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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
September 23, 1998
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Date of Report
(Date of Earliest Event Reported)
TAVA TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in its charter)
Colorado 0-19167 84-1042227
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) I. D. Number)
7887 E. Belleview Avenue, Suite 820
Englewood, Colorado 80111
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(Address of principal executive offices) (zip code)
(303) 771-9794
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On September 23, 1998 the Company announced results of operations for
the year ended June 30, 1998. The Company's Press Release dated September 23,
1998, which is filed as Exhibit 20.1 hereto, is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibit is filed with this Report:
20.1 Press Release dated September 23, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TAVA Technologies, Inc.
Date: September 23, 1998 By:/s/ John Jenkins
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John Jenkins, President and CEO
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Exhibit 20.1
PRESS RELEASE
TAVA TECHNOLOGIES, INC. ANNOUNCES YEAR END RESULTS FOR 1998
September 23, 1998 - TAVA Technologies, Inc., (NASDAQ: TAVA) Denver, Colorado, a
leading provider of automation and information technology solutions to industry,
announced results for its fiscal year and fourth quarter ending June 30, 1998.
Revenues for the year increased 31% to a record $48,363,000 from $36,843,000
recorded in 1997. Gross profit increased by 51% to $18,953,000 or 39.2% of
revenue from $12,521,000 (34.0%) in 1997. Earnings before interest, taxes,
depreciation and amortization were $2,778,000 for the year compared with a
negative $71,000 in 1997. The Company recorded a net loss of applicable to
common shareholders of $310,000 ($.02 per share) compared to a loss of
$2,750,000 ($.31 per share) for 1997.
Revenues for the fourth quarter increased 56% to a record $14,893,000 from
$9,556,000 recorded in the fourth quarter of 1997. The Company recorded net
income for the fourth quarter of $605,000 ($.03 per share) compared to a fourth
quarter loss of $ 3,234,000 in 1997. Earnings before taxes, interest,
depreciation and amortization were $1,759,000 for the quarter.
John Jenkins, CEO stated "We expect the solid trends of growth and general
improvement in our business to continue and accelerate. Revenue growth from our
third to fourth quarter; 1998 was 28%; earnings before interest taxes and
depreciation were up nearly 82% and earnings per share tripled
He added, "Our annual revenues included a $14,390,000 contribution from our Y2k
products and services, of that total, $4,129,000 was product sales and license
fees in the fourth quarter. We expect significant additional growth from this
sector in 1999."
Doug Kelsall, CFO added, "The Company's balance sheet has improved dramatically
from one year ago. Working capital at June 30, 1998 was $17,605,000 as compared
to $168,000 in 1997."
Kelsall added, "Gross margin as recorded for the quarter and year includes the
effect of modifications in overhead allocation methods that were made to reflect
changes in corporate and operating structure. The effect of these changes was to
reduce recorded G&A and increase costs of sales. Before including the effect of
these changes, Q4 gross margin was computed at 51% of revenue, a 48% increase in
gross profit on Q3 1998. These modifications have no effect on EBITDA , net
income or EPS."
As a general update to the Company's activity, Jenkins, provided the following:
"The Company's business and performance continues to grow and improve.
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Currently active projects across the organization total more than 500 with
approximately 240 those Y2k related. The Company is currently active in Y2k work
at more than 300 sites around the world.
Headcount at the end of August totaled approximately 520. This is up from 380 in
March.
The Company booked $62,000,000 of new orders in its fiscal 1998. This provides
an opening backlog for 1999 of more than $24,000,000. As we have explained
previously, booked order values for Y2k generally include only estimates of
products and services included in the inventory and assessment stage of a
project. As we extend into remediation work with a client, this is done either
as an extension and expansion of the original contract or a new contract.
As previously announced, our bookings for Y2k business increased sharply at the
very end of our fourth quarter. We expect that bookings for Q1/99 will track at
or above the rate of Q4.
In spite of the late arrival of many of the orders in Q4, we posted a 28%
increase in revenue, Q4 over Q3 and believe that we should see an accelerated
revenue increase from Q4 to Q1.
The total number of sites covered by Y2k specific contracts or master consulting
agreements has now climbed to approximately 4000. While the Company does not
expect to provide products and services to all these sites, it does expect to
address a substantial number of these, and of course those from future bookings.
Eleven of the Company's clients are now engaged in some remediation activity,
with others very close to that stage. For current clients that have progressed
far enough in assessment for us to make a reasoned calculation, we estimate the
total costs of those remediation projects at more than $150,000,000. It is clear
that all clients will not complete their remediation projects prior to December
31, 1999. We do not expect that the Company will execute all of the estimated
remediation project activity.
The Company continues to experience core business opportunity growth from its
Y2k activity. As an example, at one particular client, TAVA had previously done
work in 10 of their facilities in the U.S. We now forecast that in the course of
the next 14 months, we will work in between 100 and 150 of their U.S.
facilities. All of these facilities are potential purchasers of TAVA's non-Y2k
products and services. This example is repeated many times across the scope of
our Y2k business base.
