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Previous: SYSTEMS TECHNOLOGY ASSOCIATES INC, 8-K, 1996-08-21 |
Next: HALL INSTITUTIONAL MORTGAGE FUND LTD PARNTERSHIP, 10-Q, 1996-08-21 |
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED COMMISSION FILE NO.
FEBRUARY 29, 1996 0-13920
SYSTEMS TECHNOLOGY ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 54-0802071
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION)
14 BRYANT COURT
STERLING, VIRGINIA 20166
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(703) 471-8000
(REGISTRANT'S TELEPHONE NUMBER)
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 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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: Common Stock, par value $.50
per share; 3,424,363 shares outstanding as of February 29, 1996.
<PAGE> 2
PART I - FINANCIAL INFORMATION SYSTEMS TECHNOLOGY ASSOCIATES, INC.
Balance Sheet
<TABLE>
<CAPTION>
ITEM I. FINANCIAL STATEMENTS ASSETS
Unaudited Audited
----------- -----------
FEBRUARY 29, MAY 31,
1996 1995
CURRENT ASSETS: ----------- -----------
<S> <C> <C>
Cash 12,781 35,263
Accounts Receivable 169,731 127,964
Costs and Estimated Earings in Excess 55,831 180,526
of Billings on Uncompleted Contracts
Inventory 308,808 313,808
Prepaid Expenses and Miscellaneous 6,728 5,319
----------- -----------
Total Current Assets 553,879 662,881
Fixed assets - cost net of accum deprn 28,342 30,055
----------- -----------
TOTAL ASSETS 582,221 692,936
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable - Bank 12,500 12,500
Notes Payable - Other 30,897 59,850
Accounts Payable - Trade 84,773 118,668
Payroll Taxes Payable 2,891 1,304
Accrued Expenses 52,075 93,674
Advance From Customer 24,443 17,882
----------- -----------
Total Current Liabilities 207,580 303,878
----------- -----------
LONG-TERM LIABILITIES:
Notes Payable - Bank 17,333 26,708
Notes Payable - Other 164,233 169,916
Accrued Expenses 14,883 45,317
Deferred Interest-Former Officer 31,418 31,418
Deferred Accounts Payable 77,205 60,505
----------- -----------
Total Long-term Liabilities 305,072 333,864
----------- -----------
Total Liabilities 512,652 637,742
----------- -----------
STOCKHOLDERS' EQUITY
Redeemable Preferred Stock, $50 Par Value 100,000 100,000
2,000 Shrs Authorized 2,000 Issued and
Outstanding ($200,000 Aggregate Liquidation
Preference)
Common Stock, $.50 Par Value, 8,000,000 Shares 1,712,635 1,712,635
Authorized, 3,425,269 Shrs Issued and
3,424,363 Shares Outstanding
Capital in Excess of Par Value 2,330,161 2,330,162
Retained Deficit (4,073,176) (4,087,553)
Treasury Stock (50) (50)
----------- -----------
Total Stockholders' Equity 69,570 55,194
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 582,221 692,936
=========== ===========
</TABLE>
<PAGE> 3
SYSTEMS TECHNOLOGY ASSOCIATES, INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------ ------------
<S> <C> <C>
Revenues:
Sales of product less sales discount 244,809 235,785
------------ ------------
Cost of sales 165,660 191,917
Research and Development expense 0 0
Selling, general & administrative expense 79,656 26,308
Interest expense 4,303 5,740
------------ ------------
249,618 223,965
------------ ------------
Operating Income (Loss) (4,809) 11,820
Other Income
Extinguishment/Forgiveness of Indebtedness 2,000 0
------------ ------------
Income(Loss) before provision for income taxes
and extraordinary item (2,809) 11,820
Provision for income taxes 0 1,743
------------ ------------
Net income(loss) before extraordinary item (2,809) 10,077
Extraordinary Items:
Tax Benefit from Prior Year Net Operating Loss
Carryforward 0 1,743
------------ ------------
Net Income (Loss) (2,809) 11,820
============ ============
Earning (Loss) per share (based upon the weighted
average number of shares outstanding in each years:
Income before extraordinary items ($0.00) $0.06
Extraordinary items 0.00 0.02
------------ ------------
Net Income Per Share ($0.00) $0.08
============ ============
Weighted average number of shares outstanding 3,424,363 3,424,363
============ ============
</TABLE>
<PAGE> 4
SYSTEMS TECHNOLOGY ASSOCIATES, INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------ ------------
<S> <C> <C>
Revenues:
Sales of product less sales discount 757,737 703,850
------------ ------------
Cost of sales 586,295 527,950
Research and Development expense 0 15,187
Selling, general & administrative expense 176,657 102,773
Interest expense 14,342 19,940
------------ ------------
777,295 665,850
------------ ------------
Operating Income (Loss) (19,558) 38,000
Other Income
Extinguishment/Forgiveness of Indebtedness 32,857 219,356
------------ ------------
Income(Loss) before provision for income taxes
and extraordinary item 13,300 257,356
Provision for income taxes 1,995 83,619
------------ ------------
Net income(loss) before extraordinary item 11,305 173,737
Extraordinary Items:
Tax Benefit from Prior Year Net Operating Loss
Carryforward 1,995 83,619
------------ ------------
Net Income (Loss) 13,300 257,356
============ ============
Earning (Loss) per share (based upon the weighted
average number of shares outstanding in each years:
Income before extraordinary items $0.00 $0.05
Extraordinary items 0.00 0.02
------------ ------------
Net Income Per Share $0.00 $0.07
============ ============
Weighted average number of shares outstanding 3,424,363 3,424,363
============ ============
</TABLE>
<PAGE> 5
