================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
COMMISSION FILE NUMBER 0-20270
THE NATIONAL REGISTRY INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-4346070
--------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization.) Identification No.)
2502 ROCKY POINT DRIVE, TAMPA, FLORIDA 33607
-----------------------------------------------------
(Address of principal executive offices and zip code)
(813) 636-0099
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
There were 35,081,852 shares of outstanding Common Stock of the registrant
as of August 11, 1997.
Total number of pages: 15 Exhibit Index begins on Page 13
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<PAGE>
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PART 1 - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
THE NATIONAL REGISTRY INC.
CONDENSED BALANCE SHEETS
(In Thousands)
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
(UNAUDITED) (AUDITED)
----------- ------------
CURRENT ASSETS
Cash and cash equivalents $ 2,721 $ 914
Receivables 590 460
Prepaid expense 499 199
Deferred charges 9 6
Inventory 89 --
Other 23 23
-------- --------
Total current assets 3,931 1,602
-------- --------
Equipment
Computer equipment 2,934 2,568
Office Equipment and other 425 381
-------- --------
3,359 2,949
Less accumulated depreciation (2,093) (1,824)
-------- --------
1,266 1,125
-------- --------
Investment 105 105
======== ========
TOTAL ASSETS $ 5,302 $ 2,832
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 244 $ 368
Accrued compensation 141 346
Other accrued expenses 454 634
-------- --------
Total current liabilities 839 1,348
-------- --------
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value
Authorized - 75,000,000 shares
Issued and outstanding - 34,790,489 and
34,401,005 as of June 30, 1997 and
December 31, 1996, respectively 348 344
Preferred stock, $.01 par value convertible
Authorized - 1,000,000 shares
Issued and outstanding
Series A - Liquidation preference $100 per share
100,000 shares issued and outstanding as of
June 30, 1997 and December 31, 1996 1 1
Series C - Liquidation preference $20 per share
348,750 and 0 shares issued and outstanding
as of June 30, 1997 and December 31, 1996,
respectively 3 0
Capital in excess of par value 41,672 34,301
Accumulated deficit (37,449) (33,019)
Unamortized deferred compensation (112) (143)
-------- --------
4,463 1,484
======== ========
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 5,302 $ 2,832
======== ========
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
THE NATIONAL REGISTRY INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 386 $ 359 $ 668 $ 1,443
Cost of Sales 100 251 181 830
-------- -------- -------- --------
Gross Profit 286 108 487 613
-------- -------- -------- --------
Operating Expenses:
Selling and marketing 752 719 1,288 1,239
Royalty Fee 143 125 268 250
Product development 796 433 1,548 756
General and administrative 766 894 1,288 1,584
-------- -------- -------- --------
Total Operating Expenses 2,457 2,171 4,392 3,829
Other Income: Interest Income 65 63 132 121
======== ======== ======== ========
Net Loss ($ 2,106) ($ 2,000) ($ 3,773) ($ 3,095)
-------- -------- -------- --------
Preferred stock dividend 490 -- 490 --
======== ======== ======== ========
Net Loss Attributable to common
stockholders ($2,596) $2,000) ($4,263) ($3,095)
======== ======== ======== ========
Loss per common share and common
share equivalent ($0.07) ($0.08) ($0.12) ($0.12)
Weighted average number of
common shares outstanding 34,681 25,234 34,571 24,784
</TABLE>
See accompanying notes.
3
<PAGE>
THE NATIONAL REGISTRY INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
SIX MONTHS ENDED
JUNE 30 ,
Cash used in operating activities: 1997 1996
------- -------
Net Loss ($3,773) ($3,095)
Adjustments to reconcile net loss to net
cash used in operating activities:
Compensation applicable to stock
option grants 31 94
Depreciation 270 210
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (130) (1,017)
Prepaid expense (300) (49)
Deferred charges (3) 59
Inventory (89) 143
Other assets -- (8)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (509) 52
------- -------
(730) (516)
------- -------
Net cash used in operating activities (4,503) (3,611)
------- -------
Cash used in investing activities:
Purchase of equipment (410) (468)
------- -------
Net cash used in investing activities (410) (468)
------- -------
Cash provided by financing activities:
Issuance of common stock for services 323 173
Proceeds from issuance of preferred stock 6,397 7,205
------- -------
Net cash provided by financing activities 6,720 7,378
------- -------
Net increase in cash and cash equivalents 1,807 3,299
Cash and cash equivalents at beginning of period 914 178
======= =======
Cash and cash equivalents at end of period $ 2,721 $ 3,477
======= =======
See accompanying notes
4
<PAGE>
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THE NATIONAL REGISTRY INC.
