SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission file number 333-35021
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TELETRAC, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 43-1172403
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
3220 Executive Ridge Dr. #100, Vista, CA 92083
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(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, Including Area Code (760) 597-0510
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Not Applicable
---------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding 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 | |
--- ---
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13
or 15(d) of the Securities Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by a
court. Yes |X| No | |
--- ---
As of November 13, 2000, Teletrac, Inc. had outstanding
10,000,000 shares of Common Stock, $.01 par value per share.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TELETRAC, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $939,050 $1,270,065
Accounts receivable, less allowances of $676,570 and $1,874,717 at 2000 and 1999 3,248,595 2,752,173
Inventories, net 3,074,395 4,411,507
Prepaid expenses and other current assets 964,155 936,691
----------- -----------
Total current assets 8,226,195 9,370,436
PROPERTY AND EQUIPMENT, net 8,128,286 7,740,758
INVENTORIES, LONG-TERM 2,977,650 2,977,650
OTHER ASSETS, net of accumulated amortization of $19,185 and $4,830 at 2000 and 1999 778,612 380,190
ACCOUNTS RECEIVABLE LEASING 1,277,700 2,404,249
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Total assets $21,388,443 $22,873,283
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $1,383,428 $1,009,529
Accrued expenses 1,727,823 2,562,014
Current portion of long-term obligations 390,800 3,118,733
----------- -----------
Total current liabilities 3,502,051 6,690,276
LONG-TERM OBLIGATIONS 17,722,829 15,425,695
----------- -----------
Total liabilities 21,224,880 22,115,971
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STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 20,000,000 shares authorized and
10,000,000 issued 100,000 100,000
Warrants, 3,000,000 warrants to purchase 3,000,000 shares of common stock;
800,000 warrants to purchase 800,000 shares of common stock 468,000 468,000
Additional paid-in-capital 1,795,512 1,795,512
Accumulated deficit (2,199,949) (1,606,200)
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Total stockholders' equity 163,563 757,312
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Total liabilities and stockholders' equity $21,388,443 $22,873,283
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated balance sheets.
<PAGE>
TELETRAC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended September 30, Ended September 30,
New Company Predecessor New Company Predecessor
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Service revenue $ 16,499,755 $ 15,740,509 $ 5,390,840 $ 5,304,691
Equipment revenue 4,970,953 6,801,734 1,811,904 2,120,854
Other revenue 323,862 2,794,437 48,210 15,770
------------- ------------- ------------- -------------
Total operating revenues 21,794,570 25,336,680 7,250,954 7,441,315
OPERATING EXPENSES:
Cost of service revenues 2,281,638 2,536,639 768,448 779,741
Cost of equipment revenue 3,564,665 4,649,059 1,287,040 1,442,152
Selling, general and administrative 13,542,408 16,848,074 4,443,626 4,395,578
Engineering 3,071,277 4,763,621 961,180 1,312,118
Depreciation and amortization 1,036,832 4,341,131 319,111 1,249,450
------------- ------------- ------------- -------------
Total operating expenses 23,496,820 33,138,524 7,779,405 9,177,039
------------- ------------- ------------- -------------
LOSS FROM OPERATIONS (1,702,250) (7,801,844) (528,451) (1,737,724)
------------- ------------- ------------- -------------
OTHER EXPENSE (INCOME):
Interest expense 1,675,521 7,734,877 494,880 43,422
Gain on disposal (2,525,597) -- (759) --
Interest and other income (258,425) (912,909) (13,465) (267,912)
------------- ------------- ------------- -------------
LOSS BEFORE REORGANIZATION COSTS
AND EXTRAORDINARY GAIN OF DEBT DISCHARGE (593,749) (14,623,812) (1,009,107) (1,513,234)
REORGANIZATION COSTS -- 1,321,746 -- 282,082
EXTRAORDINARY GAIN ON DISCHARGE OF
INDEBTEDNESS, NET OF INCOME TAXES -- (123,696,449) -- (123,696,449)
------------- ------------- ------------- -------------
GAIN (LOSS) BEFORE INCOME TAXES (593,749) 107,750,891 (1,009,107) 121,901,133
PROVISION FOR INCOME TAXES -- -- -- --
------------- ------------- ------------- -------------
NET INCOME (LOSS) (593,749) $ 107,750,891 (1,009,107) 121,901,133
PREFERRED STOCK DIVIDENDS -- 3,553,366 -- --
------------- ------------- ------------- -------------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (593,749) $ 104,197,525 $ (1,009,107) $ 121,901,133
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
<PAGE>
