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Share Name | Share Symbol | Market | Type |
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AMEX:COVR | AMEX | Common Stock |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): | November 13, 2014 (November 13, 2014) |
COVER-ALL TECHNOLOGIES INC.
(Exact name of Registrant as Specified in its Charter)
Delaware | 1-09228 | 13-2698053 |
(State or Other Jurisdiction | (Commission | (IRS Employer |
of Incorporation) | File Number) | Identification No.) |
412 Mt. Kemble Avenue, Suite 110C, Morristown, New Jersey 07960
(Address of Principal Executive Offices)
Registrant's telephone number, including area code | (973) 461-5200 |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. | Results of Operations and Financial Condition. |
On November 13, 2014, Cover-All Technologies Inc. issued a press release announcing its financial results for the quarter ended September 30, 2014. A copy of the press release is attached hereto as Exhibit 99.1, which is incorporated herein by reference.
The information furnished in this section of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. | Financial Statements and Exhibits. | |
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| (d) | Exhibits. |
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| 99.1 | Press Release, dated November 13, 2014. |
[signature on following page]
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| COVER-ALL TECHNOLOGIES INC. | |
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Date: November 13, 2014 | By: | /s/ Ann F. Massey |
| Ann F. Massey, Chief Financial Officer |
Index to Exhibits
Exhibit No. | Description |
Exhibit 99.1 | Press Release, dated November 13, 2014. |
Exhibit 99.1
Cover-All Technologies Inc. 412 Mt. Kemble Avenue, Suite 110C Morristown, NJ 07960 Tel: 973.461.5200 | FOR IMMEDIATE RELEASE |
Cover-All Announces Third Quarter 2014 Results
•
33% Year-to-Date Growth in Services Revenues
•
Net Income Improves Significantly
•
Highest Cash Balance Since 2011
MORRISTOWN, NEW JERSEY (November 13, 2014) Cover-All Technologies Inc. (NYSE MKT: COVR) today announced financial results for the quarter ended September 30, 2014.
Professional and support services have exceeded our expectations and continue to positively influence revenues and earnings, said Manish Shah, CEO and President of Cover-All. The record demand from our services business is coming from implementations of last years license sales, as well as new IT services offerings and ongoing maintenance programs. Services revenues represented 93.0% of total sales and 84.7% of total gross margins in the 2014 nine month period, compared to 66.5% of total sales and 31.2% of total gross margins for the same period last year. We expect strong demand for professional and support services will continue for the remainder of 2014 and into 2015.
Mr. Shah continued, I am pleased with our teams ability to enhance the companys profitability. Cash and cash equivalents at September 30, 2014 was $4.1 million, an 18.5% increase over our cash balance at June 30 and represents the highest balance since 2011. The improvement to our balance sheet provides us flexibility to invest in growth producing initiatives, and enhances our competitiveness with potential customers. While we are not thrilled by the lack of license revenues so far in 2014, we are optimistic that we will benefit from new licensing agreements in the coming quarters.
Throughout the year, we have discussed the importance of mergers and acquisitions to enhance Cover-Alls competitiveness in the marketplace and accelerate our growth. We continue to actively examine potential corporate actions to increase shareholder value, including a potential transformative opportunity that we expect to know the outcome by the end of the year. We are encouraged by the progress we are making to profitably grow the business and create shareholder value, concluded Mr. Shah.
FINANCIAL HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
Revenue
·
Total revenues for the nine months ended September 30, 2014 were $15.2 million compared to $15.9 million for the same period in 2013.
·
License revenue for the nine months ended September 30, 2014 was $1.1 million compared to $5.3 million for the same period in 2013.
·
Support Services revenue (which represents contracted continuing revenue) was $6.4 million for the nine months ended September 30, 2014 compared to $6.0 million in the same period in 2013.
·
Professional Services revenue for the nine months ended September 30, 2014 was $7.8 million compared to $4.6 million for the same period in 2013.
GAAP Profitability
·
Operating income for the nine months ended September 30, 2014 was $1.3 million compared to a loss of $(1.1) million in the comparable period in 2013.
