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 SEPTEMBER 30, 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 September 30, 1996 the Registrant had 3,800,275 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [] No [X]
<PAGE>
<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
ASSETS
(Unaudited)
<CAPTION> AS OF
As of
September 30, 1996
<S> <C>
CURRENT ASSETS
Cash $ 277,627
Accounts receivable-trade 204,237
Inventory 50,700
Other current assets 4,712
_______
TOTAL CURRENT ASSETS 537,276
EQUIPMENT AND FIXTURES
Equipment and fixtures, net 111,697
OTHER ASSETS
Software development costs, net 629,577
Deferred offering costs 211,542
Due from affiliates 7,500
Other assets 1,685
_______
TOTAL ASSETS $1,499,277
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
<CAPTION>
As of
September 30, 1996
<S> <C>
CURRENT LIABILITIES
Notes payable $ 787,370
Notes payable to shareholders and affiliates 185,366
Accounts payable - trade 256,892
Other current liabilities 252,657
_________
TOTAL CURRENT LIABILITIES 1,482,285
SHAREHOLDERS' EQUITY
Common stock 3,800
Additional paid-in capital 3,519,783
Retained earnings (deficit) (2,756,591)
Stock subscription receivable (750,000)
___________
Total Shareholders' Equity 16,992
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,499,277
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Nine-Month Period
Ended September 30,
1996 1995
<S> <C> <C>
Revenues $1,183,498 $1,154,443
Cost of sales 500,631 294,534
________ ________
Gross profit 682,867 859,909
Operating expenses 780,514 1,133,610
________ _______
Loss before income taxes (97,647) (273,701)
Provision for taxes - -
________ _________
Net loss $(97,647) $(273,701)
Weighted average number of
common shares outstanding 3,078,663 2,798,608
Earnings (loss) per share $(.03) $(.10)
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three-Month Period
Ended September 30,
1996 1995
<S> <C> <C>
Revenues $471,654 $434,892
Cost of Sales 180,830 65,622
________ ________
Gross profit 290,824 369,270
Operating expenses 225,690 446,030
________ ________
Profit(loss) before income taxes 65,134 (76,760)
Provision for taxes - -
________ _________
Net loss $ 65,134 $(76,760)
Weighted average number of
common shares outstanding 3,626,362 2,800,275
Earnings (loss) per share $.02 $(.03)
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Month Period
Ended September 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (97,647) $(273,701)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Depreciation and amortization 106,159 43,681
Changes in operating assets and liabilities:
Increase in accounts receivable (37,756) (26,710)
Increase in inventory (31,187) (8,966)
Decrease (increase)in other current assets 1,043 (36,631)
Increase in accounts payable 35,065 37,489
Increase in current liabilities 123,612 (13,438)
Increase in non-current assets 60,029 8,326
________ ________
Net cash provided by operating
activities 159,318 (269,950)
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to equipment and fixtures (13,249) (30,544)
Additions to capitalized software
development costs (228,828) (157,010)
_________ _______
Net cash used by investing activities (242,077) (187,554)
_________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock 1,000,000 15,000
Stock subscriptions receivable (750,000)
Proceeds from the issuance of notes
payable, net 194,570 523,901
Increase in borrowings from affiliates 17,146 (32,930)
Increase(decrease)in long-term borrowing (50,000) 95,000
Increase in deferred offering costs (104,517)
________ _______
Net cash provided by financing activities 307,199 600,971
______ _______
NET INCREASE IN CASH 224,440 143,467
CASH AT BEGINNING OF PERIOD 53,187 21,994
______ ______
CASH AT END OF PERIOD $277,627 $165,461
_______ _______
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
ATLANTA TECHNOLOGY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 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 Nine Months Ended September 30,
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>
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. SRS has been relatively inactive while the
Company's focus has been to concentrate on the development and marketing of
TVC's products and did not seek outside contracts which would generate
increased revenue. Net City Inc. is not currently conducting operations.
Liquidity and Capital Resources
In July 1996, the Company sold 1,000,000 units to Euro Pacific Securities
Services GmbH in a private placement. The units consisted of one share of
common stock and one warrant to purchase one share of common stock. The price
was $1.00 per unit. The warrants expire on December 31,1999 and have an
exercise price of $4.00 per share. As of September 30, 1996, the Company has
received $250,000 in cash and used $150,000 of the proceeds to repay certain
short term notes payable. The remaining shares are being held in escrow
pending receipt of payment and the unpaid balance of the note receivable is
shown as a deduction from stockholders' equity.
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. As of September
30, 1996, no shares have been issued and the registration statement is still
pending.
ATG plans to derive its income from the sale of Time Value Corporation's
existing products, including products released or to be released in 1996, and
from the sale of scannable forms. 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.
