<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission file number 0-9111
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DBT ONLINE, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Pennsylvania 85-0439411
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
5550 W. Flamingo Road, Suite B-5
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(Address of principal Executive Offices)
Las Vegas, Nevada 89103
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(702) 257-1112
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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 Securities Exchange Act during the preceding 12
months (or for such shorter periods 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 common shares outstanding as of November 11, 1996 was 7,723,474
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DBT ONLINE, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART 1 FINANCIAL INFORMATION Page
----
Item 1. FINANCIAL STATEMENTS
<S> <C>
Condensed Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Earnings for the Nine Months
and Three Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Stockholders' Equity for the
Year Ended December 31, 1996 and the Nine Months Ended
September 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . 9
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS . . . . . . . . . . . . . . . . . . 12
Item 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBITS
Exhibit 11.1 Statements of Computation of Per Share Earnings . . . . . . . . . . . . . . . . E-1
Exhibit 27.1 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2
</TABLE>
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DBT ONLINE, INC.
PART I - FINANCIAL INFORMATION
This report contains, in addition to historical information, statements by the
Company with regard to its expectations as to financial results and other
aspects of its business that involve risks and uncertainties and may constitute
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include statements regarding
the Company,s liquidity and capital resources, expected capital expenditures
and licensure under the Company's patents. Such statements are based on
management's current expectations and are subject to a number of uncertainties
and risks that could cause actual results to differ materially from those
described in the statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
-------------- ---------------
Current assets: (Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 7,356 $ 1,643
Accounts and notes receivable, net of allowance for
doubtful accounts of $240 2,741 1,110
Prepaid expenses 484 183
--------------- -------------
Total current assets 10,581 2,936
Property and equipment, net 6,524 3,129
Investment in patents, less accumulated amortization 13,652 ----
Other assets 543 509
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Total assets $ 31,300 $ 6,574
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other
current liabilities $ 2,230 $ 1,176
Current portion of long-term debt and bank line of credit 2,030 1,110
Due to other laser patents interest holders 1,794 ----
Customer deposits 297 ----
Current and deferred Income taxes payable 624 158
-------------- -------------
Total current liabilities 6,975 2,444
Deferred income taxes 4,674 ----
Long-term debt, less current portion 1,709 1,531
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Total liabilities 13,358 3,975
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Stockholders' equity:
Preferred stock, $.10 par value. Authorized
5,000,000 shares; no shares issued or outstanding ---- ----
Common stock, $.10 par value. Authorized 40,000,000
shares; issued and outstanding, 7,723,474 shares
and 1,736,274 shares of DBT $.001 par value common stock
at September 30, 1996 and December 31,1995, respectively 772 2
Capital in excess of par value 17,993 3,871
Retained earnings (deficit) (823) (1,274)
--------------- ---------------
Total stockholders' equity 17,942 2,599
--------------- ---------------
Total liabilities and stockholders' equity $ 31,300 $ 6,574
=============== ===============
</TABLE>
See accompanying notes
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DBT ONLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------------- ------------------------
9-30-96 9-30-95 9-30-96 9-30-95
---------- ----------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
<S> <C> <C> <C> <C>
Revenues $ 11,612 $ 5,600 $ 4,473 $ 2,206
Laser patents royalties 843 ----- 843 -----
----------- ----------- ---------- -----------
Total royalties and revenues 12,455 5,600 5,316 2,206
----------- ----------- ---------- -----------
Costs and expenses:
Costs and expenses applicable to revenues 5,739 2,197 2,324 968
General and administrative 2,778 1,135 1,074 450
Selling and promotion 1,357 734 551 291
Research and development costs 1,493 650 509 274
Amortization of patents 191 ----- 192 -----
Loss on IRB transaction ----- 1,528 ----- 1,528
----------- ----------- ---------- -----------
Total costs and expenses 11,558 6,244 4,650 3,511
----------- ----------- ---------- -----------
Operating income 897 (644) 666 (1,305)
Other income:
Interest income 58 13 40 12
Interest expense (203) (64) (84) (39)
----------- ----------- ---------- -----------
Earnings (loss) before income taxes 752 (695) 622 (1,332)
Provision for income taxes (301) (235) (238) (235)
----------- ----------- ---------- -----------
Net earnings $ 451 $ (930) $ 384 $ (1,567)
=========== =========== ========== ===========
Net earnings per common share $ 0.06 $ (0.12) $ 0.05 $ (0.20)
