UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 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 0-20309
TAPISTRON INTERNATIONAL, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1684918
------- -----------
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
6203 Alabama Highway
P.O. Box 1067
Ringgold, Georgia
(Address of principal executive offices)
30736-1067
(Zip Code)
(706) 965-9300
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most recent practicable date.
Class Outstanding at June 10, 1998
----------------------------- ----------------------------
Common Stock $.0004 Par Value 34,785,611
1
<PAGE>
TAPISTRON INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of July 31, 1997 and April 30, 1998 3
Condensed Consolidated Statements of Operations for the Three Months Ended
April 30, 1997 and 1998 and for the Nine Months Ended April 30, 1997 and 1998 4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
April 30, 1997 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION 12
SIGNATURE 12
</TABLE>
2
<PAGE>
TAPISTRON INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
Condensed from
Audited Financial
Statements Unaudited
July 31, 1997 April 30, 1998
----------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and Cash equivalents $27,946 $484,757
Receivables, net of allowances of $39,905 as of July 31, 1997
and April 30, 1998 720,740 374,219
Notes Receivable 350,000 66,667
Inventory 1,231,002 1,670,301
Prepayments 102,453 135,604
Deferred income taxes 100,000 100,000
------------ -----------
Total current assets 2,532,141 2,831,548
PROPERTY AND EQUIPMENT, NET 564,324 521,226
OTHER ASSETS
Long-term receivables, net of allowances of $500,000 as of
July 31, 1997 and April 30, 1998 - -
Patents and patent license 263,068 272,026
Deferred income taxes 1,900,000 1,900,000
Other 8,247 6,673
------------ -----------
Total other assets 2,171,315 2,178,699
------------ -----------
TOTAL $5,267,780 $5,531,474
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $0 $0
Current Portion of long-term debt 4,315 1,693
Accounts payable 178,068 107,036
Accrued expenses 655,621 165,293
Customer deposits 936,026 100,000
------------ -----------
Total current liabilities 1,774,030 374,023
LIABILITIES SUBJECT TO SETTLEMENT UNDER
REORGANIZATION PROCEEDINGS 2,520,557 350,000
LONG-TERM DEBT 744 744
COMMITMENTS AND CONTINGENCIES 0 447,918
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value - 2,000,000 shares
authorized; no shares issued and outstanding - -
Common stock - $.0004 par value - 100,000,000 shares
authorized; 10,581,813 outstanding as of July 31, 1997
and 34,841,129 outstanding as of April 30, 1998 4,233 13,936
Additional paid-in capital 22,899,108 26,541,716
Accumulated deficit (21,918,100) (22,184,071)
Treasury stock - 55,518 shares outstanding, at cost (12,792) (12,792)
------------ -----------
Total stockholders' equity 972,449 4,358,789
TOTAL $5,267,780 $5,531,474
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
TAPISTRON INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended April 30, Nine months ended April 30,
--------------------------- --------------------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $59,745 $954,692 $2,860,687 $3,701,614
COST OF SALES 37,256 576,976 2,032,465 2,247,143
----------- ----------- ------------ -----------
Gross profit 22,489 377,716 828,221 1,454,470
OPERATING EXPENSES
General & Administrative expenses 612,121 594,452 1,273,209 1,745,432
----------- ----------- ------------ -----------
612,121 594,452 1,273,209 1,745,432
----------- ----------- ------------ -----------
OPERATING LOSS (589,632) (216,736) (444,987) (290,961)
----------- ----------- ------------ -----------
OTHER INCOME (EXPENSE)
Interest expense 0 (2,175) (54,837) (10,657)
Interest income 0 3,018 2 35,648
----------- ----------- ------------ -----------
Other income (expense) 0 843 (54,836) 24,990
----------- ----------- ------------ -----------
NET LOSS (589,632) (215,892) (499,823) (265,971)
EARNINGS PER SHARE
Net loss (0.056) (0.006) (0.047) (0.009)
Weighted average number of
shares outstanding 10,526,295 34,785,611 10,526,295 28,906,466
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
TAPISTRON INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended April 30,
--------------------------
1997 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($499,823) ($265,971)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 130,706 143,490
Changes in operating assets and liabilities:
(Increase) decrease in receivables 138,584 629,854
(Increase) decrease in prepayments (9,766) (33,151)
