UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KA
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
QFor the transition period from: April 1, 1995 - June 30, 1995
Commission File Number: 33-22264-FW
MARKET DATA CORP.
____________________________________________________________________
(Exact name of registrant as specified in its charter)
TEXAS 76-0252235
____________________________________________________________________
(State or other jurisdiction (I.R.S. Employer incorporation of
organization) or Identification No.)
14505 Torrey Chase Blvd., Suite 410, Houston, Texas 77014
____________________________________________________________________
(Address of principal executive offices)
(713) 586-8686
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months or for such
shorter period that the registrant was required to file such reports,
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
_____ _____
The aggregate market value of the 3,586,200 shares of common stock of
the Registrant held by non-affiliates on June 30, 1995, was
approximately $1,120,688.
On June 30, 1995, 5,589,000 shares of common stock (the Registrant's
only class of voting stock) were outstanding.
PART I
Item 1. Business
Software
During the fiscal year ending March 31, 1991, the sale of financial
information and analysis software became a material product line for
the Company. The Company continues to sell software at a discount
price; however, due to a declining market there are no plans to
expand this end of the business.
Text Service
October, 1991, the Company started the development of a new product
called Text Service. This service is a digest of today's leading
investment advisors' market analysis. The Company, in its daily
production of the Text Service, excerpts from over 100 various
investment advisors, newsletter writers, fax services and "900"
number (pay per call) advisory services.
"900" number service providers utilize pay per call technology made
available from phone companies. Our editors are permitted to excerpt
from these advisors daily to produce a "digest" format product.
This digest is broadcast daily to customers of Data Broadcasting
Corporation, Bonneville Market Information Company, Global Market
Information, Inc., and Data Transmission Network Corporation. This
product of Text Service is called MarketLine. The Company has in
place various distribution agreements with quotation service
providers to market the Company's daily Text Service. the revenue is
generally split on a 50/50 basis.
On March 24, 1993, the Company signed an agreement with Prodigy
Services Company to broadcast a Text Service to Prodigy subscribers
called The Wall Street Edge. Broadcasting of this product commenced
in April, 1993. As of June 1, 1995, Prodigy began a more aggressive
advertising / marketing campaign for the Wall Street Edge. Also in
June, Wall Street by Fax, Inc. (WSBF) a New York City based provider
of fax-on demand financial information, began advertising the
Company's financial digest, under the name Wall Street Whispers.
Licenses
The Company had a license distribution agreement with DBC in four
cities in the United States. Under the agreement, the Company
obtained a sub-carrier agreement with an FM radio station selected by
mutual agreement of DBC and the Company. The license agreement was
sold to DBC, March 31, 1994.
InfoPlan
InfoPlan International, Inc. was introduced to the Company in June
1993, as a possible acquisition candidate. The Company acquired an
option to purchase substantially all of Infoplan from it's founder
Michael J. Wing in July 1993. Additionally, the Company agreed to
advance funds to InfoPlan to reduce its short-term payables and
provide working capital. These advances were secured by the assets
of InfoPlan, including its trademark and proprietary software.
Further, Michael J. Wing, InfoPlan president, personally guaranteed
the advances.
InfoPlan was never able to produce the revenue stream that had been
projected at the time the option was granted. Additionally, InfoPlan
had combined long and short-term debt in excess of $1,000,000.
Therefore, management felt it was in the Company's best interest not
to exercise the option. Failure to collect this amount could have a
material adverse effect on the Company's financial position.
Renet
Market Data Corp, (MDC), Market Data Acquisition Corp. ("MDAC"), a
California corporation and wholly-owned subsidiary of MDC, and Renet
Financial Corporation, a California corporation, entered into a plan
and Agreement of Merger (the "Plan") on October 2, 1995, to merge
Renet with and into MDAC (the "Merger"), with Renet becoming the
surviving corporation and wholly-owned subsidiary of MDC, and MDAC
ceasing operations.
The Merger was completed on March 1, 1996, and in accordance with the
Plan: 1) each outstanding share of Renet common stock was converted
in the right to receive 0.9403555 shares of MDC's common stock; 2)
each outstanding share of Renet preferred stock was converted into
the right to receive 5.642133 shares of MDC's common stock; 3) each
option currently outstanding to purchase shares of Renet common stock
was converted into the right to purchase .9403555 shares of MDC's
common stock; and 4) Renet became a wholly owned subsidiary of MDC.
The shareholders of Renet own 66.25% of the issued and outstanding
shares of MDC following the Merger.
Renet is a franchisor of financial services to real estate
brokerages, builders, developers, financial planners and tax
preparers who want to provide access to conventional, government
backed and home equity mortgage loans to their clients. Over 175
franchisees and 200 wholesale brokers utilized Renet's mortgage
banking operations as a direct lender. Renet's access to
approximately 100 additional lenders, and a consumer finance
division, permits it to offer a broad range of products. Renet
offers VA and FHA loans, and also has direct endorsement and
automatic approval of Housing and Urban Development ("HUD") and
Veterans Administration ("VA") loans. Renet is located in Orange,
California.
No monetary consideration was exchanged in the merger. The merger
was a combination of a pooling of interests of both parties. The
exchange ratio applicable to the merger was determined through
extensive, armslength negotiations between the management of MDC and
Renet, which originated in August 1994.
Item 2. Properties
The Company presently leases approximately 2,660 square feet of
commercial space in Houston, Texas consisting of offices and storage
facilities. The current lease expires during November, 1997.
Item 3. Legal Proceedings
InfoPlan International, Inc.
On September 25, 1995, a Complaint against InfoPlan International,
Inc. and Michael J. Wing, individually, was filed in Federal Court.
Mr. Wing signed an Agreed Judgment for actual damages in the amount
of $358,394.82, attorney fees in the amount of $9,442.13, pre-
judgment interest in the amount of $6,598.39 and post-judgment
interest at the rate allowed by law. The Agreed Judgment, entered on
November 27, 1995, was final as of December 27, 1995. Mr. Wing was
notified by legal counsel, Sheinfeld, Maley & Kay, Houston, Texas, on
January 10, 1996, that MDC was prepared to abstract judgment in each
county where Mr. Wing or InfoPlan owns property, and to file a writ
of execution and bill of sale.
On February 9, 1996, Mr. Steven C. Naremore, on behalf of MDC, and
Mr. Michael J. wing, on behalf of InfoPlan, signed a Covenant Not To
Execute. On February 12, 1996, MDC received a payment from InfoPlan
in the amount of $147,000.00. The balance of principal, $211,394.82,
attorney fees, pre-judgment interest, and post judgment interest will
be paid in installments on May 31, 1996, July 31, 1996, and September
30, 1996. If InfoPlan fails to meet any of the installments, the
Agreed Judgment may be executed without notice.
In the event the Company is unable to collect the amount due from
InfoPlan, the Company believes the value of the collateral exceeds
the value of the debt.
Market Data Corp. of New York
On July 17, 1995, the Company received a proposed Settlement
Agreement from Market Data Corporation (MDC) of New York, who
previously had contacted the Company regarding a potential "name"
conflict. MDC of New York asserted that their use of the name
preceded the Company's use by a matter of months and had requested
the Company to consider a name change. On October 27, 1995, the
Settlement Agreement was accepted and signed by Steven C. Naremore,
President. The agreement provides payment to the Company of $27,000,
in two installments of $13,750 each, to cover related expenses. On
December 8, 1995, the first installment was received. Those funds
were recorded in unearned revenue and will be recognized as revenue
as the Company incurs expenses related to the name change.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fiscal year ended March 31, 1995, or the three months ended June 30,
1995.
