<PAGE> 1
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, 1996
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 Number: 0-21633
BRISTOL TECHNOLOGY SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 58-2235556
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18201 Von Karman Avenue, Suite 305, Irvine, California 92612
(Address of principal executive offices) (Zip Code)
</TABLE>
(714)475-0800
(Issuer's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the issuer (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. X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.001 par value - 4,687,500 shares as of November 30, 1996
Class A Redeemable Common Stock Purchase Warrants - 718,750 as of November 30,
1996
Page 1 of 15
Exhibit Index on Page 13
<PAGE> 2
BRISTOL TECHNOLOGY SYSTEMS, INC.
Index
<TABLE>
<CAPTION>
Page
PART I --- FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
BRISTOL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES (SUCCESSOR):
CASH REGISTERS INCORPORATED (PREDECESSOR):
Consolidated Balance Sheets as of September 30, 1996 (Successor)
and June 30, 1996 (Successor) 3
Consolidated Statement of Operations for the three months ended
September 30, 1996 (Successor) and for the three months ended September
30,1995 (Predecessor) 4
Consolidated Statement of Operations for the period from inception
(April 3, 1996) to September 30, 1996 (Successor), for the six months
ended June 30, 1996 (Predecessor) and for the nine months ended
September 30, 1995 (Predecessor) 5
Consolidated Statement of Cash Flows for the period from inception
(April 3, 1996) to September 30, 1996 (Successor), for the six months
ended June 30, 1996 (Predecessor) and for the nine months ended
September 30, 1995 (Predecessor) 6
Notes to Unaudited Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 9-11
PART II --- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12-15
</TABLE>
2
<PAGE> 3
PART I --- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
BRISTOL TECHNOLOGY SYSTEMS, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Successor)
===============================
September 30, June 30,
1996 1996
------------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 158,755 $ 418,497
Accounts receivable, net of allowance for doubtful accounts
of $23,144 at September 30, 1996 and$10,144 at June 30, 1996 917,111 653,409
Inventories 1,366,193 1,058,364
Deferred tax assets 113,299 116,305
Prepaid expenses and other current assets 323,351 105,468
----------- -----------
Total current assets 2,878,709 2,352,043
Property and equipment, at cost:
Equipment 125,720 56,020
Automobiles 22,881 13,470
Leasehold improvements 45,645 --
----------- -----------
194,246 69,490
Less accumulated depreciation and amortization (12,386) --
----------- -----------
Total property and equipment, net 181,860 69,490
Intangible assets, net of accumulated amortization of $7,356 at
September 30, 1996 434,063 441,419
Deposits 8,040 --
=========== ===========
Total assets $ 3,502,672 $ 2,862,952
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line-of-credit $ 206,014 $ 236,036
Accounts payable 983,283 684,881
Accrued expenses 353,086 226,824
Deferred revenue 230,979 206,078
Customer advances 282,061 140,635
Note payable to related party 40,000 40,000
Current portion of capital lease obligations 4,962 --
----------- -----------
Total current liabilities 2,100,385 1,534,454
Capital lease obligations - non-current portion 49,223 --
Subordinated notes payable 817,500 817,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value:
Authorized shares --- 4,000,000
None issued and outstanding -- --
Common stock, $.001 par value:
Authorized shares --- 20,000,000
Issued and outstanding shares --- 3,250,000 at September 30 and
3,239,405 at June 30 3,250 3,239
Additional paid-in capital 548,998 539,009
Accumulated deficit (16,684) (31,250)
----------- -----------
Total stockholders' equity 535,564 510,998
----------- -----------
Total liabilities and stockholders' equity $ 3,502,672 $ 2,862,952
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
BRISTOL TECHNOLOGY SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
(Successor) (Predecessor)
============ ============
Three Months Ended September 30
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenue:
System sales and installation $ 1,582,736 $ 1,201,348
Service and supplies sales 537,002 462,912
----------- -----------
Net revenue 2,119,738 1,664,260
Costs and expenses:
Cost of system sales and installation 1,079,727 826,662
Cost of service and supplies sales 334,516 283,406
Selling, general and administrative 670,949 463,981
----------- -----------
Total costs and expenses 2,085,192 1,574,049
----------- -----------
Operating income 34,546 90,211
Other (income) expense:
Interest income (5,699) (2,696)
Interest expense 25,679 5,047
----------- -----------
Total other expense 19,980 2,351
----------- -----------
Income before income taxes 14,566 87,860
Income tax provision -- 30,813
----------- -----------
=========== ===========
Net income $ 14,566 $ 57,047
=========== ===========
Net income per common and common equivalent share:
Primary $ 0.004 $ 56.99
=========== ===========
Fully diluted $ 0.004 $ 56.99
=========== ===========
Common and common equivalent
shares used in computing per
share amounts:
Primary 3,250,000 1,001
=========== ===========
Fully diluted 3,250,000 1,001
=========== ===========
</TABLE>
See accompanying notes.