(Increase) decrease in inventory 914,012 (504,923)
Increase (Decrease) in customer deposits 0 (836,026)
Increase (Decrease) in accounts payable and accrued expenses 114,619 (186,360)
Increase (Decrease) in accounts payable and accrued expenses,
which are subject to settlement under a plan of reorganization 0 (945,328)
----------- -----------
Net cash provided by (used by) operating activities 788,332 (1,998,414)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for other assets (5,000) (23,939)
Capital expenditures (17,440) (18,214)
----------- -----------
Net cash (used by) investing activities (22,440) (42,153)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 599,970 400,000
Proceeds from issuance of common stock 0 2,500,000
Principal payments of debt (1,007,167) (402,622)
----------- -----------
Net cash provided by (used by) financing activities (407,197) 2,497,378
NET INCREASE (DECREASE) IN CASH EQUIVALENTS: 358,694 456,811
Cash and cash equivalents - beginning of period 17,149 27,946
----------- -----------
Cash and cash equivalents - end of period $375,843 $484,757
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $19,569 $19,772
=========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Transfers from fixed assets to inventory $163,270 $0
Issuance of stock in lieu of professional fees $0 $375,000
Issuance of stock for reorganization debt $0 $1,225,230
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
TAPISTRON INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
------------------------------
In the opinion of the management of Tapistron International, Inc.
("Tapistron") and Fabrication Center, Inc. ("FCI"), a wholly-owned subsidiary
of Tapistron, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments, except as noted elsewhere in the notes to the condensed
consolidated financial statements) necessary to present fairly its financial
position as of April 30, 1998 and the results of its operations for the three
and nine months ended April 30, 1997 and 1998, and cash flows for the nine
months ended April 30, 1997 and 1998. These statements are condensed and
therefore do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
The statements should be read in conjunction with the consolidated financial
statements and footnotes included in the Company's Annual Report on Form 10-K
for the year ended July 31, 1997. The results of operations for the three and
nine months ended April 30, 1998 are not necessarily indicative of the
results to be expected for the full year.
NOTE 2 - EARNINGS PER SHARE
---------------------------
Earnings per common share is computed based on the weighted average number of
common shares outstanding during each period presented and, when dilutive,
common equivalent shares (stock options and warrants) outstanding during each
of the periods.
NOTE 3 - INVENTORY
------------------
<TABLE>
<CAPTION>
Inventory at April 30, 1998 consists of the following:
<S> <C>
Raw Material $531,978
Work in Process 1,138,323
------------
$1,670,301
NOTE 4 - FRESH START ACCOUNTING
-------------------------------
The Company does not meet the requirements for fresh start reporting based on
the test found in paragraph 36 of SOP 90-7. As shown in the computations
below, the holders of the existing voting shares immediately before
confirmation received 50.08% of the voting shares of the emerging entity.
Existing voting shares immediately before confirmation 10,581,813
Voting shares issued per plan of reorganization to shareholders owning
existing voting shares immediately before confirmation 6,837,295
------------
Voting shares in the emerging entity held by holders of existing voting
shares immediately before confirmation 17,419,108
Total existing voting shares of the emerging entity 34,785,611
The holders of existing voting shares immediately before confirmation receive
50.08% of the voting shares of the emerging entity.
</TABLE>
6
<PAGE>
NOTE 5 - LIABILITIES SUBJECT TO SETTLEMENT UNDER REORGANIZATION PROCEEDINGS
---------------------------------------------------------------------------
The Company filed a Voluntary Petition for Chapter 11 Bankruptcy on June 21,
1996. The original Plan of Reorganization of Tapistron International, Inc.
was filed with the Court on November 21, 1996 (the "Plan"). An Amended and
Restated Plan of Reorganization of Tapistron International, Inc. was filed
with the Bankruptcy Court on March 14, 1997 (the "Amended Plan") and
confirmed on August 18, 1997. After confirmation, the Company proceeded with
an issuance of common stock at the rate of $0.15 per share for a total of
16,666,666 shares.
