UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
Commission File Number 0-22101
IAT MULTIMEDIA, INC.
(exact name of registrant as specified in its charter)
Delaware 13-3920210
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(State or other jurisdiction of (I.R.S Employer
Incorporation or organization) Identification No.)
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 VOGELSANG-TURGI, SWITZERLAND
(Address of principal executive offices)
(011) (41) (56) 223-5022
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(Registrant's telephone number, including area code)
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 ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
Class Outstanding at July 31, 1997
- ---------------------------- ----------------------------
Common Stock, $.01 par value 9,605,000 shares
IAT MULTIMEDIA, INC. AND SUBSIDIARIES
FORM 10-Q INDEX
FOR QUARTERLY PERIOD ENDED JUNE 30, 1997
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997 3
(unaudited) and December 31, 1996
Consolidated Statements of Operations for Three Months 4
Period ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Operations for Six Months 5
Period ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows for Six Months 6
Period ended June 30, 1997 and 1996 (unaudited)
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 9-14
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE PAGE 16
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IAT MULTIMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, Year ended
1997 December 31,
(unaudited) 1996
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,969,432 $ 264,661
Marketable securities 2,725,623
Accounts receivable, less allowance for doubtful accounts of
$ 37'418 in 1997 and $20'000 in 1996 190,882 309,133
Inventories 378,953 437,128
Prepaid expenses and other current assets 394,757 192,996
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Total current assets 13,659,647 1,203,918
Equipment and improvements, less accumulated depreciation
and amortization 644,404 638,955
Other assets:
Other assets 464,849 96,667
Deferred registration costs - 276,525
------------ ------------
$ 14,768,900 $ 2,216,065
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Notes payable, banks $ 1,489,963 $ 1,811,837
Accounts payable and other current liabilities 898,003 1,013,400
Loans payable, stockholders 451,389 1,107,407
------------ ------------
Total current liabilities 2,839,355 3,932,644
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Loans payable, stockholders, net of current portion 434,896 963,704
------------ ------------
Series A Convertible Preferred Stock, $.01 par value, redeem-
able, authorized, issued and outstanding 1,875,000 shares - 1,400,000
------------ ------------
Stockholders' equity/(deficit):
Preferred stock, $.01 par value, authorized 500,000 shares,
none issued
Common stock, $.01 par value, authorized 20,000,000 shares, issued and
outstanding 9,600,000 shares at June 30, 1997
and 4,375,000 shares at December 31, 1996 96,000 43,750
Capital in excess of par value 26,172,273 8,002,884
Accumulated deficit (15,216,491) (12,293,447)
Cumulative translation adjustments 442,867 166,530
------------ ------------
Total stockholders' equity/(deficit) 11,494,649 (4,080,283)
------------ ------------
$ 14,768,900 $ 2,216,065
============ ============
See Notes to Consolidated Financial Statements
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IAT MULTIMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Period
Ended June 30,
--------------------------
1997 1996
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Net Sales $ 216,246 $ 266,516
Cost of Sales 106,235 191,953
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Gross margin 110,011 74,563
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Operating expenses:
Research and development costs:
Expenses incurred 771,502 632,596
Less participations received 47,506 31,142
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Research and development costs, net 723,996 601,454
Selling expenses 529,652 375,459
General and administrative expenses 501,121 321,621
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1,754,769 1,298,534
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Operating loss (1,644,758) (1,223,971)
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Other income (expense):
Interest expense (38,465) (49,128)
Interest income 188,519 -
Other income/(expense) (3,511) 10,982
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Net loss $(1,498,215) $(1,262,117)
=========== ===========
Loss per share of common stock $ (0.16) $ (0.22)
=========== ===========
Weighted average number of
common shares outstanding 9,101,715 5,751,715
=========== ===========
See Notes to Consolidated Financial Statements
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IAT MULTIMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Period
Ended June 30,
--------------------------
1997 1996
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Net Sales $ 415,251 $ 782,482
Cost of Sales 245,746 532,659
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Gross margin 169,505 249,823
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Operating expenses:
Research and development costs:
Expenses incurred 1,427,559 1,288,856
Less participations received 88,681 226,345
