- Record Professional Services
Revenue
- Annual profitability improves
significantly
- Conference call and webcast will
include merger update and presentation with the management of
Cover-All and Majesco
Cover-All Technologies Inc. (NYSE MKT: COVR) today announced
financial results for the quarter and year ended December 31,
2014.
“While total revenues were flat compared to last year’s record
revenues, profitability improved significantly to $0.4 million for
2014 from a net loss of $2.9 million last year,” said Manish Shah,
CEO and President of Cover-All. “Profitability would have been even
higher had it not been for $0.4 million of expenses we incurred
during the 2014 fourth quarter as a result of the proposed merger
with Majesco we announced on December 14, 2014. Improvements to
profitability and prudent cash management meaningfully improved our
liquidity and balance sheet, and at December 31, 2014 the Company’s
cash position increased nearly 150% to $4.6 million.
“We reported record professional services revenue in 2014 driven
by implementations of last year’s licensing sales. Throughout 2014,
we successfully completed several implementation phases and helped
five customers go live with their Cover-All products. Successful
and rapid implementations are critically important as we work on
achieving the next cycle of licensing sales. Strong demand for
professional services continues to increase as a result of ongoing
implementation projects, as well as the next rounds of recently
completed implementations at existing customers. We expect demand
for professional services to remain strong throughout 2015.
Cover-All’s ability to implement our software quickly and cost
effectively increases our value proposition to potential customers
and enhances our credibility within the industry.
“The other significant milestone of 2014 was the December 14
merger announcement with Majesco. This is a transformative
opportunity for Cover-All’s shareholders, employees and customers.
The merger should improve our competitiveness as there are a
limited amount of vendors in the marketplace today that will
compare to the combined company’s proven and comprehensive
solutions. We are excited about this opportunity, which accelerates
the creation of shareholder value through what we expect to be
faster and more consistent growth. Majesco is expected to file a
registration statement on Form S-4 on February 19, 2015 and we look
forward to providing more details on the proposed merger in our
conference call and webcast today.”
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31,
2014
Revenue
- Total revenues for the year ended
December 31, 2014 were $20.5 million, compared to $20.5 million in
2013.
- License revenue was $1.1 million in
2014, down 81% compared to $5.9 million in 2013.
- Support Services revenue (which
represents contracted continuing revenue) was $8.4 million in 2014,
compared to $8.1 million in 2013, an increase of 3%.
- Professional Services revenue was $11.0
million in 2014, up 71% compared to $6.4 million in 2013.
GAAP Profitability
- Operating income for the year ended
December 31, 2014 was $0.8 million compared to a loss of $2.4
million in 2013.
- Net income for the year ended December
31, 2014 was $0.4 million, or $0.01 per basic and diluted share,
compared to a net loss of $(2.9) million, or $(0.11) 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 year ended December 31, 2014 was $2.6 million, or $0.10 per
basic and diluted share, compared to $2.6 million, or $0.10 per
basic and diluted share, in the same period of 2013. Excluding
merger costs in 2014 and restructuring costs in 2013, EBITDA for
2014 would have been $3.0 million or $0.11 per basic and diluted
share, compared to $2.9 million, or $0.11 per diluted share in
2013.
- Net income, excluding non-recurring
acquisition and restructuring related costs, a non-GAAP metric, for
the year ended December 31, 2014 was $0.8 million, or $0.03 per
basic and diluted share, compared to a net loss of $(2.6) million,
or $(0.10) per basic and diluted share, in the same period of
2013.
Balance Sheet
- As of December 31, 2014, the Company
had $4.6 million in cash and cash equivalents and $2.5 million in
accounts receivable.
FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER ENDED DECEMBER
31, 2014
Revenue
- Total revenues for the three months
ended December 31, 2014 were $5.3 million, compared to $4.5 million
for the same period in 2013, an increase of 16%.
- License revenue for the fourth quarter
of 2014 was $34,000 compared to $599,000 for the same period in
2013.
- Support Services revenue (which
represents contracted continuing revenue) was $2.0 million for the
fourth quarter of 2014, down 5% compared to $2.1 million for the
same quarter last year.
- Professional Services revenue for the
fourth quarter of 2014 was $3.2 million, compared to $1.8 million
for the same quarter in 2013, an increase of 78%.
GAAP Profitability
- Operating loss for the three months
ended December 31, 2014 was $(0.5) million, compared to an
operating loss of $(1.3) million in the comparable period in
2013.
- Net loss for the three months ended
December 31, 2014 was $(0.6) million, or $(0.02) per basic and
diluted share, compared to a net loss of $(1.5) million, or $(0.06)
per basic and diluted share, in the same quarter of 2013.
