-----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, NF9XIDuBB1av/F7hZlXow8oywz3OKQjT6JfJ+VTGlKUkOfBAMXenDlKw7bLg5Y/l 4bc4BGm5YgY3J8T/LXWGRg== /in/edgar/work/0000950170-00-001768/0000950170-00-001768.txt : 20001114 0000950170-00-001768.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950170-00-001768 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAZTEC INTERNATIONAL INC CENTRAL INDEX KEY: 0000801354 STANDARD INDUSTRIAL CLASSIFICATION: [7370 ] IRS NUMBER: 330178457 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15353 FILM NUMBER: 760057 BUSINESS ADDRESS: STREET 1: 900 MIDDLESEX TURNPIKE BUILDING 5 CITY: BILLERICA STATE: MA ZIP: 01821-3929 BUSINESS PHONE: 5082629600 MAIL ADDRESS: STREET 1: 900 MIDDLESEX TURNPIKE BUILDING 5 CITY: BILLERICA STATE: MA ZIP: 01821-3929 10-Q 1 0001.txt 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 September 30, 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) 900 Middlesex Tpk., 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 November 10, 2000, was 5,549,928 shares. SAZTEC INTERNATIONAL, INC. FORM 10-QSB QUARTER ENDED SEPTEMBER 30, 2000 CONTENTS Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Statements of Operations - Three months ended September 30, 2000 and 1999 3 Consolidated Balance Sheets - September 30, 2000 and June 30, 2000 4 Consolidated Statement of Changes in Stockholders' Equity - September 30, 2000 5 Consolidated Statements of Cash Flows - Three months ended September 30, 2000 and 1999 6 - 7 Notes to Consolidated Financial Statements - September 30, 2000 and 1999 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 12 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 SEPTEMBER 30, 2000 AND 1999 (Unaudited) 2000 1999 ----------- ----------- Revenues $ 1,851,132 $ 2,181,781 Cost of services 1,574,106 1,635,683 ----------- ----------- Gross profit 277,026 546,098 Selling and administrative expense 451,997 579,508 ----------- ----------- Loss from operations (174,971) (33,410) Interest expense 36,571 10,864 Loss before provision for income taxes (211,542) (44,274) Income taxes -- -- ----------- ----------- Net loss applicable to common stockholders $ (211,542) $ (44,274) =========== =========== (Loss) per share of common stock: Basic and diluted net loss applicable to common stockholders $ (.047) $ (.01) =========== =========== Weighted average number of shares 4,515,747 4,461,121 =========== =========== See accompanying notes. 3 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND JUNE 30, 2000
ASSETS September 30, June 30, 2000 2000 ------------ ------------ Unaudited Audited ------------ ------------ Current assets Cash and cash equivalents $ 213,963 $ 484,294 Restricted cash 27,230 27,230 Accounts receivable, less allowance for doubtful accounts of $42,014 at September 30, 2000 and $42,911 at June 30, 2000 1,298,644 1,442,136 Work in process 40,206 6,909 Prepaid expenses and other current assets 158,597 119,765 ----------------------------- Total current assets 1,738,640 2,080,334 Property and equipment, net 220,278 306,440 Other assets Goodwill and other intangible assets, less accumulated amortization of $102,992 at September 30, 2000 and $99,962 at June 30, 2000 122,370 125,400 Deposits and other assets 89,738 46,515 ----------------------------- Total assets $ 2,171,026 $ 2,558,689 ============================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Line of Credit $ 541,728 $ 545,998 Convertible note payable 500,000 500,000 Current portion of long-term debt and capital lease obligations 50,572 89,102 Accounts payable 1,096,596 1,065,817 Accrued liabilities 363,761 517,990 Customer deposits 65,122 75,653 ----------------------------- Total current liabilities 2,617,779 2,794,560 Long-term debt and capital lease obligations less current portion 42,134 57,186 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 and 4,515,747 shares issued and outstanding at June 30, 2000 and September 30, 2000 12,450,675 12,435,975 Contributed capital 14,498 14,498 Accumulated deficit (12,850,829) (12,639,287) Other comprehensive income (103,231) (104,243) ----------------------------- Total stockholders' equity (488,887) (293,057) ----------------------------- Total liabilities and stockholders' equity $ 2,171,026 $ 2,558,689 =============================
See accompanying notes. 4 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY SEPTEMBER 30, 2000
Common Stock ----------------------------- Cumulative Number of Contributed Accumulated Translation Shares Amount Capital Deficit Adjustment ------------ ------------ ------------ ------------- ------------ Balance at June 30, 2000 4,469,371 $ 12,435,975 $ 14,498 $(12,639,287) $ (104,243) Stock issued pursuant to Employee options and grants 46,376 $ 14,700 Net loss (211,542) Translation adjustment 1,012 ------------------------------------------------------------------------------ Balance at September 30, 2000 4,515,747 $ 12,450,675 $ 14,498 $(12,850,829) $ (103,231) ==============================================================================