PART II
Item 5. Market for the Company's Common Stock and Related
Stockholder Matters.
The common stock of the Company commenced trading in the over-the-
counter market on November 19, 1988. The following table sets forth,
for the periods indicated through the fiscal year ended March 31,
1995 and the three months ended June 30, 1995, the range of high and
low bid quotations for the Company's common stock as reported by a
market-maker in the Companies securities.
The quotations which appear below reflect inter-dealer prices,
without retail mark-up, mark-down or commissions and may not
represent actual transactions.
<TABLE>
<S> <C> <C>
Quarter Ended High Bid Low Bid
____________________ _________ _________
June 30, 1993 $ 1.75 $ .75
September 30, 1993 $ 1.50 $ .875
December 31, 1993 $ 1.00 $ .875
March 31, 1994 $ 1.00 $ .875
June 30, 1994 $ .875 $ .75
September 30, 1994 $ 1.25 $ .625
December 31, 1994 $ .875 $ .625
March 31, 1995 $ .75 $ .375
June 30, 1995 $ .875 $ .3125
</TABLE>
The Company has not paid any dividends on its common stock and the
Board of Directors of the Company presently intends to pursue a
policy of retaining earnings, if any, for use in the Company's
operations and to finance expansion of its business. The declaration
and payment of dividends in the future, of which there can be no
assurance, will be determined by the Board of Directors inlight of
conditions then existing, including the Company's earnings, financial
conditions, capital requirements, and other factors.
As of June 30, 1995, the company had approximately 80 shareholders of
record, which does not include shareholders whose shares are held in
street or nominee names.
Item 6. Selected Financial Data
The following summarizes certain selected financial data, which
should be read in conjunction with the Company's financial statements
and related notes and with Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere
herein. The selected financial information set forth below has been
derived from the Company's audited financial statements included in
this report, and should be read in conjunction with the financial
statements and related notes.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three
Months Year Ended March 31,
___________ ___________________________________________________________
6/30/95 1995 1994 1993 1992 1991
___________ ___________ ___________ ___________ ___________ ___________
Operation Data
Revenue $ 118,307 $ 635,015 $ 973,949 $1,018,815 $1,143,994 $ 810,503
Net Income
(loss) 268 $ (36,162) $ 343,758 $ (17,394) $ 69,821 $ 3,059
Net Income
(loss)
per share .00 $ (.01) $ .06 (.00) $ .01 .00
Cash Dividend
per share .00 .00 .00 .00 .00 .00
Weighted
average
number of
shares 5,576,520 5,562,917 5,458,333 5,120,000 5,120,000 5,063,333
Three
Months Year Ended March 31,
___________ ___________________________________________________________
6/30/95 1995 1994 1993 1992 1991
___________ ___________ ___________ ___________ ___________ ___________
Balance Sheet Data
Current
Assets $ 358,509 $ 367,881 $ 590,614 $ 95,973 $ 133,448 $ 142,540
Total
Assets $ 629,567 $ 644,481 $ 858,001 $ 260,310) $ 264,615 $ 248,411
Current
Liabilities $ 22,742 $ 46,082 $ 225,940 $ 40,507 $ 27,418 $ 81,035
Shareholders'
Equity $ 606,825 $ 598,399 $ 632,061 $ 219,803 $ 237,197 $ 167,376
Per Share
Equity $ .11 $ .11 $ .12 $ .04 $ .05 $ .03
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Introduction
This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the
Consolidated Financial Statements of the Company and the Notes
thereto on pages F-1 through F-12.
Change in Fiscal Year-end
The Company's fiscal year-end has been changed from March 31 to June
30, due to the merger with Renet Financial Corp. As a result, the
accompanying financial statements and following discussion present
results for a three month "Interim Period" from April 1, 1995 to June
30, 1995.
Liquidity and Capital Resources
During the three-month period ended June 30, 1995, the Company
experienced a net decrease in cash of $32,297. Of this amount,
$40,455 was used for Operating Activities, while $8,158 was provided
from Financing Activities. Uses of cash from Operating Activities
included an increase in accounts receivable of $21,841 and a decrease
in accounts payable of $22,711. Accounts receivable increased
because the Company did not receive Prodigy's payment for May
subscribers until July 7, 1995. Sources of cash from Financing
Activities were the result of 24,000 shares of stock issued under
Regulation S-8 as compensation for consulting services rendered. The
Company's current ratio improved from 8.0 to 1 at March 31, 1995 to
15.8 at June 30, 1995.
During the three-month period ended June 30, 1995, the Company
experienced a decrease in sales of hardware, software and text
services. These decreases contributed to the Company's negative cash
flow of $32,297.
During the year ended March 31, 1995, the Company sustained an
increase in cash of $99,919. Of this amount, an increase of $115,823
was from Operating Activities, an increase of $2,500 from Financing
Activities, and a decrease of $18,404 from Investing Activities.
Sources of cash from Operating Activities included a decrease in
Accounts Receivable of $431,319. Of this decrease $400,000 was
collected from DBC for the sale of the license agreement. Another
source of cash from Operating Activities also included a decrease in
Federal Income Tax Payable of $168,000 and accrued compensation of
$30,000. There were also increases of $89,366 in receivables from
InfoPlan, $24,161 in federal income tax receivable and $14,244 in
officer receivables.
Uses of cash from Investing Activities included an increase in note
receivable from InfoPlan in the amount of $16,563. The Company also
purchased furniture and computer equipment in the amount of $369 and
$1,472, respectively.
The only Financing Activity, an increase in cash of $2,500, was the
result of an employee exercising a stock option on April 15, 1994,
for 50,000 share of common stock.
The resources used to increase the accounts and note receivable from
InfoPlan came from the cash received for the sale of the DBC license
agreement. The decision to advance InfoPlan additional funds during
the year was based on management's discussion with Michael J. Wing,
President of Infoplan. It is management's opinion that the
collateral more than secures the debt. The Company holds an
Intellectual Property Collateral Assignment on InfoPlan.
The Company has maintained a current ratio of 1.8 to 1 in 1991; 6.3
to 1 in 1992; 2.4 to 1 in 1993, 2.6 to 1 in 1994; and 8.0 to 1 in
1995. Management hopes the current ratio to improve as no increases
in current liabilities are expected.
The capital expenditures for the next year are anticipated at
approximately $15,000. These expenditures will be for computer
systems. Funding for these expenditures will be from current
operations. For periods beyond one year, the Company anticipates
that any required expenditures can be financed from current
operations. The nature of these expenditures would be for additional
computer systems and office equipment.
In 1993, the Company held an equity position in the company,
DataSport, Inc. (DSI), at a stated cost of $36,000. This company
markets a sports information system in the same form as the QuoTrek.
Market Data was one of the marketing companies in addition to being a
stockholder. During 1994, DBC acquired all the shares of DSI. In
exchange for its 150 shares of DSI, the Company received a warrant to
purchase 9167 shares of DBC common stock at $4.61 per share. This
warrant expires December 31, 1998. At March 31, 1994, the Company
recognized a $12,000 loss on the Data Sport, Inc. investment. The
Company recognized no loss on the investment for the year ending
March 31, 1995.
