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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, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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 / /
8,185,030 shares of Common Stock were issued and outstanding as of May 14, 1997.
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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 1997 1996
-------------------- --------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 4,479,743 $ 1,198,730
Accounts receivable 2,470,253 3,802,364
Inventories 1,142,946 1,154,187
Prepaid expenses and other 265,824 315,911
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Total Current Assets 8,358,766 6,471,192
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EQUIPMENT - net of accumulated depreciation of $461,362
and $417,087 at March 31 and December 31, respectively 518,909 434,638
----------- -----------
OTHER ASSETS - net of accumulated amortization of $915,221
and $832,652 at March 31 and December 31, respectively 615,166 617,506
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TOTAL $ 9,492,841 $ 7,523,336
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 583,372 $ 1,386,306
Accrued expenses 321,250 525,653
Current portion of term loan payable 26,210 25,994
Credit line payable -- 745,000
Advance billings 434,986 149,675
Payroll and other taxes payable 66,660 65,808
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Total Current Liabilities 1,432,478 2,898,436
TERM LOAN PAYABLE 24,427 31,065
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Total Liabilities 1,456,905 2,929,501
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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
8,180,030 and 7,375,030 shares issued and outstanding
in 1997 and 1996, respectively 8,180 7,375
Additional paid-in capital 9,615,670 6,088,975
Accumulated deficit (1,587,914) (1,502,515)
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Total Stockholders' Equity 8,035,936 4,593,835
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TOTAL $ 9,492,841 $ 7,523,336
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</TABLE>
See Notes to Financial Statements.
2
<PAGE>
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
STATMENTS OF OPERATIONS
- -----------------------
<TABLE>
<CAPTION>
(Unaudited)
--- Three Months Ended ---
March 31, March 31,
1997 1996
------------ ------------
<S> <C> <C>
REVENUES:
Sales $ 1,576,044 $ 434,002
Service contracts 233,533 169,094
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Total Revenues 1,809,577 603,096
COST OF SALES AND SERVICE 831,431 319,688
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GROSS PROFIT 978,146 283,408
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EXPENSES:
Selling, general and administrative 1,041,164 645,349
Depreciation and amortization 47,374 37,867
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Total Expenses 1,088,538 683,216
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LOSS FROM OPERATIONS (110,392) (399,808)
OTHER INCOME - NET 24,993 17,530
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NET LOSS ($ 85,399) ($ 382,278)
=========== ===========
NET LOSS PER COMMON SHARE $ (0.01) $ (0.05)
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING 7,591,100 7,274,000
=========== ===========
</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,
1997 1996
---------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($ 85,399) ($ 382,278)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 126,843 106,965
Changes in assets and liabilities:
Accounts receivable 1,332,111 450,874
Inventories 11,241 (211,854)
Prepaid expenses 50,087 (28,209)
Accounts payable - trade (802,934) (3,202)
Deferred revenue 285,311 33,833
Payroll and other taxes payable 852 574
Accrued expenses (204,403) (187,076)
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Net cash provided by (used in) operating activities 713,709 (220,373)
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INVESTING ACTIVITIES:
Payments for equipment (128,546) (29,694)
Payments for other assets (80,228) (82,195)
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Net cash used in investing activities (208,774) (111,889)
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FINANCING ACTIVITIES:
Issuance of common stock 3,527,500 4,499
Repayment of borrowings (751,422) (4,167)
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Net cash provided by financing activities 2,776,078 332
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INCREASE (DECREASE) IN CASH 3,281,013 (331,930)
CASH, BEGINNING OF PERIOD 1,198,730 1,258,119
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CASH, END OF PERIOD $ 4,479,743 $ 926,189
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</TABLE>
See Notes to Financial Statements.
4
<PAGE>
TRINITECH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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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,
1996 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 1996 audited financial statements. Results of operations for
the period ended March 31, 1997 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, 1997 DECEMBER 31, 1996
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Parts $ 726,417 $ 750,722
Finished goods 416,529 403,465
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Total $1,142,946 $1,154,187
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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 months ended March 31, 1997 were $1,809,577 as
compared to $603,096 for the three months ended March 31, 1996, an increase of
200%. The increase in revenues during the three months ended March 31, 1997 was
principally due to an increase in the delivery of software systems and increased
deliveries of the Trinitech TouchPad(R) Systems, primarily 350 units of its
touch vending terminal to a non-financial service firm customer. During 1996,
the Company delivered 1,750 units of its touch vending terminal to such
non-financial service firm customer. The additional delivery of touch vending
terminals, during the first quarter of 1997, completes the contractual
obligation to such customer. Approximately 36% and 20% of the Company's sales
revenues for the periods ended March 31, 1997 and 1996, respectively were
derived from software installations. Revenue from export sales approximated
$1,221,000 (77% of sales) and $31,000 (7% of sales) during the three months
ended March 31, 1997 and 1996, respectively. In addition, revenues from service
contracts increased by 38% in the three months ended March 31, 1997 over the
comparable 1996 quarter. The increase in service revenue resulted from an
increase of equipment in use by customers. Service and maintenance for 1997 and
1996 sales of the Company's touch vending terminal products (2,100 units) will
be managed on an actual time and material arrangement. Even though the Company
expects its service and maintenance revenue to grow in the financial sector,
management does not anticipate receiving any significant future service and
maintenance revenue from its 1997 and 1996 sales of touch vending terminal
products. The Company did not experience any significant price changes in its
product lines during the three month periods ended March 31, 1997 and 1996.
