<PAGE> 1
The 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, August 31, 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
October 18,1996: 8,746,900.
Transitional Small Business Disclosure Format Yes [ ] No [ X ]
1
<PAGE> 2
EDUDATA CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
FORM 10-QSB REPORT
August 31, 1996
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1 Interim Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet-August 31, 1996 3
Condensed Consolidated Statements of Operations 4
Thirteen Week and Twenty-Six Week Periods Ended August 31, 1996
Condensed Consolidated Statement of Shareholders' Equity 5
Twenty Six Week Period Ended August 31, 1996
Condensed Consolidated Statement of Cash Flows 6
Twenty-Six Week Period Ended August 31, 1996
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 5 Other Information 13
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>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
August 31, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 133,843
Accounts receivable, less allowances for bad
debts and sales returns of $20,975 909,867
Inventories 1,532,426
Prepaid expenses and other 205,131
-----------
Total current assets 2,781,267
Property and equipment, net 351,399
Other assets 35,790
-----------
Total assets $ 3,168,456
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,600,505
Accrued salaries and wages 62,995
Other accrued expenses 263,628
Customer deposits 4,560
Income tax payable 26,000
Current portion of capital lease obligations 18,468
Notes payable to related parties 277,015
-----------
Total current liabilities 2,253,171
Capital lease obligations 71,402
Other long term liabilities 13,979
-----------
Total liabilities 2,338,552
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 (1,589,480)
-----------
Total shareholders' equity 829,904
-----------
Total liabilities and shareholders' equity $ 3,168,456
===========
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
3
<PAGE> 4
EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEK, AND TWENTY SIX WEEK PERIODS ENDED AUGUST 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Twenty Six Weeks
-------------- ----------------
<S> <C> <C>
Net sales $ 3,526,279 $ 6,784,910
Cost of sales (2,098,391) (3,865,972)
----------- -----------
Gross profit 1,427,888 2,918,938
Operating expenses
Selling, general and administrative expenses 1,247,007 2,683,343
Research and development expenses 73,676 161,301
Interest expense 5,482 12,561
----------- -----------
Income before tax 101,723 61,733
Provision for taxes on income 26,000 26,000
----------- -----------
Net income $ 75,723 $ 35,733
=========== ===========
Net income per common share $ .01 $ .00
=========== ===========
Weighted average common shares and share
equivalents outstanding 9,049,721 8,564,537
=========== ===========
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
4
<PAGE> 5
EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE TWENTY SIX WEEK PERIOD ENDED AUGUST 31, 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 income 35,733 35,733
--------- ------- ---------- ----------- ----------
Balance at August 31,
1996 8,746,900 $87,469 $2,331,915 $(1,589,480) $ 829,904
========= ======= ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
5
<PAGE> 6
EDUDATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWENTY SIX WEEK PERIOD ENDED AUGUST 31, 1996
(unaudited)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 35,733
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 34,186
Allowances for bad debts and sales returns (7,305)
Inventory write down 70,822
Deferred rent 1,351
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (853,539)
Inventories (531,163)
Prepaid expenses and other (52,146)
Other assets 252
Increase (decrease) in:
Accounts payable 62,857
Accrued expenses 136,150
Customer deposits (244,785)
Income taxes payable 26,000
-----------
Net cash used by operating activities (1,321,587)
-----------
Cash flows from investing activities:
Purchase of property and equipment (137,057)
-----------
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 1,055,000
Proceeds from borrowings from related parties 25,000
Payments on borrowings from related parties (25,000)
-----------
Net cash provided by financing activities 925,876
-----------
Net decrease in cash and cash equivalents (532,768)
Cash and cash equivalents, beginning of period 666,611
-----------
Cash and cash equivalents, end of period $ 133,843
===========
Supplemental cash flow information:
Capital lease obligation incurred $ 5,997
</TABLE>
The accompanying notes are an integral part of these interim consolidated
financial statements.
