-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Effny3miMoryiGWmeqGPGEiUqRTyoqEOxP35N5AobSd/qps2SippeDQFBJYY4/V7 K35PyycsWN/cMyjj+ZfsEA== 0000950147-01-500901.txt : 20010516 0000950147-01-500901.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950147-01-500901 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VITRIX INC /NV/ CENTRAL INDEX KEY: 0000836937 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 133465289 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-10320 FILM NUMBER: 1637624 BUSINESS ADDRESS: STREET 1: 51 WEST THIRD STREET STREET 2: SUITE 301 CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 6029675800 MAIL ADDRESS: STREET 1: 20 EAST UNIVERSITY STREET 2: SUITE 304 CITY: TEMPE STATE: AZ ZIP: 85281 FORMER COMPANY: FORMER CONFORMED NAME: FBR CAPITAL CORP /NV/ DATE OF NAME CHANGE: 19960930 FORMER COMPANY: FORMER CONFORMED NAME: BARRIE RICHARD FRAGRANCES INC DATE OF NAME CHANGE: 19920703 10QSB 1 e-6829.txt QUARTERLY REPORT FOR THE QTR ENDED 3/31/2001 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 [ ] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from __________ to __________ Commission File number 33-58694 VITRIX, INC. (Exact name of small business issuer as specified in its charter) Nevada 13-3465289 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 51 West Third Street, Suite 310, Tempe, Arizona 85281 (Address of principal executive offices) (480) 967-5800 (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer: (1) has 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 [ ] At May 11, 2001, the issuer had outstanding 6,295,828 shares of Common Stock, par value $.005 per share. Transitional Small Business Disclosure Format: Yes [ ] No [X] PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS. VITRIX, INC. BALANCE SHEETS
March 31, June 30, 2001 2000 ----------- ----------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 23,016 $ 620,765 Accounts receivable - trade, net 178,714 229,717 Inventory 61,890 91,204 Prepaid expenses and other current assets 28,019 38,182 ----------- ----------- TOTAL CURRENT ASSETS 291,639 979,868 PROPERTY AND EQUIPMENT, NET 123,551 168,779 ----------- ----------- TOTAL ASSETS $ 415,190 $ 1,148,647 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Current portion of long-term debt $ 79,572 $ 46,303 Accounts payable 269,649 88,953 Accrued liabilities 102,523 145,143 Deferred revenue 138,930 152,307 ----------- ----------- TOTAL CURRENT LIABILITIES 590,674 432,706 LONG-TERM DEBT, LESS CURRENT PORTION 17,413 34,231 ----------- ----------- TOTAL LIABILITIES 608,087 466,937 ----------- ----------- COMMITMENTS: -- -- STOCKHOLDERS' EQUITY (DEFICIT): Common stock, $.005 par value, 50,000,000 shares authorized, 3,147,914 and 3,050,822 shares issued and outstanding 157,395 152,541 Contributed capital 2,647,094 2,498,005 Accumulated deficit (2,997,386) (1,968,836) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (192,897) 681,710 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 415,190 $ 1,148,647 =========== ===========
The Accompanying Notes are an Integral Part of the Financial Statements 2 VITRIX, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended March 31, March 31, --------------------------- --------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Revenues: Product sales $ 165,460 $ 308,407 $ 751,149 $ 834,237 Services revenue 122,266 68,105 403,117 106,150 ----------- ----------- ----------- ----------- TOTAL REVENUES 287,726 376,512 1,154,266 940,387 ----------- ----------- ----------- ----------- COST OF REVENUES: Product 81,082 111,549 379,813 319,233 Services 58,138 30,052 155,186 30,052 ----------- ----------- ----------- ----------- TOTAL COST OF REVENUES 139,220 141,601 534,999 349,285 ----------- ----------- ----------- ----------- GROSS PROFIT 148,506 234,911 619,267 591,102 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Sales and marketing 160,797 236,936 650,860 522,458 Research and development 136,160 152,260 499,541 359,765 General and administrative 188,601 174,557 491,222 457,360 ----------- ----------- ----------- ----------- TOTAL COSTS AND EXPENSES 485,558 563,753 1,641,623 1,339,583 ----------- ----------- ----------- ----------- NET LOSS FROM OPERATIONS (337,052) (328,842) (1,022,356) (748,481) ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE): Interest expense (11,952) (4,438) (18,097) (8,564) Interest income 1,689 7,731 11,903 16,696 ----------- ----------- ----------- ----------- (10,263) 3,293 (6,194) 8,132 ----------- ----------- ----------- ----------- NET LOSS $ (347,315) $ (325,549) $(1,028,550) $ (740,349) =========== =========== =========== =========== BASIC LOSS PER SHARE $ (0.11) $ (0.12) $ (0.33) $ (0.28) =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,147,914 2,827,922 3,105,408 2,627,295 =========== =========== =========== ===========
The Accompanying Notes are an Integral Part of the Financial Statements 3 VITRIX, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEAR ENDED JUNE 30, 2000 AND THE NINE MONTH PERIOD ENDED MARCH 31, 2001 (Unaudited)
