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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 September 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
--------------
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 |_|
7,313,530 shares of Common Stock were issued and outstanding as of November 11,
1996.
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 828,243 $ 1,258,119
Accounts receivable 2,110,581 2,409,434
Inventories 1,106,239 1,000,450
Prepaid expenses and other 360,319 201,849
----------- -----------
Total Current Assets 4,405,382 4,869,852
----------- -----------
EQUIPMENT - net of accumulated depreciation of $379,643
and $283,306 at September 30 and December 31, respectively 418,907 403,512
----------- -----------
OTHER ASSETS - net of accumulated amortization of $735,758
and $565,107 at September 30 and December 31, respectively 612,246 596,561
----------- -----------
TOTAL $ 5,436,535 $ 5,869,925
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 558,328 $ 353,129
Accrued expenses 401,705 454,449
Current portion of term loan payable 26,667 16,667
Advance billings 64,051 120,634
Payroll and other taxes payable 60,167 25,633
----------- -----------
Total Current Liabilities 1,110,918 970,512
TERM LOAN PAYABLE 36,667 29,167
----------- -----------
Total Liabilities 1,147,585 999,679
----------- -----------
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 (1,712,146) (1,057,230)
----------- -----------
Total Stockholders' Equity 4,288,950 4,870,246
----------- -----------
TOTAL $ 5,436,535 $ 5,869,925
=========== ===========
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--- Three Months Ended --- --- Nine Months Ended ---
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Sales $ 837,359 $ 1,100,084 $ 3,060,009 $ 2,932,740
Service contracts 184,660 131,575 533,973 355,182
----------- ----------- ----------- -----------
Total Revenues 1,022,019 1,231,659 3,593,982 3,287,922
COST OF SALES AND SERVICE 496,233 556,129 2,033,170 1,514,841
----------- ----------- ----------- -----------
GROSS PROFIT 525,786 675,530 1,560,812 1,773,081
----------- ----------- ----------- -----------
EXPENSES:
Selling, general and administrative 799,273 591,056 2,153,268 1,724,276
Depreciation and amortization 42,165 38,726 118,379 104,628
----------- ----------- ----------- -----------
Total Expenses 841,438 629,782 2,271,647 1,828,904
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (315,652) 45,748 (710,835) (55,823)
OTHER INCOME - NET 18,860 16,862 55,919 47,377
----------- ----------- ----------- -----------
NET INCOME (LOSS) ($ 296,792) $ 62,610 ($ 654,916) ($ 8,446)
=========== =========== =========== ===========
NET INCOME (LOSS)
PER COMMON SHARE $ (0.04) $ 0.01 $ (0.09) $ (0.00)
=========== =========== =========== ===========
AVERAGE COMMON SHARES
OUTSTANDING 7,306,530 7,249,430 7,292,059 7,177,173
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS (Unaudited)
- --------------------------------------------------------------------------------
---Nine Months Ended ---
September 30, September 30,
1996 1995
----------- -----------
OPERATING ACTIVITIES:
Net loss ($ 654,916) ($ 8,446)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 348,737 284,002
Changes in assets and liabilities:
Accounts receivable 298,853 (804,868)
Inventories (105,789) 133,219
Prepaid expenses (158,470) (31,374)
Accounts payable - trade 205,199 278,079
Deferred revenue (56,583) (100,785)
Payroll and other taxes payable 34,534 6,609
Accrued expenses (52,744) 160,606
----------- -----------
Net cash provided by operating activities (141,179) (82,958)
----------- -----------
INVESTING ACTIVITIES:
Payments for equipment (111,732) (155,528)
Payments for other assets (268,085) (266,630)
----------- -----------
Net cash used in investing activities (379,817) (422,158)
----------- -----------
FINANCING ACTIVITIES:
Issuance of common stock 73,620 372,125
Proceeds from borrowings 30,000 50,000
Repayment of borrowings (12,500) --
----------- -----------
Net cash provided by financing activities 91,120 422,125
----------- -----------
INCREASE (DECREASE) IN CASH (429,876) (82,991)
CASH, BEGINNING OF PERIOD 1,258,119 1,035,276
----------- -----------
CASH, END OF PERIOD $ 828,243 $ 952,285
=========== ===========
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 September 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:
September 30, 1996 December 31, 1995
------------------ -----------------
Parts $ 688,066 $ 634,003
Finished goods 418,173 366,447
---------- ----------
Total $1,106,239 $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 nine months ended September 30, 1996 were
$1,022,019 and $3,593,982 as compared to $1,231,659 and $3,287,922 in the
comparable periods in 1995. In spite of a significant backlog entering into the
third quarter, the Company experienced a decrease in revenues during the three
months ended September 30, 1996 as a direct result of delays in receiving
