<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
[X] Annual Report Pursuant To Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (Fee required) for the Fiscal Year Ended June 30,
1997
Commission File Number: 0-15692
TOTAL RESEARCH CORPORATION
(Exact name of Registrant as specified in Charter)
Delaware 22-2072212
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification Number)
Princeton Corporate Center
5 Independence Way, CN 5305
Princeton, New Jersey 08543-5305
(Address of principal executive office)
Registrant's telephone number including area code: (609) 520-9100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value;
(Title of Class)
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
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of September 16, 1997 was approximately $17,000,000 based on
the average bid and asked prices for such Common Stock as reported on the NASDAQ
system.
The number of shares of Common Stock outstanding as of September 16, 1997 was
10,056,134.
Documents incorporated by reference: None
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
Total Research Corporation ("The Company"), is engaged in the business of
providing full-service marketing research in the form of information and
analyses for use in strategic and tactical marketing decisions.
The Company became operative in 1975 in the State of New Jersey, then, in 1986,
reincorporated in the State of Delaware and qualified to do business in the
State of New Jersey.
The Company became a Public Company by filing and registering with the
Securities and Exchange Commission effective on March 26, 1987.
In 1994, the Company acquired Business Marketing Services, Ltd., a marketing
research company based in London, England.
In 1995, the Company acquired the market research division of the Carlson
Companies, an organization based in Minneapolis, Minnesota.
(B) NARRATIVE DESCRIPTION OF BUSINESS
The Company is a full-service marketing research firm that provides information
and analyses for use in strategic and tactical marketing decisions. The Company
uses advanced statistical techniques, proprietary software and information
systems to develop statistical data bases to develop market analyses. Its
clients use these analyses as the basis for strategies to enhance the market
performance of existing and proposed products and services. The Company believes
that it is one of the leading companies specializing in the development and
application of advanced statistical techniques to marketing information and
issues.
The Company emphasizes predictive market research, which is typically more
complex and offered at higher prices than other forms of market research. The
Company also performs a substantial volume of traditional market research. The
Company's ability to provide predictive market research has been an important
factor in obtaining contracts for more traditional market research. Traditional
market research makes up for the majority of market research products and
constitutes the primary business of most market research firms. Although the
current market for predictive market research using advanced statistical
techniques is smaller than that for research using more traditional techniques,
the Company believes that demand for market research using advanced statistical
methodologies has been increasing more rapidly.
The Company provides these analyses either through custom-designed studies for
specific clients, or through proprietary standardized packages of advanced
statistical research and analysis techniques that address certain frequently
encountered marketing concerns. Standardized packages currently offered by the
Company include systems for determining price elasticity, the effects of the
introduction or elimination of a particular brand on the market shares of
competing brands, and
<PAGE> 3
the effect of product attributes on customer purchase decisions. The Company has
used its standardized packages to conduct studies relating to products in a
number of different industries.
The Company has a substantial client base that is among the 500 largest
companies in the United States as well as industry leaders around the world.
INDUSTRY BACKGROUND
The market research industry is composed of a diverse group of marketing,
advertising, public opinion, and product development and positioning research
organizations that gather, process and analyze information. They obtain and
measure respondents' reactions and behavior concerning products and services,
promotions, pricing and distribution.
Market research organizations vary greatly in size and scope, ranging from local
field interviewing groups to full-service organizations offering extensive data
base and data collection capabilities providing a wide array of reports and
analyses to many industry groups. Many organizations conduct custom studies,
responding to the issues of a single client, and many conduct multi-client
studies, which typically provide information on issues for a specific industry.
PRODUCTS AND SERVICES
Custom-Designed Studies: The Company's primary business has been to provide
clients with custom-designed research in which the client retains the exclusive
use of the resulting study and the related database. These studies address both
long-term strategic and short-term tactical marketing considerations. These
include market positioning for new and existing products, projections of future
market potential, segmentation of markets, and identification of significant
brand attributes.
The development of a custom-designed study, as conducted by the Company,
involves a number of specific steps. The development of a proposal for a
research project begins with the formulation of study objectives. In a
single-client study, study objectives typically originate with the client,
although the Company typically assists in refining the objectives. Study design
includes selecting the universe of respondents to be studied and the sampling
techniques to be employed, establishing the information required, and deciding
the methods of statistical analysis and means of reporting.
The Company then begins the process of collecting, processing, and analyzing
data. The Company develops a database for each quantitative study it conducts.
Because of its extensive in-house facilities, the Company can readily provide
the client with several means of accessing this database, including storage
media from which the client can manipulate the data using software developed by
the Company.
The average base price of a custom-designed, single client study in fiscal 1997
was approximately $50,000. The time to complete such a study generally ranges
from 8 to 12 weeks, although studies involving ongoing data collection generally
require monthly or quarterly interim reporting.
Proprietary Packages: Based on its experience in conducting custom-designed,
single-client studies using statistical methodologies, the Company has been able
to identify certain marketing issues frequently encountered by clients in a
broad range of industries. In response, the Company has developed standardized
packages to address these marketing issues.
<PAGE> 4
The standardized packages are software which embed proprietary combinations of
various advanced statistical methodologies and algorithms that permit a client's
marketing management to compose and alter, on an ongoing basis, various
scenarios designed to explain and predict consumer behavior and product sales
levels. The design of the software allows the Company to tailor the study and
report to the needs of the individual client. The client may receive information
in the form of written reports, company presentations or by delivery of the
database and a customer version of the relevant proprietary software. The use of
standardized packages decreases the Company's cost of designing and implementing
a study for a potential client.
The Company's standardized packages include:
- Price Elasticity Measurement System ("PEMS(R)") permits the
evaluation of pricing strategies for different products and
services. PEMS is designed to enable the client to predict
sales of products and services under a broad range of possible
competitive pricing scenarios.
- Component Assessment ("COMPASS(TM)") is designed to enable
clients to analyze the structure of a competitive market and
to determine the effect that individual product attributes
have on a customer's purchase decision. This package can be
utilized in developing products or selecting attributes for
advertising messages for specific markets.
- Predictive Segmentation(R) is a technology that enables
marketers to identify the various segments and or sub-markets
of individual products and to differentiate the demands of
each segment. Predictive Segmentation is particularly powerful
as it combines demographic and usage and attitude factors in
determining the optimal segmentation.
- Total Research Bias Correction(TM) (TRBC(TM)) is a technology
that enables marketers to improve the accuracy and value of
any research by reducing fundamental sources of bias, error,
and distortion in market research data. This results in a
better understanding of marketing behavior and substantial
improvement of the predictive accuracy and value of market
research.
Multi-Client Studies: Multi-client studies are generally designed by a market
research firm to meet what the firm perceives to be an informational need shared
by a number of potential clients. The initial focus of the study and early study
design are usually developed by the research firm at its own expense before
client commitments are obtained. The completed study is sold to a number of
clients, each of whom obtains access to the study results on a non-exclusive
basis.
<PAGE> 5
EQUITREND(R): This product provides strategic guidance to improve brand equity.
Brand equity is defined as the inherent value in a particular brand name of
product or service, resulting from consumer experiences with, and perceptions
of, the brand. As such, it is based on actual usage, as well as the expectations
created by advertising, publicity, word-of-mouth, packaging, etc., and is best
measured as perceived quality.
Because of the nature of the data EQUITREND provides, subscribers tend to
contract for additional projects to provide further in-depth analysis or explore
other aspects of their brands' marketing. EQUITREND is highly compatible with
other proprietary technologies offered by the Company. To date, over 110 U.S.
corporations have invested in information through EQUITREND.
Other Products/Services:
CUSTOMER LOYALTY MANAGEMENT:
The Total Research Customer Loyalty Management Process was designed to provide
clients with a systematic means of improving its operating results and
marketplace performance through effective use of information from customers and
employees. The process provides clients with:
- - The ability to set priorities and allocate resources to optimize both
customer loyalty and organizational performance
- - Insight into their competitive positions
- - Identification of the attributes that can set their organizations' apart
from competitors by delivering superior value to customers
- - Opportunities for service and product innovations, beyond those currently
offered
- - Tailored strategies for high-potential market segments
- - An action plan for implementation that reflects prioritized customer
requirements, internal resources and industry environment
- - A proven means to evaluate the success of improvement initiatives
A typical Total Research Customer Loyalty Management Process is made up of the
following five distinct phases:
1. OBJECTIVES AND COMMUNICATIONS DEVELOPMENT ensures organizational agreement
and alignment on purposes and applications of the research by means of
individual and group discussions with key management personnel. During
this phase the Company will develop a plan to communicate with employees
and customers throughout the process.
2. DISCOVERY uses qualitative techniques with employees and customers to
identify their perceptions of important attributes of satisfaction, value
and loyalty.
3. PERFORMANCE ASSESSMENT quantitatively measures customer perceptions of
relative importance and competitive performance in areas affecting
satisfaction, value, loyalty, and share of business.
<PAGE> 6
4. ACTION PLANNING incorporates customer requirements for satisfaction and
value into the quality and process improvement activities of the
organization through the use of a wide range of tools, techniques and
communications which support process improvement teams.
5. SUCCESS MEASUREMENT provides the ongoing quantitative measurement
necessary to determine improvement progress against Performance Assessment
baseline data. Linkage of internal and external performance to
organizational results is the goal. Qualitative monitoring is conducted to
identify emerging issues.
Due to the specific experience required to address Customer Loyalty Management
research, the unit is organized as a division of the Company. The Division
enjoys a series of relationships and alliances with several prominent consulting
organizations, with expertise in specific industries and consulting
technologies, which constitute complimentary capabilities to those of the
Division staff. Members of the Division are frequently asked to speak at outside
conferences and seminars.
STUDY IMPLEMENTATION
The Company gathers information for its research projects in a variety of ways,
including telephone and personal interviews, focus groups, mail surveys, content
analysis of various types of communications, store audits and product-use tests.
The Company operates two telephone data collection centers in Tampa, Florida and
London, England. Both the Tampa and London facility have 80 fully computerized
interviewing stations. The Company has its own focus group facilities and has
access to other focus group facilities in major metropolitan areas. Focus groups
provide qualitative information through structured, in-depth discussions in a
controlled environment. The Company's Princeton focus group facility is fully
equipped with audio-visual equipment. In addition, the Company has developed a
nationwide network of several hundred independent field service organizations to
conduct personal interviews.
The Company maintains a national probability sample for use as a tool to collect
data to accurately project market and demographic information. This national
probability sample consists of approximately 250 scientifically selected
locations in 48 states which, taken together, provide a representative
cross-section of U.S. population demographics.
The Company uses both cross-tabular and multivariate statistical techniques to
analyze the collected data. Cross-tabulation is the arithmetic compilation of
the results of the data collected and is used for studies with descriptive
objectives, although cross-tabulation also can meet certain limited diagnostic
goals. Multivariate analysis recognizes the interdependence of multiple
variables and attempts to synthesize the results in a simple equation model or
graphic display. Multivariate analysis is usually used to meet both diagnostic
and predictive objectives. The Company believes it is an industry leader in the
utilization of multivariate analysis for predictive research, and often develops
its own software to interpret and enhance its study results.
<PAGE> 7
CLIENTS
The Company has directed its marketing efforts toward companies and institutions
with sophisticated and comprehensive statistical research and marketing
information needs. In fiscal 1997, approximately 81 percent of the Company's
full-service clients were among the 500 largest commercial and financial
companies in the United States and their equivalents internationally. The
Company currently serves approximately 210 commercial clients and several
government agencies. During fiscal 1997, approximately 74 percent of the dollar
value of contracts from full service clients were from recurring research
projects. For the fiscal years ended June 30, 1997, June 30, 1996 and June 30,
1995, the Company had no single client that contributed revenues of greater than
10 percent.
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
---------------------------------
Industry 1997 1996 1995 Representative Clients
- -------- ---- ---- ---- ----------------------
<S> <C> <C> <C> <C>
Health Care 32.0% 28.6% 25.3% Bristol-Myers Squibb, Amgen,
Genentech, Roche, Pfizer,
Abbott, Merck, SmithKline
Beecham, Ortho-McNeil, Eli
Lilly, Novartis
Telecommunications/
Information Systems 24.5 28.9 23.8 AT&T, IBM, Motorola,
Compaq, Hewlett Packard,
DEC, Sprint, Bell Atlantic, US
West, Microsoft
Manufacturing/Industrial 11.1 7.2 14.8 FMC, Monsanto, Masonite,
Dow Chemical, Dow Corning,
DuPont
Consumer Products 10.9 10.4 13.1 Bausch & Lomb, 3M, Black
& Decker, Michelin, Eastman
Kodak
Financial Services 7.4 13.8 10.8 Merrill Lynch, Prudential,
Fidelity Investments, Alliance
& Leicester
Other 14.1 11.1 12.2 Mercedes-Benz, Mobil, BP Oil,
----- ----- ----- Ryder, USPS
Totals 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
<PAGE> 8
LICENSING
In August 1992, the Company entered into an agreement with Paradigma, s.a. of
Buenos Aires, Argentina, to license its products and the name "Total Research
Argentina." In May 1995, the Company renewed its agreement and alliance with
TRCA through April 30, 1998. The Company has given TRCA the right to represent
the Company in Argentina and to market the Company's proprietary products.
In consideration for the use of the name Total Research and its products, TRCA
will pay the Company royalties based on the gross TRCA revenues. For fiscal 1997
and fiscal 1996, TRCA's royalty obligations to the Company were approximately
$50,000 and $71,700 respectively. The Company has also been granted the
irrevocable option to acquire 25 percent of TRCA in exchange for $2,500 up to
and including April 30, 1998; the Company had not exercised these options as of
June 30, 1997.
INTERNATIONAL OPERATIONS
A significant percentage of projects that the Company carries out for its
clients involved conducting marketing research internationally. As a result, the
Company has carried out projects in over 50 countries including most European
countries, throughout South America, Canada and Mexico, China, Japan, Australia,
India and other countries. To do this, the Company has developed a network of
working relationships in key locations around the world with research firms
which it can depend on to provide quality support.
In May of 1996, the Company announced a strategic alliance with Asia Market
Intelligence, (AMI), the largest independent marketing services firm in Asia.
This alliance enables the Company to offer full, comprehensive service for the
Asia component of global studies that it undertakes for such clients as
Hewlett-Packard, IBM, and Motorola.
