California
|
95-3276269
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
2310 Cousteau Court
Vista, California
(Address of principal executive offices)
|
92081-8346
(Zip Code)
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
ý
|
Class
|
Outstanding at December 14, 2011
|
|
Common Stock, no par value per share
|
12,962,999 shares
|
PART I
|
FINANCIAL INFORMATION
|
PAGE
|
|||
Item 1.
|
3-10
|
||||
Item 2.
|
11-13
|
||||
Item 3.
|
14
|
||||
Item 4.
|
14
|
||||
PART II
|
OTHER INFORMATION
|
||||
Item 1.
|
15
|
||||
Item 1A.
|
15
|
||||
Item 2.
|
15
|
||||
Item 3.
|
15
|
||||
Item 4.
|
|||||
Item 5.
|
15
|
||||
Item 6.
|
16
|
||||
PART I
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
October 31, 2011
|
April 30, 2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
2,536
|
$
|
3,881
|
||||
Certificates of deposit
|
500
|
499
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $75
|
1,024
|
203
|
||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
-
|
32
|
||||||
Deferred cost of revenue
|
376
|
113
|
||||||
Inventories
|
1,722
|
436
|
||||||
Other current assets
|
317
|
132
|
||||||
Total current assets
|
6,475
|
5,296
|
||||||
Equipment, furniture and fixtures, net
|
430
|
432
|
||||||
Other noncurrent assets
|
65
|
65
|
||||||
Total assets
|
$
|
6,970
|
$
|
5,793
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
964
|
$
|
152
|
||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
89
|
231
|
||||||
Accrued payroll and related taxes
|
369
|
326
|
||||||
Warranty reserves
|
26
|
31
|
||||||
Payable to Parent
|
252
|
251
|
||||||
Other current liabilities
|
60
|
67
|
||||||
Deferred revenues
|
1,995
|
615
|
||||||
Total current liabilities
|
3,755
|
1,673
|
||||||
Long-term liabilities
|
2
|
12
|
||||||
Total liabilities
|
3,757
|
1,685
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred shares, no par value; 20,000 shares authorized; no shares issued or outstanding
|
-
|
-
|
||||||
Common shares, no par value; 50,000 shares authorized; 12,963 shares issued and outstanding
|
56,370
|
56,370
|
||||||
Accumulated deficit
|
(53,157
|
)
|
(52,262
|
)
|
||||
Total shareholders' equity
|
3,213
|
4,108
|
||||||
Total liabilities and shareholders' equity
|
$
|
6,970
|
$
|
5,793
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Sales of products
|
$
|
1,693
|
$
|
1,793
|
$
|
2,014
|
$
|
3,244
|
||||||||
Services
|
251
|
189
|
539
|
450
|
||||||||||||
1,944
|
1,982
|
2,553
|
3,694
|
|||||||||||||
Cost of sales:
|
||||||||||||||||
Cost of product sales
|
1,314
|
1,222
|
1,971
|
2,378
|
||||||||||||
Cost of services
|
63
|
25
|
155
|
68
|
||||||||||||
1,377
|
1,247
|
2,126
|
2,446
|
|||||||||||||
Gross profit
|
567
|
735
|
427
|
1,248
|
||||||||||||
Research and development expenses
|
24
|
-
|
24
|
-
|
||||||||||||
Selling, general and administrative expenses
|
689
|
598
|
1,299
|
1,227
|
||||||||||||
Income (loss) from operations
|
(146
|
) |
137
|
(896
|
) |
21
|
||||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
1
|
2
|
2
|
3
|
||||||||||||
Other
|
2
|
-
|
(1
|
) |
12
|
|||||||||||
Net income (loss)
|
$
|
(143
|
) |
$
|
139
|
$
|
(895
|
) |
$
|
36
|
||||||
Net income (loss) per share:
|
||||||||||||||||
Basic and diluted
|
$
|
(0.01
|
) |
$
|
0.01
|
$
|
(0.07
|
) |
$
|
-
|
||||||
Weighted average shares used in computation of net income (loss) per share:
|
||||||||||||||||
Basic and diluted
|
12,963
|
12,963
|
12,963
|
12,963
|
Six Months Ended
October 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
(895
|
)
|
$
|
36
|
|
||
Adjustments to reconcile net income (loss) to net cash provided by (used in)
|
||||||||
operating activities:
|
||||||||
Depreciation and amortization
|
66
|
56
|
||||||
Warranty reserve expense
|
7
|
7
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(821
|
)
|
(496
|
)
|
||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
32
|
804
|
||||||
Deferred cost of revenue
|
(263
|
)
|
(64
|
)
|
||||
Inventories
|
(1,286
|
)
|
224
|
