SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: June 30, 1996
Commission File Number: 33-38511-FW
AUTOMATED COMPLIANCE & TRAINING, INC.
(Exact name of registrant as specified in its charter)
Utah 76-0279816
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
57 West 200 South, Suite 101; Salt Lake City, Utah 84101
(Address of principal executive offices)
(801) 322-1111
(Issuer's telephone number)
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
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date: 12,666,053
Transitional Small Business Disclosure Format: YES NO X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements. PAGE
ACCOUNTANTS' REPORT 3
UNAUDITED CONSOLIDATED BALANCE SHEETS 4
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 6
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS 7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
GENERAL INFORMATION 12
LIQUIDITY AND CAPITAL RESOURCES 13
RESULTS OF OPERATIONS 14
PART II - OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Securtiy Holders 14
ITEM 6. Exhibits and Reports on Form 8-K 15
<PAGE>
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General Information
From its inception, the Company and its wholly owned
subsidiaries have been development stage companies. They have
developed a variety of products, including OSHA/Safety & Health
and Sexual Harassment compliance software programs, as well as
individual, small business and family financial service products.
For the three months ending June 31, 1996 and 1995 AC & T
Direct, a wholly owned subsidiary of Automated Compliance and
Training, Inc. (the Registrant), has been marketing compliance
software packages, addressing the issues of OSHA safety and
health and sexual harassment. These products have been marketed
to various medical, dental, mortuary and industrial users. The
products are also marketed through trade associations, government
agencies and directly to businesses. AC&T Direct continues to be
active in working with federal OSHA, and other federal agencies
to establish the Safety & Health and Sexual Harassment compliance
software as a federal model for safety compliance and employee
training.
The Missouri Funeral Directors Association has approved AC&T
Direct's Safety & Health Plus program as their primary compliance
training vehicle. Also, the United States Postal Service invited
AC&T Direct to Washington D.C. to demonstrate Safety & Health
Plus to a special re-engineering team assigned the task of
implementing an improved system of safety compliance and record
keeping.
Sales of Safety & Health Plus have been effected by the
cutback in the congressional OSHA budget. These cutback have
scaled back OSHA's regulatory level. At the same time,
regulatory reform legislation remains stalled in Congress
limiting the effect of OSHA and creating the perception that OSHA
lacks the power to enforce regulatory compliance.
The Registrant feels when the stalemate in Washington is
concluded, its OSHA compliance software will again be in strong
demand. The Beta testing of the Windows version of Safety &
Health Plus continues and will add strength to the national
marketing of the product.
During the last half of fiscal year 1996, CMI's Family
Finance product moved into a more prominent roll. The alliance
with Surety Life and Lincoln Benefit Life has proven to be a
successful launching pad for these family finance products. The
Excelerator Training Program, instigated in December 1995 has
shown immediate results and developed a positive trend for the
future. Development of the CMI product distribution network will
yield a more efficient and timely delivery of the Registrant's
financial services to its clients. Operations in the two pilot
areas, California and Minneapolis St. Paul, have provided
valuable information about the target market of financial
professionals and their clients. This information has allowed
CMI to modify portions of the marketing program, which have
proven to be very successful as new marketing techniques have
been implemented. As a result of the modifications, Chequemate
Family Success Centers have now expanded to 86, with 18 regions.
The Regional and Center Managers are recruiting sales people,
with direct assistance from Chequmate corporate staff, and are
training and motivating sales activity.
The alliance of Chequemate and Safeguard Business Systems,
Inc. will enhance the relationship with Safeguard's customers by
adding the Registrants' coded computerized reporting and feed-back
system as an addition to the service Safeguard presently supplies
through their One Write Check System." The Registrant has been
marketing CashFlow PLUS to the clients of the Safeguard Regional
Office in Salt Lake City. The Salt Lake Regional Office will
coordinate the roll out of the CashFlow PLUS integration to Safeguard
clients nationwide.
Both subsidiary Companies (CMI and AC&T Direct) have faced a
variety of challenges during the fiscal year 1996 in entering
products into separate markets. Although certain synergies are
inherent between all four products, the main target markets for
each product are distinct. The pilot programs that have been
running since July 1995 have provided valuable information in the
development of CMI and AC&T Direct. The Registrant anticipates
the information provided from the pilot centers will result in
positive trends on subsequent financial reports.
Liquidity and Capital Resources
The unaudited financial statements, as of June 30, 1996,
reflect the consolidated financial position of the Registrant and
its subsidiary entities. June 30, 1995 totals have also been
consolidated. As of June 30, 1996, the Registrant had current
assents of $192,698 with current liabilities of $214,810. This
represents negative working capital of $22,112. At June 30, 1995
current assets were $360,628 with current liabilities of $243,045
which represented working capital of $117,637.
The decrease in working capital results in a ratio of
current assets to current liabilities, as of June 30, 1996, of .88 as
compared to 1.48 on June 30, 1995. This change is primarily a timing
difference of cash received from the sale of capital stock.