ACQUISITION OF BUSINESS MARKETING SERVICES
Effective July 1, 1994, the Company's wholly owned subsidiary, Total Research,
Ltd.("TR-UK") acquired BMS through a purchase of assets. The full management
team and research staff joined Total Research as part of the acquisition, and
the new subsidiary now conducts business under the name of Total Research
Corporation in Europe.
The Company enjoys a strong position in the European research market and a
strong franchise in the most rapidly growing segment of the European research
market, that of pan-European (multi-country) research projects for major
international companies. Total Research - Europe has substantial experience in
both business-to-business and consumer research throughout Europe: it markets
several multi-client products as well as continues to grow its health care
practice.
The Company's UK operations maintains a pool of interviewers who are European
nationals living in London, giving it the capability to conduct interviews in
the native languages of a wide variety of European countries. Operationally,
clients have one single, English-speaking point of contact which can provide
project updates, consistent translations, and multi-cultural analysis of
research results. This facilitates the development of stronger relationships
with major multi-national companies that conduct sophisticated marketing
research projects worldwide.
<PAGE> 9
ACQUISITION OF CARLSON RESEARCH COMPANY
In November of 1995, the Company acquired Carlson Research Company of
Minneapolis, Minnesota. As part of the terms of the acquisition, Total Research
entered into a strategic alliance with the Carlson Marketing Group to mutually
develop and service business. Revenues attributed to Carlson for June 30, 1997
and June 30, 1996 were approximately $2,650,000 and $1,300,000, respectively.
BACKLOG
The Company's backlog at June 30, 1997, was approximately $12,000,000 as
compared to approximately $9,600,000 as of June 30, 1996 and approximately
$7,300,000 as of June 30, 1995. The Company defines backlog as the unearned
portions of its existing contracts. The amount of backlog at any time may not be
indicative of intermediate or long-term trends in the Company's operations. The
increase from year to year can be attributed the continuing increase in business
serviced in the United States and United Kingdom.
FEE ARRANGEMENTS
Basic data collection and tabulation assignments generally are obtained by
competitive bidding at a fixed fee. Full-service and advanced-level research
assignments involve competitive bidding or fees payable on a negotiated basis.
Most contracts are negotiated on a fixed-price basis subject to adjustment for
specified criteria. Included in most current contracts are provisions to recover
certain unanticipated costs. The Company sells multi-client studies and can sell
EQUITREND at a quoted retail price. Enhancement services, to the extent
requested by a purchaser, are expected to be negotiated on an individual basis
or to be set at a fixed hourly rate for the particular level of the Company
employee providing the service.
The Company employs the percentage-of-completion method of accounting for
recognizing its revenues on individual projects. Clients are generally billed in
accordance with the terms of applicable contracts, which are not necessarily
indicative of the stage of completion of the project.
COMPETITION
The market research industry is highly competitive and is characterized by a
large number of relatively small organizations and a limited number of large
full-service organizations, many of which are believed to have financial
resources greater than those of the Company. Although the Company is not one of
the largest providers of general market research, management believes that it is
currently one of the leading providers of market research and analysis services
using advanced statistical techniques. In 1996, Total Research was listed as one
of the 50 largest companies in the marketing research industry by Marketing
News. The Company's primary competitors include: Burke Marketing Services, Inc.;
M/A/R/C, Inc.; Migilari/Kalpin; Market Facts, Inc.; National Analysts; and
Walker Research Incorporated.
The Company believes that the principal competitive factors for traditional
market research are the quality of data collection and validation, the ability
to design, implement and report on marketing research subjects in a short period
of time, and price. In addition the Company believes that the principal
competitive factors for market research using advanced statistical techniques
are the quality and experience in developing and implementing this type of
research and the reputation of
<PAGE> 10
its personnel. During economic downturns, the Company may experience increased
competition for research budgets, which are often vulnerable to cost-cutting
activities.
EMPLOYEES
As of June 30, 1997, the Company employed 190 full-time employees. The Company
uses approximately 250 part-time, hourly employees for data gathering and
processing purposes. All employees are non union. The Company believes that it
maintains a positive relationship with its employees.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's headquarters and principal U.S. operating facility is located in
Princeton, New Jersey. As of June 30, 1997, the Company was leasing
approximately 48,663 square feet of office space for its Princeton operations;
the lease expires June 30, 2006. The Company leases a total of 7,559 square feet
for its Tampa, Florida office; the lease is currently under negotiation for
renewal. The Company leases a total of 1,926 square feet for its Chicago,
Illinois office; the lease expires on December 31, 1998. The Company leases
2,400 square feet for its Poughkeepsie, New York office; the lease expires on
June 30, 2000. The Company leases 4,800 square feet for its Chiswick, London
office space; the lease expires October 31, 2003 with a tenant break clause at
October 31, 1998. The Company leases approximately 6,000 square feet for its
Acton, London data collection facility; the lease expires on March 31, 1999. The
Company leases a total of 6,083 square feet for its Minneapolis, Minnesota
office; the lease expires April 30, 2001.
The Company has recently negotiated to sub-lease approximately 20,000 square
feet of space in its Princeton offices.
ITEM 3. LEGAL PROCEEDINGS
As of June 30, 1997 there were no material legal actions, proceedings, or
litigation pending at that time, or, to the knowledge of the Company,
threatened, to which the property of the Company was subject, or to which the
Company was a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual General Meeting of shareholders was held on may 13, 1997 at the
Company's headquarters in Princeton, New Jersey. The following were the
propositions considered and the votes cast:
1. To elect the slate of directors, as proposed by management (Lorin Zissman,
Hugh J. Devine, William N. Levy, J. Edward Shrawder, Anthony Galli, Albert
Angrisani, Roger Thomas).
<TABLE>
<S> <C>
For 8,057,663
Against 41,551
Abstentions 0
</TABLE>
2. To confirm the appointment of Amper, Politziner & Mattia as auditors to
the Company.
<PAGE> 11
<TABLE>
<S> <C>
For 7,916,466
Against 44,428
Abstentions 56,690
</TABLE>
3. Proposal to increase the options with respect to the 1995 Stock Incentive
Plan (950,000 shares)
<TABLE>
<S> <C>
For 7,146,439
Against 781,005
Abstentions 90,140
</TABLE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The high-and low-bid prices of the Company's Common Stock, as reported by NASDAQ
for the Company's quarters from fiscal 1994 to date were as follows:
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
------------------- -------------------- ------------------- --------------------
High Low High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal 1994
Common Stock $ .844 $ .531 $1.160 $ .656 $1.530 $ .813 $1.250 $ .875
Fiscal 1995
Common Stock $1.031 $ .656 $ .875 $ .656 $2.813 $ .781 $2.438 $1.719
Fiscal 1996
Common Stock $2.563 $1.750 $1.688 $1.438 $1.188 $ .938 $1.688 $1.375
Fiscal 1997
Common Stock $1.438 $ .875 $1.000 $ .625 $1.250 $0.813 $1.281 $ .813
</TABLE>
The high and low bid and asked prices of Registrant's Common Stock on September
16, 1997 were $1.688 and $1.625, respectively.
The above listed quotes reflect inter-dealer prices without retail mark-up,
mark-down or commissions and are not necessarily representative of actual
transactions or of the true value of the Common Stock.
As of September 16, 1997, the Company had 572 shareholders of record of its
Common Stock. However, the Company has reason to believe that its total
shareholders number in excess of 1,800. The Company has never declared a
dividend and does not plan to do so in the near future.
<PAGE> 12
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(A) LIQUIDITY AND CAPITAL RESOURCES
During the end of fiscal 1996, Management established a committee to review and
improve the Company's operations. One of its key recommendations was to improve
the control and management of cash. As a result, the Company generated almost
$5.0 million in cash from operations during fiscal 1997. The cash was used to:
- - Repay over $3.5 million of its bank debt (leaving just over $200,000 from
its UK subsidiary)
- - Paydown capital leases of approximately $100,000
- - Deposit almost $700,000 in its operating accounts
At June 30, 1997, the Company had a working capital deficiency of ($1,150,722),
a decrease of $987,933 from June 30, 1996, and the current ratio dropped to .87
from .98 at the same point in time. This was the result of management utilizing
cash to pay off bank term debt in advance. This enabled the company to increase
its financial flexibility.
On June 30, 1997, the Company renegotiated its agreement with Summit Bank
(formerly the United Jersey Bank of Princeton, New Jersey, "the Bank"). The
Agreement has been amended as follows:
- - A one year $2.5 million revolving line of credit at a variable interest
rate based on certain financial ratios. As of June 30, 1997, the rate is
prime plus one-half percent. As of June 30, 1997, the Company was in
compliance with all of the financial ratios and has not borrowed against
this line.
- - A three year $500,000 term line, secured by equipment, furniture and
fixtures at an interest rate based on certain financial ratios. As of June
30, 1997, the rate is prime plus one-half percent. As of June 30, 1997,
the Company has not borrowed against this line.
In addition to the Summit Bank agreement discussed above, the Company has a bank
overdraft facility of pound sterling 300,000 with Coutts & Co in London, UK. The
borrowings against this facility are charged at a rate of 3 percent above the UK
Base Rate. At June 30, 1997, the borrowings were at pound sterling 129,262
(approximately U.S. $214,575) and the UK Base Rate was 6.75 percent. The Company
believes that its current sources of liquidity and capital resources will be
sufficient to fund its long-term obligations and working capital needs for the
foreseeable future.
Net Accounts Receivable totaled $5,101,596 at June 30, 1997, compared to
$4,166,486 at the prior year-end, for a net increase of $935,110. The increase
in receivables is primarily the result of the Company's increasing business.
Costs and estimated earnings in excess of billings on uncompleted contracts
totaled $1,240,852 at June 30, 1997, compared to $1,737,734 at the prior
year-end, for a net decrease of $496,882. This decrease is the result of normal
fluctuations in the business from period to period.
Current and long-term deferred tax assets decreased by $262,338 from $773,118 in
fiscal year 1996 to $510,780 in fiscal year 1997. Based on the Company's
expected earnings for the future,
<PAGE> 13
management has determined that the future operating income of the Company should
be sufficient to recognize fully these net deferred tax assets.
Capitalized Market Research Products decreased by $80,000 to $224,449, versus
$304,449 in fiscal 1996. The Company did not invest in developing any new
products during the fiscal year.
Deferred Data Accumulation Costs decreased by $80,000 from $347,436 in fiscal
1996 to $267,436 in fiscal 1997.
Accounts payable and accrued expenses totaled $4,661,785, an increase of
$1,011,255 during fiscal 1997 from $3,650,530 in fiscal 1996. Additionally, the
Company has $91,000 remaining from the $516,500 accrued in fiscal 1996 related
to the restructuring expense incurred during the last quarter of fiscal 1996.
The increase is primarily the result of the Company's increasing business.
Billings in excess of earnings totaled $3,887,372, an increase of $1,772,230
during fiscal 1997 from $2,115,142 in fiscal 1996. The increasing business and
the more aggressive billing policy of the Company have accounted for this
increase.
Income taxes payable totaled $166,474, an increase of $80,171 during fiscal 1997
from $86,303 in fiscal 1996. The increasing earnings of the Company accounted
for this increase.
Other long-term liabilities totaled $279,020, an increase of $40,957 during
fiscal 1996 from $238,063 in fiscal 1996. This increase is mainly the result of
the Company accruing rental expense for it renewed lease in its Princeton office
in accordance with FASB 13, Accounting for Leases.
Inflation had no material effect on the financial performance of the Company
during fiscal 1997.
(B) RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Statement of Income Data:
(Expressed as a percentage of revenues) Year Ended June 30
------------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Direct costs 50.8% 46.4% 41.1%
------ ------ ------
Gross profit 49.2% 53.6% 58.9%
Operating expenses 44.9% 57.7% 50.8%
Unusual Costs -- 4.6% --
------ ------ ------
Income (loss) from operations 4.3% (8.7%) 8.1%
Interest expense (.7%) (1.4%) (1.6%)
Other income (expense), net 0.2% 0.4% 0.3%
------ ------ ------
Income (loss) before income taxes 3.8% (9.8%) 6.8%
Provision for (benefit) from income taxes 1.6% (3.6%) 2.9%
------ ------ ------
Net income(loss) 2.2% (6.3%) 3.9%
====== ====== ======
</TABLE>
FISCAL YEAR ENDED JUNE 30, 1997 AS COMPARED TO FISCAL YEAR ENDED JUNE 30, 1996
During fiscal 1996, lower gross profits and unanticipated corporate expenses
resulted in the Company incurring losses. As a result, senior management
initiated a committee to analyze all
<PAGE> 14
operations of the Company. The specific goal was to significantly improve the
Company financially. Upon completion of its analysis, the Company announced and
immediately implemented a plan to restructure and consolidate operations which
included the re-organization of its existing six divisions into four. The
restructuring included the elimination of several senior positions and the
reduction of corporate overhead by close to $2 million annually, from ten to
five percent of revenue.
Going into fiscal 1997, the Company knew it had low-margin project work and
excessive operating commitments which would negatively effect its profitability
for the first six months. However, it began to sell business with improved
pricing and reduced bank debt through tighter invoicing and improved cash
collection procedures.
Management believed once it had completed the first six months of the fiscal
year, it would begin to see an improved bottom line. The following chart shows
key financial figures as a percentage of revenue by quarter versus fiscal year
1996:
<TABLE>
<CAPTION>
Fy '96 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
Operating Expenses 57.7% 48.1% 46.9% 44.2% 42.5%
Interest Expense 1.4% 1.4% 1.2% 0.5% 0.0%
Net Income (6.3%) 0.3% 1.1% 2.9% 3.5%
</TABLE>
Revenues for fiscal 1997 increased 24.2%, or $5,728,253 versus the prior year,
to $29,443,302. This increase was the result of a full fiscal year of revenues
the research division of Carlson Marketing Group it acquired in November 1995,
as well as growth in its Total Research/Customer Loyalty Management, Global
Health Care and newly formed Strategic Marketing Services divisions.
During fiscal 1997, the Company delivered a much greater percentage of
quantitative and international business which included substantial out-of-pocket
expenses for data collection, which had the effect of reducing gross profits. As
a result, the Company experienced an increase in direct costs of $3,940,386 from
$11,001,246 in fiscal 1996 to $14,941,632 in fiscal 1997. This had a negative
impact on Company's overall gross margins decreasing it from 53.6 percent in
fiscal 1996 to 49.3 percent in fiscal 1997.
