UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended July 31, 1996
Commission File Number 0-17623
Database Technologies Inc.
(Exact name of registrant as specified in its charter)
Delaware 02-0429620
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
172 Route 101, Suite D-5, Bedford, NH 03110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(603) 472-8222
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, $.001 Par Value - 2,291,082 as of
July 31, 1996.
PART I: FINANCIAL INFORMATION
DATABASE TECHNOLOGIES INC.
BALANCE SHEETS
(Amounts in hundreds, except per share data)
July 31, 1996 April 30, 1996
(Unaudited) (*)
--------------- --------------
ASSETS
Current Assets
Cash $ 545 $ 8,099
Receivables Trade
less allowance for doubtful accounts
(Note 1) 2,944 3,749
Other Current Assets 422 422
-------- ---------
Total current assets 3,911 12,270
-------- ---------
Property and Equipment (Note 1 )
Equipment,Furniture & Fixtures 14,027 14,027
less accumulated depreciation 13,938 13,938
--------- ---------
Net property and equipment 89 89
--------- ---------
Other Assets
Security Deposits 150 150
TOTAL ASSETS $4,150 $12,659
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities
Notes payable officer/stockholder (Note 2) $ 136,530 $ 127,530
Accounts payable trade 2,050 4,243
Customer Deposits 0 1,663
Accrued expenses 0 688
Payroll Taxes Payable 260 0
--------- ---------
Total current liabilities 138,840 134,124
Stockholder's Deficit
Common stock par value $0.001 per share
Authorized 2,500,00 shares
Issued and outstanding-
2,381,092 shares in 1995,
1994 and 1993 (Note 3) 2,381 2,381
Additional paid-in capital 12,154 12,154
Accumulated Deficit (149,225) (136,000)
------------ -----------
Total Stockholders' Equity $(134,690) $(121,465)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY) $ 4,150 $ 12,659
<FN>
The accompanying notes to financial statements
are an integral part of this statement.
(*) Condensed from the Company's audited financial statements.
DATABASE TECHNOLOGIES,INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDING JULY 31, 1996 and JULY 31, 1995
(Amounts in hundreds, except per share data)
Three Months Three Months For the Year
Ended Ended Ended
July 31,1996 July 31,1995 April 30, 1996
(Unaudited) (Unaudited) (*)
-------------- ------------- ----------------
Revenue (Note 1) $ 18,174 $44,461 $ 188,620
Cost of revenue 2,702 18,309 96,319
--------- -------- ----------
Gross Revenue 15,472 26,153 92,301
Operating Expenses
Selling and Delivery 2,261 1,751 11,500
General and Admin. 25,035 24,864 120,964
--------- --------- -----------
27,296 26,514 132,464
Gain (Loss)
from Operations (11,824) (462) (40,163)
Other Income/(Expense)
Nonoperating Income (Expense)
Interest expense 0 0 (10,829)
---------- ---------- ----------
0 0 (10,829)
NET PROFIT (LOSS) (11,824) (462) (50,992)
Before Provision
For Income Tax
Provision For Income
Taxes ( Note 1) 0 0 0
State Income Tax 1,401 0 0
Net Income (Loss)
After Income Taxes (13,225) (462) (50,992)
Net Profit (Loss)
Per Share (Note 6) $(0.005) $(0.000) $(0.02)
<FN>
The accompanying notes to financial statements
are an integral part of this statement.
(*) Condensed from the Company's audited financial statements.
DATABASE TECHNOLOGIES INC.
STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDING JULY 31, 1996
(Amounts in hundreds,except per share data)
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
BALANCE AT
April 30, 1996 2,491,082 $2,381 $12,154 $(136,000) $(121,464)
Net Loss (13,225) (13,225)
----------- ---------- --------- ---------- ----------
BALANCE AT
July 31,1996 2,491,082 $2,381 $12,154 ($149,225) ($134,689)
<FN>
The accompanying notes to financial statements
are an integral part of this statement.
DATABASE TECHNOLOGIES,INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY,31,1996 AND
FOR THE YEAR ENDED APRIL 30,1996
(Amounts in hundreds)
Three Months For the year
Ended Ended
July 31, 1996 April 30, 1996
(Unaudited) (*)
Cash Flows From Operating Activities:
Net income (loss) $(13,225) $(50,992)
Adjustments To Reconcile Net Income (Loss)
To Net Cash Provided by
Operating Activities:
Depreciation and amortization 0 2,374
(Increase) Decrease in the following Assets
Accounts receivable 845 7,747
Prepaid expenses (414) (414)
Increase (decrease) in the following
Liabilities
Notes payable-Shareholder 9,000 59,784
Accounts payable (2,193) (8,392)
Accrued expenses 0 224
Customer Deposits 0 1,663
Payroll Taxes Payable 260 0
---------- ---------- ________ _________
Net cash Used In Operating Activities $(5,727) $11,994
---------- ----------
Cash Flows From Investing Activities:
Equipment Furniture & Fixtures 0 $(1,924)
Net cash Provided By (Used In) Investing
Activities 0 0
Cash Flows from Financing Activities:
Decrease in Retained Earnings $(13,281) $(7,317)
Net Cash Provided By Financing Activities 0 0
NET INCREASE (DECREASE)CASH $ (7,554) $ 2,753
CASH, Beginning of Period $ 8,099 $ 5,346
CASH, End of Period $ 545 $ 8,099
<FN>
The accompanying notes to financial statements
are an integral part of this statement.
