SANDATA, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED AUDITED
November 30, May 31,
1996 1996
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 932,578 $ 368,400
Accounts receivable - net of allowance for
doubtful accounts of $293,000 at November
30, 1996 and $350,000 at May 31, 1996 1,349,163 1,180,905
Receivables from affiliates 221,027 190,635
Receivable from former affiliate 26,258 26,258
Note receivable from former affiliate, net
of allowance for doubtful accounts of $119,000
at November 30, 1996 and May 31, 1996,
respectively -0- 77,100
Notes receivable - officers 102,867 102,867
Inventories 21,258 27,972
Prepaid expenses and other current assets 171,691 172,897
--------- --------
TOTAL CURRENT ASSETS 2,824,842 2,147,034
FIXED ASSETS, NET 5,921,437 9,399,625
OTHER ASSETS
Cash surrender value of officers' life
insurance, security deposits and other 439,329 410,683
--------- ---------
TOTAL ASSETS $9,185,608 $11,957,342
--------- ----------
--------- ----------
See notes to consolidated condensed financial statements
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED AUDITED
November 30 May 31,
1996 1996
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued expenses $1,180,840 $1,022,058
Current portion of long-term debt 1,004,757 768,354
Note payable - affiliate 205,000 1,000,000
Deferred/unearned revenue 7,387 4,299
Deferred income 259,378 205,252
--------- ---------
TOTAL CURRENT LIABILITIES 2,657,362 2,999,963
LONG-TERM DEBT 156,228 4,322,234
NOTES PAYABLE - AFFILIATES 1,642,000 462,000
DEFERRED INCOME 252,336 177,530
DEFERRED INCOME TAXES 175,675 83,000
-------- --------
TOTAL LIABILITIES 4,883,601 8,044,727
SHAREHOLDERS' EQUITY
Common stock 816 816
Additional paid in capital 1,539,786 1,279,710
Retained earnings 2,898,291 2,768,975
Treasury stock (136,886) (136,886)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 4,302,007 3,912,615
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $9,185,608 $11,957,342
--------- ----------
--------- ----------
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995 1996 1995
REVENUES:
Service fees $2,622,024 $2,162,135 $5,110,874 $4,236,135
Real estate rental income 53,160 81,897 134,700 118,939
Other income 85,291 66,104 168,557 118,091
Interest income 1,999 5,555 4,979 19,697
--------- --------- --------- ---------
2,762,474 2,315,691 5,419,110 4,492,862
COSTS AND EXPENSES:
Service Fees:
Operating 1,538,327 1,155,888 2,970,362 2,376,532
Selling, general and administr-
ative 551,894 557,019 1,016,183 1,086,938
Depreciation and amortization 294,061 239,953 597,001 460,426
Interest expense 50,994 51,503 104,937 103,800
-------- -------- --------- ---------
2,435,276 2,004,363 4,688,483 4,027,696
--------- --------- --------- ---------
Real Estate:
Operating 93,177 204,077 246,894 242,985
Depreciation and amortization 18,944 13,064 47,302 17,584
Interest expense 52,378 77,024 133,918 107,655
Real estate taxes 32,012 33,000 71,012 43,000
196,511 327,165 499,126 411,224
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 2,631,787 2,331,528 5,187,609 4,438,920
--------- --------- --------- ---------
Earnings (loss) from operations
before income taxes 130,687 (15,837) 231,501 53,942
Income tax expense (benefit) 57,685 (31,050) 102,185 (3,138)
------- ------- ------- -------
NET EARNINGS $ 73,002 $ 15,213 $ 129,316 $ 57,080
-------- ------- --------- -------
-------- ------- --------- -------
EARNINGS PER COMMON SHARE $ 0.04 $ 0.02 $ 0.07 $ 0.07
-------- -------- -------- --------
Weighted average common shares
outstanding 1,724,757 763,955 1,724,757 763,955
See notes to consolidated condensed financial statements
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED NOVEMBER 30,
1996 1995
Cash flows from operating activities:
Net earnings $ 129,316 $ 57,080
Adjustments to reconcile net earnings to
net cash provided by (used in) operating
activities: Depreciation and amortization 644,303 478,010
(Gain) on disposal of fixed assets (268,340) --
(Gain) on transfer of facility (15,586) --
Decrease in allowance for doubtful
accounts receivable (57,195) (20,000)
Increase (decrease) in deferred income (139,408) 153,010
Recognition of deferred revenue (10,547) --
(Increase) decrease in operating assets (162,181) 400,869
Increase in operating liabilities 533,432 198,254