SYSTEMS TECHNOLOGY ASSOCIATES, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
---------------------------------------------
Net Income (Loss) $13,300 $257,356
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (used in) Operating
Activities:
Depreciation and Amortization 6,357 4,342
Extinguishment/Forgiveness of Debt (32,857) (219,356)
Decrease (Increase) in Assets:
Accounts Receivable-Billed (41,767) 7,227
Accounts Receivable-Unbilled 124,695 67,796
Inventory 5,000 (66,173)
Prepaid Expenses and Miscellaneous (1,409) (1,163)
Deposits 0 6,280
Increase (Decrease) in Liabilities:
Accounts Payable-Trade (33,895) 22,223
Payroll Taxes Payable 1,587 (23,733)
Accrued Expenses (40,814) (1,295)
Advance from Customer 6,561 0
------------ ------------
Net Cash Provided by (Used in) operating
Activities $6,758 $53,504
------------ ------------
INVESTING ACTIVITIES:
---------------------------------------------
Acquisition of Property and Equipment ($4,644) ($13,231)
------------ ------------
Net Cash Used in Investing Activities ($4,644) ($13,231)
------------ ------------
FINANCING ACTIVITIES:
---------------------------------------------
Proceeds from Additional Borrowing $0 $92,500
Repayment of Notes Payable (42,021) (102,917)
Proceeds on Sale of Stocks/Equipment 725 18,750
Net Increase in Long-Term Accrued Expenses 16,700 19,127
------------ ------------
Net Cash Provided by (Used in) Financing
Activities ($24,596) $27,460
------------ ------------
Net Increase (Decrease) in Cash (22,483) 67,733
Cash-Beginning of Year 35,263 54,700
------------ ------------
Cash-Ending Balance $12,781 $122,433
============ ============
</TABLE>
<PAGE> 6
SYSTEMS TECHNOLOGY ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
1. Inventories:
Inventories consist of the following:
<TABLE>
<CAPTION>
2/29/96 2/28/95
--------- --------
<S> <C> <C>
Raw Materials $ 250,501 $ 269,249
Work-In-Process -0- -0-
Sub-assembly 58,308 45,406
--------- ---------
Total: $ 308,809 $ 314,655
========== =========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION OF ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Sales for the three months ended February 29, 1996 totaled $258,039 a nine
percent increase over last years $235,785. Sales for the three months included
sales of about $75,000 from the Network Services division who's sales were
temporarily discontinued in early April. Therefore, sales of the existing STA
product lines actually showed a decrease from last year's level. Selling,
General and Administrative expenses increased due to the higher salaries, start
up costs and advertising of the Network Services division. Total costs
slightly exceeded Sales resulting in a small loss for the quarter versus a
$11,820 gain a year ago. Two years ago the Company's sales consisted mainly of
its Engineering Service Circuits (ESC) system and its Signal Converters. The
Company shipped the last ESC in December and its last Signal Converters in
March. Current sales are derived from reselling a former competitors systems
and manufacturing and selling an old line of Line Conditioning equipment. It is
important that the Company find additional product lines to sell if it expects
to survive and grow.
LIQUIDITY AND CAPITAL RESOURCES
With the ending of our ESC and Signaling Converter sales, the Company is faced
with holding about $250,000 in obsolete inventory and intends to take a write
down of such after discussions with the auditors in May. When the writedown is
undertaken, it will place the Company back into a negative net worth at a time
when its sales and earning power is greatly diminished. As almost half the
debt of the Company is with the former management, the Company is currently
trying to negotiate with them for a debt reduction or buyout plan to bring
total debt of $512,652 down to a more acceptable level. If the Company is not
successful, it is difficult to see how the Company can attract the necessary
talent and resources needed to survive and move the Company forward.
<PAGE> 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a) Reference is made to the Exhibit Index immediately following the
signature page of this report.
b) There were no Form 8-K's filed during this quarter.
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.
Date: 13 June, 1996 Systems Technology Associates, Inc.
------------------- -----------------------------------
(Registrant)
/s/ TERRY A. SCOTT
-------------------------------------
Terry A. Scott
Chairman of the Board
<PAGE> 8
EXHIBIT INDEX
Exhibits
* 3(a) - Articles of Incorporation of Registrant
* 3(b) - By-Laws of Registrant
*Incorporated by reference from exhibits to Registrants for S-18
Registration Statement, Registration No. 2-94042W.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 12,781
<SECURITIES> 0
<RECEIVABLES> 242,807
<ALLOWANCES> 17,245
<INVENTORY> 308,808
<CURRENT-ASSETS> 553,879
<PP&E> 474,931
<DEPRECIATION> 446,589
<TOTAL-ASSETS> 582,221
<CURRENT-LIABILITIES> 207,580
<BONDS> 305,072
0
100,000
<COMMON> 1,712,635
<OTHER-SE> (1,743,066)
<TOTAL-LIABILITY-AND-EQUITY> 582,221
<SALES> 244,809
<TOTAL-REVENUES> 244,809
<CGS> 165,660
<TOTAL-COSTS> 165,660
<OTHER-EXPENSES> 62,411
<LOSS-PROVISION> 17,245
<INTEREST-EXPENSE> 4,303
<INCOME-PRETAX> (4,809)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,809)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,809)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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