-----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, VIVZ0bzpczofsUWgas8z2JJOibpAOzYuxYp6r1NOWO0ADP1UeCWFB3vvz31lVR8J q0Y7jsJ9aSJtcbfBZPLz8g== 0000950170-99-001793.txt : 19991117 0000950170-99-001793.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950170-99-001793 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99755504 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 SEPTEMBER 30, 1999 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 November 15, 1999, was 4,461,121 shares. SAZTEC INTERNATIONAL, INC. FORM 10-QSB QUARTER ENDED SEPTEMBER 30, 1999 CONTENTS
PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Statements of Operations - Three months ended September 30, 1999 and 1998 3 Consolidated Balance Sheets - September 30, 1999 and June 30, 1999 4 Consolidated Statement of Changes in Stockholders' Equity - September 30, 1999 5 Consolidated Statements of Cash Flows - Three months ended September 30, 1999 and 1998 6 - 7 Notes to Consolidated Financial Statements - September 30, 1999 and 1998 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, 1999 AND 1998 (Unaudited)
1999 1998 ----------- ----------- REVENUE $ 2,181,781 $ 1,766,685 Cost of services 1,635,683 1,503,209 ----------- ----------- GROSS PROFIT 546,098 263,476 Selling and administrative expense 579,508 509,203 ----------- ----------- LOSS FROM OPERATIONS (33,410) (245,727) Interest expense 10,864 8,156 ----------- ----------- LOSS BEFORE PROVISION FOR INCOME TAXES (44,274) (253,883) Income tax benefit -- (76,601) ----------- ----------- NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (44,274) $ (177,282) =========== =========== (LOSS) PER SHARE OF COMMON STOCK: Basic and diluted net loss applicable to common stockholders $ (.01) $ (.04) =========== =========== Weighted average number of shares 4,461,121 4,461,121 =========== ===========
See accompanying notes. 3 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1999 AND JUNE 30, 1999
SEPTEMBER 30, 1999 JUNE 30, 1999 ------------------ ------------- ASSETS (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 214,985 $ 338,088 Restricted cash 26,210 26,210 Accounts receivable, less allowance for doubtful accounts of $39,904 at September 30 and $28,155 at June 30 1,716,218 1,612,573 Work in process 202,851 118,720 Prepaid expenses and other current assets 122,079 112,601 ------------ ------------ TOTAL CURRENT ASSETS 2,282,343 2,208,192 PROPERTY AND EQUIPMENT, NET 388,564 422,076 OTHER ASSETS Goodwill and other intangible assets, less accumulated amortization of $90,872 at September 30 and $87,842 at June 30 134,490 137,520 Deposits and other assets 61,156 63,626 ------------ ------------ TOTAL ASSETS $ 2,866,553 $ 2,831,414 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank note payable $ 328,291 $ 0 Current portion of long-term debt and capital lease obligations 169,030 172,375 Accounts payable 674,290 620,366 Accrued liabilities 528,015 728,230 Customer deposits 298,629 385,461 ------------ ------------ TOTAL CURRENT LIABILITIES 1,998,255 1,906,432 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 85,346 104,039 ACCRUED EXPENSES, NON-CURRENT 4,389 7,355 STOCKHOLDERS' EQUITY Preferred stock-no par value; 1,000,000 authorized; no shares issued Common stock-no par value; 10,000,000 shares authorized; 4,461,121 shares issued at September 30 and June 30 12,430,811 12,430,811 Contributed capital 14,498 14,498 Accumulated deficit (11,554,160) (11,509,886) Cumulative translation adjustment (112,586) (121,835) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 778,563 813,588 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,866,553 $ 2,831,414 ============ ============
See accompanying notes. 4 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY SEPTEMBER 30, 1999
COMMON STOCK -------------------------- CUMULATIVE NUMBER CONTRIBUTED ACCUMULATED TRANSLATION OF SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT --------- ------------ -------------- ------------ ------------ Balance at June 30, 1999 4,461,121 $ 12,430,811 $ 14,498 $(11,509,886) $ (121,835) Net loss (44,274) Translation adjustment 9,249 --------------------------------------------------------------------------------------- Balance at September 30, 1999 4,461,121 $ 12,430,811 $ 14,498 $(11,554,160) $ (112,586) =======================================================================================
See accompanying notes. 5 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Unaudited)
INCREASE (DECREASE) IN CASH 1999 1998 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (44,274) $ (177,282) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 59,117 53,398 Provision for (recovery of) bad debts 11,749 (3,555) Changes in assets and liabilities: Accounts receivable (115,394) 316,366 Work in process (84,131) 57,257 Prepaid expenses and other current assets (9,478) (7,391) Deposits and other assets 332 (19,458) Accounts payable 53,924 (13,364) Accrued liabilities (203,181) (174,445) Customer deposits and non-current accrued expenses (86,832) (85,074) ------------------------------ NET CASH USED IN OPERATING ACTIVITIES (418,168) (53,548) ------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (22,575) (23,317) Payments received on notes receivable 2,138 5,567 Decrease in restricted cash 0 141,358 ------------------------------ NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES (20,437) 123,608 ------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt and capital lease Obligations (22,038) (23,663) Borrowings on revolving credit line 1,751,487 785,995 Payments on revolving credit line (1,423,195) (815,677) Proceeds from common stock issue ------------------------------ NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 306,254 (53,345) ------------------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH 9,248 6,151 ------------------------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (123,103) 22,866 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 338,088 513,192 ------------------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 214,985 $ 536,058 ==============================
See accompanying notes. 6 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Unaudited)
1999 1999 ------- ------- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Financed purchases of property and equipment through notes payable $ 0 $ 3,310 ===================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $14,957 $ 7,948 ===================== Income taxes $ 0 $ 4,483 =====================
See accompanying notes. 7 SAZTEC INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1999 AND 1998 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 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, Italy, Spain, and Belgium. Identifiable assets of Saztec Europe Ltd. located outside of Ardrossan, Scotland are immaterial.