-------- --------
Net cash provided by operating activities 653,794 1,267,223
-------- ---------
Cash flows from investing activities:
Collection of note receivable - officer -- 129,000
Purchases of fixed assets (948,074) (1,648,098)
Increases in advances from affiliates -- 13,000
Collections of note receivable-former
affiliates 77,100 148,370
Proceeds from sale/leaseback transaction 925,000 --
------- --------
Net cash provided by (used in) investing
activities 54,026 (1,357,728)
Cash flows from financing activities:
Proceeds from private placement offering 260,076 --
Proceeds from term loan -- 750,000
Principal payments on term loan (350,718) (999,430)
Proceeds from line of credit 1,750,000 1,390,000
Principal payments on line of credit (2,188,000) (1,035,000)
Proceeds from notes payable - affiliates 2,560,000 --
Principal payments on notes payable
- affiliates (2,175,000) --
--------- ---------
Net cash (used in) provided by financing
activities (143,642) 105,570
Increase in cash and cash equivalents 564,178 15,065
Cash and cash equivalents at beginning
of period 368,400 102,613
-------- --------
Cash and cash equivalents at end
of period $ 932,578 $ 117,678
-------- --------
-------- --------
<FN>
<F1>
Note: As of July 31, 1995 the Company assumed lease obligations totalling
$4,143,140 of debt as disclosed in the Notes to the Consolidated Condensed
Financial Statements in conjunction with the acquisition of a facility.
<F2>
Note: As of November 1, 1996 a company affiliated with the Directors of the
Company assumed certain debt obligations relative to the transfer of a facility
under a master lease agreement in the amount of $3,140,884 as disclosed in the
Notes to the Consolidated Condensed Financial Statements.
</FN>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The Consolidated Condensed Balance Sheet as of November 30, 1996, the
Consolidated Condensed Statements of Operations for the three and six-
month periods ended November 30, 1996 and 1995 and the Consolidated
Condensed Statement of Cash Flows for the six-month periods ended
November 30, 1996 and 1995 have been prepared by Sandata, Inc. and
Subsidiaries (the "Company") without audit. In the opinion of
Management, all adjustments (which include only normal, recurring
adjustments) necessary to present fairly the financial position as of
November 30, 1996 and for all periods presented have been made.
For information concerning the Company's significant accounting
policies, reference is made to the Company's Annual Report on Form 10-
KSB for the year ended May 31, 1996. Results of Operations for the
period ended November 30, 1996 are not necessarily indicative of the
operating results expected for the full year.
2.RELATED PARTY TRANSACTIONS
(A) On July 1, 1992, the Company loaned $1,000,000 to the Company's Chairman,
bearing interest at the prime rate plus 1-1/4% and was due July 1, 1995. On
September 1, 1993, the Company issued a new note for the then outstanding
balance of $490,000, bearing interest at prime plus 1-1/4% and was due April
30, 1994. On May 1, 1994, the Company extended the due date of the note to
the earlier of April 30, 1995 or as the Company may demand at any time after
the effective date of the then proposed privatization transaction. The
Chairman paid $340,000 of the outstanding loan to the Company during the year
ended May 31, 1995. On May 1, 1995, the Company extended the due date of the
note to October 31, 1995. On July 31, 1995, the Chairman, as a result of the
assignment of the lease with the Nassau County Industrial Development Agency
("NCIDA") from BFS Sibling Realty Inc., formerly known as Brodsky Sibling
Realty Inc. ("BFS") to Sandata, Inc., repaid $129,000. The remaining balance
of the note receivable was repaid by the Chairman during the quarter ended
February 29, 1996.
(B)On June 1, 1994, BFS, an affiliate substantially owned by the
Company's Chairman, borrowed $3,350,000 in the form of Industrial
Development Revenue Bonds ("Bonds") to finance costs incurred in
connection with the acquisition, renovation and equipping of the
Company's new office space located at 26 Harbor Park Drive, Port
Washington, New York (the "Facility" or the "Building") from the
NCIDA. These Bonds were subsequently purchased by a bank (the "Bank").
