U.S. SECURITIES AND EXCHANGE
COMMISSION WASHINGTON, D.C.
20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934: For the fiscal year
ended December 31, 1996
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934: For the transition
period from __________ to __________
Commission file number 0-17773
ATS MONEY SYSTEMS, INC.
(Name of small business issuer in its charter)
Nevada 13-3442314
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
25 Rockwood Place, Englewood, New Jersey 07631
(Address of principal executive offices) (Zipcode)
Issuer's telephone number: (201) 894-1700
Securities registered under Section 12(b) of the Exchange Act:None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
(Title of class)
Check whether the issuer: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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______
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this
form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal
year: $8,059,474
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such stock,
as of a specified date within the past 60 days:
Approximately $1,600,822 based on the average of the high
bid price ($.69) and low asked price ($.78) published by the
National Quotation Bureau Inc. on March 21, 1997.
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: As of March 21, 1997 - 5,791,911 shares of Common Stock,
$.001 par value
DOCUMENTS INCORPORATED BY REFERENCE
1997 definitive proxy statement to be filed with the Commission
incorporated by reference into Part III.
Transitional Small Business Disclosure Format: Yes ; No X
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
General
ATS Money Systems, Inc. ("ATS"), with Innovative
Electronics, Incorporated ("IEI"), a wholly-owned subsidiary
(collectively, the "Company"), is engaged in the development,
sale and service of currency counting systems and equipment
for department and chain stores' cash offices and bank
commercial vaults and of communications systems primarily used by
chain stores. The Company's customers are businesses that
handle a large number of cash, check and credit transactions
on a daily basis, such as banks, department stores and chain
stores. The Company was incorporated in 1987 under the laws of
the State of Nevada and is the successor to a similar
business acquired by merger in 1988.
In August 1994, the Company, through IEI, which was formed
for such purpose, acquired the business and substantially all
of the assets of Innovative Electronics, Incorporated. Based
in Miramar, Florida, IEI is engaged in the business of
marketing hardware and software products designed by IEI or its
predecessor to permit the exchange of pricing, product and other
information among stores within a chain and between such stores
and the stores' headquarters.
Products
The Company is in the business of marketing currency
counting systems,proprietary software computer systems, computers and
peripherals for automating chain and department stores' cash
offices and bank commercial vaults. In addition, IEI is
engaged in the business of marketing point-of-sale (POS)
systems, communications hardware and software products
primarily used by chain stores to permit the internal exchange
of information.
The principal products sold by the Company during 1996 were
its CP-2000 Deposit/Register Verification, PowerVault and CP-3000
Retail Cash Office Management Systems, which accounted for
34.9% of the Company's 1996 revenues, and an IEI
communications product, the StoreComm ISP and its related
hardware, which accounted for 21.4% ofthe Company's 1996 revenues.
The Company also sells various typesof currency/document counters and
dispensers.
ATS CP-2000 Deposit/Register Verification System
The CP-2000 is an integrated system consisting of a
computer, a currency counter, one or more peripherals and a
proprietary software system, which provides an alternative to
performing manual record keeping of cash receipts and transfers,
primarily for banks and retail establishments. The CP-2000, using
an IBM-PC or compatible computer, interfaces with the Company's currency
counters to speed up counting, tally various accounts,
maintain period-to-date totals, maintain records and
automatically prepare and print various management reports as a
by-product of the counting operation. The CP-2000's software is
readily modifiable to fit the particular needs of a user and can
be upgraded. All information is captured on diskette or fixed
disk which assists in generating historical account analysis for
management.
The CP-2000 is designed for operators with little or no
prior computer experience. Its appeal to management is
based on the significant labor savings which can be achieved through
its use.If the user does not have an IBM-PC or compatible computer
and the associated currency counting equipment, the Company can
furnish all equipment necessary for the CP-2000. The CP-2000
varies in price depending upon the hardware configuration and the
specific application software used.
ATS PowerVault Cash Vault Management System
The PowerVault was developed to provide a more
comprehensive solution for the requirements of larger banks. The
PowerVault utilizes LAN technology and software such as Microsoft
Windows and Microsoft Access. While the PowerVault retains all
of the benefits to users of the CP-2000, it is designed to
provide a significant increase in control over, and
accountability for, funds as they move within the cycle of a
vault. In addition, the PowerVault offers the capability of
providing reports, in hard copy or file, to customers as soon as
their deposits have been processed.
The PowerVault is comprised of a combination of workstations
with application software providing different functions for the
various steps in vault processing. Because the requirements of
each vault differ to some degree, the number of workstations and
the price of the total system fluctuates substantially.
ATS CP-3000 Retail Cash Office Management System
The CP-3000 was developed for the retail industry in
response to the trend of using a UNIX operating system in
store operations. Application software for the CP-3000 is loaded
into a central in-store processor (an "ISP"), thereby
eliminating the need for stand-alone computers and, in their
place, using low-cost ASCII terminals.
The software for the CP-3000 is written in C language,
which allows it to be used in a stand-alone PC, a PC emulating a
terminal or an ASCII terminal connected to the host ISP, thereby
making the system suitable for retailers using UNIX or other
operating systems.
The CP-3000 utilizes advanced software screen managers. It
is intended to offer the user greater flexibility and to
provide the Company with the ability to offer custom
applications without extensive code writing. The Company believes
that this feature enables the CP-3000 to be more competitive
without eroding profit margins. The selling price of the CP-3000
varies substantially depending upon the specific requirements
of the customer for hardware, software and peripherals.
StoreComm ISP (In-Store Processor)
The StoreComm ISP provides retailers with the ability to
program and support many varieties of point-of-sale ("POS")
terminals at any location, 24 hours a day, from a central host
computer via satellite communication. The StoreComm ISP
maintains price look-up files downloaded from the
headquarters' host and allows for credit authorization pass
through. The StoreComm ISP utilizes proprietary PC-based,
intelligent, high performance interface boards, each with its
own CPU and memory.
StoreComm AP
The StoreComm AP provides full POS
network configuration, management and control from a single host control
point. This system facilitates the transport of data between
corporate the headquarters of a chain of stores and the stores
within the chain, management of price look-up files, credit
authorization and the ability to inquireon store-level information,
as necessary.
ATM Cassette Management System
During 1996, ATS developed and made the first installation
of a new system designed to control the currency cassettes
used in Automated Teller Machines ("ATMs"). This system provides
a bank, or other ATM operator, with the information needed to
fill each ATM cassette with the optimum amount of money based
on the historical record of amounts dispensed. In addition,
the system maintains a record of the date each ATM should be
refilled and when cassettes are to be filled, shipped and
returned. The system also keeps a record of the seal numbers
affixed to the cassette when it is filled so that any tampering
would be detected upon its return.
Other Products
In addition to the foregoing products, the Company
markets several coin and currency/document counters, all microprocessor
controlled for accuracy.
Counters are used by banks, retail establishments,
transit authorities, currency exchanges and other commercial and
governmental agencies for accurately counting large quantities of
coins, currency, coupons, transit toll tickets, checks and
other documents. The Company offers three different models of
currency/document counters, each of which can count at least 1000
documents per minute. Two of the models can be equipped with a
counterfeit detection aid.In addition, the Company offers a coin
counter/packager and a coin counter/sorter. In the first quarter of 1997,
the Company introduced an electronic scale for weighing currency and coins.
The ATS-5000 Automated Telephone Cash Ordering System
(the "ATS-5000"), like the CP-2000, is an integrated system
which allows coin and currency orders to be taken automatically
over the telephone. With the ATS-5000, the caller placing the
order enters all necessary information with the telephone
keypad, thereby eliminating the personnel formerly needed to answer
the telephone and write the order. After an order is placed,
the ATS-5000 prepares all of the various reports and documents necessary
for picking, packing and shipping the order. The document needed to
charge the account placing the order is also prepared.
The ATS-5000 answers the phone in a friendly, natural voice,
repeats the amount of each item ordered and informs the caller of the
total amount of the order when it is completed. Upon completion, the
caller is also given an order confirmation number. The ATS-5000
can service multiple callers simultaneously, process standard
orders automatically and prepare a variety of management
reports. The ATS-5000 not only saves labor, but also eliminates the
possibility of transcribing errors.
The Company also markets a number of other related products.
One of such products, a teller-assist currency and coin
dispenser, can dispense up to six denominations of currency at a
rate of 24 notes in four seconds after the teller enters the
amount to be dispensed and is available in different
configurations.
Maintenance and Service Contracts
The Company warrants its products for 90 days after
sale. Warranty and after-warranty service on all hardware
products is provided through a national third-party service
company under contract to the Company. As a result, a customer
usually is able to receive a response to a service request
within four business hours and the Company does not incur the
overhead expenses which would normally be associated with
maintaining a field service department. Warranty and after-
warranty service on all software products is handled over the
telephone by the Company's help-desk personnel who are trained on
the various systems installed in customers' locations.
Pursuant to its maintenance contracts, customers
purchasing complete systems have access to a toll-free "hot line"
which allows them to call the Company directly if they have
a problem. The Company's support department determines the
nature of the problem and arranges for the dispatch of technical
service when necessary. If the problem is operator-oriented, it
is usually correctable without a visit from a field
technician. Customers purchasing stand-alone equipment have
access to the Company's third party service company in the event
of a problem. Customers who purchase StoreComm ISP or
StoreComm AP systems call IEI directly if they have a problem,
where customer support personnel are available to help resolve the
problem.
The Company's maintenance contracts usually are for a
maximum of one year, generally commence at the beginning of the
calendar year and are prepaid in full at such time, except for
software maintenance contracts covering the StoreComm ISP and the
StoreComm AP, which are billed annually and paid on a quarterly
basis.
The Company retains ownership of all service contracts with
its customers, which are priced to return a profit to the Company.
Marketing
The Company believes that the immediate market for its
products are those businesses that handle large amounts of cash
on a daily basis, such as banks and retail chain stores and
department stores. The Company is an established supplier of
currency counting and control systems and equipment and, since
its acquisition of IEI, has begun to establish itself as a
supplier of hardware and software systems designed to permit
the exchange of data among stores within a chain. The Company's
users include major banks in the United States as well as
national and regional armored car operators. In the retail
industry, the Company's customers include Bergdorf-Goodman, T.J.
Maxx, Target Stores, The Home Depot, Lowe's Companies, Inc.
and Kohls department stores.
Pursuant to a Software Development Project Agreement
and a Software License Agreement (collectively, the "Agreements")
with Wells Fargo Armored Service Company ("Wells Fargo"), the
Company has agreed, for a term expiring March 5, 1998, to
provide to Wells Fargo the PowerVault software and hardware
necessary to equip all of Wells Fargo's cash processing
centers to process bank deposits picked up from bank customers,
and to consolidate chain store deposits into one large deposit
prior to shipment to the bank. All software developed under the
arrangement is pursuant to agreed specifications and is being
warranted to such specifications. The arrangement also provides
for the parties to jointly promote the sale of the PowerVault,
the CP-2000 and Wells Fargo's services, and for the compensation
to each other for sales of the other's products made as a result
of such joint marketing efforts. In addition, the parties have
entered into various collateral agreements, including a
software support/consulting agreement, a hardware sale
agreement and a hardware maintenance agreement. The Company
has agreed with Wells Fargo that until the termination of the
Agreements, the Company will not supply services (i) to armored
car companies, except that the Company may continue to render
hardware and software maintenance services to its existing
armored car customers, or, (ii) directly or indirectly, to third party
service suppliers to owners or operators of automated teller machines. The
Agreements also restrict Wells Fargo from using products which
compete with the Company's systems. During 1996, revenue from
the sale of hardware, software and maintenance agreements
under the Agreements aggregated approximately $232,430, as
compared to $391,894 in 1995. This decrease resulted from Wells
Fargo's continuing decisio to defer indefinitely the installation of
additional systems which the Company had projected to be installed
during 1994 and beyond. In January 1997, Loomis Armored, Inc.
acquired WellsFargo through a newly-formed company, Loomis, Fargo and Co.
("Loomis"). The Company currently is in discussions with management
of Loomis to determine their plans for the future roll-out, if any,
of systems.
The Company remains committed to establishing other
strategic business alliances, although no assurances can be given that any
such alliances will be formed or that such alliances will be
successful.
In general, because of the nature of the Company's
products, a large potential customer will normally place a small
order for the Company's products for testing in one or several locations.
If testing meets the customer's criteria, the customer will
generally order a large quantity of product for installation
throughout its locations and, thereafter, will order decreasing
quantities to complete installation at smaller or newly established
locations. Therefore, a large customer one year may not be a
significant customer the next year. During 1996, The Home Depot and
Target Stores each accounted for more than 10% of the Company's revenues.
The Company's bank sales are not seasonal, but its sales to retailers
generally occur during the first three quarters of each year.
Since 1984, the Company has marketed its products on a
national basis, primarily by its own employees, supervised by
the Company's executive officers. Although the Company expects that a high
percentage of its future sales will continue to be made by its
own employees, it has taken steps to take advantage of the sales
potential available through indirect sales channels, such as value-added
resellers ("VARs"), and through the formation of strategic
business alliances with larger companies engaged in the sale of
complementary products and services, such as Wells Fargo. While the
Company continues to believe that strategic business alliances can be a
valuable source of additional business, its experience to date
with VARs has not been satisfactory and that program is being
discontinued.
The Company has organized its sales organization into a
territory sales group, a national accounts sales group for
retail cash office systems sales, and a POS and
communications systems solutions sales group. This structure is
designed to assure coverage of the banking industry, which is
comprised of local or regional organizations, and
the retail industry, which is essentially controlled by chain
organizations with headquarters control over systems and
purchasing. The territory sales group is responsible for direct
sales to banks and independent retail operations within a specific
geographical area in which the representative is assigned.
This group also serves to support the sales efforts of
sales representatives of those organizations with which the
Company may form a business alliance. The national accounts sales
group is headquartered at the Company's offices in New Jersey
and is responsible for retail cash office systems sales to chain
stores with centralized management and purchasing. The POS and
communications systems solutions sales group is headquartered
at IEI's offices in Miramar, Florida, and is responsible for
the sale of POS and communications products to chain stores.
The Company's sales staff receives a base salary plus
commissions.
The Company participates in industry conferences such as
the National Retail Federation ("NRF") Annual Conference, the
Bank Administration Institute ("BAI") Conference, the NRF
RetailInformations Systems Conference and the Food Marketing
Institute's Marketechnics Conference. In addition, the Company
conducts a small number of private shows in selected cities.