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NOTES TO CONDENSED FINANCIAL STATEMENTS -- UNAUDITED
1. Basis of Presentation
The accompanying financial statements are unaudited and condensed and,
therefore, do not contain certain information included in the annual financial
statements of The National Registry Inc. (the "Company"). In the opinion of
management, all adjustments (consisting only of normally recurring accruals) it
considers necessary for a fair presentation have been included.
The Company's condensed interim financial results are not necessarily
indicative of results to be expected for a full fiscal year and should be read
in conjunction with its financial statements and the notes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, as filed with the Securities and Exchange Commission on March 27, 1997, as
amended in Amendment No. 1 to Form 10-K/A as filed with the Securities and
Exchange Commission on April 30, 1997.
Certain amounts in the 1996 audited financial statements have been
reclassified to conform with 1997 presentation.
2. Net Loss per Common Share
For the six month periods ended June 30, 1997 and 1996 the loss per common
share was computed by dividing the net loss by the weighted average number of
shares outstanding during the periods. Common stock equivalents, relating to
convertible Series A Preferred Stock, convertible Series C Preferred Stock and
the exercise of stock options and warrants were not included in this calculation
due to their anti-dilutive effect.
5
<PAGE>
THE NATIONAL REGISTRY INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- UNAUDITED
3. Stockholders' Equity
On February 6, 1997, the Company completed an equity financing (the "Series
C Preferred Stock Private Placement") pursuant to which two accredited
investment funds purchased an aggregate of 350,000 shares of the Company's
Series C Preferred Stock, $.01 par value per share, for an aggregate purchase
price of $7.0 million before commissions and expenses which totaled
approximately $603,000. The Series C Preferred Stock carries a six percent per
annum accretion which the Company treated as a dividend resulting in a charge to
accumulated deficit and a credit to capital in excess of par value. The Company
recorded accretion of $105,000 and $167,000, respectively, for the three and six
month periods ended June 30, 1997.
Shares of the Series C Preferred Stock are convertible at the option of the
holder into shares of Common Stock, at the lesser of (i) $2.375 per share or
(ii) 82.5% of a floating price equal to the average closing bid price of the
Common Stock for the five trading days immediately preceding the date of
conversion. One-third of the Series C Preferred Stock became convertible 121
days after the closing date. An additional one-third became convertible 151 days
after the closing date and the remaining one-third became convertible 181 days
after the closing date. All shares of Series C Preferred Stock issued and
outstanding as of February 4, 2000 will be converted into shares of Common
Stock. During the quarter ended June 30, 1997, 1,250 shares of Series C
Preferred Stock were converted into 19,749 shares of Common Stock. The Company
may redeem the Series C Preferred Stock at any time based upon a formula
relating to the applicable conversion price at the time of the redemption or
under certain other circumstances. As part of the Series C Preferred Stock
Private Placement, the Company also issued warrants to purchase up to 400,000
shares of common stock at an exercise price of $2.6125 per share, subject to
certain adjustments from time to time. The warrants expire five years after the
date of closing.
In connection with the Series C Preferred Stock Private Placement, the
Company also issued warrants to purchase an aggregate of 140,000 shares of
Common Stock at an exercise price of $2.6125 per share to certain finders.
Warrants to purchase up to 70,000 shares are exerciseable through February 4,
2000. The remaining warrants are exercisable through February 4, 2002. The
Company has also agreed to certain registration rights with respect to these
warrants.
On March 17, 1997, the Company filed a registration statement with the
Securities and Exchange Commission (the "SEC") to register certain shares of
Common Stock issuable upon conversion of the Series C Preferred Stock, shares of
Common Stock held by certain selling stockholders named in the registration
statement and shares of Common Stock issuable upon the exercise of certain
options and warrants. On May 23, 1997 the registration statement was declared
effective by the SEC.
