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SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal quarter ended November 30, 1996 Commission file number 0-15671
UNICOMP, INC.
(Exact name of Registrant as specified in its charter)
COLORADO 84-1023666
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1850 PARKWAY PLACE, SUITE 925
MARIETTA, GA 30067
(Address of principal executive offices) (zip code)
Registrant's telephone number: (770) 424-3684
Indicate by check mark whether the registrant (1) has filed all reports
required to be files by Section 13 or 15(d) of the Exchange Act 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 ____
The number of shares outstanding of the registrant's Common Stock as of
January 10, 1996 was 6,761,845.
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UNICOMP, INC.
Index
PART I. FINANACIAL INFORMATION PAGE
ITEM 1. Financial Statements
Consolidated Balance Sheets as of November 30, 1996
and February 29, 1996 3
Consolidated Statements of Operations for the
three months ended November 30, 1996 and 1995 5
Consolidated Statements of Operations for the
nine months ended November 30, 1996 and 1995 6
Consolidated Statements of Cash Flows for the
nine months ended November 30, 1996 and 1995 7
Notes to the Consolidated Financial Statements 8
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 14
Signatures 14
Exhibit Index 15
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
___________________________________
UNICOMP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF NOVEMBER 30, 1996 AND FEBRUARY 29, 1996
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NOV. 30, FEB. 29,
1996 1996
----------- ---------
(UNAUDITED) (AUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 5,921,447 $ 1,261,153
Accounts and other receivables:
Trade, net of allowance of $171,140 and $137,878
as of November 30, 1996 and February 29, 1996,
respectively 5,768,627 4,721,909
Related party receivables -- 404,478
Other receivables 362,829 205,636
Inventories 847,541 715,944
Prepaid expenses 648,250 852,050
Other assets 96,400 171,396
------------- ------------
Total current assets 13,645,094 8,332,566
------------- ------------
Property and equipment, net 2,608,020 2,401,969
------------- ------------
Other assets:
Acquired and developed software, net of accumulated
amortization of $2,402,040 and $1,371,355 as of
November 30, 1996 and February 29, 1996,
respectively 5,398,673 4,802,724
Goodwill, net of accumulated amortization of
$84,708 and $57,345 as of November 30, 1996 and
February 29, 1996, respectively 745,542 694,489
Deferred tax asset 164,024 348,638
Other 446,679 91,667
------------- ------------
Total other assets 6,754,918 5,937,518
------------- ------------
Total assets $ 23,008,032 $ 16,672,053
------------- -------------
------------- -------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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3
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UNICOMP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF NOVEMBER 30, 1996 AND FEBRUARY 29, 1996
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NOV. 30, FEB. 29,
1996 1996
----------- ---------
(UNAUDITED) (AUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,443,850 $ 2,128,526
Accrued expenses 409,194 1,195,896
Deferred revenues 1,301,083 1,662,864
Lines of credit 1,828,777 1,078,933
Income taxes payable 208,151 148,015
Other accrued taxes 405,548 393,915
Current portion of notes payable 242,288 375,105
------------- ------------
Total current liabilities 6,838,891 6,983,254
------------- ------------
Long-term liabilities:
Notes payable 1,027,802 1,072,926
Convertible notes -- 1,980,000
Deferred income taxes 669,076 519,109
------------- ------------
Total long-term liabilities 1,696,878 3,572,035
------------- ------------
Total liabilities 8,535,769 10,555,289
------------- ------------
Stockholders' equity:
Common stock: $.01 par value, authorized 25,000,000,
issued and outstanding 7,090,245 and 5,163,432 at
November 30, 1996 and February 29, 1996, respectively 70,902 51,634
Additional contributed capital 13,953,663 6,229,829
Retained earnings 1,790,653 475,636
------------- ------------
15,815,218 6,757,099
Treasury stock (1,268,473) (460,554)
Cumulative translation adjustment (74,482) (179,781)
------------- ------------
Total stockholders' equity 14,472,263 6,116,764
------------- ------------
Total liabilities and stockholders' equity $ 23,008,032 $ 16,672,053
------------- -------------
------------- -------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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4
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UNICOMP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER30, 1996 AND 1995
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THREE MONTHS ENDED NOVEMBER 30,
------------------------------------
1996 1995
------------------ ----------------
(UNAUDITED) (UNAUDITED)
Revenue:
Equipment and software $ 2,974,881 $ 3,347,345
Maintenance and services 3,650,227 3,243,968
------------ ------------
Total revenue 6,625,108 6,591,313
------------ ------------
Cost of sales:
Equipment and software 1,851,357 1,883,450
Maintenance and services 579,423 571,417
------------ ------------
Total cost of sales 2,430,780 2,454,867