Product Development and Enhancement
In 1984, the Company's predecessor recognized that
most cash-handling operations in businesses which handle large
amounts of cash on a daily basis did not have adequate cash
reporting/verification systems; and that most record keeping was
done by hand and, therefore, was costly and time consuming. It
was this realization that led to the development of the
Company's proprietary software systems to automate cash
processing. The Company has continued to enhance its systems
and, in 1996 and 1995, the Company spent $505,293 and $264,350,
respectively, to enhance its systems.
The Company relies on the complexity of its systems and
its licensing agreements to protect its computer software coding.
Manufacture, Distribution and Proprietary Rights
The Company does not manufacture any of the equipment it
sells, although some equipment and components are manufactured
exclusively for the Company. Some equipment is distributed
exclusively by the Company in the United States. Other
equipment is purchased on an OEM basis with the Company's
label and still other equipment is distributed with the
manufacturer's label on a non-exclusive basis by the Company.
Other than the printed circuit boards used in conjunction
with the StoreComm ISP and the StoreComm AP, all of which are
proprietary and manufactured to the Company's specifications,
substitute equipment for use in the Company's systems is
obtainable by the Company from other sources.
Employees
As of March 19, 1997 the Company had 46 full-time employees,
16 of whom are at IEI. Ten of the Company's employees are
executive and administrative personnel, 10 are systems
software development personnel, nine are customer software
support personnel, five are customer hardware support
personnel and 12 are sales and marketing personnel. The
Company's employees are covered by a comprehensive medical and
major medical plan, and receive life insurance and long-term
disability benefits. The Company is not a party to any
collective bargaining agreement and considers its employee
relations to be satisfactory.
It is the Company's practice to require its marketing
employees to sign a non-compete agreement which restricts
the employee, following the employee's termination of
employment, from competing with the Company for a six-month
period in any territory where the employee served for the
Company or with respect to any of the employee's former
accounts. The Company's technical employees also are required to
sign a confidentiality agreement.
From time to time, the Company utilizes the services
of independent consultants to provide computer systems
analysis and software design and support. The Company retains
all rights to the work product created for the Company by such
consultants.
Competition
The Company's business is highly competitive. There are
other manufacturers and distributors of the systems and equipment
marketed by the Company which have the resources and technical
staff to develop and market systems and equipment similar to
that of the Company. A number of these competitors are larger
than the Company and have substantially greater resources. The
Company believes its competitors generally sell products which are
rigid in their application and not suitable for all retail
operations. The Company, on the other hand,
generally customizes its products to fit a customer's specific
needs. As a result, the Company believes its products are more
flexible and more comprehensive than its competitors' current
products.
ITEM 2 - DESCRIPTION OF PROPERTY
The Company leases approximately 8,350 square feet in a
four story brick building in Englewood, New Jersey at a
current annual rental of $171,438, subject to increases for real
estate taxes and utility costs, for a term which ends on
December 15, 1998. At the option of the Company, the term may be
extended for an additional five years. Approximately 50 percent
of the space is used as executive and sales offices,
approximately 20 percent is used for storage and approximately
30 percent is used for testing and development.
IEI leases approximately 12,500 square feet in a
contemporary office park in Miramar, Florida at a current
annual rental of $124,587, subject to increases for real
estate taxes and utility costs, for a term which expires on
April 30, 2000. The Company considers its facilities suitable
and adequate for its present use.
ITEM 3 - LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Company is a party or to which any of its property is subject.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders of
the Company during the fourth quarter of its 1996 fiscal year.
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information. The following table sets forth
the quarterly high and low bid prices, as reported in the "pink
sheets" published by the National Quotation Bureau Inc., for the
two years ended December 31, 1996. The quotations reported
represent prices between dealers, do not include retail
markups, markdowns or commissions, and do not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
1996 Calendar Year High Bid Low Bid
<S> <C> <C>
1st Quarter $1-1/4 $ 7/8
2nd Quarter 1-3/8 1
3rd Quarter 1-3/8 1
4th Quarter 1 7/16
1995 Calendar Year High Bid Low Bid
1st Quarter $ 3/4 $ 1/2
2nd Quarter 15/16 3/8
3rd Quarter 1-5/16 11/16
4th Quarter 1-5/16 7/8
</TABLE>
(b) Holders. As of March 21, 1997, the Company had 404
holders of record of Common Stock, including Cede & Co. which
held 1,675,353 shares of Common Stock as nominee for a number of
securities brokers. Bulletin Board Market Makers maintaining a
market in the Common Stock on March 21, 1997 consisted of
Financial America Securities, Inc., M. H. Meyerson & Company,
Knight Securities LP, Mayer & Schweitzer, Inc., Paragon Capital
Corporation, Herzog, Heine, Geduld, Inc., Nash Weiss & Co., Inc.
and Sharpe Capital Inc.
(c) Dividends. The Company has never paid any cash dividends
and does not plan to pay cash dividends in the foreseeable
future. The payment of dividends will depend upon the Company's
outstanding loan arrangements as well as it short-term and long
term cash availability, working capital and working capital
needs and other factors, as determined by the Company's Board
of Directors.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION IN REVIEWING MANAGEMENT'S DISCUSSION AND ANALYSIS,
REFERENCE IS MADE TO THE FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED AS
ITEM 7 "FINANCIAL STATEMENTS" IN THIS ANNUAL REPORT ON FORM 10
KSB.
Certain statements contained in this Item 6 and elsewhere in
this Annual Report on Form 10-KSB regarding matters that are not
historical facts, such as the market for the Company's products
and the Company's plans to expand its business and to
establish other strategic alliances, are forward-looking
statements (as such term is defined in the Securities Act of
1933) and because such statements include risks and
uncertainties, actual results may differ materially from those
expressed or implied by such forwardlooking statements.
Working Capital and Liquidity
Information with respect to levels of working capital and
other ratios as of December 31, 1996, 1995 and 1994 is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Working Capital $1,512,100 $1,481,287 $1,293,813
(current assets
less current
liabilities)
Working Capital 2.78 to 1 2.58 to 1 2.59 to 1
Ratio (current
assets to
current liabilities)
Percentage of Current 35% 46% 50%
Liabilities to
Stockholders Equity
Percentage of Total 45% 59% 66%
Liabilities to
Stockholders Equity
</TABLE>
At December 31, 1996, cash (and cash equivalents)
amounted to $308,138 and the Company did not have any
outstanding borrowings. In April 1996, First Union
National renewed a $750,000 discretionary line of
credit for the Company's short-term needs, at an interest rate
equal to such bank's base rate plus 1/2%. All advances
under this line of credit are required to be secured by
a lien on substantially all of the Company's assets. As
of December 31, 1996 and March 21, 1997, the Company did
not have any draw against this line of credit.
Management believes that economic conditions within the
two largest industries from which the Company draws its
customers banking and retail - will continue to improve in
1997, which may result in increased revenues for the
Company.
The Company believes that its working capital and
available cash during 1997 will be adequate to maintain its
operations and pay its outstanding obligations as they become
due, and that excess cash will be used primarily to purchase
inventory, and to enhance its software. The Company does not believe
that it will be necessary to raise additional funds during 1997,
except by temporary bank borrowings in the normal course of
business.
The Company does not believe that inflation will have
a material impact on the Company's sales or income.
Results of Operations
1996 Compared with 1995
Revenues for 1996 decreased $354,042 (4.2%) to $8,059,474
from $8,413,516 for 1995. Product and system sales decreased
$317,106 (5.2%) to $5,752,718 from $6,069,824 in 1995 due to lower
sales by IEI only partially offset by higher sales by ATS.
Maintenance revenue during 1996 amounted to $2,306,756, a
decline of $36,936 (1.6%) from the prior year. This was primarily
due to the loss of an equipment hardware maintenance contract from
a major customer during 1996.
Cost of goods sold and service expenses declined from 47.9%
of sales in 1995 to 44.4% in 1996. This was primarily due to
ATS sales of more profitable systems. Maintenance costs also
decreased due to a new contract with a different third party
maintenance vendor.
Selling, general and administrative expenses were
$4,004,115 in 1996 compared to $3,849,891 in 1995, an increase
of $154,224 (4.0%), primarily due to non-recurring expense of
$307,828 relating to legal and accounting fees incurred in
connection with the possible acquisition of a company that did
not materialize. Similarly, the prior year had a non-recurring
expense of $381,314 due to legal and accounting fees incurred in
connection with a Settlement Agreement which resolved a
potential proxy contest. Excluding these expenses in both years,
other expenses in 1996 increased by $227,710 (6.6%). The
largest increase were ATS expenses of Director's Fees and
Expenses ($65,424-105.4%); Travel ($39,408 - 32.9%) and Software
Amortization ($33,020 - 22.8%).
Interest income in 1996 was $38,767, an increase of $13,554
(53.8%) over 1995. This was due to a larger amount of short-
term investments arising from available cash during 1996.
The tax provision of $199,260 was $11,373 (6.1%) greater
than the 1995 provision of $187,887, as a result of higher
taxable income.
As a result of the foregoing, the Company had net income of
$317,382 for 1996 compared to $369,650 in 1995, a decrease of
$52,268 (14.1%).
New Accounting Pronouncements:
See Note 2 of the Notes to Consolidated Financial Statements for
a discussion of two new accounting standards that were effective in
1996.
1995 Compared with 1994
IEI was acquired in August of 1994 and its results of
operations were reflected in the Company's financial statements
for the remaining balance of 1994.
In 1995, IEI was operational for twelve months and increased its
revenues by $2,224,602 over revenue during the five month period of 1994.
This accounted for most of the $2,668,792 (46.4%) increase in
revenues from $5,744,724 in 1994 to $8,413,516 in 1995. Product
and systems sales increased $2,041,639 (50.7%) from
1994 sales, while maintenance revenues of $2,343,692
were $627,153 (36.5%) higher than in 1994.
Cost of goods sold and service expenses rose as a
percentage of sales from 47.7% in 1994 to 47.9% in 1995. This slight
overall increase was comprised of a 4.1% increase in cost of systems
and stand-alone products and a decrease of 9.2% in maintenance
costs due to IEI contracts which include software support only.
Selling, general and administrative expenses increased
$1,204,295 (45.5%) in 1995, primarily due to a $878,276 increase in
expenses of IEI, which was operational for twelve months of 1995 compared
to five months of 1994. Substantially all of the remaining increase was
due to legal fees of $361,794 incurred in connection with a potential
proxy contest relating to the election of directors at the 1995
Annual Meeting. Accounting fees related thereto were $19,520. In
August 1995, the Company, Gerard F. Murphy and Fred Den entered into a
Settlement Agreement with Michael M. Smith and Louis Z. Weitz (then
directors of the Company), which resolved a potential
proxy contest threatened by Mr. Smith. As part of the Settlement
Agreement, the Company agreed to pay all legal and accounting expenses
of the parties related thereto.
The tax provision for 1995 of $187,887 was $174,046 greater than
the 1994 provisionof $13,841. In 1994, the deferred tax benefit
from utilizing operating loss carryforwards offset most of the liability.
In 1995, there were no such tax benefits.
As a result of the foregoing, the Company had net income of $369,650
in 1995, compared to $360,026 in 1994, an increase of $9,624 or 2.7%.
ITEM 7 -
ATS MONEY SYSTEMS, INC.
Consolidated Financial Statements as of
December 31, 1996 and 1995 and for
Each of the Three Years in the
Period Ended December 31, 1996, and
Independent Auditors' Report
ATS MONEY SYSTEMS, INC.
TABLE OF CONTENTS Page
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheets 2
Statements of Operations 3
Statements of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-13
INDEPENDENT AUDITORS' REPORT
ATS Money Systems, Inc.
