SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 3, 1995
INAV Travel Corporation
(Exact name of registrant as specified in its charter)
Colorado 0-11808 59-2219994
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
2225 E. Randol Mill Road, Suite 305 Arlington, Texas 76011
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 633-9400
<PAGE>
Item 2. Acquisition or Disposition of Assets
a) ACQUISITION OF ASSETS. On August 3, 1995, INAV Travel Corporation, through
its subsidiary Santiago Data Systems, a Nevada corporation ("Santiago
Nevada"), acquired the assets and business of Santiago Data Systems, Inc.,
a California corporation ("Santiago California"), by means of an Asset
Purchase Agreement.
b) ASSETS AND "BUSINESS" INVOLVED IN THE ACQUISITION. Seller (Santiago
California) sold, transferred and conveyed to Purchaser (Santiago Nevada)
certain assets rights, benefits, contracts agreements and leases, etc. Such
assets include software source code and libraries owned or licensed by
Seller, computer equipment, furniture, customer and prospect lists and
accounts receivable as of July 31, 1995. Also included were assigned
commitments with vendors and processors, as well as proprietary rights to
Santiago California's seven trade-marked products. Such assets will be used
by Purchaser in the business for much the same purposes as previously
utilized by the Seller. Santiago is a developer and marketer of medical and
dental automated practice management software and automated information
management services. Santiago markets both directly to health care
providers and through its network of independent billing centers who market
the Santiago products and provide billing and other services to their
clients.
c) CONSIDERATION AND SOURCES OF FUNDS. Consideration for the above transaction
was as follows: 1) forgiveness of $200,000 of loans previously advanced to
Seller by Purchaser, 2) payment of $529,000 to Seller in 61 installments,
3) payment of $240,000 to unsecured lenders in 12 monthly installments, 4)
assumption of accounts payable in the amount of $95,000, 5) assump- tion of
an obligation to Tom Banks of $55,426 and 6) assumption of an obligation to
AST Research Property Lease Settlement Agreement in the amount of $91,000.
Purchaser intends to satisfy the above-listed financial requirements and
obligations from internally generated funds from its INAV medical
receivables brokerage business and funds generated by the Santiago business
during the payment periods involved. If necessary, additional funds would
be sought from loans and/or equity funding.
The consideration paid for the assets and business of the Seller was mainly
based on 1) Seller's existing debt obligations, 2) obligations to unsecured
lenders, payables and others, 3) and the revenue generating nature of the
business and size of the customer base, as opposed to the Seller's history
of financial performance.
RELATIONSHIPS. Purchaser agreed to purchase the above-described business
and assets from Seller through its Board of Directors and key shareholders.
Thomas Banks, not a Key shareholder of Seller, was president and a director
of Seller. He is also president of Santiago Nevada, and such relationship
was duly notified to Seller's shareholders, Board of Directors, and noted
in Seller's Shareholder Resolution. Mr. Banks will continue as an employee
of Purchaser as president and a director of the Santiago subsidiary. Mr.
Banks also has the right to become the owner of 25 percent of the stock of
the Purchaser's Santiago subsidiary, under the terms of resolutions
approved in connection with the organizational meeting of Purchaser's
Santiago subsidiary on May 18, 1994. An agreement is in place whereby Banks
may exchange his right of ownership in the subsidiary for 300,000 post
split shares of INAV, or its successor.
2
<PAGE>
Item 7. Financial Statements and Exhibits.
It is impracticable to provide the required financial statements for the
acquired business at the time this report on Form 8-K is filed. Such financial
statements will be filed as soon as practicable.
a. Exhibits.
The following is a list of exhibits filed as part of this Current
Report on Form 8-K.
Exhibit
Number Description of Exhibit
- - ------ ----------------------
2.1 Asset Purchase Agreement dated as of August 1, 1995, by and between
Santiago Data Systems, Inc., a California corporation and Santiago Data
Systems, Inc., a Nevada corporation.
2.2 Pro forma Financial Statement dated December 31, 1994 and July 31, 1995.
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 hereunto duly authorized.