4
<PAGE> 5
BRISTOL TECHNOLOGY SYSTEMS, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
(Successor)
===========
Inception (Predecessor) (Predecessor)
============ ============
(April 3, 1996) Six Months Nine Months
to Ended Ended
September 30 June 30 September 30
1996 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
System sales and installation $ 1,582,736 $ 3,018,990 $ 3,114,773
Service and supplies sales 537,002 998,774 1,311,747
----------- ----------- -----------
Net revenue 2,119,738 4,017,764 4,426,520
Costs and expenses:
Cost of system sales and installation 1,079,727 2,148,267 2,113,168
Cost of service and supplies sales 334,516 634,195 749,663
Selling, general and administrative 702,199 1,172,762 1,271,460
Write-off of cash surrender value of life insurance -- 76,140 --
----------- ----------- -----------
Total costs and expenses 2,116,442 4,031,364 4,134,291
----------- ----------- -----------
Operating income (loss) 3,296 (13,600) 292,229
Other (income) expense:
Interest income (5,699) (11,583) (8,632)
Interest expense 25,679 8,683 16,004
----------- ----------- -----------
Total other (income) expense 19,980 (2,900) 7,372
----------- ----------- -----------
Income (loss) before income taxes (16,684) (10,700) 284,857
Income tax provision (benefit) -- (3,752) 96,984
----------- ----------- -----------
=========== =========== ===========
Net income (loss) $ (16,684) $ (6,948) $ 187,873
=========== =========== ===========
Net income (loss) per common and common equivalent share:
Primary $ (0.006) $ (6.88) $ 187.69
=========== =========== ===========
Fully diluted $ (0.006) $ (6.88) $ 187.69
=========== =========== ===========
Common and common equivalent
shares used in computing per
share amounts:
Primary 2,954,355 1,010 1,001
=========== =========== ===========
Fully diluted 2,954,355 1,010 1,001
=========== =========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
BRISTOL TECHNOLOGY SYSTEMS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(Successor)
==============
Inception (Predecessor) (Predecessor)
============= =============
(April 3, 1996) Six Months Nine Months
to Ended Ended
September 30, June 30 September 30
1996 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
Operating activities
Net income (loss) $ (16,684) $ (6,948) $ 187,873
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating activities:
Depreciation and amortization 19,742 9,930 33,888
Provision for doubtful accounts 13,000 15,224 14,032
Deferred taxes 3,006 8,500 37,507
Changes in operating assets and liabilities:
Accounts receivable (276,702) (195,210) (92,385)
Inventories (307,829) 218,979 (206,841)
Prepaid expenses and other (271,683) 35,364 (11,798)
Accounts payable 364,838 314,026 36,248
Accrued expenses 145,012 9,689 501
Deferred revenue 24,901 (66,542) (19,994)
Customer advances 141,426 (233,487) 109,530
----------- ----------- -----------
Net cash provided by (used in) operating activities (160,973) 109,525 88,561
Investing activities
Purchase of CRI, net of cash acquired of $5,535 (949,427) -- --
Capital expenditures (65,148) (20,650) (8,749)
----------- ----------- -----------
Net cash used in investing activities (1,014,575) (20,650) (8,749)
Financing activities
Debt and capital lease repayments (5,423) -- --
Net borrowings (repayments) on line of credit (30,022) (13,406) (152,803)
Note payable to related party -- (35,000) 70,000
Issuance of subordinated notes payable 817,500 -- --
Issuance (repurchase) of stock 552,248 (37,203) --
----------- ----------- -----------
Net cash provided by (used in) financing activities 1,334,303 (85,609) (82,803)
----------- ----------- -----------
Net increase (decrease) in cash 158,755 3,266 (2,991)
Cash at beginning of period -- 2,269 7,036
=========== =========== ===========
Cash at end of period $ 158,755 $ 5,535 $ 4,045
=========== =========== ===========
Supplemental disclosures of cash flow information:
=========== =========== ===========
Interest paid $ 3,151 $ 8,683 $ 16,004
=========== =========== ===========
Taxes paid $ 4,000 $ 14,500 $ 25,969
=========== =========== ===========
Supplemental disclosure of non-cash transactions:
Capital lease obligations $ 59,608 $ -- $ --
=========== =========== ===========
</TABLE>
See accompanying notes
6
<PAGE> 7
BRISTOL TECHNOLOGY SYSTEMS, INC.