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Research and development costs, net 1,338,878 1,062,511
Selling expenses 958,338 812,118
General and administrative expenses 826,450 674,067
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3,123,666 2,548,696
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Operating loss (2,954,161) (2,298,873)
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Other income (expense):
Interest expense (123,783) (86,068)
Interest income 190,448 -
Other income 16,077 12,415
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Net loss $(2,871,419) $(2,372,526)
=========== ===========
Loss per share of common stock $ (0.39) $ (0.41)
=========== ===========
Weighted average number of
common shares outstanding 7,426,715 5,751,715
=========== ===========
See Notes to Consolidated Financial Statements
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IAT MULTIMEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Period
Ended June 30,
---------------------------------
1997 1996
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Cash flows from operating activities:
Net loss $(2,871,419) $(2,372,526)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 138,681 104,184
Increase (decrease) in cash attributable to
changes in assets and liabilities:
Accounts receivable 76,544 528,705
Inventories 30,854 (298,431)
Other current assets (191,437) (11,650)
Other assets (368,182) -
Accounts payable and other current liabilities (52,684) 113,998
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Net cash used in operating activites (3,237,643) (1,935,720)
----------- -----------
Cash flows from investing activites
Purchases of equipments and improvements (200,490) (129,370)
Purchase of marketable securities (2,725,623) -
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Net cash used in investing activites (2,926,113) (129,370)
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Cash flows from financing activites
Proceeds from (repayments of) loans payable, stockholders (1,055,382) 304,131
Proceeds from issuance of common stock 17,098,164 819,583
Payment of preferred stock dividend (51,625)
Proceeds from (repayments of) short-term bank loan (208,634) 728,143
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Net cash provided by financing activites 15,782,523 1,851,857
----------- -----------
Effect of exchange rate changes on cash 86,004 19,832
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Net increase/(decrease) in cash and cash equivalents 9,704,771 (193,401)
Cash, beginning of period 264,661 198,879
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Cash and cash equivalents, end of period $ 9,969,432 $ 5,478
=========== ===========
Supplemental disclosures of cash flow information,
cash paid during the period for interest $ 128,267 $ 77,411
=========== ===========
Supplemental schedule of non-cash financing activities, deferred
registration costs paid included in other assets
and in proceeds from issuance of common stock $ 276,525 $ 0
=========== ===========
See Notes to Consolidated Financial Statements
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IAT MULTIMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INTERIM FINANCIAL INFORMATION - The unaudited interim consolidated
financial statements contain all adjustments consisting of normal recurring
adjustments, which are, in the opinion of the management of IAT Multimedia,
Inc. (the "Company"), necessary to present fairly the consolidated financial
position of the Company as of June 30, 1997, and the consolidated results of
operations and cash flows of the Company for the three months periods and the
six month periods ended June 30, 1997 and 1996 respectively. Results of
operations for the periods presented are not necessarily indicative of the
results for the full fiscal year. These financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto, including the Independent Auditors' Report, filed with the Securities
and Exchange Commission as part of the Company's Registration Statement on Form
S-1 (File No. 333-18529).
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of IAT Multimedia, Inc., its wholly owned subsidiary IAT
AG, Switzerland, ("IAT Switzerland") and a 74.9% owned subsidiary, IAT
Deutschland GmbH Interaktive Medien Systeme ("IAT GmbH"), Bremen. All
intercompany accounts and transactions have been eliminated.
FOREIGN CURRENCY TRANSLATION - The Company has determined that the
Swiss Franc, the local currency of IAT Switzerland, is the functional currency.
The financial statements of the subsidiaries have been translated into U.S.
dollars in accordance with Statement of Financial Accounting Standards No. 52
(SFAS No. 52), "Foreign Currency Translation", SFAS No. 52 provides that all
balance sheet accounts are translated at period end rates of exchange (1.44 and
1.35 Swiss Francs for each U.S. Dollar at June 30, 1997 and December 31, 1996,
respectively), except for equity accounts which are translated at historical
rates. Income and expense accounts are translated at the average of the
exchange rates in effect during the period. The resulting translation
adjustments are included as a separate component of stockholders'
equity/(deficit), whereas gains or losses arising from foreign currency
transactions are included in results of operations.
