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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 quarter June 1, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to .
Commission file number 0-12850
EDUDATA CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 13-3152648
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 N. Westlake Blvd., Suite 202, Westlake Village, CA 91362
(Address of principal executive offices)
Issuer's telephone number, including area code (805) 381-2700
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares of registrant's common stock outstanding as of
July 19, 1996: 8,746,900.
Transitional Small Business Disclosure Format Yes [ ] No [X]
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EDUDATA CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
FORM 10-QSB REPORT
JUNE 1, 1996
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C>
Item 1 Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet - June 1, 1996 3
Condensed Consolidated Statement of Operations-Thirteen Week
Period Ended June 1, 1996 4
Condensed Consolidated Statement of Shareholders' Equity-
Thirteen Week Period Ended June 1, 1996 5
Condensed Consolidated Statement of Cash Flows-Thirteen Week
Period Ended June 1, 1996 6
Notes to Interim Condensed Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis or Plan of Operation 9
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 13
(a) Exhibits 13
(b) Reports on Form 8-K 13
Signatures 14
Exhibit 11 Statement Regarding Computation of Net Income (Loss) Per Share 15
Exhibit 27 Financial Data Schedule 16
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 1, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 545,103
Accounts receivable, less allowances for bad
debts and sales returns of $28,975 482,696
Inventories 1,397,656
Prepaid expenses and other 87,358
-----------
Total current assets 2,512,813
Property and equipment, net 290,923
Other assets 35,788
-----------
Total assets $ 2,839,524
===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 1,212,744
Accrued salaries and wages 97,620
Other accrued expenses 341,203
Customer deposits 31,619
Current portion of capital lease obligations 15,505
Notes payable to related parties 302,015
-----------
Total current liabilities 2,000,706
Capital lease obligations 71,333
Other long term liabilities 13,304
-----------
Total liabilities 2,085,343
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Common stock, par value $.01 per share; 10,000,000 shares
authorized; 8,746,900 shares issued and outstanding 87,469
Paid in capital 2,331,915
Accumulated deficit (1,665,203)
-----------
Total shareholders' equity 754,181
-----------
Total liabilities and shareholders' equity $ 2,839,524
===========
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
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EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEK PERIOD ENDED JUNE 1, 1996
(Unaudited)
<TABLE>
<S> <C>
Net sales $ 3,258,631
Cost of sales (1,767,582)
-----------
Gross profit 1,491,049
Operating expenses
Selling, general and administrative expenses 1,436,336
Research and development expenses 87,625
Interest expense 7,078
-----------
Net loss $ (39,990)
===========
Net loss per common share $ (.01)
===========
Weighted average common shares outstanding 7,829,830
===========
</TABLE>
The accompanying notes are an integral part of these interim
consolidated financial statements.
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EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THIRTEEN WEEK PERIOD ENDED JUNE 1, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number of Shares Common Paid In Accumulated
Outstanding Stock Capital Deficit Total
---------------- ------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance at March 2,
1996 7,509,900 $75,099 $1,289,782 $(1,625,213) $ (260,332)
Issuance of common stock
for cash, net of
issuance costs 1,237,000 12,370 1,042,133 1,054,503
Net loss $(39,990) (39,990)
--------- ------- ---------- ----------- ----------
Balance at June 1, 1996 8,746,900 $87,469 $2,331,915 $(1,665,203) $ 754,181
========= ======= ========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
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EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEK PERIOD ENDED JUNE 1, 1996
(Unaudited)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (39,990)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 13,744
Allowances for bad debts and sales returns 696
Inventory write down 4,822
Deferred rent 675
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (434,369)
Inventories (330,393)
Prepaid expenses and other 65,627
Other assets 252
Increase (decrease) in:
Accounts payable (308,092)
Accrued expenses 214,791
Customer deposits (217,726)
-----------
Net cash used by operating activities (1,029,963)
-----------
Cash flows from investing activities:
Purchase of property and equipment (75,982)
-----------
Cash flows from financing activities:
Decrease in book overdraft (49,906)
Payment of accounts payable in excess of terms to related party (79,218)
Net proceeds from issuance of common stock 1,088,561
Proceeds from borrowings from related parties 25,000
-----------
Net cash provided by financing activities 984,437
-----------
Net decrease in cash and cash equivalents (121,508)
Cash and cash equivalents, beginning of period 666,611
-----------
Cash and cash equivalents, end of period $ 545,103
===========
Supplemental cash flow information:
Common stock issuance costs incurred
not paid for at period end $ 34,058
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
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EDUDATA CORPORATION AND SUBSIDIARIES.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEK PERIOD ENDED
JUNE 1, 1996
(Unaudited)
1. General
The accompanying unaudited interim condensed consolidated financial
statements include the accounts of Edudata Corporation and Subsidiaries (the
"Company"). They have been prepared in accordance with generally accepted
accounting principals for interim financial information and with instructions
to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principals for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair representation have been included. Operating
results for the thirteen week period ended June 1, 1996 are not necessarily
indicative of the results that may be expected for the year ending March 1,
1997. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-KSB
for the period ended March 2, 1996.
