10-Q/A 1 a10-qa.txt 10-Q/A ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark one) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000. [ ] 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 00024865 NEWGEN RESULTS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 33-0604378 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 12680 HIGH BLUFF DRIVE, SUITE 300 SAN DIEGO, CALIFORNIA 92130 (Address of principal executive offices) (858) 481-7545 (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 15(d) 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 / / As of August 8, 2000, there were 10,528,704 shares of the Registrant's Common Stock outstanding. ================================================================================ NEWGEN RESULTS CORPORATION FORM 10-Q INDEX

2. PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS NEWGEN RESULTS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these financial statements. 3. NEWGEN RESULTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

The accompanying notes are an integral part of these financial statements. 4. NEWGEN RESULTS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

The accompanying notes are an integral part of these financial statements. 5. NEWGEN RESULTS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated interim financial statements included herein have been prepared by Newgen Results Corporation and subsidiaries (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission") for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three and six month periods ended June 30, 2000, are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999. In the opinion of management, these interim consolidated financial statements contain all adjustments (consisting of normal recurring entries) which are necessary for a fair and accurate presentation of financial position at June 30, 2000, and the results of operations and cash flows for the three and six month periods ended June 30, 2000 and 1999. Certain reclassification have been made to prior consolidated financial statements to conform with current presentations. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. INVESTMENTS Investments are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES, which requires that the Company determine the appropriate classification of investments at the time of purchase and reevaluate such designation as of each balance sheet date. At June 30, 2000, the Company considered all investments as available for use in its current operations, and therefore classified them short-term, available-for-sale investments. Available-for-sale investments are stated at fair value, with unrealized gains and losses, if any, net of tax, reported as a separate component of stockholders' equity. The cost of securities sold is based on the specific identification method. There were no realized gains or losses for the three and six months ended June 30, 2000. 6. At June 30, 2000, cash, cash equivalents and short-term investments available-for-sale consisted of the following (unaudited):

Investments in government securities as of June 30, 2000, in the amount of $1,495,350 are scheduled to mature within one year. 3. COMPUTATION OF BASIC AND DILUTED NET INCOME PER SHARE Net income per share has been calculated under Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE. This statement requires companies to compute earnings per share under two different methods (basic and diluted). Basic earnings per share are based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are based on the weighted average number of shares of common stock and potentially dilutive securities (options and warrants) outstanding during the period, computed using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share for the periods indicated.

7. 4. SEGMENT INFORMATION The Company's revenues are substantially derived from two service segments: database marketing and consulting operations. The database marketing segment provides outsourced database management, direct marketing and related customer retention services for the service department of automobile dealerships and manufacturers. The consulting segment develops and implements new techniques and programs that enable automobile dealerships to grow their business, streamline inefficient processes and more effectively market their services, and includes the services offered by Newgen Management Services, Inc., a wholly-owned subsidiary of the Company. The following tables summarize segment information for the three and six months ended June 30, 2000 and 1999.

The following table reconciles the Company's reportable segments' gross profit to consolidated net income for the periods presented:

8. 5. COMPREHENSIVE INCOME Comprehensive income for the three and six months ended June 30, 2000 and 1999 consisted of:

6. SOFTWARE DEVELOPMENT COSTS In accordance with the adoption of the American Institute of Certified Public Accountants' ("AICPA") Statement of Position 98-1, ACCOUNTING FOR THE COST OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE, the Company capitalized $1,088,000 and $2,094,000 for the three and six months ended June 30, 2000, respectively, and is included in Other Assets in the accompanying consolidated balance sheets. 7. RECENT ACCOUNTING PRONOUNCEMENTS In December 1999, the Commission issued Staff Accounting Bulletin ("SAB") No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS. This SAB summarizes the Commission's view in applying generally accepted accounting principles to revenue recognition in financial statements. This SAB was amended by SAB 101B, which defers the effective date for all registrants with fiscal years that begin after December 15, 1999 to allow for the option of implementing no later than the fourth quarter of fiscal 2000. Management is currently determining the impact of SAB No. 101 and does not believe that its adoption will have a material impact on the Company's consolidated financial statements. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This Statement was amended by SFAS No. 137 which defers the effective date to all fiscal quarters of fiscal years beginning after June 15, 2000. The adoption of SFAS 133 is not expected to have a material effect on the Company's financial position or results of operations. 8. NOTES RECEIVABLE FROM STOCKHOLDERS The Company received notes from two executive officers in the aggregate amount of $140,000 as payment for stock options exercised. The following table describes the terms of these notes:

In August 2000, the Company received additional notes from Gerald Benowitz in the aggregate amount of approximately $2,728,000 for payment of stock options exercised. 9. OTHER INCOME In June 2000, the Company recorded a gain of $1,000,000 related to the settlement of a vendor dispute in Other Income. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations of Newgen Results Corporation and subsidiaries (the "Company") should be read in conjunction with the consolidated unaudited financial statements and the related notes thereto included elsewhere in this Form 10-Q and the audited consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 1999 included in the Company's Form 10-K. Certain statements set forth below constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties, and other factors including, but not limited to, those discussed herein and in the Form 10-K for the year ended December 31, 1999, that may cause the actual results, performance or achievements of the Company, or industry results to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update information contained in any forward-looking statement. OVERVIEW The Company provides customized, outsourced database management, direct marketing and related services for service departments of automobile dealerships and for automobile manufacturers. The Company has expertise both in database marketing and customer retention services, as well as an in-depth knowledge of automobile service department operations. The Company generates revenue from database marketing services and consulting services. Revenues from database marketing services are derived primarily from customer retention services, including the RESULTS program. Database marketing services comprised 97% and 88% of total revenues for the three and six months ended June 30, 2000 and 1999, respectively. Revenues from consulting services were derived from consulting services provided to Ford Motor Company and its dealerships and services provided to automobile dealerships' service and parts departments by Newgen Management Services, Inc., a wholly-owned subsidiary of the Company. Consulting services comprised 3% and 12% of total revenues for the three and six months ended June 30, 2000 and 1999, respectively. Database marketing services revenues consist of revenues from the RESULTS program as well as ancillary products and services. Revenues for the RESULTS program are based on the 10. number of active names in a dealership's database, typically a fixed number determined by the dealership. For customers acquired in connection with the acquisition of Computer Care in November 1999, who are not on the RESULTS program, revenues are based on the number of service reminder letters and follow-up phone calls performed on behalf of the dealer. For services provided under the RESULTS program, the Company invoices each of the dealers on a monthly basis in advance. For services provided under the former Computer Care program, dealers are invoiced at the end of the month. Consulting revenues from Newgen Management Services, Inc. are based on installation fees, fixed monthly fees and profit sharing. All other consulting revenues are based principally on a per diem rate for the services provided. The Company is also reimbursed for travel expenses and associated costs it incurs in providing consulting services, which are included as revenues. The Company recognizes all of its revenues in the month during which it performs the related database marketing or consulting services. The Company derives a significant portion of its revenues from Ford and Ford dealerships. Although each Ford dealership utilizing the Company's database marketing services enters into a separate contract with the Company, collection of receivables from Ford dealerships is primarily centralized through Ford's accounting department. The Company's current consulting engagement with Ford relating to the implementation of the Around The Wheel program for certain Ford dealers has been completed. Ford has extended certain maintenance aspects of the project through the end of August 2000. The Company is currently negotiating an extension through December 2000. Consulting revenue is expected to decrease as a result of the completion of the Around The Wheel contract. The Company is not currently seeking a commitment from Ford for new consulting engagements beyond the completion of the Around The Wheel project, except for services provided by Newgen Management Services, Inc. A significant amount of the Company's database marketing services are attributable to Ford dealerships. Sales of RESULTS program to Ford dealerships represented 39% and 54% of total revenues for the three months ended June 30, 2000 and 1999, respectively, and 39% and 55% for the six months ended June 30, 2000 and 1999, respectively. The Company also continues to provide data mining services to Ford Motor Company. Services provided under this agreement have begun to diminish as the project nears completion, which is expected in fourth quarter of 2000. One hundred percent of consulting services were provided to Ford during the three and six months ended June 30, 2000. Cost of revenues consist of database marketing services costs, consulting costs and installation costs. Costs of database marketing services include the printing and