SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] 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)
11415 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 March 31, 1995 was 327,478,340 shares.
Transitional Small Business disclosure format. Yes _____ No X
INDEX
Page
PART I
Item 1. Financial Statements
Consolidated Balance Sheets 2
Consolidated Income Statements (Unaudited) 3,4
Consolidated Statements of Cash Flows 5
Management's Statement 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation 7
PART II
Item 1. Legal Proceedings 8
Item 2. Change in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Matters 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
Financial Data Schedule 10
ITEM 1. FINANCIAL STATEMENTS
--------------------
DATA NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
March 31, September 30,
1996 1995
__________ __________
Assets
Current Assets:
Cash and equivalents $ 30,342 $ 91,359
Receivables:
Trade, less allowances for bad 270,286 244,932
debts of $5,077 in 1996 and
1995, respectively
Other 2,941 5,989
Inventory, at cost 69,660 47,692
Prepaid expenses 28,771 4,633
_______ _______
Total current assets 402,000 394,605
Property and equipment, at cost 613,574 431,141
Less: Accumulated depreciation (339,887) (319,137)
_______ _______
295,439 112,004
_______ _______
Other assets 8,086 9,696
_______ _______
$683,773 $516,305
======== ========
Liabilities and Stockholders' Deficit
- -------------------------------------
Current Liabilities:
Deferred revenue $133,210 $132,478
Accounts payable 83,631 61,778
Accrued expenses 27,844 20,070
Current portion - capital leases 35,940 6,932
_______ _______
Total current liabilities 280,625 221,258
_______ _______
Note payable - related party 869,072 869,072
Capital leases, net of
current portion 83,866 753
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 (582,537) (607,525)
________ ________
$683,773 $516,305
======== ========
See Note to Consolidated Financial Statements
2
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
--------------------------------
DATA NATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Six Months Ended
_________________________
March 31, March 31,
1996 1995
_________ _________
Net sales $ 1,335,208 $ 1,250,000
Cost of sales 692,332 672,527
___________ ___________
Gross profit 642,876 577,473
Selling and marketing expense 207,630 194,183
General and administrative expense 373,581 305,084
___________ ___________
Operating income 61,665 78,206
Other income (expense):
Interest and other income 9,318 2,022
Interest expense, primarily
related party (45,994) (46,742)
___________ ___________
(36,676) (44,720)
___________ ___________
Net income $ 24,989 $ 33,486
=========== ===========
Net income per share - -
Weighted average shares outstanding 327,478,340 327,478,340
=========== ===========
See Note to Consolidated Financial Statements
3
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
--------------------------------
DATA NATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Three Months Ended
________________________
March 31, March 31,
1996 1995
_________ _________
Net sales $ 604,058 $ 519,927
Cost of sales 350,386 329,610
___________ ___________
Gross profit 253,672 190,317
Selling and marketing expense 104,251 97,322
General and administrative expense 207,093 120,906
___________ __________
Operating income (loss) (57,672) (27,911)
Other income (expense):
Interest and other income 7,121 (1,025)
Interest expense, primarily related
party (23,244) (17,344)
___________ __________
(16,123) (18,369)
___________ __________
Net income (loss) $ (73,795) $ (46,280)
=========== ==========
Net income (loss) per share - -
Weighted average shares outstanding 327,478,340 327,478,340
=========== ===========
See Note to Consolidated Financial Statements
4
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
--------------------------------
DATA NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
_________________________
March 31, March 31,
1996 1995
_________ _________
Cash flow from (used in) operating activities
Net income $ 24,989 $ 33,486
Adjustments to reconcile net income to
cash flow from operating activities:
Depreciation 20,750 32,249
Changes in assets and liabilities:
(Increase) decrease in receivables (25,354) 25,969
(Increase) decrease in inventory (21,968) (22,285)
(Increase) decrease in prepaid
expenses (24,138) (4,266)
(Increase) decrease in other assets 4,658 (1,004)
Increase (decrease) in accounts
payable 21,853 (36,374)
Increase (decrease) in accrued
expenses 7,774 28,231
Increase (decrease) in deferred
revenue 731 (7,491)
_______ _______
Total adjustments (15,694) 15,029
