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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 JUNE 30, 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
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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 |_|
7,306,530 shares of Common Stock were issued and outstanding as of August 8,
1996.
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
BALANCE SHEETS
- ---------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,239,043 $ 1,258,119
Accounts receivable 1,956,192 2,409,434
Inventories 1,182,491 1,000,450
Prepaid expenses and other 294,665 201,849
----------- -----------
Total Current Assets 4,672,391 4,869,852
----------- -----------
EQUIPMENT - net of accumulated depreciation of $344,825
and $283,306 at June 30 and December 31, respectively 390,028 403,512
----------- -----------
OTHER ASSETS - net of accumulated amortization of $644,051
and $565,107 at June 30 and December 31, respectively 613,061 596,561
----------- -----------
TOTAL $ 5,675,480 $ 5,869,925
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 750,247 $ 353,129
Accrued expenses 163,287 454,449
Current portion of term loan payable 16,667 16,667
Advance billings 121,805 120,634
Payroll and other taxes payable 16,899 25,633
----------- -----------
Total Current Liabilities 1,068,905 970,512
TERM LOAN PAYABLE 20,833 29,167
----------- -----------
Total Liabilities 1,089,738 999,679
----------- -----------
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 shares authorized;
7,306,530 and 7,272,530 shares issued and
outstanding in 1996 and 1995, respectively 7,307 7,273
Additional paid-in capital 5,993,789 5,920,203
Accumulated deficit (1,415,354) (1,057,230)
----------- -----------
Total Stockholders' Equity 4,585,742 4,870,246
----------- -----------
TOTAL $ 5,675,480 $ 5,869,925
=========== ===========
</TABLE>
See Notes to Financial Statements. 2
<PAGE>
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (Unaudited)
- ---------------------------------------------
<TABLE>
<CAPTION>
--- Three Months Ended --- --- Six Months Ended ---
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Sales $ 1,788,648 $ 1,014,691 $ 2,222,650 $ 1,832,656
Service contracts 180,219 135,277 349,313 223,607
----------- ----------- ----------- -----------
Total Revenues 1,968,867 1,149,968 2,571,963 2,056,263
COST OF SALES AND SERVICE 1,217,249 531,922 1,536,937 958,712
----------- ----------- ----------- -----------
GROSS PROFIT 751,618 618,046 1,035,026 1,097,551
----------- ----------- ----------- -----------
EXPENSES:
Selling, general and administrative 708,646 624,932 1,353,995 1,133,220
Depreciation and amortization 38,347 33,564 76,214 65,902
----------- ----------- ----------- -----------
Total Expenses 746,993 658,496 1,430,209 1,199,122
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 4,625 (40,450) (395,183) (101,571)
OTHER INCOME - NET 19,529 12,840 37,059 30,515
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 24,154 ($ 27,610) ($ 358,124) ($ 71,056)
=========== =========== =========== ===========
NET INCOME (LOSS)
PER COMMON SHARE $ 0.00 ($ 0.00) $ (0.05) $ (0.01)
=========== =========== =========== ===========
AVERAGE COMMON SHARES
OUTSTANDING 7,295,294 7,171,197 7,284,704 7,141,044
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements. 3
<PAGE>
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS (Unaudited)
- ---------------------------------------------
---Six Months Ended ---
June 30, June 30,
1996 1995
------------ ------------
OPERATING ACTIVITIES:
Net loss ($ 358,124) ($ 71,056)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 222,211 179,019
Changes in assets and liabilities:
Accounts receivable 453,242 (403,765)
Inventories (182,041) (30,035)
Prepaid expenses (92,816) (9,220)
Accounts payable - trade 397,118 322,554
Deferred revenue 1,171 (75,592)
Payroll and other taxes payable (8,734) 8,913
Accrued expenses (291,162) 87,696
----------- -----------
Net cash provided by operating activities 140,865 8,514
----------- -----------
INVESTING ACTIVITIES:
Payments for equipment (48,034) (82,456)
Payments for other assets (177,193) (180,608)
----------- -----------
Net cash used in investing activities (225,227) (263,064)
----------- -----------
FINANCING ACTIVITIES:
Issuance of common stock 73,620 270,625
Repayment of borrowings (8,334) 0
----------- -----------
Net cash provided by financing activities 65,286 270,625
----------- -----------
INCREASE (DECREASE) IN CASH (19,076) 16,075
CASH, BEGINNING OF PERIOD 1,258,119 1,035,276
----------- -----------
CASH, END OF PERIOD $ 1,239,043 $ 1,051,351
=========== ===========
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 June 30, 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:
June 30, 1996 December 31, 1995
------------- -----------------
Parts $ 794,825 $ 634,003
Finished goods 387,666 366,447
----------- -----------
Total $1,182,491 $ 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(R) 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 and six months ended June 30, 1996 were
$1,968,867 and $2,571,963 as compared to $1,149,968 and $2,056,263 in the
comparable periods in 1995, an increase of 71% and 25%, respectively. The
increase in revenues was principally due to second quarter installation of
approximately 550 units of the Trinitech Touch Vending Terminal(TM) products to
ATG, the leading Swedish off-track betting operation. At June 30, 1996, the
Company had a commitment from ATG to supply an additional 1,500 units under
contract, which delivery the Company expects to complete during 1996.
