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 Period of Three Months Ended June 30,1997.
[ ] 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 000-21725
THE TRANSLATION GROUP LTD.
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(Exact name of registrant as specified in its charter)
Delaware State 23-3382869
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(I.R.S. Employer Identification No.)
44 Tanner Street
Haddonfield, NJ 08033
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(Address of principal executive offices) (Zip Code)
Indicated by check mark whether the registrant (I) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods 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
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Applicable Only to Issuers Involved in Bankruptcy
Proceeding During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. YES NO
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Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, .001 Par Value-Issued 2,366,340 shares as of June 30, 1997.
INDEX
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - June 30, 1997 and March 31,
1997
Condensed consolidated statements of income - Three months ended June
30, 1997 and 1996
Condensed consolidated statements of cash flows - Three months ended
June 30, 1997 and 1996
Notes to condensed consolidated financial statements - June 30, 1997
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports of Form 8-K
Signatures
<TABLE>
<CAPTION>
The Translation Group, LTD.
and Subsidiaries
Consolidated Balance Sheets
June 30, 1997 (unaudited) and March 31, 1997 (unaudited)
June 30, March 31,
1997 1997
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<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 3,766,066 $ 3,883,608
Accounts receivable, net of allowance for
doubtful accounts of $25,000 1,301,591 1,197,105
Inventory and other current assets 548,387 521,171
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Total current assets 5,616,044 5,601,884
Property and equipment 1,200,613 1,073,070
Less: accumulated depreciation and amortization (367,547) (331,563)
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Net property and equipment 833,066 741,507
Other assets 284,265 128,475
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TOTAL ASSETS $ 6,733,375 $ 6,471,866
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 255,672 $ 196,847
Notes payable 382,600 510,073
Accrued liabilities 429,350 458,837
Accrued income taxes 49,340 -
Deferred income taxes 278,792 278,792
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Total current liabilities 1,395,754 1,444,549
Stockholders' equity:
Common stock, $.001 par value, 15,000,000
shares authorized, 2,366,340 and 2,318,000
outstanding, respectively 2,366 2,318
Preferred stock, $.001 par value, 1,000,000
authorized, none outstanding
Additional paid-in capital 4,844,751 4,614,852
Retained earnings 490,504 410,147
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Total stockholders' equity 5,337,621 5,027,317
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,733,375 $ 6,471,866
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
The Translation Group, LTD.
and Subsidiaries
Consolidated Statements of Income
For the three months ended June 30, 1997 and 1996 (unaudited)
3 months 3 months
June 30, June 30,
1997 1996
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<S> <C> <C>
Revenue $ 1,491,673 $ 1,789,619
Cost of services 877,326 1,012,502
Depreciation and amortization 35,983 38,524
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Gross profit 578,364 738,593
Selling, general and administrative expenses 493,954 462,002
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Operating income 84,410 276,591
Non-operating income (expense)
Interest income 50,120 3,782
Interest expense (4,833) -
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45,287 3,782
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Income before income taxes 129,697 280,373
Provision for income taxes 49,340 101,536
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Net income $ 80,357 $ 178,837
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Net income per common share outstanding $ 0.04 $ 0.12
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Weighted average shares outstanding 2,037,000 1,468,500
========== ==========
</TABLE>
<TABLE>
<CAPTION>
The Translation Group, LTD.
and Subsidiaries
Consolidated Statements of Cash Flow
For the three months ended June 30, 1997 And 1996 (unaudited)
3 months 3 months
June 30, June 30,
1997 1996
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<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 80,357 $ 178,837
Depreciation and amortization 35,983 38,524
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable (104,486) (441,234)
Inventory and other current assets (27,216) (4,850)
Other assets (5,282) 23,108
Accounts payable 58,825 269,385
Notes payable (127,473)
Accrued liabilities (29,487) 51,940
Accrued income taxes 49,340 (28,275)
Deferred income taxes - 19,025
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Net cash flows provided by (used for) operating activities (69,439) 106,460
CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
Purchase of property and equipment (127,543) (78,855)
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Issuance of common stock 79,440 -
Deferred offering costs - (81,417)
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Net cash flows provided by (used for) financing activities 79,440 (81,417)
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Net decrease in cash and cash equivalents (117,542) (53,812)
Cash and cash equivalents, beginning of period 3,883,608 668,314
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Cash and cash equivalents, end of period $ 3,766,066 $ 614,502
========== =========
</TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. 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 June 30, 1997
are not necessarily indicative of the results that may be expected for the year
ended March 31, 1998. The consolidated balance sheet as at March 31, 1997 is
restated (unaudited) to reflect the acquisition of the Word House Companies on a
pooling of interests basis. Reference is made to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report for the
year ended March 31, 1997, Form 10-K.