See accompanying notes. 5 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited)
Increase (decrease) in cash 2000 1999 ----------- ----------- Cash flows from operating activities: Net loss $ (211,542) $ (44,274) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,071 59,117 Provision for (recovery of) bad debts (897) 11,749 Changes in assets and liabilities: Accounts receivable 144,388 (115,394) Work in process (33,297) (84,131) Prepaid expenses and other current assets (43,123) (9,478) Deposits and other assets (43,223) 332 Accounts payable 30,779 53,924 Accrued liabilities (154,230) (203,181) Customer deposits and non-current accrued expenses (10,531) (86,832) --------------------------- Net cash used in operating activities (318,606) (418,168) --------------------------- Cash flows from investing activities: Disposals (additions) to property and equipment net 86,121 (22,575) Payments received on notes receivable 4,291 2,138 --------------------------- Net cash provided by (used by) investing activities 90,412 (20,437) --------------------------- Cash flows from financing activities: Principal payments on debt and capital lease Obligations (53,581) (22,038) Borrowings on revolving credit line 1,576,450 1,751,487 Payments on revolving credit line (1,580,720) (1,423,195) Issuance of common stock issue 14,700 --------------------------- Net cash (used in) provided by financing activities (43,151) 306,254 --------------------------- Effect of exchange rate changes on cash 1,014 9,248 --------------------------- Net increase (decrease) in cash and cash equivalents (270,331) (123,103) Cash and cash equivalents at beginning of period 484,294 338,088 --------------------------- Cash and cash equivalents at end of period $ 213,963 $ 214,985 ===========================
See accompanying notes. 6 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited)
2000 1999 ------- ------- Supplemental schedule of non-cash investing and financing activities: Financed purchases of property and equipment through notes payable $ 0 $ 0 ================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $22,196 $14,957 ================== Income taxes $ 0 $ 0 ==================
See accompanying notes. 7 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 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 1. COMMON STOCK Per a resolution adopted by the Board of Directors, the Company issued on July 19, 2000, 46,376 shares of common stock in lieu of compensation in the amount of $14,700 to certain key employees. The price used for calculation of the shares was based on the average of close price for the 30 day period prior to June 14, 2000, which calculated to $.317/share NOTE 3. FOREIGN OPERATIONS AND MAJOR CUSTOMERS-SEGMENTS Revenue, 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, and Italy. Identifiable assets of Saztec Europe Ltd. located outside of Ardrossan, Scotland are immaterial. Quarter Ended September 30, 2000 1999 ----------- ----------- Revenue United States $ 1,488,873 $ 1,704,516 United Kingdom/Western Europe* 362,259 477,265 ----------- ----------- $ 1,851,132 $ 2,181,781 =========== =========== Income (loss) before income taxes United States $ (286,492) $ 57,204 United Kingdom/Western Europe 74,950 (101,478) ----------- ----------- $ (211,542) $ (44,274) =========== =========== Depreciation United States $ 36,268 $ 36,415 United Kingdom/Western Europe (36,227) 19,672 Amortization-U.S. only 3,030 3,030 ----------- ----------- $ 3,071 $ 59,117 =========== =========== Identifiable Assets September 30, 2000 September 30, 1999 ------------------ ------------------ United States $ 1,631,164 $ 1,959,653 United Kingdom 539,862 906,900 ----------- ----------- $ 2,171,026 $ 2,866,553 =========== =========== * Adjusted for intercompany revenue 8 NOTE 4. 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 period which totaled 4,515,747 and 4,461,121 for the quarters ended September 30, 2000, and 1999, respectively. NOTE 5. SUBSEQUENT EVENTS: In October, 2000, the Company entered into a one-year note payable with a related party for $350,000 due October, 2001. Interest accrues at Prime plus 2% and is due upon maturity. In October, 2000, the Company also entered into a one-year convertible note payable with a second related party (Datamatics Technology Ltd.) for $550,000 due October, 2001. Interest accrues at Prime plus 2% and is due upon maturity. The note may be converted into common stock at the conversion price of $0.36/share. