-----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, AmFubNaHZ1f6I8ePCxRmccnB6L21vXgfq08vQz4QjBZU27v/VLlFCT4Rfk0Ys49e ykbEI0NnUikw0PkKOh9rfA== 0000921895-97-000871.txt : 19971117 0000921895-97-000871.hdr.sgml : 19971117 ACCESSION NUMBER: 0000921895-97-000871 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITECH SYSTEMS INC CENTRAL INDEX KEY: 0000099047 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 061344888 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-12292 FILM NUMBER: 97720754 BUSINESS ADDRESS: STREET 1: 333 LUDLOW STREET CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2034258000 10QSB 1 QUARTERLY REPORT ON FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark one) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1997 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to________ COMMISSION FILE NO. 0-21324 TRINITECH SYSTEMS, INC. (Exact name of registrant as specified in its charter) NEW YORK 06-1344888 (State of incorporation) (I.R.S. Employer identification number) 333 LUDLOW STREET, STAMFORD, CONNECTICUT 06902 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 425-8000 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / 8,259,530 shares of Common Stock were issued and outstanding as of November 11, 1996. PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements TRINITECH SYSTEMS, INC.
BALANCE SHEETS (Unaudited) September 30, December 31, ASSETS 1997 1996 ----------------- -------------------- CURRENT ASSETS: Cash $2,666,060 $1,198,730 Accounts receivable 2,312,341 3,802,364 Inventories 1,586,380 1,154,187 Prepaid expenses and other 338,905 315,911 ----------------- -------------------- Total Current Assets 6,903,686 6,471,192 ----------------- -------------------- EQUIPMENT - net of accumulated depreciation of $586,928 and $417,087 at September 30 and December 31, respectively 802,715 434,638 ----------------- -------------------- OTHER ASSETS - net of accumulated amortization of $901,031 and $832,652 at September 30 and December 31, respectively 604,747 617,506 ----------------- -------------------- TOTAL $8,311,148 $7,523,336 ================= ==================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable - trade $855,102 $1,386,306 Accrued expenses 278,268 525,653 Current portion of term loans payable 51,648 25,994 Credit line payable - 745,000 Advance billings 141,829 149,675 Payroll and other taxes payable 94,194 65,808 ----------------- -------------------- Total Current Liabilities 1,421,041 2,898,436 TERM LOANS PAYABLE 54,746 31,065 ----------------- -------------------- Total Liabilities 1,475,787 2,929,501 ----------------- -------------------- COMMITMENTS: STOCKHOLDERS' EQUITY: 10% Convertible preferred stock - par value $1.00; 1,000,000 shares authorized; -0- outstanding - - Common stock - par value $.001; 15,000,000 shares authorized 8,242,530 and 7,375,030 shares issued and outstanding in 1997 and 1996, respectively 8,243 7,375 Additional paid-in capital 9,814,045 6,088,975 Accumulated deficit (2,986,927) (1,502,515) ----------------- -------------------- Total Stockholders' Equity 6,835,361 4,593,835 ----------------- -------------------- TOTAL $8,311,148 $7,523,336 ================= ====================
See Notes to Financial Statements. 2 TRINITECH SYSTEMS, INC. STATEMENTS OF OPERATIONS (Unaudited)
--- Three Months Ended --- --- Nine Months Ended --- September 30, September 30, September 30, September 30, 1997 1996 1997 1996 ------------------ -------------------- --------------------- ---------------- REVENUES: Sales $ 549,509 $ 837,359 $2,990,786 $3,060,009 Service contracts 259,793 184,660 768,638 533,973 ----------- ---------- ---------- ---------- Total Revenues 809,302 1,022,019 3,759,424 3,593,982 ----------- ---------- ---------- ----------- COST OF SALES AND SERVICE: Parts and materials 206,217 275,073 1,009,202 1,516,223 Labor, overhead and other costs 278,888 221,160 717,098 516,947 ----------- ---------- ---------- ---------- Total Cost of Sales and Service 485,105 496,233 1,726,300 2,033,170 ----------- ---------- ---------- ---------- GROSS PROFIT 324,197 525,786 2,033,124 1,560,812 ----------- ---------- ---------- ---------- EXPENSES: Selling, general and administrative 1,241,663 799,273 3,476,698 2,153,268 Depreciation and amortization 60,008 42,165 158,594 118,379 ----------- ---------- ---------- ---------- Total Expenses 1,301,671 841,438 3,635,292 2,271,647 ----------- ---------- ---------- ---------- LOSS FROM OPERATIONS (977,474) (315,652) (1,602,168) (710,835) OTHER INCOME - NET 41,240 18,860 117,756 55,919 ----------- ---------- ------------ ----------- NET LOSS ($936,234) ($296,792) ($1,484,412) ($654,916) =========== ========== ============ =========== NET LOSS PER COMMON SHARE $ ( 0.11) $( 0.04) $( 0.18) $( 0.09) =========== ========== ============ =========== AVERAGE COMMON SHARES OUTSTANDING 8,219,800 7,306,500 8,027,200 7,292,100 =========== ========== ============ ===========
See Notes to Financial Statements. 3 TRINITECH SYSTEMS, INC. STATEMENTS OF CASH FLOWS (Unaudited)
