UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington 25, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR QUARTERLY PERIOD ENDED MARCH 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 No. 0-23062
ATLANTA TECHNOLOGY GROUP INC.
(Exact name of issuer as specified in its charter)
Delaware 58-2077053
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 EMBASSY ROW
SUITE 570
ATLANTA, GA 30328
(Address of principal executive offices, zip code)
(770) 671-0600
(Issuer's telephone number)
1117 PERIMETER CENTER WEST
SUITE N 316
ATLANTA, GA 30338
(Former address of principal executive offices, zip code)
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 []
As of March 31, 1996 the Registrant had 2,800,275 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [] No [X]
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ATLANTA TECHNOLOGY GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
ASSETS
(Unaudited)
<CAPTION> AS OF
As of
March 31, 1996
<S> <C>
CURRENT ASSETS
Cash $ 32,170
Accounts receivable-trade 201,016
Inventory 20,550
Other current assets 5,037
_______
TOTAL CURRENT ASSETS 258,773
EQUIPMENT AND FIXTURES
Equipment and fixtures, net 123,912
OTHER ASSETS
Software development costs, net 547,860
Deferred offering costs 139,851
Other assets 26,140
_______
TOTAL ASSETS $1,096,536
<FN>
See notes to financial statements
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<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
<CAPTION>
As of
March 31, 1996
<S> <C>
CURRENT LIABILITIES
Notes payable $ 716,200
Notes payable to shareholders and affiliates 151,152
Accounts payable - trade 305,883
Other current liabilities 155,424
_________
TOTAL CURRENT LIABILITIES 1,328,659
SHAREHOLDERS' EQUITY
Common stock 2,800
Additional paid-in capital 2,520,783
Retained earnings (deficit) (2,755,706)
___________
Total Shareholders' Equity (232,123)
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,096,536
<FN>
See notes to financial statements.
</TABLE>
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ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three-Month Period
Ended March 31,
1996 1995
<S> <C> <C>
Revenues $410,476 $274,850
Cost of Sales 162,134 120,526
________ ________
Gross profit 248,342 154,324
Operating expenses 345,104 254,659
________ ________
Loss before income taxes (96,762) (100,335)
Provision for taxes - -
Net loss (96,762) (100,335)
Weighted average number of
common shares outstanding 2,949,581 2,795,275
Earnings (loss) per share $(.03) $(.04)
<FN>
See notes to financial statements.
</TABLE>
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<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Three-Month Period
Ended March 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(96,762) $(100,335)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Depreciation and amortization 93,157 17,238
Changes in operating assets and liabilities:
Increase in accounts receivable (34,534) 108,492
Increase in other current assets (319) 7,671
Increase in current liabilities 110,434 (61,907)
________ ________
Net cash provided (used) by operating
activities 71,976 (28,841)
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to equipment and fixtures (3,312) (16,186)
Additions to capitalized software
development costs (113,199) (59,820)
Increase (decrease) in other noncurrent 12 (8,002)
assets __ _______
Net cash used by investing activities (116,499) (84,008)
_________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Costs associated with proposed common
stock offering (32,826)
Proceeds from the issuance of notes
payable, net 73,400
Payments on notes to affiliates (17,068) 118,230
________ _______
Net cash provided by financing activities 23,506 118,230
______ _______
NET (DECREASE) INCREASE IN CASH (21,017) 5,381
CASH AT BEGINNING OF PERIOD 53,187 21,994
______ ______
CASH AT END OF PERIOD $32,170 $27,375
_______ _______
<FN>
See notes to financial statements.
</TABLE>
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ATLANTA TECHNOLOGY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1996
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial statements. 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, all
adjustments (all of which are of a normal recurring nature) considered
necessary for a fair presentation have been included. The unaudited
Consolidated Statement of Operations for the Three Months Ended March 31, 1996
is not necessarily indicative of the results to be expected for a full year.
The unaudited financial statements should be read in conjunction with the
audited financial statement of the Company.
2. Organization and Intercorporate Relationships:
(A) The Company
Atlanta Technology Group, Inc. ("the Company") was incorporated under
the laws of the State of Delaware in October 1993. The Company is the parent
company of three Georgia corporations Time Value Corporation, Silver Ridge
Software Inc., and Net City Inc.
<PAGE>
Notes to consolidated financial statements (continued)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Atlanta Technology Group, Inc. ("ATG") is a holding company based in Atlanta,
Georgia with three subsidiaries in the information technology field. The
primary subsidiary is Time Value Corporation, a Georgia corporation ("TVC")
that was formed to develop, market and support a medical cost containment
system designed to reduce the clinical and administrative costs of
producing documentation, correspondence and record keeping for the medical
community. The medical cost containment system is known as Documentplus.
