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, 1997
[ ] 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 (IRS Employer Identification No.)
incorporation or organization)
5535 STATE BRIDGE ROAD
ALPHARETTA, GA 30024
(Address of principal executive offices, zip code)
(770) 814-2442
(Issuer's telephone number)
400 EMBASSY ROW
SUITE 570
ATLANTA, GA 30328
(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, 1997 the Registrant had 5,591,083 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)
As of
September 30,1997
<S> <C>
CURRENT ASSETS
Cash $ 32,660
Accounts receivable-trade 242,066
Inventory 43,509
Other current assets 24,713
______
TOTAL CURRENT ASSETS 342,948
EQUIPMENT AND FIXTURES
Equipment and fixtures, net 90,131
OTHER ASSETS
Software development costs, net 730,154
Other assets 2,534
_______
TOTAL ASSETS $1,165,767
<FN>
See notes to financial statements
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ATLANTA TECHNOLOGY GROUP,INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
As of
September 30,1997
<S> <C>
CURRENT LIABILITIES
Notes payable $ 126,638
Notes payable to shareholders and affiliates 33,087
Accounts payable - trade 156,976
Other current liabilities 179,488
_______
TOTAL CURRENT LIABILITIES 496,189
Notes payable - noncurrent 36,000
SHAREHOLDERS' EQUITY
Common stock 5,591
Additional paid-in capital 5,024,100
Retained earnings (deficit) (3,021,113)
Stock subscription receivable (1,375,000)
___________
Total Shareholders' Equity 633,578
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,165,767
<FN>
See notes to financial statements.
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ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Nine-Months
Ended Sept. 30,
<C> <C>
<S> 1997 1996
Revenues $ 985,295 $1,183,498
Cost of sales 340,886 500,631
Gross profit 644,409 682,867
Operating expenses 481,731 780,514
_______ _______
Loss from operations 162,678 (97,647)
Provision for taxes - -
_________ _________
Net loss $ 162,678 $(97,647)
Weighted average number of
common shares outstanding 4,479,680 3,078,663
Earnings (loss) per share $.04 $(.03)
<FN>
See notes to financial statements
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ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months
Ended Sept. 30
<S>
<C> 1997 <C>1996
Revenues $ 268,303 $471,654
Cost of Sales 97,446 180,830
_______ _______
Gross profit 170,857 290,824
Operating expenses 166,376 225,690
_______ _______
Profit from operations 4,481 65,134
Provision for taxes - -
______ _______
$ 4,481 $ 65,134
Net Profit
Weighted average number of
common shares outstanding 4,830,213 3,626,362
Earnings (loss) per share $.00 $ .02
<FN>
See notes to financial statements.
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ATLANTA TECHNOLOGY GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months
Ended Sept. 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 162,677 $(97,647)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 71,954 106,159
Changes in operating assets and liabilities:
Increase in accounts receivable (96,814) (37,756)
Increase in inventory (2,802) (31,187)
Decrease (increase)in other current assets 88,981 1,043
(Decrease) increase in accounts payable (60,929) 35,065
(Decrease) increase in other current liabilities (177,690) 123,612
_________ _______
Net cash (used)provided by operating activities (14,623) 99,289
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to equipment and fixtures (1,542) (13,249)
Additions to capitalized software
development costs (156,131) (228,828)
(Increase) decrease to other noncurrent assets (1,000) 60,029
_______ _________
Net cash used by investing activities (158,673) (182,048)
CASH FLOWS FROM FINANCING ACTIVITIES:
Conversions of notes payable and the
issuance of common stock 144,455 -
Proceeds from stock subscriptions receivable 435,000 250,000
(Decrease)increase in notes payable (498,082) 194,570
(Decrease)increase in borrowings from
affiliates (75,000) 17,146
Increase (decrease) in long-term borrowing 36,000 (50,000)
Increase in deferred offering costs - (104,517)
_______ _________
Net cash provided by financing activities 42,373 307,199
NET (DECREASE) INCREASE IN CASH (130,923) 224,440
CASH AT BEGINNING OF PERIOD 163,583 53,187
CASH AT END OF PERIOD $ 32,660 $277,627
<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
SEPTEMBER 30, 1997
(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, 1997 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 two Georgia corporations Time Value Corporation, and Net City
Inc.
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 two 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. Net City Inc.
is not currently conducting operations.
Liquidity and Capital Resources
Working capital increased from $(835,354) at December 31, 1996 to $(153,241)
at September 30,1997. This increase was the result of the Company realizing
profits on operations, payment of stock subscritions receivable and reduction
of reserves set aside for professional services and a legal action which was
settled for a lesser amount during the third quarter. During the third quarter
ended September 30, 1997, the Company received payment of $75,000 from
EuroPacific Securities GmbH as payment for stock subscriptions receivable.