Under the Amended Plan of Reorganization, all creditors will be paid in full
(unless the creditor elected to accept a discounted amount or the creditor
and the Company agreed to different terms), with interest from stock and cash
payments.
In accordance with the Amended Plan, the treatment for each class of
creditors is as follows:
Class 1: In accordance with the Company's Amended Plan, the allowed Class 1
Administrative Claims have been paid in full.
Class 2: The allowed Class 2 Claim of Metrahealth, Administrator for the
Travelers, Employee Benefits Plan has been paid in full. (A)
Class 3: There were no Class 3 Claims.
Class 4: The allowed Administrative Claim of Avonwood Capital Corporation as
Company's investment banker for post-petition payments due for professional
services to the Company is being satisfied in accordance with the terms of
its employment as approved by the Court on November 12, 1996 and subsequently
modified by the parties on August 11, 1997 over twenty (20) months by monthly
retainer payments of $10,000 per month for nineteen (19) months and a final
payment of $2,000 on the twentieth month, and issuance of 1,500,000 shares of
the common stock of the Company, issued on November 12, 1997, pursuant to
Section 5.5 of the Amended Plan and Section 1145 of the Bankruptcy Code.
Class 5: The allowed Secured Claim of the holders of the Demoss Loan
Documents, the Culbreath Loan Documents and the Parker Loan Documents, which
were secured by liens upon the Company's personal property were paid from the
liquidation of their collateral pre-confirmation. (B)
Class 6: The allowed claim of the holders of the Landav Loan Documents were
satisfied in exchange for the issuance and delivery of 4,092,629 shares of
common stock on November 24, 1997. (C)
Class 7: As provided for in the Amended Plan, each unsecured creditor shall
receive its pro rata share (based on the amount of its allowed claim compared
to the total of unsecured claims) of (i) cash in the amount of $500,000 plus
(ii) its pro rata share of a second aggregate payment of $500,000 together
with interest, payable at $50,000 per new machine sale by the Company. The
balance of the unsecured claims, shall be paid as follows. Each unsecured
creditor could elect one of two options with respect to the payment of the
balance of its claim. Option 1: the sum of 15% of the balance of its claim.
Option 2: the creditors pro rata share of 1,000,021 shares of common stock
issued by the Company. At any time on or prior to September 30, 2000 (the
"Final Settlement Date"), each unsecured creditor shall, at the sole and
exclusive option of the Company, receive an additional cash payment or
additonal shares of common stock based on the average of the closing prices
of the Company's common stock for the period that is not less than five (5)
nor more than thirty-five (35) trading days prior to the Final Settlement
Date such that the total amount received by the unsecured creditors pursuant
to this Option 2, either in additional stock or cash, equals its pro rata
share of the difference between the total amount of unsecured claims less all
principal amounts to be paid pursuant to the first $500,000 and the second
aggregate amount of $500,000. If between the August 29, 1997 (the "Effective
Date") and the September 30, 2000 the average of the closing prices of the
Company's common stock for any five (5) consecutive trading day period
multiplied by 1,000,021
7
<PAGE>
exceeds the balance of unsecured claims multiplied by factor for time value
or if any unsecured creditor shall sell, pledge, or trade the stock, directly
or indirectly, issued to it, then such creditors shall no longer be entitled
to any further distribution on the Final Settlement Date.