LOSS PER COMMON SHARE - Loss per share of common stock is based upon
the weighted average number of shares outstanding, including common stock
equivalents. The weighted average includes shares and common stock equivalents
issued within one year of the completion of the Company's initial public
offering (the "IPO") on April 1, 1997 with an issue price less than the
anticipated IPO price. Shares of common stock placed in escrow upon completion
of the IPO have been excluded from the calculation of loss per share.
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IAT MULTIMEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2. INVENTORIES
June 30, December 31,
1997 1996
------------ ------------
Raw Materials......................$ 351,175 $ 406,202
Finished Goods..................... 27,778 30,926
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$ 378,953 $ 437,128
============ ============
NOTE 3. IPO PROCEEDS
On April 1, 1997 the Company received the proceeds from its
IPO of the sale of 3,350,000 shares of its common stock at $6.00 per share,
which generated net proceeds of approximately $16,822,000 after Underwriters`
commission and offering expenses of approximately $3,278,000.
NOTE 4. SUBSEQUENT EVENT
On July 10, 1997 the Company announced that the board of directors has
authorized the institution of a stock repurchase plan under which the company
may purchase up to 300,000 shares of common stock as permitted by applicable
rules and regulations adopted under federal securities laws. The purchases will
be made from time to time in open market transactions at the then-prevailing
market price, although the company has no commitment or obligation to purchase
all or any of the shares.
On August 4, 1997 the Company signed a Letter of Intent with Trend
Plus GmbH whereby the Company will acquire 90% of Trend Plus' common stock in
exchange for $4,000,000 in convertible preferred stock of the Company. The
preferred shares will be convertible into common stock 18 months after the
closing date of the purchase. The conversion price will be the average closing
price of the common stock immediately prior to conversion. As part of the
agreement the current owners of Trend Plus will provide approximately
$1,150,000 to working capital in form of contributions and loans at and before
closing.
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IAT MULTIMEDIA, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
INTRODUCTION
The Company develops, manufactures and markets customizable high
quality visual communications systems for use in desktop computers which permit
users to hold multi-point video conferences in two or more locations, as well
as providing additional video, audio and data transfer features not available
in traditional video conferencing systems. Unlike traditional video
conferencing companies, the Company's focus is on high quality system
solutions.
The Company has developed two generations and is currently developing
a third generation of its technology. The first generation was developed using
a large number of computer boards and readily available components as the
Company's initial entry in the visual communications field and to assess
customer needs. The second generation, utilized in the Company's current
systems, is characterized by a substantially reduced number of computer boards
and improved capabilities. These systems use a combination of fully
programmable digital signal processors and less-flexible hardwired processors.
The second generation systems have inherently high prices per unit. Third
generation systems, which the Company expects to begin shipping at the end of
the fourth quarter of 1997 or the first quarter of 1998, utilize Texas
Instruments' TMS320C8x programmable digital signal processor and are designed
for commercial production with target sales prices below the sales prices of
the second generation systems. The Company has encountered various technical
problems in the development stage of its third generation products attributable
to development work performed by third parties which has resulted in a delay in
the introduction of the third generation systems to the market.
The Company believes that its third generation of systems will be its
first systems which have the potential for widespread commercialization and
that increasing sales of these products will result in corresponding decreases
in sales, and eventual phasing out of its second generation products.
The Company's revenues have quarterly fluctuations in which the fourth quarter
has historically reflected the highest quarterly revenues, as a result of the
perceived desire by its customers to deplete allocated budgets for the
Company's products prior to the end of the calendar year. There can be no
assurance that this trend will continue. Quarterly fluctuations depend in part
on the timing of introduction of new products by the Company and its
competitors. The Company's sales in the six months ended June 30, 1996 were
proportionately higher compared to the past years as a result of the
introduction of the Company's second generation systems. The volume of sales
has decreased in the six months ended June 30, 1997 as the customers await the
release of the Company's third generation systems.
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RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1997 COMPARED TO THREE MONTH PERIOD ENDED
JUNE 30, 1996
The average exchange rate for the U.S. Dollar increased substantially as
compared to the Swiss Franc by approximately 19.0% resulting in a decrease in
all revenue and expense accounts in the second quarter 1997 by this same
percentage. The average Swiss Franc to U.S. Dollar exchange rate was SF 1.44 =
$1.00 in the second quarter 1997 as compared to SF 1.21 = $1.00 in the second
quarter 1996.