Notes to Unaudited Consolidated Financial Statements
September 30, 1996
Note (A) -- Basis of Presentation
Bristol Technology Systems, Inc. (the "Company") was incorporated on
April 3, 1996. The Company made an acquisition on June 28, 1996 of 100% of the
outstanding common stock of Cash Registers Incorporated (CRI) for approximately
$883,001 in cash and acquisition related expenses of approximately $71,961 (the
"Acquisition"). The Acquisition was accounted for as a purchase in accordance
with Accounting Principles Board Opinion No. 16. The purchase price was
allocated to the underlying assets and liabilities based upon their respective
fair values. The allocation of the purchase price included the assignment of
approximately $441,419 to excess of cost over net assets acquired. The results
of CRI are included in the consolidated financial statements from June 29, 1996.
Accordingly, the financial statements for the period subsequent to the
Acquisition (Successor) are not comparable to the financial statements amounts
for the periods prior to the Acquisition (Predecessor).
The accompanying unaudited consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information, and with the instructions to Form
10-QSB and Item 310 of Regulation S-B Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated balance sheet and footnotes of the
Company as of June 30, 1996 and the financial statements and footnotes of CRI as
of June 30, 1996 and 1995 and for the three years ended June 30, 1996 included
in the Company's Registration Statement on Form SB2.
Note (B) -- Fiscal Year
The Company's fiscal year-end is December 31.
Note (C) -- Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
7
<PAGE> 8
BRISTOL TECHNOLOGY SYSTEMS, INC.
Notes to Unaudited Consolidated Financial Statements
September 30, 1996
Note (D) -- Debt
CRI's line of credit was amended in October 1996 to provide for
aggregate borrowings of $350,000. The line of credit does not have a termination
date, but is reviewed annually for renewal. Borrowings under the line bear
interest at a rate which the Company and bank mutually agree upon. At September
30, 1996, the agreed upon interest rate was 9.25%. Borrowings under the line of
credit are secured by CRI's accounts receivable. As of September 30, 1996, the
Company had $206,014 outstanding under the line. The line prohibits the
reduction or depletion of CRI's capital without 30 days prior written notice to
the bank. At September 30, 1996, the Company was in compliance with the
covenants on the CRI line of credit.
In addition, on October 10, 1996, the Company entered into a loan
agreement with a bank whereby the Company may borrow up to $200,000 under a
revolving line of credit. Borrowings under the line will bear interest at prime
rate plus 1% and interest is payable monthly. The line expires on October 1,
1997. Borrowings under the line are personally guaranteed by two officers of the
Company. The line includes certain covenants including limitations on additional
indebtedness and certain financial covenants.
Note (E) -- Unaudited Pro Forma Information for CRI Acquisition
The following presents the unaudited pro forma results of operations
of the Company for the nine months ended September 30, 1996 and 1995 as if the
CRI Acquisition had been consummated on January 1, 1995, and includes certain
pro forma adjustments resulting from the acquisition, including the
amortization of intangible assets and an increase in interest expense. In
addition, the pro forma provision for income taxes reflects the tax impact of
the pro forma adjustments.