Operating expenses for fiscal 1997 totaled $13,221,437, a decrease of 3.4
percent or $461,346 from the fiscal year 1996 total of $13,682,783. Expressed as
a percent of revenue, operating expenses decreased to 44.9 percent of revenue in
fiscal 1997, versus 57.7 percent in the prior year, for a reduction of 12.8
percent of revenue. This decrease can be attributed to the corporate expense
reduction initiated by the Company in late fiscal 1996.
Income from operations totaled $1,280,233 for fiscal 1997, an increase of
$3,350,712, versus a loss from operations of ($2,070,480) during fiscal 1996 for
all the reasons set forth above.
<PAGE> 15
The Company's interest expenses decreased from $342,024 in fiscal 1996 to
$202,133 in fiscal 1997 as a result of decreased borrowings, as discussed under
Liquidity and Capital Resources.
Other income totaled $50,050 for fiscal 1997, a decrease of $37,047 versus
income of $87,097 earned in fiscal 1996, due primarily to licensing income of
approximately $50,000 earned by the Company as the result of its licensing
arrangement with TRCA in Argentina.
Income before taxes totaled $1,128,150 for fiscal 1997, an increase $3,453,556
versus a loss before taxes of ($2,325,407) in fiscal year 1996 for the reasons
set forth above.
The income tax provision for fiscal 1997 was $489,955, versus an income tax
benefit of ($842,363) in fiscal 1996 for the reasons set forth above.
Net income for fiscal 1997 was $638,195, or $.06 per share, versus a net loss of
$1,483,044, or $.15 per share for fiscal 1996.
The Company defines backlog as the unearned portions of its existing contracts
at each balance sheet date. At June 30, 1997, backlog was approximately
$12,000,000 as compared to a backlog of approximately $9,600,000 at June 30,
1996. The amount of backlog at any time may not be indicative of intermediate or
long-term trends in the Company's operations.
FISCAL YEAR ENDED JUNE 30, 1996 AS COMPARED TO FISCAL YEAR ENDED JUNE 30, 1995
Beginning in fiscal 1996, the Company planned to aggressively increase revenues
through geographic expansion as well as through new product introduction. As a
result, the Company incurred significant planned as well as unanticipated
expenses beyond those normally incurred for recurring operations. Revenues for
fiscal 1996 increased 23 percent, or $4,464,606 versus the prior year, to
$23,715,049. This increase was the result of its acquisition of the research
division of Carlson Marketing Group, the growth of its Total Research - Europe
division, as well as growth in its Total Research/Customer Loyalty Management
and Health Care divisions. Its two other divisions, Consumer Research Services
and Information Technologies, generated total revenues less than the previous
fiscal year.
During fiscal 1996, the Company experienced a change in its business operations
which did not manifest itself until the fourth quarter. The Company delivered a
much greater percentage of quantitative and international business during fiscal
1996 which includes substantial out-of-pocket expenses for data collection,
which reduces gross profits. As a result, the Company experienced a major
increase of direct costs of $3,096,415 or 39.2 percent from $7,904,831 in fiscal
1995 to $11,001,246 in fiscal 1996. This had a negative impact on Company's
overall gross margins decreasing it from 58.9 percent in fiscal 1995 to 53.6
percent in fiscal 1996.
Operating expenses for fiscal 1996 totaled $13,682,783, an increase of 39.8
percent or $3,897,465 from the fiscal year 1995 total of $9,785,318. Expressed
as a percent of revenue, operating expenses increased to 57.7 percent of revenue
in fiscal 1996, versus 50.8 percent in the prior year. This increase can be
attributed to a number of factors.
- An increase in expense related to the operations and integration of
the research division of Carlson Marketing Group and the expansion
of the Company's UK subsidiary.
<PAGE> 16
- The Company's aggressive corporate development program to develop
strategic alliances with firms in different countries to market its
international EQUITREND product as well as the capability to perform
market research on a global basis significantly increased its
operating costs.
- Costs associated with enhancing the overall data processing and
reporting capacity of the Company.
- The Company incurred increased salary and fringe benefit costs and
increased sales expenses as the result of its increasing revenues.
- The demand for the EQUITREND product was less than anticipated which
necessitated the reevaluation of it on the balance sheet. However,
management still considers EQUITREND to be important to the current
and future strategy of the Company.
Lower gross profits and unanticipated expenses resulted in reduced profitability
for the Company which necessitated action in the fourth quarter by senior
management to correct the problem. The Company announced and immediately
implemented a plan to restructure and consolidate operations which included the
re-organization of its six divisions into four. This plan resulted in a pre-tax
charge of $1,101,500.
The charge includes a write-down of capitalized market research products and
deferred data accumulation costs of $550,000, severance costs of $406,500, and
charges to develop and implement the plan of $145,000. Management does not
anticipate incurring additional charges such as these in the foreseeable future.
Loss from operations totaled $2,070,480 for fiscal 1996, a decrease of 232.7
percent or ($3,630,774), versus income from operations of $1,560,294 during
fiscal 1995 for all the reasons set forth above.
The Company's interest expenses increased from $307,460 in fiscal 1995 to
$342,024 in fiscal 1996 as a result of increased borrowings, as discussed under
Liquidity and Capital Resources. It is anticipated that interest expense will
continue to increase in fiscal year 1997 due to the new terms.
Other income totaled $87,097 for fiscal 1996, an increase of $27,805 versus
income of $59,292 earned in fiscal 1995, due primarily to licensing income of
approximately $68,000 earned by the Company as the result of its licensing
arrangement with TRCA in Argentina.
Loss before taxes totaled $2,325,407 for fiscal 1996, a decrease of 277.2
percent or $3,637,533 versus income before taxes of $1,312,126 in fiscal year
1995 for the reasons set forth above.
The income tax benefit for fiscal 1996 was $842,363, versus an income tax
provision of $552,626 in fiscal 1995 due to the loss of the Company. The income
tax benefit represents approximately 36.2 percent of pretax loss in fiscal 1996.
Net loss for fiscal 1996 was $1,483,044, or $.15 per share, versus net income of
$759,500, or $.08 per share for fiscal 1995.
<PAGE> 17
The Company defines backlog as the unearned portions of its existing contracts
at each balance sheet date. At June 30, 1996, backlog was approximately
$9,600,000 as compared to a backlog of approximately $7,300,000 at June 30,
1995. The amount of backlog at any time may not be indicative of intermediate or
long-term trends in the Company's operations.
(C) SELECTED FINANCIAL DATA FOR YEARS ENDED JUNE 30, 1997, 1996, 1995,
1994 AND 1993
The following data has been extracted from the annual financial statements
attached hereto as an exhibit:
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------------------------
Statement of Income Data (000): 1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues $ 29,443 $ 23,715 $ 19,250 $ 13,688 $ 12,570
Direct Costs 14,942 11,001 7,905 6,070 5,443
-------- -------- -------- -------- --------
Gross Profit 14,501 12,714 11,345 7, 618 7,127
Operating Expenses 13,221 13,683 9,785 6,842 6,494
Unusual Charges -- 1,101 -- -- --
-------- -------- -------- -------- --------
Income(Loss)from Operations 1,280 (2,070) 1,560 776 633
Interest Expense (202) (342) (307) (38) (68)
Other Income (Expense),net 50 87 59 (52) --
-------- -------- -------- -------- --------
Income(Loss) Before Income Taxes 1,128 (2,325) 1,312 686 565
Provision (Benefit) for Income Taxes 490 (842) 552 291 (177)
-------- -------- -------- -------- --------
Income(Loss) Before Accounting Change 638 (1,483) 760 395 742
-------- -------- -------- -------- --------
FAS 109 Accounting Change 0 -- -- 65 --
-------- -------- -------- -------- --------
Net Income (Loss) $ 638 (1,483) $ 760 $ 460 $ 742
======== ======== ======== ======== ========
Net Income(Loss)Per Common Share $ .06 ($ 0.15) $ .08 $ .05 $ .09
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------
Balance Sheet Data (000): 1997 1996 1995 1994 1993
-------- -------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Working Capital.(Deficiency) $ (1,151) $ (17) $ 210 $1,573 $ 658
Total Assets 12,948 13,155 11,743 7,440 5,220
Capital Lease Obligations And
Notes Payable 215 2,142 1,406 604 42
Shareholders' Equity 3,648 2,821 4,323 3,419 2,552
</TABLE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See annexed financial statements.
<PAGE> 18
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Financial Accounting Standards Board issued Statement No.128, "Earnings Per
Share" (SFAS No.128). Under this new standard, new guidelines must be followed
in computing earnings per share (EPS) to permit the result to be more compatible
with EPS standards of other countries and with that of the International
Accounting Standards Committee (IASC).
This Statement shall be effective for financial statements for both interim and
annual periods ending after December 15, 1997. The Company intends on complying
with the standard with the presentation of Second Quarter Fiscal Year 1998
results; the impact upon the Company's EPS is unknown at this time.
<PAGE> 19
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AT JUNE 30, 1997
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Director
Name Age Since Position Held with Company(1)
- ------------------------- -------- ----- ------------------------------------------------
<S> <C> <C> <C>
Lorin Zissman(3) 66 1975 Chief Executive Officer, and Chairman of the
Board of Directors
Albert Angrisani(3) 47 1994 Director, Vice-Chairman
Eric C. Zissman(2), (3) 32 - Chief Financial and Administrative Officer,
Treasurer
Theresa Flanagan(3) 36 - President, Quality Management
Patti Hoffman(3) 48 - President, U.S. Regional Offices
Mark Nissenfeld, Ph.D(3) 40 - President, Global Health Care
Roger Thomas(3) 52 1994 President, Strategic Marketing Services
William N. Levy, Esq. 56 1984 Secretary and Director
William Van Zandt 57 - Executive Vice President, Global Health Care
Division
John Morton 51 - Senior Vice President, Strategic Marketing
Services
Dr. Bashir Datoo 55 - Senior Vice President, Strategic Marketing
Services
J. Edward Shrawder 56 1993 Director
Anthony Galli 70 1990 Director
Hugh Devine 58 1978 Director
</TABLE>
(1) All directors hold office until the next annual meeting of shareholders or
until their successors are duly elected and qualified. Executive officers
are elected annually by the Board of Directors and serve at the discretion
of the Board.
(2) Mr. Eric Zissman is the son of Mr. Lorin Zissman.
(3) These individuals are members of the Company's Management Council.
(t)Upon review of Forms 3,4, and 5, there have been no delinquencies with filing
of same for any of the so stated officers and directors of the Company.
<PAGE> 20
LORIN ZISSMAN has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since it began operating in 1975. From 1974 to
1975, Mr. Zissman was the President of the Total Research Division of U.S.
Testing Corp. and from 1970 to 1974 he was the President of Total Research, Inc.
prior to its acquisition by U.S. Testing Corp. From 1969 to 1970, Mr. Zissman
was an officer and director of Response Analysis, a market research company.
From 1956 to 1969, he was employed by Opinion Research Corporation, and served
as the President of ORC Caravan Surveys, a subsidiary of Opinion Research
Corporation, from 1965 to 1969. Mr. Zissman has worked in market research from
1955 to the present. He graduated from Temple University in 1951.
WILLIAM N. LEVY, ESQ. has been the Secretary of the Company since 1978 and a
director since 1984. Since 1966, Mr. Levy has practiced law in New Jersey. He is
a principal of Levy & Levy, P.A., a law firm with offices in Voorhees, New
Jersey. Levy & Levy, P.A. acts as general and securities counsel to the Company.
Mr. Levy received a B.A. in 1963 and a J.D. in 1966, both from the University of
Pennsylvania.
ALBERT ANGRISANI is President of Princeton Management, which provides U.S.
corporations and public institutions with turn-key consulting and project
finance services, and he has recently been appointed by Governor Christine Todd
Whitman to Chair the New Jersey State Capital Partnership Fund. Mr. Angrisani
served as U.S. Assistant Secretary of Labor from 1980 to 1984. Subsequently, he
started the government services practice for the financial industries division
of Arthur D. Little Inc. Mr. Angrisani received a B.A. Degree from Washington
and Lee University and an MBA in finance and an MA in accounting from New York
University.
ERIC C. ZISSMAN joined the Company in 1988. In September 1996, he was named
Chief Financial Officer. In September 1993, he was named Vice President of
Accounting and Finance. Before joining Total Research, Mr. Zissman was a first
level manager at AT&T and a staff accountant at Margaretten & Company during the
years 1986 to 1988. Mr. Zissman graduated from Rider University in 1986.
J. EDWARD SHRAWDER was elected to the Company's Board of Directors in November
1993. Mr. Shrawder, former president of Elrick and Lavidge, a marketing research
firm, started his own marketing and marketing research consultancy in Illinois
in 1992. He was director of the Council of American Survey Research
Organizations (CASRO) in 1990 and 1991. He received his undergraduate degree in
economics from Oberlin College and his MBA in marketing and mathematical methods
from the University of Chicago.
ROGER THOMAS, a director of the Company since 1994, is also the President of
Strategic Marketing Services. He joined Business Marketing Services Ltd., the
predecessor company, in 1984 and became Managing Director in 1986. Prior to this
he worked for Industrial Market Research Ltd., a leading European
business-to-business research firm for six years, and the Ladbroke Group, a
major UK hotel and leisure company, where he was responsible for acquisitions
and new business development. Mr. Thomas is a graduate of the University of
Southampton with a degree in economics and accounting.
<PAGE> 21
THERESA FLANAGAN has been with Total Research in a number of positions of
increasing responsibility since 1983; she currently is President, Customer
Loyalty Division. Ms. Flanagan possesses an intimate understanding of both the
practical aspects of conducting Quality and Customer Loyalty Management
processes and the strategic issues involved in a company's decision to utilize
the QM approach. Ms. Flanagan has her B.A. in Economics and an MBA in Marketing
from Rutgers University.
MARK NISSENFELD, PH.D is the President, Global Health Care Division. Dr.
Nissenfeld has over 16 years experience conducting both qualitative and
quantitative research. During this time he has conducted a large number of
in-depth personal interviews as well as moderated focus groups. In addition, he
has conducted numerous quantitative research studies utilizing a variety of
multivariate techniques. In the past seven years, he has focused his energies on
the field of health care marketing research. Dr. Nissenfeld has a Ph.D. and M.S.
in Psychology from the University of Pennsylvania, and B.S. from Boston
University.
