UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period Ending: January 31, 1997
______________
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 03110-5416
________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(603) 472-8222
______________________________________________________________________
(Registrant's telephone number, including area code)
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
Number of shares outstanding of the issuer's classes of
common stock, as of January 31, 1997:
Common stock $.001 par value ...............................2,491,082
Total pages: 16
DATABASE TECHNOLOGIES,INC.
FORM 10Q JANUARY 31, 1997
________________________________________________________________________________
PART I: FINANCIAL INFORMATION
ITEM 1 - Financial Statments
_____________________________________________________________________________
(following pages)
DATABASE TECHNOLOGIES,INC.
BALANCE SHEET
JANUARY 31, 1997
- ------------------------------------------------------------------------------
JANUARY 31,1997 APRIL 30,1996
( Unaudited) (*)
- -------------------------------------------------------------------------------
A S S E T S
CURRENT ASSETS:
Cash $ 3,926. $ 8,099.
Accounts Receivable
-trade (Note 8) 2,502. 3,749.
(less allowance for doubtful accounts)
Other Current Assets 0. 422.
_____________ ________________
Total current assets 6,428. 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:
Other assets 150. 150.
________________ ______________
Net other assets 150. 150.
_________________ ____________
Total assets $ 6,667. $ 12,659.
Continued -1
DATABASE TECHNOLOGIES,INC.
BALANCE SHEET
JANUARY 31, 1997
- ------------------------------------------------------------------------------
JANUARY 31,1997 APRIL 30,1996
( Unaudited) (*)
- -------------------------------------------------------------------------------
L I A B I L I T I E S A N D
S T O C K H O L D E R S E Q U I T Y
CURRENT LIABILITIES
Notes Payable
- officer/stockholder (Note 2) $ 156,600. $ 127,530.
Accounts payable
- trade 9,009. 4,243.
- customer deposits 0. 1,663.
- accrued expenses 0. 668.
Payroll taxes payable 924. 0.
_______________ _______________
Total current liabilities $ 166,533. $ 134,124.
STOCKHOLDERS' EQUITY
Common stock-par value $0.001
authorized 2,500,000 shares,
2,381,082 issued 2,381. 2,381.
Additional paid-in capital 12,154. 12,154.
(Accumulated Deficit) ( 174,401.) ( 136,000.)
________________ _______________
Total stockholders' equity ( 159,866.) ( 121,465.)
_________________ _______________
Total liabilities and
stockholders' equity $ 6,667. $ 12.659.
_________________ ______________
The accompanying notes to financial statements are an integral
part of this statement.
Concluded -2
___________________________________________________________________________
(*) Condensed from the Company's audited financial statements.
DATABASE TECHNOLOGIES,INC.
STATEMENT OF INCOME
THREE MONTHS ENDING JANUARY 31, 1997 and January 31, 1996
and
NINE MONTHS ENDING JANUARY 31,1997 and January 31, 1996
________________________________________________________________________________
Three Months Three Months Nine Months Nine Months
Ending Ending Ending Ending
Jan.31,1997 Jan.31,1996 Jan.31,1997 Jan. 31,1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
________________________________________________________________________________
REVENUE (note 6) $23,142. $50,392. $69,208. $146,217.
COST OF REVENUE 4,473. 31,062. 17,823. 74,596.
Gross profit 18,669. 19,330. 51,385. 71,621.
OPERATING EXPENSES
Selling & Delivery 3,211. 18,015. 12,011. 49,483.
General & Admin. 25,125. 15,292. 76,374. 40,018.
Total operating
expenses 28,336. 33,307. 88,385. 89,501.
Profit(loss) from
Operations ( 9,667.) ( 13,977.) ( 37,000.) ( 17,880.)
OTHER INCOME (EXPENSE)
Interest Expense 0. 0. 0. 0.
Other Expense 0. 0. 0. 0.
Net Expense 0. 0. 0. 0.
NET PROFIT (LOSS)
before income taxes ( 9,667.) ( 13,977.) ( 37,000.) (17,880.)
(Note 4)
Provision for Income 0. 0. 0. 0.
Taxes (Note 1)
State Income Tax 0. 0. 1,401. 0.
NET INCOME (LOSS) ( $ 9,667.) ( $13,977.) ( $38,401.) ( $17,880.)