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
Pro Forma Pro Forma
As Adjusted As Adjusted
------------- -------------
Net revenue $6,137,502 $4,426,520
Net income (loss) (82,974) 125,364
Net income (loss) per share (0.03) 0.04
Shares used in computing net income
(loss) per share 2,954,355 2,954,355
The pro forma results of operations are prepared for comparative
purposes only and do not necessarily reflect results that would have occurred
had the CRI Acquisition occurred on January 1, 1995 or the results which may
occur in the future.
Note (F) -- Subsequent Events
On November 20, 1996, the Company successfully completed an initial
public offering of its common stock and warrants. The Company sold 1,437,500
shares of Common Stock and 718,750 Class A Redeemable Common Stock Purchase
Warrants. The Company raised net proceeds, after deducting underwriting
discounts and commissions and the estimated expenses of the offering, of
$7,018,000. On November 22, 1996, $850,000 of these proceeds were used to repay
$817,500 in notes payable as well as $32,500 in accrued interest.
On December 12, 1996, the Company entered into an agreement and plan
of merger with the shareholders of a POS dealership based in Seattle,
Washington, Automated Register Systems, Inc. (ARS) for the purchase of all of
the outstanding common stock of ARS for consideration of approximately
$1,700,000 to be paid with a combination of cash and the Company's common stock.
The transaction will be recorded under the purchase method of accounting.
Company management expects that this merger transaction will close on
approximately December 31, 1996.
8
<PAGE> 9
BRISTOL TECHNOLOGY SYSTEMS, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following information includes forward-looking statements, the realization
of which may be impacted by certain important factors discussed in the "Risk
Factors" section of the Company's final prospectus dated November 12, 1996,
including but not limited to, limited operating history, risks related to the
Company's acquisition strategy, need for additional financing to implement
acquisition strategy, substantial competition, reliance on key personnel,
integration of CRI, dependence of manufacturers, current reliance on major
customer, fixed fee contracts, potential conflicts of interest, control by
management, potential inability to market newly developed products,
anti-takeover effects of certain charter and bylaw provisions, possible
volatility of stock price, possible environmental liabilities and absence of
dividends.
OVERVIEW
The Company was formed in April 1996 to establish a national network of
full service dealerships of retail automation equipment, such as point-of sale
("POS") systems, electronic cash registers ("ECRs") and related hardware and
software. A POS system is used at the "point of sale" in a retail establishment.
It leads or prompts the retail clerk through a sales transaction with a
customer. The Company intends to implement a program of selective POS
dealership acquisitions and consolidations. The Company will then seek to
enhance the profitability of the acquired dealerships through the benefits
derived from the economies of scale flowing from a volume-oriented business,
improved value added operations, better trained personnel, quicker on-site
service, greater product diversity, focused leasing programs, major/national
account programs and enhanced service and support of end user installations.
From April 3, 1996 (date of incorporation) to September 30, 1996,
management of the Company devoted substantially all of its efforts to the
raising of capital, the identification of dealership acquisition candidates and
the acquisition of its first dealership, CRI, on June 28, 1996. The following
discussion and analysis of the results of operations relates to the consolidated
financial statements of the Company for the three months ended September 30,
1996 compared to the stand-alone financial statements of CRI for the three
months ended September 30, 1995. In addition, the following discussion and
analysis of the results of operations relates to the combined financial
statements of the Company from inception (April 3, 1996) to September 30, 1996
and CRI for the six months ended September 30, 1996 compared to the stand-alone
financial statements of CRI for the nine months ended September 30, 1995. The
discussion and analysis of financial condition relates to the consolidated
balance sheet of the Company as of September 30, 1996.