Given the general late start in addressing the embedded system issue, most of
our Y2k clients are confining current spending to Y2k projects until they better
understand the scope. That said, we have already booked non-Y2k business with
some new Y2k clients and have clear indications from many that they see TAVA
clearly as a supplier beyond year 2000.
The content and quality of our database information continues to be a major
competitive advantage for us. In addition, it has positioned us to address
rapidly additional leverage opportunities such as addressed below very rapidly.
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We added more than 10,000 items to our database in Q4, which now stands at
approximately 40,000 items. Our research capacity is now operating at a rate of
approximately 1000 new items per week. The "hit rate" on client inventories
continues to climb now that the fourth quarter surge of orders has been
processed.
In Q4, client inventory items processed through our Y2k compliance database
numbered more than 55,000 resulting in approximately 20,000 billable database
reports after reduction for unique items. As an indication of the sharp ramp in
demand, we expect to process nearly 80,000 client inventory items and generate
more than 35,000 billable database reports in Q1.
The Company issued more than 200 licenses in Q4/99. This figure includes
multiple licenses to a number of clients.
The Company's position in the utility market through TAVA/Beck, LLC is also
growing rapidly. While there was no material contribution from the venture in
Q4/99, we expect a solid positive financial contribution in Q1. This will be in
the form of an equity change given the structure of the deal.
The Company's licensee Colorado Med Tech is also having increasing success in
the health care industry. We expect that contribution from license revenues will
begin in our second quarter.
The Company's alliance and solution provider partner programs continue to expand
in scope and impact. The Company recently signed a solution provider partner
agreement with Unisys. Unisys and TAVA are teamed on a Y2k engagement with a
major domestic airline. The Unisys agreement has generated significant early
positive response, particularly from their international operations.
The Company also recently executed a business partner agreement with the IBM
Greater China Group. IBM will market TAVA's PlantY2kOne products and services
for resale and will be using the product to address the non-IT portion of its
own Y2k business.
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Earnings Recap:
(Numbers are in $000's, except per share amounts)
<TABLE>
<CAPTION>
Quarter Quarter Year Year
Ending Ending Ending Ending
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
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<S> <C> <C> <C> <C>
Revenue $ 14,893 $ 9,556 $ 48,363 $ 36,843
Cost of Sales 8,318 6,592 29,410 24,322
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Gross Margins 6,575 2,964 18,953 12,521
SG&A 4,884 5,054 16,360 12,546
Amort of Goodwill & Cap Sftwr + Depr. 967 773 2,382 1,582
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Total Expenses 5,851 5,827 18,742 14,128
Other Income ( Expenses) (119) (361) (461) (1,080)
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Net Income (loss) $ 605 $ (3,224) $ (250) $ (2,735)
Net Income (loss) applicable to comn shldr. 605 (3,239) (310) (2,750)
Per share -basic 0.03 (0.28) (0.02) (0.31)
Per share - diluted 0.03 (0.28) (0.02) (0.31)
Weighted average shares - basic 21,471,000 11,532,000 18,356,000 8,882,000
Weighted average shares - diluted 23,194,000 11,532,000 18,356,000 8,882,000
EBITDA $ 1,759 $ (2,133) $ 2,778 $ (71)
</TABLE>
Balance Sheet Info: June 30, 1998
<TABLE>
<CAPTION>
Assets Liabilities and Equity
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<S> <C> <C> <C>
Cash $ 4,993 Total Current Liabilities $ 10,260
Other Current 22,872 Long Term Liabilities 5,589
Total Current assets 27,865 Total Liabilities 15,847
Other Assets 16,316 Shareholder's Equity 28,333
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Total Liabilities and
Total Assets $ 44,181 Shareholder's Equity $ 44,181
Working Capital $ 17,605
</TABLE>
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Statements made in this Press Release that are not historical or current facts
are "forward looking statements" made pursuant to the safe harbor provisions of
federal securities laws. Forward-looking statements represent management's best
judgment as to what may occur in the future, but are subject to certain risks
and uncertainties that could cause actual results and events to differ
materially from those presently anticipated or projected. Such factors include
adverse economic conditions, entry of new and stronger competitors, inadequate
capital, unexpected costs, failure to integrate operations of recently acquired
subsidiaries and failure to capitalize upon access of new clientele. Specific
risks and uncertainties which may affect forward-looking statements about the
Company's Plant Y2K One(TM) business and prospects include the possibility that
a competitor will develop a more comprehensive or less expensive Y2K solution,
and delays in market awareness of Tava and its product and service solutions.
These factors and others are discussed in the "Management's Discussion and
Analysis" section of the Company's most recent Annual Report on Form 10-KSB,
to which reference should be made.
CONTACTS: Investor Relations
TAVA Technologies, Inc. Pacific Consulting Group, Inc.
John Jenkins, CEO Scott Liolios
Doug Kelsall, CFO Telephone (949) 574-3860
Telephone (303) 771-9794
Media:
Barnhardt/CMI Public Relations
Margaret Ebeling
(303) 626-7200