We have audited the accompanying consolidated balance
sheets of ATS Money Systems, Inc. as of December 31, 1996
and 1995, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows
for each of the three years in the period ended December
31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits 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 statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the consolidated
financial position of ATS Money Systems, Inc. as of
December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years
in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
March 21, 1997
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<S> <C> <C>
ASSETS 1996 1995
CURRENT ASSETS:
Cash and cash equivalents $ 308,138 $ 164,548
Trade accounts receivable,
less allowance for doubtful
accounts of $74,183 in 1996,
and $92,363 in 1995 1,264,521 1,560,626
Inventories (Note 4) 567,420 520,996
Prepaid expenses and other
current assets (Note 5) 219,922 172,221
Total current assets 2,360,001 2,418,391
PROPERTY - At cost:
Office furniture 91,011 52,912
Office machinery and equipment 146,021 100,520
Subtotal 237,032 153,432
Less accumulated depreciation 102,432 68,796
Property - net 134,600 84,636
OTHER ASSETS:
Software costs, less accumulated
amortization of $511,790 in
1996 and $361,641 in 1995 (Note 2) 908,586 631,568
Deposits 50,677 65,073
Total other assets 959,263 696,641
TOTAL $3,453,864 $3,199,668
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 148,921 $ 155,808
Accrued expenses 210,160 418,058
Deferred revenue 322,125 247,602
Deferred income taxes 4,732 -
Other liabilities 161,963 115,636
Total current liabilities 847,901 937,104
LONG-TERM - Deferred credit,
less amortization of $67,727 in
1996 and $39,211 in 1995 (Note 3) 217,440 245,956
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY (Note 7):
Common stock - $.001 par value, 25,000,000
shares authorized, 5,891,911 and 5,835,794
shares issued at December 31, 1996 and
1995, respectively 5,892 5,836
Additional paid-in capital 2,374,397 2,319,920
Accumulated earnings (deficit) 8,334 (309,048)
Treasury stock - 100,000 shares, at par value (100) (100)
Total stockholders' equity 2,388,523 2,016,608
TOTAL $3,453,864 $3,199,668
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<S> <C> <C> <C>
1996 1995 1994
REVENUE:
Equipment and systems sales $5,752,718 $6,069,824 $4,028,185
Equipment maintenance and
service revenue 2,306,756 2,343,692 1,716,539
Total revenue 8,059,474 8,413,516 5,744,724
COSTS AND EXPENSES:
Cost of goods sold and
service expense:
Equipment and systems 2,633,655 3,032,235 1,849,448
Equipment maintenance and service 943,829 999,066 889,609
Selling, general and administrative
expenses
(Notes 5 and 12) 4,004,115 3,849,891 2,645,596
Total costs and expenses 7,581,599 7,881,192 5,384,653
INCOME FROM OPERATIONS 477,895 532,324 360,071
NET INTEREST (INCOME) (38,767) (25,213) (13,796)
INCOME BEFORE INCOME TAX EXPENSE 516,642 557,537 373,867
INCOME TAX EXPENSE (Note 8) 199,260 187,887 13,841
NET INCOME $ 317,382 $ 369,650 $ 360,026
EARNINGS PER COMMON SHARE (Note 2):
Primary and fully diluted $ 0.05 $ 0.06 $ 0.06
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,878,975 5,837,605 5,716,955
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Additional Accumulated Total
Common Paid-in (Deficit) Treasury Stockholders'
Stock Capital Earnings Stock Equity
<S> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1993 $5,816 $2,314,364 $(1,038,724) $(100) $1,281,356
Issuance of common stock
due to exercise of stock
options (4,171) shares 4 1,171 - - 1,175
Net income - 1994 - - 360,026 - 360,026
BALANCE,
DECEMBER 31, 1994 5,820 2,315,535 (678,698) (100) 1,642,557
Issuance of common stock
due to exercise of stock
options (15,653 shares) 16 4,385 - - 4,401
Net income - 1995 - - 369,650 - 369,650
BALANCE,
DECEMBER 31, 1995 5,836 2,319,920 (309,048) (100) 2,016,608
Issuance of common stock
for the issue of stock
grants(40,000 shares)
and the exercise of
stock options
(16,117 shares) 56 54,477 - - 54,533
Net income - 1996 - - 317,382 - 317,382
BALANCE,
DECEMBER 31, 1996 $5,892 $2,374,397 $ 8,334 $(100) $2,388,523
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<S> <C> <C> <C>
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $317,382 $369,650 $360,026
Adjustments to reconcile net income
to cash provided by (used in) operating
activities:
Depreciation and amortization 233,398 154,478 139,088
Changes in current assets and liabilities:
Compensation expense recorded for
common stock issued under Director
Stock Plan 50,000 - -
Trade accounts receivable - net 296,105 (704,782) 313,318
Inventories (46,424) 96,800 46,428
Prepaid expenses and other
current assets (33,305) (54,083) 14,608
Accounts payable - trade (6,887) (83,976) 81,845
Accrued expenses (207,899) 189,154 (31,126)
Deferred revenue 74,523 (75,939) 62,711
Deferred income taxes 4,732 - -
Deposits 40,192 (42,596) (34,382)
Other liabilities 6,136 92,531 (9,840)
Net cash provided by (used in)
operating activities 727,953 (58,763) 942,676
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of software
development costs (505,296) (264,350) (304,324)
Additions to property (83,600) (34,109) (32,351)
Cost of acquisition - - (204,110)
Net cash used in investing
activities (588,896) (298,459) (540,785)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of stockholder's loan - - 30,000
Notes issued to employee (Note 5) - (10,000) (45,000)
Proceeds from the issuance of common stock 4,533 4,401 1,175
Net cash provided by
(used in) financing activities 4,533 (5,599) (13,825)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 143,590 (362,821) 388,066
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 164,548 527,369 139,303
CASH AND CASH EQUIVALENTS, END OF YEAR $308,138 $164,548 $527,369
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Income taxes $210,000 $114,499 $8,100
See notes to financial statements.
</TABLE>
ATS MONEY SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1.DESCRIPTION OF COMPANY OPERATIONS
ATS Money Systems, Inc. ("ATS"), with a wholly-owned
subsidiary, Innovative Electronics, Inc., acquired in August,
1994 (collectively, the ("Company"), is engaged in the
development, sale and service of currency counting systems and
equipment for department and chain stores' cash offices and
bank commercial vaults and of communications systems primarily
used by chain stores. In addition, the Company offers
maintenance and service contracts through a national service
organization on all machines and equipment they sell. The
Company's customers are businesses that handle a large number
of cash, check and credit transactions on a daily basis, such
as banks, department stores and chain stores. ATS was
incorporated in 1987 under the laws of the State of Nevada and
is the successor to a similar business acquired by merger in
1988.
The principal products sold by the Company during 1996 were its
ATS CP-2000 Deposit/Register Verification, Powervault and
CP3000 Retail Cash Office Management Systems, and an IEI
communications product, the StoreComm ISP and its related
hardware.
The principal market for the Company's products has been in the
United States.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial
statements include the accounts of ATS Money Systems, Inc. and
its wholly owned subsidiary. All significant intercompany
transactions and account balances have been eliminated.
Cash and Cash Equivalents - Cash and cash equivalents include
investments with original maturities of three months or less.
Inventories - Inventories are stated at the lower of cost or
market. Cost is determined by the first-in, first-out method
for machine parts and specific identification for machines held
for sale.
Property - Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which
range from five to ten years.
Capitalized Software Costs - The Company capitalizes computer
software development costs in accordance with the provisions of
Statement of Financial Accounting Standards No. 86. Costs
incurred to establish the technological feasibility of computer
software are expensed as incurred. Costs incurred for product
enhancements, subsequent to establishing technological
feasibility, are capitalized and stated at the lower of cost or
net realizable value. Capitalized costs are amortized using the
straight-line method over five years, which approximates the
estimated remaining useful life of the product. It is possible
that the estimate of the economic life of the products and related
carrying values could be reduced in the near term due to
competitive pressures. Amortization of computer software costs
amounted to $228,275, $162,765 and $139,708 for the years ended
December 31, 1996, 1995 and 1994, respectively. Fully depreciated
software costs of $77,700, $69,950, and $118,936 were written off
in 1996, 1995 and 1994, respectively.
Revenue Recognition - Revenue from equipment and systems sales is
recognized upon shipment to the buyer and satisfaction of related
obligations by the Company. Revenue from software licensing is
recognized on either delivery of the software if collectibility is
probable or upon completion of the majority of the product, which
equates to reaching a milestone in accordance with the contract
agreement, and any remaining insignificant obligations of the
Company are accounted for by deferring a pro rata portion
of revenue and recognizing it either ratably as the obligations
are fulfilled or on completion of performance or by recording a
current year expense for the remaining costs associated with
completing the project.
Equipment Maintenance and Service Revenue - Equipment maintenance
and service revenue is recognized as earned over the term of the
contract, which is generally a maximum of one year in length.
Deferred revenue represents the unearned portion of equipment
maintenance and service fees.
Use of Estimates - The Company's financial statements include the
use of estimates and assumptions which have been developed by
management based on available facts and information. Actual
results could differ from those estimates.
Earnings Per Common Share - For purposes of calculating earnings
per common share, for the years ended December 31, 1996, 1995 and
1994, the Company used the weighted average number of shares of
common stock outstanding during the year applied to the net
income. The exercise of stock options (see Note 7) was assumed in
the calculation.
New Accounting Pronouncements - In March 1995, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS 121"), Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed of,
which is effective in 1996. The statement requires that longlived
assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The resultant impairment, if any, would be
measured based on the fair value of the asset. The adoption of
SFAS 121 did not have any effect on the Company's results of
operations or financial position.
SFAS 123, Accounting for Stock-Based Compensation, which was
adopted by the Company in 1996, includes certain elective
provisions as to the method of recording compensation for awards
made under the Common Stock Incentive Plan. The Company has
elected to continue to account for grants under the Common Stock
Incentive Plan using the method prescribed by Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and provide pro forma disclosure of the effect of
adopting SFAS 123. The pro forma effect on net income and
earnings per share is immaterial.
Income Taxes - The Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes
("SFAS 109") effective January 1, 1993. SFAS 109 required a
change from the deferred to the liability method for financial
accounting and reporting of income taxes.
Reclassifications - Certain prior year amounts have been
reclassified in order to conform with the 1996 presentation.
3. ACQUISITION
On August 25, 1994, the Company, through a newly formed wholly
owned subsidiary, IEI Acquisition Corp., purchased certain
assets and assumed certain liabilities of a subsidiary of
Dynatech Corporation, headquartered in Miramar, Florida. The
subsidiary, which changed its name to Innovative Electronics,
Inc., is in the business of marketing hardware and software
products designed to permit the exchange of pricing, product
and other data among stores within a chain.
The acquisition was accounted for by the purchase method of
accounting. Accordingly, the assets, liabilities and results
of operations of Innovative Electronics, Inc., are included in
the consolidated financial statements, beginning on August 25,
1994.
The purchase price has been allocated to the assets acquired
and liabilities assumed based on the fair values at the date
of acquisition.
The purchase price of the assets acquired plus certain direct
closing costs aggregated to $204,110. The excess of the
estimated fair values of the assets acquired over the purchase
price ($285,167) has been recorded as a deferred credit, and
is being amortized on a straight line basis over ten (10)
years.
The details of the subsidiary acquired and its impact on cash
flow is as follows:
<TABLE>
<S> <C>
Fair value of assets acquired $551,963
Liabilities assumed 62,686
Fair value of assets acquired
over liabilities assumed 489,277
Less acquisition costs 104,110
Less excess of net assets acquired
over cash paid 285,167
Cash paid for subsidiary $100,000
</TABLE>
4. INVENTORIES
Inventories consist of machines held for sale and machine
parts, as follows:
<TABLE>
<S> <C> <C>
1996 1995
Machines held for sale $504,935 $446,433
Parts and raw materials 105,085
111,263 Reserve for obsolescence (42,600) (36,700)
Total $567,420 $520,996
</TABLE>
5.RELATED PARTY TRANSACTIONS
During 1995 and 1994, the Company engaged one of its directors
to oversee its accounting policies and activities, particularly
of its newly acquired subsidiary. During 1995, a salary was
paid to the director of $15,937, fees of $12,704 and expenses
of $1,337. During 1994, the fee was $20,000, plus expenses of
$3,819.
During 1994, the Company loaned $45,000, bearing an interest
rate of 1% above the prime rate, to one of its employees who is
not an executive officer. The loan was evidenced by two notes
of equal principal amounts. The first of these two notes was
due and payable on March 1, 1995 and the second was due and
payable on March 1, 1996 provided that if the employee was
employed by the Company on the due date the principal and
accrued interest would be forgiven. The Company amortized
these notes on a straight line basis over the 24 month contract
period beginning March 1, 1994. The employee is currently
employed and the $45,000 (a noncash transaction) was forgiven
as of March 1, 1996.
During 1995, the Company loaned $10,000, bearing an interest rate
of 1% above the prime rate, to an executive officer of the
Company. The loan was paid in December 1996.
During 1996, the Company engaged three members of the Board of
Directors as consultants on the potential acquisition which did
not materialize. The directors were paid fees and expenses of
$326, $1,013 and $11,879, respectively. Other expenses for
legal accounting and consulting services (not paid to related
parties) in connection with this potential acquisition
aggregated $294,610.
At December 31, 1996 and 1995, all directors and executive
officers, as a group, collectively owned 41% and 64%,
respectively, of the Company's common stock.
6.COMMITMENTS AND CONTINGENCIES
At December 31, 1996, the Company was committed under
noncancellable, operating leases for office space, automobiles
and office equipment, expiring at various dates through April
2000, requiring minimum annual rental payments as follows:
<TABLE>
<S> <C>
1997 $301,040
1998 289,151
1999 131,512
2000 34,183
$755,886
</TABLE>
Rental expense under such leases totaled $343,434, $322,081
and $216,351 for the years ended December 31, 1996, 1995 and
1994, respectively.
7.STOCKHOLDERS' EQUITY
Common Stock - The authorized capital stock of the Company
consists of 25,000,000 shares of
noncumulative, voting, common stock, with a par value of $.001
per share.
Common Stock Incentive Plan - In 1993, the Company adopted a
common stock incentive plan (the "Plan"), which as amended
authorizes the issuance, within ten years, of options covering
up to 480,000 shares of common stock to certain employees and
other individuals of importance to the Company. The Plan is
intended to provide incentive to continued employment of
certain employees and other individuals by enabling them to
acquire a proprietary interest in the Company. Options granted
under the Plan may be either "incentive stock options" or "non-
qualified stock options." Incentive stock options, granted
only to certain employees of the Company, expire within ten
years (five years for a 10% beneficial owner of the Company's
securities) from the date granted and are exercisable from time
to time in accordance with the terms of such options. The
exercise price of an incentive stock option must be at least
equal to the fair market value of the common stock on the date
of grant (110% for a 10% beneficial owner of the Company's
securities). Nonqualified stock options can be granted to
certain employees of the Company and advisors and consultants
to the Company. Such stock options are exercisable on or after
the date of grant and the exercise price is not limited and may
be below fair market value.
On September 14, 1993, when the fair market value of the common
stock was $.28125 per share, the Company granted 159,685
incentive stock options at such price ($.31 per share for one
employee) and 65,315 nonqualified stock options (15,315 granted
at $.28125 per share and 50,000 granted at $.001 per share).
During 1993, 50,000 nonqualified options were exercised at a
price of $.001 per share.
During 1994, the Company granted 36,000 incentive stock options
(21,000 granted at $1.25 per share and 15,000 granted at
$1.375). Also during 1994, 4,171 of the incentive stock options
were exercised at a price of $.28125 per share.
The Company did not grant any options in 1995. During 1995,
15,653 options were exercised at a price of $.28125 per share.
On February 2, 1996, the Company granted 46,001 incentive stock
options (37,626 granted at $1.03125 per share and 8,375 granted
at $1.1344 per share). On June 4, 1996, the Company granted
2,500 incentive stock options at $1.344 per share. Also during
1996, 16,117 options were exercised at $.28125 per share.
At December 31, 1996, there were 207,295 options outstanding at
prices ranging from $.28125 to $1.375 per share of which
165,619 were exercisable.
In 1995, the Company adopted the 1995 Director Stock Plan
pursuant to which the Company's nonemployee directors, upon
first being elected to the Board, are granted 10,000 shares of
the Company's common stock, and thereafter, on each reelection,
are granted options to purchase 5,000 shares of the Company's
common stock with an exercise price equal to the then fair
market value of such shares. In 1995, the nonemployee
directors have been granted 40,000 shares of common stock under
this plan, all of which were issued during 1996.
8.INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes.