On September 12, 1997, each holder of an allowed Class 7 unsecured claim
received their prorata share of the first $500,000 payment in cash and on
November 28, 1997, the creditors that elected Option 1 received their 15%
payment. In addition, the creditors that elected Option 2 received their
prorata share of the 1,000,000 shares of common stock issued on November 25,
1997. As of April 30, 1998, the Company had made $150,000 toward the second
$500,000 cash payment payable at $50,000 per new machine sale. (D,E,F)
Class 8: Each holder of an allowed Class 8 convenience claim, or those
claimants electing Class 8 treatment received their payment in cash equal to
the lesser of $1,200 or the allowed amount of such allowed convenience claim
on September 19, 1997. (G)
Class 9: The holders of the Class 9 claims had their equity interest in the
Company diluted by the common stock of the Company issued to implement the
Amended Plan and any existing preemptive rights to acquire, and other rights
to limit issuance of, the Company's common stock have been cancelled.
Class 10: The holders of the outstanding Redeemable Warrants to acquire
common stock of the Company had their rights to acquire equity interests
modified.
Class 11: The holders of outstanding options to acquire common stock of the
Company have had their stock options cancelled and rejected and shall hold no
claim.
Class 12: The holders of outstanding, non-redeemable, non-public warrants to
acquire common stock of the Company retain the rights as set forth under the
various representative warrant agreements or other agreements with respect to
non-public, non-redeemable warrants.
Class 13: The claim of Associates Commericial Corporation, Inc. shall be as
set forth in the "Consent Order Allowing Use of Cash Collateral And Providing
for Adequate Protection" entered by the Court on November 12, 1996.
In addition, the Company was authorized from the Court to incur secured debt
on January 14, 1997 from Ameristar Capital Corporation. For services
rendered, Ameristar Capital Corporation received a security interest and lien
on one CYP Machine No. 414 to secure repayment of the loan and to pay a
placement fee of $25,000 to Avonwood Capital Corporation from the proceeds of
the loan and to issue 1,000,000 shares of the Company's common stock in
accordance with its plan of reorganization. Shares of common stock were
issued as of November 25, 1997.
Liabilities Subject to Settlement under Reorganization Proceedings
------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
July 31, 1997 Pre-confirmation $2,520,557
(A) Class 2 Metrahealth Claim ($7,911)
(B) Class 5 Culbreath Loan Documents ($50,000)
(C) Class 6 Landav Loan Documents exchanged for stock ($613,894)
(D) Class 7 First $500,000 payment ($500,000)
(E) Class 7 Option 1 payment ($89,300)
(F) Class 7 Option 2 shares issued for debt ($611,336)
(G) Class 8 Convenience Claims ($49,253)
Adjustment from Pre-confirmation to Confirmation ($98,863)
Payments on the second $500,000 to Class 7 unsecured creditors ($150,000)
--------------
Second $500,000 to be payable $50,000 per new machine sale $350,000
Contingency for stock that will cover Class 7 debt $447,918
--------------
Total liabilities subject to settlement under reorganization proceedings $797,918
==============
</TABLE>
8
<PAGE>
NOTE 6 - COMMITTMENTS AND CONTINGENCIES
---------------------------------------
Under the Amended Plan, the Class 7 unsecured creditors are to receive their
prorata share of the first $500,000 cash payment and their prorata share of a
second $500,000 cash payment, payable at $50,000 per new machine sale. With
regard to the balance of their claim, each unsecured creditor could elect
either (1) 15% of the balance of its claim or (2) the creditors prorata share
of 1,000,021 shares of common stock issued by the Company. If between the
August 29, 1997 and September 30, 2000 the average of the closing prices of
the Company's common stock for any five (5) consecutive trading day period
multiplied by 1,000,000 exceeds the balance of unsecured claims multiplied by
factor for time value or if any unsecured creditor shall sell, pledge, or
trade the stock, directly or indirectly, issued to it, then such creditors
shall no longer be entitled to any further distribution.
<TABLE>
<CAPTION>
<S> <C>
April 30, 1998 closing market price $0.2000
Shares issued to Class 7 (no fractional shares were issued) 1,000,021
--------------
Total Market Value of Class 7 Stock $200,004
Balance of Class 7 unsecured claims $611,336
Time value factor @ 8.75% 1.05984676
--------------
Total Liability of Class 7 Claims $647,922
Total contingency for stock that will cover Class 7 debt $447,918
==============
</TABLE>
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and notes thereto.