RESULTS OF OPERATIONS
Quarter ended September 30, 1996 compared to the quarter ended September 30,
1995 and Nine months ended September 30, 1996 compared to the nine months ended
September 30, 1995
Net Revenue
The Company's net revenue is comprised of two components: (i) revenue
derived from the sale and installation of hardware and software ("Systems
Revenue") and (ii) revenue derived from the sale of service and supplies
("Service Revenue"). Net revenue for the quarter ended September 30, 1996
increased 27% to $2,120,000 consisting of a 32% increase in System Revenue and a
16% increase in Service Revenue compared to the quarter ended September 30,
1995. Net revenue for the nine months ended September 30, 1996 increased 39% to
$6,138,000 consisting of a 48% increase in System Revenue and a 17% increase in
Service Revenue compared to the nine months ended September 30, 1995. The
increase in System Revenue for the three month period ended September 30, 1996
was primarily a result of the sale of POS systems to several new customers in
the supermarket industry. The increase in System Revenue for the nine months
ended September 30, 1996 was primarily due to a focused effort to increase the
installed customer base along with a substantial increase in the number of
systems sold to CRI's largest customer. The increase in Service Revenue for the
three and nine month periods ended September 30, 1996 was primarily attributed
to an increase in the installed customer base. In addition, the increase in
Service Revenue for the three month period ended September 30, 1996 was due to
the sale of maintenance contracts to customers who had not originally purchased
their equipment from CRI.
The Company's largest customer accounted for approximately 41% and 39%
of net revenue for the quarters ended September 30, 1996 and 1995, respectively.
The same customer accounted for approximately 46% and 28% of net revenue for the
nine months ended September 30, 1996 and 1995, respectively. This customer has
both company-owned stores and independent franchisee stores. To date,
substantially all of the company-owned stores and a majority of the franchisee
stores have purchased their POS systems from the Company. However, the Company
and this customer have no written agreement related to the purchase of new
equipment and, accordingly, the customer may cease purchasing new equipment from
the Company at any time. The Company and this customer do have a written
contract whereby the Company has agreed to provide maintenance services for
certain equipment
9
<PAGE> 10
installed by the Company in this customer's stores. The loss of, or a decline in
orders from this key customer could have a material adverse effect on the
Company's financial and operating results.
During 1995 and 1996, CRI purchased its hardware primarily from two
main vendors, ERC Parts, Inc. ("ERC"), a distributor of Panasonic products, and
NCR Corporation ("NCR"). Sales of ERC and NCR products accounted for
approximately 34% and 18% of net revenue, respectively, for the nine months
ended September 30, 1996 as compared to 29% and 13% of net revenue,
respectively, for the nine months ended September 30, 1995. CRI has supply
agreements with both of these manufacturers. The agreements are non-exclusive,
have geographic limitations and have renewable one-year terms.
Gross Margin
Gross margin for the quarters ended September 30, 1996 and 1995
remained constant at 33%. The gross margin for Systems Revenue increased to 32%
from 31% primarily due to a decrease in pricing discounts which was partially
offset by an increase in headcount in the installation department. The gross
margin for Service Revenue decreased to 38% from 39% primarily due to the
building of infrastructure in the service department through an increase in
headcount.
Gross margin was 32% for the nine months ended September 30, 1996
compared to 35% for the nine months ended September 30, 1995. The gross margin
for Systems Revenue decreased to 30% from 32% primarily due to an investment in
growing the installed base through aggressive pricing in 1996. The gross margin
for Service Revenue decreased to 37% from 43% primarily due to the building of
infrastructure in the service department through an increase in headcount.
Selling, General and Administrative Expenses
Selling, general and administrative ("S,G&A") expenses expressed as a
percentage of net revenue was 32% for the quarter ended September 30, 1996
compared to 28% for the quarter ended September 30, 1995. S,G&A expenses
increased by $207,000, or 45%, to $671,000 from $464,000. S,G&A expenses
expressed as a percentage of net revenue was 31% for the nine months ended
September 30, 1996 compared to 29% for the nine months ended September 30, 1995.
S,G&A expenses increased by $603,000, or 47%, to $1,874,000 from $1,271,000. The
increase in S,G&A expenses for the three and nine month periods ended September
30, 1996 consisted primarily of a combination of corporate overhead expenses
that did not exist prior to April 3, 1996 and an increase in payroll and related
costs, including commissions, required to support the growth of revenue at CRI.
Write-off of cash surrender value of officers' life insurance
Write-off of cash surrender value of officers' life insurance in the
nine months ended September 30, 1996 represents amounts written off because the
ownership of the life insurance policies was transferred to former owners and a
former director of CRI in contemplation of the acquisition of CRI by the
Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash totaled $159,000 at September 30, 1996. The Company
used $51,000 in operations for the nine months ended September 30, 1996 compared
to generating $89,000 from operations for the nine months ended September 30,
1995. The Company utilized $86,000 for the purchase of property and equipment in
the nine months ended September 30, 1996 compared to $9,000 for the nine months
ended September 30, 1995.
