FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended March 31, 1998
- OR -
[ ] 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 333-20709
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Exact Name of small business issuer as specified in its charter)
DELAWARE 13-3391820
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
22681/22687 Old Canal Road, Yorba Linda, CA 92687
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(Address of principal executive offices)
(714) 974-7676
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Former Address: 22700 Savi Ranch Parkway, Yorba Linda, CA 92657
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of during the past 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 ___
The number of shares of common stock, $.01 par value, outstanding as of
April 30, 1998 was 598,734.
1
<PAGE>
INDEX
<TABLE>
<CAPTION>
<S> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - March 31, 1998
and June 30, 1997................................................... 3
Condensed consolidated statements of operations -
three months ended March 31, 1998 and 1997.......................... 4
Condensed consolidated statements of operations -
nine months ended March 31, 1998 and 1997........................... 5
Condensed consolidated statements of cash flows -
nine months ended March 31, 1998 and 1997........................... 6
Notes to condensed consolidated financial statements -
March 31, 1998 ..................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 9
PART II. OTHER INFORMATION
Item 5. Other Information................................................... 13
Item 6. Exhibits and Reports on Form 8-K.................................... 14
Signatures.......................................................... 15
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
TRANSITION ANALYSIS COMPONENTS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 June 30
1998 1997
---------------------------------
(000's omitted except share data)
---------------------------------
(unaudited) (Note)
<S> <C> <C>
Assets
Current assets
Cash $ 172 $ 133
Accounts receivable, less allowances of
$15 and $5, respectively 722 419
Prepaid expenses 41 11
Other current assets 15 --
---------------------------------
Total current assets 950 563
Furniture and equipment 661 500
Less accumulated depreciation and amortization 375 310
---------------------------------
286 190
Other assets
Security deposits 84 --
Software development - net 66 --
Excess of cost over assets acquired 56 --
---------------------------------
Total assets $ 1,442 $ 753
=================================
Liabilities and stockholders' equity
Current liabilities
Account payable and accrued expenses $ 536 $ 321
Loan payable - bank 520 --
Deferred income 277 80
---------------------------------
Total current liabilities 1,333 401
Stockholders' equity
Common stock, par value $.01 per share;
authorized 5,000,000 shares; issued
598,734 shares as of March 31, 1998
and 553,830 shares as of June 30, 1997 6 5
Additional paid-in capital 553 441
Retained-earnings (deficit) (450) (94)
---------------------------------
Total stockholders' equity 109 352
---------------------------------
Total liabilities and stockholders' equity $ 1,442 $ 753
=================================
</TABLE>
Note: The consolidated balance sheet at June 30, 1997 has been derived from the
audited consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
3
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------------
1998 1997
------------------------
(000's omitted,
except per share data)
<S> <C> <C>
Revenues $ 933 $ 570
Selling, general and administrative expenses 1,073 462
Depreciation of equipment 13 13
Amortization of software development costs 3 --
Interest expense 15 --
------------------------
Income (loss) before income taxes (171) 95
Provision for income taxes -- 28
Net (loss) income $ (171) $ 67
========================
Net (loss) income per common share -
basic and diluted $ (.29) $ .12
========================
Number of shares used in computation -
basic and diluted 598,734 553,830
========================
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
March 31,
-----------------------
1998 1997
-----------------------
(000's omitted,
except share data)
<S> <C> <C>
Revenues $ 2,502 $ 1,607
Selling, general and administrative expenses 2,785 1,276
Depreciation of equipment 37 27
Amortization of software development costs 7 --
Interest expense 29 --
-----------------------
Income (loss) before income taxes (356) 304
Provision for income taxes -- 91
-----------------------
Net (loss) income $ (356) $ 213
Net (loss) income per common share -
basic and diluted $ (.60) $ .38
Number of shares used in computation -
basic and diluted 588,573 553,830
=======================
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
March 31,
------------------
1998 1997
------------------
(000's omitted)
<S> <C> <C>
Operating activities
Net (loss) income $(356) $213
Adjusted to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 41 27
Provision for losses in accounts receivable 10 --
Changes in operating assets and liabilities:
Accounts receivable (225) (126)
Prepaid expenses and other current assets (45) (103)
Accrued expenses 255 141
Deferred income 197 56
Security deposits (83) --
------------------
Net cash (used in) provided by operating activities (206) 208
------------------
Investing activities
Costs related to RAC acquisition,
net of cash received 12 --
Purchase of equipment (111) (129)
Additions to software development (6) --
------------------
Net cash used in investing activities (105) (129)
------------------
Financing activities
Proceeds from lines of credit 520 --
Net decrease in due to former parent (170) (96)
------------------
Net cash provided by (used in)
financing activities 350 (96)
------------------
Net increase (decrease) in cash 39 (17)
Cash at beginning of period 133 134
------------------
Cash at end of period $172 $117
=================
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1998
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 and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. 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 nine month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending June 30, 1998.