2. Summary of Significant Accounting Policies
Basis of Presentation
Since inception, the Company has incurred start-up losses and has an
accumulated consolidated deficit of approximately $1,665,203 at June 1, 1996.
The Company has funded these losses, and intends to fund possible future
losses, through offering of notes and equity and/or debt securities and
ultimately, through the attainment of positive operating cash flows. Through
the acquisition of the Company's subsidiaries, Dental/Medical Diagnostic
Systems ("DMD") and Bavarian Dental Instruments ("BDI"), by Edudata (see Note
2 to the Company's Annual Report on Form 10-KSB), the Company raised
approximately $606,000, net of issuance costs and recently completed the sale
of 1,237,000 shares of the Company's common stock for approximately
$1,055,000, net of issuance costs, through an offshore offering pursuant to
Regulation S (Note 5). The Company plans additional equity financing
offerings.
The ability of the Company to raise additional funds and ultimately achieve
positive operating cash flow is uncertain and, therefore, this raises
substantial doubt about the Company's ability to continue as a going concern.
The accompanying interim condensed consolidated financial statements have
been prepared assuming that the Company will continue as a going concern
and do not include any adjustments that might result from the outcome of
this uncertainty.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. The significant estimates made in the preparation of
the combined financial statements relate to the assessment of the carrying
value of accounts receivable, inventories and warranty provision. Actual
results could differ from those estimates.
Earnings (Loss) Per Share
Earnings (loss) per share is computed based on the weighted average number of
common shares outstanding during the periods presented and common stock
equivalent unless antidilutive.
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3. Related Party Transactions
From March 3, 1996 to June 1, 1996, the Company purchased 500 teli-cameras
and frame grabber units at an aggregate cost of $375,000 from Boston
Marketing, a related party. Amounts payable to Boston Marketing at June 1,
1996 totaled $380,827 and are included in accounts payable. Through July 18,
1996, an additional 400 camera and frame grabber circuitry units have been
purchased from Boston Marketing at an aggregate cost of $300,000. Subsequent
to June 1, 1996, payments totaling approximately $225,000 have been made to
Boston Marketing.
On April 11, 1996 Boston Marketing loaned the Company $25,000 in exchange for
a promissory note that bears interest at 6% per annum and is due within six
months.
4. Inventories
Inventories at June 1, 1996 consisted of the following:
<TABLE>
<S> <C>
Raw materials $ 493,141
Work in process 439,642
Finished goods 464,873
----------
Total $1,397,656
==========
</TABLE>
Finished goods inventory included $ 146,555 of dental burs.
5. Capital Transactions
On May 30, 1996, the Company completed the sale of a total of 1,237,000
shares of its common stock to six foreign investors pursuant to Regulation S
of the Securities Act of 1933, as amended. Each share was sold at a price of
$.88 per share and, consequently, the Company raised approximately $1,055,000
from the sales, net of related expenses of approximately $34,000.
On March 5, 1996, the Company issued options to purchase 15,000 shares of
common stock to each of the four new board members and 120,000 options to
purchase common shares to an individual for services in connection with the
acquisition of DMD and BDI. All options are exercisable at $.30 per share and
expire on March 4, 2001. In April 1996, the Company granted 395,000 stock
options to employees and independent regional sales representatives. These
options vest over five years, are exercisable at $1 per share and expire in
2006.
On July 2, 1996, the Company modified the vesting period and expiration date
on 275,000 options granted to Company employees on April 1996. These options
have been modified so that they are now fully vested, rather than over five
years, and expire in 2001, rather than 2006. The exercise price of the
options remain $1.00 per share.
6. Advertising and Promotion Expense
Total advertising and promotion expense incurred for the period from March 3,
1996 to June 1, 1996 was $371,802.