mailing of letters, as well as the costs of the teleservice contacts of dealership customers. The costs of database marketing services also include all costs of managing and purifying the dealership databases, as well as the costs associated with maintaining the Company's customer service department. Costs of consulting include the direct costs of consulting personnel, as well as the cost of any independent consultants subcontracted by the Company. Costs of consulting also include costs of travel and associated costs incurred by the Company's Consulting Division. Installation costs include the direct costs (excluding sales commissions) of implementing the Company's program at dealerships and the costs of the initial download, setup and purification of the dealership's customer database. These costs are expensed as incurred and represent a one-time charge for each new dealership added to the Company's customer base. As a result, these costs are expected to decrease as a percentage of total revenues as database marketing services revenues increase, unless the Company installs a greater number of dealerships than in the past. Installation costs are presented as a separate line item to illustrate investment in implementing new dealerships. For the purposes of calculating the gross profit associated with database marketing services in Management's Discussion and Analysis of Financial Condition and Results of Operations, installation costs are added to cost of database marketing services. 11. Operating costs consist of fixed costs, such as selling, general and administrative and technology and product development costs. The Company anticipates that operating costs will increase as it develops and introduces new services, such as Carabunga.com, and increases its customer base. Historically, the Company has been able to leverage operating costs over a growing revenue base, and to the extent that the business continues to grow, the Company expects that operating costs as a percentage of total revenues will continue to decline even though they are expected to increase in absolute dollars. However, because the Company is generally unable to significantly reduce costs in the short term to compensate for any unexpected revenue shortfall, any such shortfall would have an immediate adverse effect on the business, results of operations and financial condition. Selling costs include costs of internal sales department, as well as commissions earned and certain expenses incurred by sales representatives. Likewise, any short-term increase in expenses would likely have an immediate adverse effect on the business, results of operations and financial condition of the Company, unless the Company was able to also increase revenues in the short term. General and administrative costs include accounting, payroll and human resources functions. General and administrative costs also include other non-allocated costs, such as professional fees and general corporate services. Technology and product development costs include the cost of personnel who maintain the Company's information systems and conduct research and product development activities. As of December 31, 1999, the Company had net operating loss carryforwards for federal reporting purposes of approximately $2.5 million. These net operating loss carryforwards expire in various years beginning in 2009, unless previously utilized. The net deferred tax asset recorded on the balance sheet at June 30, 2000 was $747,000 and is expected to be fully utilized during 2000. Utilization of the Company's net operating loss carryforwards may be limited as a result of certain changes in the Company's ownership. On November 30, 1999, the Company acquired Computer Care, a division of the Dealer Services Group of Automatic Data Processing, Inc. ("ADP"). Under the terms of the agreement, the Company paid approximately $11.0 million in cash at closing, and may pay up to an additional $9.0 million in cash dependent on certain earn-out criteria, which would be payable in the first quarter of 2001 and reflected as an increase in goodwill. The Company acquired a business that services over 2,000 dealerships. These include approximately 1,100 manufacturer accounts and 1,100 individual dealerships to whom the Company will be providing database marketing services. The acquisition was accounted for using the purchase method of accounting. The operations of Computer Care are included in the Company's results of operations and financial position subsequent to the date of acquisition. Acquisition goodwill of $12.0 million is being amortized on a straight-line basis over nine years. In February 2000, the Company incorporated a wholly-owned subsidiary called Carabunga.com, Inc. Carabunga.com utilizes the Internet as a marketing tool for dealerships. It is intended to be a dealership portal for one-to-one marketing programs for the automotive industry. Live operations on the Internet site began on June 26, 2000. The Internet site showcases the following three value-added products for dealers and manufacturers: - E-PROMOTIONS will identify service customers who are ready to purchase another vehicle and create an on-line program of specialty letters and telephone follow-up calls. - E-COUPONS will provide an electronic format for the delivery of coupons that offer discounted services. 