·
Net income for the nine months ended September 30, 2014 was $927,000, or $0.03 per basic and diluted share, compared to a loss of $(1.4) million, or $(0.05) per basic and diluted share, in the same period of 2013.
Non-GAAP* Profitability
·
Earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP metric, for the nine months ended September 30, 2014 was $2.6 million, or $0.10 per basic and diluted share, compared to $2.7 million, or $0.10 per basic and diluted share, in the same period of 2013.
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014
Revenue
·
Total revenues for the three months ended September 30, 2014 were $5.0 million compared to $5.1 million for the same period in 2013.
·
License revenue for the three months ended September 30, 2014 was $34,000 compared to $1.0 million for the same period in 2013.
·
Support Services revenue (which represents contracted continuing revenue) was $2.1 million for the three months ended September 30, 2014 compared to $2.0 million for the same quarter last year.
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Professional Services revenue for the three months ended September 30, 2014 was $2.8 million, compared to $2.0 million for the same quarter in 2013.
GAAP Profitability
·
Operating income for the three months ended September 30, 2014 was $301,000 compared to a loss of $(814,000) in the comparable period in 2013.
·
Net income for the three months ended September 30, 2014 was $165,000, or $0.01 per basic and diluted share, compared to a loss of $(916,000), or $(0.03) per basic and diluted share, in the same quarter of 2013.
Non-GAAP Profitability
·
EBITDA was $746,000, or $0.03 per basic and diluted share, for the three months ended September 30, 2014, compared to $456,000, or $0.02 per basic and diluted share, for the three months ended September 30, 2013.
Balance Sheet
·
As of September 30, 2014, the Company had $4.1 million in cash and cash equivalents and $1.6 million in accounts receivable.
WEBCAST AND CONFERENCE CALL INFORMATION
Management will conduct a live teleconference to discuss its 2014 third quarter financial results at 4:30 p.m. EDT on Thursday, November 13, 2014. Anyone interested in participating should call 1-888-461-2024 if calling from the United States, or 1-719-457-2083 if dialing internationally. A replay will be available until November 27, 2014, which can be accessed by dialing 1-877-870-5176 within the United States and 1-858-384-5517 if dialing internationally. Please use passcode 5808700 to access the replay.
In addition, the call will be webcast and will be available on the Companys website at www.cover-all.com or by visiting http://public.viavid.com/index.php?id=111790.
FORWARD-LOOKING STATEMENTS
Statements in this press release, other than statements of historical information, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks which may cause the Companys actual results in future periods to differ materially from expected results. Those risks include, among others, risks associated with increased competition, customer decisions, the successful completion of continuing development of new products, the successful negotiations, execution and implementation of anticipated new software contracts, the successful implementation of our acquisition
Page 2 of 6
strategies and our ability to complete or integrate acquisitions, the successful addition of personnel in the marketing and technical areas, our ability to complete development and sell and license our products at prices which result in sufficient revenues to realize profits and other business factors beyond the Companys control. Those and other risks are described in the Companys filings with the Securities and Exchange Commission (SEC) over the last 12 months, including but not limited to the Companys Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 28, 2014, copies of which are available from the SEC or may be obtained upon request from the Company.
*ABOUT NON-GAAP FINANCIAL MEASURES
In evaluating its business, Cover-All considers and uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. The Company presents EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.
The term EBITDA is not defined under U.S. generally accepted accounting principles (GAAP) and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. EBITDA has limitations as an analytical tool, and when assessing the Companys operating performance, investors should not consider EBITDA in isolation or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with GAAP. Among other things, EBITDA does not reflect the Companys actual cash expenditures. Other companies may calculate similar measures differently than Cover-All, limiting their usefulness as comparative tools. Cover-All compensates for these limitations by relying on its GAAP results and using EBITDA only supplementally.
ABOUT COVER-ALL TECHNOLOGIES INC.
Cover-All provides property and casualty insurance professionals a robust state-of-the-art, browser-based family of Policy, Business Intelligence, and Claims solutions designed to deliver products to market faster, enhance quality, ensure compliance, and reduce costs. With offices in Morristown, NJ and Honolulu, HI, Cover-All continues its tradition of developing technology solutions designed to revolutionize the way property and casualty insurance business is conducted.