7. Income Taxes
The difference between the federal statutory tax rate of 34% and the
Company's effective tax rate of 0% is the result of incurring losses from
March 3, 1996 to June 1, 1996 without current tax benefit.
As of March 2, 1996, the Company had net operating loss carryforwards for
federal purposes of approximately $1,928,000. The majority of these net
operating loss carryforwards expire between 1999 and 2006. The utilization
of net operating loss carryforwards may be limited under the provisions of
Internal Revenue Code Section 382 and are subject to various complex tax
rules and regulation which maybe subject to varying interpretations.
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Item 2. - Management's Discussion and Analysis or Plan of Operation
Introduction
This discussion summarizes the significant factors affecting the consolidated
operating results, financial condition and liquidity/cash flows of the Company
for the thirteen week period ended June 1, 1996. This discussion should be read
in conjunction with the financial statements and notes thereto, included in this
Report on Form 10-QSB and the Company's financial statements and notes thereto,
included in the Company's Annual Report on From 10-KSB for the period ended
March 2, 1996. The statements contained in this Item 2 are based on current
expectations. The statements are, in part, forward-looking and actual results
may differ materially.
As more fully described in the Company's Annual Report on Form 10-KSB for the
period ended March 2, 1996, the Company purchased 100% of the outstanding member
interests of Dental/Medical Diagnostic Systems, LLC ("DMD") and the capital of
Bavarian Dental Instruments, Inc. ("BDI"). Immediately subsequent to the
transaction, the former members of DMD and shareholders of BDI owned
approximately 66.7% of Edudata's outstanding common stock and management control
of Edudata was transferred to the former management of DMD and BDI. Accordingly,
for accounting purposes the acquisition was treated as a recapitalization of DMD
and BDI with DMD and BDI combined as the acquiror (reverse acquisition). As a
result, the combined historical financial statements of DMD and BDI became the
financial statements of Edudata. Since both DMD and BDI were only formed in
October and November of 1995, and since the historical combined financial
statements of DMD and BDI became the financial statements of Edudata, there is
no comparable financial information for the comparable period of the preceding
fiscal year.
DMD was formed in October 1995 and has been primarily involved in designing,
developing, manufacturing and marketing the TeliCam Intraoral Camera Systems
(the "TeliCam Systems"). The first shipments to customers of the TeliCam Systems
commenced in early February 1996.
BDI was formed in November 1995 and has been primarily involved in negotiating
distribution agreements to import from Russia and to distribute and market
dental burs in the United States and elsewhere. The first sales of burs
commenced in early March 1996. However, on July 9, 1996, the Company determined
to discontinue the dental bur product line. The Company intends to either sell
the dental bur product line and/or liquidate the remaining finished goods. The
Company is in the process of identifying qualified buyers of the business and is
continuing to sell the remaining dental bur inventory.
Because of the limited history of the Company's operations and because the
Company anticipates increased sales of its TeliCam Systems business, the results
of operations for the period presented is not indicative of future results.
Results of Operations
For the thirteen week period ended June 1, 1996 ("current period"), total net
sales for the Company's two product lines, TeliCam intraoral camera systems and
dental burs, amounted to $3,258,631. Total cost of sales amounted to $1,767,582,
or 54% of net sales. Gross margin for both product lines totaled $1,491,049 or
46% of net sales. Selling, general and administrative expenses related to both
product lines totaled $1,436,336. Research and development expenses and interest
expense totaled $87,625 and $7,078, respectively. For the current period,
operating profits before interest expense relating to the TeliCam intraoral
camera systems product line totaled $136,267. Operating losses before interest
expense relating to the dental bur product line totaled ($169,179) in the
current period. On a consolidated basis the net loss for the current period
totaled ($39,990) or ($.01) per share.
TeliCam Intraoral Camera Systems Product Line:
Sales: Net sales for the current period totaled $3,137,357 and primarily relate
to sales of the Company's TeliCam Systems. Net sales have increased in the
current period as compared with the period from inception (October 23, 1995) to
March 2, 1996 (the "prior period") due to increased orders, production and
shipments. As the
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Company's business continues to expand, sales are expected to increase, however,
sales of the Company's TeliCam Systems in the second quarter of fiscal 1997 may
be impacted by seasonal decreases in sales which are expected to occur in the
summer months.