PATTI HOFFMAN joined the Company in 1995 as Vice President, Human Resources. In
addition to this responsibility, Ms. Hoffman is President, Regional Offices; she
has 20 plus years of professional experience working for four publicly-held
corporations. As a member of the Senior Management Committee at West America
Bank in California, Ms. Hoffman honed those skills which have been utilized in
re-organizing the U.S. Regional Division of Total Research Corporation. Ms.
Hoffman has a B.A. from the University of Tennessee.
WILLIAM VAN ZANDT has been an officer of the Company since it began operating in
1975. From 1974 to 1975, he was Vice President, Account Executive for the Total
Research Division of US Testing Corp. From 1970 to 1974, he was Vice President
of Total Research, Inc.
JOHN MORTON joined the Company in 1982 as a Vice President and Director of
Advanced Statistical Research. In 1995, he was promoted to Senior Vice
President, New Product Development. From 1981 to 1982, Mr. Morton was founder
and president of John L. Morton, Inc., a company engaged in advanced marketing
analysis and research. During that time he also provided consulting services to
the Company. From 1976 to 1981, Mr. Morton was the Executive Vice President of
Robinson Associates, Inc., where he was primarily responsible for project
direction and was technical supervisor of the research personnel. He served as
Vice President of Aulino/Baen (formerly a marketing research company) from 1974
to 1976, and held other market research positions at Prudential Insurance
Company and General Foods from 1967 to 1974. He received his B.S. in psychology
from Muhlenberg College.
DR. BASHIR DATOO joined the Company in 1977. In 1982, Dr. Datoo was appointed
Vice President and Director of Quantitative Research and, in 1989, was promoted
to Senior Vice President. From 1976 to 1977, he was a visiting scholar at
Princeton University. From 1973 to 1976, Dr. Datoo was an associate professor at
the University of Dar Es Salaam. Dr. Datoo received a B.A. from Makerere
University College, Uganda, in 1964, and a Ph.D. from the London School of
Economics in 1968.
<PAGE> 22
ANTHONY GALLI was elected to the Company's Board of Directors in October 1990.
Mr. Galli joined Total Research in 1995 from Galli Associates, Inc., an
affiliate of Hill & Knowlton, a large public relations firm. Mr. Galli ceased to
be employed with the Company in July, 1996. He is a former Vice President and
General Manager of the New Jersey-Delaware office of Hill & Knowlton. Before
joining Hill & Knowlton, Mr. Galli was Vice President and World Director of
Marketing for Business Wire, an international press relations wire service. Mr.
Galli graduated from Temple University, began his graduate work at Harvard and
completed it for his MBA degree at Pace University in New York.
HUGH DEVINE has been an officer of the Company since it began operating in 1975,
and became a director of the Company in 1978. In 1993, he was promoted to
President of the Company. Mr. Devine ceased to be employed in July, 1996. Mr.
Devine received a B.A. in Economics from Bethany College in 1961 and a Masters
degree in Marketing from the University of Bridgeport in 1971.
<PAGE> 23
ITEM 10. EXECUTIVE COMPENSATION
(A) CASH COMPENSATION
There were no directors' fees paid during this period. The following table sets
forth a summary of compensation paid by the Company with respect to services
rendered during fiscal 1995,1996 and 1997 to the Chief Executive Officer and
each of the other three most highly-compensated Officers who received at least
$100,000 in total annual compensation.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and Principal Other Annual Restricted Stock
Position Year Salary Bonus Compensation Option Award(s)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lorin Zissman, CEO 1997 $208,455 -- -- --
1996 213,600 -- -- --
1995 209,406 $19,500 -- --
William Van Zandt 1997 $125,000 $83,302 -- --
Executive VP 1996 115,000 75,504 -- --
Global Health Care 1995 110,000 18,482 -- --
John Morton
Senior VP, 1997 $152,987 $ 1,051 -- 1,500
Strategic Marketing 1996 153,692 -- -- --
Services 1995 145,372 -- -- --
Roger Thomas 1997 $130,400 $21,234 -- 250,000
President, Strategic 1996 114,100 17,961
Marketing Services 1995 114,100 14,492
</TABLE>
(B) COMPENSATION PURSUANT TO PLANS
Included within Section A, above. No individual received more than 5 percent of
the total funds allocated and paid into the Company's 401(k) Plan.
For additional information see Notes to Financial Statements, Notes 9 and 10
concerning 401(k) and Stock Options respectively.
(C) OTHER COMPENSATION
None other than the use of one (1) vehicle by the Chief Executive Officer.
(D) COMPENSATION OF DIRECTORS
The Company has entered into a consulting agreement with a member of the Board
of Directors through June 30, 1999. The agreement contains provisions for a base
salary of $175,000 and $200,000 for the years ended June 30, 1998 and 1999. The
consultant will receive a bonus up to
<PAGE> 24
20% of the base salary based upon corporate financial goals. If the goals are
exceeded by more than $20,000, an additional 2% of the excess will be received.
(E) TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
None.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) (B) The following table sets forth as of September 16, 1997 certain
information with regard to the record and beneficial ownership of the company's
common stock by (i) each shareholder owning of record or beneficially 5 percent
or more of the Company's Common Stocks (ii) each Director individually, and
(iii) all Officers and Directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address of Beneficial Shares Percent of
Title of Class Owner Owned(1) Options Total Class
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Lorin Zissman 2,039,100 70,000 2,109,100 21.00%
7F Marten Road
Princeton, NJ 08540
Common Hugh Devine 365,304 - 365,304 3.64
49 Krebs Road
Plainsboro, NJ 08536
Common William N. Levy, Esq. 164,100 120,000 284,100 2.83
Suite 309, Plaza 1000
Voorhees, NJ 08043
Common J. Edward Shrawder 68,778 25,000 93,778 0.93
1716 Livingston Street
Evanston, IL. 60201
Common Anthony Galli 12,000 31,000 43,000 0.43
17 Exeter Court
Princeton, NJ 08540
Common Roger Thomas 150,000 300,000 450,000 4.47
27 Chesterman Court
Corney Reach Way
Chiswick, London W4 2TP
Common Albert Angrisani (2) 15,000 400,000 415,000 4.27
55 Westcott Road
Princeton, NJ 08540
All Officers and Directors as a group (13 persons) 3,261,722 32.44%
</TABLE>
(1)The Company believes the beneficial owner has sole voting and investment
power over such shares.
<PAGE> 25
(C) CHANGE IN CONTROL
There has been no change in control of the Company
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a consulting agreement with Albert Angrisani, a
member of the Board of Directors. Details are contained in Item 10, Part (D).
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULED, AND REPORTS ON FORM 8K
(A) The following documents are filed as part of this Form 10-KSB at the page
indicated.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) (1) Consolidated Financial Statements - Report of Independent Auditors ......................... F-1
Consolidated Balance Sheets - June 30, 1997 and 1996 ........................................ F-2
Consolidated Statements of Operations - Years ended June 30, 1997 and 1996 .................. F-3
Consolidated Statements of Shareholder's Equity - Years Ended June 30, 1997
and 1996 .................................................................................... F-4
Consolidated Statements of Cash Flows - Years ended June 30, 1997 and 1996 .................. F-5
Notes to Consolidated Financial Statements .................................................. F-6
(a) (2) Exhibits
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the last quarter of the
fiscal year covered by this report.
</TABLE>
<TABLE>
<CAPTION>
Sequential
Number Description Page Number
- ------ ----------- -----------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company *
3.2 By-Laws of the Company *
10.2 Lease for 5 Independence Way, Princeton, New Jersey *
10.3 401(k) Savings Plan *
10.4 1995 Stock Option Plan #
10.5 1995 Stock Option Plan- TRC- Europe #
10.6 Employment Contracts +
</TABLE>
- -----------------
* Incorporated by reference from the like numbered exhibit to Form S-18
Registration Statement, SEC File No. 33-9078-NY.
# Items 10.4 and 10.5 are incorporated by reference from Proxy Statement for
1996 Shareholders Meeting.
+Item 10.6 is incorporated by reference from 10-K SEC submission of September
29, 1997
<PAGE> 26
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors Reports F-2
Consolidated Balance Sheets as of June 30, 1997 and 1996 F-3
Consolidated Statements of Operations for the Years ended
June 30, 1997, 1996 and 1995 F-4
Consolidated Statements of Shareholders' Equity F-5
for the Years ended June 30, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for F-6
the Years ended June 30, 1997, 1996 and 1995
Notes to the Consolidated Financial Statements F-7
</TABLE>
F-1
<PAGE> 27
Independent Auditors Report
To the Board of Directors and
Shareholders of Total
Research Corporation and Subsidiary
We have audited the accompanying consolidated balance sheets of Total Research
Corporation and Subsidiary as of June 30, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Total
Research Corporation and Subsidiary as of June 30, 1997 and 1996, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
Amper, Politziner & Mattia
Edison, New Jersey
September 23, 1997
F-2
<PAGE> 28
TOTAL RESEARCH CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
ASSETS 1997 1996
----------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 678,350 $ 4,201
Accounts receivable, less allowance for doubtful accounts
of $110,000 at June 30, 1997 and June 30, 1996 5,101,596 4,166,486
Costs and estimated earnings in excess of billings on
uncompleted contracts 1,240,852 1,737,734
Deferred taxes 281,900 482,478
Income tax refund receivable 8,505 850,000
Other current assets 559,281 695,328
----------- ------------
Total current assets 7,870,484 7,936,227
Fixed assets, less accumulated depreciation of $3,334,556
at June 30, 1997 and $2,691,011 at June 30, 1996 2,316,630 2,230,205
Capitalized market research products, less accumulated
amortization of $591,947 at June 30, 1997 and $511,947 at June 30, 1996 224,449 304,449
Deferred data accumulation costs, net of accumulated depreciation of
$1,530,300 at June 30, 1997 and $1,450,300 at June 30, 1996 267,436 347,436
Goodwill, net of accumulated amortization of $223,493 at June 30, 1997 1,800,384 1,792,312
and $145,641 at June 30,1996
Deferred taxes 228,880 290,640
Other assets 240,031 253,282
----------- ------------
Total assets $12,948,294 $ 13,154,551
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable - bank $ 214,575 $ 985,000
Current maturities of long term debt -- 599,792
Accounts payable 2,106,555 1,948,404
Accrued expenses and other current liabilities 2,555,230 1,702,126
Accrued restructuring costs 91,000 516,500
Billings in excess of costs and estimated earnings 3,887,372 2,115,142
Income taxes payable 166,474 86,303
----------- ------------
Total current liabilities 9,021,206 7,953,267
Long-term liabilities
Long term debt, net of current maturities -- 2,142,000
Other long-term liabilities 279,020 238,063
----------- ------------
Total liabilities 9,300,226 10,333,330
----------- ------------
Commitments and contingencies (Note 7)
Shareholders' equity
Common stock-authorized 20,000,000 shares $.001 par value,
10,044,108 shares issued and outstanding at June 30, 1997 and
9,882,108 shares issued and outstanding at June 30, 1996 10,044 9,882
Additional paid-in capital 3,576,545 3,505,835
Cumulative translation adjustment 27,095 (90,685)
Retained earnings (accumulated deficit) 34,384 (603,811)
----------- ------------
Total shareholders' equity 3,648,068 2,821,221
----------- ------------
Total liabilities and shareholders' equity $12,948,294 $ 13,154,551
=========== ============
</TABLE>
See notes to the consolidated financial statements
F-3
<PAGE> 29
TOTAL RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues $ 29,443,302 $ 23,715,049
Direct costs 14,941,632 11,001,246
------------ ------------
Gross profit 14,501,670 12,713,803
Operating expenses 13,221,437 13,682,783
Unusual Charges (See Note 11) -- 1,101,500
------------ ------------
Income (loss) from operations 1,280,233 (2,070,480)
Interest expense (202,133) (342,024)
Other income, net 50,050 87,097
------------ ------------
Income (loss) before taxes 1,128,150 (2,325,407)
Provision (benefit) for income taxes 489,955 (842,363)
------------ ------------
Net income (loss) $ 638,195 $ (1,483,044)
============ ============
Earnings (loss) per share $ 0.06 ($ 0.15)
============ ============
Weighted average common shares
outstanding 10,340,418 9,866,398
============ ============
</TABLE>
See notes to the consolidated financial statements
F-4
<PAGE> 30
TOTAL RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
------------ Cumulative Retained Earnings
Additional Translation (Accumulated
Shares Issued Amount Paid-in Capital Adjustment Deficit)
------------- ------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balances, June 30, 1995 9,822,708 $ 9,823 $3,470,429 ($ 36,799) $ 879,233
Exercise of Options 59,400 59 35,406 -- --
Translation Adjustment -- -- -- (53,886) --
Net (Loss), 1996 -- -- -- -- (1,483,044)
---------- ------- ---------- --------- -----------
Balance, June 30, 1996 9,882,108 9,882 3,505,835 (90,685) (603,811)
Exercise of Options 162,000 162 70,710 -- --
Translation Adjustment -- -- -- 117,780 --
Net Income , 1997 -- -- -- -- 638,195
---------- ------- ---------- --------- -----------
Balance, June 30, 1997 10,044,108 $10,044 $3,576,545 $ 27,095 $ 34,384
========== ======= ========== ========= ===========
</TABLE>
See notes to the consolidated financial statements
F-5
<PAGE> 31
TOTAL RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30
---------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 638,195 $(1,483,044)
Adjustments to reconcile net income (loss) to cash
from operating activities:
Depreciation 634,903 681,480
Amortization 237,844 967,585
Accretion of warrants 8,000 16,000
Deferred tax benefit 262,015 (69,558)
Adjustment for foreign currency translation 32,187 (53,886)
(Increase) decrease in assets
Accounts receivable (935,110) (367,294)
Cost and estimated earnings in excess of billing
on uncompleted contracts 496,882 41,974
Income tax refund receivable 841,495 (850,000)
Other current assets 136,047 (83,794)
Other assets 13,251 (48,362)
Increase (decrease) in liabilities
Accounts payable 158,151 407,960
Accrued expenses and other current liabilities 942,376 365,219
Accrued restructuring costs (425,500) 516,500
Billings in excess of costs and estimated
earnings 1,772,230 939,318
Income taxes payable 80,171 (42,193)
Other long-term liabilities 40,957 (136,286)
----------- -----------
4,934,094 801,619
----------- -----------
Cash flows from investing activities:
Purchases of equipment (721,328) (775,338)
Acquisition of certain assets, net of cash
acquired -- (306,965)
Cash expended for capitalized market research
products -- (78,241)
Cash expended for deferred data accumulation -- (455,538)
costs ----------- -----------
(721,328) (1,616,082)
----------- -----------
Cash flows from financing activities:
Repayment of debt (3,512,217) (419,585)
Proceeds from long-term debt -- 1,119,062
Payment under capital lease obligations, net (97,272) (44,350)
Proceeds from issuance of common stock 70,872 35,466
----------- -----------
(3,538,617) 690,593
----------- -----------
Net increase (decrease) in cash and cash
equivalents 674,149 (123,870)
Cash and cash equivalents - beginning 4,201 128,071
----------- -----------
Cash and cash equivalents - end $ 678,350 $ 4,201
=========== ===========
Supplemental disclosure of cash paid
Income taxes $ 90,149 $ 233,435
Interest $ 191,370 $ 345,324
</TABLE>
See notes to the consolidated financial statements
F-6
<PAGE> 32
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1- THE COMPANY
Total Research Corporation ("TRC" or "the Company") was formed in 1975. The
Company performs market research for various Fortune 1000 companies in a broad
spectrum of industries.