Preferred Stock Common Stock -------------------------- ------------------------- Contributed Accumulated Shares Amount Shares Amount Capital Deficit Total ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance at July 1, 1999 10,000,000 $ 100,000 1,324,103 $ 66,205 $ 956,468 $ (870,617) $ 252,056 Issuance of stock options for services -- -- -- -- 12,000 -- 12,000 Exercise of stock options -- -- 7,000 350 26,375 -- 26,725 Exercise of warrants -- -- 26,469 1,323 4,500 -- 5,823 Sale of common stock and warrants, net of costs -- -- 673,250 33,663 1,409,662 -- 1,443,325 Issuance of common stock for services -- -- 20,000 1,000 39,000 -- 40,000 Preferred stock conversion (10,000,000) (100,000) 1,000,000 50,000 50,000 -- -- Net loss -- -- -- -- -- (1,098,219) (1,098,219) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance at June 30, 2000 -- -- 3,050,822 152,541 2,498,005 (1,968,836) 681,710 Exercise of stock options -- -- 9,707 484 10,193 -- 10,677 Exercise of warrants -- -- 87,385 4,370 117,896 -- 122,266 Issuance of warrants for services -- -- -- -- 21,000 -- 21,000 Net loss -- -- -- -- -- (1,028,550) (1,028,550) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance at March 31, 2001 -- $ -- 3,147,914 $ 157,395 $ 2,647,094 $(2,997,386) $ (192,897) =========== =========== =========== =========== =========== =========== ===========
The Accompanying Notes are an Integral Part of the Financial Statements 4 VITRIX, INC. STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended March, 31 -------------------------- 2001 2000 ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents: Cash flows from operating activities: Net Loss $(1,028,550) $ (740,349) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 48,350 30,983 Stock options and warrants issued for services 21,000 52,000 Changes in Assets and Liabilities: Accounts receivable-trade 51,003 (141,698) Inventory 29,314 (51,225) Prepaid expenses and other current assets 10,163 (22,936) Accounts payable 180,696 (68,566) Accrued liabilities (42,620) 48,752 Deferred revenue (13,377) 85,896 ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES (744,021) (807,143) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash received on sale of property and equipment 2,810 -- Purchase of property and equipment (5,932) (73,384) ----------- ----------- NET CASH USED BY INVESTING ACTIVITIES (3,122) (73,384) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt 225,000 -- Repayment of debt (188,055) -- Repayment of capital leases (20,494) (9,289) Proceeds from issuance of equity securities 132,943 1,470,050 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 149,394 1,460,761 ----------- ----------- Net change in cash and cash equivalents (597,749) 580,234 Cash and cash equivalents at beginning of period 620,765 376,365 ----------- ----------- Cash and cash equivalents at end of period $ 23,016 $ 956,599 =========== =========== The Accompanying Notes are an Integral Part of the Financial Statements 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND INTERIM FINANCIAL STATEMENTS: The accompanying financial statements of Vitrix, Inc. ("Vitrix" or the "Company") have been prepared in accordance with generally accepted accounting principles ("GAAP"), pursuant to the rules and regulations of the Securities and Exchange Commission, and are unaudited. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results for the nine month period ended March 31, 2001, may not be indicative of the results for the entire year. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 2000. ACQUISITIONS: On March 30, 2001, the Company consummated a business combination with Time America, Inc. which included the issuance of 3,147,914 shares of Vitrix, Inc. common stock (post reverse split) in consideration for all outstanding shares of Time America, Inc. The acquisition will be accounted for under the pooling-of-interests method of purchase accounting. The accompanying financial statements do not include the operations of Time America, Inc. LOSS PER SHARE: Basic loss per share of common stock was computed by dividing the net loss by the weighted average number of shares outstanding of common and preferred stock. Diluted earnings per share are computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are options and warrants that are freely exercisable into common stock at less than the prevailing market price. Dilutive securities are not included in the weighted average number of shares when inclusion would increase the earnings per share or decrease the loss per share. LONG-TERM DEBT: In January 2001, the Company secured a $225,000 working capital loan from certain third parties, including members of the Company's Board of Directors. The Company is obligated to make principal payments on this indebtedness based on accounts receivable collections. The note bears an effective interest rate of 3% per month. As of March 31, 2001 the balance due on the note was approximately $37,000 and was paid in full on April 4, 2001. 