TELETRAC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For The
Nine Months Ended September 30,
New Company Predecessor
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss $ (593,749) $ 107,750,891
Adjustments to reconcile net loss to net cash used in
operating activities -
Depreciation and amortization 1,036,832 4,341,131
Accretion of discount on senior notes -- 196,853
(Gain)/loss on assets disposed/sold (2,525,598) 15,274
Loss on assets from restructuring -- 60,394
Gain on debt discharge -- (123,696,449)
Changes in working capital and other assets and
liabilities
(Increase)decrease in trade receivables 380,129 (486,143)
Decrease in inventory 1,337,112 1,928,508
(Increase)decrease in prepaids and other (26,705) 76,397
(Decrease)in current liabilities (3,135,424) (91,810)
Refrequency liability -- (58,184)
Accrued interest 1,475,131 --
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Cash used in operating activities (2,052,272) (9,963,138)
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INVESTING ACTIVITIES:
Proceeds from sale of assets 3,600,855 10,500
Payments for property and equipment (1,235,886) (1,189,983)
Payments for other intangible assets (412,912) (705,596)
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Cash used in investing activities 1,952,057 (1,885,079)
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FINANCING ACTIVITIES:
Proceeds from secured senior note - short-term -- 3,000,000
Restricted investments -- 6,503,863
Payments on capital leases (230,800) (490,507)
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Cash provided by financing activities (230,800) 9,013,356
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NET DECREASE IN CASH AND CASH EQUIVALENTS (331,015) (2,834,861)
CASH AND CASH EQUIVALENTS, beginning of period 1,270,065 5,953,505
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CASH AND CASH EQUIVALENTS, end of period $ 939,050 $ 3,118,644
============= =============
SUPPLEMENTAL DISCLOSURE -
Interest paid $ 1,675,520 $ 7,734,877
============= =============
NONCASH TRANSACTION:
Liability incurred in connection
with bankruptcy settlement $ 1,000,000 $ -
============= =============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements
<PAGE>
TELETRAC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Total
Common Stock Additional Accumulated Stockholders'
Par $.01 Warrants Paid-in-Capital Deficit Equity
--------- --------- ---------------- ------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1999 $ 100,000 $ 468,000 $ 1,795,512 $ (1,606,200) $ 757,312
Net loss - - - (593,749) (593,749)
----------- ---------- --------------- -------------- ----------
BALANCE, September 30, 2000 $ 100,000 $ 468,000 $ 1,795,512 $ (2,199,949) $ 163,563
=========== ========== =============== ============== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS:
Teletrac, Inc., a Delaware corporation, through its wholly-owned subsidiary,
Teletrac License, Inc. (collectively, the "Company"), controls licenses issued
by the Federal Communications Commission (FCC) to construct and operate radio
location networks for the purpose of locating, tracking and communicating with
commercial fleet and consumer vehicles as a result of its acquisition of
AirTouch Teletrac. As of September 30, 2000, the Company operated in twelve
metropolitan markets: Los Angeles, Chicago, Detroit, Dallas, Miami, Houston,
Orlando, San Francisco, San Diego, Sacramento, Washington D.C./Baltimore and New
York. The Company also uses its proprietary location systems to provide vehicle
location and stolen vehicle recovery services to consumers in its Los Angeles
market. The Company offers a range of fleet management solutions, depending on
the customer's budget and location and messaging needs. All of these solutions
involve the installation in each vehicle of a vehicle location unit ("VLU") or a
"VLU+" in the case of a CDPD/GPS application. The VLU is a radio transceiver
that receives and transmits signals used to determine a vehicle's location. In
addition to the VLU, commercial fleet customers generally purchase software or
location services from the Company. The Company's primary product for commercial
fleets is Fleet Director Enterprise Edition(R), a proprietary software
application that permits simultaneous location of all fleet vehicles on a
real-time 24-hour-a-day basis through a digitized map displayed on the
customer's dedicated personal computer or network server, which is connected to
the Company's Network Control Center. Fleet Director Enterprise Edition (R) can
be complemented with the Company's data communication units, which allow two-way
messaging between the fleet dispatcher and drivers directly from the Fleet
Director Enterprise Edition(R) screen. Even though the Company has sold its
networks in Washington D.C., New York, Miami and Orlando, it has maintained
ownership of the customers on those networks.
