$4.5 million infor the thirdfirst quarter of 1998. For the nine
months ending September 30, 1999, gross profit increased 30%1999. Gross
margin decreased to $14.2
million82% from gross profit of $10.9 million in86% for the first nine monthsquarter of 1998.
The gross margin was 86%2000 and 91% for the third quarters of 1999, and
1998, respectively and was 86% and 90% for the nine months ended
September 30, 1999 and 1998, respectively. The decrease in gross margin percent for both periods is
largely due to the increased percentage of revenues derived from software maintenance and professional services, which have lower margins than
revenues from product licensing. The Company expects revenues from maintenance and services to continue to moderately increase as a
percentage of overall revenues.
SalesMarketing
SalesDevelopmentmarketingdevelopment expenses increased 34%42% to $2.8$1.7 million in the thirdfirst quarter of 19992000 from $2.1$1.2 million in the thirdfirst
quarter of 1998,
and1999. The increase is largely due to investments made for the nine-month period ended September 30, 1999,ActionPoint product line. Research and development increased 46% to
$8.0 million from $5.5 million for the first nine months of 1998. Sales
and marketing expenses
as a percentage of revenue were 51% and 45% for
the third quarter of 1999 and 1998, respectively and was 48% and 45% for
the nine months ended September 30,1999 and 1998, respectively.
The Company expects that sales and marketing expenses will increase in
the future as the Company continues to expand sales and marketing
programs, and specifically anticipates incremental expenses associated
with launching the DynamicInput product line.
Research and Development
Research and development expenses increased 35% to $1.3 million in
the third quarter of 199938% from $1.0 million in the third quarter of 1998
and for the nine month period ended September 30, 1999, increased 24% to
$3.8 million from $3.1 million23% for the first nine monthsquarter of 1998.
2000 compared to the first quarter of 1999.area, particularly for development efforts of the
recently announced DynamicInput product.area. As a result, quarterly
research and development expenses are likely to increase during the remainder of 19992000 and beyond.thirdfirst quarter of 1999
decreased2000 increased by 7%2% to $733,000$872,000 from $790,000$853,000 in the thirdfirst quarter of
1998,
and for the nine month period ended September 30, 1999, increased by 22%
to $2.3 million from $1.9 million for the first nine months of 1998.
The increase in the nine month period is primarily due to increased
staffing, various internal technology enhancements, and related costs
incurred to support the Company's revenue growth. 1999. decreasedincreased to 13%19% for the thirdfirst quarter of 1999, from 17% for the third quarter of 1998 and to 14%2000, from 16% for the
nine months ended September 30, 1999first quarter of 1999. The Company expects general and administrative expenses to increase in succeeding future periods.respectively.
Divestiture
As a result ofin conjunction with the sale of the display products division, the
Company recorded aCompany's hardware
division. of approximately $2.6 million for the period
ended September 30, 1998. This charge includes a loss from display
division operationscarryforward in the first quarter of 1998, net of2000 was offset by an increase to the valuation allowance. The tax
benefit, of
$361,000 and an estimated loss of $2.3 million, net of tax benefit, on
the sale of the net assets of the display division. All financial
statements have been restated to accountprovision for the display division as a
discontinued operation. As a result of the sale, the Company owns a
minority interest in Cornerstone Peripherals Technology, Inc., which is
reflected as an 'other asset' on the December 31, 1998 balance sheet.
Provision for Income Taxes
The provision for federal and state income taxes as a percentage of
pretax income from operations was 33% and 32% for the thirdfirst quarter of 1999 and 1998 respectively and was 34% and 31% for nine months ended
September 30, 1999 and 1998, respectively.
utilized a rate of 33%. September 30, 1999,March 31, 2000, the Company had cash and cash equivalents of $9.9$6.4 million, compared to $14.4$9.2 million at December 31, 1998.
1999.
inby operating activities was $130,000$3.0 million in the first ninethree months of 19992000 compared to net cash providedused by operating
activities of $9.2 million$454,000 in the first ninethree months of 1998.1999. The net
cash provided by operationsfunds were utilized to support increased expenses, primarily related
to the ActionPoint product family, and for the first nine months of 1998 was due
primarily to conversion to cash of various assets from the discontinued
display operation.
payments made under a stock-based incentive plan. $528,000$340,000 for the first ninethree months of
1999,2000, compared to $440,000$199,000 in the first ninethree months of 1998.
On February 14, 1997,1999. Company's Boardfirst three months of Directors authorized2000, primarily from the useproceeds of
upexercises of employee stock options. This compares to $5.0net cash used of $1.2 million to repurchasefor Company stock repurchased in the Company's common stock.