Results of Operations
Three Months Ended June 30, 1995 and 1994
During the three-months ended June 30, 1995 the Company generated
revenues of $118,307, as compared to gross revenues of $214,840 for
the same period of the previous year, a decrease of 45%. The
following is an analysis of the sales and gross profit (loss) by
major product line with related changes from the same period of the
previous year.
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
6/30/95 Amount % Change 6/30/94
___________ ___________ ___________ ___________
Hardware Sales $ 3,816 $ (4,225) (52) $ 8,041
Software Sales $ 20,404 $ (82,857) (80) $ 103,261
Text Service $ 94,087 $ (9,149) (9) $ 103,236
6/30/95 Amount % Change 6/30/95
___________ ___________ ___________ ___________
Hardware Gross
Profit (Loss) $ 1,483 $ (5,353) (78) $ 6,836
Software Gross
Profit (Loss) $ 1,501 $ 5,814 135 $ (4,313)
Text Service
Gross Profit
(Loss) $ 69,876 $ (7,845) (10) $ 77,721
</TABLE>
Operating Cost decreased $88,841 for the three months ended June 30,
1995, as compared to the same period of the previous year. The
following is an analysis of the components of operating cost with
related changes from the previous year.
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
6/30/95 Amount % Change 6/30/94
___________ ___________ ___________ ___________
Cost of Product
Sold $ 1,400 $ 1,118 396 $ 282
Cost of Software
Sold $ 14,007 $ (81,306) (85) $ 95,313
Cost of Fulfillment
(including packing,
shipping, advertising,
telephone, postage,
and credit card
charges)* $ 5,830 $ (7,349) (56) $ 13,179
Cost of Text
Service $ 24,211 $ (1,304) (05) $ 25,515
Amortization of Customer
Database $ 3,297 $ 3,297
</TABLE>
* Fulfillment cost is allocated to cost of product sold and cost of
software sold based on gross sales.
Hardware Sales and Gross Profit
The Company continued to have a decrease in hardware sales and gross
profit. This decrease is due primarily to the changes in marketing
strategy of Data Broadcasting Corp. (DBC), the Company's main
supplier of hardware. As of July 1, 1993, DBC ceased using dealers
to ship merchandise. The Company now receives only a commission for
the sale of Quotrek and Signal equipment. The decrease in revenue
was due to a decrease in sales volume. The Cost of Product Sold
reflects the cost of selling DBC products. The Company maintains no
inventory of Quotrek, Signal, or Satellite equipment, but on occasion
buys back this equipment from customers for resale. This buy back
practice ceased as of June 30, 1995.
Software Sales and Gross Profit
Software sales for the three month period decreased 80%. However,
gross profit increased 135%, due to the Company's efforts to hold
fulfillment cost to a minimum. Also, advertising cost decreased
$7,065 for the three month period compared to the same period of the
previous year. The decrease in revenue was due to a decrease in
sales volume. Cost of Software Sold decreased 85% due to an 80%
decrease in software sales.
Cost of Fulfillment decreased 56% due to the decrease in hardware and
software sales, as well as, management's efforts to reduce expenses.
The largest decreases were in telephone and advertising, $2,610 and
$7,065, respectively.
Text Service and Gross Profit
In October, 1991, the Company started the development of a new
product called Text Service. This service is a digest of today's
leading investment advisors' market analysis. This digest is
broadcast daily to customers of Data Broadcasting Corporation,
Bonneville Market Information Company, Global Market Information,
Inc., and Data Transmission Network Corporation. This product of
Text Service is called MarketLine.
On March 24, 1993, the Company signed an agreement with Prodigy
Services Company to broadcast a Text Service to Prodigy subscribers
called The Wall Street Edge. Broadcasting of this product commenced
in April 1993. As of June 1, 1995, Prodigy began a more aggressive
advertising / marketing campaign for the Wall Street Edge. Also in
June, Wall Street by Fax, Inc. (WSBF) a New York City based provider
of fax-on demand financial information, began advertising the
Company's financial digest, under the name Wall Street Whispers.
Both products have incurred a decrease in sales over the past three
month period, as evidenced by a 9% and 10% decrease in revenue and
gross profit, respectively. However, this division continues to
contribute significantly to the overall gross profit of the Company.
Management anticipates text service revenues to increase as
additional opportunities in the on-line services area are explored.
At June 30, 1995, the Text Service had 3,151 subscribers, compared to
3,268 subscribers at June 30, 1994. Cost of Text Service decreased
5%. Salaries decreased from $19,596 at June 30, 1994, to $17,118 at
June 30, 1995.
The Customer Database acquired by purchase in November 1990, is being
amortized over the years.
Net Income
The Company had a net income of $268 for the three month period ended
June 30, 1995, versus net income of $906 for the same period of the
previous year. This decrease of $638 was due primarily to the
decreases in gross profit on hardware and text service sales. The
general and administrative expenses decreased from $76,348 to
$69,294, a decrease of 9%. The following is an analysis of
significant factors causing increases and decreases with related
changes from the previous year:
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
6/30/95 Amount % Change 6/30/94
___________ ___________ ___________ ___________
Salaries $ 39,180 (4,113) (10) $ 43,293
Payroll Benefits $ 6,282 (1,425) (18) $ 7,707
Office Expense $ 2,299 (1,276) (36) $ 3,575
Legal and Professional $ 8,790 2,915 50 $ 5,875
Franchise Tax $ 0 (2,753) (100) $ 2,753
</TABLE>
The increase in legal fees was due to expenses incurred for InfoPlan
collection. The decrease in salaries and payroll benefits was due to
a reduction in personnel. Franchise taxes paid in May 1995, were
accrued on March 31, 1994. Office expenses decreased due to
management's efforts to reduce expenses.
Years Ended March 31, 1995 and 1994
The revenue for the fiscal year ended March 31, 1995, was $635,015
versus $973,949 for the previous year, a decrease of 35%. The
following is an analysis of the sales and gross profit (loss) by
major product line with related changes from the previous year.
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
3/31/95 Amount % Change 3/31/94
___________ ___________ ___________ ___________
Hardware Sales $ 22,803 $ (43,390) (65) $ 66,193
Software Sales $ 226,690 $ 45,925 25 $ 180,765
License Fees $ 0 $ (324,169) (100) $ 324,169
Text Service $ 385,219 $ (7,103) (2) $ 392,322
Net Change
_______________________
3/31/95 Amount % Change 3/31/94
___________ ___________ ___________ ___________
Hardware Gross
Profit (Loss) $ 17,324 $ (17,678) (51) $ 35,002
Software Gross
Profit (Loss) $ (8,460) $ 13,324 61 $ (21,784)
License Fees Gross
Profit (Loss) $ 0 $ (174,295) (100) $ 174,295
Text Service Gross
Profit (Loss) $ 281,091 $ (7,360) (3) $ 288,451
</TABLE>
Operating Cost decreased $144,892 for the year ended March 31, 1995,
as compared to the same period of the previous year. The following
is an analysis of the components of operating cost with related
changes from the previous year:
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
3/31/95 Amount % Change 3/31/94
___________ ___________ ___________ ___________
Cost of Product
Sold $ 1,014 $ (13,530) (93) $ 14,544
Cost of Software
Sold $ 189,971 $ 30,801 19 $ 159,170
Cost of Fulfillment
(including packing,
shipping, advertising,
telephone, postage,
and credit card
charges)* $ 49,610 $ (12,046) (20) $ 61,656
Cost of License fees $ 0 $(149,874) (100) $ 149,874
Cost of Text
Service $ 104,128 $ 257 0 $ 103,871
Amortization of Customer
Database $ 13,188 $ (500) (4) $ 13,688
</TABLE>
*Fulfillment cost is allocated to cost of product sold and cost of
software sold based on gross sales.