The significant items comprising the Company's net deferred taxes
as of December 31, 1996 and 1995 are as follows:
<TABLE>
<S> <C> <C>
1996 1995
Deferred tax assets:
Provision for bad debts $29,674 $29,674
Inventory write-downs 12,000 8,600
Payroll 8,845 6,000
Deferred credits - acquisition 85,749 91,798
Total deferred tax assets 136,268 136,072
Deferred tax liabilities:
Depreciation 11,627 4,830
Software amortization 129,373 88,468
Total deferred tax liabilities 141,000 93,298
Net deferred tax asset before
valuation allowance - 42,774
Valuation allowance - (42,774)
Net deferred tax liability $(4,732) $ -
</TABLE>
The income tax provision for the years ended December 31,
1996 and 1995 consists of the following components:
<TABLE>
<S> <C> <C>
1996 1995
Federal $123,850 $176,887
State 70,678 11,000
Total current 194,528 187,887
Deferred:
Federal 4,022 20,566
State 710 5,971
Change in valuation allowance - (26,537)
Total deferred 4,732 -
Income tax expense $199,260 $187,887
</TABLE>
A reconciliation of the Company's statutory rate to the
Company's effective rate is as follows:
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
Expected statutory rate 34.0% 34.0% 34.0%
State income tax (composite rate) 4.7 2.0 9.0
Change in valuation allowance
resulting from the utilization
of net operating loss
carryforwards and use of
tax credits - (2.3) (39.3)
38.7% 33.7% 3.7%
</TABLE>
For the year ended December 31, 1994, the Company
utilized the remaining net operating loss carryforward, which
had the effect of reducing current Federal and State income
taxes payable. For the year ended December 31, 1995, the
Company used its remaining investment tax credits, research
credits and alternative minimum tax credits, totaling $38,300
to reduce current taxes payable. At December 31, 1996, the
Company had no available net operating loss carryforwards or
tax credits for Federal or State tax purposes.
9.MAJOR CUSTOMERS
Sales to each of the Company's three major customers, which
are subject to change annually, as a percentage of
consolidated revenue, for the years ended December 31
approximated:
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
Major Customer 1 19% 16% 22%
Major Customer 2 15 13 17
Major Customer 3 9 9 12
</TABLE>
10.RETIREMENT PLAN
The Company has a defined contribution plan covering
substantially all of its employees. Company contributions to
the plan, which are discretionary, are made from its profits.
Contributions are based upon a percentage of eligible employees
salaries ranging from -0-% to a maximum of 15%. The
contributions for 1996, 1995 and 1994 were $0, $0 and $36,072,
respectively.
11.LINE OF CREDIT
The Company has a bank line of credit of $750,000 available.
Interest rates will be the bank's base rate plus 0.5%. The
Company has no borrowings outstanding at December 31, 1996.
12.SETTLEMENT AGREEMENTS
On August 30, 1995, the Company, Michael M. Smith, Gerard F.
Murphy, Fred Den and Louis Z. Weitz entered into a Settlement
Agreement which resolved a potential proxy contest threatened
by Messrs. Smith and Murphy in connection with the election of
directors at the 1995 Annual Meeting of Stockholders.
As part of the Settlement Agreement, the Company agreed to pay
all legal and accounting expenses related thereto. Legal
expenses amounted to $361,794 and accounting fees were $19,520.
Such expenses are included in Selling, General and
Administrative expenses.
On October 25, 1996, the Company, Michael M. Smith, and counsel
to Mr. Smith, which law firm also had acted as securities
counsel to the Company until its termination by the Company
effective May 31, 1996 ("Counsel"), entered into an agreement
to settle all disputes relating to amounts claimed by Mr. Smith
and Counsel to be owed to them by the Company. Pursuant to
such agreements, the Company paid Counsel $50,000 in
satisfaction of all outstanding legal bills rendered by
Counsel to the Company, and reimbursed Mr. Smith $13,034
for out-of-pocket expenses incurred by him in connection
with his Company duties.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Deloitte & Touche LLP served as the
independent auditors for the Company and its predecessor from 1988
through July 7, 1995, at which time Messrs. Weitz and Den, then
constituting a majority of the Company's threemember Board of
Directors, terminated Deloitte & Touche LLP ("Deloitte") as the
Company's auditors and engaged Margolin, Winer & Evens LLP
("Margolin") as the Company's auditors. On September 29, 1995,
Margolin was dismissed as the Company's auditors and Deloitte was
re-engaged as the Company's auditors by a reconstituted Board of
Directors of the
Company. The reports on the financial statements of the Company for
the years ended December 31, 1993 and 1994 were audited by Deloitte
and contained no adverse opinion, disclaimer of opinion,
modification or qualification. During its engagement, Margolin did
not issue any reports on the
financial statements of the Company.At no time during either of
their respective engagements, has there been any disagreements with
Deloitte or Margolin on any matter of disclosure or audit scope and
procedure, which disagreement, if unresolved to the satisfaction of
such firm, would have caused it to make reference to the subject
matter of the disagreement in connection with its report on the
Company's financial statements.
PART III
Except for information required by Item 13 (Exhibits and
Reports on Form 8-K), the information called for by Part III of
Form 10-KSB (Items 9, 10, 11 and 12) is incorporated by reference
herein from the Registrant's definitive proxy statement to be filed
with the Commission within 120 after the close of its fiscal year
ended December 31, 1996.
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Articles of incorporation and by-laws.
(a) Articles of Incorporation of ATS Money Systems, Inc.
(formerly known as More Creative Mergers, Inc.), as filed with the
Secretary of State of the State of Nevada on August 28, 1987
incorporated herein by reference to Exhibit 8 to Registration
Statement on Form S-18 (No. 33-19657-NY).
(b) Agreement of Merger of ATS Money Systems, Inc. into More
Creative Mergers, Inc., dated July 25, 1988, as filed with the
Secretary of State of the State of Nevada on September 6, 1988
incorporated herein by reference to Exhibit 12 to Post-Effective
Amendment No. 1 dated September 26, 1988 to Registration Statement
on Form S-18 (No. 33-19657-NY).
(c) By-Laws of ATS Money Systems, Inc. - incorporated herein
by reference to Exhibit 9 to Registration Statement on Form S-18
(No. 33-19657-NY).
4. Instruments defining the rights of security holders,
including indentures.
(a) Form of Common Stock certificate of ATS Money Systems,
Inc. - incorporated herein by reference to Exhibit 5 to Amendment
No. 1 dated March 11, 1988 to Registration Statement on Form S-18
(No. 33-19657-NY).
10. Material contracts.
(a) (i) Lease, dated November 30, 1989, between ATS Money
Systems, Inc. and Rockwood Four Limited Partnership incorporated
herein by reference to Exhibit 10(a) to the Annual Report on Form
10-K of ATS Money Systems, Inc. for the fiscal year ended December
31, 1989.
(ii) Amendment of Lease, dated as of December 1, 1992,
between ATS Money Systems, Inc. and Rockwood Limited Partnership
incorporated herein by reference to Exhibit 10(a)(ii) to the Annual
Report on Form 10-KSB of ATS Money Systems, Inc. for the fiscal
year ended December 31, 1992.
(iii) Amendment of Lease, dated as of September 15, 1995,
between ATS Money Systems, Inc. and Rockwood Four Limited
Partnership - incorporated herein by reference to Exhibit
10(a)(iii) to the Annual Report on Form 10-KSB of ATS Money
Systems, Inc. for the fiscal year ended December 31, 1995.
(b) Profit Sharing Plan of ATS Money Systems, Inc., dated
January 1, 1987 - incorporated herein by reference to Exhibit 19 to
Post-Effective Amendment No. 1 dated September 26, 1988 to
Registration Statement on Form S-18 (No. 33-19657-NY).
(c) Form of Salesman Employment Agreement - incorporated
herein by reference to Exhibit 10(j) to the Annual Report on Form
10-K of ATS Money Systems, Inc. for the fiscal year ended December
31, 1989.
(d) Form of Maintenance Agreement - incorporated herein by
reference to Exhibit 10(k) to the Annual Report on Form 10-K of ATS
Money Systems, Inc. for the fiscal year ended December 31, 1989.
(e) Common Stock Incentive Plan - incorporated herein by
reference to Exhibit 10(l) to the Annual Report on Form 10-KSB of
ATS Money Systems, Inc. for the fiscal year ended December 31,
1992.
(f) (i) Software Development Project Agreement, dated March
5, 1993, between ATS Money Systems, Inc. and Wells Fargo Armored
Car Service Corporation and addendum thereto incorporated herein by
reference to Exhibit 10(n)(i) to the Annual Report on Form 10KSB of
ATS Money Systems, Inc. for the fiscal year ended December 31,
1993.
(ii) Joint Sales and Marketing Agreement, dated January
1, 1993, between ATS Money Systems, Inc. and Wells Fargo Armored
Car Service Corporation - incorporated herein by reference to
Exhibit 10(n)(ii) to the Annual Report on Form 10-KSB of ATS Money
Systems, Inc. for the fiscal year ended December 31, 1993.
(iii) Hardware Maintenance Agreement, dated as of March
5, 1993, between ATS Money Systems, Inc. and Wells Fargo Armored
Car Service Corporation - incorporated herein by reference to
Exhibit 10(n)(iii) to the Annual Report on Form 10-KSB of ATS Money
Systems, Inc. for the fiscal year ended December 31, 1993.
(iv) Software License Agreement, dated as of March 5,
1993, between ATS Money Systems, Inc. and Wells Fargo Armored Car
Service Corporation - incorporated herein by reference to Exhibit
10(n)(iv) to the Annual Report on Form 10-KSB of ATS Money Systems,
Inc. for the fiscal year ended December 31, 1993.
(v) Hardware Sale Agreement, dated as of March 5, 1993,
between ATS Money Systems, Inc. and Wells Fargo Armored Car Service
Corporation - incorporated herein by reference to Exhibit 10(n)(v)
to the Annual Report on Form 10-KSB of ATS Money Systems, Inc. for
the fiscal year ended December 31, 1993.
(vi) Software Support/Consulting Agreement, dated as of
March 5, 1993, between ATS Money Systems, Inc. and Wells Fargo
Armored Car Service Corporation - incorporated herein by reference
to Exhibit 10(n)(vi) to the Annual Report on Form 10-KSB of ATS
Money Systems, Inc. for the fiscal year ended December 31, 1993.
(vii) Escrow Agreement, dated as of March 5, 1993,
between ATS Money Systems, Inc. and Wells Fargo Armored Car Service
Corporation - incorporated herein by reference to Exhibit
10(n)(vii) to the Annual Report on Form 10-KSB of ATS Money
Systems, Inc. for the fiscal year ended December 31, 1993.
(g) Joint Sales and Marketing Agreement, dated as of
September 29, 1993, between ATS Money Systems, Inc. and Standard
Register Company - incorporated herein by reference to Exhibit
10(o) to the Annual Report on Form 10-KSB of ATS Money Systems,
Inc. for the fiscal year ended December 31, 1993.
(h) Purchase Agreement, dated August 24, 1994, between ATS
Money Systems, Inc., IEI Acquisition Corp., Dynatech Corporation
and Innovative Electronics, Inc. - incorporated herein by reference
to Exhibit 10(j) to the Annual Report on Form 10-KSB of ATS Money
Systems, Inc. for the fiscal year ended December 31, 1994.
(i) ATS Moneys Systems, Inc. 1995 Director Stock Plan
(j) Employment Agreement, dated May 23, 1996, between
Gerard F. Murphy and ATS Money Systems, Inc.
(k) Technical Support Agreement, dated January 30, 1996,
between Technology Service Solutions and ATS Money Systems, Inc.
11. Statement re computation of per share earnings - Not
required since such computation can be clearly determined from the
material contained in this report on Form 10-KSB.
13. Annual report to security holders for the last fiscal
year, Form 10-Q or 10-QSB or quarterly report to security holders,
if incorporated by reference in the filing - Not applicable.
21. Subsidiaries of the small business issuer: Innovative
Electronics, Inc. - incorporated under the laws of the State of
Florida.
23. Consent of independent accountants.
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed with the Commission
during the fourth quarter of the fiscal year ended December 31,
1996.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: March 26, 1997 ATS Money Systems, Inc.
By: /s/ GERARD F. MURPHY
Gerard F. Murphy, President
(Chief Executive Officer)
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:
Dated:
March 26, 1997 /s/ GERARD F.MURPHY
Gerard F. Murphy
Director
March 26, 1997 /s/ FRED DEN
Fred Den
Director
March 26, 1997 /s/ A. PAUL COX
A. Paul Cox
Director
March 26, 1997 /s/ THOMAS J. CAREY
Thomas J. Carey
Director
March 26, 1997 /s/ JOSEPH M. BURKE
Joseph M. Burke
Vice President -Finance
(Principal Accounting
and
Financial Officer)
EXHIBIT 10.(i)
ATS MONEY SYSTEMS, INC.
1995 DIRECTOR STOCK PLAN
1. Purpose; Construction. The purpose of the ATS
MONEY SYSTEMS, INC. 1995 Director Stock Plan (the "Director
Stock Plan") is to advance the interest of ATS MONEY SYSTEMS,
INC. ("ATS") or any subsidiary that now exists or hereafter is
organized or acquired by ATS (ATS and such subsidiaries
collectively referred to as the "Company") by inducing persons
of outstanding ability and potential to join and remain with ATS
as directors, by encouraging and enabling such directors to
acquire a proprietary interest in ATS and by providing the
participating Non-Employee Directors with an additional
incentive to promote the success of the Company. The provisions
of the Director Stock Plan are intended to satisfy the
requirements of Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as now or hereafter
construed, interpreted and applied by regulations, rulings and
cases, and shall be interpreted in a mariner consistent with the
requirements thereof.
2. Definitions. As used in this Director Stock Plan,
the following words and phrases shall have the meanings
indicated:
(a) "Board" means the Board of Directors of ATS.
(b) "Cause" means (a) any act of fraud or intentional
misrepresentation, or (b) any act of embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or any direct or indirect majority-owned subsidiary of
the Company, or (c) the conviction of the Grantee for any felony.
(c) "Change of Control" means an event in which:
(i) any "person", as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than (1) the Company,
(2) any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or (3) any corporation.
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership
of Common Stock), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing a majority
of the combined voting power of the Company's then outstanding
voting securities; (ii)during any period of not more than two
consecutive years, not including any period prior to November 1,
1995, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii), or (iv) of this definition) whose election by the Board
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (213) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at
least a majority thereof;
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving or parent entity) more than 50% of
the combined voting power of the voting securities of the
Company or such surviving or parent entity outstanding
immediately after such merger or consolidation or (B) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquired a
majority of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar
effect).
(d) "Code" means the Internal Revenue Code of 1986,
as amended.