6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) STOCKHOLDERS' EQUITY: On March 30, 2001, the Company's shareholders approved a proposal effecting a 1-for-10 reverse stock split of the Company's common stock. The accompanying financial statements give effect to the reverse stock split for all periods presented. SUBSEQUENT EVENTS: In April 2001, the Company secured a $375,000 working capital loan from certain third parties, including members of the Company's Board of Directors. The Company is obligated to make monthly interest only payments on this indebtedness until November, 2001 and 12 monthly principal and interest payments commencing on November 1, 2001. The note bears an effective interest rate of 18% per annum and is collateralized by all assets of the Company and is due in full on November 1, 2002. The Company's wholly owned subsidiary, Vitrix Incorporated, changed its name to Time America, Inc. effective April 25, 2001. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. RECENT DEVELOPMENTS On March 30, 2001, the Company completed the acquisition of Time America, Inc. ("Time America"), a private Arizona-based Time and Attendence software development company. The Company issued an aggregate of 3,147,914 shares of Vitrix common stock (on a post-reverse split basis) in consideration for all of the outstanding capital stock of Time America. The merger was effected pursuant to the terms of a Merger Agreement, dated March 28, 2001, by and among the Company, Time America and Vitrix Incorporated, a wholly owned subsidiary of the Company. As a result of the acquisition, Time America was merged with and into Vitrix Incorporated, resulting in Time America becoming a wholly owned subsidiary of the Company. On March 30, 2001, the Company also held a special shareholders meeting at which the Company's shareholders approved a proposal to effect a 1-for-10 reverse stock split. The reverse split proposal was submitted to the Company's shareholders in connection with the Time America acquisition. The Time America acquisition resulted in the former shareholders of Time America owning approximately fifty percent (50%) of the Company's outstanding common stock. The acquisition of Time America helps to strengthen the Company's time and attendance product portfolio by adding products that are complementary to the Company's existing line of time and attendance products and services. The acquisition also serves to strengthen the combined company's technological expertise and increase the Company's presence in the dealer channel. COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000 REVENUES. Revenue for the nine month period ended March 31, 2001 (the "reporting period"), rose 23% to $1,154,266, compared to revenue of $940,387 for the nine month period ended March 31, 2000 (the "comparable period"). This growth was principally the result of an increase in sales volume for the Company's professional services. GROSS PROFIT. Gross profit as a percentage of revenue was 54% in the reporting period, compared to 63% in the comparable period. The decrease in gross profit as a percentage of revenue was primarily attributable to an increase in the proportion of bundled software and hardware solutions sales to software-only solutions sales. The average gross profit per unit sold on software and hardware units is lower than the average gross profit margin on software-only solutions. Due to the Company's increased service revenue volume, the Company also hired additional service support personnel resulting in an increase in cost of services. EXPENSES. Sales and marketing expenses were $650,860, or 56% of revenues, in the reporting period, compared to $522,458, or 56% of revenues, in the comparable period. The increase in sales and marketing expense is attributable to increased labor costs resulting from the hiring of additional sales and marketing personnel and increased advertising and promotional expenses. Research and development expenses were $499,541, or 43% of revenues, in the reporting period, compared to $359,765, or 38% of revenues, in the comparable period. The increase in research and development expense is attributable to increased labor costs. General and administrative expenses were $491,222, or 43% of revenues, in the reporting period, compared to $457,360, or 49% of revenues, in the comparable period. The decrease in general and administrative expenses as a percentage of revenue is primarily attributable to maintaining relatively the same level of expenses while increasing revenue. COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000 REVENUES. Revenue for the three month period ended March 31, 2001 (the "reporting quarter"), decreased 24% to $287,726, compared to revenue of $376,512 for the three month period ended March 31, 2000 (the "comparable quarter"). This decrease was principally due to a decrease in sales volume for the Company's software and hardware solutions. GROSS PROFIT. Gross profit as a percentage of revenue was 52% in the reporting quarter, compared to 62% in the comparable quarter. The decrease in gross profit as a percentage of revenue was primarily attributable to an increase in the proportion of bundled software and hardware solutions sales to software-only solutions sales. 