The Company services these clients through its locations in Princeton,
Poughkeepsie, Minneapolis, Chicago, Tampa, and London.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Revenue Recognition
The Company employs the percentage of completion method of accounting for
reporting its revenues on its single-client studies, while on multi-client
studies it recognizes revenues when the results are delivered to its clients.
Clients are generally billed in accordance with the terms of the applicable
contracts, which are not necessarily indicative of the stage of completion of
the project.
For single-client studies, the stage of completion and earned revenues are
determined for each project for the applicable period. The amount by which the
value of work completed exceeds billings to clients is carried as a current
asset on the Company's balance sheet and is shown as "costs and estimated
earnings in excess of billings on uncompleted contracts." Billings to clients in
excess of the value of work completed are carried on the Company's balance sheet
as a current liability and are shown as "billings in excess of costs and
estimated earnings."
2. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiary, Total Research Limited, after elimination of material
intercompany accounts and transactions.
3. Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-7
<PAGE> 33
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
4. Cash and Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit and all highly-liquid debt instruments with
original maturities of three months or less.
5. Fixed Assets
Fixed assets are stated at cost. Depreciation is computed using various methods
over the estimated useful lives of the assets: three years for transportation
equipment and five to ten years for office equipment and furnishings. Leasehold
improvements are amortized over the shorter of the economic lives or the
underlying lease term. Repairs and maintenance which do not extend the useful
lives of the related assets are expensed as incurred.
6. Capitalized Market Research Products
The costs of producing the Company's Market Research Products are capitalized
and amortized using the straight-line method over five years or the estimated
remaining periods for which the products provide future economic benefits,
whichever is shorter.
Market Research Products are standardized packages and are comprised of certain
computer software and proven methodologies which are used to process and analyze
data for single-client or multi-client studies.
Capitalization of costs begins on establishment of technological feasibility and
the ongoing assessment of recoverability of capitalized costs; this requires
considerable judgment by management with respect to certain factors including
the anticipated future gross revenue, estimated economic life and changes in
technology. These factors are considered on a product-by-product basis. Total
amortization expense for Capitalized Market Research Products was approximately
$80,000 and $163,000 (which includes a write-down of $150,000 as discussed in
Note 11), for the years ended June 30, 1997 and 1996, respectively.
7. Deferred Data Accumulation Costs
The Company accumulates data across a wide variety of products and industries
for use in its analysis of client-specific data. The costs of accumulating data
related to single-client studies are charged to client projects as incurred. The
costs of accumulating data for use in specific multi-client studies are
capitalized and amortized over five years or the estimated remaining periods for
which the data provides future economic benefits, whichever is shorter. The
assessment of recoverability of such costs requires considerable judgment by
management with respect to certain factors including anticipated future gross
revenue and estimated economic life. These factors are considered on a
database-by-database basis. Total amortization expense for deferred data
accumulation costs was approximately $80,000 and $730,000 (which includes a
write-down of $400,000 as discussed in Note 11), years ended June 30, 1997 and
1996, respectively.
F-8
<PAGE> 34
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
8. Goodwill
Goodwill has been recorded in relation to the excess of the purchase price over
the fair values of the identified assets acquired. The Company amortizes
goodwill over twenty-five years. The carrying value of goodwill is evaluated
periodically in relation to the operating performance and future undiscounted
net cash flows of the underlying business. Adjustments are recorded if the sum
of expected future net cash flows is less than the book value of the goodwill.
9. Stock Option Plan
The Company has elected to follow Accounting Principles Board Opinion No.25,
"Accounting for Stock issue to Employees," (APB 25) and related interpretations
in accounting for its employee stock options. Under this method, compensation
cost is measured as the amount by which the market price of the underlying stock
exceeds the exercise price of the stock option at the date which both the number
of options granted and the exercise price are known.
10. Income Taxes
The provision for income taxes includes Federal, foreign, state and local income
taxes currently payable and receivable and those deferred because of temporary
differences between the financial statement and tax basis of assets and
liabilities. The unremitted earnings of the Company's foreign subsidiary are
considered to be permanently reinvested and are not expected to be remitted to
the parent company.
11. Earnings Per Common Share
Earnings per common share are computed based on the weighted average number of
common shares and common share equivalents outstanding during each period.
Common share equivalents include the dilutive effect of certain stock options
under the treasury stock method. Fully diluted earnings per share have not been
separately presented for the year ended June 30, 1997 since they would not be
materially different.
For the year ended June 30, 1996, the Company experienced a loss per share. The
weighted average number of shares was not affected by stock options as they were
considered to be anti-dilutive due to the loss.
F-9
<PAGE> 35
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
12. Foreign Operations
The assets and liabilities of TR-UK's operations are translated at current
exchange rates, and related translation adjustments are recorded as a separate
component of shareholders' equity. Income statement accounts are translated at
the weighted average rates during the period.
13. Impairment of Long-Lived Assets
During the year ended June 30, 1996, the Company adopted SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, which had no effect on its financial condition or results of
operations. The Company records impairment losses on long-lived assets used in
operations or expected to be disposed when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
14. Presentation
Certain amounts for the year ended June 30, 1996 have been reclassified for
comparative purposes.
F-10
<PAGE> 36
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 3 - CONCENTRATION OF CASH BALANCE
At June 30, 1997, a cash balance of $848,000 was maintained in a bank account
insured by the Federal Deposit Insurance Corporation (FDIC). This balance
exceeds the insured amount of $100,000.
NOTE 4 - FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<CAPTION>
June 30,
--------
1997 1996
---------- ----------
<S> <C> <C>
Equipment $5,346,602 $4,645,145
Leasehold Improvements 304,584 276,071
---------- ----------
5,651,186 4,921,216
Less: accumulated depreciation
and amortization 3,334,556 2,691,011
---------- ----------
$2,316,630 $2,230,205
========== ==========
</TABLE>
Depreciation expense for the years ended June 30, 1997 and 1996 was
approximately $635,000 and $682,000, respectively.
NOTE 5 - NOTES PAYABLE
<TABLE>
<CAPTION>
June 30,
1997 1996
-------- --------
<S> <C> <C>
The Company has a revolving line of credit with an overall limitation of $2.5
million, not to exceed 60% of eligible receivables (including standby letters of
credit of $100,000). Borrowing under the line bear interest at a rate determined
by certain financial covenants. The line of credit expired on June 30, 1998.
The line of credit agreement includes financial covenants such as tangible net
worth, total liabilities to tangible net worth, debt service coverage ratio,
current ratio and quick ratio. $ -- $650,000
TR-UK has a bank overdraft facility of 300,000 with Coutts and Company, London,
England (approximately U.S. $498,000 and $467,000 at June 30, 1997 and 1996.)
The facility bears interest at a rate of 3 percent above the UK Base Rate. At
June 30, 1997 and 1996 the UK Base Rate was 6.5% and 6.75%. 214,575 335,000
-------- --------
$214,575 $985,000
======== ========
</TABLE>
F-11
<PAGE> 37
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D)
NOTE 6 - LONG-TERM DEBT
<TABLE>
<CAPTION>
June 30,
--------
1997 1996
---- ----
<S> <C> <C>
A $3,000,000 term loan repaid in the year ending June 30, 1997 $ -- $ 2,750,000
Discount -- (8,000)
----- -----------
Long-term debt, net of discount -- 2,742,000
Less: current portion -- 600,000
----- -----------
Long-term portion $ -- $ 2,142,000
===========
</TABLE>
At June 30, 1997 the Company had a three year $500,000 term line collateralized
by equipment, furniture and fixtures. Interest is payable at various rates based
on certain financial ratios. At June 30, 1997, the Company has not borrowed
against this line.
F-12
<PAGE> 38
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Operating leases
The Company is committed under various leases for office space. Approximate
future minimum rental payments under non-cancelable leases are as follows:
<TABLE>
<CAPTION>
For the Years Ending
June 30,
--------------------
<S> <C>
1998 1,050,000
1999 980,000
2000 1,130,000
2001 1,110,000
2002 1,020,000
2003 1,020,000
2004 1,070,000
2005 1,070,000
2006 1,070,000
----------
Total minimum payments
required $9,520,000
</TABLE>
In addition to the above minimum rentals, the leases are subject to escalation
clauses covering increases in real estate taxes and operating costs over the
base year. The leases provide for renewal options for periods from two to ten
years. Rental expense charged to operations was approximately $1,572,000 and
$1,030,000 for the fiscal years ended June 30, 1997 and 1996, respectively.
Employment agreements
The Company entered into employment agreements with key management personnel in
January 1997 that extend through June 30, 1999. The agreements contain
provisions for base salaries for the period July 1, 1997 to June 30, 1999 that
total $1,190,000. There is also a bonus arrangement for up to 20% of the base
salary if certain goals are met. If they exceed the goals by more than $20,000,
they will receive an additional 4% of the excess over the goal.
The Company has agreed to enter into a consulting agreement with a member of the
Board of Directors through June 30, 1999. The agreement contains provisions for
a base salary of $175,000 and $200,000 for the years ended June 30, 1998 and
1999. The consultant will receive a bonus based upon corporate financial goals.
If the goals are exceeded by more than $20,000, an additional 2% of the excess
will be received.
F-13
<PAGE> 39
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 8 - INCOME TAXES
Deferred tax attributes resulting from differences between financial accounting
amounts and tax basis of assets and liabilities at June 30 are as follows:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Current assets and liabilities
Allowance for doubtful accounts $ 44,000 $ 44,000
Accrued vacation 79,200 122,400
Retirement plans 83,200 70,400
Accrued royalties 39,100 39,078
Accrued restructuring costs 36,400 206,600
--------- ---------
Net current deferred tax asset $ 281,900 $ 482,478
========= =========
Non-current assets and liabilities
Depreciation ($214,320) ($123,442)
Deferred rental obligation 62,000 14,113
Capitalized market research products 178,800 251,136
Goodwill 81,400 (3,200)
State net operating loss carry forward 121,000 157,980
Other -- (5,947)
--------- ---------
Net non-current deferred tax asset $ 228,880 $ 290,640
========= =========
</TABLE>
Based on the Company's history of prior operating earnings and its expectations
for the future, which include the Company's restructuring efforts to improve
performance, management has determined that the future operating income of the
Company will more likely than not be sufficient to recognize fully these net
deferred tax assets.
As of June 30,1997, the Company has available a New Jersey net operating loss
carry forward for tax purposes of approximately $2,000,000 that begins to expire
in 2003.
The source of income (loss) before income taxes for the year ended June 30 is as
follows:
<TABLE>
<CAPTION>
1997 1996
---------- -----------
<S> <C> <C>
United States $ 808,217 $(2,521,251)
United Kingdom 319,933 195,844
---------- -----------
Total $1,128,150 $(2,325,407)
========== ===========
</TABLE>
F-14
<PAGE> 40
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
The components of the provision (benefit) for income taxes for the years ended
June 30 are as follows:
<TABLE>
<CAPTION>
June 30,
--------
1997 1996
--------- ---------
<S> <C> <C>
Current expense (benefit):
Federal $ 99,600 $(850,000)
State -- --
United Kingdom 128,340 77,195
--------- ---------
227,940 (772,805)
Deferred expense (benefit): 262,015 (69,558)
--------- ---------
$ 489,955 $(842,363)
========= =========
</TABLE>
A reconciliation of the U.S. statutory tax rate to the effective tax rate for
the year ended June 30 is as follows:
<TABLE>
<CAPTION>
June 30,
--------
1997 1996
--------- ---------
<S> <C> <C>
Computed (benefit) provision at the $ 383,571
statutory tax rate $(790,638)
Permanent differences 42,904
International rate differences 17,118 15,667
State income tax, net 48,493 (151,275)
Alternative minimum tax (40,000) 40,000
Other 37,869 43,883
--------- ---------
Income tax (benefit) provision $ 489,955 $(842,363)
========= =========
</TABLE>
F-15
<PAGE> 41
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 9 - EMPLOYEE BENEFIT AND DEFERRED COMPENSATION
The Company maintains a 401(k) Savings Plan for the benefit of all its
employees. The 401(k) Savings Plan is funded through the Company's and
participating employees' contributions and generally provides that employees may
contribute, through payroll reductions, from 1 percent to 15 percent of their
compensation. The Company made a matching contribution in an amount equal to 50
percent of each participating employee's contribution up to 3 percent of the
employee's compensation. Company contributions were approximately $213,000 and
$170,000, for fiscal years ended June 30, 1997 and 1996, respectively.
NOTE 10 - STOCK OPTION PLANS
The Company's 1986 Stock Option Plan has authorized the grant of options to
personnel for up to 1,800,000 shares of the Company's common stock. Under the
Plan, options may be granted at not less than fair market value on the date of
grant (85% of fair market value with respect to non-qualified options). Options
granted under the plan become exercisable immediately and expire five years
after the date of grant (five years and one day with respect to non-qualified
options). On April 16, 1996 the Company adopted the 1995 Stock Incentive Plan
and the 1995 Stock Incentive Plan for Total Research, Ltd. and froze the 1986
Stock Option Plan.
The 1995 Stock Incentive Plan has the authority to issue 1,750,000 options to
existing and future Officers, Directors, Employees and Consultants of the
Company. Incentive Stock Options or Non-Statutory Stock Options become
exercisable immediately and may be issued for a term of no more than five years
from the date of grant, at an option price not less than 100% of the fair market
value of the Company's common stock at the date of grant. In addition, any
non-employee director and/or advisory board director shall be automatically
granted an option to purchase 100,000 shares of common stock for each year that
such person serves as a director.