(e) "Committee" means the committee appointed by the
Board to administer the Plan
(f) "Common Stock" means the common stock, par value
$.001 per share, of ATS
(g) "Disability" means the Grantee's inability to
perform the Grantee's customary services by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than twelve
(12) months.
(h) "Fair Market Value" per share as of a particular
date means the last reported sale price of the Common Stock
regular way on such day or, in case no such reported sale takes
place on such day, the average of the reported closing bid and
asked prices regular way on such day, in either case on the New
York Stock Exchange or, if the Common Stock is not listed or
admitted t0 trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on the NASDAQ National Market
System or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on such
National Market System, the average of the closing hid and asked
prices in the over-the-counter market as furnished by any New
York Stock Exchange member firm selected from time to time by
ATS for that purpose. If the Common Stock is not listed or
admitted to trading on any national securities exchange, quoted
on such National Market System or listed in any list of bid and
asked prices in the over-the-counter market, "Fair Market Value"
shall mean the value of the Common Stock as determined in good
faith by the Committee.
(i) "Grantee" means a Non-Employee Director who has
been granted Common Stock or an Option under the Director Stock
Plan.
(j) "Non-Employee Director" means a member of the
Board of ATS who is not an employee of the Company.
(k) "Option" means a grant to a Grantee of an option
to purchase shares of Common Stock.
(I) "Retirement" means the termination of service as
a member of the Board by a Non-Employee Director that occurs (i)
after having served as a member of the Board for at least 10
years and (ii) other than for Cause.
(m) "Stock Grant" means a grant to a Grantee of
shares of Common Stock.
(n) "Trading Day" means, with respect to the Common
Stock, each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the
exchange or market on which the Common Stock is traded.
3. Administration. The Director Stock Plan shall be
administered by the Committee, and is intended to satisfy the
provisions of Rule 16b-3 under the Exchange Act or any successor
thereof
The Committee shall have the powers vested in it by
the terms of the Director Stock Plan, such powers to include the
authority to prescribe the form of the agreements embodying
awards of Options and Common Stock made under the Director Stock
Plan The Committee shall, subject to and not inconsistent with
the express provisions of the Director Stock Plan, have the
authority to administer the Director Stock Plan and to exercise
all the powers and authorities either specifically granted to it
under the Director Stock Plan or necessary or advisable in the
administration of the Director Stock Plan, including, without
limitation, the authority to prescribe, amend and rescind rules
and regulations relating to the Director Stock Plan; and to make
all other determinations deemed necessary or advisable for the
administration of the Director Stock Plan.
The Committee may delegate to one or more of its
members or t0 one or more agents such administrative duties as
it may deem advisable, and the Committee or any person to whom
it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the
Committee or such person may have under the Director Stock Plan.
The Board shall fill all vacancies, however caused,
in the Committee, may from time to time appoint additional
members to the Committee, and may at any time remove one or more
Committee members and substitute others One member of the
Committee shall he selected by the Board as chairman. The
Committee shall hold its meetings at such times and places as it
shall deem advisable All determinations of the Committee shall
be made by a majority of its members either present in person or
participating by conference telephone at any meeting or by
written consent. The Committee may appoint a secretary and make
such rules and regulations for the conduct of its business as it
shall deem advisable, and shall keep minutes of its meetings.
No member of the Board or Committee shall be liable
for any action taken or determination made in good faith with
respect to the Director Stock Plan or any Option or Common Stock
granted hereunder.
4. Eligibility. Each member of the Board who is a
Non-Employee Director shall be granted Common Stock and Options
in accordance with Sections 6 and 7 hereof The adoption of this
Director
Stock Plan shall not be deemed to give any
Non-Employee Director any right to be granted Common Stock or an
Option to purchase shares of Common Stock, other than in
accordance with the terms of this Director Stock Plan.
5. Common Stock Subject to the Director Stock Plan.
The stock subject to Stock Grants or grants of Options shall be
shares of Common Stock. Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or
that may be reacquired by ATS. The maximum number of shares of
Common Stock as to which grants of stock or Options may be
granted from time to time under the Director Stock Plan shall
not exceed 150,000- The limitation established by The preceding
sentence shall he subject to adjustment as provided in Section
7(h) hereof.
In the event that any outstanding Option under the
Director Stock Plan should for any reason expire, be canceled or
he terminated without having been exercised in frill, the shares
of Common Stock allocable to the unexercised portion of such
Option shall (unless the Director Stock Plan shall have been
terminated) become available for subsequent grants of Options
under the Director Stock Plan.
6. Grants of Common Stock and Options. Common Stock
and Options shall be granted in the following manner:
(a) INITIAL GRANTS. On October 31, 1995 (the "Initial
Grant Date"), each Non-Employee Director as of such date (a
"Current Director") shall be granted automatically, without
action by the Committee, 10,000 shares of Common Stock.
(b) GRANTS TO NEW NON-EMPLOYEE DIRECTORS. Each
Non-Employee Director (a "New Director") who, alter the Initial
Grant Date, is elected to the Board for the first time by the
shareholders of ATS at any special or annual meeting of
shareholders shall, at the time such Non-Employee Director is
elected and duly qualified, be granted automatically, without
action by the Committee, 10,000 shares of Common Stock.
(c) ANNUAL GRANTS TO NON-EMPLOYEE DIRECTORS.
Immediately following the election of directors at the annual
meeting of stockholders, beginning in 1996, each Current
Director who is a Non-Employee Director on such dare, shall be
granted automatically, without action by the Committee, an
Option to purchase 5,000 shares of Common Stock. In addition,
Immediately following the election of directors at the annual
meeting of shareholders subsequent to the election of any New
Director, such New Director, if he or she is a Non-Employee
Director on such date, shall he granted automatically, without
action by the Committee, an Option to purchase 5,000 shares of
Common Stock.
7. Terms and Conditions of Options. Each Option
granted pursuant to the Director Stock Plan shall be evidenced
by a written agreement (the "Agreement") between ATS and the
Grantee in such form as the Committee shall prescribe from time
to time, which Agreement shall comply with and be subject to the
following terms and conditions:
(a) TYPE OF OPTION. Each Option granted under the
Director Stock Plan shall be a "nonqualified stock option" which
is not qualified under Section 422 of the Code
(b) OPTION PRICE. The Option Price of each Option
granted under the Director Stock Plan shall be equal to one
hundred percent (100%) of the Fair Market Value of the shares of
Common Stock subject to such Option on the date of grant
thereof- The Option Price shall be subject to adjustment as
provided in Section 7(h) hereof.
(c) MEDIUM AND TIME OF PAYMENT. The Option Price
shall he paid in full, at the time of exercise, in certified or
bank check or cash.
(d) TERM AND EXERCISE OF OPTIONS. Options granted
under the Director Stock Plan shall be exercisable as to
thirty-three and one-third percent (331/3%) of the shares
subject thereto on the date of grant and shall become
exercisable as to an additional thirty-three and onethird
percent (331~~%) of the shares subject thereto on each of the
first and second anniversaries of such date of grant if the
Grantee continues to be a Non-Employee Director on each of such
dates. An Option shall be execrable for a period of ten (10)
years from the date of grant of such Option: provided, however,
that the exercise period shall be subject to earlier termination
as provided in Sections 7(e) and 7(f) hereof- An Option may be
exercised, as to any or all full shares of Common Stock as to
which the Option has become exercisable, at any tune prior to
expiration: provided that, in no case may an Option be exercised
as to less than one hundred (100) shares of Common Stock at any
one time (or the remaining shares covered by the Option if less
than one hundred (100) shares of Common Stock). An Option shall
be exercised by the delivery by the holder thereof, of written
notice of such exercise to ATS at its principal office
(attention of the Secretary).
(e) TERMINATION. Except as provided in this Section
7(e) and in Section 7(f) hereof, an Option may not be exercised
unless the Grantee is then in service as a director of the
Company and unless the Grantee has remained continuously in such
service as a director since the date of grant of the Option. In
the event that the service of a Grantee as a director shall
terminate (other than by reason of Retirement, death or
Disability), all Options of such Grantee that are exercisable at
the time of such termination may, unless earlier terminated in
accordance with their terms, be exercised within six months
after such termination; provided, however, that if the service
of a Grantee as a director of the Company shall terminate for
Cause, all Options theretofore granted to such Grantee, shall,
to the extent not theretofore exercised, terminate immediately
upon such termination of employment Nothing in the Director
Stock Plan or in any Agreement shall confer upon an individual
any right to continue in service as a director of the Company or
interfere in any way with the right of the Company to terminate
such service.
(f) RETIREMENT, DEATH OR DISABILITY OF GRANTEE. If a
Grantee shall the while in service as a director of the Company
or within three (3) months after the termination of such
Grantee's service, other than for Cause, or if the Grantee's
service as a director shall terminate by reason of Disability or
Retirement, all Options theretofore granted to such Grantee (to
the extent otherwise exercisable at the time of death or
termination of service) may, unless earlier terminated in
accordance with their terms, be exercised by the Grantee or by
the Grantee's estate or by a person who acquired the right to
exercise such Option by bequest or inheritance or otherwise by
reason of the Retirement, death or Disability of the Grantee, at
any time within two years after the date of retirement, death
or Disability of the Grantee.
(g) NONTRANSFERABILITY OF OPTIONS. Options granted
under the Director Stock Plan shall not be transferable
otherwise than by will or by the laws of descent and
distribution, and Options may be exercised, during
the lifetime of the Grantee, only by the Grantee or by his or
her guardian or legal representative.
(h) EFFECT OF CERTAIN CHANGES. In the event of any
extraordinary dividend, stock dividend, recapitalization,
merger, consolidation, stock split, warrant or rights issuance,
or combination or exchange of such shares, or other similar
transactions, the number of shares of Common Stock available for
awards, the number of such shares covered by outstanding awards,
and the price per share of Options shall be equitably adjusted
by the Committee reflect such event and preserve the value of
such awards; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. If while
unexercised Options remain outstanding under the Director Stock
Plan, there is a Change in Control of ATS, all Options shall be
exercisable in full, whether or not otherwise exercisable In
the event of a change in the Common Stock of ATS as presently
constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares
with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Common
Stock within the meaning of the Director Stock Plan. To the
extent that the foregoing adjustments relate to stock or
securities of ATS, such adjustments shall be made by the
Committee, whose determination in that respect shall be final,
binding and conclusive Except as heretofore expressly provided
in this Section 7(h), the Grantee shall have no rights by reason
of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger or spin-off of
assets or stock of another corporation; and any issue by ATS of
shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to the Option.
The grant of an Option pursuant to the Director Stock Plan shall
not affect in any way the right or power of ATS to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structures or to merge or to consolidate
or to dissolve, liquidate or sell, or transfer all or part of
its business or assets.
(i) RIGHTS AS A STOCKHOLDER. A Grantee or a
transferee of an Option shall have no rights as a stockholder
with respect to any shares covered by the Option until the date
of the issuance of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior
to the date such stock certificate is issued, except as provided
in Section 7(h) hereof.
(j) OTHER PROVISIONS. Except as specifically
determined by the Committee, the Director Stock Plan and the
Agreements authorized thereunder shall contain such other
provisions, including, without limitation, the imposition of
restrictions upon the exercise of an Option, as shall be
required to cause the Director Stock Plan to at all times comply
with the requirements of Rule 16b-3 under the Exchange Act or
any successor thereof.
8. Agreement by Grantee Regarding Withholding Taxes.
If the Committee shall so require, as a condition of exercise,
each Grantee shall agree that the Company may defer making
payment of or delivery of any benefits under the Director Stock
Plan until satisfactory arrangements have been made for the
payment of any tax attributable to any amounts payable with
respect to Common Stock granted under the Director Stock PlanThe
Company is authorized to take any action as the Committee may
deem advisable to enable the Company and the Grantee to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any award under the Director Stock Plan.
This authority shall include authority to withhold or receive
stock or other property and to make cash payments in respect
thereof in satisfaction of the Grantee's tax obligations.
9. Amendment and Termination of the Director Stock
Plan. The Board at any time and from time to time may suspend,
terminate, modify or amend the Director Stock Plan; provided,
however, the Director Stock Plan shall not be amended more than
once during any six (6) month period other than to comply with
changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules or regulations thereunder.
Except as provided in Section 7 hereof, no suspension,
termination. modification or amendment of the Director Stock
Plan may adversely affect any Option previously granted, without
the express written consent of the Grantee.
10. Approval by Stockholders. The Director Stock Plan
shall be subject to the approval by the affirmative vote of a
majority of the shares of Common Stock represented at the 1993
Annual Meeting of Stockholders of ATS and entitled to vote
thereon. In the event such stockholder approval is not received
within the stated period of time, then upon such event, the
Director Stock Plan and all rights hereunder shall immediately
terminate, no Grantee (or any permitted transferee thereof)
shall have any remaining rights under the Director Stock Plan
and any Agreement entered into in connection herewith shall
become null and void.
11. Effect of Headings The section and subsection
headings contained herein are for convenience only and shall not
affect the construction hereof.
12. Governing Law. The Director Stock Plan and all
determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of New Jersey without giving
effect to conflict of laws principles thereof.
13. Effective Date of Director Stock Plan The
Director Stock Plan shall be effective upon the approval of the
Director Stock Plan by the stockholders of ATS as provided in
Section 10 hereof, and shall terminate on the tenth anniversary
thereof, unless sooner terminated in accordance with Section 9
hereof No Options or Common Stock may be granted under the
Director Stock Plan on or after October 31, 2005, but Options
theretofore granted may extend beyond such date.
Exhibit 10.(j)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated May 23, 1996, between
GERARD F. MURPHY, a resident of the State of New Jersey
("Employee"), and ATS MONEY SYSTEMS, INC., a Nevada corporation
with its executive offices in the State of New Jersey (the
"Company").
Terms and Conditions
1. Position. The Company hereby employs Employee
as, and Employee hereby agrees with the Company that he shall
serve as and execute the duties of and assume the
responsibilities of, President and Chief Executive Officer of
the Company, reporting to the Board of Directors of the Company.
Employee, during the Term (as hereinafter defined), and without
any additional compensation, shall serve as a member of the
Board of Directors of the Company (the "Board of Directors") and
of any Executive Committee of the Board of Directors.
2. Extent of Services. Employee, during the Term,
shall devote his full working time, attention and efforts to the
business and affairs of the Company; provided, however, that
Employee may engage in personal and not-for-profit activities of
a non-competing nature as long as such activities do not
materially interfere with the performance of his duties to the
Company.