INAV Travel Corporation
Date: May 16, 1996 /s/ Scott A. Haire
-----------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
3
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- - ------ ----------------------
2.1 Asset Purchase Agreement dated as of August 1, 1995, by and between
Santiago Data Systems, Inc., a California corporation and Santiago Data
Systems, Inc., a Nevada Corporation.
2.2 Pro forma Financial Statement dated December 31, 1994 and July 31, 1995.
4
<PAGE>
Exhibit 2.1
5
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), is dated as of August 1,
1995 and is by and between Santiago Data Systems, Inc., a California corporation
("Seller"), and Santiago Data Systems, Inc. (formerly SDS, Inc.), a Nevada
corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, certain
assets of Seller as more specifically set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and convenants herein contained, and on the terms and subject to the conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Assets" shall mean, with respect to Seller, all of the assets of
Seller listed on Schedule A attached hereto.
(b) "Closing" shall mean the closing of the transactions contemplated by
this Agreement, which shall occur on the Closing Date at such time and
place as shall be mutually agreed in writing by parties hereto.
(c) "Closing Date" shall mean the date hereof.
(d) "Purchase Price" shall have the meaning set forth in Section 2.2.
ARTICLE II
Purchase and Sale
SECTION 2.1. PURCHASE AND SALE OF ASSETS. Subject to and upon the terms and
conditions contained herein, at Closing Seller shall, transfer, assign, convey
and deliver to Purchaser, and Purchaser shall purchase, accept and acquire from
Seller, the Assets.
SECTION 2.2. PURCHASE PRICE. The total purchase price for the Assets (the
"Purchase Price") shall be (i) forgiveness of $200,000 of loans already advanced
to Seller by Purchaser; and (ii) payment of $529,000. All cash payments of the
Purchase Price shall be made in readily available funds and in U.S. dollars.
SECTION 2.3. PAYMENT OF PURCHASE PRICE. Purchaser shall pay to Seller the
cash portion of the Purchase Price pursuant to the terms of Schedule B attached
hereto.
6
<PAGE>
SECTION 2.4. ADDITIONAL TERMS.
(a) The parties hereby agree that Purchaser and Seller will enter into an
Assumption Agreement in a mutually acceptable form (the "Assumption
Agreement") whereby Seller assumes all of Purchaser's liabilities
pursuant to, certain obligations listed in Schedule C. Other than the
obligations listed therein, Purchaser shall not assume any liabilities
or obligations of Seller.
(b) Seller agrees and convenants to use all sums received as the cash
portion of the Purchase Price to the extent necessary to retire all of
Seller's obligations to the Internal Revenue Service.
ARTICLE III.
Representations and Warranties of Seller
Seller represents and warrants that the following are true and correct as
of the date hereof:
SECTION 3.1. ORGANIZATION AND GOOD STANDING; QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, with all requisite corporate power and authority
to carry on the business in which it is engaged, to own the properties it owns,
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
SECTION 3.2. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Seller of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Seller. This Agreement and each other
agreement contemplated hereby have been duly executed and delivered by Seller
and constitute legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
SECTION 3.3. NO VIOLATION. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Seller or any agreement, indenture or other instrument under which
Seller is bound or to which any of the assets are subject, or result in the
creation, imposition on continuation, except as permitted herein, of any
security interest, lien, charge or encumbrance upon any of the Assets or (ii)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over Seller or the Assets.
SECTION 3.4. CONSENTS. No consent, authorization, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of Seller.
SECTION 3.5. LITIGATION. There are no material legal actions or
administrative proceedings or investigations instituted, or to the best
knowledge of Seller threatened, against or affecting, or that could affect, the
Assets. Seller is not subject to any continuing court or administrative order,
writ, injunction or decree applicable specifically to the Assets.
7
<PAGE>
ARTICLE IV.
