SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
( ) 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: 000-21969
CONSOLIDATED DATA, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado, United States 84-1343219
- --------------------------------- ---------------------------
(State or other jurisdiction (I.R.S. Employer ID Number)
of incorporation or organization)
6912 220th Street SW, Mountlake Terrace, WA 98043
- -----------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (425) 672-6735
--------------
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.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Shares outstanding at January 31, 2000
- ------------------------------ -------------------------------------
Common Stock, no par value 10,914,000
Preferred stock, no par value 100,000
<PAGE>
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated Balance Sheets
- Consolidated Statements of Operations
- Consolidated Statements of Cash Flows
- Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED DATA, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
December 31, September 30,
1999 1999
-------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 115,829 $ (1,165)
Property and equipment:
Online banking software 640,000 640,000
Directory marketing rights 75,000 75,000
Software 25,000 25,000
Office equipment 6,892 6,892
----------- -----------
746,892 746,892
Less accumulated depreciation and amortization (167,497) (130,708)
----------- -----------
579,395 616,183
----------- -----------
Total assets $ 695,224 $ 615,018
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,293 $ 36,134
Notes payable - CheKprotKt 253,544 262,344
Notes payable - Construction Lien Services 109,783 105,582
Notes payable - HEP Trust 64,000 64,000
Accrued interest payable 127,793 114,293
----------- -----------
Total liabilities 607,413 581,938
Stockholders' equity (deficit):
Common stock, no par value, 50,000,000 shares authorized,
10,864,000 and 10,784,000 shares issued and outstanding at
December 31, 1999 and September 30, 1999, respectively. 1,251,163 1,131,163
Preferred stock, no par value, 5,000,000 shares authorized, 100,000
shares issued and outstanding at December 31, 1999 and September
30, 1999. 10,050 10,050
Accumulated deficit (1,173,402) (1,108,133)
----------- -----------
Total stockholders' equity 87,811 33,080
----------- -----------
Total liabilities and stockholders' equity $ 695,224 $ 615,018
=========== ===========
See accompanying footnotes
</TABLE>
<PAGE>
CONSOLIDATED DATA, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
--------------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 0 $ 0
Operating expenses:
General and administrative (4,728) 4,225
Sales and marketing 19,191 0
Systems and development 39,244 2,083
------------ ------------
53,707 6,308
------------ ------------
Operating loss (53,707) (6,308)
Other expense:
Interest expense 11,562 13,144
------------ ------------
Net loss $ (65,269) $ (19,452)
============ ============
Net loss per common share - basic and diluted $ (0.01) $ (0.003)
============ ============
Weighted average shares outstanding -
basic and diluted 10,784,889 6,456,000
See accompanying footnotes
</TABLE>
<PAGE>
CONSOLIDATED DATA, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended
December 31,
-----------------------
1999 1998
OPERATING ACTIVITIES: ---------- ----------
Net loss $ (65,269) $ (19,452)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 36,789 6,000
Changes in operating assets and liabilities:
Accounts payable 16,159 -
Accrued liabilities 13,500 13,144
---------- ----------
Net cash used in operating activities 1,179 (308)
INVESTING ACTIVITIES:
Net cash used in investing activities - -
FINANCING ACTIVITIES:
Repayment of notes payable (4,185) -
Proceeds from the issuance of common stock 120,000 -
---------- ----------
Net cash provided by financing activities 115,815 -
---------- ----------
Net increase in cash $ 116,994 $ (308)
Cash at the beginning of the period (1,165) 492
---------- ----------
Cash at the end of the period $ 115,829 $ 184
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest - -
See accompanying footnotes
<PAGE>
CONSOLIDATED DATA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
instructions for Form 10Q-SB and Article 10 of Regulation S-X of the
Securities and Exchange Commission. The accompanying unaudited
financial statements reflect, in the opinion of management, all
adjustments necessary to achieve a fair statement of financial position
and results for the interim periods presented. All such adjustments are
of a normal recurring nature. It is suggested that these financial
statements be read in conjunction with the financial statements and
notes thereto included in the Annual Report of the Company on Form
10-KSB for the year ended September 30, 1999.
2. In December 1999, the Company sold 80,000 restricted common shares to
unrelated third parties in a private placement. The purchasers of the
shares also received a warrant to purchase an additional 40,000 common
shares with an exercise price of $3.00 per share. The warrant expires
September 22, 2000. The shares of common stock and warrants were
offered pursuant to an exemption to registration provided under Section
4(2), of the Securities Act of 1933. The Company received cash proceeds
of $120,000 from the sale of stock and warrants.
