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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) October 28, 1998
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COMMISSION FILE NUMBER 0-10966
NATIONAL TRANSACTION NETWORK, INC.
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(Exact name of registrant as specified in its charter)
Delaware No. 75-1535237
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
117 Flanders Road
Westborough, Massachusetts 01581
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(Address of principal executive offices) (Zip Code)
(508) 870-3200
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
National Transaction Network, Inc. ("NTN") is hereby reporting its results for
the third quarter of 1998. Revenue and earnings for the three months ended
September 30, 1998 were $1,397,025 and a loss of $982,969 respectively, compared
to $1,398,147 and a loss of $78,653 respectively, for the three months ended
September 30, 1997. For the nine months ended September 30, 1998, revenue and
earnings were $4,046,506 and a loss of $1,483,440 respectively, compared to
revenue and earnings of $3,560,713 and a loss of $453,217 respectively, for the
nine months ended September 30, 1997.
Earnings per share results for the quarter and nine months ended September 30,
1998 were a loss of $.30 and a loss of $.45 respectively, compared to earnings
per share results for the quarter and nine months ended September 30, 1997 of a
loss of $.02 and a loss of $.14 respectively.
The increase in revenue for the nine months ended September 30, 1998 as compared
to the same period a year earlier was the result of one customer's decision to
replace its lane equipment in the first three quarters of 1998. The significant
component of the operating loss in the quarter and nine months ended September
30, 1998 was the write-off of the PINnacle NT capitalized software development
costs.
In June 1998, International Verifact Inc., NTN's parent company, and Checkmate
Electronics, Inc. merged to form IVI Checkmate Corp., the third largest
electronic payment solutions provider in North America. IVI Checkmate Corp.
acquired Plourde Computing Services, Inc. ("Plourde"), an independent software
vendor, on September 29, 1998. Plourde's product is a Windows/NT based
application which has reached market acceptance. Since the NTN's PINnacle NT
product is still in field testing and was made redundant by the Plourde
acquisition, the capitalized development costs for the PINnacle NT product were
written off in the quarter ended September 30, 1998.
These costs had been previously capitalized in accordance with Statement of
Financial Accounting Standards (SFAS) No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed." It is NTN's policy
to capitalize costs relating to the development of its products once
technological feasibility has been achieved until the products are available for
general release to customers, provided that the recoverability of such costs is
reasonably assured through expected sales revenue less related selling expenses.
Management has determined that the costs capitalized for the PINnacle NT
project, totaling approximately $670,000, are not recoverable since the product
has been made redundant with the Plourde acquisition and further development on
the Pinnacle NT project has been canceled. Accordingly, NTN has written off the
capitalized software costs and will be redirecting its resources toward the
already developed Plourde Windows/NT platform product, acquired by IVI Checkmate
Corp. as mentioned above, as part of its complete payment solution with the
Mainsail switch.
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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.
NATIONAL TRANSACTION NETWORK, INC.
DATE: October 28, 1998, By /s/John J. Neubert
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John J. Neubert, Executive Vice
President and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