Non-GAAP* Profitability
- EBITDA, a non-GAAP metric, was a loss
of $(32,000), or $0.00 per basic and diluted share, for the fourth
quarter of 2014, compared to a loss of $(65,720), or $0.00 per
basic and diluted share, for the fourth quarter of 2013.
- Net loss excluding non-recurring
acquisition and restructuring related costs, a non-GAAP metric, for
the three months ended December 31, 2014 was $(0.2) million, or
$(0.01) per basic and diluted share, compared to a net loss of
$(1.5) million, or $(0.06) per basic and diluted share, for the
same period in 2013.
WEBCAST, CONFERENCE CALL AND PRESENTATION INFORMATION
Management of Cover-All and Majesco will conduct a live
teleconference to discuss Cover-All’s 2014 financial results and
provide investors an update on the proposed merger at 4:30 p.m. EST
on Thursday, February 19, 2015. Anyone interested in participating
should call 888-397-5352 if calling from the U.S., or 719-457-2645
if dialing internationally. A replay will be available until March
5, 2015, which can be accessed by dialing 877-870-5176 within the
U.S. and 858-384-5517 if dialing internationally. Please use
passcode 9018125 to access the replay.
In addition, the call will be webcast and will be available on
the Company’s website at www.cover-all.com or by visiting
http://public.viavid.com/index.php?id=113019. During the webcast,
management will be using a presentation which is accessible using
the webcast link above. The presentation will also be available on
Cover-All’s website.
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
Company’s 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 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 Company’s control. Those and other risks are described
in the Company’s filings with the Securities and Exchange
Commission (“SEC”) over the last 12 months, including but not
limited to the Company’s 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 Company’s 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 Company’s 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.
Cover-All Technologies Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three months ended
December 31,
Year ended
December 31,
2014 2013 2014 2013
Revenues:
Licenses
$ 33,517 $ 598,903 $ 1,101,231 $ 5,947,225 Support Services
2,033,963 2,140,902 8,427,649 8,147,108 Professional Services
3,198,415 1,794,486 10,949,550
6,388,403
Total Revenues 5,265,895
4,534,291 20,478,430 20,482,736
Cost of Revenues: Licenses
—
80,363
—
147,670 Support Services 1,420,814 1,209,675 6,049,385 7,089,456
Professional Services 1,396,319 1,173,160
5,015,313 3,499,100
Total Cost of
Revenues 2,817,133 2,463,198
11,064,698 10,736,226
Direct Margin
2,448,762 2,071,093 9,413,732
9,746,510
Operating Expenses: Sales and Marketing
442,911 480,759 2,002,036 2,255,059 General and Administrative
1,376,891 1,060,218 3,603,553 2,618,543 Amortization of Capital
Software 372,638 1,186,659 1,490,552 4,646,443 Acquisition Costs
406,298
—
406,298
—
Restructuring Cost
—
—
—
319,014 Research and Development 327,844
681,587 1,130,070 2,315,198
Total
Operating Expenses 2,926,582 3,409,223
8,632,509 12,154,257
Operating
(Loss) Income (477,820 ) (1,338,130 )
781,223 (2,407,747 )
Other (Income) Expense: Interest
Expense 76,407 188,251 362,256 464,071 Interest Income
—
—
—
—
Other Income
—
—
—
(3,821 )
Total Other (Income) Expense 76,407
188,251 362,256 460,250
(Loss) Income Before Income Taxes (554,227 )
(1,526,381 ) 418,967 (2,867,997 )
Income Taxes
6,001 11,914 52,479
30,380
Net (Loss) Income $ (560,228 ) $ (1,538,295 )
$ 366,488 $ (2,898,377 )
Basic Earnings (Loss) Per Common
Share $ (0.02 ) $ (0.06 ) $ 0.01 $ (0.11 )
Diluted Earnings
(Loss) Per Common Share $ (0.02 ) $ (0.06 ) $ 0.01 $ (0.11 )
Weighted Average Number of Common Shares Outstanding for
Basic Earnings (Loss) Per Common Share 26,628,000
26,348,000 26,628,000 26,173,000