3. In March 1999, the Company acquired online banking software in exchange
for 3.2 million shares of the Company's restricted common stock. For
accounting purposes, the online banking software is recorded at
$640,000 and is being amortized over its expected useful life of five
years.
4. Net loss per share has been computed in accordance with SFAS 128, which
requires disclosure of basic and diluted earnings per share. Basic
earnings per share excludes any dilutive effects of options, warrants
and convertible securities. Diluted earnings per share includes the
impact of potentially dilutive securities. Potentially dilutive options
and warrants to purchase 215,000 shares of common stock with a weighted
average exercise price of $22.65 per share were outstanding at December
31,1999. In addition, there are 450,000 common shares issuable upon
conversion of the redeemable convertible preferred stock outstanding at
December 31, 1999. There were no outstanding options or warrants to
purchase shares of common stock outstanding at December 31, 1998 other
than the 450,000 common shares issuable upon conversion of the
redeemable convertible preferred stock. The diluted effects of the
outstanding options, warrants, and convertible securities were not
included in the computation of historical diluted loss per share for
the periods outstanding because the Company reported a loss and,
therefore, the effect would be anti-dilutive. The figures above exclude
agreements that provide for additional options to be granted to
consultants and/or prospective employees, upon approval by the
Company's Board of Directors. As of December 31, 1999, these agreements
include options to purchase an aggregate of 1.8 million common shares
at $1.00 per share, subject to certain vesting requirements.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The following discussion should be read in conjunction with the financial
statements and related notes included elsewhere in this report. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from the results anticipated in these
forward-looking statements as a result of factors including, but not limited to,
those under "Factors That May Affect Future Results of Operations" below and
elsewhere in this Report.
Consolidated Data Inc. (the "Company") is a development stage company. The
Company was incorporated July 14, 1995 under the laws of the State of Colorado
and was originally known as Attache Holdings, Ltd. In November of 1998, Attache
Holdings Ltd. became Consolidated Data, Inc.
The Company was inactive until it acquired Contractor's Directory,
Inc.("Contractors Directory") on April 17, 1997 via a stock for stock
acquisition. From 1997 to the first quarter of 1999, the Company was exclusively
involved in the development of an e-Commerce business designed to fill the needs
of the construction industry. This included development of
"contractors-directory.com". Use of Contractors Directory allows public
information to be downloaded, via the Internet, and reformatted for ease of use
by contractors and suppliers. This includes credit and building permit
information.(See "Contractors Directory") Contractor Directory is a wholly-owned
subsidiary of the Company.
In March 1999 the Company purchased a software system, "YourBankOnline", which
is now the primary focus and operation of the Company. The Company still
maintains the contractors-directory.com Web site. However, the Company is no
longer marketing the Contractors Directory business and is evaluating its
options with regard to continuing this line of its business. Consequently,
management expects the revenue and cash-flow related to Contractors Directory to
be nominal during future periods. In future periods, management expects to
derive substantially all of its revenues from products and services provided to
banks, the banks' customers and other participants in the financial services
industry.
<PAGE>
Overview
YourBankOnline is a software product that enables small to medium sized banks to
offer their retail and commercial customers, banking and financial services over
the Internet. This product enables banks to offer their customers an array of
products, services and transactions over the Internet in a secure environment.
The Company acquired the YourBankOnline software in March 1999. During the
quarter ending December 31, 1999, our principal activities consisted of
recruiting employees, developing our business strategy, and raising capital for
the growth of YourBankOnline. The company has not yet generated revenues from
YourBankOnline.
To date, the majority of our resources have been directed to developing our
business plan, building our infrastructure, forming exclusive strategic
marketing alliances, and building our sales and marketing, management, and
technology personnel. We anticipate our operating expenses will increase
substantially in future periods as we increase our sales force, significantly
increase our marketing and branding efforts, continue to develop new
distribution channels, fund greater levels of product development and
technology, and expand our support staff and facilities to facilitate our
growth. Accordingly, we may incur additional losses in future periods.
QUARTER ENDED DECEMBER 31, 1999 COMPARED TO THE QUARTER ENDED DECEMBER 31, 1998
Revenues
During the quarters ending December 31, 1999 and December 31, 1998 the Company
did not generate any revenues. Management expects that it will begin to generate
revenues from licensing the YourBankOnline banking software during either the
second or third quarter of the fiscal year ending September 30, 2000. Management
expects that Contractors Directory will not generate any significant revenues in
future periods.