Note B - Organization
Prior to June 30, 1997, Transition Analysis Component Technology, Inc.
("TACTech" or the "Company") was a 90% owned subsidiary of Zing Technologies,
Inc. ("Zing"), the Company's former parent, and the remaining 10% was owned by
one officer of the Company.
The Company filed a registration statement on Form SB-1, which became effective
June 30, 1997, for the purpose of distributing the Common Stock of the Company
which was owned by Zing to the shareholders of Zing (the "Distribution"). In
connection with the Distribution, the Common Stock authorized and outstanding
was split on a 36.436-for-one basis.
Also, in connection with the Distribution, inter-company advances (excluding
income taxes) as of the effective date of the Distribution were converted to
equity and, accordingly, were included within additional paid-in capital.
Acquisition of Research Analysis Corp.
On September 22, 1997, TACTech acquired the assets of Research Analysis Corp.
("RAC"), consisting primarily of search and report software pursuant to a merger
of TACTech's newly formed and wholly owned subsidiary, with and into RAC. Upon
consummation of the Merger, RAC, as the surviving corporation, became a
wholly-owned subsidiary of the Company. The RAC acquisition was accounted for
pursuant to the purchase method of accounting and is effective as of September
1, 1997.
The following unaudited pro-forma information has been prepared assuming that
this acquisition had taken place at the beginning of the respective periods
after giving effect to pro-forma adjustments for compensation accruals and
income taxes. The number of shares used in the computations of net (loss) income
per common share is 598,734
<TABLE>
<CAPTION>
Three months ended
March 31, 1997
------------------
<S> <C>
Revenue $719,675
Net income 40,062
Net income per common share - basic and diluted $.07
</TABLE>
7
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note B - Organization (continued)
<TABLE>
<CAPTION>
Nine months ended March 31,
1998 1997
---------------------------
<S> <C> <C>
Revenue $2,585,948 $2,240,520
Net (loss) income (395,888) 302,821
Net (loss) income per common share - basic
and diluted $(.66) $.51
</TABLE>
RAC principally derives revenues from consulting services and customer-specific
projects under cost plus fixed fee contracts with the Department of Defense and
government contractors related specifically to training services, engineering
support and logistics support. These contractual services deal with issues of
reliability, maintainability, failure analyses, reliability predictions, circuit
card redesign, provisioning and weapons system file data extraction. Since the
acquisition of RAC by TACTech, RAC has commence development (and commenced
marketing) of software called "TACTRAC" to adapt RAC's component analysis
technology, used in connection with RAC's consulting services, to TACTech's
component data base technology.
It is the intention of TACTech to increase focus on TACTRAC development and
implementation and thereby to enhance and increase TACTRAC subscription revenue.
TACTech anticipates marketing the TACTRAC product through TACTech channels.
There can be no assurance that TACTech will be able successfully to develop and
market the TACTRAC product and that such failure will not result in a material
adverse effect upon TACTech. The strategic focus on marketing TACTRAC may also
have an adverse and material effect on RAC's realization of consulting revenue.
Note C - Summary of Significant Accounting Policies
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("FAS") No. 128, "Earnings per Share." FAS No. 128 replaced
the previously reported primary and fully diluted earnings per share with basic
and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented in conformity with FAS No. 128.
In October 1997, the AICPA issued Statement of Position ("SOP") 97-2, Software
Revenue Recognition, which changes the requirements for revenue recognition
effective for transactions that the Company will enter into beginning July 1,
1998. The Company has not yet assessed what the impact of the SOP will be on its
1999 financial statements.
