U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File No. 0-11808
INAV TRAVEL CORPORATION
Colorado 59-2219994
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2225 E. Randol Mill Road - Suite 305
Arlington, Texas 76011-6306
(817) 633-9400
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for 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 [ ] No [X]
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [X] No [ ]
As of May 15, 1994, 49,485,000 shares of the Issuer's $.001 par value common
stock were outstanding.
Transitional Small Business Disclosure Format
Yes [ ] No [x]
<PAGE>
INAV TRAVEL CORPORATION
Form 10-QSB
Quarter Ended March 31, 1996
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
Item 1 - Financial Statements
Consolidated Balance Sheet
March 31, 1996 (Unaudited) 3-4
Consolidated Statements of Operations -
for the Three Months ended March 31, 1996
(Unaudited) 5
Consolidated Statements of Cash Flows
for the Three Months ended March 31, 1996
(Unaudited) 6-7
Notes to Consolidated Financial Statements 8
Item 2 - Management's Discussion
and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
Item 5 - Other Information 9
Item 6 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 10
SIGNATURES 10
2
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 1996
(UNAUDITED)
ASSETS
------
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 23,000 $ 36,535
Trade accounts receivable 121,581 59,788
Notes receivable 9,000 -
Total current assets 153,581 96,323
------------ -----------
PROPERTY AND EQUIPMENT, NET 28,564 23,839
------------ -----------
OTHER ASSETS
Goodwill 947,528 956,045
Software development costs 90,158 51,879
Deposits 18,488 17,788
Total other assets 1,056,174 1,025,712
------------ -----------
$ 1,238,319 $ 1,145,874
============ ===========
</TABLE>
- Continued -
3
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (continued)
March 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, Dec. 31,
1995 1996
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Bank Overdraft $ 15,339 $ 29,616
Notes Payable, including $38,214 and $130,172 respectively,
due to related parties 238,495 397,741
Accounts payable 145,071 177,266
Accrued liabilities 247,294 142,754
Other liabilities 177,317 527,350
Deferred revenue 112,156 160,878
-------------- -----------
Total current liabilities 935,672 1,435,605
-------------- -----------
LONG TERM LIABILITIES
Note Payable 1,164,898 710,898
Other liabilities 130,000 130,000
Total long term liabilities 1,294,898 840,898
SHAREHOLDERS' EQUITY
Common stock .001 par value; 50,000,000 shares
authorized; 49,485,000 shares issued 49,485 49,485
Additional paid-in capital 518,720 518,722
Retained Earnings (deficit) (1,478,417) (1,551,797)
Treasury stock, at cost; 4,909,577and 57,518 shares, respectively (102,039) (147,039)
-------------- ------------
Total shareholders' equity (deficit) (992,251) (1,130,631)
-------------- ------------
$ 1,238,319 $ 1,145,874
============== ============
</TABLE>
4
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED 3/31/96 ENDED 3/31/95
------------- -------------
<S> <C> <C>
REVENUES
Service fee & broker income $ 1,816 $ 18,430
Smart card product sales - 13,997
Software & maintenance sales 603,099 54,598
Other income 30,008 5,329
------------- ------------
Total revenues 634,922 92,354
------------- ------------
COST OF REVENUES
Cost of service & broker fees - 3,204
Cost of smart card product sales - 6,898
Cost of software & maintenance 102,839 43,839
------------- ------------
Total cost of revenues 102,839 53,941
------------- ------------
GROSS PROFIT 532,083 38,414
------------- ------------
OPERATING EXPENSES
Selling, general & administrative 429,839 145,357
Depreciation and amortization 5,616 10,041
Loss (Gain) on disposition of assets held
for resale and related note receivable - 28,417
------------- ------------
Total operating expenses 435,455 183,814
------------- ------------
INCOME FROM OPERATIONS 96,628 (145,401)
------------- ------------
OTHER INCOME (EXPENSES)
Interest income(expense), net (1,038) 922
Other, net (2,211) 636
------------- ------------
Total other income(expense), net (3,249) 1,558
------------- ------------
NET INCOME BEFORE TAXES 93,379 (146,959)
PROVISION FOR INCOME TAXES - -
NET PROFIT (LOSS) $93,379 $ (146,959)
============= ============
Income per weighted-average common share $ 0.002 $ (0.01)
============= ============
Weighted-average common shares outstanding $ 49,485,000 $49,485,000