12. - ROAD will provide an electronic format that will enable dealerships and manufacturers to analyze their customer database to better understand potential opportunities, perform data visualization and mapping techniques, and consequently generate lists of customers who are ready to buy another vehicle. THREE MONTHS ENDED JUNE 30, 2000 AND 1999 REVENUES. Revenues from database marketing services increased by $7.4 million, or 62%, to $19.4 million in the quarter ended June 30, 2000 from $12.0 million in the quarter ended June 30, 1999. The increase in database marketing services revenues was due primarily to a net increase of approximately 1,260 RESULTS program customers and the new customers associated with the acquisition of Computer Care in November 1999, and reductions in certain customer discounts and credits. Revenues from consulting services decreased by $989,000, or 61%, to $640,000 in the quarter ended June 30, 2000 from $1.6 million in the quarter ended June 30, 1999. The decrease in consulting services revenues was due primarily to the completion of the implementation of the Around The Wheel consulting project in almost all of the target dealerships. GROSS PROFIT. Gross profit from database marketing services increased by $4.3 million, or 81%, to $9.5 million in the quarter ended June 30, 2000 from $5.2 million in the quarter ended June 30, 1999. As a percentage of database marketing services revenues, database marketing services gross profit was approximately 49% in the quarter ended June 30, 2000 and 44% in the quarter ended June 30, 1999. The increase reflects the reorganization and rationalization of the Company's field customer satisfaction department, previously recorded in cost of revenues. The former field customer satisfaction representative's main purpose was to service existing accounts. Modifying the Company's sales methodology allowed the sales representatives the ability to service accounts while selling new products to existing dealers, in addition to selling new accounts. Contributing to the increase in gross profit was the recognition of $395,000 of revenue previously deferred relating to data mining services. Some cost efficiency was also obtained through upgrading the Company's technical infrastructure. Gross profit from consulting services decreased by $457,000, or 179%, to a gross loss of $202,000 for the quarter ended June 30, 2000 from a gross profit of $255,000 for the quarter ended June 30, 1999. This decrease was due primarily to the completion of the Around The Wheel consulting project and due to lower utilization of consulting personnel. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative costs increased by $1.7 million, or 49%, to $5.1 million for the quarter ended June 30, 2000 from $3.4 million for the quarter ended June 30, 1999. The dollar increase was due primarily to continued growth of the marketing department, the addition of administrative personnel and the reorganization of the sales department. As a percentage of revenues, selling, general and administrative costs were 25% for the quarters ended June 30, 2000 and 1999. TECHNOLOGY AND PRODUCT DEVELOPMENT. Technology and product development costs increased by $120,000, or 12%, to $1.1 million for the quarter ended June 30, 2000 from $1.0 million for the quarter ended June 30, 1999. The increase was due primarily to the Company's decision to invest heavily in new service development and the difficulty of attracting qualified full-time employees. As a result, the Company was required to pay higher salaries and utilize higher cost contractors. As a percentage of total revenues, technology and product development costs decreased to 6% for the quarter ended June 30, 2000 from 8% for the quarter ended June 30, 1999. During the quarter ended June 30, 2000, the Company capitalized $1,088,000 of costs associated with software developed for internal use in accordance with the American Institute of Certified Public Accountants Statement of Position 98-1, ACCOUNTING FOR THE COST OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE. 13. AMORTIZATION OF GOODWILL AND ACQUISITION-RELATED COSTS. As a result of the Company's acquisition of Computer Care in November 1999, for the quarter ended June 30, 2000, the Company recognized $588,000 of amortization of goodwill and various acquisition-related costs. OTHER INCOME (EXPENSE), NET. Net other income increased by $1.1 million to $1.2 million for the quarter ended June 30, 2000 from net other income of $75,000 for the quarter ended June 30, 1999. This increase was due primarily to a gain of $1.0 million related to the settlement of a vendor dispute. SIX MONTHS ENDED JUNE 30, 2000 AND 1999 REVENUES. Revenues from database marketing services increased by $16.2 million, or 72%, to $38.7 million in the six months ended June 30, 2000 from $22.5 million in the six months ended June 30, 1999. The increase in database marketing services revenues was due primarily to a net increase of approximately 1,260 RESULTS program customers including the new customers associated with the acquisition of Computer Care in November 1999, and reductions in certain customer discounts and credits. Revenues from consulting services decreased by $2.0 million, or 64%, to $1.1 million in the six months ended June 30, 2000 from $3.2 million in the six months