-----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, FabBPfG0zKcAVkjVqrnIZk+FGv9QM126htuPCBccXqs6wLNx9nb6DJqI8MeP6d+Z sY2VvomxT4R04uWOoQR75w== 0000950170-00-000815.txt : 20000516 0000950170-00-000815.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950170-00-000815 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 633643 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 MARCH 31, 2000 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 March 31, 2000, was 4,469,371 shares. SAZTEC INTERNATIONAL, INC. FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 2000
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Statements of Operations -- Three months ended March 31, 2000 and 1999 3 Consolidated Statements of Operations -- 4 Nine months ended March 31, 2000 and 1999 Consolidated Balance Sheets -- March 31, 2000 and June 30, 1999 5 Consolidated Statement of Changes in Stockholders' Equity -- 6 March 31, 2000 Consolidated Statements of Cash Flows -- 7 - 8 Nine months ended March 31, 2000 and 1999 Notes to Consolidated Financial Statements -- March 31, 2000 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 MARCH 31, 2000 AND 1999 (Unaudited) 2000 1999 ----------- ----------- REVENUES $ 2,364,338 $ 2,511,398 Cost of services 1,970,688 1,870,788 ------------------------- GROSS PROFIT 393,650 640,610 Selling, general & administrative expense 705,003 605,977 ------------------------- INCOME (LOSS) FROM OPERATIONS (311,353) 34,633 Interest expense 12,428 18,326 ------------------------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (323,781) 16,307 Provision (benefit) for income taxes 3,837 (27) ------------------------- NET (LOSS ) INCOME $ (327,618) $ 16,334 ========================= INCOME (LOSS) PER SHARE OF COMMON STOCK: Basic and diluted loss applicable to common $ (.07) $ .004 stockholders ========================= Weighted average number of shares 4,469,371 4,461,121 ========================= See accompanying notes 3 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999 (Unaudited) 2000 1999 ----------- ----------- REVENUES $ 6,595,296 $ 6,113,113 Cost of services 5,276,503 4,893,300 ----------- ----------- GROSS PROFIT 1,318,793 1,219,813 Selling and administrative expense 1,943,229 1,682,332 ----------- ----------- LOSS FROM OPERATIONS (624,436) (462,519) Interest expense (income) 24,780 (1,437) ----------- ----------- LOSS BEFORE PROVISION FOR INCOME TAXES (649,216) (461,082) Provision (benefit) for income taxes 7,704 (76,225) ----------- ----------- NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (656,920) $ (384,857) =========== =========== LOSS PER SHARE OF COMMON STOCK: Basic and diluted net loss applicable to common $ (.15) $ (.09) stockholders =========== =========== Weighted average number of shares 4,469,371 4,461,121 =========== =========== See accompanying notes. 4 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2000 AND JUNE 30, 1999
ASSETS MARCH 31, JUNE 30, 2000 1999 ---------------------------- (Unaudited) CURRENT ASSETS Cash and cash equivalents 226,591 $ 338,088 Restricted cash 26,210 26,210 Accounts receivable, less allowance for doubtful accounts of $43,242 at March 31, 2000 and $28,155 at June 30, 1999 1,802,197 1,612,573 Work in process 385,789 118,720 Prepaid expenses and other current assets 115,220 112,601 Note receivable ---------------------------- TOTAL CURRENT ASSETS 2,556,007 2,208,192 PROPERTY AND EQUIPMENT, NET 311,393 422,076 OTHER ASSETS Goodwill and other intangible assets, less accumulated amortization of $84,812 at March 31 and $75,722 at June 30, 1998 128,430 137,520 Deposits and other assets 54,010 63,626 ---------------------------- TOTAL ASSETS $ 3,049,840 $ 2,831,414 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Line of Credit $ 664,559 0 Current portion long-term debt and capital lease obligations 136,340 172,375 Accounts payable 1,073,622 620,366 Accrued liabilities 648,492 728,230 Customer deposits 287,872 385,461 ---------------------------- TOTAL CURRENT LIABILITIES 2,810,885 1,906,432 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS LESS CURRENT PORTION 70,761 104,039 ACCRUED EXPENSE 0 7,355 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; 4,469,371 12,435,975 12,430,811 shares issued at March 31, 2000 and 4,461,121 shares issued at June 30, 1999 Contributed capital 14,498 14,498 Accumulated deficit (12,166,722) (11,509,802) Cumulative translation adjustment (115,557) (121,919) ---------------------------- TOTAL STOCKHOLDERS' EQUITY 168,194 813,588 ---------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,049,840 $ 2,831,414 ============================