This amount was increased to $15.0 million on Sept 17, 1997, further
increased to $20 million on August 12, 1998, and to $25 million on
February 11,first
quarter of 1999. The repurchased stock is expected to be held by the
Company and may be used to meet the Company's obligations under its
stock plans and for other corporate purposes. Purchases will be made
from time-to-time on the open market or in privately negotiated
transactions. The timing and volume of purchases will be dependent upon
market conditions and other factors. The Company intends to use cash on
hand to fund its purchases. During the nine months ended September 30,
1999 the Company used $4.2 million to repurchase stock.
Limited Software Operating History; History of
The Company has operated its Software Division since June 1994.
Accordingly, the Company's prospects must be considered in light of the
risks and difficulties frequently encountered by companies in the early
stage of development, particularly companies in new and rapidly evolving
markets. To address these risks, the Company must, among other things,
respond to competitive developments, continue to attract, retain and
motivate qualified personnel and continue to improve its products. For
the past several years, the Company has been investing in its software
business and as a result, on a stand-alone basis, the Software Division
has not achieved operating profitability and has incurred operating
losses in each quarter from inception through the quarter ending June
30, 1997. As of September 30, 1999, the Company's software operations
had cumulative pre-tax operating losses of approximately $2.5 million.
operating losses have been due in part to the commitment
of significant resources to the Company's research and development and
sales and marketing departments. The Company expects to continue to
devote substantial resources to these areas and as a result will need to
achieve significant quarterly revenues to achieve profitability. In
particular, the Company intends to continue to hire additional sales and
research and development personnel in 1999 and beyond, which the Company
believes is required if the Company is to achieve significant revenue
growth in the future. Although the Company's software related revenues
generally have increased in recent periods, there can be no assurance
that the Company's revenues will grow in future periods, that they will
grow at past rates or that the Company will remain profitable on a
quarterly or annual basis in the future.
Operating Results Subject to Significant Fluctuations; Seasonality
The Company's quarterly revenues, expenses and operating results have varied significantly in the past and are likely to vary significantly in
the future due to a variety of factors, such as demand for the Company's products, the size and timing of significant orders, the
number, the delay or deferral of customer implementations, timing and significance of product enhancements and new product
announcements by the Company and its competitors, changes in pricing policies by the Company or its competitors, customer order
deferrals in anticipation of enhancements or new products offered by the Company or its competitors, the ability of the Company to
develop, introduce and market new and enhanced versions of its products on a timely basis, changes in the Company's level of operating expenses,
budgeting cycles of its customers, product life cycles, software defects and
other product quality problems, the Company's ability to attract and retain qualified personnel, success in expanding the direct
sales and customer support organizations, changes in the Company's sales incentive plans, changes in the mix of domestic and
international revenues, the level of international expansion, foreign currency exchange rate fluctuations, performance of indirect
channel partners, changes in the mix of indirect channels through which the Company's products are offered, the impact of
acquisitions of competitors and indirect channel partners, the publication of opinions concerning the Company, its products or
technology by industry analysts, changes in the Company's ability to control costslevel of operating expenses and general domestic and international economic
and political conditions.While theThe Company believes that,
adjusting for the negative in late 1999 impact caused by Year 2000 concerns, this pattern will continue in future years, uncertainities
in buying patterns caused by concerns related to Y2K will likely have a
negative adverse impact on revenues for the fourth quarter of 1999.continue. Based upon all of the
factors described above, the Company believes that its quarterly revenues, expenses and operating results are likely to vary
significantly in the future, that period-to-period comparisons of its operating results are not necessarily meaningful and that, in
any event, such comparisons should not be relied upon as indications of future performance. cancellationdelay or postponement of customer orders in anticipation of the introduction of such new products. In addition, current and
potential competitors have established or may establish cooperative relationships among themselves or with third-parties to increase
the ability of their products to address customer needs and which may limit the Company's ability to sell its products through
particular reseller partners. Accordingly, new competitors or alliances among current and new competitors may emerge and rapidly
gain significant market share. The Company also expects that competition will increase as a result of software industry
consolidation. Increased competition is likely to result in price reductions, fewer customer orders, reduced margins and loss of
market share, any of which could materially adversely affect the Company. There can be no assurance that the Company will be able to
compete successfully against current and future competitors or that the competitive pressures faced by the Company will not
materially adversely affect its business, operating results and financial condition. substantially allmost of the Company's revenues for 2000, as revenues from the foreseeable future.ActionPoint family of products not expected to start
contributing in the second half of 2000. The Company's future operating results are, therefore, heavily dependent upon continued
market acceptance of its InputAccel products and enhancements to these products. Consequently, asuch. A decline in the demand for InputAccel or lack of market acceptance of,for
the Company's InputAccelActionPoint products as a result of competition, technological change or other factors, would have a material adverse effect on