---Nine Months Ended --- September 30, September 30, 1997 1996 ------------------------------------------- OPERATING ACTIVITIES: Net loss ($1,484,412) ($654,916) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 439,264 348,737 Changes in assets and liabilities: Accounts receivable 1,490,023 298,853 Inventories (432,193) (105,789) Prepaid expenses (22,994) (158,470) Accounts payable - trade (531,204) 205,199 Deferred revenue (7,846) (56,583) Payroll and other taxes payable 28,386 34,534 Accrued expenses (247,385) (52,744) ------------------ -------------------- Net cash used in operating activities (768,361) (141,179) ------------------ -------------------- INVESTING ACTIVITIES: Payments for equipment (537,918) (111,732) Payments for other assets (256,664) (268,085) ------------------ -------------------- Net cash used in investing activities (794,582) (379,817) ------------------ -------------------- FINANCING ACTIVITIES: Issuance of common stock 3,725,938 73,620 Proceeds from borrowings - 30,000 Repayment of borrowings (695,665) (12,500) ------------------ -------------------- Net cash provided by financing activities 3,030,273 91,120 ------------------ -------------------- INCREASE (DECREASE) IN CASH 1,467,330 (429,876) CASH, BEGINNING OF PERIOD 1,198,730 1,258,119 ------------------ -------------------- CASH, END OF PERIOD $2,666,060 $828,243 ================== ====================
See Notes to Financial Statements. 4 TRINITECH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The accompanying financial statements have been prepared by the Company without audit (except for the balance sheet information as of December 31, 1996 which has been derived from the Company's audited financial statements) in accordance with generally accepted accounting principles for interim financial information and instructions to Form 10-QSB and Item 310 (b) of Regulation S-B. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying financial statements do not include certain footnotes and financial presentations normally required under generally accepted accounting principles and, therefore, should be read in conjunction with the Company's 1996 audited financial statements. Results of operations for the period ended September 30, 1997 are not necessarily indicative of operating results for the fiscal year. 2. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or market. Inventories consisted of the following: September 30, 1997 December 31, 1996 ------------------ ----------------- Parts $1,076,326 $ 750,722 Finished goods 510,054 403,465 ---------- ----------- Total $1,586,380 $ 1,154,187 ========== ========== 3. PER SHARE INFORMATION Net loss per common share is based on the weighted average number of common shares outstanding. Common stock equivalents have not been included in the per share calculation because their effect is anti-dilutive. In February of 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128, "Earnings Per Share". The Company will adopt this standard, as required, at the end of this year. Had this standard been adopted at the beginning of 1997, for the three and nine month periods ended September 30, 1997 the Company would have reported basic loss per share of $0.11 and $0.18, respectively. 4. RIGHTS AGREEMENT On September 1, 1997, the Board of Directors declared a dividend distribution of one Right for each outstanding share of Common Stock, par value $.001 per share, of the Company to stockholders of record on September 19, 1997. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Preference Stock, par value $.001 per share, of the Company, at a price of $40 per one one-hundredth of a Preference Share, subject to adjustment, upon change of control in the Company, as defined in the rights agreement. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company commenced its present business operations in January 1991 through the acquisition of a software license for its Guided-Input(R) Trinitech TouchPad(R) System. The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere herein. Certain statements included in this report, including, but not limited to, statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations, which are not historical facts may be deemed to contain forward looking statements with respect to events, the occurrence of which involves risks and uncertainties, including, but not limited to, the Company's expectations regarding net sales, gross profit, operating income (loss) and financial condition. REVENUES Revenues for the three and nine months ended September 30, 1997 were $809,302 and $3,759,424 as compared to $1,022,019 and $3,593,982 in the comparable periods in 1996. The decrease in revenues during the three month period ended September 30, 1997 over the comparable 1996 quarter principally resulted from two reasons, 1) the Company is shifting its revenue mix from traditional capital equipment sales to licensing-based and subscription-based revenue, resulting in revenue to recur over a 12 to 36 month period rather than up-front, 2) the Company is now offering its trading-products together with linkage through its data-center. In connection therewith, several contracts that the Company had on hand, at the end of the third quarter, involves outside third party services, ie. communication linkage, expected to be completed during the fourth quarter. As a result, revenue on such contracts will not occur until they are fully installed and supporting the new services of the data-center. Management is of the opinion that charging customers by subscription and adding additional data-center routing services, should provide an increasing rate of new sales contracts and increase in revenue in the future. Subscription revenue contracts are generally for an initial period of one year with one to three year renewal periods. Initial annual revenues range from $15,000 to