-----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, BoxIc4xOZMGvzhv3Tx/PzEskqz+w3HavM1x4qU7vkOGn47+Mh7w4ssJmsBBJmhUZ pxuIEUukY+womR60rSxOqA== 0000950170-99-000226.txt : 19990217 0000950170-99-000226.hdr.sgml : 19990217 ACCESSION NUMBER: 0000950170-99-000226 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 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: SEC FILE NUMBER: 000-15353 FILM NUMBER: 99542159 BUSINESS ADDRESS: STREET 1: 43 MANNING ROAD CITY: BILLERICA STATE: MA ZIP: 01821-3966 BUSINESS PHONE: 5082629600 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 DECEMBER 31, 1998 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) 978-901-9600 (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 February 12, 1999, was 4,461,121 shares. SAZTEC INTERNATIONAL, INC. FORM 10-QSB/A FOR THE QUARTER ENDED DECEMBER 31, 1998 PAGE ----- PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Statements of Operations -- Three months ended December 31, 1998 and 1997 3 Consolidated Statements of Operations -- 4 Six months ended December 31, 1998 and 1997 Consolidated Balance Sheets -- December 31, 1998 and June 30, 199 5 Consolidated Statement of Changes in Stockholders' Equity -- 6 December 31, 1998 Consolidated Statements of Cash Flows -- 7 - 8 Six months ended December 31, 1998 and 1997 Notes to Consolidated Financial Statements -- December 31, 1998 9 - 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 - 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 2
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997 (Unaudited) 1998 1997 ---- ---- REVENUES $1,835,031 $1,964,749 Cost of services 1,519,303 1,583,791 -------------------------- GROSS PROFIT 315,728 380,958 Selling, general & administrative expense 532,612 510,245 -------------------------- LOSS FROM OPERATIONS (216,884) (129,287) Interest expense (6,623) (11,698) -------------------------- LOSS BEFORE PROVISION FOR INCOME TAXES (223,507) (140,985) Provision for income taxes 403 -------------------------- NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (223,910) $(140,985) ========================== LOSS PER SHARE OF COMMON STOCK: Basic and diluted net loss applicable to common $(.05) $(.03) stockholders ========================== Weighted average number of shares 4,461,121 4,176,845 ==========================
See accompanying notes. 3
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 (Unaudited) 1998 1997 ---- ---- REVENUES $3,601,715 $3,578,220 Cost of services 3,022,512 2,900,033 -------------- ------------ GROSS PROFIT 579,203 678,187 Selling and administrative expense 1,041,814 1,006,473 -------------- ------------ LOSS FROM OPERATIONS (462,611) (328,286) Interest expense (14,778) (24,260) -------------- ------------ (477,389) (352,546) LOSS BEFORE PROVISION FOR INCOME TAXES Provision for income taxes (76,198) -------------- ------------ NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (401,191) $(352,546) ============== ============ LOSS PER SHARE OF COMMON STOCK: Basic and diluted net loss applicable to common $(.09) $(.09) stockholders ============== ============ Weighted average number of shares 4,461,121 3,907,013 ============== ============
See accompanying notes. 4
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998 AND JUNE 30, 1998 ASSETS DEC. 31, JUNE 30, 1998 1998 ---- ---- (Unaudited) CURRENT ASSETS Cash and cash equivalents $682,443 $ 513,192 Restricted cash 59,767 172,452 Accounts receivable, less allowance for doubtful accounts of $10,204 at December 31 and $40,494 at June 30, 1998 1,429,988 1,658,274 Costs and estimated earnings in excess of billings 15,764 Work in process 115,782 176,539 Prepaid expenses and other current assets 90,463 92,833 Note receivable 23,373 ----------- ---------- TOTAL CURRENT ASSETS 2,417,580 2,613,290 PROPERTY AND EQUIPMENT, NET 430,367 443,083 OTHER ASSETS Goodwill and other intangible assets, less accumulated amortization of $81,782 at December 31 and $75,722 at June 30, 1998 143,580 149,640 Deposits and other assets 93,558 111,856 ----------- ---------- TOTAL ASSETS $3,085,085 $3,317,869 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $112,648 $29,682 Current portion long-term debt and capital lease obligations 193,427 182,599 Accounts payable 360,679 472,132 Accrued liabilities 569,533 699,455 Customer deposits 981,469 646,544 ---------- --------- TOTAL CURRENT LIABILITIES 2,217,756 2,030,412 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS LESS CURRENT PORTION 136,001 146,675 ACCRUED EXPENSE 14,371 22,362 STOCKHOLDERS' EQUITY Preferred stock-no par value; 1,000,000 shares authorized; no shares Issued Common stock-no par value; 10,000,000 shares authorized; 4,461,121 shares issued at December 31,1998 and 4,461,121 shares issued at June 30, 1998 12,430,811 12,430,811 Contributed capital 14,498 14,498 Accumulated deficit (11,614,404) 11,213,217) Cumulative translation adjustment (113,948) (113,672) ========== ========= TOTAL STOCKHOLDERS' EQUITY 716,957 1,118,420 ---------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,085,085 $3,317,869 ========== =========
See accompanying notes. 5
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY DECEMBER 31, 1998 COMMON STOCK COMMON STOCK SUBSCRIBED CUMULATIVE NUMBER OF NUMBER OF CONTRIBUTED ACCUMULATED TRANSLATION SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT ----------- ------ ---------- ------ ------------ ------------ ------------ June 30, 1998 4,461,129 $12,430,811 $14,498 $(11,213,217) $(113,672) Net loss (401,187) Translation adjustment (276) ------------- ---------- ----------- ------- --------- ----------- ----------- 4,461,129 $12,430,811 $14,498 $(11,614,404) $(113,948)
See accompanying notes. 6
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 (Unaudited) 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(401,191) $(352,546) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 110,260 121,432 Provision for bad debts (21,791) (699) Other 17 Changes in assets and liabilities: Accounts receivable 235,115 (115,127) Work in process 59,810 (305,501) Prepaid expenses and other current assets (22,229) (5,254) Deposits and other assets (16,539) 46,079 Accounts payable (110,503) (90,286) Accrued liabilities (137,023) 44,547 Customer deposits and non-current accrued expenses 337,734 155,964 -------------------- NET CASH (PROVIDED BY) USED IN OPERATING ACTIVITIES 33,643 (501,374) -------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (38,978) (106,463) Payments received on notes receivable 35,540 8,380 Decrease in restricted cash 112,685 118,940 -------------------- NET CASH PROVIDED BY INVESTING ACTIVITIES 109,247 20,857 -------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on notes payable 1,421,462 1,325,114 Payments on notes payable (1,338,496) ,466,689) Principal payments on debt and capital lease (52,889) (42,714) obligations Proceeds from issuance of common stock, net of 860,000 issuance costs -------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 30,077 675,711 -------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (3,725) (841) -------------------- NET INCREASE IN CASH 169,242 194,353 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 513,194 386,785 -------------------- CASH AND EQUIVALENTS AT END OF PERIOD $682,43 $581,138 =====================
See accompanying notes. 7
SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 (Unaudited) 1998 1997 ---- ---- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $12,210 $16,567 ======== ======= Income taxes $5,283 ========
See accompanying notes. 8 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 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. NOTE 2. FOREIGN OPERATIONS AND MAJOR CUSTOMERS- SEGMENTS Revenues, income (loss) before taxes, and identifiable assets by geographic area are shown below. United Kingdom amounts relate solely to Saztec Europe, Ltd. and its subsidiaries, whose customers are located in England, Scotland, Germany, Italy, Spain, and Belgium. Identifiable assets of Saztec Europe Ltd. located outside of Ardrossan, Scotland are immaterial.
