-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kvof7pJzn+D362Fu/htIL/036HzFCsGe+DINXTB0muo3xPPcR8T3WJxkbNyYKhNu bJ8YGFmHdtdIlczUv+bD5A== 0000950170-97-000536.txt : 19970509 0000950170-97-000536.hdr.sgml : 19970509 ACCESSION NUMBER: 0000950170-97-000536 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAZTEC INTERNATIONAL INC CENTRAL INDEX KEY: 0000801354 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 330178457 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-15353 FILM NUMBER: 97597806 BUSINESS ADDRESS: STREET 1: 43 MANNING ROAD CITY: BILLERICA STATE: MA ZIP: 01821-3966 BUSINESS PHONE: 5082629800 MAIL ADDRESS: STREET 1: 43 MANNING ROAD CITY: BILLERICA STATE: MA ZIP: 01821-3966 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 0-15353 ---------------------------- SAZTEC INTERNATIONAL, INC. CALIFORNIA 33-0178457 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 43 MANNING ROAD, BILLERICA, MASSACHUSETTS 01821 (Address of Principal Executive Office) 508-262-9600 (Registrant's Telephone Number) --------------- 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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ The number of shares outstanding of registrant's Common Stock at May 2, 1997, was 14,297,651 shares.
SAZTEC INTERNATIONAL, INC. FORM 10-QSB QUARTER ENDED MARCH 31, 1997 CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Statements of Operations -- Three months ended March 31, 1997 and 1996 3 Consolidated Statements of Operations -- 4 Nine months ended March 31, 1997 and 1996 Consolidated Balance Sheets -- March 31, 1997 and June 30, 1996 5 Consolidated Statements of Cash Flows -- 6 - 7 Nine months ended March 31, 1997 and 1996 Notes to Consolidated Financial Statements -- March 31, 1997 and 1996 8 - 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13
2
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (Unaudited) 1997 1996 ---- ---- REVENUES $2,374,030 $2,685,100 Cost of services 1,963,917 1,852,622 -------------------- ------------------- GROSS PROFIT 410,113 832,478 Selling and administrative expense 498,362 691,192 -------------------- ------------------- PROFIT (LOSS) FROM OPERATIONS (88,249) 141,286 Interest expense (16,091) (25,628) -------------------- ------------------- PROFIT (LOSS) BEFORE PROVISION FOR INCOME TAXES (104,340) 115,658 Benefit for income taxes (16,894) (84) -------------------- ------------------- NET PROFIT (LOSS) $(87,446) $115,742 ==================== =================== INCOME (LOSS) PER SHARE OF COMMON STOCK: Net income (loss) applicable to common stockholders $(.01) $.01 ==================== =================== Weighted average number of shares 14,297,651 12,652,319 ==================== ===================
See accompanying notes. 3
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996 (Unaudited) 1997 1996 ---- ---- REVENUES $7,391,138 $ 8,041,397 Cost of services 5,884,083 5,791,798 -------------------- ------------------- GROSS PROFIT 1,507,055 2,249,599 Selling and administrative expense 1,640,552 2,474,932 -------------------- ------------------- LOSS FROM OPERATIONS (133,497) (225,333) Gain on disposal of division 231,154 Interest expense (63,019) (101,176) -------------------- ------------------- LOSS BEFORE PROVISION FOR INCOME TAXES (196,516) (95,355) (Benefit) provision for income taxes (38,560) 9,010 -------------------- ------------------- NET LOSS $(157,956) $(104,365) ==================== =================== LOSS PER SHARE OF COMMON STOCK: Net loss applicable to common stockholders $(.01) $(.01) ==================== =================== Weighted average number of shares 14,048,016 12,523,070 ==================== ===================
See accompanying notes. 4
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1997 AND JUNE 30, 1996 ASSETS MARCH 31, 1997 JUNE 30, 1996 -------------- ------------- CURRENT ASSETS (Unaudited) Cash and cash equivalents $192,764 $222,023 Restricted cash 68,302 60,869 Accounts receivable, less allowance for doubtful accounts of $44,581 and $47,755 at March 31, 1997 and June 30, 1996 1,790,427 1,973,192 Costs and estimated earnings in excess of billings 21,490 Work in process 330,409 570,651 Prepaid expenses and other current assets 164,376 176,664 Note receivable for stock subscribed (Note 2) 300,000 -------------------- ------------------ TOTAL CURRENT ASSETS 2,546,278 3,324,889 PROPERTY AND EQUIPMENT, NET 361,011 598,415 OTHER ASSETS Goodwill and other intangible assets, less accumulated amortization of $60,572 and $51,482 at March 31, 1997 and June 30, 1996 164,790 173,931 Deposits and other assets 92,495 122,070 --------------------- ------------------ TOTAL ASSETS $3,164,574 $4,219,305 ==================== ================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $231,921 $389,703 Current portion of long-term debt and capital lease