over $100,000, per contract. Most contracts provide the customer with a basic system or infra-structure, via the Company's data-center. Most contracts are entered into by the customer with the intention to expand the level of services subscribed to, once the basic system and infra-structure is operational. During the three months ended September 30, 1997, capital equipment sales, software and subscription revenue were approximately 58%, 28% and 14% of sales revenues, respectively as compared to 70%, 30% and 0%, respectively during the three months ended September 30, 1996. Although subscription-based revenue has the short-term negative impact of reduced revenues in the early stage, management believes that the change will have a long-term positive impact on the future revenue growth of the Company. Management is of the opinion that this change will result in additional new orders and increased market share that it otherwise would not have had, as well as longer-term predictable revenues per customer. The increase in revenues for the nine month period ended September 30, 1997 over the comparable 1996 period was principally due to an increase in the delivery of software systems, specifically for the Company's FIXtalk software system, partially offset by a decrease in capital equipment sales. Approximately 28% and 37% of the Company's sales revenues for the three and nine month periods ended September 30, 1997 were derived 6 from software licenses as compared to approximately 30% and 20% during the comparable periods in 1996. Revenue from export sales approximated $87,000 (16% of sales) and $1,528,000 (51% of sales) during the three and nine months ended September 30, 1997 as compared to $617,000 (74% of sales) and $2,209,000 (72% of sales) during the comparable periods in 1996. In addition, revenues from service contracts increased by 41% and 44% in the three and nine month periods ended September 30, 1997 over the comparable 1996 periods. The increase in service revenue resulted from increased sales of hardware and software products during the past year. COST OF SALES AND SERVICE AND GROSS PROFIT The Company's cost of sales and service is principally comprised of labor, materials, overhead and amortization of capitalized product enhancement costs. Gross profit as a percentage of total revenues were 40.1% and 54.1% for the three and nine month periods ended September 30, 1997 as compared to 51.4% and 43.4% during the comparable periods in 1996. The increase in gross profit percentage, experienced by the Company during the nine month period in 1997, principally resulted from an increase in the amount of higher margin software installations which was partially offset by lower margins associated with the Company's touch vending terminal products sold during the first quarter of 1997 and throughout 1996. The Company obtains its materials and supplies from a variety of vendors in the US and Far East. During the three and nine months ended September 30, 1997, the Company did not experience any significant price increases in its component parts purchased. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for the three and nine month periods ended September 30, 1997 were $1,241,663 and $3,476,698 as compared to $799,273 and $2,153,268 in the comparable periods in 1996, an increase of 55.3% and 61.5%, respectively. Such increases reflected the continued expansion of the development teams both in the U.S and in London. The expansion in development efforts relates to the Company's plans of providing an increased number of new additional services during second half of 1997. These services relate to offering subscription and transaction based order-routing, via the Company's data-center, to multiple exchange-floors and between the "Buy-side" and "Sell-side" industry. As a result, the Company experienced increases in salaries and related personnel costs, travel expenses, recruiting fees and various office expenses. During the past two years, the Company added personnel principally to its technical programming and sales staff and, during the nine months ended September 30, 1997, the Company added 15 new employees. The Company's recruitment effort, which began during 1993, continues to strengthen the Company's infrastructure and position the Company to respond to increasing market and revenue opportunities. The Company, during the past several years, has spent a considerable effort in developing a variety of "trader desk-top" and "exchange-floor" trading systems. Management believes that the investment in development of the new data-center, and its services, are designed to better leverage the existing products together with providing additional sources of revenue. The Company has also continued its marketing programs for 1997, primarily focusing on public relations activities, production of various product brochures, and representation at technological exhibitions planned throughout the year. Research and development (new explorative research) expenses for the three and nine month periods ended September 30, 1997 approximated $71,900 and $212,800 as compared to $56,000 and $180,000 in the comparable periods in 1996 and are included in selling, general and administrative expenses. 