Cost of Sales: Cost of sales relating to the TeliCam Systems and related
products totaled $1,735,858 for the current period, or 55% of sales. The cost of
sales include direct costs of production, including raw materials, labor and
overhead. Cost of sales have increased due to the increase in TeliCam Systems
shipments. However, cost of sales as a percentage of net sales has decreased as
compared with the prior period due to decreased raw material costs, improvements
in production efficiencies, absorption of fixed costs over a larger production
volume and reduced expenses relating to camera modifications.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses relating to the TeliCam Systems product line totaled
$1,177,607 for the current period. These expenses relate to the enhancement and
execution of the Company's business plan, administering the continuing design,
development, manufacture and marketing of the Company's camera systems and
include the following: advertising and promotion expenses totaled $239,428
relating to trade show fees, trade magazine advertising and direct mail
promotions; travel expenses relating to attendance at trade shows totaled
$51,687; wages and benefits totaled $288,958 relating to sales and production
administration, marketing, sales and customer support staff and finance and
accounting personnel; commissions resulting from the sales of the intraoral
dental camera systems totaled $382,290; professional and consulting fees
relating to general corporate legal and financial matters totaled $41,507; rent
and utilities supporting the sales and administration activities amounted to
$38,784; and other general and administrative expenses totaled $134,953. These
expenses are expected to increase in future periods due to the need for
additional support functions as the Company's sales increase.
Research and Development Expenses: Research and development expenses relating to
the TeliCam Systems totaled $87,625 in the current period and relate to direct
expenses of ongoing design and development of enhancements to the Company's
camera system. These expenses are comprised of wages and benefits, design and
development fees, and raw material used in the development of prototypes. These
expenses are expected to continue in future periods.
Dental Bur Product Line:
Due to lower than expected dental bur sales and less than anticipated synergy
with the TeliCam Systems product line, on July 9, 1996, the Company determined
to discontinue its dental bur product line. The Company intends to either sell
the dental bur product line and/or liquidate the remaining inventory. The
Company is currently in the process of identifying qualified buyers of this
product line and is continuing to sell its remaining finished goods. Remaining
assets and liabilities relating to this product line primarily consist of
approximately $174,000 of finished goods inventory and $30,000 of accounts
payable and accrued expenses. No material loss, if any, is expected from the
disposal of this product line or liquidation of the remaining finished goods,
although no assurance can be made that this will not occur.
Sales: Dental bur net sales in the current period amounted to $121,274. Net
sales of dental burs increased in the current period as compared with the prior
period due to commencement of dental bur sales in March 1996. As previously
discussed, since the Company decided to discontinue the dental burs product
line, sales from dental burs will decrease in future periods.
Cost of Sales: Cost of sales relating to the sales of dental burs totaled
$31,724 in the current period, or 26% of net sales, and include dental bur
product costs. These expenses have increased in the current period as compared
with the prior period due to increased sales. Cost of sales is expected to
decrease in future periods as sales decline.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses relating to the dental bur business totaled $258,729 in
the current period. These expenses relate the importing, distribution, marketing
and selling the dental bur product. Expenses for the current period included the
following: advertising and promotion expenses totaled $131,159 relating to
trade shows fees, trade magazine advertising and direct mail promotion;
commissions on dental bus sales totaled $19,458; wages and benefits relating to
the administration, marketing, selling, distribution, accounting and finance
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functions totaled $49,830; related rent and utilities expenses totaled $20,933;
and other expenses totaled $37,349. These expense will decrease in future
periods as this product line is discontinued.
Interest Expense
Interest expense totaled $7,078 in the current period and related to interest on
the notes payable to related parties and lease obligations. Interest expense is
expected to continue at this level in future periods.
Capital Resources and Liquidity
For the current period, the Company used net cash in operating activities of
$1,029,963. Accounts receivable increased $434,369 due to the increase in
intraoral dental cameras sales in the current period. Inventory levels increased
$330,393 in anticipation of increased sales and production levels. Accounts
payable was paid down by $308,092 and customer deposits decreased $217,726 due
to shipments of product. These increases in working capital were partially
financed by accrued liabilities which increased $214,791.
Capital expenditures totaled $75,982, in the current period and related to
purchase of additional computer equipment to support the administrative and
production functions of the Company and payment of capital lease obligations and
accounts payable relating to equipment purchase.
Bank overdrafts decreased in the current period by $49,906 and $79,218 of
accounts payable in excess of terms were paid to a related party. These cash
outflows were primarily financed through the sale of 1,237,000 shares of common
stock to foreign investors which raised approximately $1,055,000, net of
issuance costs and issuance of a note totaling $25,000 to a related party.