Representations and Warranties of Purchaser
Purchaser represents and warrants that the following are true and correct
as of the date hereof:
SECTION 4.1. ORGANIZATION AND GOOD STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
SECTION 4.2. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Purchaser of this Agreement and the other agreements contemplated
hereby, and the consummation of the transaction contemplated hereby and thereby,
have been duly authorized by Purchaser. This Agreement and each other agreement
contemplated hereby have been duly executed and delivered by Purchaser and
constitute legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
SECTION 4.3. NO VIOLATION. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Purchaser or any agreement, indenture or other instrument under which
Purchaser is bound or (ii) violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over Purchaser or the properties
or assets of Purchaser.
ARTICLE V.
Closing Deliveries
SECTION 5.1. DELIVERIES OF SELLER. In connection with the Closing, Seller
is delivering to Purchaser the following:
(a) a bill of sale conveying the Assets to Purchaser;
(b) the Assumption Agreement; and
(c) such other instrument or instruments of transfer as shall be necessary
or appropriate, as Purchaser or its counsel shall reasonably request,
to vest in Purchaser good and marketable title to the Assets.
SECTION 5.2. DELIVERIES OF PURCHASER. In connection with the Closing,
Purchaser is delivering to Seller:
(a) that portion of the Purchase Price which is payable at Closing, in
immediately available funds; and
(b) the Assumption Agreement
SECTION 5.3. FURTHER INSTRUMENTS OF TRANSFER. Following the Closing, at the
request of Purchaser, Seller shall deliver any further instruments of transfer
reasonably requested by Purchaser and take all reasonable action as may be
necessary or appropriate to vest in Purchaser good and marketable title to the
Assets.
8
<PAGE>
ARTICLE VI.
Miscellaneous
SECTION 6.1. AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
SECTION 6.2. ASSIGNMENT. Neither this agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto.
SECTION 6.3. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
SECTION 6.4. ENTIRE AGREEMENT. This Agreement, the Schedules attached
hereto and the agreements and documents contemplated hereby constitute the
entire agreement of the parties regarding the subject matter hereof, and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
SECTION 6.5. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 6.6. SURVIVAL OF REPRESENTATION, WARRANTIES AND COVENANTS. The
representations and warranties contained herein shall survive the Closing.
SECTION 6.7. COSTS, EXPENSES AND LEGAL FEES. Each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the cost and expenses (including reasonable attorneys' fees
and expenses) incurred by the other party in successfully (i) enforcing any of
the terms of this Agreement or (ii) proving that the other party breached any of
the terms of this Agreement.
SECTION 6.8. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF
LAWS) OF THE STATE OF TEXAS.
SECTION 6.9. CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
SECTION 6.10. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. SANTIAGO DATA SYSTEMS,
INC., a California corporation
9
<PAGE>
SANTIAGO DATA SYSTEMS, INC.
a California corporation
By: /s/ Tom Banks
Its: President
SANTIAGO DATA SYSTEMS, INC.
(formerly SDS, Inc.),
a Nevada corporation
By: /s/ Scott A. Haire
Its: Secretary
10
<PAGE>
Exhibit 2.2
11
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
December 31 December 31
1994 1994
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6,228 $ - $ 6,228
Trade accounts receivable, less allowance -
for accounts of $24,000 in 1993 17,491 155,929 173,420
Inventories 40,732 2,691 43,423
Notes receivable 26,520 - 26,520
Prepaid expenses and other 22,479 25,834 48,313
--------------- --------------- ---------------
Total current assets 113,450 184,454 297,904
--------------- --------------- ---------------
PROPERTY AND EQUIPMENT, NET 154,544 29,269 183,813
--------------- --------------- ---------------
OTHER ASSETS
Assets held for sale 435,000 - 435,000
Notes receivable, less current portion 228,434 - 228,434
Software development costs - - -
Patents, net of accumulated amortization of $1,784 38,641 - 38,641
Deposits 1,500 980 2,480
--------------- --------------- ---------------
Total other assets 703,575 980 704,555
