<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 1997
--------------------------------------------------
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 0-4748
-------------------------------
Data Dimensions, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 06-0852458
(NAME OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
One Bellevue Center, 411 - 108th Avenue NE, Suite 2100, Bellevue, WA 98004
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (425) 688-1000
------------------------------
Indicate by check 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 issuers classes of
common stock, of the latest practicable date
Common Stock: 11,979,318 shares as of September 30, 1997
- ---------------------------------------------------------
Transitional small business disclosure format (check one).
YES [ ] NO [X]
The index to exhibits appears on Page ___.
Page 1 of 16
<PAGE> 2
DATA DIMENSIONS, INC.
Index
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets at September 30,1997 and
December 31, 1996. 3
Supplemental Condensed Consolidated Balance Sheets at September 30, 1997
and December 31,1996. 4
Condensed Consolidated Statements of Operations for the three and nine
month periods ended September 30, 1997 and 1996. 5
Supplemental Condensed Consolidated Statements of Operations for the
three and nine month periods ended September 30, 1997 and 1996. 6
Condensed Consolidated Statements of Cash Flows for the nine month periods
ended September 30, 1997 and 1996. 7
Notes to Condensed Consolidated Financial Statements 8
Item 2 - Management's discussion and analysis of financial condition and
results of operations. 11
PART II - OTHER INFORMATION
Item 6 - Exhibits and reports on Form 8-K 13
SIGNATURE 14
</TABLE>
Page 2 of 16
<PAGE> 3
DATA DIMENSIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 3,765 $ 2,616
Investment securities available for sale 986 7,684
Accounts receivable, net of allowance 13,065 4,604
Notes and other receivables 150 699
Prepaid and other current assets 1,491 917
Deferred income taxes - 550
-------- --------
Total current assets 19,457 17,070
Investment securities available for sale - 993
Equipment and furniture, net 1,473 824
Investment in product development, net 2,609 1,255
Other assets 1,075 62
-------- --------
Total assets $ 24,614 $ 20,204
======== ========
Current Liabilities
Advance billings $ 445 $ 990
Accounts payable 664 677
Accrued compensation and related 1,027 519
Accrued commissions 512 434
Other accrued liabilities 647 243
Deferred income taxes 1,050 -
-------- --------
Total current liabilities 4,345 2,863
-------- --------
Stockholders' Equity
Common stock and paid in capital, $.001 par
value; 20,000 shares authorized; 11,979 and
11,374 outstanding 21,392 18,031
Treasury stock, at cost (2,971) (83)
Retained earnings (deficit) 1,848 (607)
-------- --------
Total stockholders' equity 20,269 17,341
-------- --------
Total liabilities and stockholders' equity $ 24,614 $ 20,204
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3 of 16
<PAGE> 4
DATA DIMENSIONS, INC.
SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS
(Giving Effect to Pooling-of-Interests Business Combination
with Pyramid Information Systems, Inc.