=========== =========== ========== ===========
Weighted-average number of common
shares and common share equivalents
outstanding (pro forma - Note 2) 8,011,098 7,693,474 8,014,705 7,693,474
=========== =========== ========== ===========
</TABLE>
See accompanying notes
4
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DBT ONLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Year ended December 31, 1995 and
Nine Months Ended September 30, 1996 (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock
----------------------------- Capital
Shares Issued in Excess of Retained
and Outstanding Amount Par Value Earnings Total
--------------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,333,333 $ 2 $ 81 $ 470 $ 553
S-Corporation distributions paid ------- ------- ------- (117) (117)
Record distributions payable
and other adjustments upon
S-Corporation termination ------- ------- 231 (435) (204)
Issuance of common stock for
acquisitions and cash 402,941 ------- 3,559 ------- 3,559
Net loss for 1995 ------- ------- ------- (1,192) (1,192)
----------- ---------- ---------- ---------- -- --------
Balance, December 31, 1995 1,736,274 2 3,871 (1,274) 2,599
Issuance of common stock
as a result of the
Merger and Reorganization effective
August 20, 1996 5,957,200 767 13,982 ----- 14,749
Shares issued upon exercise of
stock options 30,000 3 140 ----- 143
Net earnings for the nine months ----- ----- ----- 451 451
------------ ----------- ---------- ------------ ----------
Balance, September 30, 1996 7,723,474 $ 772 $ 17,993 $ (823) $ 17,942
============ =========== ========== ============ ==========
</TABLE>
See accompanying notes.
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DBT ONLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
9-30-96 9-30-95
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings from operations $ 451 $ (930)
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 1,861 580
Deferred income taxes (123) 155
Loss on IRB transaction ----- 1,528
Change in operating assets and liabilities:
Decrease (increase) in receivables, net of
Increase (decrease) in due to other laser
patent interest holders (735) (595)
Decrease (increase) in prepaid expenses (119) (36)
Increase (decrease) in all other current liabilities 540 1,022
Increase (decrease) in income taxes payable (990) -----
------------ ------------
Net cash provided by operating activities 885 1,724
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,970) (2,040)
IRB transaction ---- (1,445)
Acquisition of data, and other (191) (226)
------------ ------------
Net cash used in investing activities (5,161) (3,711)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 143 3,085
Net change in bank line-of-credit 500 100
Proceeds from bank borrowings 1,744 1,100
Repayment of debt (903) (342)
S-Corporation distributions ----- (117)
------------ ------------
Net cash provided by financing activities 1,484 3,826
------------ ------------
Net (decrease) increase in cash (2,792) 1,839
Cash, beginning of period 10,148 156
------------ ------------
Cash, end of period $ 7,356 $ 1,995
============ ============
Supplemental cash flow information:
Interest paid $ 212 $ 63
============ ============
Income taxes paid $ 883 $ 17
============ ============
</TABLE>
See accompanying notes
<PAGE> 7
DBT ONLINE, INC.
ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
the accounts of DBT Online, Inc. (the "Company") and its wholly-owned
subsidiaries, Database Technologies, Inc., a Florida corporation ("DBT") and
Patlex Corporation, a Pennsylvania corporation ("Patlex") and are unaudited.
All significant intercompany accounts and transactions have been eliminated.
The accompanying condensed consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented. Such adjustments
consist solely of normal recurring accruals. Results for the interim periods
are not necessarily indicative of results for a full year.
As previously reported in the Form 10-KSB for the year ended June 30,
1996, the Company is organized in a holding company structure. The Company was
formerly a wholly-owned subsidiary of Patlex. On August 20, 1996, the former
shareholders of Patlex approved a Plan of Reorganization (the "Reorganization")
pursuant to which the Company was reorganized into a holding company structure
and each share of Patlex common stock was converted into one share of common
stock of the Company. As a result of the Reorganization, Patlex became a
wholly-owned subsidiary of the Company. Also on August 20, 1996, a
wholly-owned subsidiary of the Company merged with DBT (the "Merger"), and DBT
became a wholly-owned subsidiary of the Company. In the Merger, each share of
DBT common stock was converted into approximately 2.95 shares of common stock
of the Company. Pursuant to the terms of the Merger and the Reorganization,
the former shareholders of Patlex own approximately 33.2% of the Company and
the former shareholders of DBT own approximately 66.8% of the Company, based on
the number of shares and options of Patlex and DBT that were outstanding as of
August 20, 1996. Although the Company was the surviving corporation in the
Merger, for accounting purposes the transaction is treated as a purchase
business acquisition of Patlex by DBT (a reverse acquisition) and a
recapitalization of DBT. The Company has elected to adopt the fiscal year
(calendar year) of DBT, the accounting acquirer. Assets and liabilities of
Patlex acquired in the transaction are recorded at their fair values as of
August 20, 1996. The Company is the successor registrant to Patlex.