obligations 180,732 199,650 Common stock subject to repurchase (Note 2) 47,840 54,000 Income taxes payable 18,320 54,320 Accounts payable 587,444 885,692 Accrued liabilities 518,341 544,318 Customer deposits 489,936 744,278 --------------------- ------------------- TOTAL CURRENT LIABILITIES 2,074,534 2,871,961 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 148,717 241,257 COMMON STOCK SUBJECT TO REPURCHASE (NOTE 2) 8,160 46,000 ACCRUED EXPENSES, NON-CURRENT 39,718 34,385 STOCKHOLDERS' EQUITY Commonstock-no par value; 20,000,000 shares authorized; 12,513,651 shares issued at March 31, 1997, and 12,543,851 shares issued at June 30, 1996 11,570,811 11,270,811 Common stock subscribed (Note 2) 300,000 Contributed capital 14,498 14,498 Accumulated deficit (10,574,589) (10,416,633) Cumulative translation adjustment (117,275) (142,974) --------------------- ------------------- Total stockholders' equity 893,445 1,025,702 --------------------- ------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,164,574 $4,219,305 ===================== ===================
See accompanying notes. 5
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996 (Unaudited) 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(157,956) $(104,365) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 287,510 428,794 Provision for bad debts (4,448) 16,186 Loss (gain) on sale of assets 2,333 (26,751) Gain on sale of assets of division sold (Note 3) (231,154) Write-off of work in process related to litigation 139,839 Other (17,054) 13,299 Changes in assets and liabilities: Accounts receivable 298,003 (36,449) Work in process 208,408 (370,665) Prepaid expenses and other current assets 32,994 (22,914) Deposits and other assets 975 6,845 Accounts payable (312,437) 425,689 Accrued liabilities (26,775) (565,087) Customer deposits and non-current accrued expenses (288,318) 265,663 Income taxes payable (38,560) (26,879) ----------------- ----------------- NET CASH USED IN OPERATING ACTIVITIES (15,325) (87,949) ----------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (18,239) (49,917) Proceeds from the sale of property and equipment 74,905 Payments received on notes receivable 14,113 12,663 (Increase) decrease in restricted cash (7,433) (7,826) ----------------- ----------------- NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (11,559) 29,825 ----------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt and capital lease obligations (156,359) (146,709) Borrowings on notes payable 2,675,154 2,621,001 Payments on notes payable (2,832,936) (2,879,478) Net proceeds from issuance of common stock 300,000 ---------------- ----------------- NET CASH USED IN FINANCING ACTIVITIES (14,141) (405,186) ---------------- ----------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 11,766 (40,505) ---------------- ----------------- NET DECREASE IN CASH (29,259) (503,815) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 222,023 644,101 ---------------- ----------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $192,764 $140,286 ================ =================
See accompanying notes. 6
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996 (Unaudited) 1997 1996 ---- ---- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Purchase of property and equipment through issuance of notes payable and capital lease obligations $8,910 ============== Partial settlement of Common Stock Repurchase obligation $14,110 ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $60,019 $112,160 ============== ================ Income taxes $38,758 ================
See accompanying notes. 7 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 AND 1996 NOTE 1. ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements include all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations for interim periods are not necessarily indicative of results to be expected for a full year. Certain reclassifications have been made to the fiscal 1996 financial statements to conform with the current year's presentation. NOTE 2. COMMON STOCK In connection with the Company's acquisition of the outstanding minority interest of Saztec Europe, Ltd. in 1991, the Company granted a put option to the selling shareholders to repurchase 120,000 shares at $2.00 per share. The put option is exercisable at 10,000 shares ($20,000) per quarter through April, 1996. During the quarters ended September 30 and December 31, 1995 10,000 shares of common stock at $20,000 were repurchased by the Company in each quarter pursuant to the terms of the put option. For the quarter ended March 31, 1996 5,100 shares at $10,200 were repurchased. Of the stock repurchased during the periods and in prior periods, $56,000 and $90,200 remained payable to the selling shareholders at March 31, 1997 and 1996, respectively. The figure at March 31, 1997 is reduced by