(*) Condensed from the Company's audited financial statements.
STATEMENT OF CASH FLOWS (Continued)
FOR THE THREE MONTHS ENDED JULY,31,1996 AND
FOR THE YEAR ENDED APRIL 30,1996
(Amount in hundreds)
Supplemental Disclosures of Cash Flow Information
Three Months For the year
Ending Ended
July 31, 1996 April 30, 1996
(Unaudited) (*)
Cash Payments For:
Interest $ 0 $ 6,699
Income Taxes 1401 0
<FN>
The accompanying notes to financial statements
are an integral part of this statement.
(*) Condensed from the Company's audited financial statements.
DAATABASE TECHNOLOGIES,INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1996, 1995, And 1994
Note 1. Summary Of Significant Accounting Policies
Background
Database Technologies,Inc.("the Company") was incorporated under the
laws of the State of Delaware on November 4, 1988. The Company operates
a computerized database containing current prices of certain electronic
merchandise from various vendors. The Company provides this information
to assist insurance company adjusters in processing claims. The Company's
principal source of revenue is licensing fees obtained from various
insurance companies for the use of the database.
Depreciation And Amortization
Property And Equipment:Property and equipment are recorded at cost.
Depreciation and amortization are computed on the straight line method
over the following estimated useful lives:
Asset Years
----- -----
Equipment, Furniture And
Fixtures 5
Cost of maintenance and repairs are charged to expense while costs of
significant renewals and betterments are capitalized.
Organization Costs
Organization costs are being amortized on a straight line method over a
period of five years. There was no expense for 1996,1995, and 1994.
Income Taxes
Income from operations and the related provisions for income taxes consist
of the following in 1996, 1995, and 1994.
1996 1995 1994
------ ------ -----
Income (Loss) From Operations $(50,992) $(36,149) $(13,325)
Provision For Income Taxes -0- -0- -0-
No provision for income taxes was required due to the accumulated losses
in the current and prior years. The Company has elected to carry any
accumulated losses forward.
Fiscal Year Year Carryforward Expires
----------- -------------------------
1990 2005
1991 2006
1993 2008
1994 2009
1995 2010
1996 2011
Notes to Financial Statements (Continued)
Income Taxes (continued)
In February 1992, the Financial Accounting Standards Board (FASB)
issued Statement 109, Accounting for Income Taxes (FASB No.109).Under
FASB 109, deferred taxes are based on temporary differences between
assets and liabilities for financial reporting purposes and for tax
purposes.Deferred taxes are measured using the enacted tax rates
expected to apply when the temporary differences are settled or
realized. SFAS No.109 has been adapted as of the beginning of the
Company's fiscal year ended April 30, 1994. Adoption of FASB 109 has
not had an impact on the Company's prior Financial Statements.
Pension and Profit Sharing Plans
The Company has established a profit sharing plan in fiscal year April
1993. The plan covers all employees of the Company.Benefits for the
plan are calculated based on a percentage of the employee's earnings.
For the fiscal year ended 1993 the funds assets were $8,479. No
contributions were made for the fiscal years ended 1994,1995 or 1996.
Allowance For Doubtful Accounts
Allowance for doubtful accounts are computed based on an individual
account basis.
2.Related Party Transactions
Affiliates
On January 1, 1995 the Company entered into a lease agreeement with the
Brighton Ave.Trust (see note 6). The trust is controlled by Allen S.
Wolfe.
Notes Payable-Shareholder
The notes payable to shareholder of $127,530 are unsecured and bear
interest at a rate of 14% per annum for those notes issued prior to
1990. Notes issued after 1990 bear interest at a rate of 12%.
1995 1994 1993
Notes Payable - Shareholder 127,530 67,746 47,347
Notes To Financial Statements (Continued)
3.Common Stock
The Company is authorized to issue two million five hundred thousand
(2,500,000)shares of common stock.The Par value of each share is $.001.
On July 7, 1989, the Company issued 2,281,192 shares of common stock at
par to the Pathfinder Data Group,Inc.'s shareholders of record as of
June 9, 1989. The financial statements of the Company reflect the
issuance of these shares as of April 30, 1989 as if the shares had been
issued at that date and not on the effective date of the issuance.The
retroactive treatment of the common stock issuance is not in accordance
with generally accepted accounting principles.
