14
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, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT
For the transition period from ___________ to ___________
Commission file number 0-14204
DATA NATIONAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Colorado 84-0958983
_________________________________ ________________________________
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
11465 West I-70 Frontage Road North, Wheat Ridge, CO 80033
__________________________________________________________
(Address of principal executive offices)
(303) 431-1933
___________________________
(Issuer's telephone number)
Check whether the issuer (1) 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 No X
The number of shares outstanding of the issuers Common Stock, .0001 par value
as of March 31, 1995 was 327,478,340 shares.
Transition Small Business disclosure format. Yes No X
INDEX
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS page 2
CONSOLIDATED INCOME STATEMENTS (UNAUDITED) page 3 & 4
CONSOLIDATED STATEMENTS OF CASH FLOWS page 5
MANAGER'S STATEMENT page 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES page 7
NO OTHER FORMS FILED page 8
SIGNATURES page 9
ITEM 1. FINANCIAL STATEMENTS
DATA NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Unaudited)
March 31, September 30,
1995 1994
___________ _____________
Assets
Current Assets:
Cash and equivalents $107,674 $ 84,245
Receivables:
Trade, less allowances for bad 229,655 245,221
debts of $5,077 in 1995 and
1994, respectively
Other 4,731 15,134
Inventory, at cost 63,853 41,568
Prepaid expenses 12,109 7,843
_______ _______
Total current assets 418,022 394,011
Property and equipment, at cost 385,607 368,106
Less: Accumulated depreciation (319,105) (286,856)
_______ _______
66,502 81,250
_______ _______
Other assets 3,892 2,888
_____ _____
$488,416 $478,149
________ ________
________ ________
Liabilities and Stockholders' Deficit
Current Liabilities:
Deferred revenue $120,486 $127,977
Accounts payable 28,101 64,475
Accrued expenses 89,198 60,967
Current portion - capital leases 7,836 8,261
_______ _______
Total current liabilities 245,621 261,680
_______ _______
Note payable - related party 867,789 868,208
Capital leases, net of 3,785 10,526
current portion
Stockholders' Deficit:
Common stock $.0001 par value,
authorized 800,000,000 shares;
327,478,340 shares issued and
outstanding 32,747 32,747
Accumulated deficit (661,526) (695,012)
________ ________
$488,416 $478,149
________ ________
________ ________
See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
DATA NATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Six Months Ended
________________________
March 31, March 31,
1995 1994
_________ _________
Net sales $ 1,250,000 $ 1,316,449
Cost of sales 672,527 638,351
___________ ___________
Gross profit 577,473 678,098
Selling and marketing expense 194,183 228,430
General and administrative expense 305,084 286,594
___________ __________
Operating income 78,206 163,074
Other income (expense):
Interest and other income 2,022 (2,408)
Interest expense, primarily related party (46,742) (47,214)
________ ________
(44,720) (49,622)
________ ________
Net income $ 33,486 $ 113,452
___________ __________
___________ __________
Net income per share - -
Weighted average shares outstanding 327,478,340 327,478,340
___________ ___________
___________ ___________
See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
DATA NATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Three Months Ended
________________________
March 31, March 31,
1995 1994
_________ _________
Net sales $ 519,927 $ 507,577
Cost of sales 329,610 282,349
___________ ____________
Gross profit 190,317 225,228
Selling and marketing expense 97,322 108,815
General and administrative expense 120,906 134,007
___________ ____________
Operating income (27,911) (17,594)
Other income (expense):
Interest and other income (1,025) (2,447)
Interest expense, primarily related party (17,344) (24,763)
________ ________
(18,369) (27,210)
____________ ___________
Net income $ (46,280) $ (44,804)
____________ ____________
____________ ____________
Net income per share - -
Weighted average shares outstanding 327,478,340 327,478,340
___________ ___________
___________ ___________
See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
DATA NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
________________________
March 31, March 31,
1994 1993
_________ _________
Cash flow from (used in) operating activities
Net income $ 33,486 $ 113,452
Adjustments to reconcile net income to
cash flow from operating activities:
Depreciation 32,249 17,249
Changes in assets and liabilities:
(Increase) decrease in receivables 25,969 (87,466)
(Increase) decrease in inventory (22,285) (357)
(Increase) decrease in prepaid
expenses (4,266) (2,335)
(Increase) decrease in other assets (1,004) 150
Increase (decrease) in accounts
payable (36,374) (12,517)
Increase (decrease) in accrued
expenses 28,231 (43,802)
Increase (decrease) in deferred
revenue (7,491) 44,922
__________ ________
Total adjustments 15,029 (84,156)
__________ ________
Cash flow from (used in)
operating activities 48,515 29,296
Cash flow (used in) investing activities:
Purchases of property and equipment (17,501) (20,295)
Cash flow from (used in) financing activities:
Borrowings - related party - 3,568
Repayment of related party note (419) -
Borrowing under (repayment of) capital
leases (7,166) 6,273
__________ _________
Cash flow from (used in) financing activities (7,585) 9,841
Increase (decrease) in cash and equivalents 23,429 18,842
Cash and equivalents, beginning of period 84,245 200,255
__________ __________
Cash and equivalents, end of period $107,674 $ 219,097
__________ __________
__________ __________
Supplemental information:
Income taxes paid - -
Interest paid $ 46,742 $ 47,214
__________ __________
__________ __________
See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
DATA NATIONAL CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - MANAGEMENT'S STATEMENT
In the opinion of management, the accompanying financial statements
contain all adjustments (which consist only of normal, recurring adjustments)
necessary to fairly present the Company's financial position, results of
operations, and cash flows. The operating results presented are not
necessarily indicative of the operating results for the years ending September
30, 1995 and 1994.
