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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to________
Commission File No. 0-21324
TRINITECH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 06-1344888
(State of incorporation) (I.R.S. Employer identification number)
333 LUDLOW STREET, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 425-8000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 |_|
7,303,530 shares of Common Stock were issued and outstanding as of May 13, 1996.
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TRINITECH SYSTEMS, INC.
- - --------------------------------------------------------------------------------
BALANCE SHEETS
- - ---------------------------------
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
ASSETS 1996 1995
-------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash $926,189 $1,258,119
Accounts receivable 1,958,560 2,409,434
Inventories 1,212,304 1,000,450
Prepaid expenses and other 230,058 201,849
-------------- --------------
Total Current Assets 4,327,111 4,869,852
-------------- --------------
EQUIPMENT - net of accumulated depreciation of $313,883
and $283,306 at March 31 and December 31, respectively 402,629 403,512
-------------- --------------
OTHER ASSETS - net of accumulated amortization of 646,558
and $565,107 at March 31 and December 31, respectively 602,368 596,561
-------------- --------------
TOTAL $5,332,108 $5,869,925
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $349,927 $353,129
Accrued expenses 267,373 454,449
Current portion of term loan payable 16,667 16,667
Advance billings 154,467 120,634
Payroll and other taxes payable 26,207 25,633
-------------- --------------
Total Current Liabilities 814,641 970,512
TERM LOAN PAYABLE 25,000 29,167
-------------- --------------
Total Liabilities 839,641 999,679
-------------- --------------
COMMITMENTS:
STOCKHOLDERS' EQUITY:
10% Convertible preferred stock - par value $1.00; 1,000,000
shares authorized; -0- outstanding - -
Common stock - par value $.001; 15,000,000 and 10,000,000 shares authorized
in 1996 and 1995, respectively; 7,274,030 and 7,272,530 shares issued
and outstanding in 1996 and 1995, respectively 7,274 7,273
Additional paid-in capital 5,924,701 5,920,203
Accumulated deficit (1,439,508) (1,057,230)
-------------- --------------
Total Stockholders' Equity 4,492,467 4,870,246
-------------- --------------
TOTAL $5,332,108 $5,869,925
============== ==============
</TABLE>
See Notes to Financial Statements. 2
<PAGE>
TRINITECH SYSTEMS, INC.
- - --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- - ------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
--- Three Months Ended ---
March 31, March 31,
1996 1995
-------------- --------------
<S> <C> <C>
REVENUES:
Sales $434,002 $817,965
Service contracts 169,094 88,330
-------------- --------------
Total Revenues 603,096 906,295
COST OF SALES AND SERVICE 319,688 426,790
-------------- --------------
GROSS PROFIT 283,408 479,505
-------------- --------------
EXPENSES:
Selling, general and administrative 645,349 508,288
Depreciation and amortization 37,867 32,338
-------------- --------------
Total Expenses 683,216 540,626
-------------- --------------
LOSS FROM OPERATIONS (399,808) (61,121)
OTHER INCOME - NET 17,530 17,675
-------------- --------------
NET LOSS ($382,278) ($43,446)
============== ==============
NET LOSS PER COMMON SHARE $ (0.05) $ (0.01)
============== ==============
AVERAGE COMMON SHARES OUTSTANDING 7,273,997 7,113,947
============== ==============
</TABLE>
See Notes to Financial Statements. 3
<PAGE>
TRINITECH SYSTEMS, INC.
- - --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
- - ------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
---Three Months Ended ---
March 31, March 31,
1996 1995
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($382,278) ($43,446)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 106,965 84,616
Changes in assets and liabilities:
Accounts receivable 450,874 (707,750)
Inventories (211,854) (71,721)
Prepaid expenses (28,209) (25,343)
Accounts payable - trade (3,202) 69,048
Deferred revenue 33,833 27,715
Payroll and other taxes payable 574 10,665
Accrued expenses (187,076) 83,181
-------------- --------------
Net cash used in operating activities (220,373) (573,035)
-------------- --------------
INVESTING ACTIVITIES:
Payments for equipment (29,694) (52,218)
Payments for other assets (82,195) (83,548)
-------------- --------------
Net cash used in investing activities (111,889) (135,766)
-------------- --------------
FINANCING ACTIVITIES:
Issuance of common stock 4,499 55,625
Repayment of borrowings (4,167) -
-------------- --------------
Net cash provided by financing activities 332 55,625
-------------- --------------
DECREASE IN CASH (331,930) (653,176)
CASH, BEGINNING OF PERIOD 1,258,119 1,035,276
-------------- --------------
CASH, END OF PERIOD $926,189 $382,100
============== ==============
</TABLE>
See Notes to Financial Statements. 4
<PAGE>
TRINITECH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the Company
without audit (except for the balance sheet information as of December
31, 1995 which has been derived from the Company's audited financial
statements) in accordance with generally accepted accounting principles
for interim financial information and instructions to Form 10-QSB and
Item 310 (b) of Regulation S-B. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included.