The purchase accounting adjustments are applicable to Patlex, the
acquired company, for accounting purposes. The purchase price of 2,947,714
shares of Company common stock (issued as a result of a calculation based on
the number of shares of Patlex common stock and options to purchase Patlex
common stock outstanding immediately prior to the Merger and deemed to have
been issued in accordance with reverse acquisition accounting) valued at
$14,060,000, and transaction costs of $689,000, have been allocated to Patlex's
assets and liabilities based upon their estimated fair values at August 20,
1996. The fair values allocated are as follows:
<PAGE> 8
<TABLE>
<S> <C>
Current Assets $ 8,966,000
Investment in Patents 13,844,000
Other Assets 27,000
Current Liabilities (3,715,000)
Other Liabilities (4,373,000)
-----------
$14,749,000
===========
</TABLE>
The Company has not completed the determination of the fair value of
Patlex's net assets. However, the company believes the final valuation will
not result in material differences from those set forth above.
The accompanying condensed consolidated financial statements include
the financial position of the Company and its subsidiaries as of September 30,
1996 and the results of operations of DBT on an historical cost basis for the
periods presented. The results of operations include the results of operations
for Patlex for the period from August 20, 1996, the date of the Reorganization.
NOTE 2. NET EARNINGS PER SHARE
Net earnings per common share for the nine months and three months
ended September 30, 1996 presented herein, were computed by dividing net
earnings for the periods by the weighted-average number of common shares
outstanding during the periods plus common stock equivalent shares issuable
upon exercise of stock options using the treasury stock method assuming the
merger had taken place at the beginning of the periods presented. Pro forma
net earnings for the prior periods presented are computed by giving effect to
the number of shares of the Company's common stock which would have been
outstanding had the merger occurred at the beginning of the periods presented
with no change in the number of shares outstanding occurring since those dates.
NOTE 3. PRO FORMA INFORMATION
If the Merger and Reorganization had been completed on January
1, 1995, pro forma results for the nine months ended September 30, 1996 and
1995 would be as follows (the pro forma information is not necessarily
indicative of the combined results of operations that would have occurred had
the Merger and Reorganization been completed as of January 1, 1995):
<TABLE>
<CAPTION>
Pro forma (Unaudited)
-----------------------------------------------------------
(In Thousands, except per share data) Three Months Nine Months
Ended Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $6,312 $3,663 $17,769 $10,412
Gross Profit (Loss) 1,021 (718) 4,231 1,625
Net Income (Loss) 654 (1,294) 2,729 305
Net Income (Loss) Per Common Share $ 0.09 $(0.17) $0.35 $0.04
</TABLE>
2
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As stated in Note 1 to Notes to Condensed Consolidated Financial
Statements above, the Company is the parent company of two wholly-owned
subsidiaries, DBT and Patlex. DBT and Patlex are engaged in unrelated
businesses. Consequently, the following discussion and analysis of financial
condition and results of operations of the Company is presented for each
subsidiary independently. The discussion pertaining to Patlex relates only to
operations for the period from August 20, 1996, the date of the
Reorganization, through September 30, 1996.
Database Technologies, Inc.
Three Months Ended September 30, 1996 compared to the Three Months Ended
September 30, 1995
DBT's revenues increased by 103% to $4,473,000 from $2,206,000 for the
three months ended September 30, 1996 as compared to the three months ended
September 30, 1995. DBT's results of operations are directly related to the
number of customers and the amount of time, on average, users spend on its
on-line computer system.
Operating income increased to $146,000 from a loss of $1,307,000 for
the three months ended September 30, 1996 and 1995, respectively. The loss in
1995 included a non-recurring charge of $1,528,000 relating to DBT's purchase
of International Research Bureau, Inc. ("IRB") in July 1995. This decline in
operating income (without consideration of the IRB loss) is primarily
attributable to increased costs of purchased data and the depreciation charge
on DBT's computer equipment. Depreciation of computer equipment increased to
$659,000 for the three months ended September 30, 1996 from $231,000 for the
same period in 1995. Purchased data increased to $777,000 for the three months
ended September 30, 1996 from $424,000 for the same period in 1995. There is
no assurance that future purchased data costs will not continue to increase as
prices charged by certain governmental bodies and agencies change.