3. Duties and Responsibilities. Employee shall be
responsible for the overall activities of the Company, assisted
by marketing, sales and finance personnel, all in accordance
with budgets and lawful general policies and other matters as
determined from time to time by the Board of Directors.
4. Salary, Benefits, Incentive Bonus.
(a) Salary. As compensation for his services
hereunder, the Company shall pay Employee an annual salary of
not less than One Hundred and Fifty Two Thousand Dollars
($152,000). Such annual salary shall be subject to review, at
least annually, by the Compensation Committee of the Board of
Directors (the "Compensation Committee"), and if there is no
Compensation Committee, then by the Board of Directors, and
shall be increased by such amounts, if any, as the Compensation
Committee shall determine in its sole discretion; and such
higher annual salary shall thereafter be
deemed Employee's annual salary for purposes of this
Agreement. Annual salary shall be payable in equal installments
on the Company's regular paydays, subject to the usual and
required employee payroll deductions and withholding.
(b) Benefits. Employee shall be entitled to:
(i) four (4) weeks annual paid vacation and all
Company holidays;
(ii) the exclusive use of an automobile of
Employee's choice (at least equivalent to the automobile
currently supplied Employee) and all related expenses (including
maintenance and insurance), which shall be refurnished at least
every three (3) years;
(iii) participate in all employee benefit programs
now or hereafter provided by the Company, to the extent that
Employee meets the eligibility provisions thereof; and
(iv) all business and other prerequisites of
employment generally afforded executives of the Company.
(c) Profit Incentive Bonus. It is the intention,
but not the obligation, of the Company to utilize a portion of
its annual net profits each year to create a fund to be
distributed annually to deserving employees to compensate them
for their efforts on behalf of the Company. If such a fund is
created, Employee shall be paid such portion thereof as the
Compensation Committee determines in its sole discretion, which
determination shall be final.
5. Term. The term of this Agreement (the "Term")
shall commence as of January 1, 1996 and, subject to the
provisions for termination set forth in Paragraph 6, shall
initially expire at the close of business on the third
anniversary of the date hereof. The Term shall be extended
automatically for additional periods, so that the unexpired Term
of this Agreement shall continue to be two (2) years, unless
notice of non-renewal of this Agreement is given by the Company
to Employee not less than two (2) years, or by Employee to the
Company not less than one (1) year, prior to the end of the
then-existing Term.
6. Termination.
(a) Illness or Disability. If Employee is absent
from his employment by reason of illness or other incapacity for
more than six (6) consecutive months during any twelve (12)
consecutive month period, the Board of Directors may, after the
six (6) month period of such absence, terminate Employee's
employment; provided, however, that at least thirty (30) days'
prior notice (given as provided in this Agreement) of intention
to terminate was given to Employee during his period of absence.
In the event of such termination, the Company shall be obligated
to pay Employee his then accrued annual salary, accrued vacation
and accrued benefits to the date of termination of his
employment.
(b) Death. If Employee shall die, this Agreement
shall terminate automatically, and the Company shall be
obligated to pay Employee's then accrued annual salary, accrued
vacation and accrued benefits to the date of his death; and
shall pay his widow, if any, an amount equal to his then annual
salary for a period of three (3) months after his death. In
addition, if the Company is the beneficiary of insurance on
Employee's life at the time of Employee's death, Employee's
estate shall be entitled to receive, upon payment of any such
insurance proceeds, a lump sum equal to the lesser of such
proceeds or Employee's then annual salary at the date of his
death. Employee acknowledges that the Company has no obligation
to maintain insurance on Employee's life, and such insurance, if
maintained, may be discontinued at any time; provided, however,
that if any such insurance is discontinued, Employee shall have
the option, if such insurance is assignable, to continue such
insurance at his expense upon payment of any then cash surrender
value thereof to the Company.
(c) Termination for Cause. The Company may
terminate Employee's employment at any time for Cause. "Cause"
shall exist only if (i) Employee wilfully and continuously fails
substantially to perform his reasonably assigned duties (other
than as a result of Employee's absence due to illness or other
incapacity), if such failure continues for more than ten (10)
business days after notice thereof (given as provided in this
Agreement) from the Board of Directors; or (ii) Employee is
convicted of a felony likely to result in his incarceration; or
(iii) Employee wilfully commits an act of fraud or dishonesty,
of a material nature, against the Company. Upon such
termination, the Company shall be obligated to pay Employee his
then accrued annual salary, accrued vacation and accrued
benefits to the date of his termination.
(d) Termination for Good Reason or Without Cause.
If Employee voluntarily terminates his employment during the
Term for Good Reason, or if the Company terminates Employee's
employment during the Term without Cause (i) Employee shall be
paid, on the date of his termination, a lump sum amount equal to
(A) his then accrued annual salary, accrued vacation and accrued
benefits to the date of his termination, plus (B) the amount
Employee would have received from the Company during the period
equal to the greater of (x) one (1) year, or (y) the then
remaining Term of this Agreement (for which purpose, Employee
shall be deemed to be entitled to receive an annual bonus equal
to the sum of (1) the average annual bonus paid to Employee with
respect to the two (2) preceding years, and (2) the average
annual accrual allocated to Employee under the Company's Profit
Sharing Plan, if any, with respect to such years), and (ii)
Employee automatically shall become fully vested in all of the
Company's benefit programs in which he participated. "Good
Reason" shall exist only if there is a breach of a material
obligation of the Company under this Agreement which is not
remedied within ten (10) business days after notice (given as
provided in this Agreement) from Employee specifically
delineating each such act of claimed breach and setting forth
Employee's intention to terminate his employment if such breach
is not duly remedied. A breach of a material obligation shall
include any of the following events: (i) the removal of
Employee from his position as President and Chief Executive
Officer; (ii) Employee not being appointed or elected as a
member of the Board of Directors and of any Executive Committee
thereof; (iii) a material decrease in Employee's
responsibilities or authority as provided under this Agreement
(or which are hereafter assigned to him) without his consent;
(iv) a reduction in Employee's then annual salary without his
consent or the failure of the Company to pay Employee without
his consent any amounts owed to Employee pursuant to this
Agreement within five (5) days of the date such payment was due
to Employee; (v) the relocation of Employee's principal place of
employment from the New York metropolitan area; or (vi) any
other action by the Company which materially interferes with
Employee's ability to carry out his responsibilities under this
Agreement.
(e) Voluntary Termination Other Than for Good
Reason. If Employee voluntarily terminates his employment
during the Term other than for Good Reason, Employee shall be
paid the unpaid portion of his then accrued annual salary,
accrued vacation and accrued benefits to the date of
termination.
7. Restrictive Covenant. During Employee's
employment under this Agreement, and for a period of one (1)
year after termination of Employee's employment if such
employment is terminated (a) by the Company for Cause, or (b) by
Employee voluntarily other than for Good Reason, Employee shall
not, either directly or indirectly as a partner, joint venturer,
employee, agent, salesman, officer, director or stockholder for
any other party (a) enter into or engage in any business
competitive with that carried on by the Company (or any of its
subsidiaries) within any territory in which the Company (or such
subsidiary) is then doing business; or (b) solicit or attempt to
solicit any employees of the Company (or any of its
subsidiaries) for such purpose.
8. Confidential Information and Discoveries.
Employee agrees that all information of a technical or business
nature, such as know-how, trade secrets, secret business
information, plans, data, processes, techniques, customer
information, inventions, discoveries, formulae, patterns,
devices, etc. (the "Confidential Information", which is not
intended to include knowledge or skills which are known, in
general, to Employee's profession or information which at the
time disclosed by Employee is generally available to the trade),
acquired by Employee in the course of his employment are
valuable business property rights of the Company or companies
affiliated with the Company, as the case may be. Employee shall
not, at any time during or after the termination of Employee's
employment with the Company, reveal, divulge or otherwise make
known to any person any Confidential Information made known to
Employee or of which Employee has become aware, except and to
the extent that such disclosure is necessary to carry out
Employee's employment by the Company. Upon termination of this
Agreement for any reason, Employee shall immediately turn over
to the Company all books of account and other records and
property of the Company used by, or in the possession or control
of, Employee, and Employee shall certify to the Company at such
time that the Employee has complied with this requirement.
9. Expenses. The Company shall reimburse Employee
in accordance with the Company's standard business expense
policies for all reasonable expenses incurred in the performance
of his duties on behalf of the Company; provided, however, that
Employee shall have properly accounted for such expenses to the
extent necessary to substantiate the Company's Federal Income
Tax deductions for such expenses under the Internal Revenue Code
of 1986, and the regulations promulgated thereunder, or under
any successor statute of similar import.
10. Place of Employment. Employee shall perform
his primary duties under this Agreement in the New York
metropolitan area at the offices of the Company. Employee
agrees to travel on temporary trips to such other places as may
be required from time to time to perform his duties under this
Agreement. Employee shall be entitled to appropriate travel and
hotel accommodations with respect to all such business trips.
11. Indemnification. To the extent that Employee
performs his duties for the Company in good faith and in a
manner he reasonably believes to be in, or not opposed to, the
best interests of the Company, and not in contravention of the
provisions of this Agreement, the Company shall indemnify
Employee to the full extent as permitted by the Nevada General
Corporation Law, and Employee shall be required to return any
payments made to him as a result thereof as required by the
Nevada General Corporation Law. The foregoing indemnification
shall be in addition to any indemnification required by the
ByLaws and Certificate of Incorporation of the Company, as in
effect on the date of this Agreement. Employee shall provide
the Company with prompt notice of the commencement of any
litigation in which indemnification from the Company may be
sought, and shall cooperate with the Company, at the Company's
expense, in the defense of any such litigation; the Company
shall have the right to select counsel for Employee and control
the defense of such litigation, as long as the Company acts in a
timely manner. The provisions of this Paragraph shall survive
the Term and the termination of this Agreement.
12. Failure to Make Required Payments. If
Employee's employment is terminated before the conclusion of the
Term (a) by the Company for any reason, or (b) by Employee for
Good Reason, and the Company does not pay Employee, on the date
of his termination, the amounts then due pursuant to the
provisions of this Agreement, Employee shall be entitled to
interest on such unpaid amounts, from the date of termination
until the date actually paid, at a rate equal to the lesser of
(x) the prime rate (as published in the New York Times, from
time to time) plus five percent (5%), or (b) the maximum amount
permitted by law.
13. Miscellaneous.
(a) Assignment. This Agreement is not assignable
by either party except that it may, in the sole discretion of
the Board of Directors, be assigned by the Company incident to
any merger, consolidation or sale of all or substantially all of
the assets and business of the Company. In such an event,
Employee shall have the right to terminate this Agreement at any
time after such permitted assignment on one (1) months' notice
(given as provided in this Agreement); in which event, and
notwithstanding any provision of this Agreement to the contrary
(i) the provisions of Paragraph 7 shall not apply after such
termination, and (ii) Employee shall then be paid, on the date
of his termination, a lump sum amount equal to (A) his then
accrued annual salary, accrued vacation and accrued benefits to
the date of his termination, plus (B) the amount Employee would
have received from the Company during the period equal to the
lesser of (x) six (6) months, or (y) the then remaining Term of
this Agreement.
(b) Modification and Waiver. This Agreement may
not be released, discharged, abandoned, changed or modified in
any manner, except by an instrument in writing signed on behalf
of both of the parties hereto or their duly authorized
representatives. The failure of either party to enforce at any
time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way
affect the validity of this Agreement or any part thereof. Any
waiver of any breach of this Agreement shall not be held to be a
waiver of any other or subsequent breach even if of a similar or
identical nature.
(c) Provisions Void. If any term or provision of
this Agreement is adjudicated invalid or unenforceable by a
Court of competent jurisdiction, the remaining terms and
provisions of this Agreement shall remain unimpaired.
(d) Construction. This Agreement shall be
interpreted and construed under the laws of the State of New
Jersey.
(e) Arbitration. Any controversy or claim arising
out of, or related to, this Agreement shall be resolved by
binding arbitration. The arbitration shall be conducted by one
arbitrator at a location selected by the Company in Bergen or
Union County, New Jersey, in accordance with the then governing
rules of the New Jersey office of the American Arbitration
Association. In the event that the parties, or their attorneys,
if they are represented by attorneys, cannot agree to the
selection of an arbitrator, the arbitrator shall be selected by
the presiding chancery judge of the Bergen County Court. The
prevailing party shall be determined by the arbitrator and shall
be entitled to recover his or its attorney fees and expenses;
and the fees and expenses of the arbitration shall be paid by
the non-prevailing party, unless otherwise determined by the
arbitrator. The decision of the arbitrator shall be binding and
conclusive on all parties involved; and any judgment on the
decision of the arbitrator may be entered in the highest court
of any forum, federal or state, having jurisdiction.
(f) Notice. Any notice given hereunder shall be in
writing and may be sent by certified or registered mail, return
receipt requested, or by recognized overnight courier service,
to the parties at the following addresses or at such other
address as either party may, from time to time, designate in
writing:
Company: ATS Money Systems, Inc.
25 Rockwood Place
Englewood, New Jersey 07631
Attn.:_____________________________
with a courtesy copy to:
Kraemer, Burns, Mytelka & Lovell, P.A.
675 Morris Avenue
Springfield, New Jersey 07081
Attention: Douglas E. Burns, Esq.
Employee: Gerard F. Murphy
298 Park Street
Upper Montclair, New Jersey 07043
Notices are effective upon actual receipt or the
refusal of acceptance thereof.
14. Entire Agreement. This Agreement represents
all the terms and conditions and the entire understanding
between the parties with respect to the subject matter hereof.
All of the terms and provisions of this Agreement shall be
binding upon, and inure to the benefit of and be enforceable by
the respective heirs, representatives, successors and permitted
assigns of the parties, except that the duties and
responsibilities of Employee hereunder are of a personal nature
and shall not be assignable in whole or in part by Employee.
15. Survival. Notwithstanding the termination of
this Agreement for any reason, the obligations of Employee under
Paragraphs 7 and 8 shall survive and remain in full force and
effect.
The undersigned have executed or caused the
execution of this Employment Agreement as of the date first
above written.
Attest: ATS MONEY SYSTEMS, INC.