The Company needs additional cash to continue to pay down its current
liabilities and to finance increases in accounts receivable and inventory
necessary to support anticipated increased sales levels in its TeliCam Systems
business. The Company believes that funds available from operations and the
ability to raise funds through additional sales of equity and/or debt securities
will be adequate to finance its operations and meet its obligations. There can
be no assurance, however, that operations and/or efforts to raise funds through
the sale of its securities will provide adequate cash or that such capital will
be available at terms acceptable to the Company, or at all.
Seasonality
It is expected that the Company's business will be moderately seasonal, with
lower sales in the summer months.
New Accounting Pronouncements
The FASB recently issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), which is effective for
financial statements for fiscal years beginning after December 15, 1995. SFAS
123 establishes new financial accounting and reporting standards for stock-based
compensation plans. Entities will be allowed to measure compensation cost for
stock-based compensation under SFAS 123 or APB Opinion No. 25, "Accounting for
Stock Issued to Employees". Entities electing to remain with the accounting
provisions of APB Opinion No. 25 will be required to make pro forma disclosure
of net income and earnings per share as if the provisions of SFAS 123 had been
applied. The Company is in the process of evaluating SFAS 123. The potential
impact on the Company by adopting the new standard has not been quantified at
this time. The Company is required to implement SFAS 123 in fiscal 1997.
Risk Issues and Uncertainties
The statements contained herein are based on current expectations. These
statements are forward looking, and actual results may differ materially. While
the management of Edudata is optimistic about the Company's long-term prospects,
the following issues and uncertainties, among others, should be considered in
evaluating its growth outlook.
Technological Change: Management believes that the TeliCam System is the only
intraoral camera presently capable of capturing and displaying images without
the use of a printer, unlike other systems. However, in this period of rapid
technological change, competitors may develop systems that could impact the
marketplace's acceptance of the TeliCam System.
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Customer Acceptance: The Company is in the early stages of marketing the TeliCam
System product through DMD. As such, the degree to which the market will accept
and purchase these products is unknown. Accordingly, the Company's performance
and revenue will be impacted depending upon the marketplace acceptance of these
products. While the Company has tested the TeliCam System, user acceptance and
market penetration rates ultimately dictate the success of the marketing efforts
of these products.
Prices: Future prices that the Company is able to obtain for its products may
increase or decrease from current levels depending upon competitive market or
cost factors.
Intellectual Property Rights: While the Company does not own the patents, DMD
holds the exclusive worldwide rights to market the TeliCam and Frame Grabber
Circuitry (#CS6110 NTSC-PAL) to the dental market and has the rights to use the
"TeliCam" trademark through an agreement with Boston Marketing. The Company also
holds the exclusive rights to market and sell JV "Dentomal" and NPO "ALTECH"
manufactured dental burs in sixteen North and South American countries,
including the United States and Canada, for a period of three (3) years that
began in December, 1995. However, the Company may sell the dental bur rights,
along with the dental bur product line as discussed above. Nevertheless, there
can be no assurance that these efforts to protect these agreements and property
rights will be successful.
Competition: There are many companies that compete in the intraoral camera
market. The Company believes that the TeliCam Systems offered by it are superior
to competing products currently being marketed to the dental industry at the
current price points. Several of the companies with which the Company competes
are better financed and have better resources than the Company. There can be no
assurance that competitive pressures will not result in price reductions or that
other developments in the markets will have an adverse effect on the Company.
Suppliers: The Company purchases the non-proprietary hardware components
included as part of its TeliCam System from outside sources. Except for the CCU
processor, an important system component, which is purchased from a single
supplier under an agreement with Boston Marketing, discussed above, other key
components are available from a limited number of suppliers. Although there are
a limited number of suppliers of these key component parts, management believes
that other suppliers could be found to provide similar components on comparable
terms. However, changes in key suppliers could cause delays in manufacturing and
distribution of products and a possible loss in sales which could adversely
affect future operating results.
Disposition of the Dental Bur Product Line: On July 9, 1996, the Company
determined to discontinue its dental bur product line. The Company intends to
either sell the dental bur product line and/or liquidate the remaining finished
goods. Although the Company does not expect a loss from the disposition, there
can be no assurance that this will not occur.