------------ ------------
Gross profit 4,194,328 4,136,446
------------ ------------
Operating expenses:
Selling, general, and administrative 3,017,189 3,060,544
Depreciation expense 179,533 194,272
------------ ------------
Total operating expenses 3,196,722 3,254,816
------------ ------------
Operating income 997,606 881,630
Other income (expense):
Other, net 1,143 (3,816)
Interest, net (118,406) (82,908)
------------ ------------
Total other income (expense) (117,263) (86,724)
Income before provision for income taxes 880,343 794,906
------------ ------------
Provision for income taxes 307,673 102,838
------------ ------------
Net income $ 572,670 $ 692,068
------------ ------------
------------ ------------
Net income per share $ 0.10 $ 0.13
------------ ------------
------------ ------------
Weighted average number of shares 5,808,614 5,355,236
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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5
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UNICOMP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
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NINE MONTHS ENDED NOVEMBER 30,
------------------------------------
1996 1995
----------- -------------
(UNAUDITED) (UNAUDITED)
Revenue:
Equipment and software $ 7,820,795 $ 8,453,700
Maintenance and services 10,423,830 8,200,438
------------ ------------
Total revenue 18,244,625 16,654,138
------------ ------------
Cost of sales:
Equipment and software 5,416,504 4,698,892
Maintenance and services 1,756,431 1,123,436
------------ ------------
Total cost of sales 7,172,935 5,822,328
------------ ------------
Gross profit 11,071,690 10,831,810
------------ ------------
Operating expenses:
Selling, general, and administrative 8,338,189 8,140,331
Depreciation expense 530,390 533,173
------------ ------------
Total operating expenses 8,868,579 8,673,504
------------ ------------
Operating income 2,203,111 2,158,306
Other income (expense):
Other, net (11,794) (1,324)
Interest, net (268,451) (183,112)
------------ ------------
Total other income (expense) (280,245) (184,436)
Income before provision for income taxes 1,922,866 1,973,870
------------ ------------
Provision for income taxes 607,849 232,897
----------- ------------
Net income $ 1,315,017 $ 1,740,973
------------ ------------
------------ ------------
Net income per share $ 0.24 $ 0.33
------------ ------------
------------ ------------
Weighted average number of shares 5,591,341 5,282,025
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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6
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UNICOMP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
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NINE MONTHS ENDED NOVEMBER 30,
------------------------------------
1996 1995
----------- -------------
(UNAUDITED) (UNAUDITED)
Net cash provided (used) by operating activities:
Net income $ 1,315,017 $ 1,740,973
Adjustments to reconcile net income to net cash
used by operations:
Depreciation and amortization 1,588,438 1,292,841
Allowance for doubtful accounts 33,262 14,561
Deferred taxes 334,581 164,441
Changes in assets and liabilities:
Accounts and other receivables (1,210,984) (1,487,195)
Inventories (131,597) (450,895)
Prepaid expenses 203,800 (348,883)
Accounts payable 280,203 332,252
Accrued expenses (786,702) 38,477
Other accrued taxes 11,633 190,642
Deferred revenues (361,781) (316,843)
Income taxes payable 60,136 (3,207)
Other (358,432) (270,089)
------------ ------------
Net cash provided by operating activities 977,574 897,075
------------ ------------
Cash flow from investing activities:
Capital expenditures (736,441) (1,441,785)
Business Acquisition -- (422,083)
Acquired and developed software (1,626,634) (1,135,322)
------------ ------------
Net cash used by investing activities (2,363,075) (2,999,190)
------------ ------------
Cash flow from financing activities:
Payments on notes payable (177,941) (132,955)
Proceeds from borrowing 749,844 1,959,681
Issuance of common stock, net 5,763,102 169,565
Purchase of treasury stock (394,509) --
Reclassification of notes receivable from
related party -- 82,000
------------ ------------
Net cash provided by financing activities 5,940,496 2,078,291
------------ ------------
Net (decrease) increase in cash 4,554,995 (23,824)
------------ ------------
Effect of exchange rates on cash 105,299 (866)
------------ ------------
Cash and cash equivalents at beginning of period 1,261,153 85,845
------------ ------------
Cash and cash equivalents at the end of the period $ 5,921,447 $ 61,155
------------ ------------
------------ ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
7
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of management, the information furnished herein reflects all
adjustments which are necessary for the fair presentation of the results for
the periods reported. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally
accepted accounting principles has been omitted. It is suggested that these
quarterly consolidated financial statements and notes be read in conjunction
with the consolidated financial statements and notes thereto included in the
annual report on Form 10-K for the fiscal year ended February 29, 1996.