COST OF SALES AND SERVICE AND GROSS PROFIT
The Company's cost of sales and service is principally comprised of labor,
materials overhead and amortization of capitalized product enhancement costs.
Gross profit as a percentage of total revenues was 54.1% and 47.0% for the three
months ended March 31, 1997 and 1996, respectively. The increase in gross profit
in the three months ended March 31, 1997 principally resulted from an increase
in the amount of higher margin software installations which
6
<PAGE>
was partially offset by lower margins associated with the Company's touch
vending terminal products sold during the three months ended March 31, 1997. The
Company obtains its materials parts and supplies from a variety of vendors in
the US and Far East. During the three months ended March 31, 1997, the Company
did not experienced any significant price increases in its component parts
purchased.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the three months ended
March 31, 1997 were $1,041,164 as compared to $645,349 in the three months ended
March 31, 1996, an increase of 61%. Such increase reflected the continued
expansion of operations in both the US and in London. As a result, the Company
experienced increases in salaries and related personnel costs, travel expenses,
recruiting fees and various related office expenses. During the past two years,
the Company added personnel principally to its technical programming and sales
staff. Employees added to technical positions have a primary focus on the
customer hardware and software project implementation and development. The
Company's recruitment effort, which began during 1993, continues to strengthen
the management infrastructure in order to better position the Company to respond
to present customers needs as well as for the future. The Company has also
continued its marketing programs in 1997, primarily focusing on public relations
activities, production of various product brochures, and representation at
technological exhibitions planned throughout 1997. Research and development
expenses for the three months ended March 31, 1997 and 1996 approximated $61,600
and $64,000, 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, 1997 and 1996.
The Company leases a portion of its corporate office facility under a three year
sublease which expired on April 30, 1997. Sublease rental income earned during
the three month periods ended March 31, 1997 and 1996 totaled approximately
$9,800 and $9,700, respectively.
NET LOSS
Net loss for the three months ended March 31, 1997 was $85,399 ($0.01 per
share) as compared to a net loss of $382,278 ($0.05 per share) in the comparable
1996 period. This improvement in net loss principally resulted from an increase
in revenues during the three months period ended March 31, 1997 partially offset
by higher selling, general and administrative expenses. See "Revenues" and
"Selling, General and Administrative Expenses" above.
7
<PAGE>
Management has made a considerable effort with respect to an expansion of
its operations, which began in 1993 and continues into 1997. The Company
believes that this expansion will better position the Company and facilitate its
future growth. However, no assurances can be given that the planned future
growth will occur.
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 $9.6 million of working capital. At March 31, 1997, cash balances
increased to $4,479,743 from $1,198,730 at December 31, 1996. The increase is
primarily due to the Company completing a private placement of 800,000 shares of
Common stock at $4.50 per share on March 7, 1997.
The accounts receivable balance at March 31, 1997 principally represents
amounts due from customers on sales made during 1996 and 1997. The Company has
been continually placing 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, 1997 exceeded its current liabilities by
approximately $6,926,000. The Company at March 31, 1997 had long-term debt
totaling $24,000 which represents a secured term loan on the purchase of
development equipment. In addition, at March 31, 1997, the Company had no
material commitments for capital expenditures or inventory purchases. The
Company had available a one million dollar credit facility for the purpose of
financing accounts receivable and, at March 31, 1997, the Company had the full
amount of the credit line available. The line of credit, which was secured by
accounts receivable and inventory, expired on April 30, 1997. 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 1997 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 1997. 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, 1997, the Company has warrants outstanding for
the purchase of 570,837 shares of its Common stock. Assuming the exercise of all
such outstanding Warrants, the Company would realize approximately $1,613,000 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 14, 1997
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, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,479,743
<SECURITIES> 0
<RECEIVABLES> 2,500,253
<ALLOWANCES> 30,000
<INVENTORY> 1,142,946
<CURRENT-ASSETS> 8,358,766
<PP&E> 980,271
<DEPRECIATION> 461,362
<TOTAL-ASSETS> 9,492,841
<CURRENT-LIABILITIES> 1,432,478
<BONDS> 0
0
0
<COMMON> 8,180
<OTHER-SE> 9,615,670
<TOTAL-LIABILITY-AND-EQUITY> 8,035,936
<SALES> 1,576,044
<TOTAL-REVENUES> 1,809,577
<CGS> 831,431
<TOTAL-COSTS> 831,431
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,276
<INCOME-PRETAX> (85,399)
<INCOME-TAX> 0
<INCOME-CONTINUING> (85,399)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (85,399)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