Certain data that is valuable due to its historical nature is
capitalized. The majority of DBT's data, however, is valuable only to the
extent that it is up-to-date. This data is expensed as incurred. Data for
which customers incur a direct charge for access is expensed as acquired.
Purchased data is acquired by a number of methods, including, but not limited
to: (i) outright purchase, (ii) leasing of data through usage charges or
royalty agreements, and (iii) individual access charges incurred each time a
customer accesses data provided by a third party. It is anticipated that the
future cost for data obtained from these sources will increase.
Selling and administrative expenses (consisting of selling and
promotion and general administrative expenses), as a percentage of revenues,
remained relatively steady during the period, decreasing to 33.4% of sales
during the three months ended September 30, 1996 from 33.5% during the three
months ended September 30, 1995.
Research and development costs, as a percentage of revenues, remained
relatively steady decreasing to 11.4% during the three months ended September
30, 1996, from 12.4% during the three months ended September 30, 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995
DBT's revenues increased by 107% to $11,612,000 from $5,600,000 for
the nine months ended September 30, 1996 as compared to the nine months ended
September 30, 1995. DBT's results of operations are directly related to the
number of customers and the amount of time, on average, users spend on its
on-line computer system. At September 30, 1996, DBT had approximately 9300
customer accounts compared to 3700 at September 30, 1995, an increase of 151%.
The Number of customer accounts increased at a greater rate than revenues due
to the fact that many of the new customers of DBT's system are for discounted,
batch processing (involving no minutes of system use).
Operating income increased to $461,000 from a loss of $644,000 for the
nine months ended September 30, 1996 and 1995, respectively. The loss in 1995
included a non-recurring charge of $1,528,000 for the IRB transaction. This
decline in operating income (without consideration of the IRB loss) is
primarily attributable to increased costs of
3
<PAGE> 10
purchased data and the depreciation charge on DBT's computer equipment.
Depreciation of computer equipment increased to $1,503,000 for the nine months
ended September 30, 1996 from $500,000 for the same period in 1995. Purchased
data increased to $2,274,000 from $1,027,000. There is no assurance that
future purchased data costs will not continue to increase as prices charged by
certain governmental bodies and agencies change.
Selling and administrative expenses (consisting of selling and
promotion and general administrative expenses), as a percentage of revenues,
remained relatively steady during the period, increasing to 33.8% of revenues
during the nine months ended September 30, 1996 from 33.4% during the nine
months ended September 30, 1995.
Research and development costs, as a percentage of revenues, also
remained relatively steady during the period, increasing to 12.8% during the
nine months ended September 30, 1996, from 11.6% during the nine months ended
September 30, 1995.
Effective July 1, 1995, DBT purchased for cash and stock all of the
outstanding shares of common stock of IRB. Subsequent to the acquisition,
management of DBT re-evaluated the future potential of IRB's core document
retrieval business and concluded that IRB's assets, other than its on-line
customer list, had no future value to DBT. Factors which led DBT's management
to this evaluation included the conclusion that DBT's technology was superior
to IRB's, and that IRB's data was a duplicate of data which DBT already
possessed. On December 13, 1995 IRB's shares were transferred back to the
original owners of IRB in exchange for DBT common stock. DBT accounted for its
investment in IRB using the equity method. Income (loss) from operations and
net income (loss) were directly affected by the non-recurring loss on the IRB
transaction.
As a result of these transactions, DBT acquired IRB's customer list
for its on-line business and a covenant not to compete. The assets of DBT
exchanged included cash of $1,000,000 and common stock of DBT valued at
$485,600 (after accounting for the returned shares). Investments in the
operations of IRB and other costs, totaling $198,600, were recorded on DBT's
balance sheet and the remainder of the costs incurred were charged to
operations during the third and fourth quarters of 1995.
INCOME TAXES
DBT had elected to be taxed as an S corporation through June 30, 1995,
after which it revoked its S corporation election and began directly paying
taxes on its earnings. The consequences of the S corporation termination
included: (i) the accrual of the final S corporation distribution of $204,000
payable to the shareholders of DBT at June 30, 1995, and (ii) the
reclassification of $231,000 of undistributed S corporation earnings to
additional paid-in capital. Additionally, a charge to earnings was taken in
1995 to establish a deferred tax liability of $155,000 for the tax bases of
assets and liabilities that are different from those recognized for financing
reporting purposes.