- See Note 1)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 4,665 $ 2,617
Investment securities available for sale 986 7,684
Accounts receivable, net of allowance 14,258 6,396
Notes and other receivables 150 699
Prepaid and other current assets 2,116 1,256
Deferred income taxes - 550
-------- --------
Total current assets 22,175 19,202
Investment securities available for sale - 993
Equipment and furniture, net 2,289 1,109
Investment in product development, net 2,609 1,255
Other assets 1,178 128
-------- --------
Total assets $ 28,251 $ 22,687
======== ========
Current Liabilities
Advance billings $ 445 $ 1,112
Accounts payable 808 899
Accrued compensation and related 1,439 671
Accrued commissions 512 434
Other accrued liabilities 954 397
Current portion of capital lease obligations 134 -
Deferred income taxes 1,188 180
-------- --------
Total current liabilities 5,480 3,693
-------- --------
Capital lease obligations, net of current portion 455 -
-------- --------
Stockholders' Equity
Common stock and paid in capital 21,402 18,041
Treasury stock, at cost (2,971) (83)
Retained earnings 3,885 1,036
-------- --------
Total stockholders' equity 22,316 18,994
-------- --------
Total liabilities and stockholders'
equity $ 28,251 $ 22,687
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4 of 16
<PAGE> 5
DATA DIMENSIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Nine Month Period
Ended September 30 Ended September 30
----------------------- -----------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue $12,042 $ 3,962 $27,831 $ 9,551
Direct costs 6,134 2,164 13,958 5,339
------- ------- ------- -------
Gross margin 5,908 1,798 13,873 4,212
General, administrative and selling 3,695 1,648 10,132 3,921
------- ------- ------- -------
Income from operations 2,213 150 3,741 291
Other income 96 214 363 303
------- ------- ------- -------
Income before taxes 2,309 364 4,104 594
Income taxes 950 153 1,650 245
------- ------- ------- -------
Net income $ 1,359 $ 211 $ 2,454 $ 349
======= ======= ======= =======
Net income per share $ 0.11 $ 0.02(1) $ 0.20 $ 0.03(1)
======= ======= ======= =======
Weighted average common and
common share equivalents 12,332 11,793(1) 12,059 10,185(1)
======= ======= ======= =======
</TABLE>
(1) Restated to give effect to a March 20, 1997 three for one stock split.
The accompanying notes are an integral part of these financial statements
Page 5 of 16
<PAGE> 6
DATA DIMENSIONS, INC.
SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Giving Effect to Pooling-of-Interests Business Combination with
Pyramid Information Systems, Inc.
- See Note 1)
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Nine Month Period
Ended September 30 Ended September 30
----------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $ 13,814 $ 5,424 $ 33,336 $ 13,800
Direct costs 7,449 3,256 17,900 8,395
-------- -------- -------- --------
Gross margin 6,365 2,168 15,436 5,405
General, administrative and selling 3,966 1,884 11,137 4,637
-------- -------- -------- --------
Income from operations 2,399 284 4,299 768
Other income 96 214 363 303
-------- -------- -------- --------
Income before taxes 2,495 498 4,662 1,071
Income taxes 966 168 1,706 295
-------- -------- -------- --------
Net income $ 1,529 $ 330 $ 2,956 $ 776
======== ======== ======== ========
Net income per share $ 0.12 $ 0.03 $ 0.23 $ 0.07
======== ======== ======== ========
Weighted average common and
common share equivalents 12,877 12,338 12,604 10,730
======== ======== ======== ========
Supplemental net income
before pro forma
adjustments $ 1,529 $ 330 $ 2,956 $ 776
Pro forma adjustments for
contractual increase to
be made in officer salary (15) (22) (59) (66)
-------- -------- -------- --------
Pro forma net income after
contractual increase in
officer salary 1,514 308 2,897 710
Pro forma adjustment for federal
income taxes on Pyramid income (53) (33) (151) (123)
-------- -------- -------- --------
Pro forma supplemental net income $ 1,461 $ 275 $ 2,746 $ 587
======== ======== ======== ========
Pro forma net income per share $ 0.11 $ 0.02 $ 0.22 $ 0.05
======== ======== ======== ========
Weighted average common and
common share equivalents 12,877 12,338 12,604 10,730
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
Page 6 of 16
<PAGE> 7
DATA DIMENSIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Month Period Ended
September 30,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,454 $ 349
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 301 61
Deferred income taxes 1,600 245
Changes in certain operating assets and liabilities
Increase in accounts receivable (8,461) (1,383)
Decrease (increase) in notes and other receivables 549 (310)
Increase in prepaid and other current assets (574) (551)
Decrease in advance billings (545) (72)
Increase (decrease) in accounts payable (13) 446
Increase in accrued compensation and related 508 120
Increase in other accrued liabilities 404 108
Other 65 (83)
-------- --------
Net Cash Used by Operating Activities (3,712) (1,070)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments - (45,903)
Maturities and sales of investments 7,691 32,588
Purchases of equipment and furniture (862) (447)
Investment in product development (1,429) (650)
Increase in other assets (1,013) -
-------- --------
Net Cash Provided (Used) by Investing Activities 4,387 (14,412)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of advances from factor - (824)
Payment of accrued preferred stock dividends - (35)
Net proceeds from issuance of common stock 474 16,401
-------- --------
Net Cash Provided by Financing Activities 474 15,542
-------- --------
Net Increase in Cash and Cash Equivalents 1,149 60
Cash and Cash Equivalents - beginning of period 2,616 65
-------- --------
Cash and Cash Equivalents - end of period $ 3,765 $ 125
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 7 of 16
<PAGE> 8
DATA DIMENSIONS, INC.