--------------- --------------- ---------------
$ 971,569 $ 214,703 $ 1,186,272
=============== =============== ===============
</TABLE>
-continued-
12
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
December 31, 1994
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
December 31, December 31,
1994 1994
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Cash overdraft $ 22,023 $ (10,740) $ 11,283
Notes payable, including $440,328 and $261,750
due to related parties 709,213 473,296 1,182,509
Accounts payable 300,287 123,729 424,016
Accrued liabilities 264,294 118,636 382,930
Other liabilities 115,894 362,938 478,832
Deferred revenue - 89,722 89,722
--------------- --------------- ---------------
Total current liabilities 1,411,711 1,157,581 2,569,292
--------------- --------------- ---------------
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock; $.001 par value; 50,000,000
shares authorized; 49,485,000 shares issued 49,485 6,561,418 6,610,903
Additional paid-in capital 518,722 - 518,722
Retained earnings (deficit) (861,310) (7,504,296) (8,365,606)
Treasury stock, at cost; 4,909,577 and 57,518 -
shares, respectively (147,039) - (147,039)
--------------- --------------- ---------------
Total shareholders' equity (deficit) (440,142) (942,878) (1,383,020)
--------------- --------------- ---------------
$ 971,569 $ 214,703 $ 1,186,272
=============== =============== ===============
</TABLE>
13
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
December 31, December 31,
1994 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES
Service fee and broker income $ 927,391 $ 927,391
Smart card product sales 350,149 - $ 350,149
Software and maintenance sales 111,762 1,155,834 $ 1,267,596
Other 17,488 - $ 17,488
--------------- --------------- ---------------
Total revenues 1,406,790 1,155,834 $ 2,562,624
--------------- --------------- ---------------
COST OF REVENUES
Cost of service fees and broker income 127,552 - 127,552
Cost of smart card product sales 242,872 - 242,872
Cost of software and maintenance sales 35,300 218,827 254,127
--------------- --------------- ---------------
Total cost of revenues 405,724 218,827 624,551
--------------- --------------- ---------------
GROSS PROFIT 1,001,066 937,007 1,938,073
--------------- --------------- ---------------
OPERATING EXPENSES
Selling, general & administrative 1,848,347 1,443,725 3,292,072
Depreciation and amortization 28,585 - 28,585
Loss on write down of assets held for sale 68,294 - 68,294
Loss on disposition of assets held for sale and related 15,268 - 15,268
note receivable
--------------- --------------- ---------------
Total operating expenses 1,960,494 1,443,725 3,404,219
--------------- --------------- ---------------
INCOME (LOSS) FROM OPERATIONS (959,428) (506,718) (1,466,146)
OTHER INCOME AND EXPENSE
Interest expenses (25,947) - (25,947)
Other, net 35,848 - 35,848
--------------- --------------- ---------------
Total other income (expense) 9,901 - 9,901
--------------- --------------- ---------------
NET INCOME (LOSS) $ (949,527) $ (506,718) $ (1,456,245)
=============== =============== ===============
Income (loss) per weighted-average common share $ (0.02) $ 0.00 $ (0.02)
=============== =============== ===============
Weighted-average common shares outstanding 49,485,000 49,485,000
=============== =============== ===============
</TABLE>
14
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31, 1995
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
July 31, July 31,
1995 1995
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6,960 $ - $ 6,960
Trade accounts receivable, less allowance -
for accounts of $24,000 in 1993 1,061 33,235 34,296
Inventories - - -
Notes receivable 20,517 193,103 213,620
Prepaid expenses and other 18,147 17,788 35,935
--------------- --------------- ---------------
Total current assets 46,685 244,126 290,811
--------------- --------------- ---------------
PROPERTY AND EQUIPMENT, NET 137,188 - 137,188
--------------- --------------- ---------------
OTHER ASSETS
Assets held for sale 135,000 - 135,000
Notes receivable, less current portion 222,470 - 222,470
Software development costs - - -
Patents, net of accumulated amortization of $1,784 38,641 - 38,641
Deposits 1,500 - 1,500
--------------- --------------- ---------------
Total other assets 397,611 - 397,611
--------------- --------------- ---------------
$ 581,484 $ 244,126 $ 825,610
=============== =============== ===============
</TABLE>
-continued-
15