7 OTHER INCOME Other income consists principally of interest earned on cash balances and sublease income earned. Interest income for the three and nine month periods ended September 30, 1997 were approximately $41,200 and $104,800 as compared to $9,200 and $26,700 in the comparable periods in 1996. The increase in other income principally results from interest earned on higher cash balances maintained by the Company during 1997. The Company previously leased a portion of its corporate office facility under a three-year sublease which expired on April 30, 1997. Due to the continuing expansion of operations, (see "Selling, General and Administrative" above) the Company has decided not to renew the sublease and incorporated such space into its existing corporate facility. Sublease rental income earned during the three and nine month periods ended September 30, 1997 approximated $0 and $13,000 as compared to $9,700 and $29,200 in the comparable 1996 periods. NET INCOME (LOSS) Net loss for the three months ended September 30, 1997 was $936,234 ($0.11 per share) as compared to a net loss of $296,792 ($0.04 per share) in the three months ended September 30, 1996. Net loss for the nine months ended September 30, 1997 totaled $1,484,412 ($0.18 per share) as compared to a net loss of $654,916 ($0.09 per share) in the nine months ended September 30, 1996. This increase in net loss, during the three and nine month periods ended September 30, 1997, principally resulted from 1) decrease in "capital sales" type revenue resulting from the Company moving to a subscription-based revenue model which presently is in its early stage of growth and 2) lower margins experienced on the sale of the Company's touch vending terminal products sold during the first quarter of 1997. See "Revenues" and "Cost of Sales and Service and Gross Profit" above. Management has made a considerable effort with respect to an expansion of its operations, development of various trading systems which began in 1993 and continues into 1997 and changes to its business model to that of a subscription-based product offering. The Company believes that this expansion of personnel, facilities, product portfolio and subscription-based model will better position the Company and facilitate its future growth. However, in spite of its optimism, management is also cautioning that the Company's aggressive conversion from a capital sales model to a subscription-based model is causing revenue recognition from subscription-based orders to be realized over a longer period of time than the previous capital sales model. LIQUIDITY AND CAPITAL RESOURCES Since its formation, the Company's primary source of working capital has been private offerings of its securities, through which the Company has raised approximately $9.8 million of working capital. At September 30, 1997, cash balances increased to $2,666,060 from $1,198,730 at December 31, 1996. The Company's current assets at September 30, 1997 exceeded its current liabilities by approximately $5,483,000. The Company at September 30, 1997 had long-term debt totaling approximately $54,700 which represents secured term loans on the purchase of development equipment. In addition, at September 30, 1997, the Company had no material commitments for capital expenditures or inventory purchases. The Company had available a one million dollar bank line of credit facility for the purpose of financing accounts receivable and, at September 30, 1997, the Company had not used the line of credit facility. The line of credit, secured by accounts receivable and inventory, expires on June 30, 1999. Interest on the line of credit is based on the bank's prime rate plus one percent. 8 The Company believes that with its available capital, line of credit facility and anticipated funds generated from operations, it will be able to fund its cash needs through the end of 1997 without the need for additional capital or financing. The Company intends to utilize its positive financial position to internally finance its continuing research and development activities and anticipated sales growth. The Company's financial requirements and its ability to meet them thereafter will depend largely on its future financial performance. However, in the event the Company's operations do not generate cash to the extent currently anticipated by management of the Company and grow more rapidly than anticipated, it is possible that the Company would require additional funds beyond 1997. At this time, the Company does not know what sources, if any, would be available to it for such funds, if required. In addition, at September 30, 1997, the Company has warrants outstanding for the purchase of 528,837 shares of its Common stock at exercise prices between $2.00 to $4.50. Assuming the exercise of all such outstanding Warrants, the Company would realize approximately $1,477,000 in gross proceeds. 9 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 13, 1997 TRINITECH SYSTEMS, INC. (Registrant) By: /s/ Peter Kilbinger Hansen -------------------------- Peter Kilbinger Hansen Chairman of the Board and President (Chief Executive Officer) By: /s/ William E. Alvarez, Jr. --------------------------- William E. Alvarez, Jr. Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) EX-27 2 ARTICLE 5 FDS FOR 10-QSB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FORM 10-QSB FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 2,666,060 0 2,312,341 0 1,586,380 6,903,686 1,389,643 586,928 8,311,148 1,421,041 0 0 0 8,243 9,814,045 8,311,148 2,990,786 3,759,424 1,726,300 1,726,300 0 0 0 (1,484,412) 0 (1,484,412) 0 0 0 (1,484,412) (.18) (.18)
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