================================================================================
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 September 30, 1999.
[ ] 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.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware State 23-3382869
- -------------- ----------
(I.R.S. Employer
Identification No.)
30 Washington Avenue
Haddonfield, NJ 08033
------------------ -----
(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
--- ---
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
--- ---
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 2,810,340 shares as of September 30, 1999.
================================================================================
<PAGE>
Index
Part I. Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheets - September 30, 1999
(Unaudited) and March 31, 1999
Condensed consolidated statements of operations - Three months
ended September 30, 1999 and 1998 (Unaudited); six months
ended September 30, 1999 and 1998 (Unaudited)
Condensed consolidated statements of comprehensive operations
- Three months ended September 30, 1999 and 1998 (Unaudited);
six months ended September 30, 1999 and 1998 (Unaudited)
Condensed consolidated statements of cash flows - Six months
ended September 30, 1999 and 1998 (Unaudited)
Notes to condensed consolidated financial statements -
September 30, 1999 (Unaudited)
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
<PAGE>
The Translation Group, Ltd.
and Subsidiaries
Consolidated Balance Sheets
September 30, 1999 (unaudited) and March 31, 1999
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,364,243 $ 1,895,970
Accounts receivable, net of allowance for doubtful
accounts of $49,648 and $71,140, respectively 1,872,930 857,261
Work in process 278,718 390,780
Certificate of deposit, pledged - 106,540
Other current assets 438,694 350,337
-------- -------
Total current assets 3,954,585 3,600,888
Property and equipment, net of accumulated depreciation and
amortization of $1,188,248 and $773,878, respectively 1,859,292 1,007,719
Excess of purchase price over fair value of net assets acquired, net of
accumulated amortization of $333,374 and $169,547, respectively 3,822,703 1,249,717
Loans and receivables from officers 149,500 149,500
Other assets 235,921 128,017
-------- -------
TOTAL ASSETS $ 10,022,001 $ 6,135,841
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,087,867 $ 451,631
Notes payable, banks 51,199 196,672
Current maturities of long-term obligations 97,787 123,630
Obligations under capital leases 19,050
Loans payable to officers 180,000
Accrued liabilities 363,661 444,742
Deferred income 244,780 244,780
Income taxes payable 115,055
Deferred income taxes 78,000 -
------- -
Total current liabilities 2,237,399 1,461,455
Long-term obligations, less current maturities 158,010 178,254
Deferred income taxes 32,300 -
------- -
TOTAL LIABILITIES 2,427,709 1,639,709
Commitments and contingencies
Sales price guarantee 1,342,776
Common stock redeemable at the option of stockholders,
416,668 shares issued and outstanding 1,328,129
Stockholders' equity:
Preferred stock, $.001 par value, 1,000,000 authorized,
no shares issued and outstanding
Common stock, $.001 par value, 15,000,000 shares authorized, 2,818,340 shares
outstanding and 2,810,340 shares issued and to be issued at September 30,
1999 and 2,278,340 shares outstanding and to be issued at March 31, 1999 2,818 2,278
Additional paid-in capital 6,941,445 6,051,985
Unearned portion of compensatory warrants (45,000)
Retained earnings (deficit) (1,960,895) (1,467,025)
Common stock in treasury, at cost, 8,000 shares (68,032) (68,032)
Foreign currency translation adjustment 8,051 21,926
------ ------
Total stockholders' equity 4,923,387 4,496,132
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,022,001 $ 6,135,841
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
The Translation Group, Ltd.