NET PROFIT (LOSS) ( $.0048) ($.0081) ( $.0163) ($.0084)
PER SHARE (Note 6)
The accompanying notes to financial statements
are an integral part of this statement.
DATABASE TECHNOLOGIES,INC.
STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JANUARY 31,1997
_________________________________________________________________________________
Common Stock Additional
Shares Amount Paid-in Retained
Capital Earnings Total
________________________________________________________________________________
BALANCE AT
April 30, 1996 2,491,082 $2,381. $12,154. ($136,000.) ($121,464.)
Net Loss ( 38,401.) (38,401.)
__________ _______ _________ _________ _________
BALANCE AT
Jan.31,1997 2,491,082 $2,381. $12,154. ($174,401.) ($159,865.)
The accompanying notes to financial statements
are an integral part of this statement.
DATABASE TECHNOLOGIES,INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDING JANUARY 31, 1997 and JANUARY 31, 1996
and
FOR THE NINE MONTHS ENDING JANUARY 31, 1997 and JANUARY 31, 1996
- -----------------------------------------------------------------------------
Three Months Three Months Nine Months Nine Months
Ending Ending Ending Ending
Jan.31, 1997 Jan.31,1996 Jan.31,1997 Jan.31,1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
_______________________________________________________________________________
CASH FLOW FROM OPERATING ACTIVITES;
Net Income (Loss) ($ 9,667.) ($13,977.) ($38,401.) ($17,880.)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation & Amortization 0. 0. 0. 0.
(Increase) Decrease in the
following:
Assets:
Accounts Receivable
Trade 3,094. (106.) 1,247. (2,022.)
Other Assets 0. 0. 422. 0.
(Decrease) Increase in the
following liabilities:
Accounts payable:
Trade 4,771. 10,509. 4,766. (545.)
Customer Deposits 0. 0. (1,663.) 0.
Accrued Expenses 0. 0. ( 668.) 0.
Stockholder 0. 2,212. 0. (2,938.)
Accrued Expenses
-Payroll taxes 448. 237. 145. 721.
_________ ___________ ___________ __________
Net cash used in
Operating Activities 3,677. 1125. 33,243. 22,664.
___________ _________ ___________ _________
Continued -1
DATABASE TECHNOLOGIES,INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDING JANUARY 31, 1997 and JANUARY 31, 1996
and
FOR THE NINE MONTHS ENDING JANUARY 31, 1997 and JANUARY 31, 1996
- -------------------------------------------------------------------------------
Three Months Three Months Nine Months Nine Months
Ending Ending Ending Ending
Jan.31,1997 Jan.31,1996 Jan.31,1997 Jan.31,1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
_______________________________________________________________________________
CASH FLOWS FROM
INVESTING ACTIVITIES:
Payments on lease
receivable 0 0 0 0
Capital expenditures 0 0 0 0
________ __________ ___________ _________
Net cash used in
investing activities 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES:
Payment Note Payable
-officer/stockholder 3,870. 4,600. 29,070. 28,988.
Payment of interest 0. 0. 0. 0.
NET INCREASE (DECREASE)
IN CASH (193.) 3,475. (4,173.) 6,324.
CASH,Beginning of period 4,119. 8,195. 8,099. 5,346.
__________ ___________ _________ ______
CASH, End of Period 3,926. 11,670. 3,926. 11,670.
___________ ___________ ___________ ______
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAYMENTS FOR:
Interest 0 0 0 0
Income taxes 0 0 0 0
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Issuance of common stock
in exchange for services 0 0 0 0
The accompanying notes to financial statements
are an integral part of this statement.
Concluded-2
DATABASE 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.
FORM 10-Q JANUARY 31,1997
_____________________________________________________________________________
PART I: FINANCIAL INFORMATION
ITEM 2- Management's Discussion and Analysis of Financial
Condition and Results of Operations.
_______________________________________________________________________________
REVENUES
The Registrant's revenues for the third quarter ended January 31,
1997 were $23,142., a decrease of over 50% over revenues for the
same quarter ended January 31,1996 for the prior year of $50,392.
In addition revenues for the nine month period ended January 31,
1997 were $69,208. or 47% lower than the revenues for the same
nine month period ended January 31, 1996 for the prior year of.