ended June 30, 1999. The decrease in consulting services revenues was due primarily to the fact that the Company has completed its implementation of the Around The Wheel consulting project in almost all of the Company's target dealerships. GROSS PROFIT. Gross profit from database marketing services increased by $7.7 million, or 83%, to $16.9 million in the six months ended June 30, 2000 from $9.2 million in the six months ended June 30, 1999. As a percentage of database marketing services revenues, database marketing services gross profit increased to 44% in the six months ended June 30, 2000 from 41% for the six months ended June 30, 1999. The increase reflects the reorganization and rationalization of the Company's field customer satisfaction department, previously recorded in cost of revenues. The former field customer satisfaction representative's main purpose was to service existing accounts. Modifying the Company's sales methodology allowed the sales representatives the ability to service accounts while selling new products to existing dealers, in addition to selling new accounts. Some cost efficiency was also obtained through upgrading the Company's technical infrastructure. Gross profit from consulting services decreased by $769,000, or 172%, to a gross loss of $322,000 in the six months ended June 30, 2000 from a gross profit of $447,000 in the six months ended June 30, 1999. This decrease was due primarily to the fact that the Around The Wheel project was in its concluding stages, resulting in less than full utilization of the Company's consultants. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative costs increased by $3.5 million, or 56%, to $9.9 million for the six months ended June 30, 2000 from $6.3 million in the six months ended June 30, 1999. The increase was due primarily to higher commissions associated with the selling of longer-term contracts for new dealerships. To a lesser extent, the increase was due to continued growth of the marketing department, the addition of administrative personnel and the reorganization of the sales department. As a percentage of total revenues, selling, general and administrative costs were 25% for the six months ended June 30, 2000 and 1999. TECHNOLOGY AND PRODUCT DEVELOPMENT. Technology and product development costs increased by $550,000, or 33%, to $2.2 million in the six months ended June 30, 2000 from $1.7 million in the six months ended June 30, 1999. The increase was due primarily to the Company's decision to invest heavily in new service development and the difficulty of attracting qualified full-time employees. As a result, the Company was required to pay higher salaries and utilize higher cost contractors. As a percentage of total revenues, technology and product 14. development costs were 6% for the six months ended June 30, 2000 and 1999. For the six months ended June 30, 2000, the Company capitalized $2,094,000 of the cost associated with software developed for internal use in accordance with Statement of Position 98-1. AMORTIZATION OF GOODWILL AND ACQUISITION-RELATED COSTS. As a result of the Company's acquisition of Computer Care in November 1999, for the six months ended June 30, 2000, the Company recognized $1,069,000 of amortization of goodwill and various acquisition-related costs. OTHER INCOME (EXPENSE), NET. Net other income increased by $1.5 million to $1.4 million in the six months ended June 30, 2000 from net other expense of $30,000 for the six months ended June 30, 1999. This increase was due primarily to a gain of $1.0 million related to the settlement of a vendor dispute, which was recorded in Other Income during the second quarter 2000. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities was $2,843,000 and $5,018,000 for the six months ended June 30, 2000 and 1999, respectively. The decrease in cash provided by operating activities was primarily due to the timing of the collection of accounts receivable in the six months ended June 30, 2000 compared to the same period in 1999. Cash provided by (used in) investing activities was $10,023,000 and $(9,867,000) in the six months ended June 30, 2000 and 1999, respectively. The increase in cash provided by investing activities was primarily due to the maturity of short-term investments. Cash provided by financing activities was $316,000 and $30,902,000 in the six months ended June 30, 2000 and 1999, respectively. The decrease in cash provided by financing activities is due to the Company's completion of its initial public offering in May 1999, which resulted in net proceeds of approximately $32,100,000. The Company has a working capital line of credit with Silicon Valley Bank ("SVB") that is secured by substantially all of its assets. The total available amount of the line of credit is $7.0 million, including a $3.3 million sub-limit for securing letters of credit. Borrowings under this credit facility bear interest at SVB prime rate (9.5% at June 30, 2000), plus 0.5% with a maturity date of May 9, 2001. As of June 30, 2000, there are no borrowings outstanding under this line of credit. The Company has a $2,790,000 letter of credit, which expires on March 31, 2001, to secure the facility lease obligation for the Company's future facility. In addition, an amount of $113,000 has been reserved to cover facility lease obligations for