___________________________ By:/s/________________________
Witness:
___________________________ /s/___________________________
Gerard F. Murphy
Exhibit 10.(k)
TECHNICAL SUPPORT AGREEMENT BETWEEN TECHNOLOGY
SERVICE SOLUTIONS AND ATS MONEY SYSTEMS, INC. TECHNICAL SUPPORT
AGREEMENT
___________________________________________________________
MAINTENANCE AND RELATED SERVICES
This Technical Support Agreement (Agreement) is
between Technology Service Solutions (herein after referred to
as "TSS"), a general partnership under the laws of the State of
New York, with its principal office at:
Valley Forge Office Center, 580 East Swedesford Road
Wayne Pennsylvania 19087
and ATS Money Systems, Inc., (herein after referred
to as "The Company"), incorporated under the laws of the State
of New Jersey, having an office at:
25 Rockwood Place Englewood, New Jersey 07631
TSS and The Company mutually agree to the following:
This Agreement sets forth the terms and conditions
under which TSS will provide maintenance and related services to
The Company. TSS will provide such services to The Company
based on transaction documents issued by The Company and
accepted by TSS hereunder.
THIS AGREEMENT DOES NOT OBLIGATE EITHER PARTY TO
PURCHASE ANY SERVICES, BUT ONLY ESTABLISHES THE TERMS AND
CONDITIONS FOR SUCH TRANSACTIONS. THERE IS NO REPRESENTATION,
WARRANTY, OR COMMITMENT TO DO ANY PARTICULAR AMOUNT OF BUSINESS
HEREUNDER.
PRIOR TO COMMENCEMENT OF SERVICES UNDER THIS
AGREEMENT, A COMPLETED STATEMENT OF WORK MUST BE SIGNED BY BOTH
PARTIES. SUBSEQUENT TO THE SIGNING OF SUCH STATEMENT OF WORK,
THE OBLIGATION OF TSS TO PROVIDE SERVICES AND RECEIVE PAYMENT
FROM THE COMPANY SHALL BE BASED UPON THE ACCEPTANCE OF A
TRANSACTION DOCUMENT BY TSS
1.0 Scope Of Work
TSS will provide installation, warranty service,
maintenance, and other related services for end-users of
eligible computer hardware and software products specified in
Attachments to this Agreement.
Services provided will be described in each Statement
of Work issued hereunder.
TSS reserves the right to use its selected
subcontractors to provide these services.
2.0 Definitions
The term Attachment shall mean a document containing
additional information regarding the business relationship, as
well as additional terms and conditions. For example, an
Attachment may be a Statement of Work, a price schedule, or an
eligible machine listing.
The term Statement of Work shall mean a signed
document subject to the terms and conditions of this Agreement
that specifically describes the responsibilities, obligations
and any unique requirements of the services provided.
The terms transaction document shall mean a document
that contains specific information regarding The Company's
requested services to be provided to its customers hereunder.
Examples of such information include type of service, customer
name and address, machine serial number and manufacturer name,
and effective date.
The term products shall mean those eligible products
listed in an Attachment, and installed in the United States and
Puerto Rico.
The term deliverables shall mean parts and additional
items and materials that may be necessary for TSS to fulfill its
obligations under this Agreement.
The terms end-user and customer shall mean the user
of the eligible products under this Agreement.
The term parts shall mean replacement parts necessary
for TSS to perform services during the term of this Agreement,
or any extensions thereof.
3.0 Term, Termination, and Cancellation
The term of this Agreement shall be for one year from
the date of its execution by both parties. This Agreement may
be further extended by a written agreement of extension signed
by both TSS and The Company.
Any conditions of this Agreement which, by their
nature extend beyond its termination or cancellation, remain in
effect until fulfilled and apply to respective successors and
assignees.
TSS or The Company may terminate this Agreement, with
or without cause, at any time upon at least ninety days prior
written notice.
TSS or The Company may cancel this Agreement for a
material breach by the other party of its obligations hereunder
if that breach is not cured within thirty days after receiving
written notice thereof.
4.0 Charges
The charges for services provided by TSS are listed
in an Attachment. TSS may increase or decrease charges by
providing ninety days written notice. Such charges will become
effective on the first day of the applicable invoice period on
or after the effective date specified in the notice.
5.0 Payment Terms
Unless otherwise specified in an Attachment, payment
for services provided by TSS shall be net thirty days from
receipt of an acceptable TSS invoice.
Payment will be made to the TSS address specified on
the invoice.
6.0 Taxes
TSS will invoice all taxes applicable to the services
provided.
7.0 Warranty
TSS warrants that it will perform all services in a
skillful, competent, and workmanlike manner and in accordance
with its description in an Attachment or a Statement of Work.
Misuse, accident, unsuitable operating environment,
modification, failure caused by a product for which TSS is not
responsible, or operation outside of manufacturer's
specifications may void this warranty. TSS does not warranty
uninterrupted service or error-free operation.
THIS WARRANTY REPLACES ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8.0 Confidential Information
The Company understands that TSS does not wish to
receive from The Company or any of its affiliates or authorized
channels, any information which may be considered confidential
or proprietary. The Company represents and warrants that no
information will be provided that is confidential or proprietary
to The Company of any of its affiliates or authorized channels
or any third party, and TSS will not be obligated to retain in
confidence or in any way restrict the use by TSS of any
information received. In the event it becomes necessary to
provide or exchange information that is deemed confidential or
proprietary to The Company or TSS, such provision or exchange
shall not take place prior to execution of a written
confidentiality agreement.
9.0 Public Disclosure
The parties agree not to disclose the terms and
conditions of this Agreement without the express written consent
of the other party, except as may be required by law or
governmental rule or regulation, or to establish either party's
rights under this Agreement; provided, however, that if one
party seeks to disclose for reasons not requiring the other
party's consent, that party will limit the disclosure to the
extent required, will allow the other party to review the
information disclosed and will apply where available, for
confidentiality, protective orders and the like.
Any review under this paragraph will not be construed
to make the reviewing party responsible for the content of any
disclosure.
10.0 Relationship of the Parties
Neither party is the other's legal representative or
agent for any purpose, and has no authority to, and shall not
make any warranties or representations for create any
obligations for the other party.
11.0 Amendment
This Agreement may be amended, modified, or altered
only in a writing duly executed by both parties to this
Agreement.
12.0 Advertising and Use of Trademark and Service
Mark
The Company agrees not to advertise the fact that TSS
is providing services without the express written consent of
TSS. Each party agrees not to use any trademark or service mark
of the other party without its written consent, and nothing
contained herein is intended to, or shall be construed to grant
any license or right regarding any such trademark or service
mark.
13.0 Indemnification
Each party agrees to indemnify and hold the other
party harmless from any and all claims, suits, actions,
liabilities, and costs of any kind, including without
limitation, reasonable attorney fees and all cost of litigation
arising out of or pertaining to its negligent act or omission,
or failure to perform any of its obligations hereunder.
14.0 Limitation of Liability
Each party's liability for actual damages from any
cause whatsoever, except as otherwise stated in this section,
will be limited to $100,000. This limitation will apply,
regardless of the form of action, whether in contract or tort,
including negligence. This limitation will not apply to claims
by either party for bodily injury or damage to real property or
tangible personal property for which the other party is legally
liable.
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOST
PROFITS, LOST SAVINGS, INCIDENTAL DAMAGES, OR CONSEQUENTIAL
DAMAGES. EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
15.0 Force Majeure
Neither party will be considered in default or liable
for any delay or failure to perform any of its obligations under
this Agreement if such delay or failure arises directly or
indirectly out of an act of God, acts of the public enemy,
freight embargoes, strikes, quarantine restrictions, unusually
severe weather conditions, insurrection, riot, and other such
causes beyond the control of the party, provided the affected
party notifies the other party.
16.0 Order of Precedence
In the event of a conflict, the order of precedence
shall be the terms and conditions of 1) the body of this
Agreement, 2) its signed and unsigned Attachments, and 3) any
transaction documents accepted by TSS hereunder.
17.0 Severability
In the event that any term or condition contained
herein is held to be invalid or unenforceable, the remaining
terms and conditions shall be unaffected and shall continue to
inure to the benefit of and to be binding upon the parties
hereto.
18.0 Successors
The terms and conditions of this Agreement shall
inure to be benefit of and be binding upon the parties and their
respective successors and legal representatives.
19.0 Limitation on Actions
No action, regardless of form, arising out of our
related to the transactions covered by this Agreement may be
brought by one party against the other party more than two years
after the cause of action arose.
20.0 Assignment and Delegation
Except as otherwise provided for in this Agreement,
neither party shall assign any of its rights under this
Agreement, or delegate any of its duties hereunder without the
prior written consent of the other party. Any attempted
assignment or obligation without such consent is void.
21.0 Compliance with Government Legal Requirements
The parties agree to comply and do all reasonable
things necessary to comply with all federal, state, and local
laws, regulations, and ordinances relative to this Agreement.
22.0 Waiver
Failure by either party to insist in any instance
upon strict conformance by the other to any term or condition
herein or failure by either party to act in the event of a
breach shall not be construed as a consent to or waiver of any
subsequent breach of the same or of any other term or condition
contained herein.
23.0 Non-exclusive Agreement
Nothing in this Agreement will prohibit either party
from performing like or similar services for any other person or
entity.
24.0 Third Party Beneficiary
This Agreement is intended to benefit TSS and The
Company and no other parties. It is the express intent of The
Company and TSS that this Agreement is not a third-party
beneficiary contract.
25.0 Governing Law and Forum
This Agreement shall be governed by the laws of the
State of New York. Both parties expressly waive their right to
a trial by jury for any action resulting from this Agreement.
26.0 Statement of Nonrecourse
Technology Service Solutions is a New York general
partnership and all of its obligations arising out of this
Agreement are expressly nonrecourse to each Partner and its
beneficial owners.
27.0 Complete Agreement
This Agreement, its Attachments, and any transaction
documents accepted by TSS hereunder constitute the entire
agreement and understanding between the parties with respect to
the services, and no oral or written representations, terms,
conditions, or agreements, other than those set forth in this
Agreement, its Attachments, and any transaction documents, have
been relied upon or shall be binding upon the parties or imputed
to them.
28.0 Authorization
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective duly
authorized representatives.
Accepted and Agreed to:
Technology Service Solutions
________________________________ ________________________________
Company Name
By:___________________________ By:_____________________________
Authorized Signature Authorized Signature
Name:_________________________ Name:___________________________
(Type or Print) (Type or Print)
Title:________________________ Title:__________________________
Date: ________________________ Date:__________________________
TECHNOLOGY SUPPORT AGREEMENT BETWEEN ATS MONEY
SYSTEMS, INC. AND TECHNOLOGY SERVICE SOLUTIONS
ATTACHMENT A - STATEMENT OF WORK (SOW)
1.0 GENERAL INFORMATION
1.1 Purpose
The purpose of this Statement of Work (SOW) is to
fully describe the scope of work set forth in paragraph 1.0 of
the Technical Support Agreement between Technology Service
Solutions (TSS) and ATS Money Systems executed on 01/30/96.
This SOW is governed by the terms and conditions of said
Technical Support Agreement. It also sets forth the work
related responsibilities of both parties, in connection with
Technology Service Solutions providing services to ATS Money
Systems and its customers.
1.2 Scope
TSS will provide Contract Maintenance, Time and
Materials and Installation/Discontinuance Services. These
product services and charges are specified in Section 7.0.
The type of services specifically required by
individual relationships under custom proposals may vary. When
applicable, separate Agreements and Attachments will be used to
set forth the terms and conditions and charges.
Implementation for such requirements will occur
minimum of 30 days from notification by ATS Money Systems as
mutually agreed to by TSS and ATS Money Systems. Pricing for
these tasks must be submitted separately and developed on an
individual basis.
ATS Money Systems will receive all System end-user
calls for service and retain responsibility for call
administration and critical end-user management and escalation.
TSS will receive stand alone equipment and end-user
calls for service and retain responsibility for call
administration.
TSS will perform services on behalf of ATS Money
Systems on products listed in Exhibit A, "Eligible Product
List". The "Eligible Products List" will be revised from time
to time by mutual agreement of the parties as ATS Money Systems
engages TSS to perform service on additional end-user accounts.
Should items not identified by ATS Money Systems for
service be diagnosed as the cause of system failure, the
Customer Service Representative (CSR) will contact ATS Money
Systems to get approval for continued work.
Should end-users request additional work to be
performed for which the CSR was not dispatched, the CSR will
contact ATS Money Systems. If approved, ATS Money Systems will
open a new call using the standard call placement methodology.
CSR's will not perform work without prior approval.
1.3 Project Implementation and Management
TSS will provide ATS Money Systems with an
implementation Project Manager to ensure all startup activities
are implemented in accordance with this Statement Of Work. The
implementation Project Manager will ensure customer
familiarization with services, work with ATS Money Systems to
integrate daily operating procedures, establish processes for
call handling, tracking, and financial reporting, establish the
operational systems to support those processes, and transition
the account to a Central Site Manager. if required, the Project
Manager will be re-engaged whenever new processes require
implementation.
TSS will assign a Central Site Manager to ATS Money
Systems to serve as a single point of contact over the life of
the contract after implementation is completed. The Central
Site Manager will direct TSS support for ATS Money Systems,
monitor and ensure service levels are achieved, ensure timely
and accurate reporting to ATS Money Systems, and resolve any
problems that may occur.
In the event ATS Money Systems should request full
time On-Site support, ATS Money Systems will either provide call
volume estimates that would justify such an assignment or agree
to pay an additional fee for such services. If the estimates
warrant an assignment, actual call volumes will be assessed on a
quarterly basis to verify the need for continuation.
1.4 Technical Support
ATS Money Systems will maintain a support desk with
the necessary expertise, capabilities, and resources to dispatch
TSS for ATS Money Systems system customers. ATS Money Systems
support desk will operate Monday - Friday (8:00 A.M. - 07:00
P.M. EST).
ATS Money Systems will assist TSS in obtaining any
special diagnostic programs and/or procedures required for TSS
to service the specified equipment.
Level 1 and Level 2 Customer Service Representative
(CSR) technical support will be provided by TSS. ATS Money
Systems or the Product manufacturers will be engaged to provide
Level 3 technical support. Should level 3 technical support be
engaged, Level 2 will transfer the call to the appropriate Level
3 organization (ATS Money Systems or the manufacturer) and
remain engaged until the problem is identified and/or resolved.
Electronic Customer Communications Option (ECCO) TSS
shall, at its own expense, include in its Maintenance Service to
ATS Money Systems, the ECCO capability which will provide the
software for direct dispatch between ATS Money Systems and TSS.