Additional information is available online at www.cover-all.com.
Corporate Contact | Investor & Media Contact |
Ann Massey | SM Berger & Co |
Chief Financial Officer | Andrew Berger |
(973) 461-5190 | (216) 464-6400 |
amassey@cover-all.com | andrew@smberger.com |
Page 3 of 6
Cover-All Technologies Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Licenses | $ | 33,517 | $ | 1,028,474 | $ | 1,067,714 | $ | 5,348,322 | ||||||||
Support Services | 2,142,835 | 2,002,028 | 6,393,686 | 6,006,206 | ||||||||||||
Professional Services | 2,827,399 | 2,028,602 | 7,751,135 | 4,593,917 | ||||||||||||
Total Revenues | 5,003,751 | 5,059,104 | 15,212,535 | 15,948,445 | ||||||||||||
Cost of Revenues: | ||||||||||||||||
Licenses | — | 17,307 | — | 67,307 | ||||||||||||
Support Services | 1,479,127 | 1,565,818 | 4,628,570 | 5,879,782 | ||||||||||||
Professional Services | 1,297,932 | 883,174 | 3,618,994 | 2,325,940 | ||||||||||||
Total Cost of Revenues | 2,777,059 | 2,466,299 | 8,247,564 | 8,273,029 | ||||||||||||
Direct Margin | 2,226,692 | 2,592,805 | 6,964,971 | 7,675,416 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Sales and Marketing | 537,394 | 600,629 | 1,559,125 | 1,774,300 | ||||||||||||
General and Administrative | 737,168 | 492,364 | 2,226,662 | 1,558,325 | ||||||||||||
Reorganization Costs | — | 319,014 | — | 319,014 | ||||||||||||
Amortization of Capitalized Software | 372,638 | 1,186,659 | 1,117,914 | 3,459,783 | ||||||||||||
Research and Development | 278,637 | 807,856 | 802,226 | 1,633,611 | ||||||||||||
Total Operating Expenses | 1,925,837 | 3,406,522 | 5,705,927 | 8,745,033 | ||||||||||||
Operating Income (Loss) | 300,855 | (813,717 | ) | 1,259,044 | (1,069,617 | ) | ||||||||||
Other (Income) Expense: | ||||||||||||||||
Interest Expense | 96,907 | 92,397 | 285,850 | 275,820 | ||||||||||||
Interest Income | — | — | — | — | ||||||||||||
Other Income | — | — | — | (3,821 | ) | |||||||||||
Total Other (Income) Expense | 96,907 | 92,397 | 285,850 | 271,999 | ||||||||||||
Income (Loss) Before Income Taxes | 203,948 | (906,114 | ) | 973,194 | (1,341,616 | ) | ||||||||||
Income Taxes | 38,870 | 10,295 | 46,478 | 18,466 | ||||||||||||
Net Income (Loss) | $ | 165,078 | $ | (916,409 | ) | $ | 926,716 | $ | (1,360,082 | ) | ||||||
Basic Earnings (Loss) Per Common Share | $ | 0.01 | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | ||||||
Diluted Earnings (Loss) Per Common Share | $ | 0.01 | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | ||||||
Weighted Average Number of Common Shares Outstanding for Basic Earnings (Loss) Per Common Share | 26,638,000 | 26,286,000 | 26,607,000 | 26,114,000 | ||||||||||||
Weighted Average Number of Common Shares Outstanding for Diluted Earnings (Loss) Per Common Share | 26,638,000 | 26,286,000 | 26,607,000 | 26,114,000 |
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Cover-All Technologies Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 2014 | December 31, 2013 | |||||||
(Unaudited) | ||||||||
Assets: | ||||||||
Current Assets: | ||||||||
Cash and Cash Equivalents | $ | 4,134,793 | $ | 1,848,571 | ||||
Accounts Receivable (Less Allowance for Doubtful Accounts of $25,000) | 1,647,052 | 2,604,489 | ||||||
Prepaid Expenses | 550,215 | 491,905 | ||||||