8
<PAGE>
PART 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
The following table sets forth for the periods indicated the percentage
relationship to net sales of certain items from the statements of operations:
<TABLE>
<CAPTION>
Percent of Net Sales
Three months ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
----------------- -----------------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Selling, general and administrative expenses 115.0 81.1 111.3 79.4
Depreciation and amortization of equipment and
software development costs 1.7 2.2 1.8 1.7
Interest expense 1.6 -- 1.1 --
----------------- -----------------
Income (loss) before income taxes (18.3) 16.7 (14.2)% 18.9
Provision for income taxes -- 4.9 -- 5.7
----------------- -----------------
Net (loss) income (18.3)% 11.8% (14.2)% 13.2%
================= =================
</TABLE>
Results of Operations - Three Months Ended March 31, 1998 Compared to Three
Months Ended March 31, 1997
The Company reported a loss of $171,000 or a $.29 per share loss (basic and
diluted) for the quarter ended March 31, 1998 as opposed to a profit for the
comparable 1997 quarter of $67,000 or $.12 per share loss (basic and diluted).
The loss for the quarter ended March 31, 1998 is primarily attributable to
professional fees incurred by the Company in a law suit seeking injunctive
relief against a competitor and a former employee, and for bonus provisions made
under certain management employment agreements.
The Company generates revenues primarily through license agreements for its
information services provided through the Company's libraries and data bases.
These agreements are generally for terms of twelve months and may be canceled by
either party upon 30 days notice. The number of subscriber licenses generating
revenues was greater by approximately 7% at March 31, 1998 as compared to March
31, 1997.
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
-------- --------
<S> <C> <C>
Subscribers at beginning of period 98 85
Subscribers who did not renew (3) (6)
Subscribers added during period 7 16
-------- --------
Subscribers at end of period 102 95
======== ========
</TABLE>
Revenues for the three months ended March 31, 1998 were $933,000 as compared to
revenues of $570,000 for the three months ended March 31, 1997. This increase of
64% is primarily a result of the operation of the business acquired in the
Company's acquisition of Research Analysis Corporation ("RAC") in September 1997
which business generated $313,000 increase in Company sales revenues. The
balance of the increase is attributable to an approximate 7% increase in the
subscription base coupled with higher subscription prices.
9
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Results of Operations - Three Months Ended March 31, 1998 Compared to Three
Months Ended March 31, 1997 (continued)
There was a $611,000 increase in selling, general and administrative expense for
the three months ended March 31, 1998 as compared to the comparable 1997 period.
Approximately $200,000 of this increase is attributable to personnel and
programming consultants costs related to the RAC acquisition, also included in
this increase are legal and professional expenses in the amount of $125,000
relating to a lawsuit commenced by the Company seeking injunctive relief to
enjoin a former employee from using trade secrets and a competitor for breaching
a non solicitation agreement. Coincident to the Company's acquisition of RAC on
September 1, 1997, employment agreements were entered into with the former
shareholders of RAC providing, in part, for incentive bonuses up to $200,000
measured by the Company achieving certain targeted sales goals. Included in the
increases in selling, general and administrative expenses for the current period
ended March 31, 1997 over the comparable reporting period is a $100,000
provision for bonuses under such employment agreements.
There were no significant short term borrowings during the comparable 1997
period. The interest expense is attributable to amounts borrowed pursuant to the
Company's bank line of credit to fund working capital requirements and purchases
of computer and related equipment.
There was no provision for income taxes for the three months ended March 31,
1998 because of the reported loss. The Company intends to carry forward this
loss for tax purposes. In the comparable 1997 period, the Company filed its
federal income taxes on a consolidated basis for fiscal year 1997 with its
former parent, Zing. Income taxes were computed on a separate company basis
pursuant to the liability method.
Results of Operations - Nine Months Ended March 31, 1998 Compared to Nine Months
Ended March 31, 1997
The number of subscriber licenses generating revenues was greater by
approximately 7% at March 31, 1998 as compared to March 31, 1997.
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1998 1997
---------- ---------
<S> <C> <C>
Subscribers at beginning of period 95 73
Subscribers who did not renew (14) (11)
Subscribers added during period 21 33
---------- ---------
Subscribers at end of period 102 95
========== =========
</TABLE>
The Company reported a loss of $356,000 or a $.60 per share loss (basic and
diluted) for the nine month period ended March 31, 1998 as compared to reported
income of $213,000 or $.38 per share (basic and diluted) for the comparable 1997
period. The loss for the nine months ended March 31, 1998 is primarily
attributable to professional fees incurred by the Company in the Company's law
suit seeking injunctive relief against a competitor and a former employee.