the existing facility, which is expected to expire in April 2001, pending final lease termination negotiations. These letters of credit reduce the amount available under the line of credit. The line of credit contains certain covenants and restrictions, including a limitation on indebtedness requiring the Company, as of the last day of each quarter, to maintain a ratio of quick assets to current liabilities of at least 2.0 to 1.0. The Company also has a $2.0 million equipment line of credit with SVB that bears an interest rate of SVB prime rate plus 0.5% with a draw period up to June 30, 2000. As of June 30, 2000, the Company had outstanding borrowings of $550,000 under the equipment line of credit. The Company has signed a $52-million, 15-year lease to build an approximately 103,000-square foot corporate headquarters, with a projected building completion and occupancy date of April 2001. As of June 30, 2000, the Company has approximately $20.5 million of cash, cash equivalents, and short-term investments. From time to time, the Company may utilize the credit facility with SVB to meet short-term needs. The Company believes that its existing capital resources together with cash generated from operations and amounts available under the line of credit will be sufficient to meet requirements for at least the next twelve months and its potential earn-out obligation related to its Computer Care acquisition. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company invests its excess cash in short-term, interest-bearing investment-grade securities that are held for the duration of the term of the respective instrument. The Company does not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any material fashion. Accordingly, management believes that, while the investment-grade securities the Company holds are subject to changes in the financial standing of the issuer of such securities, it is not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments. 15. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In June 2000, the Company was notified by four individuals asserting claims for unspecified equity interests in the Company. The Company believes that the claims of these individuals are without merit and the Company intends to vigorously defend any lawsuit asserting the claims of these individuals. However, should any litigation be decided adversely to the Company, the Company might be required to pay damages or issue shares of the Company's common stock to these individuals. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (d) The effective date or the Company's registration statement on Form S-1 (No. 333-62703) relating to the Company's initial public offering was May 20, 1999. A total of 2,724,370 shares of common stock in the aggregate were sold by the Company at a price of $13.00 per share to an underwriting syndicate led by Hambrecht & Quist LLC, BancBoston Robertson Stephens Inc. and Dain Rauscher Wessels. The offering commenced on May 21, 1999 and ended on May 25, 1999. The initial public offering resulted in gross proceeds of approximately $35.4 million, of which $2.5 million was applied toward the underwriting discount. Expenses related to the offering totaled approximately $800,000. Net proceeds to the Company were $32.1 million. From the time of receipt through June 30, 2000, the net proceeds were used in the acquisition of Computer Care ($11.6 million), for purchases of property and equipment related to operations ($6.0 million) and development of software for internal use ($2.1 million). The remaining $12.4 million was applied to net purchases of cash equivalents and short-term investments in government securities. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's annual meeting of stockholders was held on June 8, 2000. The following nominees were elected as directors, each to hold office until the 2003 Annual Meeting of Stockholders or his successor is elected and qualified, by the vote set forth below:

The following directors' term of office continued after the annual meeting: Gary Simkin, Bert Winemiller, Bob Dorf, Abraham L. Simkin, Bernard C. Simkin, Eugene J. Fischer. The proposal to approve an amendment to the Company's Amended and Restated 1998 Equity Incentive Plan to increase the aggregate number of shares of the Company's common stock authorized for issuance under the plan by 750,000 was approved. There were 7,469,717 votes for the proposal, 554,165 votes against the proposal, and 100 votes abstaining from the proposal. The selection of Arthur Andersen LLP as independent auditors of the Company for the fiscal year ending December 31, 2000 was ratified by the vote of the stockholders. There were 8,023,607 votes for the proposal, 240 votes against the proposal, and 135 votes abstaining from the proposal. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: The following exhibits are included as part of this Report:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEWGEN RESULTS CORPORATION (Registrant) Date: August 16, 2000 /s/Gerald L. Benowitz --------------------------------- Gerald L. Benowitz President and Chief Executive Officer (Principal Executive Officer) Date: August 16, 2000 /s/ Samuel Simkin --------------------------------- Samuel Simkin Chief Financial Officer (Principal Financial Officer) 17.

NEWGEN RESULTS CORP 10-Q/A