On April 16, 1996, the Company completed its acquisition of Smoky Mountain
Technologies, Inc. ("Smoky Mountain") which designs, develops and markets
payment-processing systems. The Company issued 500,000 shares of its common
stock for all of the outstanding common stock of Smoky Mountain. This
transaction has been accounted for as a pooling-of-interests. Generally
accepted accounting principles require giving effect to a consummated
business combination accounted for by the pooling-of-interests method in
financial statements that do not include the date of consummation. As such,
the consolidated balance sheet at February 29, 1996 and the consolidated
results of operations for the three and nine months ended November 30, 1995
have been restated to reflect the combined entity. Certain prior year amounts
presented in the consolidated financial statements have been reclassified to
conform to current presentation.
2. CONVERTIBLE NOTES
426,813 shares of common stock were issued upon conversion of the remaining
$1,980,000 principal balance of convertible notes and accrued interest
thereon during the nine months ended November 30, 1996.
3. RELATED PARTY TRANSACTIONS
On August 31, 1996, the Board of Directors approved the exchange of 68,626
shares of the Company's common stock in lieu of $378,130 of indebtedness owed
to the Company by certain officers and affiliated companies. These shares
are held as treasury stock at November 30, 1996.
4. STOCK OFFERING
On November 18, 1996, the Company completed a secondary offering of an
additional 1,500,000 shares of common stock at $5.00 per share. The
proceeds, net of underwriters discounts, commissions and expenses, were $5.8
million. The proceeds from the offering will be used for repayment of certain
outstanding indebtedness, working capital and other general corporate
purposes.
5. PURCHASE OF COMMON STOCK
During the three months ended November 30, 1996, the Company purchased 80,000
shares of its common stock on the open market at a weighted average price of
$4.93 per share. These shares are held in treasury at November 30, 1996.
Subsequent to November 30, 1996, the Company purchased an additional 50,000
shares of its common stock on the open market at a weighted average price of
$4.69 per share.
8
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO CONTAINED IN ITEM 1 OF
THIS REPORT AND WITH THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED FEBRUARY 29, 1996. EXCEPT FOR THE HISTORICAL INFORMATION
CONTAINED HEREIN, THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT
ARE SUBJECT TO RISKS AND UNCERTAINTIES INCLUDING ECONOMIC, COMPETITIVE AND
TECHNOLOGICAL FACTORS AFFECTING THE COMPANY'S OPERATIONS, MARKETS, PRODUCTS,
SERVICES, AS WELL AS OTHER FACTORS CONTAINED IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K. THESE AND OTHER FACTORS MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE ANTICIPATED.
OVERVIEW
UniComp, Inc. (the "Company") provides information technology services
and products to businesses located primarily in the United Kingdom and
platform-migration software and payment-processing systems to users worldwide.
Cost of sales for maintenance and information technology services
includes supplies, parts, subcontractors and other direct costs of delivering
the services, except for salary costs, which are included in selling, general
and administrative expenses. Cost of sales for computer equipment and
supplies consists of the actual cost of the products sold. Cost of sales for
software licensing includes amortization of capitalized software development
costs, as well as any royalties payable on embedded technologies. The
Company amortizes capitalized software development costs over the estimated
life of the product, generally three to four years. Gross margins can
increase significantly as software licensing revenues increase over
amortization costs.
Selling, general and administrative expenses include salaries and
related costs for all employees, travel, internal equipment, premises and
marketing costs, as well as general office and administrative costs.
Development grants received from the government of Northern Ireland have been
recorded as a reduction in selling, general and administrative expenses, or a
reduction of capitalized development costs, and are anticipated to remain
relatively constant for the foreseeable future. Although the Company expects
the dollar amount of selling, general and administrative expenses to increase
as the Company grows, it anticipates that these expenses will remain
consistent or decrease as a percentage of total revenues.
In April 1996, the Company completed its acquisition of Smoky Mountain
which designs, develops and markets payment-processing systems. The
acquisition has been accounted for by the pooling-of-interests method.