CRI has a line of credit with a commercial bank which does not have a
termination date, but which is reviewed annually for renewal. At September 30,
1996, the line permitted borrowings up to $250,000. In October 1996, the line of
credit was amended to increase the maximum allowable borrowings to $350,000.
Borrowings under the line of credit bear interest at a rate which the Company
and the bank mutually agree upon. At September 30, 1996, the agreed upon
interest rate was 9.25%. Borrowings under the line of credit are secured by
CRI's accounts receivable. As of September 30, 1996, the Company had $206,000
outstanding under the line. The line prohibits the reduction or depletion of
CRI's capital without 30 days prior written notice to the bank.
The Company has notes payable outstanding of $817,500 at September 30,
1996. The notes originated from a private placement consummated in June 1996 in
connection with the Company's acquisition of CRI. The notes bear interest at
10%.
At September 30, 1996 the Company's principal sources of liquidity
included $159,000 of cash and $44,000 in available borrowings under CRI's bank
line of credit. In October 1996, the maximum allowable borrowing under CRI's
line of credit was increased from $250,000 to $350,000 which provides an
additional source of liquidity to the Company. On October 10, 1996, the Company
entered into a loan agreement with a bank whereby the Company may borrow up to
$200,000 under a revolving line of credit. Borrowings under the line will bear
interest a prime rate plus 1% and interest is payable monthly. The line expires
on October 1, 1997. Borrowings under the line are personally guaranteed by two
officers of the Company. The line includes certain covenants including
limitations on additional indebtedness and certain financial covenants. This
line of credit provides another source of liquidity to the Company.
On November 20, 1996, the Company successfully completed an initial
public offering of its common stock and warrants. The Company sold 1,437,500
shares of Common Stock and 718,750 Class A
10
<PAGE> 11
Redeemable Common Stock Purchase Warrants. The Company raised net proceeds,
after deducting underwriting discounts and commissions and the estimated
expenses of the offering, of $7,018,000. On November 22, 1996, $850,000 of these
proceeds were used to repay $817,500 in notes payable as well as $32,500 in
accrued interest. The Company plans to use a portion of these proceeds to repay
the outstanding balance under the CRI line of credit. The remainder of the
proceeds have been invested in short-term, interest bearing, investment-grade
securities, including money market instruments.
On December 12, 1996, the Company entered into an agreement and plan
of merger with the shareholders of a POS dealership based in Seattle,
Washington, Automated Registers Systems, Inc. (ARS) for the purchase of all of
the outstanding common stock of ARS for consideration of approximately
$1,700,000 to be paid with a combination of cash and the Company's common stock.
The transaction will be recorded under the purchase method of accounting.
Company management expects that this merger transaction will close on
approximately December 31, 1996.
Should the Company not acquire any additional dealerships, management
believes that operating cash flow, available cash and available credit
resources, together with the net proceeds of the initial public offering, will
be adequate to make the repayments of indebtedness described herein, to meet the
working capital cash needs of the Company and to meet anticipated capital
expenditure needs during the next 12 months. However, it is the Company's
intention to identify, evaluate and acquire additional POS dealerships within
the next twelve months. Because the Company's cash requirements in the future
are heavily dependent upon the frequency and cost of future acquisitions, as
well as the combination of cash, promissory notes and stocks used in executing
acquisitions, it is impossible to determine at this time the effect of the
Company's acquisition strategy on its future cash requirements. If significant
acquisition opportunities arise, the Company may need to seek additional capital
to complete them.
11
<PAGE> 12
PART II --- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibit 11 - Calculation of Earnings per Share
(b) Reports on Form 8-K
No current reports on Form 8-K were filed during the
three months ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly
BRISTOL TECHNOLOGY SYSTEMS, INC.