displays needed for the Company's production. All deliveries delayed during the
third quarter have been rescheduled for shipment in the fourth quarter in
addition to the Company's fourth quarter delivery expectations. At September 30,
1996, the Company's order backlog totaled approximately $3,250,000. The
unexpectedly long lead times in the delivery of displays used in the Company's
products resulted from increased worldwide demand for flat panel displays. In
spite of the Company's efforts to place advanced orders, to counter possible
delays of displays required to meet the above deliveries, the bulk of the
displays did not begin to arrive until early October 1996. Approximately 30% and
20% of the Company's sales revenues for the three and nine month periods ended
September 30, 1996 were derived from software installations as compared to
approximately 26% and 29% during the comparable periods in 1995. Revenue from
export sales approximated $616,000 and $2,209,000 during the three and nine
months ended September 30, 1996 as compared to $387,000 and $857,000 during the
comparable periods in 1995. In addition, revenues from service contracts
increased by 40% and 50% in the three and nine month periods ended September 30,
1996 over the comparable 1995 periods. The increase in service revenue resulted
from increased 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 nine month periods ended September 30, 1996 and 1995.
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 51.4% and 43.4% for the three and nine month periods ended September 30,
1996 as compared to 54.8% and 53.9% during the comparable periods in 1995. Cost
of sales and service was $496,233 and $2,033,170 in the three and nine months
ended September 30, 1996 as compared to $556,129 and $1,514,841 in the three
6
<PAGE>
and nine months ended September 30, 1995. Cost of sales and service (as a
percentage of gross revenues) increased from 45.2% and 46.1% in the three and
nine months ended September 30, 1995 to 48.6% and 56.6% in the three and nine
months ended September 30, 1996. This increase primarily resulted from lower
margins associated with the Company's touch vending terminal products sold
during 1996. 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 nine
month periods ended September 30, 1996 were $799,273 and $2,153,268 as compared
to $591,056 and $1,724,276 in the comparable periods in 1995, an increase of
35.2% and 24.9%, respectively. Such increases reflected the continued expansion
of operations in both the U.S and in London. 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 nine month periods ended September 30, 1996 approximated $56,000
and $180,000 as compared to $15,000 and $46,000 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 nine month periods
ended September 30, 1996 and 1995 approximated $9,700 and $29,200.
Net Income (Loss)
Net loss for the three months ended September 30, 1996 was $296,792
($0.04 per share) as compared to net income of $62,610 ($0.01 per share) in the
three months ended September 30, 1995. Net loss for the nine months ended
September 30, 1996 totaled $654,916 ($0.09 per share) as compared to a net loss
of $8,446 ($0.00 per share) in the nine months ended September 30, 1995. This
increase in net loss principally resulted from the delay in the delivery of
finished products experienced by the Company during the third quarter of 1996
due to an uncontrollable delay in the delivery of flat panel displays used in
the Company's products, combined with lower margins realized on the sale of the
Company's touch vending terminal products. 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 September 30, 1996,
cash balances decreased to $828,243 from $1,258,119 at December 31, 1995.
The Company's current assets at September 30, 1996 exceeded its
current liabilities by approximately $3,294,000. The Company at September 30,
1996 had long-term debt totaling $36,700 which represents secured term loans on
the purchase of development equipment. In addition, at September 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 September 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 September 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: November 13, 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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 828,243
<SECURITIES> 0
<RECEIVABLES> 2,110,581
<ALLOWANCES> 0
<INVENTORY> 1,106,239
<CURRENT-ASSETS> 4,405,382
<PP&E> 798,550
<DEPRECIATION> 379,643
<TOTAL-ASSETS> 5,436,535
<CURRENT-LIABILITIES> 1,110,918
<BONDS> 0
0
0
<COMMON> 7,307
<OTHER-SE> 5,993,789
<TOTAL-LIABILITY-AND-EQUITY> 5,436,535
<SALES> 3,060,009
<TOTAL-REVENUES> 3,593,982
<CGS> 2,033,170
<TOTAL-COSTS> 2,033,170
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (654,916)
<INCOME-TAX> 0
<INCOME-CONTINUING> (654,916)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (654,916)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