and Subsidiaries
Consolidated Statements of Operations
For the three months ended September 30, 1999 and 1998 (unaudited)
and the six months ended September 30, 1999 and 1998 (unaudited)
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS 6 MONTHS 6 MONTHS
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 3,996,754 $ 1,416,330 $ 5,872,531 $ 3,383,728
Cost of revenue 2,694,587 1,273,544 3,991,773 2,392,836
----------- ----------- ----------- -----------
Gross profit 1,302,167 142,786 1,880,758 990,892
Cost and expenses:
Selling, general and administration 655,349 659,732 1,233,428 1,051,835
Research and development 39,513 79,493
Corporate administration 299,363 526,899 639,572 763,372
Amortization of excess of purchase price over
fair value of net assets acquired 94,373 24,221 163,827 48,442
----------- ----------- ----------- -----------
Total 1,088,598 1,210,852 2,116,320 1,863,649
Income (loss) before other income (expense) 213,569 (1,068,066) (235,562) (872,757)
Other income (expense):
Interest income 19,708 50,575 45,656 102,537
Interest expense (30,738) (16,324) (58,214) (29,499)
Foreign currency gains (losses) (2,647) (12,607) (1,059) (14,194)
----------- ----------- ----------- -----------
(13,677) 21,644 (13,617) 58,844
----------- ----------- ----------- -----------
Income (loss) before provision for income taxes 199,892 (1,046,422) (249,179) (813,913)
Provision for income taxes 71,936 (125,280) 91,091 (125,280)
----------- ----------- ----------- -----------
Net income (loss) $ 127,956 $ (921,142) $ (340,270) $ (688,633)
========== =========== =========== ===========
Net income (loss) per common share outstanding (basic and diluted) $ 0.05 $ (0.40) $ (0.13) $ (0.30)
======= ========= ========= =========
Weighted average shares outstanding 2,772,660 2,278,340 2,649,412 2,278,340
========== ========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
The Translation Group, Ltd.
and Subsidiaries
Consolidated Statements of Comprehensive Operations
For the three months ended September 30, 1999 and 1998 (audited)
and the six months ended September 30, 1999 and 1998 (unaudited)
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS 6 MONTHS 6 MONTHS
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) $ 127,956 $ (921,142) $ (340,270) $ (688,633)
Other comprehensive income (loss)
Currency translation adjustment 26,288 6,229 (13,875) 9,132
----------- ----------- ----------- -----------
Comprehensive income (loss) $ 154,244 $ (914,913) $ (354,145) $ (679,501)
========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
The Translation Group, Ltd.
and Subsidiaries
Consolidated Statements of Cash Flows
For the six months ended September 30, 1999 and 1998 (unaudited)
<TABLE>
<CAPTION>
6 months 6 months
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss $ (340,270) $(688,633)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 206,660 146,727
Amortization of excess purchase price over fair value of net assets acquired 163,827 48,442
Amortization of discount on acquisition note payable 26,300
Amortization of compensatory warrants 45,000 90,000
Settlement agreement 334,609
Deferred income taxes (31,000)
Changes in operating assets and liabilities:
Accounts receivable (268,090) (59,767)
Work in process 112,062 385,370
Other current assets (86,357) (149,048)
Other assets (123,081) (158,539)
Accounts payable 458,236 78,553
Accrued liabilities and deferred income (111,081) (226,141)
Accrued income taxes 58,155 (31,954)
----------- -----------
Net cash provided by (used in) operating activities 110,361 (230,381)
Cash flows provided by (used in) investing activities:
Purchase of property and equipment (689,178) (186,893)
Acquisition of Planet Access, Inc., net of cash purchased of $67,922 47,607
Investment in certificate of deposit 106,540 (6,540)
Loans and advances to officers 11,072 -
Net cash provided by (used in) investing activities (523,959) (193,433)
Cash flows provided by (used in) financing activities:
Net proceeds from issuance of common stock 1,100,000
Net proceeds from long-term debt
Payment of acquisition note payable (900,000)
Net payments on notes payable (250,753)
Net proceeds from notes payable 104,277
Payments on long-term obligations (53,501) (43,750)
-------- --------
Net cash provided by (used in) financing activities (104,254) 60,527
Foreign currency translation adjustment (13,875) 9,132
-------- -----
Net (decrease) increase in cash and cash equivalents (531,727) (354,155)
Cash and cash equivalents, beginning of period 1,895,970 1,297,039
---------- ---------
Cash and cash equivalents, end of period $ 1,364,243 $ 942,884
============ =========
Supplemental disclosure of non-cash investing and financing activities:
On May 1, 1999, the Company acquired the stock of Planet Access
Networks, Inc. as described in Note A.