On September 15, 1999, the Company's Plan of Reorganization was confirmed by the
United States Bankruptcy Court and it was effective on September 29, 1999 (the
"Reorganization"). As a result of the Reorganization, the recording of the
restructuring transaction and the implementation of Fresh Start Accounting, the
Company's results of operations after September 30, 1999 (the cutoff date used
for financial reporting purposes) are not comparable to results reported in
prior periods.
NOTE 2 - BASIS OF PRESENTATION:
The condensed consolidated interim financial statements of the Company included
herein have been prepared by the Company without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC") and reflect
all adjustments that are, in the opinion of management, necessary to fairly
present the financial position, results of operaitons, and cash flows for the
interim periods. Certain information and footnote disclosures normally included
in consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such SEC rules and regulations. Management believes that
the disclosures made are adequate to make the information presented not
misleading. The results for interim periods are not necessarily indicative of
the results for the full year. The interim financial statements should be read
in conjunction with the financial statements and notes thereto contained in the
Company's audited consoldiated financial statements for the year ended December
31, 1999 filed on Form 10-K.
<PAGE>
NOTE 3 - INVENTORIES
Inventories consisted of the following at September 30, 2000 (unaudited) and
December 31, 1999:
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
Vehicle Location Units ("VLU") $3,964,762 $5,538,409
Messaging Units 972,228 944,686
Computers & Software 321,090 328,016
Other Inventory 917,607 658,818
Less: Inventory Reserves 123,642 80,772
------------------------- ------------------------
Total Inventory 6,052,045 7,389,157
Less: Long-Term Inventory 2,977,650 2,977,650
------------------------- ------------------------
Current Portion $3,074,395 $4,411,507
========================= ========================
</TABLE>
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment, including equipment under capital leases, consisted of
the following at September 30, 2000 (unaudited) and December 31, 1999:
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
System Equipment $6,475,314 $5,803,006
Automobiles 87,086 118,015
Furniture & Fixtures 674,528 666,875
Computer Equipment 1,879,544 1,371,956
Leasehold Improvements 92,161 101,005
Construction in Progress 165,036 2,501
------------------------- ------------------------
Total Property & Equipment 9,373,669 8,063,359
Accumulated Depreciation (1,245,383) (322,602)
------------------------- ------------------------
Net Property & Equipment $8,128,286 $7,740,758
========================= ========================
</TABLE>
NOTE 5 - LONG-TERM OBLIGATIONS
The Company settled the litigation in Bankruptcy Court with Milgo Solutions
f/k/a Raycal Datacom, Inc. ("Milgo") and Newcourt Leasing, Inc. regarding leased
telecommunications equipment. The settlement stipulation, which was approved by
the Court on October 27, 2000 and will become final and non-appealable on
November 21, 2000, provides that the Company shall pay Milgo the sum of
$1,000,000 over a three (3) year term, in monthly installments and without
interest. The note is secured by the equipment and the UCC-1 will be filed
accordingly. The asset was posted to property and equipment on the
condensed consolidated balance sheet due to previous fresh start accounting
adjustments reducing the assets.
NOTE 6 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements." SAB No. 101 summarizes the
SEC's view in applying accounting principles generally accepted in the United
States to revenue recognition in financial statements. SAB No. 101 must be
implemented no later than the fourth fiscal quarter for all registrants with
fiscal years beginning after December 15, 1999 and before March 15, 2000.
Management has reviewed the impact of SAB No. 101 on the Company's financial
statements and does not expect any impact to the Company's financial statements
of adopting SAB No. 101.
In July 2000, the Emerging Issues Task Force ("EITF") discussed EITF No. 00-21,
"Accounting for Multiple-Element Revenue Arrangements." EITF No. 00-21 addresses
how to account for multiple-element revenue arrangements such as combined
services of initial installation, initiation and activation services and involve
either a fixed fee or a fixed fee coupled with a continuing payment stream. The
EITF established a working group to address this issue, however, consent has not
been reached and further discussions are expected in future meetings. Due to
consensus not being reached, the Company has not determined the impact of EITF
No. 00-21 on its financial statements.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in forward-looking statements. Factors that might cause such a
difference include, but are not limited to, the "Risk Factors" set forth in the
Company's Registration Statement on Form S-1.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
REVENUES. Total revenues for the three months ended September 30, 2000
were $7.3 million, compared to $7.4 million for the three months ended September
30, 1999.
Equipment revenues decreased to $1.8 million for the three months ended
September 30, 2000 from $2.1 million for the three months ended September 30,
1999, principally due to fewer new installations during the period. Gross
commercial installations decreased to 3,122 vehicle applications for the three
months ended September 30, 2000 from 3,737 vehicle applications for the three
months ended September 30, 1999.
