UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
Commission File Number 0-8422
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TRANSACT INTERNATIONAL INC.
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(Exact name of small business issuer as specified in its charter)
CONNECTICUT 06-0732124
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
20 THORNDAL CIRCLE, DARIEN, CONNECTICUT 06820
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(Address of principal executive offices)
(203) 656-0777
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Exchange Act during the past 12 months
(or for such shorter period that the issuer 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 CORPORATE ISSUERS
The number of shares outstanding of the issuer's common stock as of
August 15, 1995 was 6,123,235.
Transitional Small Business Disclosure Format YES NO x
--- ---
<PAGE>
TRANSACT INTERNATIONAL INC.
FORM 10 QSB - Quarter Ended July 31, 1995
CONTENTS
Page
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets
July 31, 1995 (Unaudited) and April 30, 1995......................3
Statements of Operations (Unaudited)
Three Months Ended July 31, 1995 and July 31, 1994................4
Statements of Cash Flows (Unaudited)
Three Months Ended July 31, 1995 and July 31, 1994................5
Notes to the Financial Statements (Unaudited).....................6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................7
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K..................................8
SIGNATURES....................................................................8
2
<PAGE>
PART I : FINANCIAL INFORMATION
------------------------------
TRANSACT INTERNATIONAL INC.
BALANCE SHEETS
JULY 31, APRIL 30,
1995 1995
----------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents................... $ 258,204 $ 140,950
Accounts receivable, net of allowance for
doubtful accounts of $57,500 and $40,000
respectively.............................. 1,359,407 1,809,440
Inventories................................. 325,563 325,428
Costs and estimated earnings in excess of
billings on incomplete contracts.......... 316,476 135,710
Prepaid expenses and other current assets... 97,851 90,873
--------- ---------
TOTAL CURRENT ASSETS 2,357,501 2,502,401
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost........... 241,591 282,715
Less accumulated depreciation............... (183,466) (220,489)
--------- ---------
58,125 62,226
OTHER ASSETS..................................... 26,000 37,688
--------- ---------
$ 2,441,626 $ 2,602,315
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................ $1,000,637 $ 649,894
Accrued expenses............................ 447,621 510,881
Current portion of long-term debt........... 107,079 135,137
Billings in excess of costs and estimated
earnings on Incomplete contracts.......... 343,164 653,317
--------- ---------
TOTAL CURRENT LIABILITIES 1,898,501 1,949,229
LONG-TERM DEBT 37,519 49,770
--------- ---------
TOTAL LIABILITIES 1,936,020 1,998,999
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, authorized
2,000,000 shares, none issued............. --- ---
Common stock, no par value, authorized
12,000,000 shares, issued 6,201,735 shares 852,541 852,541
Additional paid-in capital.................. 5,224,726 5,224,726
Treasury stock, at cost : 78,500 shares..... (29,606) (29,606)
Deficit..................................... (5,542,055) (5,444,345)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 505,606 603,316
--------- ---------
$ 2,441,626 $ 2,602,315
========= ==========
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
TRANSACT INTERNATIONAL INC.
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED
-----------------------
7/31/95 7/31/94
--------- ---------
NET SALES........................................ $ 2,017,100 $ 1,875,220
--------- ---------
COSTS AND EXPENSES:
Cost of sales............................... 1,677,685 1,588,829
Selling and administrative.................. 434,763 453,476
--------- ---------
2,112,448 2,042,305
--------- ---------
(LOSS) FROM OPERATIONS........................... (95,348) (167,085)
--------- ---------
OTHER INCOME (EXPENSE):
Interest expense............................ (4,349) (6,585)
Other income................................ 1,987 2,625
--------- ---------
(2,362) (3,960)
--------- ---------
NET (LOSS)....................................... $ (97,710) $ (171,045)
========= ==========
NET (LOSS) PER SHARE OF COMMON STOCK............. $ (0.02) (0.03)
========= ==========
WEIGHTED AVERAGE SHARES OUTSTANDING.............. 6,123,235 6,093,235
========= ==========
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
TRANSACT INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
-----------------------
7/31/95 7/31/94
--------- ---------
OPERATING ACTIVITIES :
Net (loss) $(97,710) $ (171,045)
Adjustments to reconcile net
(loss) to cash from operations:
Depreciation of property, plant and equipment. 7,545 7,981
Changes in assets and liabilities :
Decrease in accounts receivable............ 450,033 317,787
Increase in inventories.................... (135) (109,064)
(Increase) decrease in other current assets (6,978) 4,271
(Increase) decrease in costs and estimated
earnings in excess of billings on
incomplete contracts - net............ (490,919) 54,917
Decrease in other assets................... 11,688 19,689
Increase (decrease) in accounts payable and
accrued expenses...................... 287,483 (29,293)
--------- ---------
NET CASH PROVIDED BY OPERATIONS.................... 161,007 95,243
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures.......................... (3,444) (17,488)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from short-term borrowings........... -- 150,000
Repayments of short-term borrowings........... -- (100,000)
Repayment of debt............................. (40,309) (47,646)
--------- ---------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (40,309) 2,354
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... 117,254 80,109
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR....... 140,950 5,533
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD........... $258,204 $ 85,642
======== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest...................................... $ 4,849 $ 6,370
Income taxes.................................. -- --
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
TRANSACT INTERNATIONAL INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
1. The balance sheet as of July 31, 1995, and the statements of operations
and cash flows for the three months ended July 31, 1995 and 1994 have
been prepared by the Company, without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, the
results of operations and cash flows at July 31, 1995 and all periods
presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's April 30, 1995 annual
report to stockholders. Seasonality is not a major factor in the
Company's operations. The results of operations for the three-month
period ended July 31, 1995 are not necessarily indicative of those
for a full fiscal year.