6
<PAGE> 7
EDUDATA CORPORATION AND SUBSIDIARIES.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 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 10 of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles 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, and twenty six week periods ended August 31,
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
Prior to the second quarter, the Company since inception had incurred
start-up losses and has an accumulated consolidated deficit of approximately
$1,589,480 at August 31, 1996.
The Company has funded these losses, and intends to fund possible future
losses, through the 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 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 in the first quarter of fiscal year 1997 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 consolidated 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.
7
<PAGE> 8
3. Related Party Transactions
From March 3, 1996 to August 31, 1996, 1,250 cameras and frame grabber units
at an aggregate cost of $937,500 were purchased by the Company from Boston
Marketing, a related party. Amounts payable at August 31, 1996 to Boston
Marketing totaled $412,500 and are included in accounts payable. Through
October 15, 1996, an additional 679 cameras and frame grabber circuitry units
have been purchased by the Company at an aggregate cost of $509,250.
Subsequent to August 31, 1996 payments totaling approximately $537,500 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. This note was paid in full by the Company on August 22, 1996.
4. Inventories
Inventories at August 31, 1996 consisted of the following:
<TABLE>
<S> <C>
Raw materials $ 731,600
Work in process 276,562
Finished goods 524,264
----------
Total $1,532,426
==========
</TABLE>
Finished goods inventory included $133,844 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 July 2, 1996, the Company modified the vesting period and expiration date
on 275,000 options granted in April 1996, whereby these options are fully
vested and expire in 2001.
6. Advertising and Promotion Expense
Total advertising and promotion expense incurred for the second quarter and
year to date periods ending August 31, 1996 amounted to $263,892 and
$626,979, respectively.
7. Income Taxes
The Company is accruing federal and state income taxes at the applicable
statuary rates which result in an effective tax rate of approximately 43
percent or $26,000 for the current periods. Upon further examination of the
Company's tax position following its acquisition of DMD and BDI, management
has determined that the Company's net operating losses (NOL) incurred prior
to the acquisition are not available for carryforward because management
determined that the losses were limited under the provisions of Internal
Revenue Code Section 382. The reassessment of losses available for
carryforward had no impact on previously issued financial statements because
any deferred tax assets recognized were fully offset by valuation allowances.
8
<PAGE> 9
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 and twenty six week periods ended August 31, 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. Except for the historical information
contained herein , the matters discussed in this item 2-Management's Discussion
and Analysis are forward looking statements that involve risks and uncertainties
and are based upon judgments concerning various factors that are beyond the
Company's control. See "Risk Issues and Uncertainties" below.
As more fully described in the Company's Annual Report on From 10-KSB for the
period ended March 2, 1996, on March 1, 1996 the Company purchased 100% of the
outstanding member interests of Dental/Medical Diagnostic Systems, LLC ("DMD")
and the capital stock 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 periods
of the 1996 fiscal year.
DMD was formed in October 1995 and has been primarily involved in designing,
developing, manufacturing and marketing TeliCam Intraoral Camera Systems
("TeliCam Systems"). The first shipments to customers of the TeliCam System
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. On July 9, 1996, the Company
decided to discontinue the dental bur product line. The Company intends to
either sell this 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 finished goods.
Because of the limited history of the Company's operations and because the
Company anticipates increased sales of the TeliCam Systems, the results of
operations for the period presented is not indicative of future results.