6 MONTHS ENDED DECEMBER 31, 1998 1997 ---- ---- Revenue United States $2,412,924 $1,800,788 United Kingdom/Western Europe 1,188,791 1,777,432 ---------------- ------------- $3,601,715 $3,578,220 ---------------- ------------- Income (loss) before income taxes United States $(26,525) $(183,013) United Kingdom/Western Europe (450,864) (169,533) ---------------- ------------- $(477,389) $(352,546) ---------------- ------------- Depreciation United States $61,301 $48,412 United Kingdom/Western Europe 42,899 66,960 Amortization-U.S. only 6,060 6,060 ---------------- ------------- $110,260 $121,432 ---------------- ------------- Identifiable Assets DECEMBER 31 1998 JUNE 30, 1998 ---------------- ------------- United States $1,549,959 $1,851,102 United Kingdom 1,535,126 1,466,767 ---------------- ------------- $3,085,085 $3,317,869 ---------------- -------------
9 NOTE 3. LOSS PER SHARE Loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each year which totaled 4,461,121 and 4,176,845 for the quarters ended December 31, 1998, and 1997, respectively. The inclusion of common stock equivalents would have been antidilutive and were not included for the quarter ended December 31, 1998. Effective for periods ending after December 15, 1997, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE. The standard amends the computation of earnings per share to provide for two measures, Basic Earnings Per Share and Dilutive Earnings Per Share. Under this standard, the Company would have reported the following for the quarters ended December 31: BASIC LOSS PER SHARE DILUTIVE LOSS PER SHARE 1998 $(.05) $(.05) 1997 $(.03) $(.03) 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the six months ended December 31, 1998, increased to $3,601,715 from $3,578,220 for the six months ended December 31, 1997, an increase of $23,495 or (0.7%). Revenue for the Quarter ended December 31,1998 at $1,835,031 was down $129,781 from the $1,964,749 earned for the quarter ended December 31, 1997. U.S. revenue for the six months ended December 31, 1998 of $2,412,924 increased $612,136 compared with the six month period the prior year of $1,800,788. U.S. revenue for the second quarter of the current year $1,205,013 was $449,019 higher compared to $755,994 for the quarter ended December 31, 1997. European revenue for the six months ended December 31, 1998 of $1,188,791 decreased $588,641 compared with the six month period in the prior year of $1,777,432. European revenue for the second quarter of the current year at $630,019 was $352,604 less compared to $982,623 for the quarter ended December 31, 1997. U.S. revenue has increased as a result of continued growth in scanning services revenue and the improved growth in data entry conversion revenue. European revenue is down compared to last year as a result in the decline in library retrospective conversion project revenue. As a result of a new contract with the University Cattolica del Sacro Cuore of Milan received in November 1998, and increased activity with existing customers management expect revenue to increase in Europe during the second half of the year. Gross profit for the six months ended December 31, 1998 decreased $98,984 from the prior year period to 16% of sales, compared to 19% of sales for the same period of 1997. Gross profit for the quarter ended December 31, 1998 was 17.2% of sales compared to 19.4% in the same period of 1997. Gross profit for U.S. operations increased $167,749 for the six months ended December 31, 1998 to 21% of sales compared to 18.8% for the same period last year. European gross profit decreased $266,733 for the 6 month period ended December 31,1998 to 6% of sales compared to 19% for the same period last year. The operation in Europe continues to be underutilized causing the significant reduction in gross profit margin. Selling, and administrative expenses (S&A) for the six month period increased $69,883 to $1,076,356 (30% of sales) from $1,006,473 (28% of sales) for the same period in the prior year. For the quarter ended December 31,1998 S&A increased $543,493 (29.6% of sales) from $510,245 (26% of sales) in the prior year quarter. The increase in S&A for the 6 months ended December 31, 1998 is a result of increased expense in the U.S. of $100,229 (15.5%) and a decrease in Europe of $30,346 (8.5%). Loss from operations was $497,153 for the six months ended December 31, 1998 compared to $328,286 for the six months ended December 31, 1997. Loss from operations for the three months ended December 31, 1998 was $227,765 compared to $129,287 for the same period the prior year. The decline in revenue and the lower gross profit margin in Europe has resulted in a larger than expected loss in the first half of the year. Management has initiated changes throughout it's operations in the U.S. and Europe to improve