The accompanying financial statements do not include certain footnotes
and financial presentations normally required under generally accepted
accounting principles and, therefore, should be read in conjunction
with the Company's 1995 audited financial statements. Results of
operations for the period ended March 31, 1996 are not necessarily
indicative of operating results for the fiscal year.
2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories consisted of the following:
March 31, 1996 December 31, 1995
-------------- -----------------
Parts $ 848,227 $ 634,003
Finished goods 364,077 366,447
---------- ----------
Total $1,212,304 $1,000,450
========== ==========
3. PER SHARE INFORMATION
Net loss per common share is based on the weighted average number of
common shares outstanding. Common stock equivalents have not been
included in the per share calculation because their effect is
anti-dilutive.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company commenced its present business operations in January 1991
through the acquisition of a software license for its Guided-Input(R) Trinitech
TouchPad(TM) System. The following discussion should be read in conjunction with
the consolidated financial statements and related notes included elsewhere
herein. Historical results and percentage relationships are not necessarily
indicative of the operating results for any future period.
REVENUES
Revenues for the three months ended March 31, 1996 were $603,096 as
compared to $906,295 for the three months ended March 31, 1995, a decrease of
33%. Unexpectedly long lead times in delivery of a new type of display used in
the Company's products made it impossible to schedule certain deliveries prior
to the end of the first quarter. Management believes that such delays
experienced during the first quarter do not have any impact on the Company's
expectation for the remainder of 1996. Approximately 20% and 27% of the
Company's sales revenues for the periods ended March 31, 1996 and 1995,
respectively were derived from software installations. Revenue from export sales
approximated $31,000 (7% of sales) and $264,000 (32% of sales) during the three
months ended March 31, 1996 and 1995, respectively. In addition, revenues from
service contracts increased by 91% in the three months ended March 31, 1996 over
the comparable 1995 quarter. The increase in service revenue resulted from an
increase of hardware and software products sold during the past year. The
Company did not experience any significant price changes in its product lines
during the three month periods ended March 31, 1996 and 1995. At March 31, 1996,
the Company's order backlog totaled approximately $3,800,000.
COST OF SALES AND SERVICE AND GROSS PROFIT
The Company's cost of sales and service is principally comprised of
labor, materials and overhead. Gross profit as a percentage of total revenues
was 47.0% and 52.9% for the three months ended March 31, 1996 and 1995,
respectively. Cost of sales and service decreased from $426,790 in the three
months ended March 31, 1995 to $319,688 in the three months ended March 31, 1996
as a result of the decrease in revenues as noted above (as a percentage of gross
profit, cost of sales and service increased from 47.1% in 1995 to 53% in 1996).
The Company obtains its materials parts and supplies from a variety of vendors
in the US and far east. Although the Company experienced slight price increases
in certain component parts obtained from the far east, these increases were
partially offset by price reductions in other product components due to
increased volumes purchased.
6
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the three months ended
March 31, 1996 were $645,349 as compared to $508,288 in the three months ended
March 31, 1995, an increase of 27%. Such increase reflected the continued
expansion of operations in both the U.S and in London. A significant portion of
the costs of such expansion, including personnel costs, was not realized until
mid 1995. The Company has also continued its marketing programs for 1996,
primarily focusing on public relations activities in financial trade
publications and representation at technological exhibitions planned throughout
1995. Research and development expenses for the three months ended March 31,
1996 and 1995 approximated $64,000 and $16,300, respectively and are included in
selling, general and administrative expenses.