In August 1996, tax legislation was enacted that reinstated the
research and development tax credit for the period July 1, 1996 through May 31,
1997. DT may be entitled to a reduction of its taxes to be paid for 1996 and
would expect its effective tax rate for 1996 to be reduced. DBT is currently
analyzing the effect of this tax change and has not included any potential
credit for such expenditures in its September 30, 1996 tax provision.
Patlex Corporation
Patlex has effective agreements with companies which represent a
cross-section of the United States laser industry, including users and
manufacturers. Under these agreements, approximately 115 licensees are
actively paying royalties to the Company. The Company believes the majority of
the commercial laser manufacturers making, using or selling infringing lasers
in the United States have been licensed.
4
<PAGE> 11
FOR THE PERIOD SUBSEQUENT TO THE REORGANIZATION - AUGUST 20, 1996 THROUGH
SEPTEMBER 30, 1996
Revenues from laser patents amounted to $843,000 for the period
subsequent to the merger through the end of the quarter ended September 30,
1996. This level of laser patents revenue is considered comparable to
historical levels for a comparable time period.
General and Administrative expenses in the amount of $131,000 and
amortization of investment in patents and depreciation in the combined amount
of $192,000 for the period subsequent to the merger through the end of the
quarter ended September 30, 1996 is considered comparable to historical levels
for a comparable time period.
Net earnings for the period were $343,000.
DBT Online, Inc.
The Company received no revenue for the period subsequent to the
merger through the end of the quarter ended September 30, 1996. The Company
incurred administrative expenses in the total amount of $85,000 during the
period ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The following discussion pertains to the liquidity and capital
resources of DBT Online, Inc., and results of its operations.
As of September 30, 1996, the Company had $7,356,000 in cash and cash
equivalents as compared to $1,643,000 at December 31, 1995. The increase in
the cash position is primarily due to the inclusion of the cash balance of
Patlex in the amount of $6,816,000 as of September 30, 1996.
Net working capital as of September 30, 1996 was $3,606,000 compared
to $492,000 as of December 31, 1995. As of September 30, 1996 total assets were
$31,300,000 and total liabilities were $13,358,000 as compared to $6,574,000
and 3,975,000, respectively as of December 31, 1995.. Stockholders' Equity as
of September 30, 1996 was $17,942,000 as compared to $2,599,000 as of December
31, 1995. The favorable working capital position and favorable increase in
Stockholders' Equity as of September 30, 1996 over the balances at December 31,
1995 is primarily attributable to the Merger and Reorganization that occurred
on August 20, 1996.
The Company considers its capital resources to be sufficient to meet
its needs for the immediate future. Other sources of capital that are
reasonably available to the Company, if necessary, are additional bank
borrowings and other capital markets.
The Company does not anticipate paying cash dividends in the
foreseeable future. Future declaration and payment of dividends, if any, will
depend upon the financial condition, capital requirements and earnings of the
Company, as well as other factors the Company's Board of Directors may consider
as being in the best interest of the Company.
5
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None to report.
ITEM 2. CHANGES IN SECURITIES
As a result of the Reorganization, each share of Patlex common stock
was converted into a share of common stock of the Company. In addition, as a
result of the Merger, each share of DBT common stock was converted into
approximately 2.95 shares of common stock of the Company. The resulting
exchanges increased the number of shares of common stock of the Company
outstanding from 2,565,861 on August 20, 1996 to 7,723,474 on September 30,
1996.
The terms of the common stock of the Company, and the rights of the
holders of the common stock, are the same in all material respects to the
shares of common stock of Patlex and DBT outstanding prior to the Merger and
the Reorganization.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
A Special Meeting of the shareholders of Patlex, the predecessor
registrant to the Company, was held on August 20, 1996. At the Meeting, the
shareholders approved the following:
(i) a Plan of Merger and Reorganization (the "Plan of
Reorganization") pursuant to which Patlex was reorganized (the
"Reorganization") into a holding company structure, whereby at the time of the
Reorganization the holders of shares of Patlex common stock became holders of
shares of common stock of a new holding company that was renamed "DBT Online,
Inc.," at the time of which Reorganization Patlex became a wholly-owned
subsidiary of DBT Online, Inc.;
(ii) an Agreement of Merger, dated as of February 7, 1996, as
amended and restated as of June 28, 1996, pursuant to which, immediately after
the Reorganization, DBT Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of DBT Online, Inc., merged (the "Merger") with and
into DBT, at which time DBT became a wholly-owned subsidiary of DBT Online,
Inc.; and
(iii) an amended and restated Stock Option Plan (the "Plan")
that includes, among other things, an increase in the number of authorized
shares thereunder from 375,000 to 900,000 shares available for granting options
under the plan.