Expenses
Total expenses increased $47,339, or 751%, from $6,309 during the quarter ending
December 31, 1998 to $53,707 during quarter ending December 31, 1999. This
increase is primarily attributable to costs incurred to continue the initial
development of the online banking business.
General and administrative expense decreased $8,983, or 213%, from $4,225 during
the quarter ending December 31, 1998 to a negative $4,728 during quarter ending
December 31, 1999. In October 1999, the Company received a $45,000 refund from a
vendor that provided financial planning and regulatory filing assistance. If
this refund had not had been received, general and administrative expense for
the In addition, general and administrative expense quarter ending December 31,
1999 would have been $40,272.
Sales and marketing expense increased $19,191, from nil during the quarter
ending December 31, 1998 to $19,191 during the quarter ending December 31, 1999.
The increase is primarily attributed to costs incurred to develop and prepare
sales and marketing materials as well as travel costs related to sales and
marketing activities.
Systems and development expense increased $37,161, or 1784%, from $2,083 during
the quarter ending December 31, 1998 to $39,244 during the quarter ending
December 31, 1999. This increase was primarily attributable the amortization of
the cost to acquire the online banking software. The banking software was
acquired at a cost of $640,000 and is being amortized over its expected useful
life of five years. In addition, the increase is attributed to costs incurred to
develop the Company's Web and Internet infrastructure as well as maintain the
online banking software.
<PAGE>
Interest expense decreased $1,582, or 12%, from $13,144 during the quarter
ending December 31, 1998 to $11,562 during the quarter ending December 31, 1999.
This decrease was the result of a decrease in notes payable due to repayments
made during the current quarter ending December 31, 1999.
The net loss increased $45,817, or 236%, from $19,452 during the quarter ending
December 31, 1998 to $65,269 during the quarter ending December 31, 1999.
Liquidity and Capital Resources
Through December 31, 1999 the Company has raised a total of approximately
$343,000 of capital to fund the operations of the Company. As of December 31,
1999, we had notes payable and accrued interest, in the amount of $579,394, due
to companies affiliated with our Chairman and CEO.
During the quarter ended December 31, 1999 cash provided by financing activities
was $115,815 as compared to nil during the comparable quarter ended December 31,
1998. The increase is primarily attributed to additional shares of common stock
which were issued for cash. In December 1999, the Company sold 80,000 restricted
common shares to unrelated third parties in a private placement. The purchasers
of the shares also received a warrant to purchase an additional 40,000 common
shares with an exercise price of $3.00 per share. The warrant expires September
22, 2000. The shares of common stock and warrants were offered pursuant to an
exemption to registration provided under Section 4(2), of the Securities Act of
1933. The Company received cash proceeds of $120,000 from the sale of stock and
warrants.
Management believes that our existing capital resources will not be adequate to
fund our operations through the second quarter of the fiscal year ending
September 30, 2000. We have not sustained positive earnings or cash flow and we
are required to incur significant expenses to be competitive. Consequently, we
will require additional funds during the next two to six months to successfully
execute our strategy. Additional financing may not be available on favorable
terms or at all. If we cannot raise adequate funds to satisfy our capital
requirements, we may have to limit our operations significantly. Our future
capital requirements depend upon many factors, including, but not limited to:
o rate at which we expand our sales and marketing operations;
o extent to which we expand our products and services;
o extent to which we develop and upgrade our technology and data network
infrastructure;
o occurrence, timing, size and success of acquisitions; and
o response of competitors to our service offerings.
We cannot predict the extent to which investor interest in the Company will lead
to future sales of equity securities to fund our current business plan. It is
unlikely that we will raise significant amounts of capital through borrowing or
through the issuance of other debt instruments. Therefore, in early 2000 we plan
on seeking new capital through the issuance of additional shares the Company,
either through a public offering or private placement, at prices that have yet
to be determined. Sales of a substantial number of shares of our common stock in
the public market could adversely affect the market price of our common stock.
We may also seek the advice and assistance of investment bankers and other
financial professionals to assist us in raising additional capital and we expect
to pay a fee for these services.
<PAGE>
Personnel
Our future success depends to a significant extent on the ability to attract and
retain qualified personnel. We will need to hire a significant number of
personnel in the near future, to successfully implement our business plan. The
market for experienced personnel is competitive, particularly in the areas of
Internet technology and Internet banking related technology.