Generally accepted accounting principles require giving effect to a
consummated business combination accounted for by the pooling-of-interests
method in financial statements that do not include the date of consummation.
As such, the consolidated balance sheet at February 29, 1996 and the
consolidated results of operations for the three and nine months ended
November 30, 1995 have been restated to reflect the acquisition.
In the first nine months of fiscal year ending February 28, 1997, the
Company began investing additional resources in sales and marketing efforts
associated with the introduction and promotion of several new products which
were released during the year including UNIBOL400 and UNIBOL36 NT. The
Company also continues to expand its operations at Smoky Mountain
particularly increasing the number of employees associated with sales,
marketing, computer programming, and installation services. Additionally,
the Company anticipates the hiring of
9
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additional sales and technical service personnel as the Company rolls out its
new millennium service offering, GO2000, the Company's year 2000 solution
which will be marketed to the Company's existing Unibol customer base of over
3,500 users worldwide and also to the estimated remaining 100,000 users of
the IBM System/36. These activities have increased selling, general, and
administrative expenses in advance of increases in revenue for the nine
months ended November 30, 1996. While these additional expenditures will
continue for the foreseeable future, the Company believes that additional
revenue will be generated as the result of these activities and that these
expenses as a percentage of total revenue will begin to decline.
RESULTS OF OPERATIONS
REVENUE. Total revenue for the three months ended November 30, 1996 and
1995 remained consistent at $6.6 million while total revenue for the nine
months ended November 30, 1996 increased to $18.2 million compared to $16.7
million for the comparable period in the prior fiscal year, an increase of
$1.5 million or 9.6%.
Revenue from maintenance and other information technology services
increased to $3.6 million for the three months ended November 30, 1996 from
$3.2 million for the comparable period in the prior fiscal year, an increase
of $405,000 or 12.5%. Likewise, maintenance and services revenue increased
to $10.4 million for the nine months ended November 30, 1996 from $8.2
million for the comparable period in the prior fiscal year, an increase of
$2.2 million or 27.1%. The Company acquired Advec Limited ("Advec") on
August 1, 1995. As a result, approximately $450,000 of additional maintenance
and services revenue is included for the first five months of the current
fiscal year which was not included in the prior year. The increase for the
three month period and the remainder of the increase for the nine month
period was principally due to an increase in revenue from new and renewed
hardware and software maintenance contracts, as well as an increase in
services such as custom programming, systems design and implementation,
consultancy and the Company's new millennium service offering.
Revenue from sales of computer equipment and supplies remained
consistent for the three and nine months ended November 30, 1996 at $1.4
million and $4.0 million, respectively, compared to $1.6 million and $4.2
million, respectively, for the three and nine months ended November 30, 1995.
As a result of the Advec acquisition, approximately $500,000 of additional
equipment revenue is included for the first five months of the current fiscal
year which was not included in the prior year. Increases from Advec were
offset by overall decreases in equipment sales from other divisions in
Northern Ireland. While computer equipment and supplies provide relatively
low profit margins compared to the Company's other revenue sources, equipment
is generally supplied as an adjunct to its software and services customers.
Revenue from software licensing declined slightly for the three and nine
months ended November 30, 1996 to $1.6 million and $3.8 million,
respectively, from $1.7 million and $4.2 million, respectively, for the three
and nine months ended November 30, 1995.
Revenue generated from licensing platform migration software decreased
to $1.9 million for the nine months ended November 30, 1996 from $3.8 million
for the comparable period in the prior fiscal year. This decrease was
primarily due to the recognition of $1.6 million in revenue during the nine
months ended November 30, 1995 associated with a large sale of
platform-migration software to Siemens Nixdorf. In addition to the reduction
due to this large contract in the prior year, UNIBOL36 licensing continues to
decline with revenues of $1 million for the nine months ended November 30,
1996 compared to $1.9 million for the comparable period in the prior
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fiscal year, a decrease of $900,000. The Company anticipates that the decline
in the UNIBOL36 revenues will begin to subside with the recent release of a
version of UNIBOL36 supporting Windows NT which was released in the third
quarter of the current year and is anticipated to expand the UNIBOL36 market.
This decrease was partially offset by revenue generated by sales of UNIBOL400
totaling $600,000 during the nine months ended November 30, 1996 ($385,000
of which was generated in the three months ended November 30, 1996) as the
Company's distributors and resellers utilize and market this product and
begin installations at customer sites.