Upon completion of the Reorganization and the Merger on August 20,
1996, the former holders of shares of DBT common stock, in the aggregate, owned
approximately 66.8% of the outstanding shares of DBT Online, Inc. The former
holders of shares of Patlex common stock owned approximately 33.2% of the
outstanding shares of DBT Online, Inc. common stock.
6
<PAGE> 13
ITEM 5. OTHER INFORMATION
None to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.* Computation of Earnings Per Share
27.1* Financial Data Schedule
- --------------------
* Filed herewith.
(b) Reports on Form 8-K
On August 30, 1996, the Company filed a Current Report on Form 8-K,
dated August 20, 1996, with the Securities and Exchange Commission. The
Current Report on Form 8-K reported a change in control of the Company as a
result of the Reorganization and the Merger and also reported a change in the
fiscal year of the Company to coincide with the calendar year.
On November 4, 1996, the Company filed Amendment No. 1 to the Current
Report on Form 8-K, dated August 20, 1996. Amendment No. 1 included the
financial statements of Patlex and DBT and pro forma financial information
relating to the Reorganization and the Merger.
7
<PAGE> 14
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.
DBT ONLINE, INC.
/s/ Richard Laitinen
-----------------------------------------
Richard Laitinen
Vice President and
Chief Financial Officer
(Duly authorized and
Principal financial officer)
Date: November 14, 1996
<PAGE> 1
DBT ONLINE, INC.
Statements of Computation of Per Share Earnings
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
--------------------------- -----------------------
9-30-96 9-30-95 9-30-96 9-30-95
---------- ---------- --------- ---------
(Note A) (Note A)
<S> <C> <C> <C> <C>
Net income (Loss) $451 ($930) $384 ($1,567)
============================ =========================
Earnings per share - primary $0.06 ($0.12) $0.05 ($0.20)
============================ =========================
Earnings per share - fully diluted $0.06 ($0.12) $0.05 ($0.20)
============================ =========================
Average number of common and common equivalent shares:
PRIMARY:
Weighted average common shares outstanding 7,697,120 7,693,474 7,700,727 7,693,474
Dilutive effect of exercise of certain stock options 313,978 ----- 313,978 -----
---------------------------- -------------------------
Average common shares - Primary 8,011,098 7,693,474 8,014,705 7,693,474
============================ =========================
FULLY DILUTED:
Weighted average common shares outstanding 7,697,120 7,693,474 7,700,727 7,693,474
Dilutive effect of exercise of certain stock options 313,978 ----- 313,978 -----
---------------------------- -------------------------
Average common shares - Fully diluted 8,011,098 7,693,474 8,014,705 7,693,474
============================ =========================
</TABLE>
Note A.
The calculations above, relating to the periods ended September 30, 1995,
are presented on a proforma basis since the Company reorganized and merged
with Database Technologies, Inc. on August 20, 1996. Consequently, the
presentation is based on the number of the Company's common stock which would
have been outstanding had the merger occurred at the beginning of the periods
presented with no change in the number of shares outstanding occurring since
that date.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 7,356 7,356
<SECURITIES> 0 0
<RECEIVABLES> 2,981 2,981
<ALLOWANCES> 240 240
<INVENTORY> 0 0
<CURRENT-ASSETS> 10,581 10,581
<PP&E> 9,324 9,324
<DEPRECIATION> 2,800 2,800
<TOTAL-ASSETS> 31,300 31,300
<CURRENT-LIABILITIES> 6,975 6,975
<BONDS> 0 0
0 0
0 0
<COMMON> 772 772
<OTHER-SE> 17,170 17,170
<TOTAL-LIABILITY-AND-EQUITY> 31,300 31,300
<SALES> 4,473 11,612
<TOTAL-REVENUES> 5,316 12,455
<CGS> 3,576 5,739
<TOTAL-COSTS> 4,650 8,780
<OTHER-EXPENSES> 1,074 2,778
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 84 203
<INCOME-PRETAX> 622 752
<INCOME-TAX> 238 301
<INCOME-CONTINUING> 384 451
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 384 451
<EPS-PRIMARY> .05 .06
<EPS-DILUTED> .05 .06
</TABLE>