Hardware sales and gross profit
During the year ended March 31, 1994, DBC made the decision to employ
their in house sales staff to market their own propriety hardware;
therefore, eliminating the need for third party resellers, such as
MDC. This has had a negative impact on hardware sales as evidenced
by the continued decrease in revenue. Revenue from hardware sales
was $190,215, $66,193, and $22,803 for the years ended, March 31,
1993, 1994, and 1995, respectively. The decrease in revenue was from
a decrease in sales volume.
The Cost of Product Sold reflects the cost of selling DBC products.
the Company now receives a commission for the sale of Quotrek and
Signal equipment. The Company maintains no inventory of Quotrek,
Signal or Satellite equipment, but on occasion buys back this
equipment from customers for resale. This buy back practice ceased
as of June 30, 1995.
Software sales and gross profit
Software sales for the current year were up 25%. Gross profit,
although a loss, improved 61% due to the Company's efforts to hold
fulfillment costs to a minimum. The Company has discontinued its
relationship with Sentient Software. Management decided to terminate
its relationship with Sentient Software because it proved to be
financially unsuccessful for the Company. During the years ended
March 31, 1995, and 1994, the Company incurred a gross loss of $1,577
and $12,035 respectively, on the sales of the software product. The
product required MDC personnel to provide support service after the
sale, and management felt his would have a negative impact on any
potential profits on the sale of this product. Cost of Software Sold
increased 19% due to the 25% increase in software sales.
Cost of Fulfillment decreased 20% due to management's efforts to
contain costs. There were significant decreases in telephone and
postage expenses, $8,252 and $8,881, respectively. However,
advertising increased $6,339.
License Fees and gross profit
At March 31, 1994, the Company sold its license agreements to DBC for
an initial payment of $400,000, plus a participation in the revenue,
in the markets, through March 31, 1999, not to exceed $400,000. At
March 31, 1994, the Company recognized a gain of $378,000 on this
transaction. The Company no longer receives monthly license fees.
There was no Cost of License Fees for the year ended March 31, 1995,
because the license agreement was sold to DBC March 31, 1994.
Text service and gross profit
In October, 1991, the Company started the development of a new
product called Text Service. This service is a digest of today's
leading investment advisors' market analysis. This digest is
broadcast daily to customers of Data Broadcasting Corporation,
Bonneville Market Information Company, Global Market Information,
Inc., and Data Transmission Network Corporation. This product of
Text Service is called MarketLine.
Data Broadcasting Corp. (DBC) and Data Transmission Network (DTN) are
two of the most widely known names in this niche market. DBC
represents 7.5% of the Company's annual revenue and DTN represents
3.5% of the Company's revenue. Neither entity is material to the
Company, but rather represent the two largest resellers within the
target market.
On March 24, 1993, the Company signed an agreement with Prodigy
Services Company to broadcast a Text Service to Prodigy subscribers
called The Wall Street Edge. Broadcasting of this product commenced
in April, 1993.
The Prodigy reseller / distribution agreement is material in that it
represents 4% of the Company's annual revenue. Contractually, the
Company is not permitted to disclose the terms and conditions of the
Prodigy Agreement.
Both products incurred a stagnant growth pattern over the past year,
as evidenced by a 2% and 3% decrease in revenue and gross profit,
respectively. The Text Service revenue decreased 2% for the year
ended March 31, 1995, due to a decrease in the subscriber base. At
March 31, 1995, the Text Service had 3,020 subscribers as compared to
3,600 at march 31, 1994. However, this division continues to
contribute significantly to the overall gross profit of the Company.
The overall cost of the Text Service remained relatively unchanged.
The Text Service began transmitting the report via fax, which incurs
a fee for fax transmissions. For the year ended March 31, 1995, this
cost was $2,009.
As of June 1, 1995, Prodigy began a more aggressive advertising /
marketing campaign for The Wall Street Edge. Also in June, Wall
Street by Fax, Inc. (WSBF) a New York City based provider of fax-on
demand financial information, began advertising the Company's
financial digest, under the name Wall Street Whispers.
The Company's on-line publishing activities have contributed
significantly to net income during the past year. This trend is
expected to continue as Management explores additional opportunities
in this area.
The customer database, acquired by purchase in November 1990, is
being amortized over five years.
Net Income
The Company had a net loss for the year ended March 31, 1995, of
$36,162 versus a net income of $343,758 for the previous year. This
decrease was attributed to the gain on the sale of the license
agreements recognized at March 31, 1994 and a 35% decrease in
revenue. The general and administrative expenses increased to
$331,651 from $325,727, an increase of 9%. The following is an
analysis of significant factors causing increases and decreases with
related changes from the previous year.
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
3/31/95 Amount % Change 3/31/94
___________ ___________ ___________ ___________
Legal and
Professional Fees $ 43,889 $ 27,291 164 $ 16,598
Franchise Tax $ 17,742 10,814 156 $ 6,928
Consulting Fees $ 8,160 8,160 100 $ 0
Salaries $ 167,858 (42,094) (20) $ 209,952
</TABLE>
The increase in legal fees was due to managements efforts to complete
an acquisition/merger with Renet. Franchise tax increased due to the
gain on the sale of the license agreements. Consulting fees were for
retaining Asset Allocation, Inc. to advise the board on issues
relating to acquisitions and capital raising activities, as well as
investor relations. Salaries decreased as a result of a reduction in
personnel.
For the year ended March 31, 1995, there was no Other Income
(Expense). During the year ended March 31, 1994, the Company had
Other Income (Expense) of $366,339. Of this amount, $240 was
interest income earned on a money market account.
As of March 31, 1993, the Company had an investment in 150 shares of
common stock of Data Sport, Inc. (DSI) stated at a cost of $36,000.
During 1994, DBC acquired all of the shares of DSI. In exchange for
its 150 shares, the Company received a warrant to purchase 9,167
shares of DBC common stock, at $4.61 per share, through December 31,
1988. The Company recognized a $12,000 loss on the exchange, stating
the investment in the DBC warrant, which is classified as held-for-
sale, at an estimated market value of $24,000 at March 31, 1994.
There was no change in estimated market value during 1995.
Effective March 31, 1994, the Company sold its license agreements to
DBC for $400,000. A gain of $378,099 was recorded in the 1994
Statement of Operations. In addition to the $400,000, DBC will pay
to the Company, no later than May 1st each year, the excess, if any,
of 50% of the gross margin generated during each twelve-month period
occurring during the five-year period ending March 31, 1999, less a
specified minimum gross margin. DBC's payment obligations during the
five-year period will not exceed $400,000. Additional income will be
recognized if future payments are received.