REVENUES. The Company's revenues for the second quarter 1997
decreased by 19.1% to $216,000 from $267,000 in the comparable period of the
prior year. The decrease is primarily a result of the strengthening of the
U.S. Dollar against the Swiss Franc.
COST OF SALES. Cost of sales for the second quarter 1997 decreased to
$106,000 from $192,000 in the second quarter 1996. The cost of sales as a
percentage of sales decreased to 49.1% from 72.0%. The decrease is primarily a
result of proportionately high royalty income from various customers generating
higher profit margins. The decrease is primarily a result of proportionately
higher royalty income from various customers generating high profit margins
partially offset by sales of second generation systems generating lower gross
margins at the end of their life-cycle.
RESEARCH AND DEVELOPMENT COSTS. Research and development costs
incurred increased by 22.0% to $772,000 in the second quarter 1997 from
$633,000 in the second quarter 1996. This increase is primarily a result of an
increase of development costs incurred by third parties in connection with the
development of the wavelet compression technology performed by the Technical
University of Berlin and of software and product licenses acquired in
connection with the development of the third generation products. Research
participations increased by 54.8% to $48,000 for the second quarter 1997 from
$31,000 for the second quarter 1996. The increase is primarily a result of
research participations through a government subsidy granted in the second
quarter 1997 by the state government of Berlin in connection with the
development of the wavelet compression technology, which offers up to 300 to 1
compression with scalable data loss ("Wavelet Compression Technology"), by the
Technical University of Berlin. The subsidy is granted for 35%-40% of the
actual expenditures incurred in Berlin.
SELLING EXPENSES. Selling expenses increased by 41.3% to $530,000 in
the second quarter 1997 from $375,000 in the second quarter 1996. This increase
is a result of expenses incurred in connection with the production of market
and product communication brochures, an increase in trade fair expenses, an
enhancement of the sales and marketing personnel and costs related to the
marketing agreement entered into between the Company and General Capital on
October 24, 1996, as amended, (the "Marketing Agreement").
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by 55.6% to $501,000 in the second quarter 1997 from
$322,000 in the second quarter 1996. The increase is primarily a result of the
Company being a public company since April 1, 1997 resulting in D&O liability
and life insurance premiums and investor relations services not incurred in the
prior year comparable period and in an increase of board member fees, legal and
auditing expenses and other corporate overhead.
- 10 -
INTEREST. Interest expense decreased by 22.4% to $38,000 in the second
quarter 1997 from $49,000 in the second quarter 1996 as a result of a reduction
in outstanding bank loans. Interest income increased to $189,000 in the second
quarter 1997 from zero in the second quarter 1996 as a result of the investment
of the IPO proceeds in short and medium-term investments bearing interest in
the average of approximately 5.5%.
NET LOSS. Net loss for the three months ended June 30, 1997 increased
by 18.7% to $1,498,000 from $1,262,000 for the comparable prior year period.
The loss primarily increased as a result of higher operating expenses partially
offset by higher interest income.
SIX MONTH PERIOD ENDED JUNE 30, 1997 COMPARED TO SIX MONTH PERIOD ENDED
JUNE 30, 1996
The average exchange rate for the U.S. Dollar increased substantially as
compared to the Swiss Franc by approximately 20.0% resulting in a decrease in
all revenue and expense accounts in the six months ended June 30, 1997 by this
same percentage. The average Swiss Franc to U.S. Dollar exchange rate was SF
1.44 = $1.00 in the six months ended June 30, 1997 as compared to SF 1.20 =
$1.00 in the six months ended June 30, 1996.
REVENUES. The Company's revenues for the six months ended June 30,
1997 decreased by 46.9% to $415,000 from $782,000 in the comparable period of
the prior year. Sales in the six months ended June 30, 1996 reached a peak as a
result of the introduction of the Company's second generation systems. The
volume of sales has dropped in the six months ended June 30, 1997 as the
customers await the release of the Company's third generation systems.
COST OF SALES. Cost of sales for the six months ended June 30, 1997
decreased to $246,000 from $533,000 in the six months ended June 30, 1996. The
cost of sales as a percentage of sales decreased to 59.2% from 68.1%. The
decrease is primarily a result of proportionately higher royalty income from
various customers generating high profit margins partially offset by sales of
second generation systems generating lower gross margins at the end of their
life-cycle.