The Bonds bore interest at prime plus 3/4 of 1% until August 11, 1995,
at which time the interest rate became fixed at 9% for a five-year
term through September 1, 2000. At that time, the interest rate will
be adjusted to a rate of either prime plus 3/4 of 1%, or the
applicable fixed rate if offered by the Bank. As a condition to the
issuance of the Bonds, the NCIDA obtained title to the Facility, which
it then leased to BFS.
(C) On June 21, 1994 (as of June 1, 1994), the Company and its
Chairman guaranteed the full and prompt payment of principal and
interest of the Bonds and the Company granted the Bank a security
interest and lien on all the assets of the Company. In connection with
the issuance and sale of the Bonds, the Company entered into a lease
agreement (the "Sublease") with BFS, whereby the Company leased the
Facility for the conduct of its business and, in consideration
therefor, was obligated to make lease payments that at least equal
amounts due to satisfy the underlying Bond obligations.
(D) On July 31, 1995 (as of July 1, 1995), by an Assignment and
Assumption and First Amendment to Lease between the Company and BFS,
the Company assumed the obligations of BFS under the lease and became
the direct tenant and the beneficial owner of the Facility
(collectively the "Assignment Transaction"). In connection with the
Assignment Transaction, the Sublease was terminated. During the
period commencing July 1, 1995 and ending October 31, 1996 the Company
paid rent for the Facility to NCIDA in the amount of $48,600 per
month, subject to adjustment based upon the then effective interest
rate of the Bonds, among other things. In connection with the
Assignment Transaction, the Company obtained the right to acquire the
Facility upon expiration of the lease with the NCIDA (the "Lease") and
became directly liable to the NCIDA for amounts due thereunder.
In connection with the Assignment Transaction, the Company assumed
certain indebtedness owed to affiliates of the Company's Chairman as
follows: (i) the $364,570 remaining balance of a 48-month term loan
bearing interest at 8.7% per annum, and (ii) the $428,570 remaining
balance of a 42-month term loan bearing interest at 8.91%. Each of
the foregoing loans were incurred in connection with the construction
of improvements to the Building, are collateralized by the assets of
the primary obligor and are guaranteed by the Company's Chairman. The
Company entered into the Assignment Transaction primarily to satisfy
certain requirements of the U.S. Small Business Administration ("SBA")
in connection with the financing discussed below.
(E)On August 11, 1995, the Company entered into a $750,000 loan
agreement with the Long Island Development Corporation ("LIDC"), under
a guarantee by the SBA (the "SBA Loan"). The entire $750,000 proceeds
have been used to repay a portion of the Bonds. The SBA Loan is
payable in 240 monthly installments and bears interest of 7.015%.
(F) As of November 1, 1996, the Company entered into an Assignment and
Assumption of and Second Amendment to Lease Agreement among BFS
Realty, LLC, an affiliate of the Company's Directors (the "Assignee"),
the Bank and the Company (the "Second Amendment").
In connection with the Second Amendment, (i) the Assignee assumed all
of the Company's obligations under the Lease with the NCIDA and
entered into a sublease with the Company for the Facility; and (ii)
the Company conveyed to the Assignee the right to become the owner of
the Facility upon expiration of the Lease. In addition, pursuant to
the sublease, the Company has assumed certain obligations owed by the
Assignee to the NCIDA under the Lease. The Assignee has indemnified
the Company with respect to certain obligations relative to the Lease
and the Second Amendment.
As a result of the Second Amendment and related transactions discussed
above, the Company's indebtedness as of November 1, 1996 was reduced
by an aggregate of $3,140,884. The Company and its Chairman have
guaranteed such obligation, among others, in connection with the
foregoing.
3. NET EARNINGS PER COMMON SHARE
Earnings per share for the three and six months ended November 30,
1996 includes the dilutive effect of outstanding stock options and
warrants. The number of common stock equivalents determined by
applying the modified treasury stock method included in the
calculation of earnings per share for the three and six months ended
November 30, 1996 was 894,135. The effect of outstanding options and
warrants was antidilutive for the three and six months ended November
30, 1995. Accordingly, the outstanding options and warrants were not
included in the calculation of earnings per share for the three and
six months ended November 30, 1995.
