<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2000
--------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
------------- --------------
Commission File Number: 0-24283
REGISTRY MAGIC INCORPORATED
--------------------------------------------------------------------------------
(Exact name of Small Business Issuer as specified in its Charter)
FLORIDA 65-0623427
-------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6251-B Park of Commerce Blvd. NW, Boca Raton, Florida 33487
--------------------------------------------------------------------------------
(Address of principal executive offices)
(561) 994-3223
-------------------------------
(Issuer's telephone number)
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last Report.)
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
past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 5,880,068 shares of Common
Stock as of December 11, 2000.
--------------------------------------------------------------------------------
<PAGE> 2
REGISTRY MAGIC INCORPORATED
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - October 31, 2000 (unaudited) and
July 31, 2000
Condensed Statements of Operations (unaudited) for the Three
Months Ended October 31, 2000 and 1999
Condensed Statements of Cash Flows (unaudited) for the Three
Months Ended October 31, 2000 and 1999
Notes to Condensed Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis and Plan of
Operation
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Page 2
<PAGE> 3
REGISTRY MAGIC INCORPORATED
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, July 31,
2000 2000
------------ ------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................... $ 1,539,297 $ 1,876,667
Accounts receivable, net ................................................ 58,556 206,566
Inventories ............................................................. 102,168 107,950
Due From Related Parties ................................................ -- 100,000
Advances to Synergex .................................................... 48,333 36,642
Advances to Bristol Retail Solutions .................................... 250,000 --
Other current assets .................................................... 43,583 16,845
------------ ------------
Total current assets ......................................... 2,041,937 2,344,670
Property and equipment, net ................................................ 151,741 182,092
Advances to Synergex ....................................................... 101,667 113,358
Other assets ............................................................... 11,010 11,010
------------ ------------
$ 2,306,355 $ 2,651,130
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ................................ $ 323,237 $ 250,496
------------ ------------
Total current liabilities .................................................. 323,237 250,496
============ ============
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares
outstanding ............................................................ -- --
Common stock, $.001 par value; 30,000,000 shares authorized; 5,380,068 and
5,380,068 shares issued and outstanding respectively ................... 5,380 5,380
Additional paid-in capital ............................................... 14,016,102 14,016,102
Accumulated deficit ...................................................... (12,038,364) (11,620,848)
------------ ------------
Total shareholders' equity .................................. 1,983,118 2,400,634
------------ ------------
$ 2,306,355 $ 2,651,130
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
Page 3
<PAGE> 4
Registry Magic Incorporated
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
October 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Product sales ...................... $ 55,450 $ 523,458
----------- -----------
Total income ....................... 55,450 523,458
Costs and expenses:
Cost of goods sold ................. 44,018 318,738
General and administrative ......... 323,530 964,367
Research and development ........... 107,991 282,324
Depreciation ....................... 32,258 55,837
Interest income, net ............... (34,831) (57,889)
----------- -----------
Total costs and expenses ........... 472,966 1,563,377
----------- -----------
Net loss ........................... $ (417,516) $(1,039,919)
=========== ===========
Weighted average shares
outstanding .................. 5,380,068 5,887,649
=========== ===========
Net loss per common share (basic and
diluted) ..................... $ (.08) $ (.18)
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
Page 4
<PAGE> 5
REGISTRY MAGIC INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
October 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating Activities:
Net loss ................................... $ (417,516) $(1,039,919)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation ............................... 32,258 55,837
Decrease in accounts receivable ............ 148,010 45,844
Decrease (increase) in inventories ......... 5,782 (5,273)
Increase in other current assets ........... (26,738) (24,906)
Decrease in other assets ................... -- 4,730
Increase (decrease) in accounts
payable and accrued expenses ............. 72,741 (215,623)
----------- -----------
Net cash used in operating
activities ..................... (185,463) (1,179,310)
----------- -----------
Investing Activities:
Purchase of equipment ...................... (1,907) --
Due From Related Party ..................... 100,000 --
Advances to Bristol Retail Solutions ....... (250,000) --
Sale of equipment .......................... -- 2,221
----------- -----------
Net cash from (used in) investing
activities ...................... (151,907) 2,221
----------- -----------
Financing Activities:
Exercise of stock options .................. -- 2,850
Repurchase of common stock ................. -- (60,000)
----------- -----------
Net cash from financing activities -- (57,150)
----------- -----------
Net decrease in cash ............. (337,370) (1,234,239)
Cash beginning of period ....................... 1,876,667 4,968,294
----------- -----------
Cash end of period ......................... $ 1,539,297 $ 3,734,055
=========== ===========
Supplemental disclosures:
Cash paid for interest: .................... $ -- $ 76
=========== ===========
Cash paid for income taxes: ................ $ -- $ --
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
Page 5
<PAGE> 6
Registry Magic Incorporated
Notes to Condensed Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB. 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. The results of operations
for the three-month period ended October 31, 2000 are not necessarily indicative
of the results to be expected for the year ended July 31, 2001. The condensed
interim financial statements should be read in conjunction with the audited
financial statements and notes, contained in the Company's Annual Report on Form
10-KSB for the year-end July 31, 2000.