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
July 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
July 31, July 31,
1995 1995
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Cash overdraft $400 $46,206 $46,606
Notes payable, including $440,328 and $261,750
due to related parties 749,004 425,781 1,174,785
Accounts payable 262,873 171,625 434,498
Accrued liabilities 150,090 747,917 898,007
Other liabilities 77,262 421,345 498,607
Deferred revenue - 100,430 100,430
--------------- --------------- ---------------
Total current liabilities 1,239,629 1,913,304 3,152,933
--------------- --------------- ---------------
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock; $.001 par value; 50,000,000
shares authorized; 49,485,000 shares issued 49,485 6,561,418 6,610,903
Additional paid-in capital 518,722 - 518,722
Retained earnings (deficit) (1,079,313) (8,230,596) (9,309,909)
Treasury stock, at cost; 4,909,577 and 57,518 -
shares, respectively (147,039) - (147,039)
--------------- --------------- ---------------
Total shareholders' equity (deficit) (658,145) (1,669,178) (2,327,323)
--------------- --------------- ---------------
$581,484 $244,126 $825,610
=============== =============== ===============
</TABLE>
16
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
July 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
INAV Santiago
Travel Data
Corporation Systems Pro Forma
--------------- --------------- ---------------
July 31, July 31,
1995 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES
Service fee and broker income $ 30,592 $ - $ 30,592
Software and maintenance sales 265,864 1,509,652 $ 1,775,516
Other 38,666 - $ 38,666
--------------- --------------- ---------------
Total revenues 335,122 1,509,652 $ 1,844,774
--------------- --------------- ---------------
COST OF REVENUES
Cost of service fees and broker income (145) - (145)
Cost of software and maintenance sales 107,810 152,108 259,918
--------------- --------------- ---------------
Total cost of revenues 107,665 152,108 259,773
--------------- --------------- ---------------
GROSS PROFIT 227,457 1,357,544 1,585,001
--------------- --------------- ---------------
OPERATING EXPENSES
Selling, general & administrative 267,277 1,906,674 2,173,951
Depreciation and amortization 5,076 14,240 19,316
Loss (Gain) on disposition of assets held
for resale and related note receivable 233,136 - 233,136
--------------- --------------- ---------------
Total operating expenses 505,489 1,920,914 2,426,403
--------------- --------------- ---------------
INCOME (LOSS) FROM OPERATIONS (278,032) (563,370) (841,402)
--------------- --------------- ---------------
OTHER INCOME AND EXPENSE
Interest expenses 4,905 - 4,905
Other, net 36 (800) (764)
--------------- --------------- ---------------
Total other income (expense) 4,941 (800) 4,141
--------------- --------------- ---------------
NET INCOME (LOSS) $ (282,973) $ (564,170) $ (847,143)
=============== =============== ===============
Income (loss) per weighted-average common share $ (0.02) $ 0.00 $ (0.02)
=============== =============== ===============
Weighted-average common shares outstanding 49,485,000 49,485,000
=============== =============== ===============
</TABLE>
17
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMS CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
The Pro Forma Consolidated Balance Sheet as of December 31, 1994 and Pro Forma
Statements of Operations for the year ended December 31, 1994 for INAV Travel
Corporation ("INAV") are derived from financial statements previously filed with
the securities and Exchange Commission on Form 10-KSB and from audited financial
statements contained within this document. The Pro Forma Consolidated Balance
Sheet as of December 31, 1994 and Pro Forma Statements of Operations for the
year ended December 31, 1994 for Sanitago, SDS, Inc.
("SDS") were prepared by management.
The pro forma financial information should be read in conjunction with each
Company's historical Financial Statements and Notes thereto as of and for the
years ended December 31, 1994.
The pro forma information does not purport to be indicative of the results of
operations or the financial position which would have actually been obtained of
the acquisition transactions had been consummated on the dates indicated. In
addition, the pro forma financial information does not purport to be indicative
of results of operations or financial positions that may be obtained in the
future.