============= ============
</TABLE>
5
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLDIATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
----- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income(Loss) for the period $ 93,379 $ (690,487)
Adjustments to reconcile net income(loss) to net
cash used by operating activities:
Depreciation 5,616 129,467
Loss on write down of software 77,885
Loss on disposition and write down of assets held
for sale and related notes receivable
Gain on disposition of PC3 assets and certain 168,972
liabilities
Changes in assets and liabilities (17,944)
Trade accounts receivable (61,793)
Inventories - (3,420)
Notes receivable - 18,732
Prepaid expenses and other - 22,479
Deposits (700) 1,500
Accounts payable 32,195 (58,059)
Accrued Liabilities (104,540) (113,384)
Other Liabilities 350,033 12,456
Deferred revenues 48,722 160,878
Other 1,034 0
------------ ---------------
Net cash used by operating activities 363,946 (290,925)
------------ ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Disposal (Purchase) of property and equipment (4,725) (3,227)
Software development costs capitalized (38,279) (55,750)
Cash paid in connection with sale of PC3 - (2,580.00)
Proceeds from sale of Assets held for Sale
and related notes receivable 295,512
Collections on notes receivable (9,000) 75,000
Advances on notes receivable - -
------------ ---------------
Net cash provided (used) by investing activities (52,004) 308,955
------------ ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Receipts on notes payable 454,000 (556,854)
Principle payments on notes payable (159,246) 561,538
Increase (decrease) in cash overdraft (14,277) 7,593
Purchase of treasury stock 45,000 -
------------ ---------------
Net cash provided by financing activities 325,477 12,277
INCREASE / (DECREASE) IN CASH (13,535) 30,307
------------ ---------------
Cash at beginning of period 36,535 6,228
Cash at end of period $ 23,000 $ 36,535
============ ===============
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest $ 1,038 $ 87,427
============ ===============
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCIAL ACTIVITIES
Issuance of note payable for acquisition of assets
and certain liabilities of Santiago $ - $ 529,000
============ ===============
</TABLE>
<PAGE>
INAV TRAVEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
1. BASIS OF PRESENTATION
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although management believes the disclosures
herein are adequate to make the information presented not misleading. These
interim financial statements should be read in conjunction with the most recent
financial statements of INAV Travel Corporation included in the Company's report
on Form 10-KSB for the year ended December 31, 1995.
The interim financial information included herein is unaudited; however it
reflects all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
financial position, results of operations and cash flows for the interim period.
The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company
- -----------
INAV Travel Corporation (the "Company") is a leading provider of practice
management software and cash management resources to physicians, dentists,
chiropractors and medical billing centers. As of March 31, 1996, the Company
provides business management services to approximately 3,400 physicians,
dentists, chiropractors with over 2,300 physical locations supporting these
services.
The Company's objective is to increase the number of physician customers using
its practice management software products and through the use of a common
software platform, become an important link for the electronic exchange of
information between physician practices and connecting service providers.
Currently over 250 clients are on line to process information for financial
services through the Company's OneClaim Plus (TM) practice management system.
In the future, the Company also plans to establish Internet connections with
customers through an Internet hub set up to work in conjunction with the
practice management software. The Company's strategy for achieving this
objective is to move the Company's 3,400 existing practice management customers
to the SDS Health Network Information System, acquire new practice management
systems under the SDS Health Network Platform and provide new and enhanced
services along with related service products.