Weighted Average Number of Common Shares Outstanding for
Diluted Earnings (Loss) Per Common Share 26,628,000
26,348,000 26,628,000 26,173,000
Cover-All Technologies Inc. and
Subsidiaries CONSOLIDATED BALANCE SHEET
(UNAUDITED) December 31,
2014
December 31,
2013
Assets: Current Assets: Cash and Cash Equivalents $
4,564,595 $ 1,848,571
Accounts Receivable (Less Allowance for
Doubtful Accounts of $25,000)
2,532,853 2,604,489 Prepaid Expenses 361,930 491,905 Deferred Tax
Asset 864,037 850,500 Total Current
Assets 8,323,415 5,795,465 Property and
Equipment – Net 499,639 708,590
Goodwill 1,039,114 1,039,114
Capitalized Software (Less Accumulated Amortization of $23,795,743
and $22,305,191, Respectively) 6,474,031
7,964,583
Customer Lists/Relationships (Less
Accumulated Amortization of $402,000 and $341,333,
Respectively)
—
60,667 Deferred Tax Asset 2,661,391
2,674,928
Deferred Financing Costs (Net of
Amortization of $67,000 and $36,082, Respectively)
24,483 56,201 Other Assets
148,290 424,522 Total Assets $ 19,170,363
$ 18,724,070
Liabilities and Stockholders’
Equity: Current Liabilities: Accounts Payable $ 1,413,353 $
1,059,238 Accrued Expenses Payable 1,253,298 1,412,400 Deferred
Charges 183,219 231,051 Short-Term Debt 1,842,780
—
Current Portion of Capital Lease 119,608 114,640 Deferred Revenue
2,454,435 2,997,455 Total Current
Liabilities 7,266,693 5,814,784
Long-Term Liabilities: Long-Term Debt
—
1,639,109 Long-Term Portion of Capital Lease 233,531
353,139 Total Long Term Liabilities 233,531
1,992,248 Total Liabilities 7,500,224
7,807,032 Commitments and Contingencies
—
—
Stockholders’ Equity: Common Stock, $.01 Par Value,
Authorized 75,000,000 Shares;26,786,693 and 26,402,227 Shares
Issued and Outstanding in 2014 and 2013, Respectively 267,867
264,022 Paid-In Capital 33,057,142 32,674,374 Accumulated Deficit
(21,654,870 ) (22,021,358 ) Total Stockholders’
Equity 11,670,139 10,917,038 Total
Liabilities and Stockholders’ Equity $ 19,170,363 $
18,724,070
Cover-All Technologies
Inc. and Subsidiaries RECONCILIATION OF U.S. GAAP NET
(LOSS) INCOME TO EBITDA (UNAUDITED) Three
months ended
December 31,
Year ended
December 31,
2014 2013 2014 2013
Net (Loss) Income $ (560,228 ) $ (1,538,295 ) $ 366,488 $
(2,898,377 ) Interest Expense, Net 76,406 188,252 362,256
464,072 Income Tax Expense 6,001 11,913 52,479 30,379 Depreciation
49,317 63,218 229,540 251,853 Amortization 396,086
1,209,192 1,582,938 4,755,896
EBITDA $ (32,418 ) $ (65,720 ) $ 2,593,701 $ 2,603,823
EBITDA per Common Share: Basic $ (0.00 $ (0.00
) $ 0.10 $ 0.10 Diluted $ (0.00 $ (0.00 ) $ 0.10 $
0.10
RECONCILIATION OF SELECTED U.S.
GAAP MEASURES TO NON U.S. GAAP MEASURES (UNAUDITED)
Three months ended
December 31,
Year ended
December 31,
2014 2013 2014 2013
Net Income (Loss) (U.S. GAAP) $ (560,228 ) $ (1,538,295 ) $
366,488 $ (2,898,377 ) Acquisition Costs 406,298 — 406,298 —
Restructuring Costs — — —
319,014 Net Income (Loss) (Excluding Acquisition and
Restructuring Costs) (Non U.S. GAAP)
$
(153,930
)
$
(1,538,295
)
$
772,786
$
(2,579,363
)
Earnings (Loss) per Common Share (Excluding Acquisition and
Restructuring Costs): Basic $ (0.01 ) $ (0.06 ) $ 0.03 $ (0.10 )
Diluted $ (0.01 ) $ (0.06 ) $ 0.03 $ (0.10 )
Three
months ended
December 31,
Year ended
December 31,
2014 2013 2014 2013
EBITDA $ (32,418 ) $ (65,720 ) $ 2,593,701 $ 2,603,823
Acquisition Costs 406,298 — 406,298 — Restructuring Costs —
— — 319,014 EBITDA
(Excluding Acquisition and Restructuring Costs) $ 373,880 $
(65,720 ) $ 2,999,999 $ 2,922,837 EBITDA per Common Share
(Excluding Acquisition and Restructuring Costs): Basic $ 0.01
$ (0.00 ) $ 0.11 $ 0.11 Diluted $ 0.01 $ (0.00 ) $
0.11 $ 0.11
Corporate ContactCover-All Technologies Inc.Ann Massey,
973-461-5190Chief Financial
Officeramassey@cover-all.comorInvestor & Media ContactSM
Berger & CoAndrew Berger, 216-464-6400andrew@smberger.com
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