the Company's business, operating results and financial condition.Continued Growth of the MarketEmerging MarketsData Captureinteraction management and Document Management Applications
Although demand for documentdata capture software for document
management applications has grown in recent years, thisis fragmented, rapidly changing, and extremely
competitive. This market is still emerging and there can be no assurance that it will continue to grow or that organizations will
continue to adopt the Company's products. The Company has spent, and intends to continue to spend, considerable resources educating
potential customers about the Company's software products and the document processinginteraction management market generally. However, there can be no
assurance that such expenditures will enable the Company's new products to achieve any additional degree of market acceptance. The
rate at which organizations have adopted the Company's existing products has varied significantly and the Company expects to continue
to experience such variations in the future. There can be no assurance that the
markets for the Company's products will continue to develop or that the
Company's products will be accepted within such markets. If the markets for the Company's products fail to develop, or develop more slowly than
the Company currently anticipates, the Company's business, operating results and financial condition would be materially adversely
affected.document image processingits software, new products and
product enhancements can require long development and testing periods. As a result, significant delays in the general availability
of such new releases or significant problems in the installation or implementation of such new releases could have a material adverse
effect on the Company's business, operating results and financial condition. The Company has experienced delays in the past in the
release of new products and new product enhancements. There can be no assurance that the Company will be successful in developing and
marketing, on a timely and cost effective basis, new products or new product enhancements that respond to technological change,
evolving industry standards or customer requirements, that the Company will not experience difficulties that could delay or prevent
the successful development, introduction or marketing of these products or that the Company's new products and product enhancements
will achieve market acceptance.
Year 2000 Readiness Disclosure
The following information constitutes a "Year 2000 Readiness
Disclosure" for purposes of the Year 2000 Information and Readiness
Disclosure Act:
Many currently installed computer systems are not capable of
distinguishing 21st century dates from 20th century dates. As a result,
in less than one year, computer systems and/or software used by many
companies in a very wide variety of applications will experience
operating difficulties unless they are modified or upgraded to
adequately process information involving, related to or dependent upon
the century change. Significant uncertainty exists concerning the scope
and magnitude of problems associated with the century change.
The Company recognizes the need to ensure its operations will not
be adversely impacted by the Year 2000 problem. The Company's Year 2000
compliance effort has been led since mid-1998 by a committee headed by
its Vice Presidents of Operations and Product Strategy. The effort has
been focused on compliance of the Company's products and the Company's
critical business systems. Non-critical business systems will be
addressed if and when necessary, as the Company currently anticipates
minimal impact to operations and ready availability of replacement goods
or services in this category.
As more fully discussed below, the Company's products make only
limited use of date algorithms and generally are user configurable
and/or dependent on third-party products for date information. As a
result, it is impossible to make definitive statements concerning the
compliance of any particular system, but the Company believes that when
properly installed, its products can be configured in a compliant
manner.
As a software developer, the Company is dependent on relatively few
critical suppliers. These tend to be infrastructure vendors rather than
component vendors, most notably including building utilities,
telecommunications and internet service as well as third-party software
suppliers whose products are used for product development, internal
business processes and operating platforms for the Company's products.
Generally these suppliers are well established enterprises which have
provided assurances that they are or will be Year 2000 compliant
sufficiently before January 1 to avoid business disruptions, and the
Company anticipates no significant disruptions from these suppliers.
The Company's flagship product, InputAccel, is a modular,
configurable, enterprise software application that operates on a
Microsoft Windows platform and can export information to one or more
third-party software applications. The product's current revision (2.2)
has been subjected to code inspection testing for Year 2000 compliance
by the Company, and the Company offers no-charge test systems to
licensed end-users so that they may perform compliance testing in their
own environments. The Company warrants to new end-users that the
product is capable of compliant installation and that the Company will
take prompt action to address any Year 2000 defects that may be
encountered. However, due to the product's configurable nature and its
interdependence with third-party products, its warranty is of limited
scope in order to avoid liability for externally introduced Year 2000
problems. The Company is advising users of InputAccel revisions prior
to 2.2 to upgrade to the current revision to install a no charge
software patch that will eliminate potential Y2K issues in 2 specific
client modules.
Released versions of PixToolsr development toolkit products and the
PixViewTM image utility application do not represent, store or process
dates, and the Company believes that the Year 2000 compliance issue is
inapplicable to these products alone. It should be noted however, that
the toolkit algorithms are intended to be combined with other program
elements in the course of development, and toolkit users must exercise
care not to introduce Year 2000 problems with those program elements.
The Company's internal information technology systems are comprised
of certain hardware, including computers and telecommunications
equipment; software applications, including sales management,
accounting, electronic mail, word processing, spreadsheets and the
Windows operating system as well as software development platforms.