6
<PAGE>
THE NATIONAL REGISTRY INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALSYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
Except for the historical information contained herein, certain of the
matters discussed in this quarterly report are "forward-looking statements" as
defined in Section 21E of the Securities Exchange Act of 1934, as amended, which
involve certain risks and uncertainties which could cause actual results to
differ materially from those discussed herein. Such risks and uncertainties
include, but are not limited to, the Company's limited operating history and
substantial accumulated net loss, the Company's need for additional funds,
technological and market uncertainty, competition, the Company's dependence upon
a software licensor, the Company's dependence on patents and other proprietary
rights, control of the Company, the possibility of liquidation or bankruptcy of
the Company, the impact of failure to meet NASDAQ SmallCap Market eligibility
and maintenance requirements, the possible delisting of the Company's Common
Stock from the NASDAQ SmallCap Markets, shares of the Company's capital stock
eligible for future public sale, the limited liquidity of the Common Stock and
the market price volatility of the Common Stock. See the relevant discussions
elsewhere herein, and in the Company's registration statement on Form S-3
(Registration No.333-23467) declared effective on May 23, 1997 by the SEC, and
the Company's periodic reports and other documents filed with the Securities and
Exchange Commission for further discussions of these and other risks and
uncertainties applicable to the Company and its business.
Recent Developments
During the three month period ended June 30, 1997, the Company entered into
the contracts and agreements discussed below. There can be no assurance that any
of the programs discussed below will be commercially successful, if successful
that sales will result from such programs or that any future sales will be
commercially profitable for the Company. In addition, there can be no assurance
that any of the value added reseller agreements will result in any sales to the
Company or if sales do result, that such sales will be profitable for the
Company.
The STATE OF CONNECTICUT entered into an agreement with the Company to
provide identification solutions to help eliminate social services
fraud by individuals collecting benefits in multiple states. The
contract has a one year value of approximately $50,000.
INGRAM MICRO, MERISEL and TECH DATA, all leading computer industry
distributors, entered into agreements with Key Tronic to distribute the
Company's equipment throughout the United States. The Company has
supplied to these distributors several hundred units.
The Company entered into a development license agreement with Computer
Associates to enhance the Unicenter(R) TNG(TM) workstation security
feature with NRI finger imaging authentication.
7
<PAGE>
THE NATIONAL REGISTRY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)
A. Results of Operating Activities
For the three and six month periods ended June 30, 1997, the Company
incurred net losses of $2,106,000 and $3,773,000, respectively, resulting in
losses per common share of $.07 and $0.12, respectively. This compares to net
losses of $2,000,000 and $3,095,000 for the three and six month periods ended
June 30, 1996 or $.08 and $0.12 per common share, respectively. The increases of
$106,000 and $678,000, respectively, in net losses for the three and six month
periods ended June 30, 1997, are due primarily to increases in employee expenses
and certain professional fees, decreases in start-up revenues from long-term
contract sales during the first quarter of 1997 and increases in expenses
related to finalizing proto-type models and bringing them to market.
Approximately $149,000 and $301,000, respectively, of the net losses in the
three and six month periods ended June 30, 1997, and $159,000 and $304,000,
respectively, of the net losses in the three and six month periods ended June
30, 1996, were attributable to non-cash items, including depreciation and the
issuance of certain stock options.
Revenue and Gross Profit
For the three and six month periods ended June 30, 1997, the Company
reported operating revenues of $386,000 and $668,000, respectively. This
compares to operating revenues of $359,000 and $1,443,000, respectively, for the
three and six month periods ended June 30, 1996, or an increase of $27,000 and a
decrease of $775,000, for such periods respectively. The increase for the three
month period was primarily due to increased sales of hardware and NRIdentity(TM)
software products, while the decrease for the six month period was primarily due
to start-up revenue of $860,000 related to the Connecticut State project that
was recognized in the first quarter of 1996. Revenues for the three month period
ended June 30, 1997 consisted primarily of sales of NRIdentity(TM) scanners and
software to commercial users (approximately $199,000) and ongoing revenues from
contracts with the States of New Jersey and Connecticut and Nassau County, New
York (approximately $187,000). The Company's ongoing contracts with these
agencies will generate approximately $252,000 in revenue in the second six
months of 1997.