RESEARCH AND DEVELOPMENT COSTS. Research and development costs
incurred increased by 10.8% to $1,428,000 in the six months ended June 30, 1997
from $1,289,000 in the comparable period of the prior year. The Company has
increased the number of employees involved in research and development to
complete their third generation of products. In addition, this increase is a
result of development costs incurred by third parties in connection with the
development of the wavelet compression technology performed by the Technical
University of Berlin and of software and product licenses acquired in
connection with the development of the third generation products. Research
participations have decreased by 60.6% to $89,000 for the six months ended June
30, 1997 from $226,000 for the six months ended June 30, 1996. This decrease is
primarily a result of the completion in the second quarter 1997 of the joint
development projects with Deutsche Telekom, one of the Company's strategic
partners. In the six months ended June 30, 1997 $75,000 where received in
research participations through a government subsidy granted by the state
government of Berlin. The subsidy is granted for 35%-40% of the actual
expenditures incurred in Berlin in connection with the development of the
Wavelet Compression Technology by the Technical University of Berlin.
- 11 -
SELLING EXPENSES. Selling expenses increased by 18.0% to $958,000 in
the six months ended June 30, 1997 from $812,000 in the six months ended June
30, 1996. This increase is a result of expenses incurred in connection with the
production of market and product communication brochures, an increase in trade
fair expenses, an enhancement of the sales and marketing personnel and costs
related to the Marketing Agreement concluded with General Capital.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by 22.6% to $826,000 in the six months ended June 30, 1997
from $674,000 in six months ended June 30, 1996. The increase is primarily a
result of the Company being a public company since April 1, 1997 resulting in
D&O liability and life insurance premiums and investor relations services not
incurred in the prior year comparable period and in an increase of board member
fees, legal and auditing expenses and other corporate overhead.
INTEREST. Interest expense increased by 44.2% to $124,000 in the six
months ended June 30, 1997 from $86,000 in the six months ended June 30, 1996.
This increase is principally due to the increase in stockholders' loans in the
first quarter 1997 which were repaid in April 1997, partially offset by a
reduction of outstanding bank loans in the second quarter 1997. Interest income
increased to $190,000 in the six months ended June 30, 1997 from zero in the
six months ended June 30, 1996 as a result of the investment of the IPO
proceeds in short and medium-term investments bearing interest in the average
of approximately 5.5%.
NET LOSS. Net loss for the six months ended June 30, 1997 increased by
21.0% to $2,871,000 from $2,373,000 for the comparable prior year period. The
loss primarily increased as a result of the Company's increase in operating
expenses and a decrease in research participations.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $9,705,000 during the six
months ended June 30, 1997 as compared to a decrease of $193,000 during the six
months ended June 30, 1996. The increase is the result of the IPO proceeds
received on April 1, 1997
Net cash used in operating activities totaled $3,238,000 during the
six months ended June 30, 1997 compared to $1,936,000 during the six months
ended June 30, 1996. The increase is primarily due to prepaid insurance
premiums and marketing agreement expenses and an increase of the net loss for
the six months ended June 30, 1997.
Net cash used in investing activities totaled $2,926,000 during the
six months ended June 30, 1997 compared to $129,000 during the six months ended
June 30, 1996. The increase is primarily a result of the investment of part of
the IPO proceeds in marketable securities.
Net cash provided by financing activities totaled $15,783,000 during
the six months ended June 30, 1997 as compared to $1,852,000 during the six
months ended June 30, 1996. During the six months ended June 30, 1997 cash was
provided by net proceeds from issuance of common stock of $17,098,000 partially
offset by repayments of loans to stockholders and of short-term bank loans and
of the payment of the preferred stock dividend. In the six months ended June
30, 1996 cash was provided by loans from stockholders ($304,000), an increase
of
- 12 -
short term bank loans ($728,000) and net proceeds from issuance of common
stock ($820,000).
IAT Switzerland had a line of credit and two loans with a Swiss bank
for approximately $1,320,000 in the aggregate. IAT GmbH has a line of credit
with a German bank for approximately $630,000. The credit lines and loans of
the Swiss and German bank are due on demand. Since the end of April 1997 the
Company has been renegotiating the terms and conditions of certain loans with
its Swiss bank, resulting in a reduction of the credit line of approximately
$280,000 to approximately $1,040,000. In the event the Company is required to
repay a further portion, or all of its indebtedness to the Swiss bank, it will
utilize a portion of the proceeds from the IPO.