Securities and Exchange Commission Inquiry
The Securities and Exchange Commission is conducting an inquiry, as to the
valuation and related disclosures surrounding the acquisition of the online
banking software. The purchase and sale agreement between the Company and DTEK
(the seller of the software) provided a valuation of $10 million dollars. For
accounting purposes, the software was valued at $640,000, and is being amortized
over its estimated useful life of five years. The company, its Chairman, and
other related parties are cooperating fully in this inquiry or investigation.
Impact of Year 2000 Computer Issues
All computer systems utilized by the Company, including the YourBankOnline
system, were fully Y2K compliant and did not experience Year 2000 transition
issues. Management does not expect on-going Year 2000 transition issues will
have a material impact on operations as all aspects of the system have been
designed to accurately handle any Y2K issue.
Factors That May Affect Future Results Of Operations
In addition to the other information included in this Report, the following
factors should be considered in evaluating our business and future prospects:
Because we are a Development Stage Company and have a limited operating history,
an investor in our common stock must consider the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets, including the Internet banking and electronic commerce markets. These
risks include our ability to:
o successfully expand our sales and marketing efforts;
o develop and maintain strategic marketing relationships;
o promote acceptance of our Internet banking services by customers of our
client banks;
o respond effectively to competitive pressures;
o continue to develop and upgrade our technology; and
o attract, retain and motivate qualified personnel.
We cannot guarantee that we will succeed in achieving these goals, and there can
be no assurance we will ever achieve or sustain profitability. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
detailed information on our limited operating history.
We incurred net losses of $65,269 for the quarter ending December 31, 1999 and
$1,173,402 from inception through December 31, 1999. At December 31, 1999, we
had an accumulated deficit of $1,173,402. We expect to incur significant
operating losses on a quarterly basis in the future.
<PAGE>
We will need to generate significant revenues to achieve and maintain
profitability, and we cannot assure you that we will be able to do so. Even if
we do achieve profitability, we cannot assure you that we can sustain or
increase profitability on a quarterly or an annual basis in the future. If our
revenues grow more slowly than we anticipate or if our operating expenses exceed
our expectations, our financial performance will likely be adversely affected.
See "Liquidity and Capital Resources" for further information on our anticipated
capital funding plans.
Government regulation
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may be
adopted in the future that address issues including user privacy, pricing, and
the characteristics and quality of products and services. Any new laws or
regulations relating to the Internet or the manner in which existing laws are
applied to the Internet could adversely affect our business. Our primary
customers are banks. The banking industry, including electronic banking, is
heavily regulated, and we expect that this regulation will affect the relative
demand for our products and services. In addition, through their ability to
regulate our bank customers' system requirements, bank regulators can
effectively regulate the required security systems, communication technologies
and other features of our products and services. There can be no assurance that
federal, state or foreign governmental authorities will not adopt new
regulations addressing electronic banking or banking operations generally that
could require us to modify our current or future products and services.
Forward-looking statements
From time-to-time, the Company or its representatives may have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission
or other regulatory agencies. Words or phrases "will likely result", "are
expected to", "will continue", " is anticipated", "estimated", "project or
projected", or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). The Reform Act does not apply to initial
registration statements. The Company wishes to ensure that meaningful cautionary
statements accompany such statements, so as to maximize to the fullest extent
possible the protections of the safe harbor established in the Reform Act.
Accordingly, such statements are qualified in their entirety by reference to and
are accompanied by the preceding and following discussion of certain important
factors that could cause actual results to differ materially from such
forward-looking statements.
<PAGE>
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
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8K
Exhibits:
None.
Reports on Form 8K:
None.
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
Consolidated Data, Inc.
Date: February 14, 2000 /s/ Pakie V. Plastino
------------------------------ -----------------------------------
Pakie V. Plastino
Chief Executive Officer and Director
Date: February 14, 2000 /s/ William D. Doehne
------------------------------ -----------------------------------
William D. Doehne
Chief Operating Officer and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1999 FORM 10-QSB OF CONSOLIDATED DATA, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 115,829
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 115,829
<PP&E> 746,892
<DEPRECIATION> 167,497
<TOTAL-ASSETS> 695,224
<CURRENT-LIABILITIES> 607,412
<BONDS> 0
0
10,050
<COMMON> 1,251,163
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 695,224
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 53,707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,562
<INCOME-PRETAX> (65,269)
<INCOME-TAX> 0
<INCOME-CONTINUING> (65,269)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65,269)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