|
||||
Other current assets
|
(185
|
)
|
84
|
|||||
Accounts payable
|
812
|
(462
|
)
|
|||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
(142
|
)
|
563
|
|||||
Accrued payroll and related taxes
|
43
|
13
|
||||||
Warranty reserves
|
(12
|
)
|
(32
|
)
|
||||
Payable to Parent
|
1
|
-
|
||||||
Other current and long-term liabilities
|
(17
|
)
|
5
|
|
||||
Deferred revenues
|
1,380
|
(384
|
) | |||||
Net cash provided by (used in) operating activities
|
(1,280
|
)
|
354
|
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of certificates of deposit
|
(500
|
)
|
(997
|
)
|
||||
Proceeds from redemption of certificates of deposit
|
499
|
1,495
|
||||||
Additions to equipment, furniture and fixtures
|
(64
|
)
|
(150
|
)
|
||||
Net cash provided by (used in) investing activities
|
(65
|
)
|
348
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
(1,345
|
) |
702
|
|||||
Cash and cash equivalents at beginning of period
|
3,881
|
2,363
|
||||||
Cash and cash equivalents at end of period
|
$
|
2,536
|
$
|
3,065
|
||||
·
|
High level of security and vote encryption to ensure integrity and voter privacy;
|
·
|
Electronic and paper audit trails that offer added security and redundancy for recounts;
|
·
|
Minimal training required for poll workers to set-up and operate; and
|
·
|
Minimal voter re-education required.
|
(Amounts in thousands)
|
||||
Balance at May 1, 2011
|
$
|
31
|
||
Additional reserves
|
18
|
|||
Warranty reserve expense adjustments
|
(11
|
) | ||
Charges incurred
|
(12
|
) | ||
Balance at October 31, 2011
|
$
|
26
|
As of and for the Three Months Ended
|
||||||||||||
October 31, 2011
|
||||||||||||
Gaming
Business
|
Voting
Business
|
Totals
|
||||||||||
Total revenues
|
$
|
1,510
|
$
|
434
|
$
|
1,944
|
||||||
Income (loss) from operations
|
149
|
(295
|
) |
(146
|
) | |||||||
Depreciation and amortization
|
21
|
13
|
34
|
|||||||||
Deferred cost of revenue
|
16
|
360
|
376
|
|||||||||
Equipment, furniture and fixtures, net
|
108
|
322
|
430
|
|||||||||
Deferred revenues
|
550
|
1,445
|
1,995
|
|||||||||
Inventories
|
778
|
944
|
1,722
|
|||||||||
As of and for the Three Months Ended
|
||||||||||||
October 31, 2010
|
||||||||||||
Gaming
Business
|
Voting
Business
|
Totals
|
||||||||||
Total revenues
|
$
|
1,875
|
$
|
107
|
$
|
1,982
|
||||||
Income (loss) from operations
|
448
|
(311
|
) |
137
|
||||||||
Depreciation and amortization
|
25
|
7
|
32
|
|||||||||
Deferred cost of revenue
|
10
|
54
|
64
|
|||||||||
Equipment, furniture and fixtures, net
|
130
|
371
|
501
|
|||||||||
Deferred revenues
|
9
|
391
|
400
|
|||||||||
Inventories
|
780
|
38
|
818
|
|||||||||
As of and for the Six Months Ended
|
||||||||||||
October 31, 2011
|
||||||||||||
Gaming
Business
|
Voting
Business
|
Totals
|
||||||||||
Total revenues
|
$
|
1,848
|
$
|
705
|
$
|
2,553
|
||||||
Loss from operations
|
(360
|
) |
(536
|
) |
(896
|
) | ||||||
Depreciation and amortization
|
41
|
25
|
66
|
|||||||||
Deferred cost of revenue
|
16
|
360
|
376
|
|||||||||
Equipment, furniture and fixtures, net
|
108
|
322
|
430
|
|||||||||
Deferred revenues
|
550
|
1,445
|
1,995
|
|||||||||
Inventories
|
778
|
944
|
1,722
|
|||||||||
As of and for the Six Months Ended
|
||||||||||||
October 31, 2010
|
||||||||||||
Gaming
Business
|
Voting
Business
|
Totals
|
||||||||||
Total revenues
|
$
|
3,444
|
$
|
250
|
$
|
3,694
|
||||||
Income (loss) from operations
|
626
|
(605
|
) |
21
|
||||||||
Depreciation and amortization
|
43
|
13
|
56
|
|||||||||
Deferred cost of revenue
|
10
|
54
|
64
|
|||||||||
Equipment, furniture and fixtures, net
|
130
|
371
|
501
|
|||||||||
Deferred revenues
|
9
|
391
|
400
|
|||||||||
Inventories
|
780
|
38
|
818
|
October 31,
|
April 30,
|
|||||||
2011
|
2011
|
|||||||
(Amounts in thousands)
|
||||||||
Raw materials and subassemblies
|
$
|
1,713
|
$
|
436
|
||||
Work-in-process
|
9
|
-
|
||||||
$
|
1,722
|
$
|
436
|
October 31,
|
April 30,
|
|||||||
2011
|
2011
|
|||||||
(Amounts in thousands)
