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, 1994
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT
For the transition period from to
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Commission file number 0-14204
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DATA NATIONAL CORPORATION
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(Exact name of small business issuer as specified in its charter)
Colorado 84-0958983
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
11465 West I-70 Frontage Road North, Wheat Ridge, CO 80033
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(Address of principal executive offices)
(303) 431-1933
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(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 December 31, 1994 was 327,478,340 shares.
Transition Small Business disclosure format. Yes No X
INDEX
Page No.
ITEM 1. Financial Statements 2-4
Management's Statement 5
ITEM 2. Managements discussion and analysis
of financial condition and results of operations 6
FINANCIAL DATA SCHEDULE
ITEM 1. FINANCIAL STATEMENTS
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DATA NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Unaudited) (Audited)
December 31, December 31, September 30,
1994 1993 1994
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Assets
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Current Assets:
Cash and equivalents $122,799 $209,125 $ 84,245
Receivables:
Trade, less allowances for bad 262,536 305,731 245,221
debts of $5,077 in 1994 and
1993, respectively
Other 17,231 14,505 15,134
Inventory, at cost 63,489 43,326 41,568
Prepaid expenses 9,589 2,861 7,843
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Total current assets 475,644 575,548 394,011
Property and equipment, at cost 386,873 332,871 368,106
Less: Accumulated depreciation (293,230) (262,548) (286,856)
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93,643 70,323 81,250
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Other assets 3,892 150 2,888
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$573,179 $646,021 $478,149
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Liabilities and Stockholders' Deficit
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Current Liabilities:
Deferred revenue $120,486 $165,653 $127,977
Accounts payable 56,496 87,691 64,475
Accrued expenses 95,631 59,682 60,967
Current portion - capital leases 7,069 10,899 8,261
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Total current liabilities 279,682 323,925 261,680
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Note payable - related party 867,789 922,595 868,208
Capital leases, net of 8,207 13,545 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 (615,246) (646,791) (695,012)
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$573,179 $646,021 $478,149
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See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
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DATA NATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Three Months Ended
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December 31, December31,
1994 1993
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Net sales $730,073 $868,872
Cost of sales 342,917 416,001
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Gross profit 387,156 452,871
Selling and marketing expense 96,861 119,615
General and administrative expense 184,178 152,587
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Operating income 106,117 180,669
Other income (expense):
Interest and other income 3,047 39
Interest expense, primarily related party (29,398) (22,451)
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(26,351) (22,412)
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Net income $ 79,766 $158,257
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Net income per share - -
Weighted average shares outstanding 327,478,340 327,478,340
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See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
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DATA NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
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December 31, December31,
1994 1993
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Cash flow from (used in) operating activities
Net income $79,766 $158,257
Adjustments to reconcile net income to
cash flow from operating activities:
Depreciation 6,374 8,624
Changes in assets and liabilities:
(Increase) decrease in receivables
(19,412) (191,315)
(Increase) decrease in inventory
(21,921) 2,461
(Increase) decrease in prepaid
expenses (1,746) (276)
(Increase) decrease in other assets
(1,004) -
Increase (decrease) in accounts
payable (7,979) 30,854
Increase (decrease) in accrued
expenses 34,664 (40,284)
Increase (decrease) in deferred
revenue (7,491) 44,277
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Total adjustments (18,515) (145,659)
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Cash flow from (used in )
operating activities 61,251 12,598
Cash flow (used in) investing activities:
Purchases of property and equipment (18,767) (18,760)
Cash flow from (used in) financing activities:
Borrowings - related party - 5,169
Repayment of related party note (419) -
Borrowing under (repayment of) capital
leases (3,511) 9,863
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Cash flow from (used in) financing activities
(3,930) 15,032
Increase (decrease) in cash and equivalents 38,554 8,870
Cash and equivalents, beginning of period 84,245 200,255
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Cash and equivalents, end of period $122,799 $209,125
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Supplemental information:
Income taxes paid
Interest paid $29,398 $22,451
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See Note to Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
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DATA NATIONAL CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - MANAGEMENT'S STATEMENT
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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
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CONDITION AND RESULTS OF OPERATIONS
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Liquidity and Capital Resources
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December 31, 1994 as Compared to September 30, 1994
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Because the Company's business is somewhat seasonal, the balance sheet
at December 31, 1993 is also presented for additional analysis.
The Company's working capital increased from $132,331 at September 30,
1994 to $195,962 at December 31, 1994, primarily because of cash flow from
operations of $61,251. $18,767 was used to acquire additional equipment, and
$3,511 was used to repay capital leases. The Company was not obligated for
additional capital expenditures at December 31, 1994, 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
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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.
Service income from several non-major clients decreased. For the quarter
ended December 31, 1993 $22,275 in "New Resident" services were billed
whereas none were billed for the quarter ended December 31, 1994.
"Auto Pm" billings also decreased from $27,644 to $7,302. Cost of sales
decreased less than one percent as a percentage of sales. Marketing expenses
decreased by $22,754, or 19%, primarily because the cost of attending trade
shows of two major customers, which occur biannually, were not incurred in the
quarter ended December 31, 1994. General and administrative expenses
increased by $31,591. 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 December 31, 1993.
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
ITEMS 1 - 5. Not Applicable
ITEM 6. A Form 8-K, dated June 1994, was filed during this quarter
reporting a change in independent accountants.
FINANCIAL DATA SCHEDULE
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) 1/11/96
(Name and Title) Richard S. Simms, Vice President
(12-31-94.10q)