8 EXPENSES. Sales and marketing expenses were $160,797, or 56% of revenues, in the reporting quarter, compared to $236,936, or 63% of revenues, in the comparable quarter. The decrease in sales and marketing expense is attributable to decreased labor costs. Research and development expenses were $136,160, or 47% of revenues, in the reporting quarter, compared to $152,260, or 40% of revenues, in the comparable quarter. The decrease in research and development expense is attributable to decreased labor costs. General and administrative expenses were $188,601, or 66% of revenues, in the reporting quarter, compared to $174,557, or 46% of revenues, in the comparable quarter. The increase in general and administrative expenses as a percentage of revenue is primarily attributable to maintaining the same level of expenses while decreasing revenue. LIQUIDITY AND CAPITAL RESOURCES Working capital as of March 31, 2001 was a deficit of $299,035, compared to $920,093 at March 31, 2000. Cash and cash equivalents at those dates amounted to $23,016 and $956,599, respectively. OPERATIONS. Net cash used by operations decreased to $744,021 in the reporting period, compared to $807,143 in the comparable period. The decrease in net cash used was primarily attributable to a decrease in accounts receivable, and an increase in accounts payable. INVESTMENT ACTIVITIES. For the reporting period, the Company used $5,932 to purchase property and equipment, compared to $73,384 of property and equipment purchases in the comparable period. FINANCING ACTIVITIES. Net cash provided by financing activities decreased to $149,394 in the reporting period, compared to $1,460,761 in the comparable period. The decrease was primarily due to the Company raising $1,470,050 through a private placement of common stock and common stock warrants in the comparable period. The Company believes that, with its current working capital and funds generated through its recent working capital financings together with the cash flow from operations, it will have sufficient working capital to address the anticipated growth of demand and market for its products for the next 12 months. The Company may, however, seek to obtain additional capital through a line of credit at a financial institution or through additional debt or equity offerings during this time period. The ability to raise additional capital in the public markets will depend upon the Company's future results of operations, prospects, prevailing market conditions and the demand for the Company's products and services. No assurance can be given that the Company will be able to raise additional capital, or that such capital, if available, will be on acceptable terms. FORWARD-LOOKING INFORMATION The statements contained in this Quarterly Report on Form 10-QSB that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information which the Company believes are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein can be identified by the use of forward-looking terminology such as "believes," "expects," "may," 9 "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution the reader that these forward-looking statements that are not historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized. Because of the number and range of assumptions underlying the Company's projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections and other forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is from time to time involved in legal proceedings arising from the normal course of business. As of the date of this report, the Company is not currently involved in any legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company held a Special Meeting of Shareholders on March 30, 2001. Shareholders voted upon a proposal to amend the Company's Article of Incorporation to effect a reverse stock split of one share of Common Stock of the Company for every 10 shares of Common Stock that were issued and outstanding. The proposal was approved by the shareholders as follows: Eligible Voted For Voted Against Abstentions -------- --------- ------------- ----------- 31,479,140 19,885,653 173,374 9,000 10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) No exhibits are filed herewith pursuant to Regulation S-B. (b) Reports on Form 8-K No reports were filed on Form 8-K during the quarter ended March 31, 2001. 11 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VITRIX, INC. Dated: May 14, 2001 By /s/ Craig J. Smith ------------------------------------- Craig J. Smith Chief Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----