UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000.
[ ] 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
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ATS MONEY SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 13-3442314
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
25 ROCKWOOD PLACE ENGLEWOOD, NEW JERSEY 07631
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 894-1700
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 of 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.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
As of MAY 10, 2000, - 5,643,235 shares of common stock, $.001 par value.
Transitional Small Business Disclosure Form Yes [ ] No [X]
1
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<CAPTION>
Part I. FINANCIAL INFORMATION
Item I. Financial Statements
ATS MONEY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
March 31 December 31
ASSETS: 2000 1999
CURRENT ASSETS: (Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 783,519 $ 1,768,847
Trade accounts receivable, less allowance for doubtful
accounts of $173,269 in 2000 and in 1999 2,550,860 2,707,326
Inventories 1,116,079 719,704
Prepaid expenses and other current assets 205,316 90,921
Deferred income taxes 114,234 103,697
----------- -----------
Total current assets 4,770,008 5,390,495
----------- -----------
PROPERTY - At cost:
Office furniture 70,712 69,633
Office machinery and equipment 329,299 309,129
----------- -----------
Subtotal 400,011 378,762
Less accumulated depreciation 241,469 222,512
----------- -----------
Property - net 158,542 156,250
----------- -----------
OTHER ASSETS:
Software costs, less accumulated amortization of
$1,536,216 in 2000 and $1,380,672 in 1999 1,770,437 1,796,485
Deposits and other long-term assets 58,018 98,018
----------- -----------
Total other assets 1,828,455 1,894,503
----------- -----------
TOTAL $ 6,757,005 $ 7,441,248
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,023,840 $ 1,550,496
Deferred revenue 510,318 542,576
Other liabilities 143,188 255,167
----------- -----------
Total current liabilities 1,677,346 2,348,239
----------- -----------
LONG-TERM:
Deferred credit, less accumulated amortization of
$146,137 in 2000 and $153,265 in 1999 124,774 131,902
Deferred income taxes 255,877 256,592
----------- -----------
Total long-term liabilities 380,651 388,494
----------- -----------
COMMITMENTS and CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, non-cumulative, voting - $.001 par value, 25,000,000
shares authorized, 5,986,735 and 5,942,547
shares issued at March 31, 2000 and December 31, 1999, respectively 5,987 5,943
Additional paid-in capital 2,151,953 2,135,774
Accumulated earnings 2,541,412 2,563,142
Treasury stock - 343,500 shares, at par value
at March 31, 2000 and December 31, 1999 (344) (344)
----------- -----------
Total stockholders' equity 4,699,008 4,704,515
----------- -----------
TOTAL $ 6,757,005 $ 7,441,248
=========== ===========
See notes to consolidated financial statements.
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ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
MARCH 31 MARCH 31
2000 1999
REVENUE:
<S> <C> <C>
Equipment and systems sales $ 2,427,957 $ 2,691,908
Equipment maintenance and service revenue 636,023 598,735
----------- -----------
Total revenue 3,063,980 3,290,643
----------- -----------
COST AND EXPENSES:
Cost of goods sold and service expense:
Equipment and systems 1,433,469 1,279,889
Equipment maintenance and service 263,349 260,912
Selling, general and administrative expenses 1,390,044 1,356,017
----------- -----------
Total costs and expenses 3,086,862 2,896,818
----------- -----------
(LOSS) INCOME FROM OPERATIONS (22,882) 393,825
NET INTEREST INCOME 16,489 11,292
----------- -----------
(LOSS) INCOME BEFORE INCOME TAX EXPENSE (6,393) 405,117
INCOME TAX EXPENSE 15,337 160,000
----------- -----------
NET (LOSS) INCOME $ (21,730) $ 245,117
=========== ===========
EARNING PER COMMON SHARE:
Basic and diluted $ (0.00) $ 0.04
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 5,621,407 5,660,047
=========== ===========
See notes to consolidated financial statements.