Note B - Earning Per Share
As at June 30, 1997, there were 2,366,340 shares of common stock outstanding.
For the comparable period in 1996, there was the equivalent of 1,601,000 shares
outstanding. For the purpose of computing earnings per share, average shares
outstanding during the three months ended June 30, 1997 was 2,037,000 in
comparison to the prior year of 1,468,500. In addition, there are outstanding
common stock options of 660,000 shares at a price of $6.00 per share exercisable
at the rate of 20% a year from their date of grant, December 1, 1996 and
2,295,172 warrants to purchase common stock of the Company at an average price
of approximately $6.00 per share. The computation of earnings per share
reflecting the exercise of these options and warrants are antidilutive.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations - (stated in thousands)
For the three months ended June 30, 1997, consolidated net sales decreased $298
in comparison to the corresponding period in 1996, from $1,790 to $1,492, or
17%. Net income declined by 55% in comparison to the prior period, from $179 to
$80. Net income per share declined to $.04 from $.12 per share (on a lesser
number of shares for the 1996 period). Gross profit decreased from $739 to
$578,or 22%,(from 41% of sales to 39% of sales). Selling, general and
administrative expenses increased in the amount of $32, from $462 to $494, or
7%, also increasing from 26% to 33% of sales respectively. Interest income net
of interest expense amounted to $45 for the current quarter in comparison to
interest of $4 for the prior quarter.
Discussion
The net income for the three month period ended June 30, 1997 in comparison to
the same quarter of the prior year was negatively impacted by the following
factors: (i) There was a decline in the amounts billed to two of the Company's
principal customers during this quarter; orders in the pipeline may partially
offset this timing of deliveries. (ii) As a publicly traded entity, the Company
incurred legal, consulting and other fees to which it previously had not been
subject. (iii) The Word House Group located in the Netherlands moved their
offices. (iv) The Company continued to add to its sales and sales support
personnel to promote regular business as well as sales under a license
agreement.
The statements presented for the comparative periods are reclassified to agree
with the classifications of the current statements.
Liquidity and Sources of Capital
During the three months ended June 30, 1997, working capital remained at
approximately the same level of $4.2 million. During this period 13,340 warrants
were exercised at $6.00 per share, the Company used cash from operations in the
amount of $69,439, invested $127,543 in equipment and related software, and
incurred other changes in cash as detailed in the accompanying consolidated
statement of cash flows.
PART II - OTHER INFORMATION
Item I. Legal Proceeding - none
Item 2. Changes In Securities - none
Item 3. Defaults Upon Senior Securities - n.a.
Item 4. Submission Of Matters To A Vote Of Security Holders - none
Item 5. Other Information - none
Item 6. Exhibits And Reports Of Form 8-K - Form 8-K filed April 17,1997
relative to the proposed acquisition of the Word House Companies
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 ________________ ___________________________
Translation Group Ltd.
(Registrant)
(Name and Title)
Dated ________________ ___________________________
(Name and Title)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,766,066
<SECURITIES> 0
<RECEIVABLES> 1,301,591
<ALLOWANCES> 25,000
<INVENTORY> 548,387
<CURRENT-ASSETS> 5,616,044
<PP&E> 1,200,613
<DEPRECIATION> 367,547
<TOTAL-ASSETS> 6,733,375
<CURRENT-LIABILITIES> 1,395,754
<BONDS> 0
0
0
<COMMON> 2,366
<OTHER-SE> 5,335,255
<TOTAL-LIABILITY-AND-EQUITY> 6,733,375
<SALES> 1,491,673
<TOTAL-REVENUES> 1,491,673
<CGS> 877,326
<TOTAL-COSTS> 877,326
<OTHER-EXPENSES> 493,954
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,833
<INCOME-PRETAX> 129,697
<INCOME-TAX> 49,340
<INCOME-CONTINUING> 80,357
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,357
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