Notes to condensed consolidated financial statements
NOTE 1: Basis of Presentation
The financial statements present the consolidated financial position and results
of operations of Data Dimensions, Inc. and its subsidiaries, which include Data
Dimensions Ireland Limited (collectively, the "Company"). The financial
information included herein for the three and nine month periods ended September
30, 1997 and 1996 is unaudited; however, such information reflects all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the consolidated
financial position, results of operations and cash flows for the interim
periods. The results of operations for the 1997 interim periods presented are
not necessarily indicative of the results to be expected for the full year.
The financial information as of December 31, 1996 is derived from the
Data Dimensions, Inc. Annual Report to Shareholders, which is incorporated by
reference in the Company's 1996 Form 10-KSB. The interim condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's 1996 Annual
Report to Shareholders, and the supplemental financial statements, as described
in Note 2, should be read in conjunction with the financial statements of
Pyramid Information Services, Inc., which are included in the Company's October
30, 1997 Current Report on Form 8-K.
Recently issued accounting standards having relevant applicability to the
Company consist primarily of Statement of Financial Accounting Standards No.128
"Earnings per Share", Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" and Statement of Financial Accounting Standards
No. 131 "Disclosure about Segments of an Enterprise and Related Information",
each of which relate to additional reporting and disclosure requirements
effective for financial periods beginning after December 15, 1997. It is not
expected that the adoption of these accounting pronouncements will have a
material effect on the Company's operating results or financial condition.
NOTE 2: Acquisition of Pyramid Information Systems, Inc.
On October 30, 1997, the Company entered into a definitive agreement with
Pyramid Information Systems, Inc. ("Pyramid") and its sole shareholder, pursuant
to which in November 1997 the Company acquired all of the outstanding common
stock of Pyramid in exchange for approximately 540,000 shares of Data
Dimensions, Inc. common stock. As a result of the transaction, Pyramid, a
Los Angeles, California based company which provides computer processing and
management services to its customers, will became a wholly-owned subsidiary of
the Company.
The business combination will be accounted for as a "pooling-of-interests" for
accounting and financial reporting purposes. The pooling-of-interest method of
accounting is intended to present as a single interest two or more common
shareholder interests which were previously independent. Consequently, the
historical financial statements for periods prior to the consummation of the
combination will be restated as though the companies had been combined for all
periods presented. The accompanying supplemental financial statements give
effect to the business combination of the Company and Pyramid. These
supplemental results of operations are not necessarily indicative of results
to be expected in the future.
The calculation of supplemental net income per common and common equivalent
share for each period presented reflects the issuance of approximately 540,000
shares of Company common stock in exchange for all of the outstanding shares of
Pyramid common stock.
All fees and expenses related to the business combination and to the
consolidation of the combining companies will be expensed as required under the
pooling-of-interest accounting method. These expenses have not been reflected in
the supplemental financial statements, but will be reflected in the statement of
operations of the Company for the three month period ending December 31, 1997.
Such fees and expenses are presently estimated to approximate $650,000 ($400,000
after tax), most of which are direct transaction costs, and the remainder is the
estimated expense of consolidating and restructuring certain functions, and
certain other costs. The actual cost of the business combination could vary
significantly from those estimated. Included in such costs are commission fees
to be paid to an agent in the amount of $250,000, which can be paid either in
cash or Company common stock, at the Company's option.