Results of Operations
Sales
-----
Sales, by quarter, for the nine months ended April 30, 1998, and 1997
are summarized as follows:
Fiscal 1998 Fiscal 1997
----------- -----------
Quarter ended October 31 $1,249,830 $1,561,874
Quarter ended January 31 1,497,092 1,239,068
Quarter ended April 30 954,692 59,745
-------------- --------------
Nine months ended April 30 $3,701,614 $2,860,687
============== ==============
Sales of $954,692 for the third quarter of Fiscal 1998 exceeded the
sales of $59,745 for the third quarter of Fiscal 1997. Sales for the first
nine months of Fiscal 1998 amounted to $3,701,614, reflecting an increase of
29% over sales of $2,860,687 for the first nine months of Fiscal 1997.
Combined sales in the first and second quarter of Fiscal 1998 were
$2,746,922 compared to $2,800,942 for the first and second quarter of Fiscal
1997, a decrease of 2%.
In the third quarter of Fiscal 1998, there was an increase of $894,947
in sales, as compared to the third quarter of Fiscal 1997. This increase was
due to an increase in sales volume. During the third quarter of Fiscal 1997,
the Company did not have any CYP machine sales.
The Company's sales for the nine months of Fiscal 1998 exceeded the
sales for the nine months of Fiscal 1997 by 29%. The increase in sales is a
result of machines being sold at lower margins in the nine months of Fiscal
1997 due to the need to generate cash to support operations and technical
support of the CYP machines during the reorganization proceedings.
The Company's sales for the nine months ended April 30, 1998
($3,701,614) have exceeded the total sales for the fiscal year ended July 31,
1997 ($3,626,092). Furthermore, the Company currently has sales orders for
CYP machines totaling $1,850,000, which it expects to complete and ship in
the fourth quarter of Fiscal 1998.
Cost of Sales
-------------
Cost of sales as a percentage of sales, by quarter, for the nine months
ended April 30, 1998, and 1997 are summarized as follows:
Fiscal 1998 Fiscal 1997
----------- -----------
Quarter ended October 31 67% 71%
Quarter ended January 31 56% 72%
Quarter ended April 30 60% 62%
-------------- --------------
Nine months ended April 30 61% 71%
============== ==============
Cost of sales as a percentage of sales decreased from 71% for the nine
months ended April 30, 1997 to 61% for the nine months ended April 30, 1998.
During the nine months ended April 30, 1997, the Company
10
<PAGE>
sold machines at lower margins in order to generate cash and support
operations while under Chapter 11 protection. In addition, the Company is
beginning to realize benefits from cost control measures implemented such as
cross-training of employees. The Company's purchasing power has increased due
to its stronger financial condition.
Operating Expenses
------------------
Operating expenses as a percentage of sales, by quarter, for the nine
months ended April 30, 1998, and 1997 are summarized as follows:
Fiscal 1998 Fiscal 1997
----------- -----------
Quarter ended October 31 52% 22%
Quarter ended January 31 33% 26%
Quarter ended April 30 62% 1025%
-------------- --------------
Nine months ended April 30 47% 45%
============== ==============
Operating expenses as a percentage of sales for the nine months ended
April 30, 1998 was 47% compared to 45% for the nine months ended April 30,
1997. Operating expenses as a percentage of sales fluctuates between quarters
due to the timing and shipment of orders for the CYP machines. The increase
in percentage is due to increased personnel costs associated with the
Company's efforts to support worldwide marketing & servicing activities. The
Company believes that as sales increase, the operating expenses as a
percentage of sales will decrease because of the current capacity of the
Company's operations.
Liquidity and Capital Resources
The Company's highly liquid assets (cash and cash equivalents) at April
30, 1998 aggregated $484,757, an increase from the $27,946 balance at July
31, 1997. Its working capital position at April 30, 1998 of $2,457,525
increased significantly from the comparable amount of $758,111 at July 31,
1997. The increase in working capital resulted from the Company reducing
short term liabilities associated with the reorganization proceedings.