Revenues for the nine months ended March 31, 1998 were $2,502,000, compared to
revenues for the nine months ended March 31, 1997 of $1,607,000.
Revenues for the Company increased 56% over the prior comparable reporting 1997
period. Of the $895,000 increase, approximately 73% was generated from the
operation of the business acquired in the RAC acquisition. $210,000 of the
acquired RAC business was from consulting and customer specific projects.
10
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Results of Operations - Nine Months Ended March 31, 1998 Compared to Nine Months
Ended March 31, 1997 (continued)
Selling, general and administrative expenses as a percentage of revenues
increased approximately 32% for the nine month period ended March 31, 1998 as
compared to the comparable period in 1997. Included in the total dollar increase
of $1,509,000 were costs primarily resulting from the development of the
Company's data base relating to the commercial components and the enhancement of
the RAC search engine technology. Specifically, these costs represented
personnel costs as exhibited by employee increases shown in the schedule below
which amounted to $590,000 and the use of programming consultants at a cost of
$135,000. There were increases in marketing and selling costs of $160,000 over
the comparable reporting period and a non recurring relocation cost of $120,000.
Legal fees amounting to $360,000 were incurred by the Company in seeking
injunctive relief to enjoin a former employee from using trade secrets and a
competitor from breaching a non-solicitation agreement. Coincident to the
Company's acquisition of RAC on September 1, 1997, employment agreements were
entered into with the former shareholders of RAC providing in part, for
incentive bonuses up to $200,000 measured by the Company achieving certain
targeted sales goals. Included in the increases in selling, general and
administrative expenses for the period ended March 31, 1998 over the comparable
reporting period is a provision of $100,00 for bonuses under such management
employment agreements.
<TABLE>
<CAPTION>
Number of Employees
Nine Months Ended March 31,
1998 1997
---------- -----------
<S> <C> <C>
Sales, marketing, training and customer service 7 4
Software development, data base maintenance and
computer maintenance 19 16
Data Processing 3 3
General and administrative 9 5
---------- -----------
38 28
========== ===========
</TABLE>
The Company did not have significant short term borrowings in the nine months
ended March 31, 1997. During the current reporting period, interest costs were
incurred in the amount of $29,000 for operational use and purchase of computers
and other fixed assets related to the relocation of the Company's headquarters.
There is no provision for income taxes for the nine month period ended March 31,
1998 because of the reported loss. The Company will elect to carry forward this
loss. In the comparable period in 1997, the Company filed its federal income
taxes on a consolidated basis for fiscal year 1997 with its former parent, Zing.
Income taxes were computed on a separate company basis pursuant to the liability
method.
11
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Liquidity and Capital Resources
For the nine months ended March 31, 1997, the Company used most of its cash
generated from operations for the acquisition of computers and computer related
equipment and for the reduction of its obligations to its former parent company,
Zing Technologies, Inc. For the nine months ended March 31, 1998, cash from a
line of credit and revenues generated from operations were used to fund
operations, purchase computers and related equipment, to liquidate all
obligations to its former parent company and to pay costs related to the
acquisition of RAC.
Based upon current and anticipated levels of operations and plans for
integrating the RAC business, the Company believes that its cash flow from
operations, combined with borrowings available under the existing line of
credit, will be sufficient to meet is current and anticipated cash operating
requirements, including scheduled interest and principal payments, capital
expenditures and working capital needs for the foreseeable future. See Item 5.
Other Information
Impact of Year 2000
Some of the Company's computer systems and electronic devices are based on
software programs which were written using two digits rather than four to define
the applicable year. As a result of how those computer programs store and
manipulate dates, such systems and devices may assume that all years occur in
the 20th century. This could cause a system failure or miscalculations causing
disruptions of operations, including among other things, a temporary liability
to process transactions, send invoices, or engage in similar normal business
activities.
The Company has completed an assessment of this problem and will have to modify
or replace portions of its software programs so that its computer systems will
function properly with respect to dates in the year 2000 and thereafter. The
total Year 2000 project cost is estimated at approximately $10,000 for the
purchase and development of new software that will be expensed as incurred.