Page 8 of 16
<PAGE> 9
NOTE 2: (Continued)
Prior to the business combination Pyramid was a subchapter S corporation for
federal income tax purposes and accordingly, its taxable income was not taxed to
the corporation, but directly to its shareholder. The supplemental statements of
operations present pro forma adjustments to reflect the effect of a provision
for federal income taxes on Pyramid net income as if it had been a taxable
entity, rather than the subchapter S pass through entity as it was, for each
period presented. These pro forma adjustments do not give effect to reductions
which might have occurred had the companies been combined and utilized net
operating loss carry forwards of the Company which might have been available
during the periods presented.
Upon acquisition by the Company, Pyramid is included in the Company's
consolidated income tax group. In accordance with pooling-of-interest
accounting the Company will record a provision for deferred income taxes as of
the transaction date representing estimated future tax liabilities relating to
the excess of future net taxable income for income tax purposes resulting
primarily from cash basis accounting for tax purposes. This provision, which
is estimated to approximate $400,000 has not been reflected in the accompanying
supplemental financial statements, but will be reflected in the consolidated
statement of operations of the Company for the three month period ending
December 31, 1997.
The supplemental consolidated statements of operations also present pro forma
adjustments to reflect the effect of the difference between compensation
actually paid to Pyramid's officer/shareholder for each period and the increased
contractual agreed upon annual salary to be paid after the business combination.
In October 1997, Pyramid declared and accrued a $1 million dividend, an amount
consistent with Pyramid's normal pattern of distributing substantially all of
it's taxable income for the current tax period.
The following pro forma supplemental consolidated condensed balance sheet
information reflects adjustments for the aforementioned estimated fees and
expenses, deferred tax provision and declared Pyramid distribution, as if the
business combination and these pro forma transactions had been consummated on
September 30, 1997 (in thousands):
<TABLE>
<CAPTION>
Pro forma Pro forma
Supplemental Adjustments Supplemental
------------ ----------- ------------
<S> <C> <C> <C>
Current assets $ 23,075 $ 23,075
Non-current assets 5,176 5,176
-------- -------- --------
Total $ 28,251 $ - $ 28,251
======== ======== ========
Current liabilities
Accrued liabilities $ 4,292 $ 400 $ 4,692
Deferred income taxes 1,188 150 1,338
Dividends payable - 1,000 1,000
-------- -------- --------
5,480 1,550 7,030
Non-current liabilities 455 - 455
Stockholders' equity 22,316 (1,550) 20,766
-------- -------- --------
$ 28,251 $ - $ 28,251
======== ======== ========
</TABLE>
Page 9 of 16
<PAGE> 10
NOTE 3: Stockholders' Equity
In March 1997, the Company effected a three-for-one stock split in the form of a
stock dividend. All share and per share data presented in these financial
statements has been restated for this stock split.
During the nine months ended September 30, 1997, the Company issued
approximately 347,000 shares of its common stock pursuant to exercise of
outstanding options and in connection therewith received cash proceeds of
approximately $474,000 and approximately 7,000 shares of Company common
stock. Additionally, in June 1997, the Company issued 360,000 shares of its
common stock pursuant to the cash-less exercise of outstanding warrants and in
connection therewith received from the warrant holder approximately 95,000 of
such shares.
Page 10 of 16
<PAGE> 11
DATA DIMENSIONS, INC.
Management's Discussion and Analysis
of
Financial Condition and Results of Operations
Results of Operations
Comparison of the Three Month Periods Ended September 30, 1997 and 1996
Revenue for the three months ended September 30, 1997 was $12 million, compared
to $4 million for the comparative prior year period, a threefold increase of $8
million. This increase was primarily attributable to a heightened awareness of
the millennium problem and demand for millennium services. Revenues from the
Knowledge Transfer group, which include sales of Ardes 2k products and services,
were approximately $600,000 during the three months ended September 30, 1997;
such revenues were not significant in 1996. Licensee fees and royalty
income were approximately $700,000 for the three months ended September 30,
1997, which was about the same as such revenue during the comparable 1996
period. Licensee fees and royalties decreased during the 1997 third quarter as
compared to the immediately preceding quarter, due primarily to a softness in
the flow of business from international licensees.