See accompanying notes 5 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY MARCH 31, 2000
COMMON STOCK COMMON STOCK SUBSCRIBED CUMULATIVE NUMBER OF NUMBER OF CONTRIBUTED ACCUMULATED TRANSLATION SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT --------- ----------- ----------- ----------- ------- ------------ --------- June 30, 1999 4,461,121 $12,430,811 $14,498 $(11,509,802) $(121,919) Net loss (656,920) Stocks issued Options and Grants to 8,250 5,164 Employees Translation adjustment 6,362 --------- ----------- ----------- ----------- ------- ------------ --------- 4,469,371 $12,435,975 $14,498 $(12,166,722) $(115,557)
See accompanying notes. 6 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999 (Unaudited)
2000 1999 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (656,920) $ (384,857) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 185,022 136,660 Provision for bad debts 15,087 (28,803) Changes in assets and liabilities: Accounts receivable (204,711) 9,604 Work in process (267,069) 48,378 Prepaid expenses and other current assets (2,619) (38,183) Deposits and other assets 9,616 37,145 Accounts payable 453,256 159,445 Accrued liabilities (79,738) (82,056) Customer deposits and non-current accrued expenses (104,944) (16,410) -------------------------- NET CASH USED IN OPERATING ACTIVITIES (653,020) (159,077) -------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (65,249) (87,541) Payments received on notes receivable 0 219 Decrease in restricted cash 0 146,078 -------------------------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (65,249) 58,756 -------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on notes payable 5,634,175 2,046,332 Payments on notes payable (4,969,616) (2,038,634) Principal payments on debt and capital lease (69,313) (5,001) obligations Proceeds from issuance of common stock, net of 5,164 issuance costs -------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 600,410 2,697 -------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 6,362 (5,491) -------------------------- NET (DECREASE) IN CASH (111,497) (103,334) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 338,088 513,194 -------------------------- CASH AND EQUIVALENTS AT END OF PERIOD $ 226,591 $ 409,858 ==========================
See accompanying notes. 7 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999 (Unaudited) 2000 1999 ------- ------- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Purchase of equipment through issuance of notes payable and capital lease obligations 15,136 ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $24,780 $23,134 ======= ======= Income taxes $ 7,704 $ 5,283 ======= ======= See accompanying notes. 8 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 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. 9 MONTHS ENDED MARCH 31, 2000 1999 -------------------------- Revenue United States $ 5,016,717 $ 4,055,439 United Kingdom/Western Europe 1,578,579 2,057,674 -------------------------- 6,595,296 $ 6,113,113 ========================== Income (loss) before income taxes United States (259,164) $ 34,766 United Kingdom/Western Europe (390,052) (495,848) -------------------------- $ (649,216) $ (461,082) ========================== Depreciation United States $ 103,252 $ 71,869 United Kingdom/Western Europe 57,724 98,407 Amortization-U.S. only 9,090 9,090 -------------------------- $ 170,066 $ 179,366 ========================== Identifiable Assets MARCH 31 2000 JUNE 30, 1999 -------------------------- United States $ 1,917,484 $ 1,746,463 United Kingdom 1,132,356 1,084,951 -------------------------- $ 3,049,840 $ 2,831,414 ========================== 9 NOTE 3. EARNINGS (LOSS) PER SHARE Earnings (loss) per common share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during each year which totaled 4,469,371 for the quarter ended March 31, 2000, and 4,461,121 for quarter ended March 31, 1999. BASIC EARNINGS PER SHARE ------------------------ 2000 $ (.07) 1999 $ .004 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the nine months ended March 31, 2000, increased to $6,595,296 from $6,113,113 for the nine months ended March 31, 1999, an increase of $482,183 or (7.9%). Revenue for the Quarter ended March 31, 2000 at $2,364,338 was down $147,060 from the $2,511,398 earned for the quarter ended March 31, 1999. U.S. revenue for the nine months ended March 31, 2000 of $5,016,717 increased $961,278 compared with the nine-month period the prior year of $4,055,439. U.S. revenue for the third quarter of the current year $1,764,364 was $121,849 higher compared to $1,642,515 for the quarter ended March 31, 1999. European revenue for the nine months ended March 31, 