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest $ 58,214 $ 29,499
========= ========
Income taxes $ 500 $ 602
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE TRANSLATION GROUP, LTD.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (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 and six month periods ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended March 31, 2000.
Footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted in
accordance with rules and regulations of the Securities and Exchange Commission.
The financial statements in this report should be read in conjunction with the
financial statements and notes thereto included in the Form 10-KSB of The
Translation Group, Ltd. (the "Company").
As of May 1, 1999, the Company acquired all the issued and outstanding shares of
Planet Access Networks, Inc. (Planet) for 416,668 shares of its common stock and
cash in the amount of $900,000, payable on September 15, 1999. The Company has
agreed to give each of the four sellers the right to require the Company to
repurchase the Company's shares, within 90 days of the first anniversary of the
acquisition, at a price of $7.00 per share, if the shares are not listed on a
securities exchange or on NASDAQ and the value per share at the time is not at
least $12.00. The Company has accounted for its acquisition of Planet under the
purchase method of accounting; wherein the purchase price is allocated to the
assets and liabilities as of the acquisition date based on estimated respective
fair values. The excess of purchase price over fair value of net assets acquired
is being amortized over 10 years. The condensed consolidated statements of
operations for the six month period ended September 30, 1999 includes the
operations of Planet for the period from May 1, 1999 to September 30, 1999. Had
the Company acquired Planet as of April 1, 1998, the net loss and earnings per
share would have been $(217,453) and $(.08), respectively, for the six months
ended September 30, 1999 and $(674,842) and $(.30) for the six months ended
September 30, 1998. Reference is made to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report for the year ended
March 31, 1999, Form 10-KSB.
NOTE B - EARNING PER SHARE
For the purpose of computing earnings per share, average shares outstanding
during the three months ended September 30, 1999 and 1998 was 2,772,660 and
2,278,340, respectively. Average shares outstanding during the six months ended
September 30, 1999 and 1998 was 2,649,412 and 2,278,340, respectively. In
addition, there are outstanding common stock options of 1,939,000 shares at an
average price of approximately $5.25 per share and 2,146,660 warrants to
purchase common stock of the Company at an average price of approximately $6.00
per share. The computations of earnings per share reflecting the exercise of
these options and warrants are antidilutive.
<PAGE>
THE TRANSLATION GROUP, LTD.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (UNAUDITED)
NOTE C - RETAINED EARNINGS (DEFICIT)
Retained earnings for the six months ended September 30, 1999 includes a charge
for $153,600 for amortization of the discount on the guaranteed purchase price
of Planet.
NOTE D - ACQUISITION NOTE PAYABLE
On September 15, 1999, the Company raised $1,000,000 of equity from the sale of
500,000 shares of common stock, through a private placement with Pennsylvania
Merchant Group. These proceeds were used to pay the $900,000 Acquisition Note
Payable as described in Note A.
NOTE E - CAPITAL RESOURCES
During the next twelve months the Company anticipates a need for a substantial
increase in its capital resources. The Company will require payment of
$1,000,000 in development expenses for the automated translation systems and
$400,000 for product launch of its Financial Express product. In addition, in
April 2000, the Company may be required to repurchase from the historic
shareholders of Planet Access for $2,916,676, the Company shares issued in the
transaction, if the shares are not listed on a securities exchange or on NASDAQ
and the value per share at the time is not at least $12.00.
On September 15,1999, the Company raised $1,000,000 in equity as described in
Note D above. Additionally, on November 8, 1999, the Company entered into
another transaction, receiving net proceeds of $475,000 from promissory notes to
Mentor Capital Partners and others.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Except for historical information, the material contained in Management's
Discussion and Analysis of Financial Condition and Results of Operations is
forward-looking. For the purpose of the safe harbor provisions for
forward-looking statements of the Private Securities Litigation Reform Act of
1995, readers are urged to review the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1999 for a list of certain important factors that may
cause actual results to materially differ from those described below.