Gross margin for the three months ended September 30, 1997 was $ 5.9 million,
compared to $1.8 million for the three months ended September 30, 1996, an
increase of $4.1 million. Gross margin as a percentage of revenue
for the three month period ended September 30, 1997 was 49% compared to 45% for
the 1996 period. This percentage increase was primarily the result of an
increase in the amount of product sales revenue in 1997 which has a higher gross
margin contribution.
General, administrative and selling expenses for the three months ended
September 30, 1997 were $ 3.7 million compared to approximately $1.7 million for
the comparative prior year, an increase of approximately $2 million. General,
administrative and selling expenses increased as a result of the added cost of
the infrastructure required in order to support the Company's rapid growth. At
September 30, 1997, the Company had approximately 330 employees, a net increase
of approximately 180 since September 30, 1996. This growth results in increased
costs of facilities and related services, salaries, continued recruiting,
training, travel and other staffing costs. The Company believes that with
increased demand for its millennium services and products, further increases in
support staff and other related costs will continue. As a result, general,
administrative and selling expenses have been, and continue to be, expected to
increase in absolute dollars, while as a percentage of revenues, these costs
decreased to 31% for the 1997 third quarter as comparable to 42% during the
comparable prior year quarter. It is expected that these costs as a percent of
revenue will continue to gradually decrease as compared to prior year periods.
Other income, which is primarily comprised of interest income, was $96,000 for
the three months ended September 30, 1997, compared to $214,000 for the three
months ended September 30, 1996. The decrease in 1997 was primarily attributable
to the Company maintaining a higher average balance of interest income earning
investments during 1996 having then recently received stock offering proceeds.
Comparison of the Nine Month Periods Ended September 30, 1997 and 1996
Revenue for the nine months ended September 30, 1997 was $27.8 million, compared
to $9.6 million for the prior year period, a nearly threefold increase of $18.2
million. This increase was primarily attributable to a heightened awareness of
the millennium problem and demand for millennium services. Revenue from the
Knowledge Transfer group which include sales of Ardes 2k products and services,
approximated $600,000 during the nine months ended September 30, 1997; such
revenues were not significant in 1996. Licensee fees and royalty income of
approximately $2.6 million for the nine months ended September 30, 1997
increased nearly threefold over the prior year period.
Page 11 of 16
<PAGE> 12
Gross margin for the nine months ended September 30, 1997 was $13.9 million,
compared to $4.2 million for the nine months ended September 30, 1996, an
increase of approximately $9.7 million. Gross margin as a percentage
of revenue for the nine months ended September 30, 1997 was 50%
compared to 44% for the 1996 period. This percentage increase was primarily the
result of an increase in the amount of product sales revenue and licensee fees
and royalty income in 1997, which have higher gross margin contributions.
General, administrative and selling expenses for the nine months ended September
30, 1997 were $10.1 million compared to $3.9 million for the prior year, an
increase of $6.2 million. General, administrative and selling expenses increased
as a result of the added cost of the infrastructure required in order to support
the Company's rapid growth. As a result, general, administrative and selling
expenses have been, and continue to be, expected to increase in absolute
dollars, while as a percentage of revenues, these cost decreased to 36% for the
nine months ended September 30, 1997 as compared to 41% during the comparative
prior period. It is expected that these costs as a percent of revenue will
continue to gradually decrease as compared to prior year periods
Other income, which is primarily comprised of interest income, was $363,000 for
the nine months ended September 30, 1997, compared to $303,000 for the nine
months ended September 30, 1996. The increase in 1997 was primarily attributable
to the absence of interest expense which was incurred in 1996 related to
factored accounts receivable borrowings, which were repaid with proceeds from
the 1996 stock offering.
Liquidity and Capital Resources
At September 30, 1997, the Company had working capital of $15.1 million compared
to $14.2 million at December 31, 1996. Net cash used in operating activities
approximated $3.7 million for the nine months ended September 30, 1997 as
compared to $1 million for the comparable prior year period. Cash provided by
net income was more than offset by increases in accounts receivable, which
accounted for most of the use of cash by operating activities.