OTHER INCOME
Other income consists principally of interest earned on cash balances
and sublease income earned during the three months ended March 31, 1996 and
1995. The Company leases a portion of its corporate office facility under a
three year sublease which expires on April 30, 1997. Sublease rental income
earned during the three month periods ended March 31, 1996 and 1995 totaled
approximately $9,700 and $9,800, respectively.
NET LOSS
Net loss for the three months ended March 31, 1996 was $382,278 ($0.05
per share) as compared to a net loss of $43,446 ($0.01 per share) in the
comparable 1995 period. This increase in net loss principally resulted from a
delay in the delivery of finished products experienced by the Company during the
first quarter of 1996. See "Revenues" above.
Management has made a considerable effort with respect to an expansion
of its operations, which began in 1993 and continues into 1996. The Company
believes that this expansion of personnel and facilities will better position
the Company and facilitate its future growth.
LIQUIDITY AND CAPITAL RESOURCES
Since its formation, the Company's primary source of working capital
has been private offerings of its securities, through which the Company has
raised approximately $5.9 million of working capital.
At March 31, 1996, cash balances decreased to $926,189 from $1,258,119
at December 31, 1995. The decrease is primarily due to the net loss experienced
by the Company during the three month period ended March 31, 1996.
7
<PAGE>
The accounts receivable balance at March 31, 1996 principally
represents amounts due from customers (including sales and other taxes
approximating $207,000) on sales made during 1995 and 1996. In the past, the
Company's cash position enabled it to offer, as circumstances required,
flexibility to certain customers with respect to payment. This business practice
explains the receivable balance as business has grown. Now that new accounts are
maturing, the Company has placed an emphasis on the collection of all
outstanding receivables, and believes that all of the balances are fully
collectible. The Company's current assets at March 31, 1996 exceeded its current
liabilities by approximately $3,512,000. The Company at March 31, 1996 had
long-term debt totaling $25,000 which represents a secured term loan on the
purchase of development equipment. In addition, at March 31, 1996, the Company
had no material commitments for capital expenditures or inventory purchases. The
Company had available a one million dollar bank line of credit facility for the
purpose of financing accounts receivable and, at March 31, 1996, the Company had
not used the line of credit facility. The line of credit, which was secured by
accounts receivable and inventory, expired on April 30, 1996. Interest on the
line of credit was based on the bank's prime rate plus one percent. The Company
anticipates to renew the facility upon substantially similar terms.
The Company believes that with its available capital and anticipated
funds generated from operations it will be able to fund its cash needs through
the end of 1996 without the need for additional capital or financing. The
Company intends to utilize its positive financial position to internally finance
its continuing research and development activities and anticipated sales growth.
The Company's financial requirements and its ability to meet them thereafter
will depend largely on its future financial performance. However, in the event
the Company's operations do not generate cash to the extent currently
anticipated by management of the Company and grow more rapidly than anticipated,
it is possible that the Company would require additional funds beyond 1996. At
this time, the Company does not know what sources, if any, would be available to
it for such funds, if required.
In addition, at March 31, 1996, the Company has warrants outstanding
for the purchase of 502,587 shares of its Common stock. Assuming the exercise of
all such outstanding Warrants, the Company would realize approximately
$1,195,000 in gross proceeds.
8
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Dated: May 15, 1996
TRINITECH SYSTEMS, INC.
(Registrant)
By:/s/ Peter Kilbinger Hansen
--------------------------
Peter Kilbinger Hansen
Chairman of the Board
and President
(Chief Executive Officer)
By:/s/ William E. Alvarez, Jr.
---------------------------
William E. Alvarez, Jr.
Chief Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 926,189
<SECURITIES> 0
<RECEIVABLES> 1,958,560
<ALLOWANCES> 0
<INVENTORY> 1,212,304
<CURRENT-ASSETS> 4,327,111
<PP&E> 716,512
<DEPRECIATION> 313,883
<TOTAL-ASSETS> 5,332,108
<CURRENT-LIABILITIES> 814,641
<BONDS> 0
0
0
<COMMON> 7,274
<OTHER-SE> 5,924,701
<TOTAL-LIABILITY-AND-EQUITY> 5,332,108
<SALES> 434,002
<TOTAL-REVENUES> 603,096
<CGS> 319,688
<TOTAL-COSTS> 1,002,904
<OTHER-EXPENSES> (17,530)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (382,278)
<INCOME-TAX> 0
<INCOME-CONTINUING> (382,278)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (382,278)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