On July 7, 1990 the Company issued 100,000 shares of common stock at
$.01 per share for a total of $10,000. These shares were issued in
consideration for marketing services by an individual.
On August 30, 1993 the Company entered into an agreement with it's
former auditing firm,Sullivan,Bille & Co. in order to settle ongoing
litigation. Under this agreement, the Company will issue to Sullivan
& Bille & Co. 75,000 shares of it's common stock on or about October 5,
1993. These shares are not registered under the Securities Act of 1993
and are restricted as defined in Rule 144 under the Act. The shares may
not be offered for sale or transferred except pursuant to an effective
registration statement under the Act. These restrictions shall apply
for a period not to exceed two years from the date of issuance. In the
event Sullivan & Bille & Co. continues to own all or a portion of the
75,000 shares of stock on the day which is 2 years from the date of
issuance Allan S. Wolfe agrees that he will, upon the request of
Sullivan & Bille & Co. purchase these shares at a price of $.18 per
share.
4. Major Customer
The Company had no major customer who accounted for more than 10% of the
total revenue dduring the year ended April 30, 1996. There was no major
customer in the years 1994 or 1995.
5. Licensing and Marketing Agreements
On February 28, 1994, the Company entered into a licensing agreement
with ADP Property Claims Services,Inc. This agreement was to continue
in effect until December 31, 1998. However,on October 30,1995, ADP
terminated the contract with the Company. Under this Agreement, ADP
was to market the Company's database products along with and combined
with it's own products. The Companies are attempting to reach a new
agreement.
On December 13,1993, the Company entered into a marketing agreement with
David A. Johnson & Assoc.. This agreement will continue in effect until
December 12, 1998 and may be extended for an additional 5 years. Under
this agreement David A. Johnson & Assoc. will market the Company's
database products and combined with it's own products.
Notes To Financial Statements (Continued)
6.Commitments & Contingencies
Lease
On November 19, 1989, the Company entered into an agreement to lease
office space at $450 per month for a period of 24 months.This agreement
was then extended on a month to month basis.The lease agreement was
terminated by mutual consent of both parties as of December 31,1994.
The cost of this lease for the year ended April 30, 1995 was $3,600.
In January 1995 the Company entered into an agreement with the Brighton
Ave. Trust to rent new office space. The cost of this lease for the year
ended April 1995 was $2000 and $6,000 in 1996.
The Company leases an auto from Allan S. Wolfe. The Cost of this lease
for the year ended April 30, 1995 and 1996 was $5,400 in each year.
Litigation
On September 30, 1993 the Company settled a lawsuit brought against it
by it's former auditors, Sullivan,Bille & Co. for certain unpaid
professional fees. The settlement resulted in the Company paying
Sullivan,Bille & Co. $12,000 in cash and the issuance of 75,000
restricted share of stock (see note #3).
7.Income (Loss) Per Share
The loss per common share for the year ended April 30, 1996 has been
computed based on the weighted average number of shares outstanding of
2,491,082.
DATABASE TECHNOLOGIES,INC.
ITEM 2- MANAGEMENT'S DISCUSSION and ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
July 31, 1996
REVENUES
The Registrant's revenues for the first quarter ended July 31,1996
were $18,174, a decrease of $26,000. from the same quarter of the
prior year.
OPERATING EXPENSES
The Registrant's total operating expenses in the quarter ended July 31,
1996 were $27,296. and when compared to the same quarter of the prior
year represent a increase of $800. Thus it appears the operating expenses
are stable and probably at a bare minimum level.
When a comparison is made between the selling expenses and general and
administrative expenses between the last quarter and the same quarter
the prior year, selling expenses were up $500. and the G & A up $300.
INCOME
In the current quarter ended July 31, 1996 the Registrant had an
operating loss of $11,824 which was $14,000 more than the loss for
the same quarter of the prior year. The drastic decline in revenues
in the quarter ended July 31, 1996 was the cause of the loss. Until
revenues can be increased the Registrant will probably sustain losses
in the coming quarters.
INCOME TAX
No provision for Federal or State corporate income taxes has been made
due to the tax loss carryforward from prior tax years.
LIQUIDITY and CAPITAL RESOURCES
The Registrant is of the opinion unless new revenues can be generated
the liquidity problem will worsen. Thus far the Registrant has relied
on it's major stockholder/officer to provide funds for the Company
when the need arises however there is a limit to these resources and
the Registrant's financial problems will not improve unless revenues
improve.
PART II: OTHER INFORMATION
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
Not Applicable
ITEM #6 Exhibits and Reports on Form 8 - K
a. Exhibits
None
b. Reports on Form 8-K ( all incorporated by reference )
None
DATABASE TECHNOLOGIES INC.
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.
DATABASE TECHNOLOGIES INC.
(Registrant)
September 12, 1996 Allan S. Wolfe
Date Allan S. Wolfe
Chief Executive Officer, Chief
Financial Officer, and a Director