Results of Operations
For the thirteen week and twenty six week periods ended August 31, 1996
("current periods"), total net sales for the Company's two product lines
(intraoral dental cameras and dental burs) amounted to $3,526,279 and
$6,784,910, respectively. Cost of sales for both product lines totaled
$2,098,391 or 60% of net sales and $3,865,972 or 57%, respectively. Gross margin
for both product lines totaled $1,427,888, or 40% of net sales and $2,918,938 or
43%, respectively. Selling, general and administrative expenses related to both
product lines totaled $1,247,007, and $2,683,343, respectively. Research and
development expenses totaled $73,676 and $161,301, respectively for the second
quarter and the year to date. Interest expense totaled $5,482 for the quarter
and $12,561 for the year to date. For the current periods, operating profits
before interest expense relating to the intraoral camera product line totaled
$155,348 and $291,615, respectively. Operating losses before interest relating
to the dental bur product line totaled ($47,927) and ($217,106), respectively in
the current periods. On a consolidated basis the net income before tax for the
current periods totaled $101,723 and $61,733,respectively. Tax expense was
$26,000 for the current
9
<PAGE> 10
periods. This resulted in net income of $75,723 or $.01 per share for the
quarter and $35,733 or $.00 per share for the year to date.
Intraoral Dental Camera Systems Product Line:
Sales: Net sales relating the intraoral dental camera systems for the second
quarter totaled $3,462,579 and $6,599,936 for the year to date, and primarily
relate to sales of the Company's TeliCam Systems.
Cost of Sales: Cost of sales relating to intraoral dental camera systems and
related products totaled $2,058,631 for the second quarter, or 59% of sales and
$3,794,488 or 58% year to date. 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 camera shipments. The increase in the second
quarter as compared to the first quarter as a percent is primarily due to an
increase in lower margin international sales.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses relating to the intraoral dental camera systems product
line totaled $1,174,923 for the second quarter , and $2,352,530 year to date.
These expenses relate to administering the continuing design, development,
manufacture and marketing of the Company's camera systems. The expenses include
the following: advertising and promotion expenses totaling $219,833 and $451,762
, respectively for the current periods. These costs relate to trade show fees,
trade magazine advertising and direct mail promotions. Salaries and wages
totaled $283,737 and $505,183, respectively 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 $347,827 and $705,644, respectively. These
expenses are expected to increase relative to net sales 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 intraoral dental camera totaled $73,676 and $161,301, respectively in the
current periods 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 for engineering personnel, 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:
On July 9, 1996, the Company decided to discontinue its dental bur product line.
The Company intends to either sell this product line and/or liquidate the
remaining finished goods. The Company is currently in the process of identifying
qualified buyers and is continuing to sell its remaining finished goods.
Remaining assets and liabilities relating to this product line primarily consist
of approximately $133,844 of finished goods inventory and $37,792 of accounts
payable and accrued expenses. No loss is expected on the sale of this product
line or liquidation of the remaining finished goods..
Sales: Dental bur net sales in the current periods amounted to $63,700 and
$184,974, respectively. As previously discussed, since the Company decided to
discontinue the dental burs product line, sales from dental burs decreased in
the second quarter and will continue to decrease in future periods.
Cost of Sales: Cost of sales relating to the sales of dental burs totaled
$39,760 in the second quarter, or 62% of net sales, and $71,484 year to date or
39% of net sales, and included dental bur product costs. As a percent, these
costs have increased due to the discontinuance of the business.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses relating to the dental bur business totaled $71,868 and
$330,597, respectively in the current periods. These expenses relate the
importing, distribution, marketing and selling the dental bur product.. These
expenses have decreased in the second quarter and will continue to decrease in
future periods as this product line is discontinued.
10
<PAGE> 11
Capital Resources and Liquidity
For the current period, the Company used net cash in operating activities of
$1,321,587. Accounts receivable increased $853,539 to $909,867 primarily due to
the increase in intraoral dental camera sales internationally shipped in the
current period. Inventory levels increased $531,163 to $1,532,426 in
anticipation of increased sales and production levels for the cameras. Accounts
payable was increased by $ 62,857 to $1,600,505 and customer deposits decreased
$244,785 to $4,560 due to shipments of product. These increases in working
capital were partially financed by accrued liabilities which increased $136,150.
Capital expenditures totaled $137,057, in the current period and related
primarily to purchases of additional computer equipment to support the
administrative and production functions of the Company.