Recently issued accounting standards are not applicable to the
Company.
Year Ended March 31, 1994 and 1993
The Revenue for the fiscal year ended March 31, 1994, was $973,949
versus $1,018,815 for the previous year, a decrease of 4%. The
following is an analysis of the sales by major product line with
related changes from the previous year.
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
3/31/94 Amount % Change 3/31/93
___________ ___________ ___________ ___________
Hardware Sales $ 66,193 $ (124,022) (65) $ 190,215
Software Sales $ 180,765 $ (290,259) (62) $ 471,024
License Fees $ 324,169 $ 22,151 7 $ 302,018
Text Service $ 392,322 $ 359,360 1,090 $ 32,962
Net Change
_______________________
3/31/94 Amount % Change 3/31/93
___________ ___________ ___________ ___________
Hardware Gross
Profit (Loss) $ 35,002 $ (31,609) (47) $ 66,611
Software Gross
Profit (Loss) $ (21,784) $ (63,709) (152) $ 41,925
License Fees Gross
Profit (Loss) $ 174,295 $ 10,696 6 $ 163,599
Text Service Gross
Profit (Loss) $ 288,451 $ 294,586 4,802 $ (6,135)
</TABLE>
Operating Cost decreased $251,343 for the year ended March 31, 1994,
as compared to the same period of the previous year. The following
is an analysis of the components of operating costs with related
changes from the previous year:
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
3/31/94 Amount % Change 3/31/93
___________ ___________ ___________ ___________
Cost of Product
Sold $ 14,544 $ (74,695) (84) $ 89,239
Cost of Software
Sold $ 159,170 $ (192,047) (55) $ 351,217
Cost of Fulfillment
(including packing,
shipping, advertising,
telephone, postage,
and credit card
charges)* $ 61,656 $ (58,330) (49) $ 119,986
Cost of License fees $ 149,874 $ 11,455 8 $ 138,419
Cost of Text
Service $ 103,871 $ 64,774 166 $ 39,097
Amortization of Customer
Database $ 13,688 $ (2,500) (15) $ 16,188
</TABLE>
* Fulfillment cost is allocated to cost of product sold and cost of
software sold based on gross sales.
Hardware sales and gross profit
During the year ended March 31, 1994, DBC made the decision to employ
their in house sales staff to market their own propriety hardware;
therefore, eliminating the need for third party resellers, such as
MDC. This has had a negative impact on hardware sales as evidenced
by the continued decrease in revenue. Revenue from hardware sales
was $190,215, and $66,193 for the years ended, March 31, 1993 and
1994, respectively. The decrease in revenue
was from a decrease in sales volume.
The Cost of Product Sold reflects the cost of selling DBC products.
the Company now receives a commission for the sale of Quotrek and
Signal equipment. The Company maintains no inventory of Quotreks,
Signals or Satellite equipment, but on occasion buys back this
equipment from customers for resale.
Software sales and gross profit
Software sales for the current year were down in volume and revenue
due to competitive pricing of new programs. The Company added one
new major program during the year, ExperTrader by Sentient Software,
Inc., but it lost $12,035. The Company anticipates new Dealer /
Resale agreements to be in place during the coming year that should
increase software sales and corresponding gross profits.
The Company does not keep records on volume sales by specific
product. However, there were no major increases in the cost of
software sold from the years ended March 31, 1993, to the year ended
March 31, 1994, but there was a significant decrease in the number of
sales invoices processed.
Cost of Software Sold decreased $192,047 due to the $290,259 decrease
in software sales.
Cost of Fulfillment decreased 49% due to the decrease in hardware and
software sales and managements efforts to reduce expenses. There
were significant decreases in telephone, $4,544; advertising $37,706;
and credit card fees, $10,998.
License fees and gross profit
The 7% increase in the license fees in the current year is due to the
aggressive marketing of DBC. The program that hurt the hardware
sales has benefitted the license fees revenues. At March 31, 1994,
the Company sold its license agreements to DBC for an initial payment
of $400,000, plus a participation in the revenue in the markets,
through March 31, 1999, not to exceed $400,000. At March 31, 1994,
the Company recognized a gain of $378,000 on this transaction. The
Company will no longer receive monthly license fees.
Cost of License Fees increased slightly due to the increases in
station and line rental of $9,880 for the year ended March 31, 1994,
as compared to the same period of the previous year.
Text service and gross profit
In October, 1991, the Company started the development of a new
product called Text Service. This service is a digest of today's
leading investment advisors' market analysis. This digest is
broadcast daily to customers of Data Broadcasting Corporation,
Bonneville, Market information Company, All Quotes, Inc., and Data
Transmission Network Corporation. This product of Text Services is
called MarketLine.
On March 24, 1993, the Company signed an agreement with Prodigy
Services to broadcast a Text Service to Prodigy subscribers called
The Wall Street Edge. Broadcasting of this product commenced in
April, 1993. Both products have shown growth and should continue in
future periods and contribute significantly to the gross profit of
the Company.
The Text Service revenue increased from $32,962 for the year ended
March 31, 1993, to $392,322 for the year ended March 31, 1994. The
year ended March 31, 1994, was the first full year of Text Service
operations.
Cost of Text Service increased $64,774, for the year end March 31,
1994, as compared to the same period of the previous year. The Text
Service did not become fully operational until the year ended March
31, 1994. The product was first broadcast on Prodigy in April 1993.
The Company's on-line publishing activities have contributed
significantly to net income during the past year. This trend is
expected to continue as management explores additional opportunities
in this area.
The customer database, acquired by purchase in November 1990, is
being amortized over five years.
Net Income
The Company had a net income for the year ended March 31, 1994, of
$343,758 verses a net loss of $17,394 for the previous year. This
increase was attributable to the gain on the sale of the license
agreements mentioned above. The general and administrative expenses
increased to $325,727 from $283,664, an increase of 15%. The
following is an analysis of significant factors causing increases
with related changes from the previous year:
<TABLE>
<S> <C> <C> <C> <C>
Net Change
_______________________
3/31/94 Amount % Change 3/31/93
___________ ___________ ___________ ___________
Legal and
Professional Fees $ 16,598 $ 10,351 166 $ 6,247
Franchise Tax $ 6,928 5,817 523 $ 1,111
Rent $ 22,189 8,167 58 $ 14,022
Salaries $ 209,952 21,159 11 $ 188,793
</TABLE>
The increase in legal and professional fees was the results of a $500
increase in the monthly accrual for accounting and audit fees and the
engagement of Sheinfeld, Maley & Kay to prepare the option agreement,
promissory note and other legal documents relating to InfoPlan
International, Inc.
The franchise tax payment increased to $6,084 at May 1993 from $275
at May 1992. This account also includes property taxes, but they
remained relatively unchanged.
The rent increased because the Company moved to a larger office space
in September 1992.
The salaries increase was the result of bonuses granted to S.C.
Naremore and W.E. Whalen, after the sale of the DBC license
agreements. This information is detailed in Item 11. Executive
Compensation.
During the year ended March 31, 1994, the Company had Other Income
(Expense) of $366,339. Of this amount $240 was interest income
earned on a money market account.
As of March 31, 1993, the Company had an investment in 150 shares of
common stock of Data Sport, Inc. (DSI) stated at a cost of $36,000.