4. SALE/LEASEBACK TRANSACTION
In June 1996, the Company consummated a Sale/Leaseback of certain
fixed assets (principally furniture, fixtures, computer hardware and
equipment). The fixed assets, which had a net book value of
approximately $657,000, were sold for $925,000. The resulting gain of
approximately $268,000 was recorded as deferred income and is being
recognized over the life of the lease, which is forty-eight (48)
months. Approximately $16,800 and $33,600 of deferred gain was
recognized for the three and six months ended November 30, 1996.
5.STOCKHOLDERS EQUITY
On September 30, 1996 Sandata announced that it entered into a letter
of intent to raise, on a "best efforts--all or none" basis, $1,500,000
pursuant to a private offering of an aggregate of 300,000 shares of
Common Stock and five year warrants for the purchase of 150,000 shares
of Common Stock at an exercise price of $7.00 per share. Neither the
shares of Common Stock, the warrants nor the shares of Common Stock
underlying the warrants will be registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements. However, the letter of intent contemplates that
purchasers of such Units will be granted certain registration rights.
In connection with such registration, it is contemplated that an
additional 100,000 shares of the Company's Common Stock will be
registered for certain security holders of the Company.
Contemporaneously with the execution and delivery by the Company of
the letter of intent, certain assignees of the placement agent
acquired 100,000 shares of the Company's Common Stock at a purchase
price of $3.00 per share; the net proceeds received by the Company
after payment of expenses were $260,076. Reference is made to "Part I, Item
2 - Management's Discussion and Analysis or Plan of Operation" and "Part II,
Item 2 - Changes in Securities" for a discussion of the sale of Company's
securities.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Revenues were $2,762,474 and $5,419,110 for the three and six months
ended November 30, 1996 as compared to $2,315,691 and $4,492,862 for
the three and six months ended November 30, 1995, increasing $446,783
and $926,248, respectively.
Service fee revenue for the three and six months ended November
30, 1996 was $2,622,024 and $5,110,874, an increase of $459,889 and
$874,739 for the same periods of the prior fiscal year. The increase
is attributable to revenues derived from a new product called SanTrax.
Real estate rental income was $53,160 and $134,700 for the three and
six months ended November 30, 1996 as compared to $81,897 and $118,939
for the three and six months ended November 30, 1995.
Other income for the three and six-month period ended November 30,
1996 was $85,291 and $168,557, respectively as compared to $66,104 and
$118,091 for the three and six month-period ending November 30, 1995.
This increase is partially due from the gain realized upon the sale of
assets in connection with the following sale/leaseback transaction.
In June 1996, the Company consummated a sale/leaseback of certain
fixed assets (principally furniture, fixtures, computer hardware and
equipment). The fixed assets, which had a net book value of
approximately $657,000, were sold for $925,000. The resulting gain of
approximately $268,000 was recorded as deferred income and is being
recognized over the life of the lease, which is forty-eight (48)
months. Approximately $16,800 and $33,600 of deferred gain was
recognized for the three and six months ended November 30, 1996.
Expenses Related to Services
Operating expenses increased $382,439 or 33% and $593,830 or 25% for
the three and six months ended November 30, 1996 as compared to the
three and six months ended November 30, 1995.
Programming and payroll costs relating to existing applications and
costs associated with SanTrax and its operations, including telephone
and expenses related to equipment, were the primary factors for the
increase in operating expenses.
Selling, general and administrative expenses were $551,894 and
$1,016,183 for the three and six months ended November 30, 1996, as
compared to $557,019 and $1,086,938 for the three and six months ended
November 30, 1995, a decrease of $5,125 and $70,755, respectively.
The decrease is primarily due to a decrease in payroll and related
costs and administrative costs related to existing product lines.
Depreciation and amortization expense increased $54,108 and $136,575 to
$294,061 and $597,001 for the three and six months ended November 30, 1996
as compared to $239,953 and $460,426 for the three and six months ended
November 30, 1995. The increase was primarily attributable to fixed asset
additions, including software capitalization costs.