Bank overdrafts decreased in the current period by $49,906, Also, $79,218 of
accounts payable in excess of terms were paid to a related party. Cash on hand
at the end of the period was $133,843.
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. A note totaling $25,000 was issued and repaid 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. 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 is the only intraoral
camera presently capable of capturing and displaying images without the use of
an external freeze frame device (i.e.printer), unlike other systems. However, in
this period of rapid technological change, competitors may develop systems that
are comparable or superior to the TeliCam Systems.
Customer Acceptance: The Company is in the early stages of marketing the TeliCam
Systems products through DMD. As such, the degree to which the market will
accept and purchase these products is
11
<PAGE> 12
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. 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 and
dental bur markets. The Company believes that the TeliCam System and dental burs
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 decided
to discontinue its dental bur product line. The Company intends to either sell
this product line and/or liquidate the remaining finished goods. Although the
Company does not expect a loss on 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.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 5 - Other Information
On October 4, 1996, the Company issued two promissory notes aggregating
$250,000 to two non-affiliated investors. Each promissory note bears interest
at a rate of 10% per annum and matures (subject to the non-occurrence of
certain events of default) upon the earlier to occur (a) December 3, 1996 and
(b) the consummation of certain other capital raising events. At the option
of the holders, and under certain circumstances, the Company's promissory
notes may be exchanged for certain equity securities of the Company.
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.
13
<PAGE> 14
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 October 18,1996 By: /s/ Ronald E. Wittman
-------------------------
Ronald E. Wittman
Chief Financial Officer
14
<PAGE> 1
Edudata Corporation and Subsidiaries
For the Thirteen Week and Twenty Six Week Periods Ended August 31, 1996
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
NET INCOME PER SHARE WAS Thirteen Weeks Twenty Six Weeks
CALCULATED AS FOLLOWS: -------------- ----------------
<S> <C> <C>
Primary:
Net Income (loss) $ 75,723 $ 35,733
Weighted average common shares outstanding 8,746,900 8,288,479
Incremental shares under stock options computed
under the treasury stock method using the average
market price of the issuer's commons stock during
the period 302,821 276,058
Net income (loss) per share $ .01 $ .00
Fully diluted:
Net income (loss) $ 75,723 $ 35,733
Weighted average common shares outstanding 9,049,721 8,564,536
Incremental shares under stock options computed under
the treasury stock method using the market price of the
issuer's common stock at the end of the period of higher
than the average market price 307,407 307,407
Weighted average common and common equivalent
shares outstanding 9,054,307 8,595,886
Net Income (loss) per share $ .01 $ .00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
This schedule contains summary financial information extracted from the interim
condensed consolidated financial statements of Edudata Corporation and
Corporation as of and for the twenty six week period ended August 31, 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> 6-MOS
<FISCAL-YEAR-END> MAR-02-1996
<PERIOD-START> MAR-03-1996
<PERIOD-END> AUG-31-1996
<EXCHANGE-RATE> 1
<CASH> 133,843
<SECURITIES> 0
<RECEIVABLES> 909,867
<ALLOWANCES> 20,975
<INVENTORY> 1,532,426
<CURRENT-ASSETS> 2,781,267
<PP&E> 351,399
<DEPRECIATION> 43,405
<TOTAL-ASSETS> 3,168,456
<CURRENT-LIABILITIES> 2,253,171
<BONDS> 0
0
0
<COMMON> 87,469
<OTHER-SE> 2,331,915
<TOTAL-LIABILITY-AND-EQUITY> 3,168,456
<SALES> 6,784,910
<TOTAL-REVENUES> 6,784,910
<CGS> 3,865,972
<TOTAL-COSTS> 2,844,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,561
<INCOME-PRETAX> 61,733
<INCOME-TAX> 26,000
<INCOME-CONTINUING> 35,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,733
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