At June 30, 1996, long term debt was $393,127 compared to
$1,902,262 at June 30, 1995, a reduction of $509,135, or 56
percent over fiscal 1995. This reduction was accomplished by
converting certain shareholder/Director debt to capital stock and
by additional sales of common stock.
At June 30, 1996, the stockholders' equity was $143,206
versus a negative $114,999 at June 30, 1995. This represents an
improvement of $258,205 over the first quarter.
The 2,000,000 share stock offering to limited offshore
investors expired December 31, 1995. However, a new offshore
offering is currently being prepared that management feels will
be sufficient to support the operations of the Registrant through
the fiscal year 1997. To the knowledge of the Registrant, none
of the shares sold in off shore transactions for 1995 or 1996
have been sold back into the United States.
Results of Operations
For the first quarter 1997, gross revenues of the Registrant
were comprised of $20,883 sales of the AC&T Direct products and
$98,661 of sales of the CMI products.
The Registrant experienced a loss of $327,258 for the three
month period ended June 30, 1996, compared to a loss of $326,943
for the same period of the prior fiscal quarter. The loss for
the three month period ended June 30, 1996 is mainly attributed
to the software development and start up costs, administrative
costs and marketing programs and procedures associated with the
Registrant and its subsidiaries entry into their respective
markets. These results represent the merger of two development
stage corporations. The shift away from governmental support of
Health and Safety Compliance has naturally effected the AC&T
Direct compliance products. The Companies move to place more
emphasis on the CMI family of products has proven to be a strong
strategic move. It is anticipated that through September 30,
1996 the current financial trend will continue due to the expense
of building the product distribution network and implementation
of the strategic marketing plan. Thereafter, future financial
statements should show improved operational results based on both
the new marketing strategies, and current alliances and
endorsements with various business entities.
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the regular scheduled Annual Shareholders' Meeting held
August 9, 1996 at the Registrant's corporate headquarters in Salt
Lake City, Utah, an Amendment to the Articles of Incorporation of
the Registrant to change the name Automated Compliance &
Training, Inc., to Chequemate International, Inc. was presented
for a vote with an affirmative vote of at least a majority needed
to effect the Amendment. The Amendment was passed with an
effectvie date of September 1, 1996 on 9,147,042 shares or 72.2%
of outstanding stock voting in the affirmative, 51,500 shares
voting against and 11,428 shares abstaining.
Current market analysis and feedback has shown that the
Chequemate System has application in a wide range of market
segments ranging from large corporations to banks and all areas
of the financial community. Therefore, the name change was
recommended to capitalize on the potential of the Chequemate
patented system. The new corporate structure will increase
market penetration and enhance market name recognition.
At the Annual Shareholders' Meeting, Blaine Harris,
Lavar Butler, Robert Warfield, Harold Glick and Chuck Coonradt
were elected as Directors of the Registrant for the term of one year.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(21) Subsidiaries of the Registrant
Chequemate International, Inc:
Organized in the State of Utah
AC&T Direct, Inc. :
Organized in the State of Utah
Families in Focus, Inc. :
Organized in the State of Utah
(b) Reports on Form 8-K
None
<PAGE>
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.
Dated: August 15, 1996 By: /s/ Lavar Butler
Lavar Butler, President
Dated: August 15, 1996 By: /s/ John Garrett
John Garrett, C.F.O.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 AND 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS YEAR
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996 MAR-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1995 MAR-31-1996
<CASH> 48,725 186,671 30,380
<SECURITIES> 0 0 0
<RECEIVABLES> 36,792 45,154 54,862
<ALLOWANCES> 3,324 2,458 2,457
<INVENTORY> 92,302 128,596 83,881
<CURRENT-ASSETS> 192,698 360,628 184,661
<PP&E> 92,727 96,056 93,533
<DEPRECIATION> (117,614)<F1> (87,252)<F2> (103,173)<F3>
<TOTAL-ASSETS> 536,333 787,263 546,403
<CURRENT-LIABILITIES> 214,814 243,045 243,929
<BONDS> 0 0 0
<COMMON> 1,267 1,174 1,267
0 0 0
0 0 0
<OTHER-SE> 141,939 (116,173) 118,906
<TOTAL-LIABILITY-AND-EQUITY> 536,333 787,263 546,403
<SALES> 119,544 98,218 0
<TOTAL-REVENUES> 119,544 98,218 0
<CGS> 58,819 18,318 0
<TOTAL-COSTS> 381,227 390,298 0
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> (6,465) (16,545) 0
<INCOME-PRETAX> (326,967) (326,943) 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (326,967) (326,943) 0
<EPS-PRIMARY> (.03) (.03) 0
<EPS-DILUTED> 0 0 0
<FN>
<F1>THIS INCLUDES AMORTIZATION COSTS OF SOFTWARE PRODUCTS IN THE AMOUNT OF
$340,207.
<F2>THIS INCLUDES AMORTIZATION COSTS OF SOFTWARE PRODUCTS OF $386,989.
<F3>THIS INCLUDES AMORTIZATION COSTS OF SOFTWARE PRODUCTS OF $340,206.
</FN>
</TABLE>