Nearly all of the above hardware and software applications are
commercially available products from major suppliers. Many of these
products have been subject to upgrade or replacement concurrent with the
Company's recent relocation or as a result of scheduled maintenance, for
which there have been no extraordinary costs.
Critical externally supplied products and services include
electricity, telecommunications, internet service, payroll and shipping.
Such products and services are generally supplied by major providers
which currently represent that they will have no significant Year 2000
problems. In the event any such third-parties cannot provide the
Company with products, services or systems that meet the Year 2000
requirements on a timely basis, or in the event Year 2000 issues prevent
such third-parties from timely delivery of products or services required
by the Company, the Company's results of operations could be materially
adversely affected.
The InputAccel customer base is comprised primarily of large public
and private enterprises which have devoted, or will devote in 1999,
significant efforts to Year 2000 compliance issues. While InputAccel
may enhance the overall efficiency of such a customer's operations, it
is nevertheless not likely to be a material factor in any customer's
Year 2000 compliance effort. To the extent that such customers' MIS
departments are occupied with Year 2000 issues, they may defer
enterprise software acquisitions that are not critical to the Year 2000
effort, such as InputAccel. Such acquisition deferrals could have a
material adverse effect on the Company's business, operating results,
and financial condition.
The Company is dependent on Microsoft products which serve as the
operating system for its products and as the development platform for
those same products. In addition, the Company uses Windows-based
computers and a number of Microsoft applications in the regular conduct
of its business. While the Company regards the possibility of a
significant Year 2000 problem in Microsoft's products to be remote, if
such a problem were to occur in any of the Microsoft products used by
the Company, it could impact the Company's operations or development
efforts negatively.
To date, the Company has made no extraordinary expenditures in its
effort to achieve Year 2000 compliance other than the labor costs
associated with compliance analysis. Replacement products have been
secured, where necessary, in conjunction with scheduled and budgeted
maintenance. Other costs for replacing software have been insignificant
as most are under maintenance contracts or under warranty. The Company
does not anticipate that any significant future expenditure will be
required to achieve compliance, and it believes that any such
expenditure will have no material bearing on the Company's financial
performance. Accordingly, the Company has not adopted any formal
contingency plan in the event its Year 2000 project is not completed in
a timely manner.
The Company believes that, as a comparatively small and centralized
business operation, its Year 2000 risks are identifiable, and it
believes that it is already substantially prepared for the Year 2000.
Nevertheless there can be no assurance that all risks have been
identified and will be cured or that no business disruptions will occur
due to Year 2000 problems within the Company or from outside the
Company. The above discussion of compliance efforts, risks and costs
contain forward-looking statements based on the Company's current best
estimates, which estimates are based on currently available information.
Such information may be subject to change, in which case compliance
efforts, risks and costs could vary materially from current estimates
which could have a material adverse affect on the Company's business,
operating results and financial condition.
Euro
On January 1, 1999, the "euro" was introduced. On that day, the
exchange ratios of the currencies of the eleven countries participating
in the first phase of the European Economic and Monetary Union were
fixed. The euro became a currency in its own right and the currencies of
the participating countries, while continuing to exist for a three-year
transition period, are now fixed denominations of the euro. The
conversion to the euro will have significant effects on the foreign
exchange markets and bond markets and is requiring significant changes
in the operations and systems within the European banking industry. Our
information system is designed to accommodate multi-currency
environments. As a result we have the flexibility to transact business
with vendors and customers in either euro or traditional national
currency units. For those countries where bank accounts were not
automatically translated into dual currency bank accounts, we maintain
separate euro accounts.
mustmay establish additional foreign operations, expand its
international sales channel management and support organizations, hire additional personnel, customize its products for local
markets, recruit additional international resellers and increase the productivity of existing international resellers. To the extent
that the Company is unable to do sothese things in a timely and cost-
effectivecost-effective manner, the Company's sales growth internationally, if
any, will be limited, and the Company's business, operating results and financial condition could be materially adversely affected.
Even if the Company is able to successfully expand its international operations there can be no assurance that the Company will be
able to maintain or increase international market demand for its products. - - - - -Registrantregistrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
\ INPUT SOFTWARE,
ACTIONPOINT, INC.
Dated: May 15, 2000
(Registrant) By:
/s/ JOHN FINEGAN
John Finegan
Chief Financial Officer
and Secretary
(Principal Financial and Accounting Officer)
------------------------------
Registrant
Date: November 15,1999 /s/ John Finegan
------------------------------
John Finegan
Chief Financial Officer
and Secretary
(Principal Financial and
Accounting Officer)
EXHIBITExhibit Description
- --------- ------------------------------------------------------------TO EXHIBITS
Exhibit Number Exhibit Title
11.1
Statement of Computation of Earnings per Share
27
Financial Data Schedule (electronic filing only)