Interest expense was $50,994 and $104,937 for the three and six months
ended November 30, 1996 as compared to $51,503 and $103,800 for the
three and six months ended November 30, 1995.
Expenses Related to Real Estate Operations
Operating expenses were $93,177 and $246,894 for the three and six
months ended November 30, 1996, as compared to $204,077 and $242,985
for the three and six months ended November 30, 1995, a decrease of
$110,900 and an increase of $3,909, respectively.
Interest expense was $52,378 and $133,918 for the three and six months
ended November 30, 1996 as compared to $77,024 and $107,655 for the
three and six months ended November 30, 1995.
The decreases in expenses relating to the operation of the Facility for the
three months ended November 30, 1996 and the increases in expenses for the
six months ended November 30, 1996 resulted from the Company's becoming the
beneficial owner and Lessee of the Facility as of July 31, 1995 in addition
to the effect of the subsequent Second Amendment transaction as of November 1,
1996 (as described below), whereby the Company became the Sublessee of the
Facility.
Income Tax Expenses
Income tax expense for the three and six months ended November 30,
1996 was $57,685 and $102,185, respectively. For the three and six
months ended November 30, 1995, the income tax benefit was $31,050 and
$3,138, respectively. The tax benefit arose from the filing of amended
tax returns for prior years which has resulted in a refund of an overpayment.
Liquidity and Capital Resources
The Company's working capital increased as of November 30, 1996 to $167,480,
as compared with a deficiency at May 31, 1996 of $852,929.
In June 1996, the Company entered into a sales/leaseback transaction
whereby certain fixed assets were sold for $925,000 and concurrently
leased back to the Company. The proceeds were used to repay
outstanding advances against the Company's Credit Agreement (as defined
below).
The Company has spent approximately $948,000 in fixed asset additions,
including software capitalization costs in connection with revenue
growth and new product development.
In September 1996, the Company sold 100,000 shares of its common stock
in connection with a private placement offering (as described later in
this section). The net proceeds received by the Company after payment
of expenses relating to the offering were $260,076. Reference is made
to "Part II, Item 2 - Changes in Securities" for a discussion of the
sale of such securities.
On July 1, 1992, the Company loaned $1,000,000 to the Company's
Chairman, bearing interest at the prime rate plus 1-1/4% and was due
July 1, 1995. On September 1, 1993, the Company was issued a new note
for the then outstanding balance of $490,000, bearing interest at
prime plus 1-1/4% and being due April 30, 1994. On May 1, 1994, the
Company extended the due date of the note to the earlier of April 30,
1995 or as the Company may demand at any time after the effective date
of the then proposed privatization transaction. The Chairman paid
$340,000 of the outstanding loan to the Company during the year ended
May 31, 1995. On May 1, 1995, the Company extended the due date of the
note to October 31, 1995. On July 31, 1995, the Chairman, as a result
of the assignment of the lease with the Nassau County Industrial
Development Agency ("NCIDA") from BFS Sibling Realty Inc., formerly
known as Brodsky Sibling Realty Inc. ("BFS"), an affiliate
substantially owned by the Company's Chairman, to Sandata, Inc.,
repaid $129,000. The remaining balance of the note receivable was
repaid by the Chairman during the quarter ended February 29, 1996.
On July 31, 1993, the Company received a promissory note from
Compuflight, Inc. ("Compuflight"), a former affiliate (the Company's
Chairman was a principal stockholder and Chairman of Compuflight
through December 1, 1993) to evidence the Company's accounts
receivable from Compuflight. The note was payable in increments of
$20,000 per month including interest at the rate of one percent above
prime on the unpaid balance and was due April 1, 1994. On November 1,
1993, the note was amended. The amended note is payable in minimum
increments of $20,000 per month with interest at ten percent (10%) per
annum and contains provisions for accelerated payments based upon
Compuflight achieving certain results. Payments commenced on February
28, 1994 and are to continue until such time as the indebtedness and
any accrued interest are paid in full. In connection with the
promissory note, the Company received a security interest in
substantially all the then existing assets of Compuflight, which has
been assigned to the Bank as collateral for the Company's Credit
Agreement with the Bank. Aa of November 30, 1996, Compuflight is indebted
to the Company in the amount of $145,039, of which $118,781 represents
the balance due on the note and $26,258 represents accounts receivable.
