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.

 

 

 

 

(d)

        Exhibits.

 

 

 

 

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.

 

 

 

 

 

 

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 year’s 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 team’s ability to enhance the company’s 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-All’s 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.

·

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 Company’s 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 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


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 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.

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 


Page 4 of 6



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