-----------------------------------------
(Registrant)
December 19, 1996
- --------------------------
Date By: /s/ Richard H. Walker
-----------------------------------------
Richard H. Walker
President
By: /s/ Kelly Kaufman
-----------------------------------------
Kelly Kaufman
Vice President of Finance
(Principal financial and accounting officer)
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
- -------------- --------------------------------------- -------------------------
<S> <C> <C>
11 Calculation of Earnings Per Share 14-15
</TABLE>
13
<PAGE> 1
EXHIBIT 11
BRISTOL TECHNOLOGY SYSTEMS, INC.
Computation of Earnings per Share
<TABLE>
<CAPTION>
(Successor) (Predecessor)
============ =============
Three Months Ended September 30
-----------------------------
1996 1995
------------ -------------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income $ 14,566 $ 57,047
========== ==========
Weighted average number of common
shares outstanding during the period 3,250,000 1,001
Incremental common shares attributable
to outstanding options -- --
---------- ----------
Total shares 3,250,000 1,001
========== ==========
Primary earnings per share $ 0.004 $ 56.99
========== ==========
FULLY DILUTED EARNINGS PER SHARE
Net income $ 14,566 $ 57,047
========== ==========
Weighted average number of common
shares outstanding during the period 3,250,000 1,001
Incremental common shares attributable
to outstanding options -- --
---------- ----------
Total shares 3,250,000 1,001
========== ==========
Fully diluted earnings per share $ 0.004 $ 56.99
========== ==========
</TABLE>
14
<PAGE> 2
EXHIBIT 11
BRISTOL TECHNOLOGY SYSTEMS, INC.
Computation of Earnings per Share
<TABLE>
<CAPTION>
(Successor)
============
Inception (Predecessor) (Predecessor)
============ ============
(April 3, 1996) Six months Nine Months
to Ended Ended
September 30 June 30 September 30
1996 1995 1995
------------ ------------ ------------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income (loss) $ (16,684) $ (6,948) $ 187,873
=========== =========== ===========
Weighted average number of common
shares outstanding during the period 2,954,355 1,010 1,001
Incremental common shares attributable
to outstanding options -- -- --
----------- ----------- -----------
Total shares 2,954,355 1,010 1,001
=========== =========== ===========
Primary earnings (loss) per share $ (0.006) $ (6.88) $ 187.69
=========== =========== ===========
FULLY DILUTED EARNINGS PER SHARE
Net income (loss) $ (16,684) $ (6,948) $ 187,873
=========== =========== ===========
Weighted average number of common
shares outstanding during the period 2,954,355 1,010 1,001
Incremental common shares attributable
to outstanding options -- -- --
----------- ----------- -----------
Total shares 2,954,355 1,010 1,001
=========== =========== ===========
Fully diluted earnings (loss) per share $ (0.006) $ (6.88) $ 187.69
=========== =========== ===========
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
CONSOLIDATED BALANCE SHEET AS OF SEPT. 30, 1996 AND THE UNAUDITED STATEMENT OF
OPERATIONS FOR THE PERIOD FROM INCEPTION (APRIL 3, 1996) TO SEPT. 30, 1996 IN
THE REPORT ON FORM 10-QSB FOR THE THREE MONTHS SEPT. 30, 1996 OF BRISTOL
TECHNOLOGY SYSTEMS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS:
</LEGEND>
<CIK> 0001016657
<NAME> BRISTOL TECHNOLOGY SYSTEMS
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-03-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 158,755
<SECURITIES> 0
<RECEIVABLES> 940,255
<ALLOWANCES> 23,144
<INVENTORY> 1,366,193
<CURRENT-ASSETS> 2,878,709
<PP&E> 194,246
<DEPRECIATION> 12,386
<TOTAL-ASSETS> 3,502,672
<CURRENT-LIABILITIES> 2,100,385
<BONDS> 0
0
0
<COMMON> 3,250
<OTHER-SE> 532,314
<TOTAL-LIABILITY-AND-EQUITY> 3,502,672
<SALES> 2,119,738
<TOTAL-REVENUES> 2,125,437
<CGS> 1,414,243
<TOTAL-COSTS> 2,116,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 13,000
<INTEREST-EXPENSE> 25,679
<INCOME-PRETAX> (16,684)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,684)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,684)
<EPS-PRIMARY> (.006)
<EPS-DILUTED> (.006)
</TABLE>