Conflict of Interests: The Company's Executive Vice President, Secretary and
Director, Hiroki Umezaki, is also an owner of Boston Marketing. As described
more fully in Item 12 in the Company's Annual Report on Form 10-KSB for the
period ended March 2, 1996, the Company has entered into agreements with Boston
Marketing with respect to the TeliCam System and Boston Marketing has loaned
money to the Company.
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PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(3) Exhibits:
(3)(i) Certificate of Incorporation and by-laws.*
(3)(ii) Certificate of Amendment to Certificate of Incorporation.**
(4)(b) Stock Appreciation Rights Plan.*
(10.1) The Contribution Agreement dated February 29, 1996 by and between
the Company and DMD.***
(10.2) Contribution Agreement dated February 29, 1996 by and between the
Company and BDI.***
(10.3) Letter of Authorization and Declaration of Exclusive Rights by JV
"DENTOMAL" to BDI dated December 25, 1995.***
(10.4) Letter of Authorization dated January 3, 1996 and Declaration of
Exclusive Rights dated December 21, 1995 by NPO "ALTECH" to BDI.***
(10.5) Agreement by and between DMD and Boston Marketing Company, Ltd.
dated February 1, 1996***
(11) Statement re: Computation of earnings per share.****
(27) Financial Data Schedule.****
(b) Reports on Form 8-K
On March 17, 1996, the Company filed a report on Form 8-K, dated March
1, 1996 regarding the acquisition of DMD and BDI.
On May 15 and 20, 1996, the Company filed an amendment to the Form 8-K
dated March 1, 1996 to submit the required financial statements regarding the
acquisition of DMD and BDI.
On May 31, 1996, the Company filed a Form 8-K, dated May 20, 1996
disclosing the Company's change in year end.
* Incorporated by reference to Exhibits 3(a) and 3(b) to Registrant's
Registration Statement on Form S-1 (File No. 2-88997)
** Incorporated by reference to Exhibit 3(b) to Registrant's Annual Report on
Form 10-K for the fiscal year ended July 31, 1987.
*** Incorporated by reference to the exhibits to Registrant's Report on Form
8-K, dated March 1, 1996.
**** Included herewith.
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Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
duly caused this report to be signed on behalf by the undersigned, thereto duly
authorized.
Edudata Corporation
Dated July 22, 1996 By: /s/ Robert H. Gurevitch
---------------------------
Robert H. Gurevitch
Chairman of the Board and Chief
Executive Officer
14
<PAGE> 1
Edudata Corporation and Subsidiaries
For the Thirteen Week Period Ended June 1, 1996
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
NET INCOME PER SHARE WAS For the Thirteen Week Period Ended
CALCULATED AS FOLLOWS: June 1, 1996
<S> <C>
Primary:
Net Income (loss) $ (39,990)
Weighted average common shares outstanding 7,829,830
Incremental shares under stock options
computed under the treasury stock method
using the average market price of the issuer's
common stock during the periods --
Weighted average common and common stock
equivalent shares outstanding 7,829,830
Net income (loss) per share $ (.01)
Fully diluted:
Net income (loss) $ (39,990)
Weighted average common shares outstanding 7,829,830
Incremental shares under the stock options
computed under the treasury stock method using
the market price of the issuer's common stock
at the end of the period if higher than the
average market price --
Weighted average common and common
equivalent shares outstanding 7,829,830
Net Income (loss) per share $ (.01)
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF EDUDATA CORPORATION AS OF AND FOR THE
THIRTEEN WEEK PERIOD ENDED JUNE 1, 1996 INCLUDED IN THIS REPORT ON FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-02-1996
<PERIOD-START> MAR-03-1996
<PERIOD-END> JUN-01-1996
<EXCHANGE-RATE> 1
<CASH> 545,103
<SECURITIES> 0
<RECEIVABLES> 482,696
<ALLOWANCES> 28,280
<INVENTORY> 1,397,656
<CURRENT-ASSETS> 2,512,813
<PP&E> 290,923
<DEPRECIATION> 35,788
<TOTAL-ASSETS> 2,839,524
<CURRENT-LIABILITIES> 2,000,706
<BONDS> 0
0
0
<COMMON> 87,469
<OTHER-SE> 2,331,915
<TOTAL-LIABILITY-AND-EQUITY> 2,839,524
<SALES> 3,258,631
<TOTAL-REVENUES> 3,258,631
<CGS> 1,767,582
<TOTAL-COSTS> 1,767,582
<OTHER-EXPENSES> 1,523,961
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,078
<INCOME-PRETAX> (39,990)
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,990)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,990)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