<PAGE>
Results of Operations- Three Months Ended September 30, 1996
Revenues for the third quarter ended September 30,1996 were $471,654, a 8%
increase from revenues of $434,892 for the third quarter ended September 30,
1995. As the company moves further into the distribution mode for its products
revenues from the sale of medical software increase as revenues from software
consulting are decreasing. Revenues relating to the sale of the Documentplus
system continued to increase during this quarter to represent 70% of sales
versus 42% of sales during the third quarter of 1995. The Company was also
able to cut operating expenses from $446,030 during the third quarter ended
September 30,1995 to $225,690, a savings of $220,340, for the third quarter
ended September 30,1996. Lowered operating costs were accounted for
primarily by savings in labor, and rent which were partially offset by
increases in advertising, tradeshow and interest expenses.
Costs of sales during the third quarter ended September 30, 1996 increased
by $115,208 primarily because the sales which were generated during this period
reflect product sales which carry a higher cost of sales than the consulting
and software engineering contracts.
TVC made presentations on Documentplus to doctors at more than 22 meetings
during the third quarter of 1996. Attendance at these meetings ranged from 10
doctors to over 230 doctors. At the end of the third quarter of 1995, TVC had
installed 270 systems in clinics, primarily in the eastern region of the US.
At the end of the third quarter 1996, TVC had installed over 400 systems in
clinics nationwide.
Gross profits for the third quarter ended September 30, 1996 decreased to
$290,824 from $369,270 for the same period of 1995. The primary reason for
this decrease was the decrease in billings for consulting services which
carried a comparatively low cost of sales. Despite the decrease in the gross
profit for this quarter, the Company was able to generate its first quarterly
profit this period due to the decrease in operating expenses.
The Company earned its first quarterly profit ever for the third quarter ending
September 30, 1996. Net profit for the quarter ended September 30, 1996 was
$65,134 an increase of $141,894 over the loss of $76,760 for the quarter ended
September 30, 1995. This increase was due to the increased level of business
achieved by TVC without any corresponding increase in expenses for facilities
and personnel.
<PAGE>
Results of Operations - Nine Months Ended September 30, 1996
Revenues for the nine month period ended September 30,1996 were $1,183,498, a
2.5% increase from revenues of $1,154,443 for the nine month period ended
September 30, 1995. The reason for this INcrease was the continuing growth of
sales of the Documentplus system. During this time the Company was also able to
cut operating expenses from $1,133,610 during the nine months ended September
30, 1995 to $780,514, a savings of $353,096 for the nine months ended September
30, 1996. Lowered operating costs were accounted for primarily by savings in
labor, rent and travel expenses which were partially offset by increases in
advertising, show and demo and interest expenses.
Costs of sales during the nine month period ended September 30, 1996 increased
by $206,097 primarily because the sales which were generated during this period
reflect product sales which carry a higher cost of sales than the consulting
and software engineering contracts.
Gross profits for the nine months ended September 30, 1996 decreased to $682,867
from $859,909 for the same period of 1995. The primary reason for this decrease
was that billings for consulting services, which were at a higher lever in 1995,
carry a very low cost of sales.
Net loss for the nine months ended September 30, 1996 was $97,647 a decrease of
$176,054 from the loss of $273,701 for the nine months ended September 30,
1995. This decrease was due to the increased level of business achieved by TVC
and the lowering of operating expenses during the nine month period.
<PAGE>
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
In July 1996, the Company entered into an agreement with Euro Pacific
Securities Services GmbH of Dusseldorf, Germany whereby Euro Pacific
purchased 1,000,000 units of Atlanta Technology Group, Inc. in a
private placement. The units consisted of one share of common stock
and a warrant to purchase one share of common stock. The warrants
will expire on December 31, 1999 and have an exercise price of $4.00
per share. The units were purchased for $1.00 each. The Company
issued 1,000,000 shares of its common stock to Euro Pacific Services.
The shares are being held in escrow until receipt of payment. These
certificates were issued pursuant to Regulation S for sale to persons
residing outside the United States.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
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 September 30, 1996.
<PAGE>
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/ James E. Cassidy
By: ______________________________
James E. Cassidy
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<CASH> 277,627
<SECURITIES> 0
<RECEIVABLES> 216,237
<ALLOWANCES> 12,000
<INVENTORY> 50,700
<CURRENT-ASSETS> 537,276
<PP&E> 247,901
<DEPRECIATION> 136,204
<TOTAL-ASSETS> 1,499,277
<CURRENT-LIABILITIES> 1,482,285
<BONDS> 0
<COMMON> 3,800
0
0
<OTHER-SE> 13,192
<TOTAL-LIABILITY-AND-EQUITY> 1,499,277
<SALES> 1,183,498
<TOTAL-REVENUES> 1,183,498
<CGS> 500,631
<TOTAL-COSTS> 780,514
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 160,338
<INCOME-PRETAX> (97,647)
<INCOME-CONTINUING> (97,647)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (97,647)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