The project is estimated to be completed no later than June 1998, which is prior
to any anticipated impacts on the Company's operating systems. The Company
believes that with modifications to existing software and systems, and
conversions to new software and systems, the Year 2000 Issue will not pose
significant operational problems for the Company's computer systems. However, if
such modifications and conversions are not made, or are not completed timely,
the Year 2000 issue could have a material and adverse effect on the Company.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
There is no guarantee that the systems of the Company's business relations are
Year 2000 compliant and will be timely converted. A year 2000 failure by a
relation could have a material and adverse effect on the Company.
Subsequent Events
In April 1998, the Company settled the lawsuit the Company brought against a
competitor and a former employee.
12
<PAGE>
PART II. OTHER INFORMATION
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
ITEM 5. OTHER INFORMATION
When used in this Form 10-QSB, and in future filings by TACTech with the
Securities and Exchange Commission, in TACTech's press releases and in any oral
statements made with the approval of an authorized TACTech executive officer,
the words or phrases "will likely result", "are expected to", "will continue",
"is anticipated", "estimate", "project", or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties, including those discussed below, that could cause
actual results to differ materially from historical earnings or those presently
anticipated or projected. TACTech wishes to caution readers not to place undo
reliance on such "forward-looking statements", which speak only as of the date
made. TACTech wishes to advise readers that factors listed below could affect
TACTech's financial performance and could cause TACTech's actual results for
future periods to differ materially from any opinion or statements expressed
with respect to future periods in any current statements.
TACTech will NOT undertake and specifically declines any obligation to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.
Dependence on Key Personnel
The business of TACTech is substantially dependent upon the active participation
and technical expertise of its executive officers. TACTech is dependent upon the
services of Malcolm Baca, its Executive Vice President and Chief Operating
Officer. The Company currently maintains a key-man life insurance policy on such
executive officer in the amount of $1,700,000. The Company's Board of Directors
regularly re-evaluates the need for and the amount of such key-man life
insurance. There can be no assurance, however, that TACTech can obtain
executives of comparable expertise and commitment in the event of death, or that
the business of TACTech would not suffer material adverse effects as the result
of the death (notwithstanding coverage by key-man insurance), disability or
voluntary departure or any such executive officer.
Competition
TACTech's license agreements are cancelable on thirty (30) days notice.
Approximately 50% of TACTech's information for its data bases comes from
numerous companies in the private sector. Accordingly, there can be no assurance
that existing arrangements with private suppliers of data will continue in
effect or, if they are canceled, that TACTech will be able to enter into
arrangements with other suppliers on terms as beneficial to TACTech as those
presently in effect. Moreover, there can be no assurance that other companies,
including existing customers of TACTech, will not avail themselves of sources of
data to develop their own software and data base services either in competition
with TACTech or to enable them to have their own sources for such services or
obtain such services from others. TACTech's software services and data bases are
protected by trade secret provisions of license agreements and by copyright
laws, but because such provisions and laws are frequently difficult or costly to
enforce, there can be no assurance that such protection will prove effective.
13
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
Technical Changes and New Product Development
In the event of changes in the structure of the computer hardware systems used
by subscribers to operate TACTech's data software, TACTech would incur capital
costs for new equipment and development costs in connection with the
reconfiguring of its software programs, which cost could be substantial and
could have an adverse effect on TACTech's profitability. In addition, TACTech
regularly incurs capital costs in connection with its new product development in
advance of their being ready for market, and there can be no assurance that such
new products will prove profitable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibit is included herein:
No exhibit is included herein.
The Company did not file any report on Form 8-K during the three months
ended March 31, 1998.
14
<PAGE>
TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC.
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.
Transition Analysis Component Technology, Inc.
----------------------------------------------
(Registrant)
Date: May 13, 1998 /s/ Robert E. Schrader
----------------------
Robert E. Schrader
President and Chief Executive Officer
Date: May 13, 1998 /s/ Martin S. Fawer
-------------------
Martin S. Fawer
Treasurer and Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 172
<SECURITIES> 0
<RECEIVABLES> 737
<ALLOWANCES> 15
<INVENTORY> 0
<CURRENT-ASSETS> 950
<PP&E> 661
<DEPRECIATION> 375
<TOTAL-ASSETS> 1,442
<CURRENT-LIABILITIES> 1,333
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 103
<TOTAL-LIABILITY-AND-EQUITY> 1,442
<SALES> 933
<TOTAL-REVENUES> 933
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> (171)
<INCOME-TAX> 0
<INCOME-CONTINUING> (171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (171)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