Software licensing revenue generated from payment-processing systems
continues to grow dramatically as this segment expands in both market
penetration for existing products and in market acceptance of new products.
Revenue from payment-processing systems increased to $920,000 and $1.9
million, respectively, for the three and nine months ended November 30, 1996
from $172,000 and $420,000, respectively, in the comparable periods of the
prior fiscal year, increases of 435% and 352%, respectively, for three and
nine month periods.
INTERNATIONAL REVENUE. Revenue from international operations,
principally in the United Kingdom, remained consistent at $14.5 million for
the nine months ended November 30, 1996 from $14.7 million for the comparable
period in the prior fiscal year. Increases attributable to increased revenue
arising as a result of the Advec acquisition and increased revenue from new
contracts and the renewal of existing contracts was offset by a decline in
revenue from the sale of platform-migration software as a result of the prior
year's large sale to Siemens Nixdorf and the decrease in UNIBOL36 revenue as
described above.
Revenue in the United States increased to $3.8 million for the nine
months ended November 30, 1996 from $2.0 million for the comparable period in
the prior fiscal year, an increase of $1.8 million or 90%. This increase was
primarily due to a $1.6 million increase in total revenue from the
payment-processing division for the nine months ended November 30, 1996 to
$2.1 million from $500,000 for the comparable period in the prior fiscal year.
GROSS PROFIT. Gross profit for maintenance and other information
technology services remained relatively consistent at 84.1% for the three
months ended November 30, 1996 compared to 82.4% for the three months ended
November 30, 1995. Gross profit for maintenance and other information
technology services declined slightly to 83.1% for the nine months ended
November 30, 1996 from 86.3% for the comparable period in the prior fiscal
year due principally to pricing pressure caused by more competitive market
conditions on bids for new and renewed contracts.
Cost of sales for computer equipment and supplies for the three and nine
months ended November 30, 1996 was $1.2 million and $3.5 million,
respectively, compared to $1.4 million and $3.4 million, respectively, for
the three and nine months ended November 30, 1995. Gross profit margin for
computer equipment and supplies was 15.2% compared to 12.0%, respectively,
for the three months ended November 30, 1996 compared to the three months
ended November 30, 1995 and 13.0% compared to 18.5%, respectively, for the
nine months ended November 30, 1996 compared to the nine months ended
November 30, 1995. The fluctuations in gross profit margins is due to
overall declining margins for computer equipment and peripherals and product
mix which varies based on customer needs.
Cost of sales for software for the three and nine months ended November
30, 1996 was $685,000 and $1.9 million, respectively, compared to $500,000
and $1.3 million, respectively, for the three and nine months ended November
30, 1995. Gross profit margin for the three month period ended November 30,
1996 was 57.2% compared to 71.5% for the comparable period in the
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prior fiscal year. For the nine months ended November 30, 1996, gross profit
margin was 49.2% compared to 71.1% for the comparable period in the prior
fiscal year. The decrease in gross profit margin on software was due to an
increase in amortization expense on capitalized software due principally to
the release of UNIBOL400 during the current year, the effect of the large
sale to Siemens Nixdorf in the prior year, and the decline in software
licensing revenue from the UNIBOL36 product. These margins are expected to
increase in future periods as UNIBOL400 and payment-processing systems gain
additional market acceptance and licensing revenues increase.
OPERATING EXPENSES. Selling, general and administrative expenses
remained consistent at $3.0 million for the three months ended November 30,
1996 and 1995 and increased slightly to $8.3 million for the nine months
ended November 30, 1996 compared to $8.1 million for the comparable period in
the prior fiscal year, and increase of $198,000 or 2.4%. Selling, general
and administrative expenses as a percentage of total revenue improved to
45.7% for the nine months ended November 30, 1996 compared to 48.9% for the
comparable period in the prior fiscal year. The largest component of the
Company's selling, general and administrative expenses consisted of employee
salaries and related costs, which were $6.3 million for the nine months ended
November 30, 1996 compared to $6.1 million for the nine months ended November
30, 1995.
INTEREST EXPENSES. Net interest expense increased to $268,000 for the
nine months ended November 30, 1996 from $183,000 for the comparable period
in the prior fiscal year. The increase in interest expense was principally
due to interest costs associated with the $2.0 million principal amount of
7.0% convertible notes issued in December 1995. All of these notes were
converted into shares of the Company's common stock during the nine months
ended November 30, 1996.