The Company's gross margin percentages before operating expenses for the
three and six month periods ended June 30, 1997 were 74% and 73% respectively,
compared to 30% and 42%, respectively for the same periods in 1996. The
increases from 1996 to 1997 were primarily due to the shift from the sale of
services during 1996 to the sale of hardware and software during 1997.
8
<PAGE>
THE NATIONAL REGISTRY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)
Operating Expenses
Total operating expenses for the three and six month periods ended June 30,
1997, increased over the same periods in 1996 by $286,000 and $563,000,
respectively. This represents changes of 13% and 15%, respectively. The
following table provides a breakdown of the changes in operating expenses for
the three month and six month periods ended June 30, 1997 as compared to the
same periods in 1996:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
------------------------ ------------------------
(in thousands, except %) (in thousands, except %)
$ % $ %
Change Change Change Change
------ ------ ------ ------
Selling and marketing $33 5% $49 4%
Royalty fee 18 14 18 7
Product development 363 84 792 105
General and administrative (128) (14) (296) (19)
====== ====== ====== ======
$286 13% $563 15%
====== ====== ====== ======
The Company is finalizing a plan that it believes will reduce operating
expenses in order to reduce the monthly cash burn rate. The plan may include
closing corporate facilities outside its Tampa headquarters and reducing the
number of employees.
9
<PAGE>
THE NATIONAL REGISTRY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)
Selling and Marketing
Selling and marketing expenses increased $33,000 and $49,000, or 5% and 4%,
for the three and six month periods ended June 30, 1997, respectively, compared
to the same periods in 1996. The increases were primarily due to increases in
employee, travel and marketing expenses related to the Company's increased
efforts to generate revenues. These increases were partially offset by decreases
in certain professional consulting services.
The Company has attempted to market its biometric finger image
identification technology for a wide range of potential uses including computer
network access security, protection of medical and financial records,
facilitation of electronic commerce, enhancing customer service in banking,
deterring check fraud and on-line fraud, enhancing security in the travel and
healthcare industries and deterring fraud in government social services
programs. While the Company has received favorable responses from a limited
number of potential commercial customers there can be no assurance that the
Company will be able to secure contracts for its products and services in
commercial markets or, if it is able to secure such contracts, that any of such
contracts will prove to be profitable for the Company. The sales cycle for the
Company's products has taken longer to develop than management anticipated due
to the newness of the technology and the extended period of evaluating, testing
and piloting prototypes.
Product Development
Product development expenses for the three and six month periods ended June
30, 1997, increased $363,000 and $792,000, or 84% and 105%, respectively,
compared to the same periods in 1996. The increases were primarily due to
increases in employee, travel and depreciation expenses. These increases were
partially offset by decreases in professional consulting services.
The Company's strategy has been to develop low-cost fingerprint scanners
that capture an image of an individual's fingerprint and convert the resulting
image into digital form. NRIdentity(TM) scanners are manufactured by Key Tronic
Corporation ("Key Tronic") under a developmental joint venture agreement dated
December 14, 1995. Under this agreement, the Company licensed certain optical
and electronic technology to Key Tronic for the development, manufacture and
marketing of computer keyboards and other computer attached desktop peripheral
devices incorporating such technology.
The Company's sales efforts are dependent upon the successful introduction
of scanning devices into the commercial market. During the six months ended June
30, 1997, the Company shipped approximately 385 units (including scanners and
NRIdentity software) to the major channel distributors and has also shipped
approximately 1,000 units to a number of commercial enterprises that are
developing prototypes and pilots for a wide range of applications. Though there
is no assurance, the Company believes that the continued development and
marketing of NRIdentity(TM) Personal Authentication Scanner devices will give
the Company a competitive advantage in selling its finger-imaging identification
software and systems.