8
<PAGE>
Results of Operations
- ---------------------
This section discusses the results of operations of the Company and its
subsidiaries for the quarterly period ended March 31, 1996. Since the first of
January 1996, the Company has been able to achieve several of its goals
following the acquisition of Santiago SDS, Inc.
In the quarterly period ended March 31, 1996, revenues of $634,921 were
generated by claims servicing fees, consulting and software and maintenance
sales. In the comparable quarter in 1995, revenues were $92,354. In the second
quarter, the Company expects to release two new products involving the Internet
which may substantially increase the Company's revenues. In the third quarter,
the Company expects to introduce its Windows Practice Management Software,
which will make the Company's practice management software compatible with the
Windows operating system. Development of new product is an ongoing process.
Operating Expenses for the first quarter 1996 consisted of $102,839 for cost of
revenues and $435,455 for general and administrative expenses. In comparison,
cost of revenues were $53,940 and general and administrative expenses were
$183,814 for the first quarter in 1995. These expenses include costs associated
with the processing and servicing of medical claims, personnel, building
occupancy lease, new business and product development activities, as well as
corporate, administrative, accounting and legal expenses. Net income was $93,379
as compared to net loss of $146,959 for the first quarter 1995.
The Company is unable to measure the impact of future healthcare insurance
legislation, if any, on its medical receivables business. The short and medium
range impact of inflation on INAV's businesses is expected to be minimal.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1996, the Company had total assets of $1,238,319 with current
assets of $153,581 and property, equipment and other assets of $28,564. Total
current liabilities at March 31, 1996 were $935,672. Total long term liabilities
were $1,294,898 of which $1,164,898 consisted of loans to the Company by certain
of its officers, directors and shareholders. Net working capital at the end of
the period was ($782,091).
It is management's intent to generate sufficient cash flows to cover its normal
operating and administrative costs but these cash flows were negative in the
first quarterly period due to the cost of the Company's aggressive growth and
product development activities, payments relating to pre-existing obligations
and repayment of loans from certain officers, directors and shareholders. The
Company is actively engaging in capital expenditure programs for its product
systems, software and hardware products. The Company will attempt to enhance
cash flows from operations through sales efforts and operating efficiencies and
in addition, may attempt to sell stock or other securities through private
placement or to obtain loans in 1996 as necessary to fund the continued
development of the Company, its programs and strategic acquisitions. However,
there can be no assurance that the Company will be successful in this regard.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On January 5th, 1996, in connection with the restructuring of the Company's
liabilities, Robert T. Shaw was issued an unsecured Promissory Note in the
amount of $455,000 at 8% interest maturing in December 1997. Mr. Shaw also
purchased 4,500,000 shares of treasury stock for $45,000. The proceeds were used
to restructure short term liabilities and enhance the Company's current software
developments.
9
<PAGE>
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Exhibits-All exhibits are incorporated by reference from prior filings with
- -------- the Commission.
Financial Statements-See Item 1 for financial statements filed with this report.
- --------------------
Reports on Form 8-K - No reports were filed on Form 8K during this period.
- -------------------
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
INAV TRAVEL CORPORATION
Date: May 10, 1996 /s/ Scott A. Haire
----------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 23,000
<SECURITIES> 0
<RECEIVABLES> 121,581
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 153,581
<PP&E> 28,564
<DEPRECIATION> 5,616
<TOTAL-ASSETS> 1,238,319
<CURRENT-LIABILITIES> 935,672
<BONDS> 0
0
0
<COMMON> 49,485
<OTHER-SE> 1,478,417
<TOTAL-LIABILITY-AND-EQUITY> 1,238,319
<SALES> 603,099
<TOTAL-REVENUES> 634,922
<CGS> 102,839
<TOTAL-COSTS> 102,839
<OTHER-EXPENSES> 433,244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,038
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 634,922
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,379
<EPS-PRIMARY> 0.002
<EPS-DILUTED> 0.002
</TABLE>