18
<PAGE>
SANTIAGO DATA SYSTEMS, INC.
FINANCIAL STATEMENTS
JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
19
<PAGE>
TABLE OF CONTENTS
Page #
------
Balance Sheet - Assets 22
Balance Sheet-Liabilities and Equity 23
Statement of Operations 24
Statement of Cash Flows 25
Notes to Financial Statements 26-27
20
<PAGE>
R. ANDREW GATELY & CO.
Certified Public Accountant
To the Board of Directors &
Stockholders' of Santiago Data Systems, Inc.
We have audited the accompanying balance sheet of Santiago Data Systems, Inc. (a
California Corporation) as of June 30, 1995, and the related statements of
income, retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Company's Management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above fairly, in all
material respects, the financial position of Santiago Data Systems, Inc., as of
June 30, 1995, and results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
As discussed in Note C to the financial statements, Company's management and
stockholders' sold, on August 1, 1995, all of the Company's assets.
The accompanying financial statements have been prepared assuming that the
Company will continue is a going concern. As discussed in Note F to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency, which raise substantial doubt about its
ability to continue as a going concern. Managements plans regarding those
matters also are described in Note C. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
R. Andrew Gately & Co.
Los Alamitos, California
April 8, 1996
- - --------------------------------------------------------------------------------
5030 Katella Avenue, Suite 224. Los Alamitos, California 90720
(310) 596-2622. (714) 995-6535. FAX (310) 596-4290
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SANTIAGO DATA SYSTEMS, INC.
BALANCE SHEET
AS OF JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
ASSETS
CURRENT ASSETS
Accounts Receivables (Net of 0 Allowance) $ 40,567
Due from MedBanc 200,435
Prepaid Assets & Deposits 17,788
--------
Total Current Assets 258,790
Property Plant & Equipment
Equipment, Furniture & Fixtures 424,656
Less Accumulated Depreciation (424,656)
--------
Net Property & Equipment 0
--------
TOTAL ASSETS $ 258,790
===========
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SANTIAGO DATA SYSTEMS, INC.
BALANCE SHEET
AS OF JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Deficit in Cash $ 37,763
Accounts Payable & Accrued Liabilities 162,514
Due to Officer/Stockholder 65,447
Payroll Tax Liability (Note B & C) 747,917
Priority Service Contracts 100,430
Due to MedBanc 168,469
Note to Vendor 91,000
Notes to Stockholders' & Employees (Note D) 360,334
Accrued Interest on Notes 161,876
-------
TOTAL CURRENT LIABILITIES 1,895,750
Contingencies (Note F)
STOCKHOLDERS' EQUITY
Preferred Stock Series A, No Par Value
Authorized Shares - 20,000,000
Issued - 13,333,333 (Note E) 200,000
Preferred Stock Series B, No Par Value
Authorized Shares- 40,000,000
Issued - 4,879,623 (Note E) 243,981
Common Stock, No Par Value
Authorized Shares - 40,000,000
Issued - 14,258,771 6,117,437
DEFICIT (8,198,378)
TOTAL STOCKHOLDERS' EQUITY-DEFICIT (1,636,960)
-----------
TOTAL LIABILITIES & EQUITY $ 258,790
============
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SANTIAGO DATA SYSTEMS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
REVENUE
Sales To Customers $ 1,403,427
COST & EXPENSES
Cost of Items Sold to Customers 142,757
Advertising 75,106
Commissions 39,925
Employee Expenses 27,985
Insurance 46,575
Interest 54,462
Lease Expense 25,158
Marketing 24,142
Payroll and related expenses (Note B) 1,188,565
Postage 44,440
Rent 68,907
Telephone 94,962
Depreciation 14,240
Other 87,355
---------
Total Cost & Expenses 1,934,579
---------
Income tax expense 800
Net Loss (531,952)
Deficit - Beginning (7,666,426)
-----------
Deficit - Ending $ (8,198,378)
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SANTIAGO DATA SYSTEMS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1995
(See Accompanying Notes to Financial Statements and Accountants' Opinion)
OPERATING ACTIVITIES
Net Loss $ (531,952)
Adjustments to Revenue Net Loss to Net Cash Used
in Operating Activities:
Depreciation 14,240
CHANGES IN ASSETS & LIABILITIES
Accounts Receivable 115,362
Inventories 2,691
Due from MedBanc (200,435)
Deposits & Prepaid 8,046
Accounts Payable & Accrued liabilities 14,286
Due to Shareholders' & Employees 31,483
Payroll Tax Liability 383,812
Due to MedBanc 57,134
Priority Service Container Payable 10,708
Accrued Interest 43,240
Other 24,362
Cash Used In Operating Activities (27,023)
Cash Deficit - Beginning (10,740)
--------
Cash Deficit - Ending $ (37,763)
==========
25
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Santiago Data Systems, Inc.
