Paul,
Hope this helps.
Brad
(BSNS WIRE) Heartsoft Reports Nine-month Results for FY 1998; Sees 50% I
Heartsoft Reports Nine-month Results for FY 1998; Sees 50% Increase in Revenues
for 4th Fiscal Quarter
Business Editors/High-Tech Writers
TULSA, Okla.--(BUSINESS WIRE)--March 12, 1999--Heartsoft, Inc.
(OTC BB:HTSF), publisher of educational software products for
children, reported today that net revenues for the 9 months ending
December 31, 1998, were $669,337 compared to $1,079,615 for the same
period one year ago.
The decrease in revenues was the result of the discontinuation of
the company's unprofitable Advanced Technologies division.
Further, the company also reported that sales of its educational
software products from its remaining core products division are
expected to increase at least 50% for the fourth quarter ending March
31, 1999, when compared to sales for the same period in 1998.
According to Heartsoft's Chairman & CEO, Benjamin P. Shell, "We
are glad to see the last effects of the closing of our Advanced
Technologies division in Dallas on the company's financial statement.
Now we can focus substantially all of our resources into accelerating
the growth of our marketing, sales, and distribution capabilities."
"We are also pleased that we have already begun to see a positive
effect on revenues as we have moved the company from a software
development focus to a marketing & sales focus. Our new products are
receiving very strong reception by educators in the U.S. and
international distribution opportunities are in the works with over a
dozen foreign distributors. With the popularity of our new critical
thinking skills product, Thinkology(R), and the introduction of
additional products during 1999 and 2000, we are in an excellent
position to see significant growths in both revenues and net income
this year," said Shell.
Net income decreased to $5,074 for the 9 months ending December
31, 1998, from $184,742 for the same period in 1997. The decrease in
net income is also correlated to the costs associated with phasing out
the discontinued Advanced Technologies division as well as costs
associated with the expansion of the company's internal sales
organization.
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Heartsoft, Inc.
Quarterly Report Ending December 31, 1998.
Select Financial Data
*T
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
This report contains forward-looking statements. These
forward-looking statements can generally be identified as such because
the context of the statement will include words such as the Company
"believes", "plans", "intends", "anticipates", "expects", or words of
similar import. Similarly, statements that describe the Company's
future plans, objectives, estimates, or goals are also forward-looking
statements. Such statements address future events and conditions
concerning capital expenditures, earnings, litigation, liquidity,
capital resources, and accounting matters. Actual results in each case
could differ materially from those currently anticipated in such
statements by reason of factors such as economic conditions, including
changes in customer demands; future legislative, regulatory and
competitive developments in markets in which the Company operates; and
other circumstances affecting anticipated revenues and costs.
RESULTS OF OPERATIONS
Net Sales, derived from the combination of three revenue sources
during fiscal 1997 and only two revenue sources during 1998, declined
to $669,000 for the 9 months ending December 31, 1998, when compared
to $1,080,000 for the same period one year ago. The decrease in Net
Sales is fully attributed to the elimination of revenue from the
company's unprofitable Advanced Technologies Division, which was
completely phased out during the fourth quarter of fiscal 1997, and a
67% reduction of the one-time revenues derived from international
product licensing.
Prior to December 31, 1998, the principle focus of the company
was on the development of the company's educational software product
lines with only minimal focus placed on product sales. During
November, 1998, the company completed all software development
projects and shifted its focus to the building of its marketing,
sales, and distribution forces.
The company anticipates that results from these efforts will
begin to have a positive affect on the company's revenues during the
fourth quarter, ending March 31, 1999, continuing with a much larger,
material affect on its revenue growth during the first quarter of
fiscal 1999, ending June 30, 1999.
COST OF GOODS SOLD
Cost of Goods sold decreased by 46% as a result of the shutdown
of the unprofitable Advanced Technologies Division which generated its
revenues through the sale of 3rd party products. Sale of these 3rd
party products by the discontinued division greatly increased the
company's cost of goods since the products were purchased from
publishers and sold to end-users resulting in much smaller margins. In
the future, the company anticipates the cost of goods sold will remain
approximately 10 to 12% of net sales.
RESTRUCTURING AND OFFICE CLOSURE
Prior to December 31, 1998, the principle focus of the company
was on the development of the company's educational software product
lines with only minimal focus placed on product sales. During
November, 1998, the company completed all software development
projects and shifted its focus to the building of its marketing,
sales, and distribution forces.
Also, during the fourth quarter of fiscal 1997, the company
eliminated its Advanced Technologies division in Dallas, Texas, and
shifted all of its available resources to its sole remaining core
products division in Tulsa, Oklahoma.
Certain on-going expenses related to the closing of the Advanced
Technologies Division were carried into 1998 and had a minor impact on
Operating Expenses
OPERATING EXPENSES
Operating Expenses decreased slightly for the 9 months ended
December 31, 1998, to $571,000 compared to $658,000 for the period
ending December 31, 1997. The decrease can be attributed to
streamlining of the company's software development group and to
cost-saving measures implemented across the board.
NET INCOME
Net income decreased to $5,100 for the 9 months ending December
31, 1998, down from $184,700 for the same period one year ago. The
decrease is the result of the elimination of revenues from the
company's Advanced Technologies division as well as the one-time
charges associated with the division's closing.
Additionally, the company's remaining core products division
significantly increased expenses associated with the establishment of
its new inside sales organization during the quarter ending December
31, 1998.
SALES AND MARKETING
The Company's sales and marketing efforts are comprised primarily
of compensation for the Company's sales and marketing personnel,
advertising, trade shows and other promotional costs.
For the foreseeable future it is the intention of the company to
increase its market share within the school, home, and home-school
market with its current product line and to expand or add to its
product lines whenever it believes favorable market conditions exist.
Recent endorsements by third party reviews of the company's new
critical thinking skills product, Thinkology(R), have caused the
company to accelerate the growth of its marketing and sales strategy.
As a result, the company began to significantly increase staffing of
its inside sales group in November, 1998, and continuing into 1999.
The company believes that results from this expansion will begin
to have a positive impact on revenues during its fourth fiscal quarter
and will have a significant impact on revenues during the first
quarter of fiscal 1999.
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Heartsoft, Inc.
Select Financial Data
10Q Report for December 31, 1998
Balance Sheet
(unaudited)
Dec. 31, 1998 Sep. 30, 1998
============= =============
ASSETS
Cash & Cash Equivalents $ 397,030 365,568
Inventory 21,353 18,744
Prepaid Expenses and Deposits 198,294 174,383
------------- -------------
Total Current Assets $ 616,676 558,695
Fixed Assets-Net 123,585 123,585
Developed Software 891,197 857,658
Deferred income tax benefit 138,926 138,926
------------- -------------
Total Other Assets $ 1,153,708 1,120,169
------------- -------------
Total Assets $ 1,770,385 1,678,864
============= =============
LIABILITIES
Accounts Payable - Trade $ 256,904 221,254
Notes Payable-current portion 22,626 22,626
Lease obligations-current portion 54,900 54,900
Taxes Payable 65,394 65,394
------------- -------------
Total Current Liabilities $ 399,824 $ 364,174
Long Term Liabilities 244,244 188,976
------------- -------------
Total Liabilities $ 644,068 $ 553,150
STOCKHOLDERS EQUITY
Retained Earnings (1,749,946) (1,749,946)
Common Stock 3,723 3,723
Preferred Stock 11,380 11,380
Paid-In Capital 2,867,466 2,838,586
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