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<CAPTION>
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
MARCH 31 MARCH 31
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income $ (21,730) $ 245,117
Adjustments to reconcile net (loss) income to cash
provided by operating activities:
Depreciation and amortization 167,376 142,520
Deferred income taxes (11,252) 20,936
Changes in current assets and liabilities:
Trade accounts receivable - net 156,466 782,322
Inventories (396,375) (543,137)
Prepaid expenses and other current assets (114,395) (48,263)
Accounts payable and accrued expenses (526,656) (909,412)
Deferred revenue (32,258) 1,126,182
Deferred income taxes (10,537) 18,084
Deposits and other long-term assets 40,000 5,832
----------- -----------
Net cash (used in) provided by operating activities (850,803) 883,738
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of software development costs (129,499) (202,604)
Additions to property (21,249) (30,080)
----------- -----------
Net cash used in investing activities (150,748) (232,684)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Common Stock 16,223 --
----------- -----------
Net cash used in financing activities 16,223 --
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (985,328) 651,054
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,768,847 286,368
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 783,519 $ 937,422
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 408,542 $ 151,568
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
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ATS MONEY SYSTEMS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2000
NOTE 1 - UNAUDITED INFORMATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Item 310 (b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, the accompanying unaudited financial statements
reflect all adjustments (which comprise only normal recurring accruals)
necessary to present fairly the Company's consolidated financial position as of
March 31, 2000, and the results of its operations and its cash flows for the
three month periods ended March 31, 2000 and 1999. Information included in the
consolidated balance sheet as of December 31, 1999 has been derived from the
Company's audited financial statements contained in its Annual Report on Form
10-KSB for the year ended December 31, 1999, to which reference is made.
Operating results for the three month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000.
Certain prior year amounts have been reclassified in order to conform with the
2000 presentation.
NOTE 2 - 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.
NOTE 3 - CAPITALIZED SOFTWARE COSTS
The Company capitalizes computer software development costs in accordance with
the provisions of Statement of Financial Accounting Standards No. 86;
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed". 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 estimated 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 $155,547 and $143,032 for the three month periods ended March 31,
2000 and 1999, respectively.
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NOTE 4 - REVENUE RECOGNITION
Revenue Recognition - Revenue from equipment and system 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, 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.
NOTE 5 - 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.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
At March 31, 2000, the Company was committed under noncancelable, operating
leases for office space, automobiles and office equipment, expiring at various
dates through February 2004, requiring minimum rental payments as follows:
YEAR ENDING DECEMBER 31:
2000 $ 247,829 (Balance of Year)
2001 316,319
2002 303,940
2003 303,940
2004 94,392
----------
$1,266,420
==========
NOTE 7 - EARNINGS PER COMMON SHARE
Basic earnings per common share is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. The computation of diluted earnings per share is similar to
the computation of basic earnings per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. For the
three month periods ended March 31, 2000 and 1999, the dilutive effect on
earnings per common share was insignificant.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Reference is made to Item 6 - "Management's Discussion and Analysis or Plan of
Operation", contained in the Company's Annual Report on Form 10-KSB for its year
ended December 31, 1999, for a discussion of the Company's financial condition
as of December 31, 1999, including a discussion of the Company's anticipated
liquidity and working capital requirements during 2000.
This Quarterly Report on Form 10-QSB contains, in addition to historical
information, certain forward-looking statements that involve significant risks
and uncertainties. Such forward-looking statements are based on management's
belief as well as assumptions made by, and information currently available to,
management pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements can generally be
identified as such because the context of the statement may include words such
as the Company "believes", "expects" or words of similar import. Similarly,
statements that describe the Company's future plans, objectives, estimates or
goals are also forward-looking statements. Such statements address future events
and conditions concerning capital expenditures, earnings, sales, liquidity and
capital resources, and accounting matters. The Company's actual results could
differ materially from those expressed in or implied by the forward-looking
statements contained herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in "Financial
Condition" below and in Item 1 - "Description of Business" and elsewhere in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999, as
well as factors such as future economic conditions and economic conditions in
the industries in which the Company's customers compete, a determination by the
Company's customers to prolong their test cycles of the Company's equipment,
software and software support services, a determination by the Company's
customers to modify or change their underlying computer and cash reporting
systems, acceptance by customers of the Company's products, changes in customer
demand, legislative, regulatory and competitive developments in markets in which
the Company operates and other circumstances affecting anticipated revenues and
costs. The Company undertakes no obligation to release publicly the result of
any revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date of this Quarterly Report on Form 10-QSB
or to reflect the occurrence of other unanticipated events.
7
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COMPARISON OF CONSOLIDATED OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
(THE "2000 QUARTER") TO THE THREE MONTHS ENDED MARCH 31, 1999 (THE "1999
QUARTER").
Total revenues for the 2000 Quarter were $3,063,980 compared to $3,290,643 for
the 1999 Quarter, a decrease of $226,663 (6.9%). In the 2000 Quarter, equipment
and systems sales decreased $263,951 (9.8%) due primarily to a large order from
a major retailer in the first quarter of 1999, which was not duplicated in 2000.
Maintenance and service revenue increased by $37,288 (6.2%) from the 1999
Quarter, due to more systems being under contract.