The 1995 Stock Incentive Plan for Total Research, Ltd. has the authority to
issue 245,000 options. This plan has similar terms and conditions to the 1995
Stock Incentive Plan.
Pro forma information regarding net income and earnings per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for June 30, 1997 and 1996 respectively: risk-free interest rates of
6.50% and 6.88%; dividend yields of 0% and 0%; volatility factors of the
expected market price of the Company's common stock of .76 and .76; and a
weighted average expected life of the option of 5 years.
F-16
<PAGE> 42
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the options
is recorded in expense in the year issued since most options vest when issued.
In accordance with provisions in certain employment and consulting agreements,
1,500,000 options were issued in the year ended June 30, 1997 that do not vest
until June 30, 1999 (the termination date of the agreements). Since we expect
these options to fully vest at that date, the compensation expense arising from
those stock options are recorded in the current year. The Company's pro forma
information follows:
<TABLE>
<CAPTION>
June 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Pro forma net income (loss) 83,116 (1,640,911)
Pro forma income(loss) per share 0.01 (0.17)
</TABLE>
There was no compensation expense recorded from stock options for the years
ended June 30, 1997 and 1996.
A summary of the Company's stock option activity, and related information for
the years ended June 30, follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- --------------------------
Weighted - Weighted -
Options Average Options Average
(000) Exercise Price (000) Exercise Price
----- -------------- ----- --------------
<S> <C> <C> <C> <C>
Outstanding - beginning of year 1,411 $0.69 1,124 $0.57
Granted 1,696 0.82 352 1.12
Exercised (162) (0.44) (41) (0.67)
Forfeited or Expired (258) (0.87) (24) (1.06)
Outstanding - end of year 2,687 $0.77 1,411 $0.69
====== ===== ====== =====
Exercisable - end of year 1,187 $0.72 1,411 $0.69
Weighted - average fair value of
options granted during the year:
Where exercise price equals
stock price $0.55 $0.75
</TABLE>
F-17
<PAGE> 43
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
Following is a summary of the status of stock options outstanding at June 30,
1997:
<TABLE>
<CAPTION>
Outstanding Options Exercisable Options
------------------------------------------------ --------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Contractual Exercise Exercise
Price Range Number Life Price Number Price
----------- ------ ----------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
$.00 - $.50 427,850 0.80 years $0.43 427,850 $0.43
$.51 - $1.00 2,163,500 4.2 years 0.81 663,500 0.80
$1.01 - $1.50 53,000 3.6 years 1.23 53,000 1.23
$1.51 - $2.00 37,500 3.2 years 1.77 37,500 1.77
$2.01 - $2.50 5,000 2.8 years 2.13 5,000 2.13
</TABLE>
NOTE 11 - UNUSUAL CHARGES
During the fourth quarter of 1996, the Company announced a plan to restructure
and consolidate operations, concentrate resources, and better position itself to
achieve its strategic growth objectives. The plan resulted in a $1,101,500
pre-tax charge. The charge included a write-down of capitalized market research
products and deferred data accumulation costs of $550,000, severance costs of
$406,500 and charges to develop and implement a plan of $145,000.
F-18
<PAGE> 44
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 12 - SEGMENT INFORMATION
The Company operates in one principal industry segment: market research
services. Geographic financial information for the year ended June 30 (in 000's)
is as follows:
<TABLE>
<CAPTION>
June 30,
1997 1996
-------- --------
<S> <C> <C>
Revenue - United States $ 20,781 $ 18,210
- Europe 8,662 6,236
- Eliminations -- (731)
-------- --------
Totals $ 29,443 $ 23,715
======== ========
Operating Income (Loss) - United States $ 912 $ (2,320)
- Europe 368 250
- Eliminations -- --
-------- --------
Totals $ 1,280 $ (2,070)
======== ========
Identifiable Assets - United States $ 10,185 $ 11,231
- Europe 5,111 3,790
- Eliminations (2,348) (1,866)
Totals $ 12,948 $ 13,155
======== ========
</TABLE>
F-19
<PAGE> 45
TOTAL RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
NOTE 13 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for
1997 and 1996 (in thousands, except for earnings per share):
<TABLE>
<CAPTION>
1997 FIRST QTR. SECOND QTR. THIRD QTR. FOURTH QTR.
- ---- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenue $6,561,501 $6,765,057 $7,470,957 $8,645,787
Gross Margin $3,275,753 $3,407,130 $2,688,587 $5,130,200
Net Income $ 21,957 $ 78,350 $ 219,833 $ 318,055
Earnings per share $ .00 $ .01 $ .02 $ .03
</TABLE>
<TABLE>
<CAPTION>
1996 FIRST QTR. SECOND QTR. THIRD QTR. FOURTH QTR.
- ---- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenue $5,305,127 $5,741,807 $6,262,864 $ 6,405,251
Gross Margin $2,819,002 $2,574,202 $3,398,414 $ 3,922,185
Net Income $ 175,098 $ 6,903 $ 945 $(1,665,990)
Earnings per share $ .02 $ .00 $ .00 $ (.17)
</TABLE>
F-20
<PAGE> 46
TOTAL RESEARCH CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, Total Research Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: September 29, 1997 By: /s/ LORIN ZISSMAN
--------------------- -------------------------------------------
LORIN ZISSMAN, Chief Executive Officer and
Chairman of the Board of Directors
Dated: September 29, 1997 By: /s/ ERIC C. ZISSMAN
--------------------- -------------------------------------------
ERIC C. ZISSMAN, Chief Financial Officer
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, this report has been signed on behalf of Total Research Corporation
and in the capacities and on the dates indicated.
Dated: September 29, 1997 By: /s/ LORIN ZISSMAN
--------------------- -------------------------------------------
LORIN ZISSMAN, Chief Executive Officer and
Chairman of the Board of Directors
Dated: September 29, 1997 By: /s/ AL ANGRISANI
--------------------- -------------------------------------------
AL ANGRISANI, Director
Dated: September 29, 1997 By: /s/ HUGH DEVINE
--------------------- -------------------------------------------
HUGH DEVINE, Director
Dated: September 29, 1997 By: /s/ WILLIAM N. LEVY
--------------------- -------------------------------------------
WILLIAM N. LEVY, Esq., Director
Dated: September 29, 1997 By: /s/ ANTHONY GALLI
--------------------- -------------------------------------------
ANTHONY GALLI, Director
Dated: September 29, 1997 By: /s/ J. EDWARD SHRAWDER
--------------------- -------------------------------------------
J. EDWARD SHRAWDER, Director
<PAGE> 47
TOTAL RESEARCH CORPORATION
SIGNATURES
(CONTINUED)
Dated: September 29, 1997 By: /s/ JOHN MORTON
--------------------- -------------------------------------------
JOHN MORTON, Senior Vice President,
Strategic Marketing Services
Dated: September 29, 1997 By: /s/ DR. BASHIR DATOO
--------------------- -------------------------------------------
DR. BASHIR DATOO, Senior Vice President,
Strategic Marketing Services
Dated: September 29, 1997 By: /s/ ROGER THOMAS
--------------------- -------------------------------------------
ROGER THOMAS, Director, President, Strategic
Marketing Services
Dated: September 29, 1997 By: /s/ ERIC C. ZISSMAN
--------------------- -------------------------------------------
ERIC C. ZISSMAN, Chief Financial Officer
Dated: September 29, 1997 By: /s/ THERESA FLANAGAN
--------------------- -------------------------------------------
THERESA FLANAGAN, President,
Quality Management
Dated: September 29, 1997 By: /s/ PATTI HOFFMAN
--------------------- -------------------------------------------
PATTI HOFFMAN, President,
U.S. Regional Offices
Dated: September 29, 1997 By: /s/ MARK NISSENFELD
--------------------- -------------------------------------------
MARK NISSENFELD, President,
Global Health Care
Dated: September 29, 1997 By: /s/ WILLIAM VAN ZANDT
--------------------- -------------------------------------------
WILLIAM VAN ZANDT, Executive Vice President,
Global Health Care
- --------
(2) Mr. Devine retired as President of the Company in July, 1996.
<PAGE> 1
EXHIBIT 1
[TOTAL RESEARCH CORPORATION letterhead]
TOTAL RESEARCH CORPORATION EMPLOYMENT AGREEMENT
1. INTRODUCTION
This document represents an employment agreement between Total Research
Corporation, hereafter referred to as "the Company" and Roger Thomas hereafter
referred to as "the Employee". This agreement will serve as the guide and the
financial arrangement for the Company and the Employee working in partnership in
meeting all of the business and profitability goals of the Company from January
2, 1997 through June 30, 1999. This agreement represents the entire agreement
between the parties with respect to the subjects hereof, and supersedes all
prior agreements and understandings.
This Employment Agreement will automatically renew for two (2) additional one
(1) year periods at the end of the contract period referenced above. Such
continuation of employment will be based on the same financial terms and
conditions covered under this agreement except for those that may be negotiated
by either party within ninety (90) days prior to the end of this employment
agreement.
2. DUTIES AND RESPONSIBILITIES
The employee will serve as President Strategic Marketing Services Division. In
this capacity the employee will be responsible for the overall management and
operation of the Company's strategic marketing market research practice as well
as the London operations and all international strategic alliances. The Employee
shall also perform further duties as are incidental or implied, consistent with
the background, training and qualifications of the Employee or may be reasonably
delegated by the Board of Directors. The Employee shall devote full time to
his/her employment and expend best efforts on behalf of the Company. The
Employee agrees to be an active member of the Management Council.
The Employee will report directly to the Vice Chairman and/or the Board of
Directors as the case may be.
Employee Initials RT Date 20/6 Company Initials LZ Date: 4/22/97
<PAGE> 2
ROGER THOMAS EMPLOYMENT AGREEMENT CONTINUED PAGE 2
The Employee is bound to all of the policies and procedures established by the
Company.
3. FINANCIAL
Base Salary:
In consideration to the Employee for services rendered under this Agreement, and
in exchange for full compliance with this Agreement, the Company agrees to
commit to and pay the employee $60,0000 for the period January 2, 1997 through
June 30,1997, $120,000 for the period July 1, 1997 through June 30, 1998 and
$130,000 for the period July 1, 1998 through June 30, 1999. The employee will be
paid in United Kingdom currency equivalent to the dollar amounts indicated in
this agreement. The increase in compensation from one period to another is
contingent on satisfactory performance in the prior period.
Satisfactory performance is both financial and non-financial as reflected in the
goal addendum attached to this agreement and will be evaluated by the Vice
Chairman with ratification by the Board of Directors.
Payment of base salary will be on normally scheduled Company paydays.
Bonus:
The Employee will be entitled to a bonus based on a two pronged system; (1). Is
based on the Employee's division's performance and (2). is based on the
Company's corporate performance. A separate addendum to this employment
agreement will establish the goals for fiscal years 1998 and 1999 which reflects
this two pronged goal plan. Unless otherwise approved by the Board of Directors,
this will be the only bonus plan in which the Employee is entitled to
participate.
Under this bonus arrangement the Employee will receive twenty (20) percent of
their base salary for meeting the established fiscal year corporate and
divisional goal. For every $20,000 that the divisional goal exceeds plan, the
Employee will receive an additional four (4) percent of the $20,000 excess.
Should the plan fall slightly below goal i.e., ninety-five (95) percent of goal,
the Employee will be entitled to a reduced bonus. The reduced bonus will pay the
Employee ten (10) percent of salary if ninety-five (95) to ninety-nine and nine-
tenths (99.9) percent of the goal is achieved.
Employee Initials: RT Date 20/6 Company Initials LZ Date 4/22/97
<PAGE> 3
ROGER THOMAS EMPLOYMENT AGREEMENT CONTINUED PAGE 3
The bonus entitlement for fiscal year 1997 is covered in a separate document
which is attached to this agreement.
All bonuses will be paid within one hundred and five (105) days after the end of
the fiscal year.
The Employee must be employed through the end of any fiscal year in order to be
entitled to receipt of any eligible bonus for that fiscal year.
Stock Options:
The Employee will be issued 250,000 stock options effective January 2, 1997.
These options are for services to be performed until June 30, 1999 and vest on
that date. Vesting is contingent on the employee remaining employed through the
vesting date. If the Employee's performance is terminated for any reason other
than for performance and/or cause all of the entitled options will immediately
vest on the date of termination.
4. OTHER EMPLOYMENT ISSUES
By signing and agreeing to this employment agreement, the Employee is committing
to two and one-half (2.5) years of employment with the Company. The two and one
half (2.5) years begin on January 2, 1997 and conclude on June 30, 1999.
The unsuccessful achievement of established goals, in keeping with Company
policy, could result in the involuntary termination of employment for
non-performance.
5. CODE OF ETHICS AND NON COMPETE
As an officer of the Company, the Employee must abide by the Company's Code of
Ethics. The entire Company's Code of Ethics is attached to this document.
Employee Initials RT Date 20/6 Company Initials LZ Date: 4/22/97
<PAGE> 4
ROGER THOMAS EMPLOYMENT AGREEMENT CONTINUED PAGE 4
The Employee's signature on this document will acknowledge that they have read,
understand and agree to adhere to all of the contents of the ethics policies.
As an officer of the Company, the Employee agrees that they will not on their
own account or jointly with or as a manager, agent, officer, employee,
consultant or otherwise on behalf of any other person, firm or corporation
directly or indirectly for a period of two (2) years after the termination of
this employment agreement:
- - Solicit business from any person, firm or company who is a client of or
in the habit of dealing with the Company.
- - Solicit or entice away or endeavor to solicit or entice away any
employee of the Company.
- - Use or procure to use with any business of any corporate or business
name that is identical to or likely to be confused with the name of the
Company, Total Research Corporation.
- - Do or say anything that is harmful to the reputation of the Company or
which may lead any person or persons to cease to do business with the
Company.
Additionally, as an officer of the Company, the Employee further acknowledge
that they will be exposed to and or come in contact with various proprietary
information belonging to the Company and/or methodologies devised by employees
of the Company for the purpose of effectuating the Company's products to
clients. The Employee agrees that they will not employ such proprietary
information and/or methodologies for use with another employer or customer or
anyone else upon termination of your employment relationship with the Company.