OVERVIEW
The Company translates technical documents and software written in one language
into other languages, and specializes in providing high tech translation and
localization services, principally in the Information Technology ("IT") sector
of the translation market. The Company also offers completely integrated website
design, development and hosting services through its subsidiary, Planet Access
Networks, Inc.
By linking its sophisticated website expertise and language technology, the
Company plans to emerge as a leading supplier of global communications products
and services. The initial products and service include designing websites for
rapid, cost effective translation and offering, via proprietary extranets the
rapid, cost effective translation of content for the software/IT, and financial
markets.
The Company has ongoing development programs directed toward the completion of
computer-based automated translation systems. These new powerful information
tools will provide the basis for the creation of unique translation products for
special niche markets. The Company believes that this strategy will result in
significant increases in revenues and profitability. The Company has been in
transition while developing its own software systems through its strategic
licensing relationships with Gedanken, Inc. and ESTeam AB to produce specialized
automated translation products for the financial information technology and
telecommunication fields.
As indicated in Note A above, as of May 1, 1999, the Company acquired all of the
outstanding shares of Planet Access Networks, Inc. (Planet), which develops and
hosts sophisticated e-commerce web sites.
RESULTS OF OPERATIONS
REVENUES: Revenues for the quarter ended September 30, 1999 (the "Current
Quarter") increased $2,581,000, to $3,997,000 from $1,416,000 for the quarter
ended September 30, 1998 (the "Comparable Quarter"). Revenue for the six months
ended September 30, 1999 (the "Current Period") increased $2,489,000, to
$5,873,000 from $3,384,000 for the six months ended September 30, 1998 (the
"Comparable Period"). The increases in revenues for both the Current Quarter and
the Current Period were principally due to the consolidation of Planet beginning
May 1, 1999. Revenues in the Company's United States translation and
localization services declined due to the completion of a substantial project in
October 1998, continued softness in the Asian economies which has caused clients
to postpone projects intended for sale in those markets, and increased
competition in the software translation markets. To address these issues, the
<PAGE>
Company has hired additional sales personnel. However, due to the competitive
conditions in the translation markets, increased quotes do not necessarily
result in immediate increases in sales.
The Company's future results of operations will also benefit from the
acquisition of Planet. Planet's business has continued to experience substantial
growth, with revenues increasing in the Current Quarter. Planet recently
received a multi-million dollar contract to develop the next-generation
e-commerce product comparison site for brandwise, LLC. brandwise is a newly
established e-commerce comparison shopping service founded by Hearst Corp.,
Whirlpool Corp. and The Boston Consulting Group. The first segment of this
potentially large website went "live" on the internet on October 28, 1999.
GROSS PROFIT: Gross profit increased to $1,302,000 in the Current Quarter, or
33% of sales, from $143,000 in the Comparable Quarter, or 10% of sales. Gross
profit increased to $1,881,000 in the Current Period, or 32% of sales, from
$991,000 in the Comparable Period, or 30% of sales. The increases in gross
profit for both the Current Quarter and the Current Period were principally due
to the consolidation of Planet beginning May 1, 1999. Gross profit for both the
Current Quarter and the Current Period were negatively impacted by higher
staffing levels in its United States translation operations, in anticipation of
a number of projects which were delayed by customers. To address this issue, the
Company recently reduced staffing levels at the United States translation
operations. In the longer term, the Company also is seeking to improve gross
profits by investing in better automated translation systems, which should
reduce costs, and by developing specialized automated translation products for
the financial information technology and telecommunication fields, which should
provide greater gross revenues. Gross margin will also increase as Planet, with
its higher gross margin, is consolidated with the Company's translation and
localization businesses.
SELLING, GENERAL AND ADMINISTRATION: Selling, general and administration
("SG&A") expenses decreased by 1% to $655,000 during the Current Quarter from
$660,000 in the Comparable Quarter. SG&A expenses increased for the Current
Period by 17% to $1,233,000 as compared to $1,052,000 in the Comparable Period.
This increase in SG&A expenses for the six month period reflects increased
marketing expenditures and substantial expenditures to develop the specialized
automated translation products referred to above.
