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, 1996
[ ] 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 0-8422
------
TRANSACT INTERNATIONAL INC.
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
CONNECTICUT 06-0732124
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
20 THORNDAL CIRCLE, DARIEN, CONNECTICUT 06820
-----------------------------------------------
(Address of principal executive offices)
(203) 656-0777
---------------------------
(Issuer's telephone number)
- ------------------------------------------------------------------------------
(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
State the number of shares outstanding of each of the issuer's classes of
common equity as of August 15, 1996 was 6,123,235.
Transitional Small Business Disclosure Format (Check One);
YES NO X
---- ----
<PAGE>
TRANSACT INTERNATIONAL INC.
FORM 10 QSB - QUARTER ENDED JULY 31, 1996
CONTENTS
PAGE
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets
July 31, 1996 (Unaudited) and April 30, 1996..............3
Statements of Operations (Unaudited)
Three Months Ended July 31, 1996 and
July 31, 1995 ............................................4
Statements of Cash Flows (Unaudited)
Three Months Ended July 31, 1996 and
July 31, 1995.............................................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
SIGNATURE ...........................................................8
2
<PAGE>
PART I : FINANCIAL INFORMATION
TRANSACT INTERNATIONAL INC.
BALANCE SHEETS
JULY 31, APRIL 30,
1996 1996
------------- -------------
ASSETS (UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 73,454 $ 287,986
Accounts receivable, net of allowance
for doubtful accounts of $105,000 and
$92,000 respectively 1,579,043 1,021,320
Inventories 309,877 406,750
Costs and estimated earnings in excess of
billings on incomplete contracts 298,927 329,063
Prepaid expenses and other current assets 51,095 68,263
------------- -------------
TOTAL CURRENT ASSETS 2,312,396 2,113,382
------------- -------------
PROPERTY, PLANT AND EQUIPMENT, AT COST 283,745 277,727
Less accumulated depreciation (224,478) (215,648)
------------- -------------
59,267 62,079
OTHER ASSETS 80,775 2,300
------------- -------------
TOTAL ASSETS $ 2,452,438 $ 2,177,761
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Short-term borrowings $ 150,000 $ 150,000
Accounts payable 1,202,848 1,555,119
Accrued expenses 424,405 368,311
Current portion of long-term debt 71,902 82,352
Billings in excess of costs and estimated
earnings on Incomplete contracts 778,282 209,707
------------- -------------
TOTAL CURRENT LIABILITIES 2,627,437 2,365,489
------------- -------------
STOCKHOLDERS' DEFICIENCY
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 (6,222,660) (6,235,389)
------------- -------------
TOTAL STOCKHOLDERS' DEFICIENCY (174,999) (187,728)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 2,452,438 $ 2,177,761
============= =============
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
TRANSACT INTERNATIONAL INC.
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED
-----------------------------
7/31/96 7/31/95
------------ --------------
NET SALES $ 2,426,117 $ 2,017,100
------------ --------------
COSTS AND EXPENSES:
Cost of sales 2,063,388 1,677,685
Selling and administrative 345,600 434,763
------------ --------------
2,408,988 2,112,448
------------ --------------
PROFIT (LOSS) FROM OPERATIONS 17,129 (95,348)
------------ --------------
OTHER INCOME (EXPENSE):
Interest expense (5,080) (4,349)
Other income 680 1,987
------------ --------------
(4,400) (2,362)
------------ --------------
NET INCOME (LOSS) $ 12,729 $ (97,710)
============ ==============
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK $ -- $ (.02)
============ ==============
WEIGHTED AVERAGE SHARES
OUTSTANDING 6,123,235 6,123,235
============ ==============
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
TRANSACT INTERNATIONAL INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
- ------------------------------------------------------------------------------
THREE MONTHS ENDED
--------------------------
7/31/96 7/31/95
------------ -----------
OPERATING ACTIVITIES:
Net income (loss) $ 12,729 $ (97,710)
Adjustments to reconcile net income (loss)
to cash from operations:
Depreciation of property, plant and equipment 8,830 7,545
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (557,723) 450,033
(Increase) decrease in inventories 96,873 (135)
(Increase) decrease in other current assets 17,168 (6,978)
(Increase) decrease in costs and estimated
earnings in excess of billings on incomplete
contracts - net 598,711 (490,919)
(Increase) decrease in other assets (78,475) 11,688
(Decrease) increase in accounts payable and
accrued expenses (296,177) 287,483
------------ -----------
NET CASH (USED IN) PROVIDED BY OPERATIONS (198,064) 161,007
------------ -----------
INVESTING ACTIVITIES:
Capital expenditures (6,018) (3,444)
------------ -----------
FINANCING ACTIVITIES:
Repayment of debt (10,450) (40,309)
------------ -----------
NET (DECREASE) INCREASEIN CASH AND
CASH EQUIVALENTS (214,532) 117,254
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 287,986 140,950
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 73,454 258,204
============ ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 5,080 4,849
Income taxes --- ---
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
TRANSACT INTERNATIONAL INC.