2. Inventories consist of raw materials and manufacturing supplies.
3. Amounts per share have been computed using the weighted average number
of common shares outstanding during each period. No effect has been
given to shares issuable pursuant to outstanding options as their effect
would be antidilutive.
4. There was no benefit for income taxes in the three month periods ended
July 31, 1995 and July 31, 1994, as the loss generated cannot be carried
back to offset income in prior years.
The Company has operating loss carryovers and investment tax credit
carryforwards for tax return purposes of approximately $5,600,000 and
$104,000 respectively, expiring in 1996 through 2009.
The tax effects of temporary differences giving rise to the Company's
deferred tax assets at July 31, 1995 are as follows:
Net operating loss carryforward $ 2,070,000
Investment tax credit carryforward 104,000
Other reserves and liabilities 153,000
---------
2,327,000
Valuation allowance 2,327,000
---------
$ ---
=========
Due to the Company's cumulative losses, management does not consider
that enough support to overcome the "more likely than not" criteria
existed at July 31, 1995 to record a deferred tax asset. As a result,
for financial reporting purposes, deferred tax assets are reduced by
a full valuation allowance.
6
<PAGE>
TRANSACT INTERNATIONAL INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Sales for the three months ended July 31, 1995 increased $141,880 (7.6%)
as compared to the comparable three month period of last year. Gross profit
as a percentage of net sales was approximately 16.8% for the three months
ended July 31, 1995 and 15.3% for the three months ended July 31, 1994.
This increase of 1.5% in gross profit reflects a better mix of work in
1995 and higher revenues to absorb fixed overhead expenses. However, gross
margins remain under pressure due to competitive conditions. Selling and
administrative expenses decreased $18,713 in the 1995 quarter compared to
the 1994 quarter. This decrease was principally due to reduced headcount
and fringe benefits partially offset by an increase in the provision for
doubtful accounts and salary increases. The Company had no bank borrowings
in the first quarter of 1995 and therefore interest expense declined
$2,236. The reduced net loss in 1995 compared to 1994 of $73,335 results
primarily from the increase in sales and the reduction in selling and
administrative expenses.
The Company's sales order backlog as of July 31, 1995 is approximately
$2.0 million. This compares to a $3.4 million backlog as of July 31, 1994.
In addition, in August 1995, the Company was awarded a contract from the
U.S. Air Force for $2.4 million which will be completed in the next twelve
months.
LIQUIDITY AND CAPITAL RESOURCES:
During the first three months of fiscal 1995, the Company generated
approximately $161,000 in cash from its operations. Since a significant
portion of the Company sales are comprised of several large contracts
with varying progress payment terms, it is not unusual for the balances
of accounts receivable and costs and estimated earnings in excess of
billings on incomplete contracts to fluctuate significantly depending
on the stage of completion of the contracts and the Company's workload.
The Company intends to meet its current obligations by continuing to
reduce its costs and overhead expenses while maintaining its revenue
base.
7
<PAGE>
PART II: OTHER INFORMATION
---------------------------
TRANSACT INTERNATIONAL INC.
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K.
--------------------------------
(a) Exhibits - 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.
TRANSACT INTERNATIONAL INC.
---------------------------
Registrant
Date: September 8, 1995 /s/ BRUNO S. FRASSETTO
------------------------ ---------------------------
Bruno S. Frassetto
President
Date: September 8, 1995 /s/ AXEL COELLN
------------------------ ---------------------------
Axel Coelln
Executive Vice President
(Principal Financial and
Accounting Officer)
8
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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ART. 5 FDS FOR 1ST QUARTER 10-Q
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