efficiencies and increase operating results. Gary Abernathy, the COO and President of the U.S. operations has left the company to pursue other business interests effective December 1998. Christopher Parker who joined the company in February of 1998 as CEO of Saztec International has also taken over the responsibility of President of the U.S. operation. John Kerr, Treasurer of Saztec Europe and Thomas O'Loughlin, Treasurer of Saztec International have also left the company and their position will be consolidated into Vice President of Finance and Administration operating from the corporate offices in the U.S. 11 Mike Dale has been appointed Managing Director of Saztec Europe Ltd., effective January 1999. Chris Dowd, the former Director of Business Development and Roland Wolf, Sales Manager of Saztec Germany have left the company to pursue other business interests. A plan has been initiated in Germany that will reduce selling and administrative overheads while continuing to serve our clients efficiently. Cash Flow increased $169,242 for the six months ended December 31, 1998 compared to an increase of $194,353 for the same period the prior year. Net cash from operating activities increased $33,643 net cash from investing activities increased $109,247 mainly as a result in a decrease in restricted cash of $112,685. Cash flow from financing activities of $30,077 and effect of exchange rate changes of ($3,725) make up the balance of the change. The Company has analyzed its exposure to potential data processing "Year 2000" problems and formulated a plan to ensure its systems are in compliance by June 30, 1999. This will be effected through replacement of PC-level hardware and an upgrade to a third-party software package which has been certified Year 2000 compliant. Total planned cost through the balance of the current year is expected to be less than $50,000 beyond continuing systems upgrades to increase production performance. The Company is also in the process of compiling certifications of Y2K compliance from its vendors. No external consulting resource requirements are expected. The company believes that all actions and implementation of new software should mitigate the effect of the year 2000 issue. However, if such modifications are not made or completed timely the year 2000 issue could have an effect on operations and financial condition of the company. The Company's operations may be affected by the introduction of the Euro on January 1, 1999. A material amount of revenue generated by the sales and production facilities in the United Kingdom is derived from customers located in countries adopting the common currency. The Company will continue to be subject to exchange rate risk as a result of the pound sterling's fluctuations against the new currency and may encounter pricing pressure from competitors located in countries participating in its adoption. CAPITAL RESOURCES AND LIQUIDITY The Company has 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% (11.75% and 12.5% at December 31, 1998 and 1997, respectively). Available borrowings are 70% of domestic trade receivables less than 90 days old (80% at December 31, 1998), with an aggregate maximum borrowing level that declines $10,000 per month from $120,000 at January 1, 1999 until maturity on April 1, 1999. The company is in the process of negotiating an extension of this agreement as well as reviewing financing options with local banks. Aggregate borrowings were $112,468 on December 31, 1998. On December 31,1997, the company had advances of $132,936 outstanding on the credit line. The company was in compliance with the convenants contained in the agreement throughout the six month period ended December 31, 1998. The foregoing information may contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. Readers are cautioned not to place undo reliance on these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this report. 12 SAZTEC INTERNATIONAL, INC. DECEMBER 31, 1998 FORM 10-QSB/A PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K (A) EXHIBITS The following Exhibit is filed by attachment to this Form 10-QSB/A: EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 27 Financial Data Schedule (B) REPORTS ON FORM 8-K: None. 13 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: February 12, 1999 SAZTEC INTERNATIONAL, INC. (Registrant) By: /s/ CHISTOPHER PARKER ---------------------- Christopher Parker CEO 14 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 27 Financial Data Schedule EX-27 2
5 6-MOS JUN-30-1998 DEC-31-1998 682,443 0 1,542,493 10,204 430,367 2,417,580 430,367 110,260 3,085,085 2,217,756 136,001 0 0 12,430,811 (11,731,854) 3,085,085 0 3,601,715 0 3,022,512 0 0 (19,764) (477,389) (76,198) (401,191) 0 0 0 (401,191) (.09) (.09)
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