QUARTER ENDED SEPTEMBER 30, 1999 1998 ---- ---- Revenue United States $1,704,516 $1,207,910 United Kingdom/Western Europe 477,265 558,775 --------------------------------------------------- $2,181,781 $1,766,685 =================================================== Income (loss) before income taxes United States $57,204 $16,441 United Kingdom/Western Europe (101,478) (270,324) --------------------------------------------------- $ (44,274) $ (253,883) =================================================== Depreciation United States $36,415 $30,274 United Kingdom/Western Europe 19,672 20,094 Amortization-U.S. only 3,030 3,030 --------------------------------------------------- $59,117 $53,398 =================================================== Identifiable Assets SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 ------------------ ------------------ United States $1,959,653 $1,627,744 United Kingdom 906,900 1,211,934 --------------------------------------------------- $2,866,553 $2,839,678 ===================================================
8 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 period which totaled 4,461,121 for the quarters ended September 30, 1999, and 1998, respectively. The inclusion of common stock equivalents would have been antidilutive and were not included for the quarter ended September 30, 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 EPS DILUTIVE EPS 1999 $(.01) $(.009) 1998 $(.04) $ (.04) 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenue for the three months ended September 30, 1999 increased 23.5% to $2,181,781 from $1,766,685 for the quarter ended September 30, 1998. U.S. revenue for the quarter increased 41.1% and European revenue decreased 14.6% compared to the prior year first quarter. The sales mix in the United States continues to grow with the traditional data conversion projects and scanning projects increasing consistently; revenue from Europe was down due to poor delivery performance of a major subcontractor. Revenue from foreign sources comprised 21.9% of consolidated revenues for the first three months of the current year as compared with 31.6% in the prior year. Loss before taxes of $(44,274) was reduced $209,609 as compared with $(253,883) in the prior year. U.S. Income before taxes increased $40,763 to $57,204, while Europe's loss before taxes was $168,846 lower than the previous year. Gross profit for the quarter of $546,098 was $282,262 higher and gross margin of 25% was 10% higher than results from the first quarter of the prior year, with the company continuing to lower it's cost in Europe and move the overall business into higher value added services. Selling and administrative (S&A) expenses for the current year quarter increased $70,305 to $579,508 from $509,203 for the same period in the prior year. As a percentage of sales, S&A decreased to 26.6% from the 28.8% ratio of the prior year period. Cash for the period decreased $123,103, and borrowing on the line of credit increased by $382,292. This is a result of increased sales revenue which increased accounts receivables by $115,394, the pay down of accrued liabilities of $203,181 and an increase in work in process inventory of $84,131, as a result of the work being performed in Europe that is ahead of schedule. All work in process inventory is for existing contracts and should be delivered in the next 3 months. The Company has analyzed its exposure to potential data processing "Year 2000" problems and formulated a plan to ensure its systems were in compliance by December 31, 1999. This has been effected through replacement of PC-level hardware and an upgrade to a third-party software package, which has been certified as Year 2000 compliant. Total cost is under $100,000, and is a subset of ongoing systems upgrades to increase production. CAPITAL RESOURCES AND LIQUIDITY At September 30, 1999 the Company had borrowed $383,292 under its revolving credit agreement which allows for borrowings of $500,000. The revolving credit agreement provides for interest at the lender's prime rate plus 2.5% (10.75 % at September 30, 1999). The credit agreement is secured 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 is from June 22, 1999 to June 21, 2000. Maximum borrowing under the agreement is limited to 80% of outstanding domestic accounts receivable less than ninety days old, up to $500,000. The Company is in compliance with covenants contained in the current agreement and was in compliance at all times with the covenants contained in the agreement during the period ending September 30, 1999. 10 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, 1999 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 None. 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 15, 1999 SAZTEC INTERNATIONAL, INC. (Registrant) By: /S/ PAUL F. PARSHLEY -------------------- Paul F. Parshley CFO 13 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------- ---------------------- 27 Financial Data Schedule EX-27 2
5 1 3-MOS JUN-30-2000 JUL-1-1999 SEP-30-1999 214,985 0 1,756,122 39,904 202,851 2,282,343 3,721,991 3,333,427 2,866,553 1,998,255 85,346 0 0 12,430,811 (98,088) 2,866,553 0 2,181,781 0 1,635,683 579,508 0 10,864 (44,274) 0 (44,274) 0 0 0 (44,274) (.01) (.009)
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