Employee Initials RT Date 20/6 Company Initials LZ Date: 4/22/97
<PAGE> 5
ROGER THOMAS EMPLOYMENT AGREEMENT CONTINUED PAGE 5
Please acknowledge your understanding and compliance with the terms of this
Employment Agreement by signing on the line provided below. A second copy is
provided for your personal records.
N WITNESS WHEREOF, the parties hereto have executed the Agreement.
ACKNOWLEDGED, AGREED AND CONSENTED:
By: /s/ ROGER THOMAS Date: 20/6
------------------------------ ------------------------------
Signature
For Total Research Corporation:
By: /s/ LORIN ZISSMAN Date: 4/22/97
------------------------------ ------------------------------
Signature
LORIN ZISSMAN CHAIRMAN/CEO
----------------------------------
Name and Title
<PAGE> 6
[TOTAL RESEARCH CORPORATION letterhead]
TOTAL RESEARCH CORPORATION EMPLOYMENT AGREEMENT
1. INTRODUCTION
This document represents an employment agreement between Total Research
Corporation, hereafter referred to as "the Company" and Mark Nissenfeld
hereafter referred to as "the Employee". This agreement will serve as the guide
and the financial arrangement for the Company and the Employee working in
partnership in meeting all of the business and profitability goals of the
Company from January 2, 1997 through June 30, 1999. This agreement represents
the entire agreement between the parties with respect to the subjects hereof,
and supersedes all prior agreements and understandings.
This Employment Agreement will automatically renew for two (2) additional one
(1) year periods at the end of the contract period referenced above. Such
continuation of employment will be based on the same financial terms and
conditions covered under this agreement except for those that may be negotiated
by either party within ninety (90) days prior to the end of this employment
agreement.
2. DUTIES AND RESPONSIBILITIES
The employee will serve as President Global Health Care. In this capacity the
employee will be responsible for the overall management and operation of the
Company's world wide health care market research practice. The Employee shall
also perform further duties as are incidental or implied, consistent with the
background, training and qualifications of the Employee or may be reasonably
delegated by the Board of Directors. The Employee shall devote full time to
his/her employment and expend best efforts on behalf of the Company. The
Employee agrees to be an active member of the Management Council.
The Employee will report directly to the Vice Chairman and/or the Board of
Directors as the case may be.
Employee Initials MN Date 5/10/97 Company Initials LZ Date: 4/22/97
<PAGE> 7
MARK NISSENFELD EMPLOYMENT AGREEMENT CONTINUED PAGE 2
The Employee is bound to all of the policies and procedures established by the
Company.
3. FINANCIAL
Base Salary:
In consideration to the Employee for services rendered under this Agreement, and
in exchange for full compliance with this Agreement, the Company agrees to
commit to and pay the employee $55,0000 for the period January 2, 1997 through
June 30,1997, $120,000 for the period July 1, 1997 through June 30, 1998 and
$130,000 for the period July 1, 1998 through June 30, 1999. The increase in
compensation from one period to another is contingent on satisfactory
performance in the prior period.
Satisfactory performance is both financial and non-financial as reflected in the
goal addendum attached to this agreement and will be evaluated by the Vice
Chairman with ratification by the Board of Directors.
Payment of base salary will be on normally scheduled Company paydays.
Bonus:
The Employee will be entitled to a bonus based on a two pronged systems; (1). is
based on the Employee's division's performance and (2). is based on the
Company's corporate performance. A separate addendum to this employment
agreement will establish the goals for fiscal years 1998 and 1999 which reflects
this two pronged goal plan. Unless otherwise approved by the Board of Directors,
this will be the only bonus plan in which the Employee is entitled to
participate.
Under this bonus arrangement the Employee will receive twenty (20) percent of
their base salary for meeting the established fiscal year corporate and
divisional goal. For every $20,000 that the divisional goal exceeds plan, the
Employee will receive an additional four (4) percent of the $20,000 excess.
Should the plan fall slightly below goal i.e., ninety-five (95) percent of goal,
the Employee will be entitled to a reduced bonus. The reduced bonus will pay the
Employee ten (10) percent of salary if ninety-five (95) to ninety-nine and nine-
tenths (99.9) percent of the goal is achieved.
Employee Initials MN Date 5/10/97 Company Initials LZ Date: 4/22/97
<PAGE> 8
MARK NISSENFELD EMPLOYMENT AGREEMENT CONTINUED PAGE 3
The bonus entitlement for fiscal year 1997 is covered in a separate document
which is attached to this agreement.
All bonuses will be paid within one hundred and five (105) days after the end of
the fiscal year.
The Employee must be employed through the end of any fiscal year in order to be
entitled to receipt of any eligible bonus for that fiscal year.
Stock Options:
The Employee will be issued 250,000 stock options effective January 2, 1997.
These options are for services to be performed until June 30, 1999 and vest on
that date. Vesting is contingent on the employee remaining employed through the
vesting date. If the Employee's performance is terminated for any reason other
than for performance and/or cause all of the entitled options will immediately
vest on the date of termination.
4. OTHER EMPLOYMENT ISSUES
By signing and agreeing to this employment agreement, the Employee is committing
to two and one-half (2.5) years of employment with the Company. The two and one
half (2.5) years begin on January 2, 1997 and conclude on June 30, 1999.
The unsuccessful achievement of established goals, in keeping with Company
policy, could result in the Employee's employment being involuntary terminated
for non-performance.
Additionally, the Employee is entitled to all benefits offered by the Company in
accordance with Company policy.
5. CODE OF ETHICS AND NON COMPETE
As an officer of the Company, the Employee must abide by the Company's Code of
Ethics. The entire Company's Code of Ethics is attached to this document.
Employee Initials MN Date 5/10/97 Company Initials LZ Date: 4/22/97
<PAGE> 9
MARK NISSENFELD EMPLOYMENT AGREEMENT CONTINUED PAGE 4
The Employee's signature on this document will acknowledge that they have read,
understand and agree to adhere to all of the contents of the ethics policies.
As an officer of the Company, the Employee agrees that they will not on their
own account or jointly with or as a manager, agent, officer, employee,
consultant or otherwise on behalf of any other person, firm or corporation
directly or indirectly for a period of two (2) years after the termination of
this employment agreement:
- - Solicit business from any person, firm or company who is a client of or
in the habit of dealing with the Company.
- - Solicit or entice away or endeavor to solicit or entice away any
employee of the Company.
- - Use or procure to use with any business of any corporate or business
name that is identical to or likely to be confused with the name of the
Company, Total Research Corporation.
- - Do or say anything that is harmful to the reputation of the Company or
which may lead any person or persons to cease to do business with the
Company.
Additionally, as an officer of the Company, the Employee further acknowledge
that they will be exposed to and or come in contact with various proprietary
information belonging to the Company and/or methodologies devised by employees
of the Company for the purpose of effectuating the Company's products to
clients. The Employee agrees that they will not employ such proprietary
information and/or methodologies for use with another employer or customer or
anyone else upon termination of your employment relationship with the Company.
Employee Initials MN Date 5/10/97 Company Initials LZ Date: 4/22/97
<PAGE> 10
MARK NISSENFELD EMPLOYMENT AGREEMENT CONTINUED PAGE 5
Please acknowledge your understanding and compliance with the terms of this
Employment Agreement by signing on the line provided below. A second copy is
provided for your personal records.
N WITNESS WHEREOF, the parties hereto have executed the Agreement.
ACKNOWLEDGED, AGREED AND CONSENTED:
By: /s/ MARK NISSENFELD Date: 5/10/97
------------------------------ ------------------------------
Signature
For Total Research Corporation:
By: /s/ LORIN ZISSMAN Date: 4/22/97
------------------------------ ------------------------------
Signature
LORIN ZISSMAN CHAIRMAN/CEO
----------------------------------
Name and Title
<PAGE> 11
[TOTAL RESEARCH CORPORATION letterhead]
TOTAL RESEARCH CORPORATION EMPLOYMENT AGREEMENT
1. INTRODUCTION
This document represents an employment agreement between Total Research
Corporation, hereafter referred to as "the Company" and Patti Hoffman hereafter
referred to as "the Employee". This agreement will serve as the guide and the
financial arrangement for the Company and the Employee working in partnership in
meeting all of the business and profitability goals of the Company from January
2, 1997 through June 30, 1999. This agreement represents the entire agreement
between the parties with respect to the subjects hereof, and supersedes all
prior agreements and understandings.
This Employment Agreement will automatically renew for two (2) additional one
(1) year periods at the end of the contract period referenced above. Such
continuation of employment will be based on the same financial terms and
conditions covered under this agreement except for those that may be negotiated
by either party within ninety (90) days prior to the end of this employment
agreement.
2. DUTIES AND RESPONSIBILITIES
The employee will serve as President US Regional Offices. In this capacity the
employee will be responsible for the overall management and operation of the
Company's non headquarters offices. Additionally the Employee will be
responsible for the planning, directing and coordinating of the company's human
resources function worldwide. The Employee shall also perform further duties as
are incidental or implied, consistent with the background, training and
qualifications of the Employee or may be reasonably delegated by the Board of
Directors. The Employee shall devote full time to his/her employment and expend
best efforts on behalf of the Company. The Employee agrees to be an active
member of the Management Council.
The Employee will report directly to the Vice Chairman and/or the Board of
Directors as the case may be.
Employee Initials PH Date 4/29 Company Initials LZ Date: 4/22/97
<PAGE> 12
PATTI HOFFMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 2
The Employee is bound to all of the policies and procedures established by the
Company.
3. FINANCIAL
Base Salary:
In consideration to the Employee for services rendered under this Agreement, and
in exchange for full compliance with this Agreement, the Company agrees to
commit to and pay the employee $50,0000 for the period January 2, 1997 through
June 30,1997, $110,000 for the period July 1, 1997 through June 30, 1998 and
$120,000 for the period July 1, 1998 through June 30, 1999. The increase in
compensation from one period to another is contingent on satisfactory
performance in the prior period.
Satisfactory performance is both financial and non-financial as reflected in the
goal addendum attached to this agreement and will be evaluated by the Vice
Chairman with ratification by the Board of Directors.
Payment of base salary will be on normally scheduled Company paydays.
Bonus:
The Employee will be entitled to a bonus based on a two pronged system; (1). Is
based on the Employee's division's performance and (2). is based on the
Company's corporate performance. A separate addendum to this employment
agreement will establish the goals for fiscal years 1998 and 1999 which reflects
this two pronged goal plan. Unless otherwise approved by the Board of
Directors, this will be the only bonus plan in which the Employee is entitled
to participate.
Under this bonus arrangement the Employee will receive twenty (20) percent of
their base salary for meeting the established fiscal year corporate and
divisional goal. For every $20,000 that the divisional goal exceeds plan, the
Employee will receive an additional four (4) percent of the $20,000 excess.
Should the plan fall slightly below goal i.e., ninety-five (95) percent of goal,
the Employee will be entitled to a reduced bonus. The reduced bonus will pay the
Employee ten (10) percent of salary if ninety-five (95) to ninety-nine and nine-
tenths (99.9) percent of the goal is achieved.
Employee Initials PH Date 4/29 Company Initials LZ Date: 4/22/97
<PAGE> 13
PATTI HOFFMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 3
The bonus entitlement for fiscal year 1997 is covered in a separate document
which is attached to this agreement.
All bonuses will be paid within one hundred and five (105) days after the end of
the fiscal year.
The Employee must be employed through the end of any fiscal year in order to be
entitled to receipt of any eligible bonus for that fiscal year.
Stock Options:
The Employee will be issued 250,000 stock options effective January 2, 1997.
These options are for services to be performed until June 30, 1999 and vest on
that date. Vesting is contingent on the employee remaining employed through the
vesting date. If the Employee's performance is terminated for any reason other
than for performance and/or cause all of the entitled options will immediately
vest on the date of termination.
4. OTHER EMPLOYMENT ISSUES
By signing and agreeing to this employment agreement, the Employee is committing
to two and one-half (2.5) years of employment with the Company. The two and one
half (2.5) years begin on January 2, 1997 and conclude on June 30, 1999.
The unsuccessful achievement of established goals, in keeping with Company
policy, could result in the Employee's employment being involuntary terminated
for non-performance.
Additionally, the Employee is entitled to all benefits offered by the Company in
accordance with Company policy.
5. CODE OF ETHICS AND NON COMPETE
As an officer of the Company, the Employee must abide by the Company's Code of
Ethics. The entire Company's Code of Ethics is attached to this document.
Employee Initials PH Date 4/29 Company Initials LZ Date: 4/22/97
<PAGE> 14
PATTI HOFFMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 4
The Employee's signature on this document will acknowledge that they have read,
understand and agree to adhere to all of the contents of the ethics policies.
As an officer of the Company, the Employee agrees that they will not on their
own account or jointly with or as a manager, agent, officer, employee,
consultant or otherwise on behalf of any other person, firm or corporation
directly or indirectly for a period of two (2) years after the termination of
this employment agreement:
- - Solicit business from any person, firm or company who is a client of or
in the habit of dealing with the Company.
- - Solicit or entice away or endeavor to solicit or entice away any
employee of the Company.
- - Use or procure to use with any business of any corporate or business
name that is identical to or likely to be confused with the name of the
Company, Total Research Corporation.
- - Do or say anything that is harmful to the reputation of the Company or
which may lead any person or persons to cease to do business with the
Company.
Additionally, as an officer of the Company, the Employee further acknowledge
that they will be exposed to and or come in contact with various proprietary
information belonging to the Company and/or methodologies devised by employees
of the Company for the purpose of effectuating the Company's products to
clients. The Employee agrees that they will not employ such proprietary
information and/or methodologies for use with another employer or customer or
anyone else upon termination of your employment relationship with the Company.
Employee Initials PH Date 4/29 Company Initials LZ Date: 4/22/97
<PAGE> 15
PATTI HOFFMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 5
Please acknowledge your understanding and compliance with the terms of this
Employment Agreement by signing on the line provided below. A second copy is
provided for your personal records.
N WITNESS WHEREOF, the parties hereto have executed the Agreement.