During 1994, DBC acquired all of the shares of DSI. In exchange for
its 150 shares, the Company received a warrant to purchase 9,167
shares of DBC common stock, at $4.61 per share, through December 31,
1988. The Company recognized a $12,000 loss on the exchange, stating
the investment in the DBC warrant, which is classified as held-for-
sale, at an estimated market value of $24,000 at March 31, 1994.
There was no change in estimated market value during 1995.
Effective March 31, 1994, the Company sold its license agreements of
DBC for $400,000. A gain of $378,099 was recorded in the 1994
Statement of Operations. In addition to the $400,000, DBC will pay
to the Company, no later than May 1st each year, the excess, if any,
of 50% of the gross margin generated during each twelve-month period
occurring during the five-year period ending March 31, 1999, less a
specified minimum gross margin. DBC's payment obligations during the
five-year period will not exceed $400,000. Additional income will be
recognized if future payments are received.
During the current year, the Company had a positive cash flow from
operations of $111,412. Cash flow for the next year is expected to
be positive due to an increase in Text Service revenues and other on-
line services.
Item 8. Financial Statements and Supplementary Data
The response to this item is being submitted as a separate Section of
the report beginning on page F-1.
The audited financial report, dated May 22, 1996, was issued prior to
the receipt of the SEC comment letter dated, May 28, 1996. The
comment letter requested additional disclosure to the financial
statements. In the future, all audited statements will reflect the
items requested in the comment letter. However, for this transition
report, the additional disclosure requirements are being made below:
Receivable - InfoPlan
InfoPlan International, Inc. was introduced to the Company in June
1993, as a possible acquisition candidate. The Company acquired an
option to purchase substantially all of InfoPlan from its founder
Michael J. Wing in July 1993. Additionally, the Company agreed to
advance funds to InfoPlan to reduce its short-term payables and
provide working capital. These advances were secured by the assets
of InfoPlan including its trademark and propriety software. Further,
Michael J. Wing, InfoPlan president, personally guaranteed the
advances.
InfoPlan was never able to produce the revenue stream that had been
projected at the time the option was granted. Additionally, InfoPlan
had combined long and short-term debt in excess of 1,000,000.
Therefore, management felt it was in the Company's best interest not
to exercise the option.
The receivable from InfoPlan was listed as a current asset because it
was management's intention to collect the amount during the current
period. There has never been a provision for uncollectibility
because management has always believed this debt, plus interest, and
any legal fees incurred for collection, would be collected.
On February 12, 1996, the Company collected $147,000 on the
receivable. On June 19, 1996, $93,982 should be received.
Accounts Receivable - Reserve for Collectibility
There is no reserve for the collectibility of the accounts
receivable. Based on the past experience, the Company has had very
limited bad debt, from charges being disputed. The bad debt expense
was $0, $396, $1,155 for the years ended March 31, 1995, 1994 and
1993, respectively. Of the $37,511 accounts receivable at March 31,
1995, $33,919 is for Text Service fees which are usually collected
fifteen to thirty days after the end of the month.
Gain on Sale of DBC License Agreements
The following is a calculation of the gain on the sale of the license
agreements:
<TABLE>
<S> <C> <C>
Amount received from DBC $400,000
Less: License Agreements,
net of amortization:
Detroit $ 3,699
Kansas City 3,389
Honolulu 3,389
Denver 3,389
13,866
Less: Honolulu Dish, net
of $3,443 accumulated
depreciation 8,035
_____________
Gain on Sale $378,099
=============
</TABLE>
Notes Receivable Officers
For the years 1988 through 1993, Mr. S.C. Naremore and Mr. W.E.
Whalen received cash advances in lieu of additional compensation for
a total consideration of $17,204.77 and $23,872.82, respectively.
During the fiscal year ended March 31, 1995, Mr. Naremore received an
additional $14,244 in advances from the Company. It is the intention
of Mr. Naremore and Janice Whalen, widow of W.E. Whalen, to repay
these advances.
Customer Database
The database of the Company was merged with that of a competitor in
November 1990. Also the competitor signed a non-compete covenant
with MDC that covered the sale of certain hardware and software
products.
The amortization period selected by the Company was based on an
approximate 20% turnover rate experienced by its databases prior to
the purchase. Such rate did not dramatically change after the
acquisition of the database in November 1990. As of November 1995
the database was fully amortized. The non-compete covenant was
amortized over three years, ending May 1993.
Catalogs
The previous catalogs were developed and printed at a total cost of
$6,573 for 172 cases, 125 catalogs per case. These catalogs were
expensed to advertising as mailed.
In August 1995, Management decided not to publish a 1995-96 catalog,
due to the declining market of software products. The $1,215 was
expensed.
Federal Income Tax
There are no deferred tax liabilities, deferred tax assets or
valuation allowance, pursuant to paragraph 43 of FAS 109.
Stock Options
The following table states the number of options and the price ranges
for options granted, exercised, canceled and outstanding for the
years ended March 31, 1995, 1994, and 1993
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
___________ ___________ ___________
Outstanding at beginning 325,000 655,000
of year
Granted 655,000
Exercised (50,000) (330,000)
___________ ___________ ___________
Outstanding at end
of year 275,000 325,000 655,000
=========== =========== ===========
Prices per share:
Unexercised on March 31 $.05-$.50 $.05-$.50 $.005-$.50
Exercised $.05 $.005-$.05
</TABLE>
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial disclosure
None.
PART III
Item 10. Directors and Executive Officers
The present directors and executive officers of the Company, their
ages, positions held in the Company and duration of service are as
follows:
<TABLE>
<S> <C> <C> <C>
Name Age Position Since
__________________ ____ ________________ _____________
Steven C. Naremore 38 President and March 1988
Director
Janice S.Whalen 46 Secretary, Treasurer June 1994
and Director
</TABLE>
Business Experience
The following is a brief account of the business experience during at
least the past five years of each director and executive officer,
including the principal occupation and employment during that period,
and the name and principal business of the organization in which such
occupation and employment were carried out.
Steven C. Naremore, age 38, has been president, chief executive
officer and a director of the Company since its inception in March
1988. In May 1989, Mr. Naremore became vice president of D.E. Wine
Investments, Inc. and resigned effective September 1994.
Janice S. Whalen, age 46, has been a director, secretary and
treasurer of the Company since June 1994, following the death of her
husband and director of the Company, W.E. Whalen. Ms. Whalen holds a
BBA in Accounting and an MBA from University of Texas at Tyler. She
is also a Certified Public Accountant in the state of Texas. Ms.
Whalen has worked in various private industries as well as taught
college level accounting. Ms. Whalen has worked for the company
since June 1991.
Item 11. Executive Compensation
The following table sets forth the summary compensation for all
officers for services during the three fiscal years ended March 31,
and for the three month period ended June 30, 1995.