Service revenues increased to $5.4 million for the three months ended
September 30, 2000 from $5.3 million for the three months ended September 30,
1999 primarily due to an increase in the average commercial service revenue per
vehicle application to $33.46 in September 2000 from $29.75 in September 1999.
Total commercial vehicle applications in service at September 30, 2000 were
51,709 as compared to 56,994 on September 30, 1999.
COST OF SERVICE REVENUES. Cost of service revenues includes the direct cost
of providing service (network telephone, billing, roadside assistance and bad
debt expense). Cost of revenues were $0.8 million for the three months ended
September 30, 2000 and for the three months ended September 30, 1999.
COST OF EQUIPMENT. Cost of equipment decreased to $1.3 million for the
three months ended September 30, 2000 from $1.4 million for the three months
ended September 30, 1999 due to a decrease in new installations.
RESEARCH AND DEVELOPMENT, ENGINEERING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES. Research and development, engineering, selling, general
and administrative expenses decreased by $0.3 million, to $5.4 million for the
three months ended September 30, 2000 from $5.7 million for the three months
ended September 30, 1999. Most of the expense reduction was a result of fewer
engineering personnel and telephone cost reductions.
DEPRECIATION AND AMORTIZATION. Depreciation and Amortization decreased
for the three months ended September 30, 2000 to $0.3 million from $1.2 million
for the three months ended September 30, 1999, primarily due to the disposal of
certain assets related to networks no longer in use or owned by the Company.
OPERATING LOSSES. Operating losses incurred by the Company were $0.5
million for the three months ended September 30, 2000, as compared to $1.7
million for the three months ended September 30, 1999, for the reasons discussed
above.
INTEREST EXPENSE. Interest expense was $0.5 million for the three
months ended September 30, 2000 verses $43,422 for the three months ended
September 30, 1999. During the three months ended September 30, 1999, most
interest expense was suspended during the bankruptcy reorganization process.
<PAGE>
REORGANIZATION COSTS AND DEBT DISCHARGE. Reorganization costs were $0.3
million for the three months ended September 30, 1999. The Company accounted for
the bankruptcy reorganization in accordance with SOP 90-7 and as such had
recognized a gain from the debt discharge, equity discharge, and reorganization
of $123.7 million.
NET INCOME /LOSS. For the reasons discussed , net loss was $1.0
million for three months ended September 30, 2000 compared to net income of
$121.9 million for three months ended September 30, 1999. No tax benefit has
been recognized for any period due to the uncertainty of net operating loss
carry-forward utilization.
Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
REVENUES. Total operating revenues for the nine months ended September
30, 2000 were $21.8 million, compared to $25.3 million for the nine months ended
September 30, 1999.
Equipment revenues decreased to $5.0 million for the nine months ended
September 30, 2000 from $6.8 million for the nine months ended September 30,
1999, principally due to fewer new installations during the period. The
reduction in number of sales was primarily due to a sharp reduction in direct
sales personnel. Gross commercial installations decreased to 9,033 vehicle
applications for the nine months ended September 30, 2000 from 10,856 vehicle
applications for the nine months ended September 30, 1999.
Service revenues increased to $16.5 million for the nine months ended
September 30, 2000 from $15.7 million for the nine months ended September 30,
1999, an increase of 5%, primarily due to an increase in the average commercial
service revenue per vehicle application to $33.46 in September 2000 from $29.75
in September 1999. Total commercial vehicle applications in service at September
30, 2000 were 51,709 as compared to 56,994 on September 30, 1999.
Other revenues for the nine months ended September 30, 2000 was $0.2
million as compared to $2.8 million for the nine months ended September 30,
1999. In 1999, the Company licensed its proprietary location and messaging
solution to an affiliate of Ituran Location and Control LTD, Teletrac's Israeli
licensee. The agreement permits Ituran's affiliate to market and operate
Teletrac's proprietary technology in Latin and South America and certain
countries in Eastern Europe. In addition to the initial licensing fee, the
agreement includes provisions for future royalty payments. As part of the
consideration of the licensing agreement, Ituran and Teletrac agreed to the
elimination of future royalty payments due to Teletrac for Israel.
COST OF SERVICE REVENUES. Cost of service revenues includes the direct cost
of providing service (network telephone, billing, roadside assistance and bad
debt expense). Cost of revenues decreased to $2.3 million for the nine months
ended September 30, 2000 from $2.5 million for the nine months ended September
30, 1999. Cost of service revenues declined due to the shutting down of the San
Francisco / Sacramento networks along with the sale of the New York and
Washington DC networks to Ituran, USA.