Reference should be made to the notes to the consolidated financial
statements included in Form 10-KSB for the year ended September 30, 1994, for
additional information.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
March 31, 1995 as Compared to September 30, 1994
The Company's working capital increased from $132,331 at September 30,
1994 to $172,401 at March 31, 1995, primarily because of cash flow from
operations of $48,515. Cash flow was used to acquire additional equipment of
$17,501, and $7,166 was used to repay capital leases. The Company was not
obligated for additional capital expenditures at March 31, 1995, but may be
expected to continue to upgrade its systems given the nature of its business.
The Company remains dependent upon the Dillon note for financing, and
almost certainly would cease operations if the note were deemed in default and
called or not renewed.
The Company believes that favorable operating results will continue and
provide adequate liquidity for the near-term future.
Results of Operations
For the quarter ended March 31, 1995, the nature of the Company's
operations was unchanged and focused on providing marketing services to
service stations and similar entities, nationally. The Company remains
dependent upon two major customers which account for over 50% of net sales.
For the quarter ended March 31, 1995 $5,806 more in "AutoPM" services were
billed, and $23,371 less for the six month period ended March 31, 1995.
Additionally, there was a net increase of $32,775 in billings to "New
Residents" in the quarter ended March 31, 1995. Revenue from "Customer
Handouts" decreased from $14,915 for the quarter ended March 31, 1994
to $1,820 for the quarter ended March 31, 1995. There were no other
significant trends.
For the six month period ended March 31, 1995, "Service Income"
decreased from $892,805 to $880,080. "Auto PM" billings also decreased from
$40,752 to $17,381. However, "New Resident" billings increased by $10,377.
Billings for "Customer Handouts" decreased by $15,305.
Cost of sales for the quarter ended March 31, 1995 increased to 63.4% as
a percentage of sales because of the high fixed costs of production, which
would not follow the decrease in net sales for the quarter. For the six
months ended March 31, 1995 cost of sales was 53.8% as a percentage of sales
compared to 48.5% for the six months ended March 31, 1994. The increase is
due substantially to an increase in production salaries. Selling and
marketing expense decreased from $108,815 for the quarter ended March 31, 1994
to $97,382 for the quarter ended March 31, 1995. For the six months ended
March 31, 1995 selling and marketing expense decreased $34,247 from the
comparable period in the prior year. The major reason for the change is not
incurring the cost of attending trade shows of two major customers, which
occur biannually.
General and administrative expenses decreased from $134,007 for the
quarter ended March 31, 1994 to $120,906 for the quarter ended March 31, 1995,
which appears to be due to cost-cutting measures implemented by management.
For the six month period ended March 31, 1995 general and administrative
expenses increased by $18,490 over the six month period ended March 31, 1994.
For the six month period, administrative salaries were increased because of
raises for existing employees and employment of additional clerical staff.
Legal expense increased as a result of litigation as more fully described in
Form 10-KSB, and audit fees were incurred in the current year but not in the
quarter ended March 31, 1994.
Interest expense is substantially all related to the Dillon note, and is
expected to remain a significant cost in the near future.
DATA NATIONAL CORPORATION
FORM 10-QSB
December 31, 1994
PART II
ITEM 6. Not applicable.
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(REGISTRANT) DATA NATIONAL CORPORATION
BY (SIGNATURE) /s/ Richard S. Simms
(DATE) January 1, 1996
(NAME AND TITLE) Richard S. Simms, Vice
President
(3-31-95.10q)
[ARTICLE] 5
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-END] MAR-31-1995
[CASH] 107,674
[SECURITIES] 0
[RECEIVABLES] 234,732
[ALLOWANCES] 5077
[INVENTORY] 63,853
[CURRENT-ASSETS] 418,022
[PP&E] 385,607
[DEPRECIATION] 319,105
[TOTAL-ASSETS] 488,416
[CURRENT-LIABILITIES] 245,621
[BONDS] 0
[COMMON] 327,478,340
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 488,416
[SALES] 1,250,000
[TOTAL-REVENUES] 1,250,000
[CGS] 672,527
[TOTAL-COSTS] 1,171,734
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] (46,741)
[INCOME-PRETAX] 33,486
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 33,486
[EPS-PRIMARY] 0
[EPS-DILUTED] 0