TAXES. The effective income tax rate (income taxes expressed as a
percentage of pretax income) was 31.6% for the nine months ended November 30,
1996, compared to 11.8% for the comparable period in the prior fiscal year.
This increase was principally due to the fact that the Company became fully
taxable after the elimination of the valuation allowance on the Company's
deferred tax asset during fiscal year ended February 28, 1996, which has
resulted in an increase in the tax provision for the first nine months of
fiscal year 1997 to $608,000 from $233,000 for the comparable period in the
prior fiscal year, an increase of $375,000.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended November 30, 1996, the Company generated cash
from operations of $978,000 compared to $897,000 for the same period a year
ago. During the nine months ended November 30, 1996, the Company expended
$740,000 for capital improvements compared to $1.44 million for the nine
months ended November 30, 1995, or a decrease of $700,000 over the current
year. During the second quarter of the prior fiscal year the Company acquired
a building in Belfast, Northern Ireland for approximately $600,000 which
houses certain of the Company's operations. Other significant investing
expenditures in the first nine months of fiscal year ending February 28, 1997
included capitalization of internally developed software of approximately
$1,630,000, an increase of $500,000 over the same period in the prior year
principally due to capitalization of new products being developed from the
payment-processing division.
During the nine months ended November 30, 1996, significant sources of
cash from financing activities included, additional borrowings on the short
term lines of credit in the United
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States and United Kingdom of $750,000 primarily for working capital
requirements of Smoky Mountain and general corporate purposes. Additionally,
on November 18, 1996, the Company completed a secondary offering of an
additional 1,500,000 shares of common stock at $5.00 per share (the
"Offering"). The proceeds, net of underwriters discounts, commissions and
expenses, were $5.8 million. The proceeds from the Offering will be used for
repayment of certain outstanding indebtedness, working capital and other
general corporate purposes.
During the nine months ended November 30, 1996, all of the remaining
$1,980,000 convertible notes were converted into 426,813 shares of the
Company's common stock.
The Company believes that the proceeds from the Offering, together with
cash generated from increased profitability and available credit, if
necessary, will be sufficient to meet its working capital needs both on a
short and long-term basis. However, the Company's capital needs will depend
on many factors, including the Company's ability to maintain the trend of
profitable operations, the need to develop and improve products, and various
other factors. Depending on its working capital requirements, the Company
may seek additional financing through debt or equity offerings in the private
or public markets at any time. The Company's ability to obtain additional
financing will depend on its results of operations, financial condition and
business prospects, as well as conditions then prevailing in the relevant
capital markets. There can be no assurance that financing will be available
or, if available, will be on terms acceptable to the Company.
SEASONALITY AND INFLATION
The Company's operations have not proven to be significantly seasonal,
although quarterly revenues and net income may vary. Although the Company
cannot accurately determine the amounts attributable thereto, the Company has
been affected by inflation through increased costs of employee compensation
and other operating expenses. The Company believes that these have not had a
material effect on the Company's operations or its financial condition.
13
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1, 2, 3, 4 AND 5 ARE NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
27.1 Financial Data Schedule (SEC use only)
(B) REPORTS ON FORM 8-K
None
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.
UNICOMP, INC.
/s/ L. Allen Plunk January 14, 1996
- ----------------------- ---------------------
L. Allen Plunk Date
Chief Financial Officer
14
<PAGE>
UNICOMP, INC.
EXHIBIT INDEX
27.1 Financial Data Schedule (SEC use only)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-1-1996
<PERIOD-END> NOV-30-1996
<CASH> 5,921,447
<SECURITIES> 0
<RECEIVABLES> 5,939,767
<ALLOWANCES> 171,140
<INVENTORY> 847,541
<CURRENT-ASSETS> 13,645,094
<PP&E> 2,608,020
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,008,032
<CURRENT-LIABILITIES> 6,838,891
<BONDS> 0
0
0
<COMMON> 70,902
<OTHER-SE> 14,401,361
<TOTAL-LIABILITY-AND-EQUITY> 23,008,032
<SALES> 7,820,795
<TOTAL-REVENUES> 18,244,625
<CGS> 5,416,504
<TOTAL-COSTS> 7,172,935
<OTHER-EXPENSES> 8,868,579
<LOSS-PROVISION> 44,548
<INTEREST-EXPENSE> 268,451
<INCOME-PRETAX> 1,922,866
<INCOME-TAX> 607,849
<INCOME-CONTINUING> 1,315,017
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,315,017
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