Net cash used in operations for the nine months ended April 30, 1998 was
$1,998,414, of which $945,328 was used to reduce liabilities subject to the
Amended Plan of Reorganizaiton and $504,923 was used to purchase inventory.
Net cash provided by financing activities for the nine months ended April 30,
1998 was $2,497,378 which included the $2,500,000 private placement the
Company consummated in August of 1997.
The Company believes its current cash needs will be adequately provided
from anticipated cash generated from operations and short-term borrowings.
Long-term cash requirements, other than normal operating expenses, are
anticipated for development and enhancement of CYP technology, financing
anticipated growth and possible acquisitions of certain businesses
complementary to the Company's business.
Year 2000 Compliance
--------------------
The Company has addressed the "Year 2000 issues" as it affects the
Company's internal computer programs and believes that its significant
internal computer programs and systems are currently Year 2000 compliant.
Forward-Looking Statements for Purposes of "Safe Harbor" Under the Private
--------------------------------------------------------------------------
Securities Reform Act of 1995
-----------------------------
The Company has made, and may continue to make, various forward-looking
statements with respect to its financial position, projected costs, projected
savings and plans and objectives of management. Such forward-looking
statements are identified by the use of forward-looking words or phrases such
as "anticipates," "intends," "expects," "plans," "believes," "estimates," or
words or phrases of similar import. These forward- looking statements are
subject to numerous assumptions, risks, and uncertainties, and the statements
looking
11
<PAGE>
forward beyond Fiscal 1998 are subject to greater uncertainty because of
the increased likelihood of changes in underlying factors and assumptions.
Actual results could differ materially from those anticipated by the
forward-looking statements.
The applicable risks and uncertainties include general economic and
industry conditions that affect all international businesses, as well as
matters that are specific to the Company and the market it serves. Actual
sales in Fiscal 1998 may be materially less than the sales projected in the
forward-looking statements if the Company's customers cancel or delay current
orders or reduce the rate at which the Company is building or expects to
build CYP machines for such customers. Such cancellations, delays, or
reductions may occur if there is a substantial change in the general economy
or if a customer were to experience major financial difficulties. Margins may
differ from those projected in the forward-looking statements if management
does not achieve success in improving margins or other events occur that
differ from the estimates used in preparing the Company's financial
statements.
In addition, all subsequent written and oral forward-looking statements
attributable to the Company, or persons acting on behalf of the Company, are
expressly qualified in their entirety by reference to such factors.
The Company's forward-looking statements represent its judgement only on
the dates such statements are made. By making any forward-looking statements,
the Company assumes no duty to update them to reflect new, changed, or
unanticipated events or circumstances.
PART II. OTHER INFORMATION
No reports on Form 8-K were filed by Registrant during the quarterly period
ended April 30, 1998.
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,
Tapistron International, Inc.
------------------------------
(Registrant)
Date: 6/10/98 /s/ J. Darwin Poe
-----------------------------------------
J. Darwin Poe
(Signing on behalf of the registrant
as President and Chief Executive Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS OF TAPISTRON INTERNATIONAL, INC., FOR THE
THREE MONTHS PERIOD ENDED APRIL 30, 1998, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 485
<SECURITIES> 0
<RECEIVABLES> 481
<ALLOWANCES> 40
<INVENTORY> 1,670
<CURRENT-ASSETS> 2,832
<PP&E> 1,360
<DEPRECIATION> 839
<TOTAL-ASSETS> 5,531
<CURRENT-LIABILITIES> 374
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 4,345
<TOTAL-LIABILITY-AND-EQUITY> 5,531
<SALES> 955
<TOTAL-REVENUES> 955
<CGS> 577
<TOTAL-COSTS> 577
<OTHER-EXPENSES> 594
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2)
<INCOME-PRETAX> (216)
<INCOME-TAX> 0
<INCOME-CONTINUING> (216)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (216)
<EPS-PRIMARY> .006
<EPS-DILUTED> .006
</TABLE>