Net cash provided by investing activities was $4.4 million during the nine
months ended September 30, 1997 as compared to net cash used of $14.4 million
during the comparable prior year period. The increase in cash provided by
investment activities resulted from proceeds from the maturity and sale of
investments of $7.7 million, offset by purchases of equipment and furniture and
investment in product development. During the last six months of 1996 and the
first nine months of 1997, the Company invested approximately $1.2 million and
$1.4 million, respectively, in capitalized product development cost in personnel
and other related operating expenses in the development of an advanced product
based upon its current proprietary Year 2000 process. The product, Ardes 2k, is
licensed directly to clients and third-party providers, including computer and
software companies, systems integrators, and consultants.
The Company has no significant commitments for capital expenditures and believes
that based upon its current operating plan, cash generated from operations and
its cash and investments will be adequate to finance its current working capital
requirements.
Forward-Looking Statements and Associated Risks
The foregoing discussion contains certain forward-looking statements,
including, among others, anticipated trends in the Company's financial
condition and results of operation (including expected changes in the Company's
gross margin and general, administrative and selling expense). These
forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties. Actual
results could differ materially from these forward-looking statements.
Important factors to consider in evaluating such forward-looking statements
include (i) the shortage of reliable market data regarding the millennium
consulting market; (ii) changes in external competitive market factors or in
the Company's internal budgeting process which might impact trends in the
Company's results of operations; (iii) unanticipated working capital or other
cash requirements; (iv) changes in the Company's business strategy or an
inability to execute its strategy due to unanticipated changes in the
millennium consulting market; and (v) various competitive factors that may
prevent the Company from competing successfully in the marketplace. In view of
these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this Quarterly Report on Form 10-QSB
will in fact transpire.
Page 12 of 16
<PAGE> 13
Item 6 - Exhibits and reports on Form 8-K
(a) The following exhibits are filed as a part of this report:
Exhibit No.
11. Statements re computation of per share earnings
27. Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter ended
September 30, 1997.
The Company filed a Current Report on Form 8-K dated October 30, 1997 regarding
the acquisition of Pyramid Information Systems, Inc.
Page 13 of 16
<PAGE> 14
SIGNATURE
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.
Data Dimensions, Inc.
(Registrant)
November 14, 1997 By: /s/ Larry W. Martin
--------------------------------------------------
Date Larry W. Martin, President and Chief Executive Officer
(Acting Principal Financial and Accounting Officer)
Page 14 of 16
<PAGE> 1
EXHIBIT 11
DATA DIMENSIONS, INC.
CALCULATIONS OF NET INCOME PER SHARE
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Actual weighted average shares
outstanding for period 11,978 11,331 11,708 9,729
Dilutive common stock options using the
treasury stock method 354 462 351 456
------- ------- ------- -------
Total shares used in per share
calculations 12,332 11,793(1) 12,059 10,185(1)
======= ======= ======= =======
Net income $ 1,359 $ 211 $ 2,454 $ 349
======= ======= ======= =======
Net income per share (2) $ 0.11 $ 0.02(1) $ 0.20 $ 0.03(1)
======= ======= ======= =======
</TABLE>
(1) Adjusted to give effect to a 3 for 1 stock split effective March 20, 1997.
(2) Fully diluted earnings per share does not differ by more than three percent
from primary earnings per share.
Page 15 of 16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,765
<SECURITIES> 986
<RECEIVABLES> 13,065
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,457
<PP&E> 1,881
<DEPRECIATION> 408
<TOTAL-ASSETS> 24,614
<CURRENT-LIABILITIES> 4,345
<BONDS> 0
0
0
<COMMON> 18,421
<OTHER-SE> 1,848
<TOTAL-LIABILITY-AND-EQUITY> 24,614
<SALES> 12,042
<TOTAL-REVENUES> 12,042
<CGS> 0
<TOTAL-COSTS> 6,134
<OTHER-EXPENSES> 3,695
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,309
<INCOME-TAX> 950
<INCOME-CONTINUING> 1,359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,359
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