The ratio of cost of equipment and system sales to sales increased from 47.5% in
the 1999 Quarter to 59.0% in the 2000 Quarter, due to an increase in hardware
sales compared to system sales. Cost of maintenance and service to related
revenue decreased from 43.6% in the 1999 Quarter to 41.4% in the 2000 Quarter.
Selling, general and administrative expenses were $1,390,044 in the 2000 Quarter
compared to $1,356,017 in the 1999 Quarter. This was an increase of $34,027
(2.5%) and was primarily attributable to increases in marketing and trade show
costs.
Interest income for the 2000 Quarter was $16,489 compared to $11,292 for the
1999 Quarter. This increase of $5,197 (46.0%) was due to more funds available
for short term investments at higher interest rates.
The provision for income taxes in the 2000 Quarter was $15,337 reflecting an
increase in state tax allocations, offset somewhat by a decrease in federal
income taxes. This compares to a $160,000 provision in the 1999 Quarter.
As a result of the foregoing, net income decreased $266,847 (108.9%) from a net
profit of $245,117 in the 1999 Quarter to a net loss of $21,730 in the 2000
Quarter.
8
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FINANCIAL CONDITION:
- -------------------
At March 31, 2000, the Company had working capital of $3,092,662 (an increase of
$50,406 from $3,042,256 at December 31, 1999) and cash and cash equivalents
(including short term investments) of $783,519 (as compared to $1,768,847 at
December 31, 1999).
During the first three months of 2000, operating activities used $850,803 of net
cash, primarily from paying accrued liabilities and purchasing inventory.
Investing activities used $150,748 of net cash primarily for software
development.
The Company has a $750,000 discretionary line of credit for the Company's
short-term needs, at an interest rate equal to the bank's prime 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. Also, the Company has a standby term
line of credit for $150,000 (solely for the purchase of equipment) at an
interest rate equal to the bank's prime rate plus 1%. The Company has not
utilized the discretionary or standby lines of credit since February 1998.
The Company believes that its current working capital, together with anticipated
funds from operations, will be sufficient to meet the Company's projected
operating needs and capital expenditures for the foreseeable future.
In 1998, the Company commenced a program to repurchase up to 500,000 shares of
its common stock from time to time in the over-the-counter market. Although no
shares were purchased during the 2000 Quarter, the Company is continuing such
program during 2000 and, through May 8, 2000 the Company purchased 243,500
shares of its common stock for an aggregate of $254,025.
The Company leases its facilities. As of March 31, 2000, the Company had no
material commitments for capital expenditures.
IMPACT OF THE YEAR 2000 ISSUE:
The Company has completed its Year 2000 remediation efforts and, since
January 1, 2000, has not experienced any significant problems internally or with
suppliers and customers in connection with this event. Nevertheless, there still
remain some future dates that could potentially cause computer systems problems.
The Company spent approximately $9,000 on its Year 2000 remediation
efforts. No significant future costs are anticipated.
Because the Company has not, to date, experienced any significant
problems in the Year 2000, it does not anticipate any major impact on its
operations.
9
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
10
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ATS MONEY SYSTEMS, INC.
-------------------------------------
(Registrant)
May 12, 2000 /s/ Gerard F. Murphy
--------------------------------- -------------------------------------
May 12, 2000 Gerard F. Murphy
(Date) Chief Executive Officer
President
(Principal Executive Officer)
May 12, 2000 /s/ Joseph M. Burke
--------------------------------- -------------------------------------
May 12, 2000 Joseph M. Burke
(Date) Vice President - Finance
(Principal Accounting and
Financial Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of March 31, 2000 and the Consolidated Statement
of Operations for the three months ended March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000828509
<NAME> ATS MONEY SYSTEMS, INC.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 783,519
<SECURITIES> 0
<RECEIVABLES> 2,724,129
<ALLOWANCES> 173,269
<INVENTORY> 1,116,079
<CURRENT-ASSETS> 4,770,008
<PP&E> 400,011
<DEPRECIATION> 241,469
<TOTAL-ASSETS> 6,809,766
<CURRENT-LIABILITIES> 1,677,346
<BONDS> 0
6,143
0
<COMMON> 0
<OTHER-SE> 4,692,865
<TOTAL-LIABILITY-AND-EQUITY> 6,809,766
<SALES> 2,427,957
<TOTAL-REVENUES> 3,063,980
<CGS> 1,433,469
<TOTAL-COSTS> 1,696,818
<OTHER-EXPENSES> 1,390,044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,393)
<INCOME-TAX> 15,337
<INCOME-CONTINUING> (21,730)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,730)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