NET INCOME (LOSS): The Company had net income of $127,956 during the Current
Quarter as compared to a net loss of $921,142 for the Comparable Quarter. The
Company incurred a net loss of $340,270 during the Current Period, as compared
to a net loss of $688,633 during the Comparable Period.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its operations with the proceeds of its
initial public offering in 1995, cash flow from operations, and bank line of
credit, which was secured by a certificate of deposit. The acquisitions of the
Word House Group and Planet Access were largely financed by the issuance of the
Company's common stock as the major component of the consideration.
The change in the Company's strategic direction towards accelerated development
of advanced automated translation systems and facilitation of a web-based
strategy has substantially increased the Company's working capital requirements
to the point that cash flow from operations are insufficient to sustain the
Company at its current level of activity.
During the Current Period, $110,000 was provided by operations, consisting
principally of a substantial increase in accounts payable and accounts
receivable, at Planet Access, which is experiencing substantial growth in its
working capital requirements while its business grows. The
<PAGE>
Company invested $689,000 in property and equipment, and incurred other changes
in cash as detailed in the accompanying consolidated statement of cash flows.
Cash flow from operations, together with currently available resources, will be
insufficient to meet these obligations. The Company recently retained one
investment banking firm to assist it in developing a financing plan to fund its
need for additional capital. The Company will likely be exploring a range of
financing options, including the public or private issuance of debt or equity
securities. In addition, the Company retained another firm to seek a strategic
partner for one or more of its businesses. Although the Company is actively
pursing each of these alternatives, and believes that it will be able to obtain
the required financing, there can be no assurance that it will be successful in
completing the financing required by its business plan on commercially
acceptable terms, if at all. If the Company were to be unable to obtain
financing for its business plan, it would be required to reduce the number of
projects in development and/or sell or discontinue existing operations.
YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Company's computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
The Company's plan to resolve the Year 2000 Issue involves the following four
phases: assessment, remediation, testing and implementation. To date, the
Company has completed its assessment of all systems that could be significantly
affected by the Year 2000. The Company is primarily in the business of providing
services but those services are supported by the use of computer hardware and
software systems in the production of a substantial portion of those services.
The Company's vendors consist primarily of individual translators and other
service professionals who are not expected to be materially impacted by the Year
2000 Issue. The Company is also dependent upon third party suppliers for utility
services and telecommunications capabilities. The Company has its primary
locations in geographically diverse locations in North America, Europe and Asia.
If one of the Company's locations should be unable to operate due to the Year
2000 Issue affecting one of its third party supplies, the Company believes that
replacement services could be rendered from another of the Company's locations.
The Company has not yet completed a comprehensive study as to whether its third
party suppliers and strategic partners are Year 2000 compliant. It is in the
process of gathering information about the Year 2000 status and will continue to
assess and monitor their compliance.
STATUS
The Company has completed a full evaluation of all of its systems, the Company
has begun the remediation phase and believes it is 90% complete with the
information already obtained in the evaluation process. The Company expects to
have all critical systems and hardware compliant before November 29, 1999.
Following these replacements, the Company plans to test all equipment and
software. The testing phase will be completed no later than December 10, 1999.
During the period of testing the critical systems, any system or piece of
equipment that is found to be non-compliant, will be retired and replaced. The
Company does not expect the cost to replace such equipment to be material.
<PAGE>
THIRD PARTIES
The Company has queried its significant supplies and strategic partners that do
not share information systems with the Company, but has not received answers to
all of its queries. To date, the Company is not aware of any of these third
parties with a Year 2000 Issue that would materially impact the Company's
results of operations, liquidity, or capital resources. However, the Company has
no means of ensuring that they will be Year 2000 ready. The inability of those
third parties to complete their Year 2000 resolution process in a timely fashion
is not expected to materially impact the Company. The Company believes that it
could partially compensate for the failure of those third parties to comply by
utilizing its operations in other geographic locations to meet the client
requirements or by using alternate suppliers.
