UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-26392
LEVEL 8 SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 11-2920559 |
(State or other jurisdiction of incorporation (I.R.S Employer Identification Number)
or organization)
214 Carnegie Center, Suite 303, Princeton, New Jersey 085401
(Address of principal executive offices) (Zip Code)
(609) 987-9001
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15d of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO _
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES _ NO X
Indicate the number of shares outstanding in each of the issuer’s classes of common stock, as of the latest practicable date.
25,256,790 shares of common stock, $.001 par value, were outstanding as of November 6, 2003.
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Level 8 Systems, Inc.
Index
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PART I. Financial Information |
Page Number |
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Item 1. Financial Statements |
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Consolidated balance sheets as of September 30, 2003 (unaudited) |
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and December 31, 2002............................................................................................................... | |
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Consolidated statements of operations for the three and nine months |
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ended September 30, 2003 and 2002 (unaudited).................................................................. | |
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Consolidated statements of cash flows for the nine months |
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ended September 30, 2003 and 2002 (unaudited)................................................................... | |
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Consolidated statements of comprehensive loss for the three and nine |
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months ended September 30, 2003 and 2002 (unaudited)..................................................... | |
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Notes to consolidated financial statements (unaudited)...................................................... | |
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Item 2. Management’s Discussion and Analysis of Financial Condition and |
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Results of Operations................................................................................................................. | |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk ............................................ | |
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Item 4. Controls and Procedures........................................................................................................... | |
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PART II. Other Information............................................................................................................................... | |
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SIGNATURES........................................................................................................................................................... | |
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Part I. Financial Information
Item 1. Financial Statements
LEVEL 8 SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
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September 30, 2003 |
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December 31, 2002 |
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ASSETS |
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Cash and cash equivalents |
$ 70 |
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$ 199 |
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Cash held in escrow |
775 |
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-- |
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Assets of operations to be abandoned |
220 |
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453 |
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Trade accounts receivable, net |
3 |
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1,291 |
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Receivable from related party |
-- |
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73 |
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Notes receivable |
-- |
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867 |
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Prepaid expenses and other current assets |
369 |
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731 |
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Total current assets |
1,437 |
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3,614 |
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Property and equipment, net |
67 |
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162 |
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Software product technology, net |
4,958 |
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7,996 |
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Other assets |
47 |
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80 |
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Total assets |
$ 6,509 |
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$ 11,852 |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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Short term debt. |
$ 2,570 |
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$ 2,893 |
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Accounts payable |
2,594 |
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3,537 |
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Accrued expenses: |
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Salaries, wages, and related items. |
317 |
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107 |
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Restructuring. |
-- |
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772 |
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Other |
1,509 |
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1,332 |
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Liabilities of operations to be abandoned |
610 |
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916 |
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Deferred revenue |
104 |
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311 |
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Total current liabilities |
7,704 |
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9,868 |
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Long term liability |
131 |
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-- |
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Warrant liability. |
466 |
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331 |
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Senior convertible redeemable preferred stock |
3,530 |
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-- |
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Stockholders' equity (deficit): |
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Preferred stock |
-- |
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-- |
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Common stock |
24 |
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19 |
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Additional paid-in-capital |
203,852 |
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202,916 |
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Accumulated other comprehensive loss |
(3) |
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(717) |
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Accumulated deficit |
(209,195) |
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(200,565) |
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Total stockholders' equity (deficit) |
(5,322) |
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1,653 |
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Total liabilities and stockholders' equity |
$ 6,509 |
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$ 11,852 |
The accompanying notes are an integral part of the consolidated financial statements.
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LEVEL 8 SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2003 |
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2002 |
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2003 |
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2002 |
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Revenue: |
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Software |
$ 9 |
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$ 324 |
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$ 88 |
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$ 440 |
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Maintenance |
80 |
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28 |
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247 |
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511 |
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Services |
24 |
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471 |
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98 |
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949 |
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Total operating revenue |
113 |
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823 |
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433 |
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1,900 |
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Cost of revenue: |
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Software |
1,553 |
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