2. NOTES RECEIVABLE BRISTOL RETAIL SOLUTIONS
Effective October 20, 2000, Bristol entered into a promissory note
whereby Registry advanced $250,000 to Bristol to be used by Bristol for working
capital purposes. In the event the proposed merger between Registry and Bristol
does not close, Bristol will repay Registry the amount outstanding, plus
interest at the rate of 8% per annum on October 19, 2001. The Note is secured by
all of Bristol's inventory and receivables not subject to and second to the
first lien of Coast Business Credit.
3. SUBSEQUENT EVENTS
In November 2000, the Company, pursuant to a promissory note, advanced
Bristol an additional $400,000 under the same terms as the original advance.
In November 2000, the Company received cash in the amount of $500,000
from a private investor for 500,000 restricted shares of common stock at $1.00
per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS HAVE BEEN
PREPARED ASSUMING THAT THE COMPANY WILL CONTINUE AS A GOING CONCERN.
THE AUDITORS REPORT ON THE COMPANY'S 2000 FINANCIAL STATEMENTS STATES
THAT "THE COMPANY HAS SUFFERED RECURRING LOSSES FROM OPERATIONS AND HAS
A CASH DEFICIENCY FROM OPERATIONS AND IS EXPERIENCING ONGOING
OPERATIONAL LOSSES THAT RAISE SUBSTANTIAL DOUBT ABOUT ITS ABILITY TO
CONTINUE AS A GOING CONCERN. THIS QUARTERLY REPORT FORM 10-QSB CONTAINS
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS, OTHER THAN STATEMENTS
OF HISTORICAL FACTS, INCLUDED IN OR INCORPORATED BY REFERENCE INTO THIS
FORM 10-QSB, ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, WHEN USED IN
THIS DOCUMENT, THE WORDS "ANTICIPATE," "ESTIMATE," "PROJECT" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN
RISKS, UNCERTAINTIES AND ASSUMPTIONS INCLUDING THOSE RISKS DESCRIBED IN
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB AS WELL AS IN THIS REPORT ON
FORM 10-QSB SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES
MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL
RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR
PROJECTED. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS WE
INCLUDE IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT
ASSURE YOU THAT THESE EXPECTATIONS WILL PROVE TO BE CORRECT.
Page 6
<PAGE> 7
The following discussion and analysis should be read in conjunction
with the financial statements of the Company and the notes thereto appearing
elsewhere.
OVERVIEW
Registry was organized to design, develop, commercialize and market
proprietary products and services that exploit recent advances in speech
recognition technologies. The Company also is developing secured voice enabled
applications that can be incorporated with emerging technologies in wireless
area networks with particular emphasis on point-of-sale equipment. The products
currently offered or under development by Registry have the objective of
enabling a user to speak into a telephone or to a computer in a natural
conversational manner and, in turn, have the product listen, understand and
respond by performing tasks or retrieving information in a secured environment.
Registry's initial product was the Virtual Operator(TM) a speech driven
auto-attendant and call routing turnkey product. The Virtual Operator product is
generating only limited sales and the Company has been unable to successfully
create a substantial market for it. This has resulted in significant losses for
Registry Magic over the past three years.
Beginning in August 2000, the Company has begun to reposition itself in
the Mobile Commerce (mCommerce) industry by leveraging its existing speech
application technologies, incorporating emerging wireless technologies (i.e.
Bluetooth), and shifting its business model to one focused on developing
recurring revenue. Under this new direction, the Company has broadened its
technology base to capitalize on the expanding mobile Internet and eCommerce
marketplaces. Registry is also seeking to establish distribution capacity for
its technologies through a combination with a major distributor of point-of-sale
equipment.
The Company is subject to all of the risks inherent in the
establishment of a new business enterprise. To address these risks, the Company
must, among other things, increase the number of key customer installations,
enter into successful distribution arrangements, expand into the international
market, respond to competitive developments, and attract, retain and motivate
qualified personnel. Failure to achieve one or more of these goals could have a
material adverse effect upon the Company's business, operating results and
financial condition.