a discount negotiated of $14,110. A common stock subscription was received for 1,200,000 shares during the quarter ended June 30, 1996. Consideration was received in August and September, 1996. NOTE 3. SALE OF DIVISION In June, 1995 management agreed to sell the assets of the Knightswade Microfilm Division, based in Winchester, England and in August 1995, the Marketing Fulfillment Division based in Billerica, Massachusetts. The sales were completed on September 1, 1995. Operating results for the divisions for the nine months ended March 31, 1996 were: 3 MONTHS ENDED -------------- SEPTEMBER 30, 1995 ------------------- Revenue $312,965 Gross profit (loss) $(13,102) Operating profit (loss) $(45,173) Gain on sale of division $231,154 Gain on sale of division includes gains and losses on sales of assets, severance costs, and related closedown costs. A loss of $145,000 for the sale of Knightswade was recognized in the quarter ended June 30, 1995. 8 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 AND 1996 NOTE 4. LITIGATION On December 14, 1995, an order was entered granting the Summary Judgment motion of Digital Equipment Corporation ("DEC") in the case in which the Company had sued DEC in connection with a contract that had been terminated by DEC in 1993. The decision effectively terminated the Company's claim against DEC. While the Company believes that its case was meritorious, it determined during the period for appeal, that it would be an imprudent use of the Company's resources to pursue an appeal. The loss of the claim resulted in the Company's writing off of the $139,839 work in process reserve maintained in connection with the contract in the nine months ended March 31, 1996. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the nine months ended March 31, 1997, declined to $7,391,138 from $8,041,397 for the nine months ended March 31, 1996, a decrease of $650,259 or (8.1%). Excluding the revenue of the divisions sold (see Note 3), revenue for the nine months ended March 31, 1997, was $337,294 below prior year amounts, a decrease of (4.4%). Revenue for the quarter ended March 31, 1997 was $311,073 (11.6%) short of the same quarter in the prior year. U.S. revenue for the nine months ended March 31, 1997 was off $406,789 from the $3,525,204 figure for the same period in the prior year, excluding revenue from the division sold. European revenue, excluding the division sold, held steady, increasing $69,528 over the nine month period in the prior year, to $4,272,723. The sales mix in the United States and Europe was relatively unchanged from the prior year period. Foreign revenue comprises 58% of consolidated revenues, a slight increase from the prior year, due to the domestic decrease and foreign increase. Gross margin for the quarter ended March 31, 1997 decreased 13.7%, from 31% to 17.3% of sales compared to the prior year quarter, net of divisions sold. This decline is due to increased training costs, domestic competitive pressure on pricing, and increased subcontract costs. Selling and administrative expenses of $1,640,552 for the nine month period ended March 31, 1997 decreased $834,380 as compared to the same period in the prior year. The decrease is $746,740 net of the write-off of work in process in the prior year connected with the DEC litigation and other income, at 31.3%. Selling and administrative expenses for the current year quarter ended March 31 of $498,362 is $198,230 less than those for the same quarter in the prior year, a decrease of 27.9%. Selling expense for the quarter ended March 31, 1997 increased to $243,117 from the $240,641 spent in the quarter ended December 31, 1996 and is $24,415 higher than the quarter ended March 31, 1996. Year to date selling expense of $695,495 is $131,642 less than the nine months of the prior year. Administrative expense, excluding the write-off in the prior year and other income, decreased $615,098 (39.4%) from the prior year period. $217,245 of the savings is attributable to the decrease from last year's third quarter to the current year third quarter. S&A as a Percent of Revenue QUARTER ENDED: CURRENT YEAR PRIOR YEAR - -------------- ------------ ---------- September 30 21.5% 38.9% December 31 23% 28.9% March 31 21% 24.2% Other income for the prior year of $52,199 consists largely of gain on the disposition of assets in the ordinary course of business of $25,439 and favorable adjustments to prior-period accruals for estimated legal fees and relocation costs from Dayton, Ohio and Kansas City, Missouri to Billerica, Massachusetts. Loss from operations of $(88,249) for the quarter ended March 31, 1997 is $229,535 less than the prior year quarterly income from operations of $141,286. Loss from operations for the nine month period, net of divisions sold and the write-off related to the DEC litigation, for