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
1. The accompanying financial statements have been prepared assuming that
Transact International Inc. (the "Company") will continue as a going
concern. The Company's ability to continue as a going concern is
uncertain based on the matters discussed in the next three sentences.
The Company has a stockholders' deficiency and working capital deficiency
of $174,999 and $315,041, respectively, at July 31, 1996. The Company is
presently seeking additional orders and is exploring the sale or licensing
of certain product lines that would enable the Company to continue as a
going concern. However, there is no assurance that the Company will be
successful in attaining additional profitable orders or in selling or
licensing certain product lines.
The balance sheet as of July 31, 1996, and the statements of operations
and cash flows for the three months ended July 31, 1996 and 1995 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, 1996 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, 1996 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, 1996 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
not material or antidilutive.
4. There was no income taxes in the three month period ended July 31, 1996
because the Company has a substantial net operating loss carryforward.
There was no benefit for income taxes in the three month period ended July
31, 1995, 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 $6,100,000 and
$104,000 respectively, expiring in 1997 through 2010.
The tax effects of temporary differences giving rise to the Company's
deferred tax assets at July 31, 1996 are as follows:
Net operating loss carryforward $ 2,250,000
Investment tax credit carryforward 104,000
Other reserves and liabilities 128,000
------------
2,482,000
Valuation allowance (2,482,000)
------------
$ ---
============
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, 1996 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:
Net income for the first quarter of 1996 was $12,729, representing a $110,439
increase over the $97,710 loss in the first quarter of 1995. This increase
results primarily from the increase in sales and the reduction in selling and
administrative expenses in 1996. Sales for the three months ended July 31,
1996 increased $409,017 (20.3%) as compared to the comparable three month
period of last year. Three major projects contributed to this improved sales
picture. On-going projects at Hickam and Dover Air Force Bases peaked during
this period resulting in increased billings and a new, fast track, project for
UPS Louisville for advanced aircraft handling equipment added to the overall
result. Gross profit as a percentage of net sales was approximately 15.0% for
the three months ended July 31, 1996 and 16.8% for the three months ended July
31, 1995. This decrease of 1.8% in gross profit percentage reflects the lack
of a high margin terminal project in 1996 that was completed in 1995,
partially offset by higher revenues from transfer ball sales in 1996 which
have high margins. Gross margins remain under pressure, particularly for
terminal projects, due to competitive conditions. Selling and administrative
expenses decreased $89,163 in the first quarter of 1996 compared to the first
quarter of 1995. This decrease was principally due to reduced compensation
and travel expenses of $91,355 partially offset by an increase of $15,435 in
legal expenses.
The Company's sales order backlog as of July 31, 1996 is approximately $5.3
million. This compares to a $2.0 million backlog as of July 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES:
During the three months ended July 31, 1996, the Company used approximately
$198,000 in cash in its operations this primarily resulted from an increase in
accounts receivable and a decrease in accounts payable, offset by an increase
in billings and excess of costs and estimated earnings on incomplete
contracts. At July 31, 1996 the Company has a working capital deficiency of
$315,041.
The Company's ability to continue in business is dependent upon its ability to
increase profitability and/or sell or license certain product lines. The
Company is currently seeking additional orders and is exploring the sale or
license of certain product lines that would enable the Company to continue as
a going concern. However, there is no assurance that the Company will be
successful in attaining additional profitable orders or in selling or
licensing certain product lines.
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
SIGNATURE
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
/s/ Bruno S. Frassetto
DATE: SEPTEMBER 11, 1996 ------------------------------
BRUNO S. FRASSETTO
President and
Chief Financial Officer
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS IS A LEGEND
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1996
<CASH> 73
<SECURITIES> 0
<RECEIVABLES> 1,684
<ALLOWANCES> 105
<INVENTORY> 310
<CURRENT-ASSETS> 2,312
<PP&E> 284
<DEPRECIATION> 224
<TOTAL-ASSETS> 2,452
<CURRENT-LIABILITIES> 2,627
<BONDS> 0
0
0
<COMMON> 853
<OTHER-SE> (1,028)
<TOTAL-LIABILITY-AND-EQUITY> 2,452
<SALES> 2,426
<TOTAL-REVENUES> 2,426
<CGS> 2,063
<TOTAL-COSTS> 2,063
<OTHER-EXPENSES> 332
<LOSS-PROVISION> 13
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 13
<INCOME-TAX> 0
<INCOME-CONTINUING> 13
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