2000 of $1,578,579 decreased $479,115 compared with the nine-month period in the prior year of $2,057,694. European revenue for the third quarter of the current year at $599,974 was $268,909 less compared to $868,883 for the quarter ended March 31, 1999. U.S. revenue continues to increase as a result of 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. Gross profit for the nine months ended March 31, 2000 increased $98,980 from the prior year period to 20% of sales, compared to 20% of sales for the same period of 1999. Gross profit for the quarter ended March 31, 2000 was 17% of sales compared to 25.5% in the same period of 1999. Gross profit for U.S. operations decreased $67,781 for the nine months ended March 31, 2000 to 22% of sales compared to 27.7% for the same period last year. European gross profit decreased $177,802 for the nine month period ended March 31, 2000 to 1% of sales compared to 21.% for the same period last year. Selling and administrative expenses (S&A) for the nine month period increased $260,897 to $1,943,229 (29.5% of sales) from $1,682,332 (27.5% of sales) for the same period in the prior year. For the quarter ended March 31, 2000 S&A increased to $705,003 (29.8% of sales) from $605,977 (24.1% of sales) in the prior year quarter. Loss from operations was $624,436 for the nine months ended March 31, 2000 compared to $462,519 for the nine months ended March 31, 2000. Loss from operations for the three months ended March 31, 2000 was $311,353 compared to profit from operations of $34,633 for the same period the prior year. Cash Flow decreased $111,497 for the nine months ended March 31, 2000 compared to a decrease of $103,334 for the same period the prior year. Net cash from operating activities decreased $653,020; net cash from investing activities decreased $65,249. Cash flow from financing activities of $600,410 and effect of exchange rate changes of $6,362 make up the balance of the change. 11 CAPITAL RESOURCES AND LIQUIDITY The Company has a revolving credit agreement with a U.S. finance company, which is secured by substantially all the assets of the Company, effective December 10, 1999. The agreement bears interest at the lender's prime rate plus 2.5% (11.5% at March 31, 2000). Available borrowings are 80% of domestic trade accounts receivable less than 90 days old and are subject to a maximum borrowing ceiling of $800,000. The line of credit is repaid directly from a collateral account established by the lender, through a lockbox at the Company's bank. At March 31, 2000 the Company had total available borrowings of $800,000 and had borrowed $664,559. At March 31, 1999 the Company had total available borrowings of $120,000 against a previous line of credit, and had borrowed $0. The Company was not in compliance with certain covenants contained in credit agreements at March 31, 2000. The Company's minimum net working capital and minimum consolidated tangible net worth were below limitations set forth in the agreement. The Company is in compliant with all other covenants and has met all financial obligations to date. The Company has received a waiver of these covenants for 90 days from March 31, 2000, with the understanding that Saztec is pursuing additional sources of capital and/or subordinated debt infusions, which will in effect restore deficiencies to acceptable documented levels. The revolving credit agreement is intended to be a continuing agreement and shall remain in full effect for an initial term of one year and for any renewal term of one year unless terminated by either party within 30 days prior to the end of any such period. The initial term of the revolving credit agreement is from June 22, 1999 to June 21, 2000. It is anticipated that both parties will renew this line per the terms of the agreement. 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. MARCH 31, 2000 FORM 10-QSB 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: EXHIBIT NUMBER DESCRIPTION OF EXHIBIT PAGE - ------ ---------------------- ---- 27 Financial Data Schedule 16 (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: MAY 12, 2000 SAZTEC INTERNATIONAL, INC. -------------------------- (Registrant) By: /S/ PAUL F. PARSHLEY ------------------------------------------- Paul F. Parshley Vice President, Finance and Administration 14 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1 6-MOS JUN-30-1999 MAR-31-2000 226,591 0 1,802,197 43,242 385,789 2,556,007 311,393 185,022 3,049,840 2,810,885 0 0 0 12,435,975 (12,166,722) 3,049,840 0 6,595,296 0 5,276,503 0 0 24,780 (649,216) 7,704 (656,920) 0 0 0 (656,920) (.15) (.15)
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