On June 1, 1994, BFS borrowed $3,350,000 in the form of Industrial
Development Revenue Bonds ("Bonds") to finance costs incurred in
connection with the acquisition, renovation and equipping of the
Company's new office space located at 26 Harbor Park Drive, Port
Washington, New York (the "Facility" or the "Building") from the
NCIDA. These Bonds were subsequently purchased by the Bank. The
aggregate cost incurred by BFS in conjunction with such acquisition,
renovation and equipping was approximately $4,377,000. In addition,
the Company incurred approximately $500,000 in connection with
additional capital improvements. The Bonds bore interest at prime plus
3/4 of 1% until August 11, 1995, at which time the interest rate
became fixed at 9% for a five-year term through September 1, 2000. At
that time, the interest rate will be adjusted to a rate of either
prime plus 3/4 of 1%, or the applicable fixed rate if offered by the
Bank. As a condition to the issuance of the Bonds, the NCIDA obtained
title to the Facility which it then leased to BFS. On June 21, 1994
(as of June 1, 1994), the Company and its Chairman guaranteed the full
and prompt payment of principal and interest of the Bonds and the
Company granted the Bank a security interest and lien on all the
assets of the Company. In connection with the issuance and sale of the
Bonds, the Company entered into a lease agreement (the "Sublease")
with BFS, whereby the Company leased the Facility for the conduct of
its business and, in consideration therefor, was obligated to make
lease payments that at least equal amounts due to satisfy the
underlying Bond obligations.
On July 31, 1995, by an Assignment and Assumption and First Amendment
to Lease between the Company and BFS, the Company assumed the
obligations of BFS under the lease and became the direct tenant and
the beneficial owner of the Facility (collectively the "Assignment
Transaction"). In connection with the Assignment Transaction, the
Sublease was terminated. During the period commencing July 1, 1995
and ending October 31, 1996 the Company paid rent for the Facility to
the NCIDA in the amount of $48,600 per month, subject to adjustment
based upon the then effective interest rate of the Bonds, among other
things. In connection with the Assignment Transaction, the Company
obtained the right to acquire the Facility upon expiration of the
lease with the NCIDA (the "Lease") and became directly liable to the
NCIDA for amounts due thereunder. In connection with the Assignment
Transaction, the Company assumed certain indebtedness owed to
affiliates of the Company's Chairman as follows: (i) the $364,570
remaining balance of a 48-month term loan bearing interest at 8.7% per
annum, and (ii) the $428,570 remaining balance of a 42-month term loan
bearing interest at 8.91%. Each of the foregoing loans were incurred
in connection with the construction of improvements to the Building,
are collateralized by the assets of the primary obligor and are
guaranteed by the Company's Chairman.
On August 11, 1995, the Company entered into a $750,000 loan agreement
with the Long Island Development Corporation ("LIDC"), under a
guarantee by the U.S. Small Business Administration ("SBA") (the "SBA
Loan"). The entire $750,000 proceeds have been used to repay a
portion of the Bonds. The Company entered into the Assignment
Transaction primarily to satisfy certain requirements of the SBA. The
SBA Loan is payable in 240 monthly installments of $6,255, which
includes principal and interest at a rate of 7.015%.
As of November 1, 1996, the Company entered into an Assignment and
Assumption of and Second Amendment to Lease Agreement among BFS
Realty, LLC, an affiliate of the Company's Directors (the "Assignee"),
the Bank and the Company (the "Second Amendment").
In connection with the Second Amendment, (i) the Assignee assumed all
of the Company's obligations under the Lease with the NCIDA and
entered into a sublease with the Company for the Facility; and (ii)
the Company conveyed to the Assignee the right to become the owner of
the Facility upon expiration of the Lease. In addition, pursuant to
the sublease, the Company has assumed certain obligations owed by the
Assignee to the NCIDA under the Lease. The Assignee has indemnified
the Company with respect to certain obligations relative to the Lease
and the Second Amendment.
As a result of the Second Amendment and related transactions discussed
above, the Company's indebtedness as of November 1, 1996 was reduced
by an aggregate of $3,140,884. The Company and its Chairman have
guaranteed such obligation, among others, in connection with the
foregoing.