Notes to Financial Statements
June 30, 1995
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Santiago Data Systems, Inc. (the "Company") primarily develops and markets
medical billing systems for use by doctors and medical billing centers. They
also offer technical support contracts to their customers. The Company provides
electronic data interchange for insurance companies and patient billings.
Basis of accounting
Revenue from products are recognized when the product is shipped to the
customers. Revenue from the technical support contracts are recognized on a
pro-rata basis over the coverage period.
Expenses and cost are recognized when incurred.
Property and equipment are stated at cost. Depreciation is being provided over
the estimated useful lives of the assets using accelerated rates.
NOTE B-PAYROLL TAXES PAYABLE
The Company is delinquent in paying $747,917 of federal and state payroll tax
liabilities which includes interest and penalties of $229,667.
Included in payroll and related expenses for the year ended June 30, 1995, are
approximately $84,000 or penalties and $17,000 of interest, charged by federal
and state taxing authorities for the above mentioned delinquencies.
NOTE C-SUBSEQUENT EVENTS
On August 1, 1995 the Company's management and stockholders' agreed to sell all
of the Company's rights, title, interest to all the business property and assets
(real and personal), assign certain commitments and trademarks, for
approximately $1.2 million. The consideration received was made up a note,
forgiveness of debt and the assumption of certain liabilities.
In conjunction with the above mentioned sale, an installment agreement was
negotiated with the Internal Revenue Service whereby the Company's federal
payroll tax liability was reduced to $377,306 which includes an amount of
$47,183 for the personal income tax liability of an officer/stockholder of the
Company. No such agreement has been reached with the California taxing
authorities.
26
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Santiago Data systems, Inc.
Notes to Financial Statements
June 30, 1995
continued
NOTE C-SUBSEQUENT EVENTS (continued)
Per the Asset Purchase Agreement, the Company agrees to use the cash proceeds
from the sale, to the extent necessary, to retire the Company's obligation to
the Internal Revenue Service.
NOTE D-UNSECURED NOTES PAYABLE TO STOCKHOLDERS' AND EMPLOYEES
Unsecured notes payable to stockholders' and employees accrue interest at 12%.
NOTE E-PREFERRED STOCK SERIES A AND B
Preferred stock series A and B shall be entitled to receive, when declared by
the Board of Directors, annual cash dividends of 9/10th of 1 cent ($0.009) per
share and $0.01 per share, respectively, in preference to and in priority over
dividends for the common stock. In the event of a liquidations, dissolution or
winding down of the Company, the holders of series A preferred stock shall be
entitled to receive 5/10ths of 1 cent ($0.005) per share and the holders of
series B preferred stock shall be entitled to receive 10 cents ($0.10) per share
out of the assets of the corporation, plus any accrued and unpaid dividends, in
preference to and in priority over dividends for the common stock.
NOTE F-CONTINGENCIES
Going Concern
As shown in the accompanying financial statement, the Company incurred a net
loss of $531,952 for the year ended June 30, 1995, and as of that date the
Company's current liabilities exceeded its current assets by $1,636,960. These
factors create an uncertainty about the Company's ability as a going concern
(See Note C). The financial statements do not include any adjustments that might
be necessary if the Company is unable to continue as a going concern.
27
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