|
||||||||
Plant and machinery
|
$
|
680
|
$
|
674
|
||||
Computer equipment
|
1,408
|
1,308
|
||||||
Leasehold improvement
|
190
|
183
|
||||||
Furniture, fixtures and equipment
|
91
|
91
|
||||||
Construction in progress
|
1
|
50
|
||||||
2,370
|
2,306
|
|||||||
Accumulated depreciation and amortization
|
(1,940
|
)
|
(1,874
|
)
|
||||
Net equipment, furniture and fixtures
|
$
|
430
|
$
|
432
|
Three Months Ended
October 31,
|
Six Months Ended
October 31,
|
|||||||
2011
|
2010
|
2011
|
2010
|
|||||
Revenue:
|
||||||||
From unrelated customers
|
No individual customer accounted for more than 10% of total revenue
|
Two customers accounted for 34% of total revenue
|
No individual customer accounted for more than 10% of total revenue
|
Two customers accounted for 22% of total revenue
|
||||
From related customers
|
One customer accounted for 61% of total revenue
|
One customer accounted for 49% of total revenue
|
One customer accounted for 50% of total revenue
|
Two customers accounted for 65% of total revenue
|
•
|
There were no related party sales to BLM in the three and six months ended October 31, 2011 and 2010;
|
•
|
There were no accounts receivable balances from BLM as of October 31, 2011 and April 30, 2011; and
|
•
|
Liabilities to BLM arising from the sale or use of the BLM inventory, recorded as “Payable to Parent,” were $252,000 and $251,000 as of October 31, 2011 and April 30, 2011, respectively.
|
|
•
|
Revenues recognized on the sale of lottery products and support services during the three and six months ended October 31, 2011 totaled approximately $1.2 million and $1.3 million, respectively. Revenues recognized on the sale of lottery products and software support services during the three and six months ended October 31, 2010 totaled approximately $965,000 and $1.9 million, respectively;
|
•
|
There was no billings in excess of costs and estimated earnings balance as of October 31, 2011. Net cost and estimated earnings in excess of billings relating to support services totaled approximately $32,000 as of April 30, 2011;
|
•
|
In connection with the lottery product orders dated September 9, 2011 and August 12, 2011 mentioned above, there were deferred revenues of approximately $529,000 as of October 31, 2011. There was no deferred revenue balance as of April 30, 2011; and
|
•
|
Accounts receivable from the sale of lottery products totaled $385,000 as of October 31, 2011, compared to $47,000 as of April 30, 2011.
|
•
|
Revenues of $77,000 and $155,000 were recognized on the sale of support services during the three and six months ended October 31, 2011, respectively. Revenues of $78,000 and $155,000 were recognized on the sale of support services during the three and six months ended October 31, 2010, respectively;
|
•
|
There were deferred revenues of $10,000 on software support services as of October 31, 2011, compared to $9,000 as of April 30, 2011; and
|
•
|
There was no accounts receivable balance from STM as of October 31, 2011, compared to $16,000 as of April 30, 2011.
|
•
|
Revenues of $32,000 and $83,000 were recognized on the performance of contract deliverables, sale of support services and licensing during the three and six months ended October 31, 2011, respectively. Revenues of $91,000 and $511,000 were recognized on the performance of contract deliverables and sale of support services during the three and six months ended October 31, 2010, respectively;
|
•
|
Net billings in excess of costs and estimated earnings relating to the abovementioned contract dated December 16, 2009 totaled approximately $89,000 as of October 31, 2011, compared to $105,000 as of April 30, 2011;
|
•
|
There were deferred revenues of $11,000 for lottery product licensing as of October 31, 2011, compared to $10,000 on software support services as of April 30, 2011; and
|
•
|
Accounts receivable totaled approximately $11,000 as of October 31, 2011, compared to $16,000 as of April 30, 2011.