On April 20, 1995 the Company's $2,000,000 secured revolving credit
agreement (the "Credit Agreement") with the Bank was amended, extending
the due date for a period of two years. Upon maturity, the Company
may, at its option convert the outstanding principal balance of the
Credit Agreement to a five-year self-amortizing term loan. The amended
Credit Agreement revised the Company's requirements to maintain a
stated net worth amount and maximum net loss amount, plus specific
working capital and liquidity ratios, capital expenditure limitations
and restrictions on the payment of dividends. Contemporaneously, the
Bank tended a two-year term loan (the "Term Loan") of $500,000 to the
Company. The proceeds of the Term Loan were used to partially repay
outstanding advances against the Company's Credit Agreement. Principal
and interest of the Term Loan are to be repaid over a 24-month period.
As of November 30, 1996 there is a balance of $600,000 outstanding on
the line of credit and $104,154 remaining on the Term Loan.
The Company believes the results of its continued operations, together
with the available credit line and Term Loan should be adequate to fund
presently foreseeable working capital requirements.
On September 30, 1996 Sandata announced that it entered into a letter
of intent to raise, on a "best efforts--all or none" basis, $1,500,000
pursuant to a private offering of an aggregate of 300,000 shares of
Common Stock and five year warrants for the purchase of 150,000 shares
of Common Stock at an exercise price of $7.00 per share. Neither the
shares of Common Stock, the warrants nor the shares of Common Stock
underlying the warrants will be registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements. However, the letter of intent contemplates that
purchasers of such Units will be granted certain registration rights.
In connection with such registration, it is contemplated that an
additional 100,000 shares of the Company's Common Stock will be
registered for certain security holders of the Company.
Contemporaneously with the execution and delivery by the Company of
the letter of intent, certain assignees of the placement agent
acquired 100,000 shares of the Company's Common Stock at a purchase
price of $3.00 per share; the net proceeds received by the Company
after payment of expenses were $260,076. Reference is made to "Part II,
Item 2 - Changes in Securities" for a discussion of the sale of Company's
securities.
The private placement of the Company's securities consummated subsequent to
November 30, 1996.
PART II - OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS:
None
Item 2 - CHANGES IN SECURITIES:
As of September 12, 1996, the Company sold an aggregate of 100,000 shares of
its Common Stock, $.001 par value, as follows:
Name of Purchaser Number of Shares Total Consideration
James S. Cassel 51,750 $155,250
Keil Stern 31,500 94,500
Steven N. Bronson 10,000 30,000
Eric R. Elliott 2,250 6,750
Barry J. Booth 2,250 6,750
Bruce C. Barber 2,250 6,750
Total 100,000 $300,000
The Company sold the shares referred to above in a transaction exempt from
the registration requirements of Section 5 of the Securities Act of 1933, as
amended, pursuant to the exemption provided by Section 4(2) of such act.
Reference is made to "Part I, Item 2 - Management's Discussion and Analysis
or Plan of Operation" for a discussion of a private placement of the
Company's securities consummated subsequent to November 30, 1996.
Item 3 - DEFAULTS UPON SENIOR SECURITIES:
None
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
Item 5 - OTHER INFORMATION:
Reference is made to "Part I, Item 2 - Management's Discussion and
Analysis or Plan of Operation" for a discussion of recent sales of the
Company's securities.
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K:
Exhibit 27 - Financial Data Schedule (Electronic Filing Only)
The Company filed one Current Report on Form 8-K as follows:
Date of Event: September 30, 1996
Items Reported: Item 7
Financial Statements: Not Applicable
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.
SANDATA, INC.
(Registrant)
Date: January 14 , 1997 By: /s/ Bert E. Brodsky
Bert E. Brodsky
Chairman of the Board,
President, Chief Executive
Officer, Chief Financial
Officer
January 14, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Re: Sandata, Inc., File No. 0-14401
Dear Sir or Madam,
Transmitted herewith through the EDGAR system is Form 10-QSB for the
quarter ending November 30, 1996 for Sandata Inc. If you have any
questions or comments, please contact me at (516)484-4400, extension
215.
Very truly yours,
Linda Scarpantonio
Legal Coordinator