<TABLE>
<S> <C> <C> <C> <C>
Long Term
Annual Compensation Compensation
________________ _____________
Name & Principal Position Period Salary Bonus Options (#)
_________________________ _______ _______ _______ _____________
Steven C. Naremore, 6/30/95 $12,500 $
President 3/31/95 $50,000 $ 2,500
3/31/94 $50,000 $15,000
3/31/93 $50,000 $ 2,083 150,000
W.E. Whalen, 3/31/95 $ 8,333 $ 0
Vice President 3/31/94 $50,000 $15,000
3/31/93 $50,000 $ 2,083 150,000
Janice S. Whalen, 6/30/95 $12,480 $ 0
Secretary/Treasurer 3/31/95 $44,000 $ 1,500
</TABLE>
<TABLE>
Aggregated Option Exercises and Fiscal Year End Option Values
<S> <C> <C> <C>
Number of Unexercised Value of Unexercised In-
Options at Fiscal Year The-Money Options at
End Exercise or Fiscal Year End
Name Exercisable (#) Base Price Exercisable
________________ ______________ ____________ _____________________
S.C. Naremore 150,000 $ .50 $ 0
Janice S. Whalen 100,000 $ .50 $ 0
</TABLE>
The Company does not have any long-term incentive plans nor pension
plans.
Duncan E. Wine, the Company's outside director, until November 1994,
did not receive any cash compensation. During the fiscal year, ended
March 31, 1994, Wine exercised an option to purchase 300,000 shares
of stock at $.005 per share. The market price of the stock at the
date of grant was $.05 per share.
The company does not have any employment contracts or termination of
employment and change in control arrangements. None of the options
have been repriced during the last fiscal year.
The Company's Board of Directors served as the Compensation Committee
during the last fiscal year. There are not any interlocking board
arrangements among the directors.
Performance Chart
The Performance Chart which follows compares the cumulative total
shareholder return on the Company's common stock against the
cumulative total return of the S&P 500 Cash Index and the AMEX
Computer Technology Index from March 31, 1990 through March 31, 1995.
The chart assumes an investment of $100 in the Company's common stock
and in each index on March 31, 1990, and that all dividends were
reinvested.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995
_____ _____ _____ _____ _____ _____
Market Data Corp. $100 $ 71 $ 57 $714 $625 $312
AMEX Computer Tech. $100 $112 $117 $122 $132 $172
S&P 500 Cash $100 $110 $119 $133 $131 $147
</TABLE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of June 30, 1995, two officers and directors were known to own or
control beneficially more than five percent of the Company's
outstanding voting stock. The table below sets forth the total
number of shares of the Company's outstanding voting stock owned by
individuals, organizations and officers of the Company and of all
officers and directors as a group.
<TABLE>
<S> <C> <C> <C>
Name and Address of Number of Shares Owned Percent
Title of Class Beneficial Owner Beneficially and of Record of Class
_______________ _____________________ _________________________ __________
Common Stock Steven C. Naremore 1,502,800 27%
14505 Torrey Chase
Blvd., Suite 410
Houston, Texas 77014
Common Stock Janice S. Whalen 500,000 9%
14505 Torrey Chase
Blvd., Suite 410
Houston, Texas 77014
2,002,800 36%
</TABLE>
Item 13. Certain Relationships and Related Transactions
There were no transactions, or series of transactions, for the fiscal
year ended March 31, 1995 or the three months ended June 30, 1995,
nor are there any current proposed transactions, or series of the
same, to which the Company is a party, in which the amount exceeds
$60,000 and in which, to the knowledge of the Company, any director,
executive officers, nominee, five percent shareholders or any member
of the immediate family of the foregoing person, have or will have a
direct or indirect material interest.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
(a) (1) and (a) (2)
The financial statements and schedules on pages F-1 through F-12, as
listed in the accompanying Index to Financial Statements, are filed
as part of this report.
(a) (3)
None
(b), (c) and (d)
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date ______________________ MARKET DATA CORPORATION
By: ______________________________
S.C. Naremore, President
By: ______________________________
Janice S. Whalen, Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following
persons, which include the principal executive officer, principal
financial officer and a majority of the Board of Directors, on behalf
of the Registrant in capacities and on the dates indicated.
Signature Title Date
________________________ Director ___________
(Principal Executive Officer)
________________________ Director ___________
(Principal Financial Officer)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
ITEM 14
(a)(1) Financial Statements
Independent Auditors' Report F-1
Balance Sheets at June 30, 1995, March 31, 1995
and 1994 F-2
Statements of Operation for the three months
ended June 30, 1995, and the years end
March 31, 1995, 1994 and 1993 F-4
Statements of Stockholders' Equity for the
three months ended June 30, 1995, and the
years ended March 31, 1995, 1994, and 1993 F-5
Statements of Cash Flows for the three months
ended June 30, 1995, and the years ended
March 31, 1995, 1994, and 1993 F-6
Notes to Financial Statements F-8
Unaudited Pro Forma Combined Balance Sheet as of December 31, 1995,
and Unaudited Pro Forma Combined Statements of Operations for the six
months ended December 31, 1995, and the years ended June 30, 1995,
1994, and 1993, included in Form 8K filed March 18, 1996, are
incorporated herein by reference.
(a)(2) Financial Statement Schedules
All Financial statement schedules are omitted because they are
not applicable to the required information is shown in the financial
statements or the notes thereto.
MARKET DATA CORP.
Houston, Texas
FINANCIAL STATEMENTS
June 30, 1995
Independent Auditor's Report
Board of Directors
Market Data Corp.
Houston, Texas
We have audited the accompanying Balance Sheets of Market Data Corp.
as of June 30, 1995, March 31, 1995 and March 31, 1994, and the
related Statements of Operations, Stockholders' Equity and Cash Flows
for the three months ended June 30, 1995, and each of the three years
in the period ended March 31, 1995. 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
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Market
Data Corp. as of June 30, 1995, March 31, 1995, and March 31, 1994,
and the results of its operations and its cash flows for the three
months ended June 30, 1995, and for the years ended March 31, 1995,
1994, and 1993, in conformity with generally accepted accounting
principles.
Weinstein Spira & Company, P.C.
Houston, Texas
May 22, 1996
F-1
MARKET DATA CORP.
