11
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 December 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 X No
The number of shares outstanding of the issuers Common Stock, .0001 par value
as of December 31, 1994 was 327,478,340 shares.
Transition Small Business disclosure format. Yes No X
INDEX
Page
Part I
Item 1: Finacial Statments
Consolidated Balance Sheets 2
Consolidated Income Statements (Unaudited) 3
Consolidated Income Statements (Unaudited) 4
Note to Consolidated Financial Statements 5
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources 6
Results of Operations 6
Part II
Item 1: Legal Proceedings 7
Item 2: Changes in Securities 7
Item 3: Defaults Upon Senior Securities 7
Item 4: Submission of Matters to a Vote of Security Holders 7
Item 5: Other Information 7
Item 6: Exhibits and Reports on Form 8-K 7
Signatures 8
ITEM 1. FINANCIAL STATEMENTS
DATA NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Unaudited) (Audited)
December 31, December 31, September 30,
1995 1994 1995
____________ ____________ _____________
Assets
Current Assets:
Cash and equivalents $ 37,585 $122,799 $ 91,359
Receivables:
Trade, less allowances for bad 404,851 262,536 244,932
debts of $5,077 in 1994 and
1993, respectively
Other 7,183 17,231 5,989
Inventory, at cost 61,725 63,489 47,692
Prepaid expenses 4,513 9,589 4,633
_______ _______ _______
Total current assets 515,857 475,644 394,605
Property and equipment, at cost 475,352 386,873 431,141
Less: Accumulated depreciation (328,512) (293,230) (319,137)
_________ _________
146,840 93,643 112,004
_________ _________
Other assets 6,030 3,892 2,888
________ _______ ________
$668,727 573,179 $516,305
________ _______ ________
________ _______ ________
Liabilities and Stockholders' Deficit
Current Liabilities:
Deferred revenue $141,579 $120,486 $132,478
Accounts payable 67,537 56,496 61,778
Accrued expenses 27,070 95,631 20,070
Current portion - capital leases 8,483 7,069 6,932
_______ _______ _______
Total current liabilities 244,669 279,682 221,258
Note payable - related party 869,072 867,789 869,072
Capital leases, net of 31,000 8,207 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 32,747
Accumulated deficit ( 508,761) (615,246) (607,525)
_________ _________ _________
$668,727 $573,179 $478,149
_________ _________ _________
_________ _________ _________
See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
DATA NATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Three Months Ended
___________________________
December 31, December 31,
1995 1994
____________ ____________
Net sales $ 731,130 730,073
Cost of sales 341,946 342,917
___________ ___________
Gross profit 389,184 387,156
Selling and marketing expense 103,379 96,861
General and administrative expense 166,488 184,178
___________ __________
Operating income 119,317 106,117
Other income (expense):
Interest and other income 2,197 3,047
Interest expense, primarily related party (22,750) (29,398)
____________ ___________
Net income $ 98,764 $ 79,766
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
___________________________
December 31, December 31,
1995 1994
____________ ____________
Cash flow from (used in) operating activities
Net income $ 98,764 $ 79,766
Adjustments to reconcile net income to
cash flow from operating activities:
Depreciation 9,375 6,374
Changes in assets and liabilities:
(Increase) decrease in receivables (159,919) (19,412)
(Increase) decrease in inventory (14,033) (21,921)
(Increase) decrease in prepaid
expenses 120 (1,746)
(Increase) decrease in other assets 1,189 (1,004)
Increase (decrease) in accounts
payable 5,759 (7,979)
Increase (decrease) in accrued
expenses 7,000 34,664
Increase (decrease) in deferred
revenue 9,101 (7,491)
_________ ________
Total adjustments (141,408) (18,515)
_________ ________
Cash flow from (used in )
operating activities (42,644) 61,251
Cash flow (used in) investing activities:
Purchases of property and equipment (44,211) (18,767)
Cash flow from (used in) financing activities:
Borrowings - related party 1,283 -
Repayment of related party note (419)
Borrowing under (repayment of) capital
leases 31,798 (3,511)
_________ ________
Cash flow from (used in) financing activities 33,081 (3,930)
Increase (decrease) in cash and equivalents (53,774) 38,554
Cash and equivalents, beginning of period 91,359 84,245
___________ ___________
Cash and equivalents, end of period $ 37,585 $ 122,799
___________ ___________
___________ ___________
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, 1996 and 1995.
Reference should be made to the notes to the consolidated financial
statements included in Form 10-KSB for the year ended September 30, 1995, for
additional information.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
_______________________________
December 31, 1995 as Compared to September 30, 1994
___________________________________________________
Because the Company's business is somewhat seasonal, the balance sheet
at December 31, 1994 is also presented for additional analysis.
The Company's working capital increased from $173,347 at September 30,
1995 to $261,188 at December 31, 1995, primarily because of income from
operations of $98,764. $44,211 was used to acquire additional equipment. The
Company was not obligated for additional capital expenditures at December 31,
1995, but will 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 December 31, 1994, 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.
Marketing expenses increased by $6,581 primarily due to increased marketing
expenditures in other business sectors. General and administrative expenses
decreased by $17,690 due to reductions in executive salaries and other expense
reductions.
Interest expense is substantially all related to the Dillon note, and is
expected to remain a significant cost in the near future. Interest expense
decreased due to a reduction of principal on existing leases. Interest
expense will increase in the future as additional equipment is being financed
through lease agreements.
DATA NATIONAL CORPORATION
FORM 10-QSB
December 31, 1995
OTHER INFORMATION
PART II
ITEM 1. Legal Proceedings.
The Company knows of no material pending legal proceedings to which
the Company is a party or to which any of its assets are subject.
ITEM 2. Changes in Securities. None
ITEM 3. Defaults Upon Senior Securities. None
ITEM 4. Submission of Matters to a Vote of Security Holders. None
ITEM 5. Other Information. None
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) Reports on Form 8-K - None.
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 Simms, Vice
(DATE) February 16,1996
(NAME AND TITLE) Richard Simms, Vice President
[ARTICLE] 5
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] SEP-30-1996
[PERIOD-END] DEC-31-1995
[CASH] 37,585
[SECURITIES] 0
[RECEIVABLES] 399,774
[ALLOWANCES] 5,077
[INVENTORY] 61,725
[CURRENT-ASSETS] 515,857
[PP&E] 475,352
[DEPRECIATION] 328,512
[TOTAL-ASSETS] 668,727
[CURRENT-LIABILITIES] 244,669
[BONDS] 0
[COMMON] 327,478,340
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 668,727
[SALES] 731,130
[TOTAL-REVENUES] 731,130
[CGS] 341,946
[TOTAL-COSTS] 611,813
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 2,197
[INCOME-PRETAX] 98,764
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 98,764
[EPS-PRIMARY] 0
[EPS-DILUTED] 0