Silver Ridge Software Inc. ("SRS") operates as a software engineering firm
which develops custom solutions for companies that need software design or
assistance with network support and training, systems evaluation, technical
writing or project management. Net City Inc. is not currently conducting
operations.
Liquidity and Capital Resources
Working capital decreased during the three months ended March 31, 1996
principally as a result of the Company borrowing funds on a short term basis
to fund operating expenses.
On January 12, 1996, the Company filed a registration statement with the
Securities and Exchange Commission to sell 1,610,000 shares of common stock at
$3.00 per share pursuant to a public offering of common stock.
In February 1996, the Company borrowed $24,000 from an unrelated third party.
This note carries no interest and is due in May 1996. Also in February 1996,
the Company borrowed $50,000 from an unrelated third party, bearing interest
at twelve percent per annum and due six months from the date of issuance.
<PAGE>
Notes to consolidated financial statements (continued)
Through February 1996, the Company repaid $7,000 to Acquisition Advisors, Inc.,
an affiliate.
In March, 1996, promissory notes in the amount of $400,000 became due. The
Company agreed to an increase in the interest rate on the notes in exchange for
an extension of the term. All the noteholders agreed to extend the term of the
promissory notes until May 1996.
ATG plans to derive its income from the sale of its subsidiaries' existing
products, including products released or to be released in 1996, from the sale
of scannable forms and from the contract programming software engineering and
development services of SRS. Until ATG's revenues are sufficient to fund its
subsidiaries' operations, ATG will need additional outside sources of capital
to finance its subsidiaries' operations and research and development activities.
ATG anticipates that the proceeds from the Offering will be sufficient to
finance its subsidiaries' activities until revenues are sufficient to fund such
activities.
Results of Operations
Revenues for the first quarter ended March 31,1996 were $410,476, a 49%
increase from revenues of $274,850 for the first quarter ended March 31, 1995.
The reason for this increase was primarily the fact that the Company expanded
its potential customer base by presenting Documentplus to doctors at more than
24 meetings during the first quarter of 1996 compared to 8 meetings during the
same period in 1995. Attendance at these meetings ranged from 20 doctors to
over 300 doctors. The Company also began utilizing national advertising in the
fourth quarter of 1995. The sales cycle for the Documentplus system ranges
from one to nine months after initial contact. At the end of the first quarter
of 1995, TVC had installed 127 systems in clinics, primarily in the eastern
region of the US. At the end of the first quarter 1996, TVC had installed over
280 systems in clinics nationwide.
Gross profits for the first quarter ended March 31, 1996 increased to $248,341
from $154,324 for the same period of 1995. The primary reason for this increase
was the fact that TVC is now receiving the benefit of the recurring revenue
from sales of scannable forms to users as well as the increase in new system
sales. TVC also lowered its cost of goods sold in the first quarter 1996 to
39.5% from 43.8% in the first quarter of 1995. This occurred because of the
increased sales of scannable forms (which carry a lower cost of goods) and the
lower price on the scanners which was negotiated by TVC with its supplier.
<PAGE>
Notes to consolidated financial statements (continued)
Operating expenses for the quarter ended March 31, 1996 were $345,104 an
increase of $90,445 over the period ended March 31, 1995. The most significant
increases were for marketing expenses and interest accruals on short term debt.
Marketing expenses increased as a result of TVC's Documentplus system being
demonstrated to clinicians at twenty-four seminars and trade shows during the
first quarter of 1996, as opposed to the eight seminars and shows attended in
the same period in 1995.
Net loss for the quarter ended March 31, 1996 was $96,932 a decrease of $3,573
from the loss of $100,335 for the quarter ended March 31, 1995. This decrease
was due to the increased level of business achieved by TVC without any
corresponding increase in expenses for facilities and personnel. The net loss
for the quarter ended Mrch 31, 1996 also included a charge of $65,555 for
amortization of the fair market value of warrants to purchase shares of the
Company's common stock which were issued to various investors in September 1995.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The company is not currently a party to any legal proceedings the
result of which it believes could have a material adverse effect
upon its business, properties or financial condition.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
<PAGE>
Notes to consolidated financial statements (continued)
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to shareholders for a vote.
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Not applicable
(b) The Company did not file any Reports on Form 8-K during
the period ended March 31, 1996.
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ATLANTA TECHNOLOGY GROUP, INC.
Signatures
In accordance with the requirements of Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ATLANTA TECHNOLOGY GROUP INC.
/s/ Hale R. Spiegelberg
By: ______________________________
Hale R. Spiegelberg
Chief Executive Officer
Chief Financial Officer