In May 1997, the Company sold 1,000,000 units to Euro Pacific Securities GmbH
in a private placement. The units consisted on one share of common stock and
one warant to purchase one share of common stock. The price was $1.25 per unit.
The warrants expire on December 31, 2000 and have an exercise price of $2.00
share. At September 30,1997, these shares are being held in escrow pending
receipt of payment and the unpaid balance of the note receivable is shown as a
deduction from shareholders' equity..
Results of Operations- Three Months Ended September 30, 1997
Revenues for the third quarter ended September 30,1997 were $268,303, a
decrease of $203,351 from revenues of $471,654 for the third quarter ended
September 30, 1996. The primary reason for this decrease was the decrease in
billings for system sales due to the heavy travel schedule of the sales
department to attend trade shows and conferences . The Company was also able
to cut operating expenses from $225,690 during the third quarter ended
September 30,1996 to $166,376, a savings of $59,314 for the third quarter
ended September 30,1997. Lowered operating costs were accounted for primarily
by savings in interest, labor and rent which were partially offset by
increases in advertising and trade show expenses.
Costs of sales during the third quarter ended September 30, 1997 were lowered
from 38% to 36% due to a higher percentage of product sales (forms) which
carry a lower cost of sales than the sales of systems.
TVC made presentations on Documentplus to doctors at more than 30 meetings
during the third quarter of 1997. Attendance at these meetings ranged from
10 doctors to over 230 doctors. At the end of the third quarter of 1996, TVC
had installed 323 systems in clinics, primarily in the eastern region of the
US. At the end of the third quarter 1997, TVC had installed over 575 systems
in clinics nationwide.
Gross profits for the third quarter ended September 30, 1997 decreased
to $170,857 from $290,824 for the same period of 1996. Despite the decrease
in gross profit for this quarter, the Company was able to sustain profitability
during this period, due to the decrease in operating expenses attributable
primarily to the decrease in interest, rent and labor.
Results of Operations - Nine Months Ended September 30,1997
Revenues for the nine month period ended September 30,1997 were $985,295, a
decrease of $198,203 from revenues of $1,183,498 for the nine month period
ended September 30, 1996. The reason for the decrease was the decrease in
system sales during the third quarter. During this time, the Company was able
to cut operating expenses from $780,514 during the nine months ended September
30,1996 to $487,731, a savings of $298,783 for the nine months ended September
30,1997. Lowered operating costs were accounted for primarily by savings in
interest, labor, and rent expenses which were partially offset by increases
in advertising, and show and demo expenses.
Costs of sales during the nine month period ended September 30, 1997 decreased
from 42.3% to 34.5% primarily because the sales which were generated during
this period reflect the increase in form sales which carry a lower cost of
sales than sales of systems.
Gross profits for the nine months ended September 30,1997 decreased to $644,409
from $682,867 for the same period of 1996. The primary reason for this decrease
was the decrease in interest, labor and rent expenses.
Net profit for the nine months ended September 30,1997 was $162,678 an increase
of $260,325 from the loss of $97,647 for the nine months ended September 30,
1996. This increase was due to the increased level of business achieved by
TVC and the lowering of expenses during the nine month period.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In September 1997, the Company settled a legal action entitled Furukawa
vs. Atlanta Technology Group Inc. and consequently reduced a reserve set up at
December 31, 1996 to the amount of the settlement.
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 May 1997, the Company entered into a private placement agreement with
EuroPacific Securities Services GmbH of Dusseldorf, Germany whereby EuroPacific
agreed to purchase 1,000,000 units of Atlanta Technology Group, Inc. in a
private placementat a purchase price of $1.25 per unit. The units consisted
of one share of common stock and a warrant to purchase one share of common
stock. The warrants will expire December 31, 2000 and have an exercise price
of $2.00 per share.
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, 1997.
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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.
By: /s/ James E. Cassidy
______________________
James E. Cassidy
Chief Financial Officer
Date: November 10, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 32,660
<SECURITIES> 0
<RECEIVABLES> 242,066
<ALLOWANCES> 32,000
<INVENTORY> 43,509
<CURRENT-ASSETS> 342,946
<PP&E> 240,240
<DEPRECIATION> 150,109
<TOTAL-ASSETS> 1,165,767
<CURRENT-LIABILITIES> 496,189
<BONDS> 0
0
0
<COMMON> 5,591
<OTHER-SE> 633,577
<TOTAL-LIABILITY-AND-EQUITY> 1,165,767
<SALES> 985,295
<TOTAL-REVENUES> 985,295
<CGS> 340,886
<TOTAL-COSTS> 340,886
<OTHER-EXPENSES> 481,731
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,765
<INCOME-PRETAX> 162,678
<INCOME-TAX> 0
<INCOME-CONTINUING> 162,678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162,678
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