There is no assurance that the Company will successfully develop additional
scanner technology, or that the Company, its licensee, Key Tronic, or any other
person or entity will successfully market keyboards or other peripheral devices
incorporating the Company's technology.
General and Administrative
For the three and six month periods ended June 30, 1997, general and
administrative expenses decreased $128,000 and $296,000, or 14% and 19%,
respectively, compared to the same periods in 1996. These decreases were
primarily due to decreases in employee, advertising, travel and consulting
services. The decreases were partially offset by increases in certain
professional fees and
10
<PAGE>
supplies expense.
THE NATIONAL REGISTRY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)
B. Liquidity and Capital Resources
Cash and working capital as of June 30, 1997 was $2,721,000 and $3,092,000,
respectively, compared to $914,000 and $254,000, respectively, as of December
31, 1996. Cash and working capital as of June 30, 1996 was $3,477,000 and
$4,203,000, respectively.
The increase in the Company's cash and working capital as of June 30, 1997
compared to December 31, 1996, relates primarily to the Series C Preferred Stock
Private Placement, which generated net proceeds of approximately $6,397,000.
This was offset, in part, by operating expenses and certain capital expenditures
made during the six month period ended June 30, 1997.
In an effort to reduce the monthly cash burn rate, the Company is
finalizing a plan to significantly reduce operating expenses. This plan may
include closing corporate facilities outside its Tampa headquarters and reducing
the number of employees. Additionally, the Company does not anticipate making
any substantial capital expenditures during the remainder of 1997.
On February 6, 1997, the Company completed an equity financing pursuant to
which two accredited investment funds purchased an aggregate of 350,000 shares
of the Company's Series C Preferred Stock, $.01 par value per share, for an
aggregate purchase price of $7.0 million before commissions and expenses which
totaled approximately $603,000. The Series C Preferred Stock carries a six
percent per annum accretion which the Company treated as a dividend resulting in
a charge to accumulated deficit and a credit to capital in excess of par value.
The Company recorded accretion of $105,000 and $166,000, respectively, for the
three and six month periods ended June 30, 1997.
Shares of the Series C Preferred Stock are convertible at the option of the
holder into shares of Common Stock, at the lesser of (i) $2.375 per share or
(ii) 82.5% of a floating price equal to the average closing bid price of the
Common Stock for the five trading days immediately preceding the date of
conversion. One-third of the Series C Preferred Stock became convertible 121
days after the closing date. An additional one-third became convertible 151
days after the closing date and the remaining one-third became convertible
181 days after the closing date. All shares of Series C Preferred Stock issued
and outstanding as of February 4, 2000 will be converted into shares of Common
Stock. During the quarter ended June 30, 1997, 1,250 shares of Series C
Preferred Stock were converted into 19,749 shares of Common Stock. The Company
may redeem the Series C Preferred Stock at any time based upon a formula
relating to the applicable conversion price at the time of the redemption or
under certain other circumstances. As part of the Series C Preferred Stock
Private Placement, the Company also issued warrants to purchase up to 400,000
shares of common stock at an exercise price of $2.6125 per share, subject to
certain adjustments from time to time. The warrants expire five years after the
date of closing.
In connection with the Series C Preferred Stock Private Placement, the
Company also issued warrants to purchase an aggregate of 140,000 shares of
Common Stock at an exercise price of $2.6125 per share to certain finders.
Warrants to purchase up to 70,000 shares are exerciseable through February 4,
2000. The remaining warrants are exercisable through February 4, 2002. The
Company has also agreed to certain registration rights with respect to these
warrants.
On March 17, 1997, the Company filed a registration statement with the
Securities and Exchange Commission to register certain shares of Common Stock
issuable upon conversion of the Series C Preferred Stock, shares of Common Stock
held by certain selling stockholders named in the registration statement and
shares of Common Stock issuable upon the exercise of certain options and
warrants. On May 23, 1997 the registration statement was declared effective by
the SEC.