RESULTS OF OPERATIONS
Since its inception in October 1995, the Company's efforts have been
principally devoted to research, development and design of products, marketing
activities and raising capital. Beginning in fiscal 1998 the Company began
selling its initial product, the Virtual Operator.
For the three months ended October 31, 2000, product sales were
$55,450 compared to $523,458 for the three months ended October 31, 1999 a
decrease of $468,008. Sales have decreased as the Company has reduced its sales
staff and shifted its focus from its Virtual Operator product to mCommerce
products.
For the three months ended October 31, 2000, cost of sales amounted to
$44,018 or 79% of sales representing hardware costs associated with the
Company's Virtual Operator. For the three months ended October 31, 1999 cost of
sales amounted to $318,738 or 61% of sales representing hardware costs
associated with the Company's Virtual Operator.
General and administrative expense decreased by $640,837 to $323,530
for the three months ended October 31, 2000 from $964,367 for the three months
ended October 31, 1999. The reduction in general and administrative expense was
due to decreased administrative and sales staff. The decrease in staff was due
to the termination of all staff not directly focused on strategic projects. The
Company does not foresee a significant increase in general and administrative
costs from its present level.
Page 7
<PAGE> 8
Research and development expenses for the three months ended October
31, 2000 were $107,991 compared to $282,324 for the three months ended October
31, 1999 a decrease of $174,333. This was due to the Company reducing its
development staff. Research and development expenses incurred in the course of
establishing technological feasibility of the Company's software applications
have been charged to operations pursuant to Statement of Financial Accounting
Standards SFAS No.86 Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed.
Depreciation expense decreased $23,579 for the three months ended
October 31, 2000 to $32,258 from $55,837 for the three months ended October 31,
1999.
Interest income net for the three months ended October 31, 2000
amounted to $34,831 compared to $57,889 of interest income net for the three
months ended October 31, 1999 a decrease of $23,058. The decrease in interest
income was due to the Company's reduction in cash balances.
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 2000, the Company had approximately $1,539,000 in
cash and cash equivalents. The Company does not have any available lines of
credit. Since inception, and until completion of the Company's public offering
in June 1998,the Company financed its operations through loans from the
Company's Chairman and his wife and from private placements of both debt and
equity. On June 2, 1998, the Company closed an initial public offering of Common
Stock. The Company offered and sold 1,600,000 shares of Common Stock at an
offering price of $7.25 per share, raising proceeds, net of offering costs, of
approximately $9,900,000. On June 26, 1998, through the underwriter's exercise
of an over-allotment, the Company sold an additional 220,000 shares of Common
Stock raising net proceeds of approximately $1,400,000.
Net cash used in operating activities decreased by $993,847 to $185,463
for the three months ended October 31, 2000 as compared with $1,179,310 during
the three months ended October 31, 1999. Net cash used in operating activities
was primarily related to the Company's continued expansion of its research and
development and sales and marketing efforts.
Net cash from(used in) investing activities during the three months
ended October 31, 2000 and 1999 were $(151,907) and $2,221 respectively an
increase of $154,128. The increase is do to $250,000 advanced to Bristol Retail
Solutions and the repayment of $100,000 owed from a Director of the Company.
Net cash used by financing activities during the three months ended
October 31, 2000 and 1999 amounted to $0 and $57,150 respectively. For the three
months ended October 31, 1999, the Company repurchased 600,000 shares of common
stock from two former employees, the Company also received $2,850 from the
exercise of stock options.
The Company's financial statements have been prepared assuming that the
Company will continue as a going concern. The auditors' report on the Company's
2000 financial statements states that "the Company has suffered recurring losses
from operations, has a cash deficiency from operations and is experiencing
operating losses that raise substantial doubt about its ability to continue as a
going concern." The Company continues to explore the possibility of raising
funds through available sources including but not limited to equity and debt
markets. It is uncertain that the Company will be successful at raising funds
through these sources.
Page 8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds
In November 2000 the Company sold 500,000 shares of common stock to a
private investor for $500,000 of $1.00 per share.
ITEM 5. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by item 601 of Regulation S-B
The following exhibits are filed as part of this report:
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On November 21, 2000 the Company filed a current report on
Form 8-K disclosing the Plan of Merger with Bristol Retail Solutions. The
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
Page 9
<PAGE> 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGISTRY MAGIC INCORPORATED
By: /s/ Lawrence Cohn
-----------------------------------
Lawrence Cohn,
Chief Executive Officer
By: /s/ Martin Scott
-----------------------------------
Martin Scott, Secretary,
Treasurer and Principal Financial
and Accounting Officer
DATED: December 15, 2000
Page 10