the current year decreased to $(133,497) from the $(225,333) loss recognized in the prior year. 10 Net loss for the nine months ended March 31, 1997, of $(157,956) is $53,591 higher than the prior year figure of $(104,365). Adjusted for the benefit of the $231,154 gain on the sale of divisions reported in the quarter ended September 30, 1995, and a charge of $(139,839) against work in process related to litigation in the second quarter, the current year net loss to date is $37,724 less than the prior year. Operations fell $15,325 short of contributing cash during the first nine months of the current year. This is an improvement of $72,624 over the prior year period, when operations consumed $87,949. The purchase of $18,239 of equipment more than offset the receipts on the note receivable, and combined with a small increase in restricted cash, resulted in a net decrease in cash from investing activities. Proceeds from the sale of common stock was effectively applied to payments on debt and capital lease obligations. These items combined to use $29,259, net, more cash than was received during the period, for all activities. CAPITAL RESOURCES AND LIQUIDITY The Company had a revolving credit agreement secured by accounts receivable, work in process, property and equipment and other assets, bearing interest at the lender's prime rate plus 4.0%. Available borrowings were 80% of domestic trade receivables less than 90 days old, with an aggregate maximum borrowing level that declined in steps from $650,000 on August 15, 1995, to $450,000 on November 30, 1995. The credit line was payable in full on December 31, 1995. The credit agreement contained restrictive covenants that required, among other things, the maintenance of a minimum level of stockholders' equity. Due to the losses incurred through December 31, 1995, the Company was not in compliance with that level and was technically in default of the agreement. However, the lender continued to extend borrowings to the Company under the credit agreement. The Company entered into a new revolving credit agreement with the lender to borrow $450,000 to replace the matured note at the lender's prime rate plus 4%. Maximum borrowings under the new agreement decline $10,000 per month beginning February 1, 1996. Unpaid principal amounts are due July 1, 1997. Available borrowing is unchanged from the above matured note. The new agreement contains covenants which require a minimum consolidated net stockholders' equity of $500,000 and a ratio of consolidated total indebtedness to consolidated net worth not to exceed 8:1. The Company was in compliance with all covenants contained in the new agreement at March 31, 1997 and 1996. Outstanding borrowings at March 31, 1997 are $231,921 with $78,079 available. The Company's unrestricted cash balance of $192,764 on March 31, 1997 has decreased by $29,259 compared to $222,023 on June 30, 1996. At March 31, 1997, the Company's working capital was $471,744, an increase of $18,816 over working capital at June 30, 1996, and an increase of $58,332 over the amount at March 31, 1996. 11 SAZTEC INTERNATIONAL, INC. MARCH 31, 1997 FORM 10-QSB PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES Subsequent to December 31, 1995 the Company executed a new note to its prime lender to replace its revolving line of credit agreement. The new agreement does not change the rights of any holders of its securities. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders was held February 20, 1997. All directors were re-elected for one year. Tallard B.V. nominated two directors, Claus H. Stenbaek and Timothy E. Mahoney, to fill the two seats which were vacated by the prior representatives in June, 1995. Both nominees were elected. There was no solicitation in opposition to management nominees. The results of other actions at the meeting are as follows: 1. Proposal to ratify appointment of Grant Thornton LLP as independent certifying accountants for the year ended June 30, 1997: For: 7,332,656 Against: 237,000 Abstain: 10,420 ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS The following Exhibit is filed by attachment to this Form 10-QSB: EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 27 Financial Data Schedule (B) REPORTS ON FORM 8-K: None. 12 SIGNATURES 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. Dated: May 2, 1997 SAZTEC INTERNATIONAL, INC. -------------------------- (Registrant) By: /S/ THOMAS K. O'LOUGHLIN ------------------------ Thomas K. O'Loughlin Treasurer EX-27 2
5 1 9-MOS JUN-30-1997 MAR-31-1997 192,764 0 1,835,008 44,581 330,409 2,546,278 3,650,354 3,289,343 3,164,574 2,074,534 148,717 0 0 11,570,811 (102,777) 3,164,574 0 7,391,138 0 5,884,083 1,641,935 (1,383) 63,019 (196,516) (38,560) (157,956) 0 0 0 (157,956) (.01) (.01)
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