COSTS
The Company will utilize primarily internal resources to reprogram, replace,
test and implement the software and operating equipment for required Year 2000
modifications. The total costs of the Year 2000 project is estimated at $85,000
and is being funded through operating cash flows. To date the Company has
incurred approximately $35,000 ($25,000 expensed and $10,000 capitalized for new
equipment), related to all phases of the Year 2000 project. Of the total
estimated remaining project costs, approximately $30,000 is related to software
up-grades. The remaining $20,000 will be spent for testing and monitoring of
remaining systems.
RISKS
Management believes it has an effective program in place to resolve the Year
2000 Issue in a timely manner. As noted above, the Company has not yet completed
all necessary phases of its Year 2000 program. In the event that the Company
does not complete any additional phases, the Company's ability to produce
certain orders may be negatively impacted. More importantly, disruptions
resulting from Year 2000 Issues in the world economy in geographies where the
Company or its clients have significant operations could adversely affect the
Company.
The Company may be unable to meet services commitments due to computer system
failure. The amount of potential liability, lost revenue, and damages cannot be
reasonably estimated at this time.
CONTINGENCY PLANS
The Company has put plans into place in order to monitor Year 2000 issues that
may arise. This plan includes the ability for operations and accounting
functions to be transferred between locations and computer systems. Due to the
nature of the service the Company provides, management believes there will be
minimal disruption to production or customer services.
<PAGE>
PART II - OTHER INFORMATION
Item I. Legal Proceeding - none
Item 2. Changes In Securities -
Effective as of September 15, 1999, the Company completed a private placement of
500,000 shares of common stock and 250,000 common stock purchase warrants, for
gross proceeds of $1,000,000. These securities were placed with accredited
investors pursuant to Section 4(2) of the Securities Act of 1933, as amended,
and/or Regulation D thereunder. Pennsylvania Merchant Group acted as placement
agent in connection with the financing and received seven and one-half percent
commission.
Item 3. Defaults Upon Senior Securities - n.a.
Item 4. Submission Of Matters To A Vote Of Security Holders -
The registrant held its annual meeting of stockholders on September 28, 1999. At
the annual meeting, the following directors were re-elected for a term of one
year, and until their successors have been duly elected and qualified: Charles
Cascio, Gary Schlosser, John Toedtman, Theodora Landgren, and Richard Herson. In
addition, the stockholders adopted the Amended and Restated 1995 Incentive and
Non-Qualified Stock Option Plan and approved Wiss & Company as the auditors for
the fiscal year ending March 31, 2000.
Item 5. Other Information - none
Item 6. Exhibits And Reports Of Form 8-K -
(a) Exhibit
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
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.
The Translation Group, Ltd.
Dated November 15, 1999 /s/ Charles D. Cascio
----------------- ---------------------------
Charles D. Cascio
President & CEO
Dated November 15, 1999 /s/ Kenneth A. Mack
----------------- ----------------------------
Kenneth A. Mack
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit (27)
Financial Data Schedule
For Period Ended September 30, 1999
THE TRANSLATION GROUP, LTD
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF THE TRANSLATION GROUP, LTD FOR THE PERIOD ENDED SEPTEMBER 30,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,364,243
<SECURITIES> 0
<RECEIVABLES> 1,872,930
<ALLOWANCES> 49,648
<INVENTORY> 0
<CURRENT-ASSETS> 3,954,585
<PP&E> 1,859,292
<DEPRECIATION> 1,188,248
<TOTAL-ASSETS> 10,022,001
<CURRENT-LIABILITIES> 2,237,399
<BONDS> 0
0
0
<COMMON> 2,818
<OTHER-SE> 4,920,569
<TOTAL-LIABILITY-AND-EQUITY> 10,022,001
<SALES> 5,872,531
<TOTAL-REVENUES> 5,872,531
<CGS> 3,991,773
<TOTAL-COSTS> 2,116,320
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,214
<INCOME-PRETAX> 0
<INCOME-TAX> 91,091
<INCOME-CONTINUING> (340,270)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (340,270)
<EPS-BASIC> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