Approximately 15% and 16% of the Company's sales revenues for the three and six
month periods ended June 30, 1996 were derived from software installations as
compared to approximately 32% and 31% during the comparable periods in 1995.
Revenue from export sales approximated $1,520,000 (85% of sales) and $1,593,000
(72% of sales) during the three and six months ended June 30, 1996 as compared
to $207,000 (20% of sales) and $471,000 (26% of sales) during the comparable
periods in 1995. In addition, revenues from service contracts increased by 33%
and 56% in the three and six month periods ended June 30, 1996 over the
comparable 1995 periods. The increase in service revenue resulted from increases
sales of hardware and software products during the past year. The Company did
not experience any significant price changes in its product lines during the
three and six month periods ended June 30, 1996 and 1995. At June 30, 1996, the
Company's order backlog totaled approximately $3,700,000 which it expects to
complete delivery during 1996.
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
were 38.2% and 40.2% for the three and six month periods ended June 30, 1996 as
compared to 53.7% and 53.4% during the comparable periods in 1995. Cost of sales
and service increased to $1,217,249 and $1,536,937 in the three and six months
ended June 30, 1996 from $531,922 and $958,712 in the three and six months ended
June 30, 1995 as a result of the increase in revenues noted above (as a
percentage of gross
6
<PAGE>
revenues, cost of sales and service increased from 46.3% and 46.6% in the three
and six months ended June 30, 1995 to 61.8% and 59.8% in the three and six
months ended June 30, 1996). The lower gross profit experienced by the Company
during 1996 directly resulted from the lower margins associated with the
Company's touch vending terminal products sold to ATG. The Company continues to
maintain higher margins (in the 50% + range) in its core business groups that
serve the financial trading community. The Company obtains its materials 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.
Selling, General and Administrative
Selling, general and administrative expenses for the three and six
month periods ended June 30, 1996 were $708,646 and $1,353,995 as compared to
$624,932 and $1,133,220 in the comparable periods in 1995, an increase of 13.4%
and 19.5%, respectively. Such increases 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, during the past several years, has spent a considerable effort in
developing a variety of turn-key systems. Management believes that this
development effort will enhance the Company's product portfolio as its grows in
the future. The Company has also continued its marketing programs for 1996,
primarily focusing on core product marketing and public relations activities and
representation at technological exhibitions planned throughout the year.
Research and development expenses for the three and six month periods ended June
30, 1996 approximated $60,000 and $124,000 as compared to $14,700 and $31,000 in
the comparable periods in 1995 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. 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 and six month periods ended
June 30, 1996 and 1995 approximated $9,700 and $19,400.
Net Income (Loss)
Net income for the three months ended June 30, 1996 was $24,154
($0.00 per share) as compared to a net loss of $27,610 ($0.00 per share) in the
three months ended June 30, 1995. Net loss for the six months ended June 30,
1996 totaled $358,124 ($0.05 per share) as compared to a net loss of $71,056
($0.01 per share) in the six months ended June 30, 1995. This increase in net
loss, during the six month period ended June 30, 1996, principally resulted from
lower margins experienced on the sale of the Company's touch vending terminal
products to ATG. See "Revenues" and "Cost of Sales and Service and Gross Profit"
above.
7
<PAGE>
Management has made a considerable effort with respect to an
expansion of its operations and development of various turn-key systems which
began in 1993 and continues into 1996. The Company believes that this expansion
of personnel, facilities and product portfolio 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 $6.0 million of working capital. At June 30, 1996, cash
balances decreased to $1,239,043 from $1,258,119 at December 31, 1995.
The Company's current assets at June 30, 1996 exceeded its current
liabilities by approximately $3,603,000. As of July 31, 1996, the Company has
collected approximately $709,000 of its outstanding receivable balances at June
30, 1996. The Company at June 30, 1996 had long-term debt totaling $20,800 which
represents a secured term loan on the purchase of development equipment. In
addition, at June 30, 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 June 30, 1996, the Company had not used the line of credit
facility. The line of credit, which was secured by accounts receivable and
inventory, expires on April 30, 1997. Interest on the line of credit was based
on the bank's prime rate plus one percent.
The Company believes that with its available capital, line of credit
facility 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 June 30, 1996, the Company has warrants outstanding
for the purchase of 475,087 shares of its Common stock. Assuming the exercise of
all such outstanding Warrants, the Company would realize approximately
$1,140,000 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: August 12, 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 JUNE 30, 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> JUN-30-1996
<CASH> 1,239,043
<SECURITIES> 0
<RECEIVABLES> 1,956,192
<ALLOWANCES> 0
<INVENTORY> 1,182,491
<CURRENT-ASSETS> 4,672,391
<PP&E> 734,853
<DEPRECIATION> 344,825
<TOTAL-ASSETS> 5,675,480
<CURRENT-LIABILITIES> 1,068,905
<BONDS> 0
0
0
<COMMON> 7,307
<OTHER-SE> 5,993,789
<TOTAL-LIABILITY-AND-EQUITY> 5,675,480
<SALES> 1,788,648
<TOTAL-REVENUES> 1,968,867
<CGS> 1,217,249
<TOTAL-COSTS> 1,217,249
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,154
<INCOME-TAX> 0
<INCOME-CONTINUING> 24,154
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,154
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