The Company's expenditures are currently exceeding its revenues by
approximately $500,000 per month, principally as a result of the continued
research and development related to new products and operating losses. Research
participations have declined, and are expected to continue to decline to a
minimal level since the Company has developed the base technology for its third
generation. Research and development expenses however, are expected to remain
at the present level during the next quarter in order to develop additional
products and customized software which are expected to generate additional
revenues for the Company. The Company's ability to become profitable is
dependent on the completion of the development of its third generation of
products, a timely release of the products and market penetration. The timing
of revenues is difficult to project. Consequently, the Company has initiated a
cost reduction program and is continuing to review the operating plans to
reduce costs in all areas.
Cash and cash equivalents at June 30, 1997 amount to $9,969,000.
Investments in marketable securities at June 30, 1997 amount to $2,726,000. The
Company believes that its funds should be sufficient to finance its research
and development, expansion of marketing activities, capital and debt service
requirements and its working capital requirements for approximately the 15
months period following June 30, 1997. However, the Company's requirements are
subject to numerous contingencies associated with the early stage of the
Company's third generation products.
SUBSEQUENT EVENT
On July 10, 1997 the Company announced that the board of directors has
authorized the institution of a stock repurchase plan under which the company
may purchase up to 300,000 shares of common stock as permitted by applicable
rules and regulations adopted under federal securities laws. The purchases will
be made from time to time in open market transactions at the then-prevailing
market price, although the company has no commitment or obligation to purchase
all or any of the shares.
On August 4, 1997 the Company signed a Letter of Intent with Trend
Plus GmbH whereby the Company will acquire 90% of Trend Plus' common stock in
exchange for $4,000,000 in convertible preferred stock of the Company.
The preferred shares will be convertible into common stock 18 months
after the closing date of the purchase. The conversion price will be the
average closing price of the common stock immediately prior to conversion. As
part of the agreement the current owners of Trend Plus will provide
approximately $1,150,000 to working capital in form of contributions and loans
at and before closing.
- 13 -
Trend Plus is a leading provider of mobile communications to
professional clients requiring specialized voice, data and picture transfer
known as telematics. Trend Plus provides GSM and satellite-based communication
technology network services to corporate clients who require two-way
communications via a secure mobile network. The Trend Plus service and billing
system enables central station monitoring and voice/data communication with
remote equipment and personnel. With its fleet management control system Trend
Plus offers a customizable solution for the surveillance of personnel,
vehicles, buildings and cargo.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
- 14 -
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3.1 - Amended and Restated Certificate of
Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 in
the Registrant's Registration Statement on
Form S1 (File No. 333-18529)
Exhibit 3.2 - By-laws of the Registrant (incorporated by
reference to Exhibit 3.2 in the
Registrant's Registration Statement on
Form S-1 (File No. 333-18529)
Exhibit 4.2 - Underwriters' Warrants (incorporated by
reference to Exhibit 4.2 in the
Registrant's Registration Statement on
Form S1 (File No. 333-18529)
Exhibit 4.3 - Warrant issued to Vertical Financial
Holdings (one of a series of warrants with
identical terms) (incorporated by reference
to Exhibit 4.3 in the Registrant's
Registration Statement on Form S1 (File No.
333-18529)
Exhibit 4.4 - Warrant issued to Stockholders (one of
a series of warrants with identical terms)
(incorporated by reference to Exhibit 4.4 in
the Registrant's Registration Statement on
Form S1 (File No. 333-18529)
Exhibit 4.5 - Escrow Agreement (incorporated by
reference to Exhibit 4.5 in the
Registrant's Registration Statement on
Form S1 (File No. 333-18529)
Exhibit 11 - Statement re computation of per share
earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
second quarter of 1997.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IAT MULTIMEDIA, INC.
/s/Viktor Vogt
---------------------------
Dr. Viktor Vogt
Co-Chairman of the Board of
Directors and Chief Executive
Officer and President
/s/Klaus Grissemann
---------------------------
Klaus Grissemann
Chief Financial Officer
Date: August 12, 1997
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