11
<PAGE>
THE NATIONAL REGISTRY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)
Management believes that the adequacy of its cash resources will be
dependent on its ability to generate additional revenue and to obtain additional
working capital prior to the end of 1997. There can be no assurance that the
Company will achieve significant sales of its products or services during 1997
or obtain additional working capital. The Company expended net cash at a rate of
approximately $4.5 million during the six months ended June 30, 1997. The
Company believes that its existing working capital, together with anticipated
cash flows from sales, the implementation of the Company's proposed operating
expense reduction plan and the elimination of capital expenditures will be
sufficient to meet its expected working capital needs through the remainder of
1997, assuming revenues for 1997 are at least equal to the revenues recognized
in 1996. However, absent a significant increase in sales, which itself would
likely require a significant increase in working capital, the Company will
require significant additional funds during the early part of 1998 to continue
its operations. There is a significant likelihood that additional funding will
not be available with terms acceptable to the Company, if at all. It is likely
that any such additional infusion of capital would be in the form of the sale
and issuance of additional shares of Common Stock, which may substantially
increase the number of shares of Common Stock outstanding on a fully-diluted
basis. The failure to obtain such additional funds would cause the Company to
cease or curtail operations. Even if such additional funding is obtained, there
can be no assurance that the Company will be able to complete the development
and testing of its products and services or, if completed, that it will be able
to generate significant sales of its products or services.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT
NUMBER
------
11 Computation of Earnings Per Share
27 Financial Data Schedule (Electronic filing only)
(b) Reports on Form 8-K
During the quarterly period ended June 30, 1997, the Company filed two
reports on Form 8-K dated June 23, 1997, in which under "Item 5. Other Events"
the Company reported that on June 5, 1997 the Company and Clearwater Fund IV,
LLC ("Clearwater") entered into a letter agreement amending the Series C
Convertible Preferred Stock Purchase Agreement dated January 31, 1997. Under
such amendment, Clearwater agreed not to sell the Common Stock issued upon
conversion of the Preferred Stock prior to June 5, 1998. Also, the Company
reported a lawsuit against the Company filed by Cogent Systems, Inc. ("Cogent")
dated on or about June 4, 1997. The form 8-K also reported the withdrawal on
June 16, 1997 by Cogent of its complaint. The Company is currently in
discussions with Cogent to address areas of concern and obtain a mutually
beneficial resolution.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE NATIONAL REGISTRY INC.
DATE: AUGUST 14, 1997 BY: /s/ DAVID E. BROGAN
--------------------------
David E. Brogan
Treasurer and Controller
(duly authorized officer and
principal financial officer)
14
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
- ------- ----
11 Computation of Earnings Per Share
27 Financial Data Schedule (Electronic Filing Only)
EXHIBIT 11
<TABLE>
<CAPTION>
THE NATIONAL REGISTRY INC.
CALCULATION OF LOSS PER SHARE
(In thousands except per share amounts)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
PRIMARY LOSS PER SHARE: (1) 1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average shares outstanding of
Common Stock 34,681 25,234 34,571 24,784
Net loss ($2,106) ($2,000) ($3,773) ($3,095)
------- ------- ------- -------
Preferred Stock dividend $ 490 $ 0 $490 $0
Net Loss Attributable to
Common Shareholders ($2,596) ($2,000) ($4,263) ($3,095)
Net loss per share ($0.07) ($0.08) ($0.12) ($0.12)
======= ======= ======= =======
<FN>
- ----------
(1) Net loss per common share was compiled by dividing net loss by the weighted
average number of common shares outstanding during the period. Common stock
equivalents, relating to convertible Series A Preferred Stock, convertible
Series C Preferred stock, stock options and warrants are not included in this
calculation due to their anti-dilutive effect.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,721
<SECURITIES> 0
<RECEIVABLES> 650
<ALLOWANCES> 90
<INVENTORY> 89
<CURRENT-ASSETS> 3,931
<PP&E> 3,359
<DEPRECIATION> 2,093
<TOTAL-ASSETS> 5,302
<CURRENT-LIABILITIES> 839
<BONDS> 0
4
0
<COMMON> 348
<OTHER-SE> 4,111
<TOTAL-LIABILITY-AND-EQUITY> 5,302
<SALES> 668
<TOTAL-REVENUES> 668
<CGS> 181
<TOTAL-COSTS> 4,392
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (132)
<INCOME-PRETAX> (3,773)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,773)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,773)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