COST OF EQUIPMENT. Cost of equipment decreased to $3.6 million for the
nine months ended September 30, 2000 from $4.6 million for the nine months ended
September 30, 1999 due to a decrease in new installations.
RESEARCH AND DEVELOPMENT, ENGINEERING, SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES. Research and development, engineering, selling, general
and administrative expenses decreased by $5.0 million, to $16.6 million for the
nine months ended September 30, 2000 from $21.6 million for the nine months
ended September 30, 1999. The Company reduced expenses through significant
reductions in personnel along with the shutting down of the San Francisco /
Sacramento network and sale of the New York and Washington DC networks.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased
for the nine months ended September 30, 2000 to $1.0 million from $4.3 million
<PAGE>
for the nine months ended September 30, 1999, primarily due to lower asset
valuation of the Reorganized Company in comparison to the Predecessor Company.
OPERATING LOSSES. Operating losses incurred by the Company were $1.7
million for the nine months ended September 30, 2000, as compared to $7.8
million for the nine months ended September 30, 1999, for the reasons discussed
above.
INTEREST EXPENSE. Interest expense was $1.7 million for the nine
months ended September 30, 2000 verses $8.2 million for the nine months ended
September 30, 1999. Interest expense related to the senior note and warrants was
stopped upon the Chapter 11 filing. The debt level was significantly reduced
creating lower expense for 2000 as a result.
REORGANIZATION COSTS AND DEBT DISCHARGE. Reorganization costs were $1.3
million for the nine months ended September 30, 1999. The Company accounted for
the bankruptcy reorganization in accordance with SOP 90-7 and as such has
recognized a gain from the debt discharge, equity discharge, and reorganization
of $123.7 million.
GAIN ON DISPOSAL. Gain on disposal resulting from the sale of the Miami and
Orlando networks amounted to $2.5 million in the nine months ended September 30,
2000.
NET INCOME / LOSS. For the reasons discussed above, net loss was $0.6
million for the nine months ended September 30, 2000 compared to a net income
of $104.2 million for the nine months ended September 30, 1999. No tax benefit
has been recognized for any period due to the uncertainty of net operating loss
carry-forward utilization.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures were $1.2 million for the nine months ended
September 30, 2000, primarily for development of internal software applications.
The Company currently expects that its aggregate capital expenditures will be
less than $2.0 million for 2000. These capital expenditures will consist
primarily of costs associated with internal software development, the
maintenance of existing markets, and other capital improvements.
We believe cash flows from operations will be sufficient to enable us to
meet our working capital requirements for the next twelve months. However, we
are currently in the processs of attempting to enter into an asset based lending
arrangement that would provide needed working capital availability.
Additionally, in order to implement any future growth plans, equity or debt
financing will be required. In order to raise financing we anticipate that we
will need to undertake private placements or a public offering of our securities
at a future date, depending upon market conditions, in order to obtain
sufficient capital for us to implement any future growth plan. No assurance can
be given that we will be successful in raising additional investment capital in
the future, or that if we are successful, that the financial resources obtained
will be sufficient for us to successfully carry out a growth plan.
INFLATION
The Company believes that to date inflation has not had a material
effect on its results of operations. Although inflation may in the future effect
the cost of VLU and messaging units sold by the Company, the Company expects
that technology and engineering improvements are likely to offset any
foreseeable cost increases.
RECENT ACCOUNTING PRONOUNCEMENTS
See "Recent Accounting Pronouncements" in Note 6 to the Unaudited Condensed
Consolidated Financial Statements.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The parties have agreed to a settlement of the litigation in Bankruptcy
Court involving the Company, Milgo Solutions f/k/a Raycal-Datacom, Inc. and
Newcourt Leasing, Inc. The settlement stipulation, which was approved by
Bankruptcy Court on October 27, 2000 and will become final and non-appealable on
November 21, 2000, provides that the Company shall pay Milgo the sum of
$1,000,000 over a three-year term, in monthly installments and without interest.
As part of the settlement, complete mutual releases were delivered in favor of
all parties.
There have been no other material developments in legal proceedings
reported in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
None.
<PAGE>
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.
TELETRAC, INC.
By: /s/ Alan B. Howe
------------------------------
Name: Alan B. Howe
Title: Chief Financial Officer
Date: November 13, 2000
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