_______ _______
Cash flow from (used in)
operating activities 9,295 48,515
Cash flow (used in) investing activities:
Purchases of property and equipment (182,433) (17,501)
Cash flow from (used in) financing activities:
Borrowings - related party - -
Repayment of related party note - (419)
Borrowing under (repayment of) capital
leases 112,121 (7,166)
_______ _______
Cash flow from (used in) financing activities 112,121 (7,585)
Increase (decrease) in cash and equivalents (61,017) 23,429
Cash and equivalents, beginning of period 91,359 84,245
__________ __________
Cash and equivalents, end of period $ 30,342 $ 107,674
========== ==========
Supplemental information:
Income taxes paid - -
Interest paid $ 45,994 $ 46,742
========== ==========
See Note to Consolidated Financial Statements
5
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.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
March 31, 1996 as Compared to September 30, 1995
------------------------------------------------
The Company's working capital decreased from $173,347 at September 30,
1995 to $121,375 at March 31, 1996, primarily because of purchases of
equipment and increases in receivables, inventory, and prepaid expenses. The
Company was not obligated for additional capital expenditures at March 31,
1996, but is planning to upgrade its production systems and computers used for
database management.
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 note was extended and now matures on September 30,
1997.
The Company believes that favorable operating results will continue and
the combination of cash flow from operations and acquiring equipment through
leasing will provide liquidity for the near-term future.
Results of Operations
- ---------------------
For the quarter ended March 31, 1996 the Company initiated database
marketing services to the financial services industry and to retail auto
dealerships. The Company continues to provide database marketing services to
automotive repair facilities. The new business is a result of the Company's
efforts to diversify its customer base and provide integrated database
marketing services. The new business generated approximately $110,000 of
additional revenue during the quarter ended March 31, 1996. The Company
continues to remain dependent upon two major customers in the automotive
repair business which account for over 50% of net sales.
For the six month period ended March 31, 1996, revenues increased $85,158
or 6.8%. The increase is attributable to the introduction of new services to
the mortgage industry and auto dealerships.
Cost of sales for the quarter ended March 31, 1996 decreased from 63.3%
of sales to 58% of sales, primarily due to operating efficiencies. For the
six months ended March 31, 1996 cost of sales was 51.9% as a percentage of
sales compared to 53.8% for the six months ended March 31, 1995. Selling and
marketing expense increased $6,929 from $97,322 for the quarter ended March
31, 1995 to $104,251 for the quarter ended March 31, 1996. For the six months
ended March 31, 1996 selling and marketing expense increased $13,447 from the
comparable period in the prior year. The major reason for the increase is
additional staff and expenses associated with new products and
diversification.
General and administrative (G&A) expenses increased from $120,906 for the
quarter ended March 31, 1995 to $207,093 for the quarter ended March 31, 1996.
For the six month period ended March 31, 1996, G&A expenses increased by
$68,497 over the six month period ended March 31, 1995. The Company is
replacing the computer system used for production and for maintenance of the
database. Accordingly, costs associated with the information technology
department account for the increase in G&A costs. In addition to the costs
reported as G&A expense, the Company has expended $33,650 in consulting, which
has been capitalized and reported as property and equipment. The consultant
has been advising the Company on the new computer system and will assist the
Company in the transition to the new system. These costs will be amortized
over four years, the estimated useful life of the asset, beginning on the date
the new system is placed in service and the old system is removed.
Interest expense is substantially all related to the Dillon note, and is
expected to remain a significant cost in the near future.
7
DATA NATIONAL CORPORATION
FORM 10-QSB/A
March 31, 1996
PART II
- -------
ITEM 1. Legal Proceedings.
None.
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
None.
EX-27 Financial Data Schedule
8
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) August 13, 1996
(Name and Title) Richard S. Simms
(3-31-95.10q)
9