TSS shall be responsible for the operation and maintenance of
ECCO. it is understood by ATS Money Systems that it does not
acquire any right, title, or interest in the ECCO Capability
which remains the exclusive property of TSS or its affiliates.
ATS Money Systems will be responsible for providing
the equipment required for ECCO at its site.
ATS Money System's system end-users who attempt to
place service calls directly with TSS will be instructed to
contact ATS Money Systems at 1/800-526-0494 (Press #2 Software
Support).
The TSS electronic customer interface system will
maintain ninety days of history on-line at the local database.
Information available in ECCO will be limited to that which is
available within ECCO's design capabilities.
ATS Money Systems will be able to access ECCO data on
a daily basis to ascertain call status.
Voice will be used as a backup in the event that ECCO
is not available. (1/800-9TSS-FIX)
If an end-user should provide problem information to
ATS Money Systems, it will be given to the TSS CSR (via ECCO)
and the end-user will not be contacted again for problem
determination.
1.5 Safety
TSS agrees to service standard available products.
if TSS determines that products may not meet TSS safety or
serviceability standards, it will immediately suspend service
and notify ATS Money Systems of the problem. TSSs will not
resume service until corrective action has been taken and the
problem has passed TSS safety and serviceability standards.
ATS Money Systems agrees that all equipment serviced
under this agreement has received certification from
Underwriters Laboratory (UL) or an equivalent and will be
individually identified as such with the appropriate labeling.
1.6 Equipment Access
ATS Money Systems agrees to inform the end-users of
the eligible products that, to obtain service, the end-user must
provide TSS with full, free, and safe access to the equipment.
1.7 Rights to Materials
ATS Money Systems hereby grants to TSS the right to
use pre-existing training information provided to TSS to develop
and produce training materials and documentation to be used by
TSS in which TSS retains all rights, title, and interest.
1.8 Documentation
TSS will obtain all necessary documentation from ATS
Money Systems or what sources is required for servicing the
eligible products. Reproduction costs are assumed by TSS.
1.9 Field Service Support
Level 1
Problem identification and problem resolution will be
provided by TSS Remote Support Services through the usual
process.
Level 2
If Level 1 cannot resolve the problem, then the
support will be escalated within the TSS technical or network
support organizations. Level 2 will be engaged by the Level 1
contact.
Level 3
ATS Money Systems or Manufacturers product engineers
and technical specialists or software/network specialists will
be engaged as required for problem identification and
resolution. TSS' Remote Support Services representative will
contact the appropriate party.
2.0 HARDWARE SERVICES
2.1 Service Agreement
ATS Money Systems agreement is for On-Site hardware
maintenance, Time & Material and installation/discontinuance
services. The Principle Period of Maintenance (PPM) is defined
as Monday through Friday from 8:00 A.M. to 5:00 P.M., local
time, excluding government holidays.
2.2 Maintenance Strategy - ATS Money Systems Help
Desk
The service strategy for ATS Money System's system
accounts requires ATS Money Systems to perform initial problem
determination for systems customers and to dispatch a TSS
Customer Service Representative (CSR) using ECCO and the
standard call placement methodology.
TSS will provide ATS Money Systems with a part number
cross reference listing of ATS to TSS part numbers. ATS (Money
Systems) will dispatch Service calls to TSS with the probable
failing TSS Part Number and description when available.
ATS Money Systems stand alone equipment customers
will place service calls directly to TSS utilizing the 1/800-9
TSS FIX number (800-987-7349).
2.3 Customer Service Response Time
TSS shall provide telephone response to end-user
calls within one hour for hardware service and installations.
For service incidents the CSR will be dispatched for
On-Site next day repair with standard parts supplied by TSS. On
site next day repair is defined as a Monday through Friday 8:00
A.M. to 5:00 P.M., local time, on the following day after the
service call is received by TSS from ATS Money Systems or ATS
Money Systems end users in the case of stand alone equipment.
Exceptions to this will be:
1) Those calls that are specifically delayed by the
end-user.
2) For simple problems not requiring parts best
effort same day service.
3) When TSS On-Site problem determination is
required best effort same day service.
For unscheduled installations with machines in
quantities of less than ten, the CSR will schedule the work to
be performed within five business days.
All installation work involving more than ten
machines at one location or work across several geographic areas
will be handled as scheduled and planned work. TSS will require
a minimum of five business days notice for such work and the
work will be scheduled based on the requirements and complexity
of the installation.
Calls placed outside of the principle Period of
Maintenance (PPM) or on machines not listed on Exhibit A or on
ATS Coin Counters will be serviced on a best effort basis.
2.4 Service Call Flow
TSS will provide service to the ATS Money Systems
accounts using the call flow depicted in Exhibit B. These call
flows may change over time.
ATS Money Systems Responsibilities
ATS Money System's personnel are responsible for
dispatching of calls on behalf of their system customers. When
the end-user experiences a problem it will call ATS Money
Systems at 1/800-526-0494. ATS Money Systems will screen all
systems calls to:
* Verify service entitlement
* Obtain problem information and log pertinent end-user information
ATS money Systems will provide TSS with the following
information at the time of call placement:
* TSS Contract Number
* Call Billing/Type Code
* ATS Money Systems PO Number (if required)
* ATS Money Systems end-user Phone Number with Account ID
* End-User Name
* Contact Person
* Address
* Zip Code
* Contact Phone Number
* Platform/Machine Type (Exhibit C)
* Manufacturer and ModelNumber
* Serial Number
* Problem Description or Definition
* Failing Part Description
* Failing Part Number
TSS Responsibilities
Receive service calls from stand alone equipment end
users
Perform entitlement (if unentitled direct end user to
ATS Money Systems at (1/800-526-0494 Ext. 718)
Dispatch trained CSR
For Home Depot service calls obtain access code prior
to 5:00 P.M. EST/arriving on site (770-433-8211 x16410/x16425)
NOTE; Do not go to site without access code.
Call end user within one (1) hour of receiving
service call to establish an ETA.
Perform initial problem determination
Perform On-Site next day repair if part required
3.0 EDUCATION/TRAINING
3.1 Skills
TSS will dispatch appropriately trained CSR's based
on the platform/machine type indicated at the time of service
call placement.
4.0 PARTS SUPPORT
4.1 Parts Strategy
TSS will maintain an inventory of high usage parts
for the machines identified in Exhibit A; Eligible Product List,
within the TSS distribution network. Parts will be assigned a
TSS part number and Used parts Return (UPR) identification for
those parts that will be returned to the network for disposal or
repair.
Low usage parts not included in the standard
inventory will be obtained, as required, to meet the
response/repair times and will be shipped to a site designated
by the CSR.
TSS will return failing parts to the distribution
network.
TSS will be responsible for the logistics of all
spare parts.
Replaced parts supplied by TSS become the property of
TSS or its designee.
TSS assumes risk of loss for damage of parts supplied
by ATS Money Systems while in the possession or control of TSS.
TSS will provide the part(s) necessary to complete a
service call for hardware service.
TSS, in conjunction with ATS Money Systems, will
develop a recommended spare parts list and quantities for the
stocking program for ATS Money Systems accounts.
* Parts identified for the TSS stocking program will
be assigned a TSS part number and will be available through the
TSS parts distribution system.
* Parts which are not stocked by TSS will be
purchased through national buy and will be express shipped by
the next business day.
5.0 ADMINISTRATIVE SUPPORT
5.1 Machine Types and Models
All machine types and models will be assigned a TSS
platform/machine number consistent with the protocols required
for TSS databases.
5.2 Parts Numbers
TSS Part Numbers will be developed and assigned to
product part numbers consistent with the protocols for TSS
databases.
5.3 Dispatch
ATS Money Systems will perform entitlement for
Service prior to contacting TSS.
Calls for service form system end-users will be
received by ATS Money Systems at 1/800-526-0494. The end-user
will be requested to provide information identified in Section
2.4.
If a (ATS Money System) system end-user should call
TSS directly, the TSS representative will advise the end-user to
contact ATS Money Systems at 1/800-526-0494 (Press #2) for
assistance.
5.4 Activity Reporting
TSS CSR's will use Quality Service Activity Reporting
(QSAR) for service activity reporting. When recording QSAR
entries for ATS Money Systems, the CSR will use appropriate TSS
platform types, machine types, models and serial numbers, and
service code as well as the TSS Contract Number.
TSS CSR's will use service codes 01 for service, 44
for installation/discontinuance.
If the call has been properly placed via ATS Money
Systems, the machine type and the correct machine serial number
will be in the dispatch record and will automatically fill these
fields when the CSR records the service activity.
6.0 SERVICE SUPPORT
6.1 Support Level Structure
A minimum of two A+ Certified CSR's experienced
and/or trained will be available for service in the geographic
areas identified as being covered under this contract.
6.2 TSS Technical Support Responsibilities
TSS will provide a trained CSR to perform remedial
maintenance who will be responsible for using the following
recommended call flow:
Contact the end-user indicated in the call record
within one hour (CSR)
Provide On-Site next day service repair if parts are
required
Provide On-Site same day service under best effort
basis if parts are not required
Provide On-Site installations as scheduled
Obtain parts via the identified process
Utilize technical support when necessary
Update call with appropriate call coding including
identifying the problem resolved (CSR's)
Close resolved problems via their portable terminal
or via voice to the dispatch system on a timely basis
6.3 ATS Money Systems Technical Support
Responsibilities
ATS Money Systems will:
Perform Systems Problem Determination
Provide Product and customer information as
identified in Section 2.2
Dispatch the call using ECCO with all necessary call
information
Provide Level 3 support when required
6.4 Preventive Maintenance
TSS will perform Preventive Maintenance on ATS Money
Systems Printers, Document Counters and Encoding machines in
conjunction with service calls recording Service Code 08 and
machine type and serial number and serial number on the Quality
Service Activity Report (QSAR). Preventive maintenance will
consist of cleaning, inspection, adjustments and replacement of
worn components as needed. In the event that PM has not been
performed in the prior twelve (12) months on the above stated
machines TSS will schedule under a best effort basis perform PM
within sixty (60) days on those remaining machines in ATS Money
Systems end user inventory.
6.5 PAYMENTS AND INVOICING
TSS will provide monthly invoices for annuity
contract based services. TSS bills in advance for these
services (e.g. TSS would send an invoice during the first week
of March to represent March contract services). On a separate
invoice, TSS will provide a summary invoice for all incident
activity (T&M and Install/Discontinuance) performed during the
designated billing period (e.g. TSS would send an invoice during
the first week of March to represent January incident activity).
The invoice for annuity contract will contain the
following information:
* End User Contract Number
* End User Customer Name
* Purchase Order Number
* Billing period of Maintenance
* Invoice Amount
* Discount Amount
* Amount Due
Payment terms are net 30 days.
The invoice for T&M and Installation/Discontinuance
services will contain the following information:
* TSS Problem #
* Customer Problem # (if supplied)
* End User Customer Contact
* Purchase order Number (if applicable)
* Date of Service
* Total labor charge
* Total parts charge
* Total price for the incident
Each billable incident will be listed with the above
information. Payment terms are net 30 days.
Invoice detail reports are available upon request to
provide more specific information concerning the annuity
contract and incident based activity. TSS can provide the
following reports for no additional charge:
Annuity Invoice Inventory Report:
This report details the inventory by machine serial
number that is covered during the billing period. Included in
the report is the service purchased, billing period covered,
billing amount, and any applicable taxes. Subtotals are shown
for each amendment within a customer contract as well as
subtotals by customer contract.
Incident Call Detail Report:
This report provides specific information on each
billable call placed including: end user customer name,
location, contact, date of service request and service
requested. in addition, the report lists all actual and travel
hours associated with all service performed by TSS on this call
along with a listing of all parts and descriptions used to
remedy the customer's problem.
Incident Call Summary Report:
This report provides a summary of every service
activity performed by a TSS customer service representative to
remedy a customer's problem. This report contains both the
customer and TSS problem numbers as well as a description of
work performed and the associated charges.
Incident Billing Detail by State:
This report provides a summary of every service
activity by a TSS customer service representative to remedy a
customer's problem and sorts all records by the state in which
service was performed. This report lists both customer and TSS
problem numbers, the end user customer's name and location,
labor charges, parts charges, and total charges for each service
activity.
NOTE:
TSS reserves the right to change the format of
invoices and/or reports but in doing so will not provide any
less data to our customer.
6.6 REPORTS
TSS will provide current and historic call
information using ECCO. Current call progress can be displayed
at any time during a service incident. The status of a selected
call or all calls will be indicated at the time the request is
made through ECCO. ATS Money Systems may access call
information via ECCO except for the exceptions identified in
section 2.1.
Historic call status will provide information
tailored to parameters et up to track desired objectives and
information. ECCO 1.5 Users Guide describes current and
historic data available to ATS Money Systems.
7.0 PRICING
Intentionally omitted.
8.0 Authorization
Accepted and Agreed to:
Technology Service Solutions ATS Money Systems, Inc.
By: __________________________ By:___________________________
Name:_________________________ Name:_________________________
Title:________________________ Title:_________________________
Date: ________________________ Date:_________________________
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration statement
of ATS Money Systems, Inc. on Form S-8(33-64460) of our report dated March
21, 1997, appearing in this Annual Report on Form 10-KSB of ATS Money
Systems, Inc. for the year ended December 31, 1996.
Deloitte & Touche LLP
Parsippany, New Jersey
March 26, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of December, 31, 1996 and the Consolidated
Statement of Operations for the twelve months ended December 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-96
<PERIOD-END> DEC-31-96
<CASH> 308,138
<SECURITIES> 0
<RECEIVABLES> 1,338,704
<ALLOWANCES> 74,183
<INVENTORY> 567,420
<CURRENT-ASSETS> 2,360,001
<PP&E> 237,032
<DEPRECIATION> 102,432
<TOTAL-ASSETS> 3,453,864
<CURRENT-LIABILITIES> 847,901
<BONDS> 0
<COMMON> 5,892
0
0
<OTHER-SE> 2,382,631
<TOTAL-LIABILITY-AND-EQUITY> 3,453,864
<SALES> 5,752,718
<TOTAL-REVENUES> 8,059,474
<CGS> 2,633,655
<TOTAL-COSTS> 4,947,944
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 516,642
<INCOME-TAX> 199,260
<INCOME-CONTINUING> 317,382
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 317,382
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