$146,217. This decrease in revenues indicates the Registrant is
experiencing an errosion of sales and has not been able up to the
present time to rebuild the sales base of the prior quarters.
The cost of revenue for the third quarter ended January 31, 1997
decreased by approximately $27,000. over the same quarter of the
prior year and the cost of producing this revenue was 20% of the
revenues. This is in contrast to a 62% cost of revenue for the
same quarter the prior year.For the nine months ended January 31,
1997 the cost of producing revenue was 25% of the revenues. This
is in contrast to the cost of producing revenue of 51% for the
same nine month period ended January 31, 1996 of the prior year.
This is an indication that because revenues had decreased during
those periods the costs of producing those revenues decreased
substantially because there was no training or support required
when the systems are not installed. The added development costs
in producing systems and/or enhancing existing systems was not a
requirement for support of those systems.
OPERATING EXPENSES
The Registrant's total operating expenses for the quarter ended
January 31, 1997 were $28,336.as compared to the same quarter of
prior year of $33,307. This decrease of approximately $5000.
indicates the Registrant continued a reduction of costs in the
quarter. An analysis of the two components reveals most of the
decrease indicates selling and delivery expense dropped almost
$15,000. from the same period of the prior year while G&A rose
by almost $10,000. basically due to the allocation of costs that
are attributed to each component.In the nine month period ended
January 31, 1997 total operating expenses remained almost the
the same as the total operating expenses for the same nine month
period ended January 31, 1996. There was a shift in components
of those expenses in the current nine month period over the same
period of the prior year with a decrease in selling and delivery
expenses of over $$27,000. and an increase in G &A of $26,000.
The decrease in selling expense for three month and nine month
periods ended January 31,1997 is indication the Registrant has
decreased marketing and sales efforts in the insurance systems
marketplace.
The loss on operations for the quarter ended January 31, 1997
was $9,667. and is less than the loss for the same quarter
of the year prior period ended January 31, 1996 by $3,300. For
the nine month period ended January 31, 1997 the Registrant's
loss was $37,000. This loss was greater by almost $21,000. than
the same as the comparable nine month period ended January 31,
1996.
The Registrant expects revenues will not recover sufficiently
in the fiscal year ended April 30, 1997, to enable the Company
to show a profit on operations, based on the first nine months
performance, for the year.
INCOME TAX
The Registrant has not made provisions for Federal corporate
income taxes because of its tax loss carryforward.
LIQUIDITY and CAPITAL RESOURCES
The Registrant is of the opinion the revenues currently being
generated will not be sufficient to produce a positive cash flow
during the next quarter and into the first two quarters of the
next fiscal period. Debt reduction has been suspended and all
cash generated through revenues has been augmented through loans
from the Chairman and CEO for use in the daily operation of the
business. Management is of the opinion the infusion of loans
from the Chairman will be sufficient to allow the Registrant to
maintain operations at an acceptable rate until new revenues can
be generated.
The exclusive agreement between the Registrant and ADP has been
terminated therefore only the existing contracts produce royalty
income for the Registrant. This will allow the Registrant to
open its system software and database programs to all companies
on a non-exclusive basis thereby increasing the potential market
for its products. In the opinion of Management the relationship
with ADP was a complete failure due to the lack of marketing and
sales activity on the part of ADP. ADP during the period of the
agreement failed to achieve the sales goals as specified in the
agreement. The Registrant is of the opinion it must increase its
own marketing and sales efforts, which under the terms of the
agreement was severely limited. The time lost in marketing and
sales during period of the ADP agreement cannot be recovered and
only with renewed marketing and sales effort will the Registrant
be able to penetrate the market. The Registrant is developing an
open environment approach to the market and the product which it
believes can lead to increased sales and acceptance of its claim
handling products.
DATABASE TECHNOLOGIES,INC.
FORM 10-Q JANUARY 31, 1997
- ------------------------------------------------------------------------------
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 Matter 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 TECHNOLGIES,INC.
FORM 10-Q JANUARY 31, 1997
- --------------------------------------------------------------------------
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)
March 4, 1997
---------------------------------------------------------------------------
Dated (Signature)
Allan S. Wolfe
Chairman of the Board,
President, Chief Executive
Officer, Chief Financial