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Revenue for the three months ended September 30, 2000 decreased 15.2% to $1,851,132 from $2,181,781 for the quarter ended September 30, 1999. U.S. revenue for the quarter decreased 12.6% and European revenue decreased 3.5% compared to the prior year first quarter. The decrease in the US revenue was mainly in the general data conversion service area of the business. Resume processing remained steady. The company reorganized its business in the US and Europe to move to an `outsource' business model to overcome capacity limitations which limited growth and hampered the introduction of more effective workflow methods. Saztec recently announced that Datamatics Technologies Limited, a premier information technology and knowledge management provider, based in Mumbai, India, has increased its investment in Saztec. This recent event will enable a tighter coupling of the Saztec and Datamatics capabilities to provide end-to-end knowledge management solutions. Loss before taxes of $(211,542) increased $167,268 as compared with $(44,274) in the prior year. U.S. Income before taxes decreased $343,696 to $(286,492), while Europe Income improved to $74,950 as compared to a loss of $(101,478) for the period the previous year. Gross profit for the quarter of $277,026 was $269,072 lower and gross margin percentage of 15% was 40% lower than results from the first quarter of the prior year. Although the headcount was reduced, both in Europe and the US, other costs were incurred in technology development to aid the transition process. Selling and administrative (S&A) expenses for the current year quarter decreased $127,511 to $451,997 from $579,508 for the same period in the prior year. As a percentage of revenues, S&A decreased to 24.4% from the 26.6% ratio of the prior year period. Capital Resources and Liquidity At September 30, 2000 the Company had borrowed $541,728 under its revolving credit agreement which allows for borrowings of $800,000. The revolving credit agreement provides for interest at the lender's prime rate plus 2.5% (12.00 % at September 30, 2000). The credit agreement is collateralized by substantially all domestic assets of the Company, including the stock of subsidiaries. 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 was from June 22, 1999 to June 21, 2000, and was renewed for a one-year period until June 21, 2001. Maximum borrowing under the agreement is limited to 80% of outstanding domestic accounts receivable less than ninety days old, up to $800,000. The Company is in compliance with covenants contained in the renewed agreement. 10 On June 30, 2000 the Company executed a convertible promissory note agreement with Maida Vale Ltd, a subsidiary owned indirectly by Domain Foundation, a major shareholder, in the amount of $500,000 payable with interest due on June 29, 2001. The note agreement provides for simple interest at the prime lending rate plus 2.0%. The note may be converted to shares of Saztec common stock at the holders request at any time during the term of the note at an exchange rate calculated at $.50 per share for the outstanding principle and interest at the time of the conversion. This note along with accumulated interest was converted into common stock on October 18, 2000. The total amount due and converted was $517,090.50 or 1,034,181 shares. 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. 11 SAZTEC INTERNATIONAL, INC. SEPTEMBER 30, 2000 FORM 10-QSB PART II - OTHER INFORMATION ITEM 1. Legal Proceedings None. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities. None. ITEM 4. Submission of Matters to a Vote of Security Holders None. ITEM 5. Other Information On October 19, 2000 at a regular meeting of the board of directors of the company, the following individuals were elected to fill vacant board seats until the next annual meeting of shareholders and until their successors are duly elected and qualified: Dr. Lalit S. Kanodia Vidur Bhogilal ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits The following Exhibits are 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: November 14, 2000 SAZTEC INTERNATIONAL, INC. -------------------------- (Registrant) By: /S/ Christopher Parker -------------------------------- Christopher Parker President and CEO 13 EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT DESCRIPTION - -------------- ------------------- 27 Financial Data Schedule EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 1 3-MOS JUN-30-2001 JUL-1-2000 SEP-30-2000 213,963 0 1,340,658 (42,014) 40,206 1,738,640 3,602,441 (3,382,163) 2,171,026 2,617,779 0 0 0 12,450,675 (12,939,562) 2,171,026 0 1,851,132 0 1,574,106 467,296 0 36,571 (211,542) 0 (211,542) 0 0 0 (211,542) (.047) (.047)
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