|
|
|
•
|
There was no revenue recognized during the three and six months ended October 31, 2011. Revenue of $66,000 was recognized on the software product development during the three and six months ended October 31, 2010; and
|
•
|
There were no account receivable balances as of October 31, 2011 and April 30, 2011.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
(Amounts in thousands)
|
October 31,
|
October 31,
|
||||||||||||||||||||||
Revenues
|
2011
|
2010
|
Change
|
2011
|
2010
|
Change
|
||||||||||||||||||
Products:
|
||||||||||||||||||||||||
Contracts
|
$
|
1,524
|
$
|
1,290
|
$
|
234
|
$
|
1,731
|
$
|
2,581
|
$
|
(850
|
) | |||||||||||
Spares
|
169
|
503
|
(334
|
) |
283
|
663
|
(380
|
) | ||||||||||||||||
Total Products
|
1,693
|
1,793
|
(100
|
) |
2,014
|
3,244
|
(1,230
|
) | ||||||||||||||||
Services:
|
||||||||||||||||||||||||
Software Support
|
191
|
166
|
25
|
383
|
348
|
35
|
||||||||||||||||||
Product Servicing and Support
|
60
|
23
|
37
|
156
|
102
|
54
|
||||||||||||||||||
Total Services
|
251
|
189
|
62
|
539
|
450
|
89
|
||||||||||||||||||
$
|
1,944
|
$
|
1,982
|
$
|
(38
|
) |
$
|
2,553
|
$
|
3,694
|
$
|
(1,141
|
) |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||||||||||
October 31,
|
October 31,
|
October 31,
|
October 31,
|
|||||||||||||||||||||||||||||
(Amounts in thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Products
|
$
|
1,693
|
87
|
%
|
$
|
1,793
|
90
|
%
|
$
|
2,014
|
79
|
%
|
$
|
3,244
|
88
|
%
|
||||||||||||||||
Services
|
251
|
13
|
%
|
189
|
10
|
%
|
539
|
21
|
%
|
450
|
12
|
%
|
||||||||||||||||||||
Total revenues
|
$
|
1,944
|
100
|
%
|
$
|
1,982
|
100
|
%
|
$
|
2,553
|
100
|
%
|
$
|
3,694
|
100
|
%
|
||||||||||||||||
Cost of sales:
|
||||||||||||||||||||||||||||||||
Products
|
$
|
1,314
|
68
|
%
|
$
|
1,222
|
62
|
%
|
$
|
1,971
|
77
|
%
|
$
|
2,378
|
64
|
%
|
||||||||||||||||
Services
|
63
|
3
|
%
|
25
|
1
|
%
|
155
|
6
|
%
|
68
|
2
|
%
|
||||||||||||||||||||
Total costs of sales
|
$
|
1,377
|
|
71
|
%
|
$
|
1,247
|
63
|
%
|
$
|
2,126
|
83
|
%
|
$
|
2,446
|
66
|
%
|
|||||||||||||||
Gross profit:
|
||||||||||||||||||||||||||||||||
Products
|
$
|
379
|
19
|
%
|
$
|
571
|
29
|
%
|
$
|
43
|
2
|
%
|
$
|
866
|
24
|
%
|
||||||||||||||||
Services
|
188
|
|
10
|
%
|
164
|
8
|
%
|
384
|
15
|
%
|
382
|
10
|
%
|
|||||||||||||||||||
Total gross profit
|
$
|
567
|
29
|
%
|
$
|
735
|
37
|
%
|
$
|
427
|
17
|
%
|
$
|
1,248
|
34
|
%
|
Six Months Ended
|
||||||||||||
October 31,
|
October 31,
|
Increase
|
||||||||||
2011
|
2010
|
(Decrease)
|
||||||||||
(Amounts in thousands)
|
||||||||||||
Condensed cash flow comparative:
|
||||||||||||
Operating activities
|
$
|
(1,280)
|
$
|
354
|
$
|
(1,634)
|
||||||
Investing activities
|
(65)
|
348
|
(413)
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
(1,345)
|
$
|
702
|
$
|
(2,047)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II
|
OTHER INFORMATION
|
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
RESERVED
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit Number
|
Document Description
|
||
31
|
Certification of the Chief Executive Officer and Acting Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32
|
Certification Pursuant to 18 United States Code Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
||
Dated: December 14, 2011
|
INTERNATIONAL LOTTERY & TOTALIZATOR SYSTEMS, INC.
|
|
/s/
|
Jeffrey M. Johnson
Jeffrey M. Johnson
|
|
President/Acting Chief Financial Officer
|
||
Dated: December 14, 2011
|
/s/
|
Jeffrey M. Johnson
|
|
Jeffrey M. Johnson
|
|||
President/Acting Chief Financial Officer
|
Dated: December 14, 2011
|
/s/
|
Jeffrey M. Johnson
|
Jeffrey M. Johnson
|
||
President/Acting Chief Financial Officer
|
||
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Use of Estimates
|
6 Months Ended |
---|---|
Oct. 31, 2011
|
|
Use of Estimates [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. Actual results could differ from those estimates. Estimates may affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities. |