ACKNOWLEDGED, AGREED AND CONSENTED:
By: /s/ PATTI HOFFMAN Date: April 29, 1997
------------------------------ ------------------------------
Signature
For Total Research Corporation:
By: /s/ LORIN ZISSMAN Date: 4/22/97
------------------------------ ------------------------------
Signature
LORIN ZISSMAN CHAIRMAN/CEO
----------------------------------
Name and Title
<PAGE> 16
[TOTAL RESEARCH CORPORATION letterhead]
TOTAL RESEARCH CORPORATION EMPLOYMENT AGREEMENT
1. INTRODUCTION
This document represents an employment agreement between Total Research
Corporation, hereafter referred to as "the Company" and Terri Flanagan hereafter
referred to as "the Employee". This agreement will serve as the guide and the
financial arrangement for the Company and the Employee working in partnership in
meeting all of the business and profitability goals of the Company from January
2, 1997 through June 30, 1999. This agreement represents the entire agreement
between the parties with respect to the subjects hereof, and supersedes all
prior agreements and understandings.
This Employment Agreement will automatically renew for two (2) additional one
(1) year periods at the end of the contract period referenced above. Such
continuation of employment will be based on the same financial terms and
conditions covered under this agreement except for those that may be negotiated
by either party within ninety (90) days prior to the end of this employment
agreement.
2. DUTIES AND RESPONSIBILITIES
The employee will serve as President Quality Management Division. In this
capacity the employee will be responsible for the overall management and
operation of the Company's quality managment market research practice. The
Employee shall also perform further duties as are incidental or implied,
consistent with the background, training and qualifications of the Employee or
may be reasonably delegated by the Board of Directors. The Employee shall devote
full time to his/her employment and expend best efforts on behalf of the
Company. The Employee agrees to be an active member of the Management Council.
The Employee will report directly to the Vice Chairman and/or the Board of
Directors as the case may be.
Employee Initials TF Date 5/22/97 Company Initials LZ Date: 4/22/97
<PAGE> 17
TERRI FLANAGAN EMPLOYMENT AGREEMENT CONTINUED PAGE 2
The Employee is bound to all of the policies and procedures established by the
Company.
3. FINANCIAL
Base Salary:
In consideration to the Employee for services rendered under this Agreement, and
in exchange for full compliance with this Agreement, the Company agrees to
commit to and pay the employee $50,0000 for the period January 2, 1997 through
June 30,1997, $110,000 for the period July 1, 1997 through June 30, 1998 and
$120,000 for the period July 1, 1998 through June 30, 1999. The increase in
compensation from one period to another is contingent on satisfactory
performance in the prior period.
Satisfactory performance is both financial and non-financial as reflected in the
goal addendum attached to this agreement and will be evaluated by the Vice
Chairman with ratification by the Board of Directors.
Payment of base salary will be on normally scheduled Company paydays.
Bonus:
The Employee will be entitled to a bonus based on a two pronged system; (1). Is
based on the Employee's division's performance and (2). is based on the
Company's corporate performance. A separate addendum to this employment
agreement will establish the goals for fiscal years 1998 and 1999 which reflects
this two pronged goal plan. Unless otherwise approved by the Board of Directors,
this will be the only bonus plan in which the Employee is entitled to
participate.
Under this bonus arrangement the Employee will receive twenty (20) percent of
their base salary for meeting the established fiscal year corporate and
divisional goal. For every $20,000 that the divisional goal exceeds plan, the
Employee will receive an additional four (4) percent of the $20,000 excess.
Should the plan fall slightly below goal i.e., ninety-five (95) percent of goal,
the Employee will be entitled to a reduced bonus. The reduced bonus will pay the
Employee ten (10) percent of salary if ninety-five (95) to ninety-nine and nine-
tenths (99.9) percent of the goal is achieved.
Employee Initials TF Date 5/22/97 Company Initials LZ Date: 4/22/97
<PAGE> 18
TERRI FLANAGAN EMPLOYMENT AGREEMENT CONTINUED PAGE 3
The bonus entitlement for fiscal year 1997 is covered in a separate document
which is attached to this agreement.
All bonuses will be paid within one hundred and five (105) days after the end of
the fiscal year.
The Employee must be employed through the end of any fiscal year in order to be
entitled to receipt of any eligible bonus for that fiscal year.
Stock Options:
The Employee will be issued 250,000 stock options effective January 2, 1997.
These options are for services to be performed until June 30, 1999 and vest on
that date. Vesting is contingent on the employee remaining employed through the
vesting date. If the Employee's performance is terminated for any reason other
than for performance and/or cause all of the entitled options will immediately
vest on the date of termination.
4. OTHER EMPLOYMENT ISSUES
By signing and agreeing to this employment agreement, the Employee is committing
to two and one-half (2.5) years of employment with the Company. The two and one
half (2.5) years begin on January 2, 1997 and conclude on June 30, 1999.
The unsuccessful achievement of established goals, in keeping with Company
policy, could result in the involuntary termination of employment for
non-performance.
Additionally, the Employee is entitled to all benefits offered by the Company in
accordance with Company policy.
5. CODE OF ETHICS AND NON COMPETE
As an officer of the Company, the Employee must abide by the Company's Code of
Ethics. The entire Company's Code of Ethics is attached to this document.
Employee Initials TF Date 5/22/97 Company Initials LZ Date: 4/22/97
<PAGE> 19
TERRI FLANAGAN EMPLOYMENT AGREEMENT CONTINUED PAGE 4
The Employee's signature on this document will acknowledge that they have read,
understand and agree to adhere to all of the contents of the ethics policies.
As an officer of the Company, the Employee agrees that they will not on their
own account or jointly with or as a manager, agent, officer, employee,
consultant or otherwise on behalf of any other person, firm or corporation
directly or indirectly for a period of two (2) years after the termination of
this employment agreement:
- - Solicit business from any person, firm or company who is a client of or
in the habit of dealing with the Company.
- - Solicit or entice away or endeavor to solicit or entice away any
employee of the Company.
- - Use or procure to use with any business of any corporate or business
name that is identical to or likely to be confused with the name of the
Company, Total Research Corporation.
- - Do or say anything that is harmful to the reputation of the Company or
which may lead any person or persons to cease to do business with the
Company.
Additionally, as an officer of the Company, the Employee further acknowledge
that they will be exposed to and or come in contact with various proprietary
information belonging to the Company and/or methodologies devised by employees
of the Company for the purpose of effectuating the Company's products to
clients. The Employee agrees that they will not employ such proprietary
information and/or methodologies for use with another employer or customer or
anyone else upon termination of your employment relationship with the Company.
Employee Initials TF Date 5/22/97 Company Initials LZ Date: 4/22/97
<PAGE> 20
TERRI FLANAGAN EMPLOYMENT AGREEMENT CONTINUED PAGE 5
Please acknowledge your understanding and compliance with the terms of this
Employment Agreement by signing on the line provided below. A second copy is
provided for your personal records.
N WITNESS WHEREOF, the parties hereto have executed the Agreement.
ACKNOWLEDGED, AGREED AND CONSENTED:
By: /s/ THERESA FLANAGAN Date: 5/22/97
------------------------------ ------------------------------
Signature
For Total Research Corporation:
By: /s/ LORIN ZISSMAN Date: 4/22/97
------------------------------ ------------------------------
Signature
LORIN ZISSMAN CHAIRMAN/CEO
----------------------------------
Name and Title
<PAGE> 21
[TOTAL RESEARCH CORPORATION letterhead]
TOTAL RESEARCH CORPORATION EMPLOYMENT AGREEMENT
1. INTRODUCTION
This document represents an employment agreement between Total Research
Corporation, hereafter referred to as "the Company" and Eric Zissman hereafter
referred to as "the Employee". This agreement will serve as the guide and the
financial arrangement for the Company and the Employee working in partnership in
meeting all of the business and profitability goals of the Company from January
2, 1997 through June 30, 1999. This agreement represents the entire agreement
between the parties with respect to the subjects hereof, and supersedes all
prior agreements and understandings.
This Employment Agreement will automatically renew for two (2) additional one
(1) year periods at the end of the contract period referenced above. Such
continuation of employment will be based on the same financial terms and
conditions covered under this agreement except for those that may be negotiated
by either party within ninety (90) days prior to the end of this employment
agreement.
2. DUTIES AND RESPONSIBILITIES
The employee will serve as the Chief Financial Officer. In this capacity the
Employee will be responsible for developing and directing the financial plans
and policies of the Company including the establishment and maintenance of
fiscal control and safeguarding of company assets. Additionally the employee
will be responsible for the management of multiple staff functions. The Employee
shall also perform further duties as are incidental or implied, consistent with
the background, training and qualifications of the Employee or may be reasonably
delegated by the Board of Directors. The Employee shall devote full time to
his/her employment and expend best efforts on behalf of the Company. The
Employee agrees to be an active member of the Management Council.
The Employee will report directly to the Vice Chairman and/or the Board of
Directors as the case may be.
Employee Initials EZ Date 4/29/97 Company Initials LZ Date: 4/22/97
<PAGE> 22
ERIC ZISSMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 2
The Employee is bound to all of the policies and procedures established by the
Company.
3. FINANCIAL
Base Salary:
In consideration to the Employee for services rendered under this Agreement, and
in exchange for full compliance with this Agreement, the Company agrees to
commit to and pay the employee $47,500 for the period January 2, 1997 through
June 30,1997, $110,000 for the period July 1, 1997 through June 30, 1998 and
$120,000 for the period July 1, 1998 through June 30, 1999. The increase in
compensation from one period to another is contingent on satisfactory
performance in the prior period.
Satisfactory performance is both financial and non-financial as reflected in the
goal addendum attached to this agreement and will be evaluated by the Vice
Chairman with ratification by the Board of Directors.
Payment of base salary will be on normally scheduled Company paydays.
Bonus:
The Employee will be entitled to a bonus based on the Company's corporate
performance. A separate addendum to this employment agreement will establish the
goals for fiscal years 1998 and 1999 which reflects this plan. Unless otherwise
approved by the Board of Directors, this will be the only bonus plan in which
the Employee is entitled to participate.
Under this bonus arrangement the Employee will receive twenty (20) percent of
their base salary for meeting the established fiscal year corporate goal. For
every $20,000 that the corporate goal exceeds plan, the Employee will receive an
additional two (2) percent of the $20,000 excess. Should the plan fall slightly
below goal i.e., ninety-five (95) percent of goal, the Employee will be entitled
to a reduced bonus. The reduced bonus will pay the Employee ten (10) percent of
salary if ninety-five (95) to ninety-nine and nine- tenths (99.9) percent of the
goal is achieved.
Employee Initials EZ Date 4/29/97 Company Initials LZ Date: 4/22/97
<PAGE> 23
ERIC ZISSMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 3
The bonus entitlement for fiscal year 1997 is covered in a separate document
which is attached to this agreement.
All bonuses will be paid within one hundred and five (105) days after the end of
the fiscal year.
The Employee must be employed through the end of any fiscal year in order to be
entitled to receipt of any eligible bonus for that fiscal year.
Stock Options:
The Employee will be issued 250,000 stock options effective January 2, 1997.
These options are for services to be performed until June 30, 1999 and vest on
that date. Vesting is contingent on the employee remaining employed through the
vesting date. If the Employee's performance is terminated for any reason other
than for performance and/or cause all of the entitled options will immediately
vest on the date of termination.
4. OTHER EMPLOYMENT ISSUES
By signing and agreeing to this employment agreement, the Employee is committing
to two and one-half (2.5) years of employment with the Company. The two and one
half (2.5) years begin on January 2, 1997 and conclude on June 30, 1999.
The unsuccessful achievement of established goals, in keeping with Company
policy, could result in the involuntary termination of employment for
non-performance.
Additionally, the Employee is entitled to all benefits offered by the Company in
accordance with Company policy.
5. CODE OF ETHICS AND NON COMPETE
As an officer of the Company, the Employee must abide by the Company's Code of
Ethics. The entire Company's Code of Ethics is attached to this document.
Employee Initials EZ Date 4/29/97 Company Initials LZ Date: 4/22/97
<PAGE> 24
ERIC ZISSMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 4
The Employee's signature on this document will acknowledge that they have read,
understand and agree to adhere to all of the contents of the ethics policies.
As an officer of the Company, the Employee agrees that they will not on their
own account or jointly with or as a manager, agent, officer, employee,
consultant or otherwise on behalf of any other person, firm or corporation
directly or indirectly for a period of two (2) years after the termination of
this employment agreement:
- - Solicit business from any person, firm or company who is a client of or
in the habit of dealing with the Company.
- - Solicit or entice away or endeavor to solicit or entice away any
employee of the Company.
- - Use or procure to use with any business of any corporate or business
name that is identical to or likely to be confused with the name of the
Company, Total Research Corporation.
- - Do or say anything that is harmful to the reputation of the Company or
which may lead any person or persons to cease to do business with the
Company.
Additionally, as an officer of the Company, the Employee further
acknowledge that they will be exposed to and or come in contact with various
proprietary information belonging to the Company and/or methodologies devised by
employees of the Company for the purpose of effectuating the Company's products
to clients. The Employee agrees that they will not employ such proprietary
information and/or methodologies for use with another employer or customer or
anyone else upon termination of your employment relationship with the Company.
Employee Initials EZ Date 4/29/97 Company Initials LZ Date: 4/22/97
<PAGE> 25
ERIC ZISSMAN EMPLOYMENT AGREEMENT CONTINUED PAGE 5
Please acknowledge your understanding and compliance with the terms of this
Employment Agreement by signing on the line provided below. A second copy is
provided for your personal records.
N WITNESS WHEREOF, the parties hereto have executed the Agreement.
ACKNOWLEDGED, AGREED AND CONSENTED:
By: /s/ ERIC ZISSMAN Date: 4/29/97
------------------------------ ------------------------------
Signature
For Total Research Corporation:
By: /s/ LORIN ZISSMAN Date: 4/22/97
------------------------------ ------------------------------
Signature
LORIN ZISSMAN CHAIRMAN/CEO
----------------------------------
Name and Title
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 678,350
<SECURITIES> 0
<RECEIVABLES> 5,211,596
<ALLOWANCES> 110,000
<INVENTORY> 0
<CURRENT-ASSETS> 7,870,484
<PP&E> 5,651,186
<DEPRECIATION> 3,334,556
<TOTAL-ASSETS> 12,948,294
<CURRENT-LIABILITIES> 9,021,206
<BONDS> 0
0
0
<COMMON> 10,044
<OTHER-SE> 3,638,024
<TOTAL-LIABILITY-AND-EQUITY> 12,948,294
<SALES> 29,443,302
<TOTAL-REVENUES> 29,443,302
<CGS> 14,941,632
<TOTAL-COSTS> 13,221,437
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 202,133
<INCOME-PRETAX> 1,128,150
<INCOME-TAX> 489,955
<INCOME-CONTINUING> 638,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 638,195
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0
</TABLE>