Deferred Tax Asset | 850,500 | 850,500 | ||||||
Total Current Assets | 7,182,560 | 5,795,465 | ||||||
Property and Equipment – Net | 536,262 | 708,590 | ||||||
Goodwill | 1,039,114 | 1,039,114 | ||||||
Capitalized Software (Less Accumulated Amortization of $23,423,105 and $22,305,191 in 2014 and 2013, Respectively) | 6,846,669 | 7,964,583 | ||||||
Customer Lists/Relationships (Less Accumulated Amortization of $386,833 and $341,333 in 2014 and 2013, Respectively) | 15,167 | 60,667 | ||||||
Deferred Tax Asset | 2,674,928 | 2,674,928 | ||||||
Deferred Financing Costs (Net Amortization of $59,519 and $36,082 in 2014 and 2013, Respectively) | 32,764 | 56,201 | ||||||
Other Assets | 245,712 | 424,522 | ||||||
Total Assets | $ | 18,573,176 | $ | 18,724,070 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 1,221,968 | $ | 1,059,238 | ||||
Accrued Expenses | 648,720 | 1,412,400 | ||||||
Deferred Charges | 196,542 | 231,051 | ||||||
Short-Term Debt | 1,789,606 | — | ||||||
Current Portion of Capital Lease | 118,346 | 114,640 | ||||||
Unearned Revenue | 2,200,927 | 2,997,455 | ||||||
Total Current Liabilities | 6,176,109 | 5,814,784 | ||||||
Long Term Liabilities: | ||||||||
Long-Term Debt | — | 1,639,109 | ||||||
Long-Term Portion of Capital Lease | 263,911 | 353,139 | ||||||
Total Long-Term Liabilities | 263,911 | 1,992,248 | ||||||
Total Liabilities | 6,440,020 | 7,807,032 | ||||||
Commitments and Contingencies | — | — | ||||||
Stockholders’ Equity: | ||||||||
Common Stock, $.01 Par Value, Authorized 75,000,000 Shares; 26,638,477 and 26,402,227 Shares Issued and Outstanding in 2014 and 2013, Respectively | 266,385 | 264,022 | ||||||
Additional Paid-In Capital | 32,961,413 | 32,674,374 | ||||||
Accumulated Deficit | (21,094,642 | ) | (22,021,358 | ) | ||||
Total Stockholders’ Equity | 12,133,156 | 10,917,038 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 18,573,176 | $ | 18,724,070 |
Page 5 of 6
Exhibit 99.1
Cover-All Technologies Inc. 412 Mt. Kemble Avenue, Suite 110C Morristown, NJ 07960 Tel: 973.461.5200 | FOR IMMEDIATE RELEASE |
Cover-All Technologies Inc. and Subsidiaries
RECONCILIATION of GAAP NET INCOME to EBITDA
(UNAUDITED)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net Income (Loss) | $ | 165,078 | $ | (916,409 | ) | $ | 926,716 | $ | (1,360,082 | ) | ||||||
Interest Income (Expense), Net | 96,907 | 92,397 | 285,849 | 275,820 | ||||||||||||
Income Tax Expense | 38,870 | 10,295 | 46,478 | 18,466 | ||||||||||||
Depreciation | 48,965 | 60,399 | 180,223 | 188,635 | ||||||||||||
Amortization: | ||||||||||||||||
Amortization of Capitalized Software | 372,638 | 1,186,659 | 1,117,914 | 3,459,784 | ||||||||||||
Amortization of Customer Lists/Relationships | 15,167 | 15,167 | 45,501 | 66,074 | ||||||||||||
Amortization of Deferred Financing Costs | 8,042 | 7,153 | 23,437 | 20,846 | ||||||||||||
Total Amortization | 395,847 | 1,208,979 | 1,186,852 | 3,546,704 | ||||||||||||
EBITDA | $ | 745,667 | $ | 455,661 | $ | 2,626,118 | $ | 2,669,543 | ||||||||
EBITDA per Common Share: | ||||||||||||||||
Basic | $ | 0.03 | $ | 0.02 | $ | 0.10 | $ | 0.10 | ||||||||
Diluted | $ | 0.03 | $ | 0.02 | $ | 0.10 | $ | 0.10 |
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