BALANCE SHEETS
<TABLE>
<S> <C> <C> <C>
March 31,
June 30, _______________________
1995 1995 1994
___________ ___________ ___________
ASSETS
Current Assets
Cash and cash equivalents $ 74,702 $ 106,999 $ 7,080
Accounts receivable 59,352 37,511 468,830
Inventory 6,607 4,715 4,616
Prepaid expenses 4,288 3,763 8,722
Federal income tax receivable 24,161 24,161 -
Receivable from InfoPlan 189,399 190,732 101,366
___________ ___________ ___________
Total Current Assets 358,509 367,881 590,614
Property and Equipment, net of
accumulated depreciation of
$41,616 at June 30, 1995, and
$39,133 and $28,887 at March 31,
1995 and 1994, respectively 18,072 20,555 28,960
Other Assets
Customer database, net of accumulated
amortization of $59,495 at June 30,
1995, and $56,198 and $43,009 at
March 31, 1995 and 1994,
respectively 4,600 7,897 21,086
Officer Receivables 55,560 55,322 41,078
Investment in equity securities 24,000 24,000 24,000
Note receivable from InfoPlan 168,826 168,826 152,263
___________ ___________ ___________
252,986 256,045 238,427
___________ ___________ ___________
$ 629,567 $ 644,481 $ 858,001
=========== =========== ===========
</TABLE>
F-2
<TABLE>
<S> <C> <C> <C>
March 31,
June 30, _______________________
1995 1995 1994
___________ ___________ ___________
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 21,686 $ 44,397 $ 26,097
Accrued compensation 30,000
Payroll and sales tax payable 156 785 943
Customer deposits 900 900 900
Federal income tax payable 168,000
___________ ___________ ___________
Total Current Liabilities 22,742 46,082 225,940
___________ ___________ ___________
Stockholders' Equity
Common stock; $.001 par value;
50,000,000 shares authorized;
5,589,000 5,565,000 and
5,515,000 shares issued and
outstanding at June 30, 1995,
March 31, 1995, and March 31,
1994, respectively 5,589 5,565 5,515
Additional paid-in capital 309,809 301,675 299,225
Retained earnings 291,427 291,159 327,321
___________ ___________ ___________
Total Stockholders' Equity 606,825 598,399 632,061
___________ ___________ ___________
$ 629,567 $ 644,481 $ 858,001
=========== =========== ===========
</TABLE>
See notes to financial statements
F-3
MARKET DATA CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
For the
Three Months
Ended For the Year Ended March 31,
___________________________________
6/30/95 1995 1994 1993
___________ ___________ ___________ ___________
Revenues
Product and software sales $ 118,307 $ 634,712 $ 639,280 $ 706,171
License fees 324,169 302,018
Other revenues 303 10,500 10,626
___________ ___________ ___________ ___________
118,307 635,015 973,949 1,018,815
___________ ___________ ___________ ___________
Cost and Expenses
Cost of Product and
Software sales 39,618 295,113 277,585 479,553
Cost of License fees 0 0 149,874 138,419
Other Operating Cost
and Expenses 9,127 62,798 75,344 136,174
General and administrative 69,294 331,651 325,727 283,373
___________ ___________ ___________ ___________
118,039 689,562 828,530 1,037,519
___________ ___________ ___________ ___________
Income (Loss) From Operations 268 (54,547) 145,419 (18,704)
Other Income (Expense)
Interest Income 240 1,310
Gain on sale of license
agreements 378,099
Loss on investment in equity
securities (12,000)
___________ ___________ ___________ ___________
366,339 1,310
___________ ___________ ___________ ___________
Pre-Tax Income (Loss) 268 (54,547) 511,758 (17,394)
Income Tax (Expense) Benefit 18,385 (168,000)
___________ ___________ ___________ ___________
Net Income (Loss) $ 268 $ (36,162) $ 343,758 $ (17,394)
=========== =========== =========== ===========
Net Income (Loss) Per Common
Share $ 0 $ (.01) $ .06 $ 0
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 5,576,520 5,562,917 5,458,333 5,120,000
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
F-4
MARKET DATA CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended March 31, 1995, 1994, and 1993
and the Three-Month Period Ended June 30, 1995
<TABLE>
<S> <C> <C> <C> <C>
Additional Retained Total
Common Stock Paid-in Earnings Stockholders'
_______________________
Shares Amount Capital (Deficit) Equity
___________ ___________ ___________ ___________ ___________
Balance-March 31, 1992 $5,120,000 $ 5,120 $ 231,120 $ 957 $ 237,197
Net Loss (17,394) (17,394)
___________ ___________ ___________ ___________ ___________
Balance-March 31, 1993 5,120,000 5,120 231,120 (16,437) 219,803
Issuance of Stock 395,000 395 68,105 68,500
Net Income 343,758 343,758
___________ ___________ ___________ ___________ ___________
Balance-March 31, 1994 5,515,000 5,515 299,225 327,321 632,061
Issuance of Stock 50,000 50 2,450 2,500
Net Loss (36,162) (36,162)
___________ ___________ ___________ ___________ ___________
Balance-March 31, 1995 5,565,000 5,565 301,675 291,159 598,399
Issuance of Stock 24,000 24 8,134 8,158
Net Income 268 268
___________ ___________ ___________ ___________ ___________
Balance-June 30, 1995 $5,589,000 $ 5,589 $ 309,809 $ 291,427 $ 606,825
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
F-5
MARKET DATA CORP.
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C> <C>
For the
Three Months
Ended For the Year Ended March 31,
___________________________________
6/30/95 1995 1994 1993
___________ ___________ ___________ ___________
Cash Flows From Operating Activities
Net income (loss) $ 268 $ (36,162) $ 343,758 $ (17,394)
Reconciliation of net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 5,780 23,435 28,095 28,390
Noncash compensation 13,500
Gain on sale of license
agreements (378,099)
Loss on investment in equity
securities 12,000
(Increase) Decrease in:
Accounts receivable (21,841) 431,319 (11,132) (34,904)
Officer receivables (238) (14,244) (310) (380)
Inventory (1,892) (99) 10,419 16,096
Prepaid expenses (525) 4,959 9,114 (11,290)
Federal income tax receivable (24,161)
Receivable from InfoPlan 1,333 (89,366) (101,366)
Increase (Decrease) in:
Accounts payable (14,553) 18,300 2,191 10,294
Accrued compensation (30,000) 30,000
Payroll and sales tax payable (629) (158) (58) (805)
Customer deposits (1,200) (9,900)
Federal income tax payable (168,000) 168,000
___________ ___________ ___________ ___________
Net Cash Provided by (Used in)
Operating Activities (32,297) 115,823 111,412 (6,393)
___________ ___________ ___________ ___________
Cash Flows From Investing Activities
Purchase of property and equipment (1,841) (12,473) (25,180)
Purchase of equity securities
Advances on note receivable (16,563) (152,263) (36,000)
___________ ___________ ___________ ___________
Net Cash Used in Investing
Activities (18,404) (164,736) (61,180)
</TABLE>
F-6
<TABLE>
<S> <C> <C> <C> <C>
For the
Three Months
Ended For the Year Ended March 31,
__________________________________
6/30/95 1995 1994 1993
___________ ___________ ___________ __________
Cash Flows From Financing Activities
Proceeds from issuance of stock 2,500 55,000
___________ ___________ ___________ __________
Net Cash Provided by Financing
Activities 2,500 55,000
___________ ___________ ___________ __________
Net Increase (Decrease) in Cash and
Cash Equivalents (32,297) 99,919 1,676 (67,573)
Cash and Cash Equivalents -
Beginning of Period 106,999 7,080 5,404 72,977
___________ ___________ ___________ __________
Cash and Cash Equivalents -
End of Period $ 74,702 $ 106,999 $ 7,080 $ 5,404
=========== =========== =========== ==========
Supplemental Disclosure of Cash
Flow Information
Cash paid during the period
for taxes $ 0 $ 173,776 $ 0 $ 1,000
=========== =========== =========== ==========
</TABLE>
Supplemental Schedule of Noncash
Investing and Financing Activities
During the three months ended June 30, 1995, the Company issued stock for $8,158
of compensation which was accrued at March 31, 1995.
During 1994, the Company issued stock for $13,500 of compensation which was
accrued in 1993.
There were no cash payments for interest during the three-year and three-month
period ended June 30, 1995.
See notes to financial statements
F-7
MARKET DATA CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995, and March 31, 1995, 1994, and 1993
Note 1 - Summary of Significant Accounting Policies
These financial statements are presented on the accrual method of accounting in
accordance with generally accepted accounting principles. Significant
principles followed by the Company and the methods of applying those principles
which materially affect the determination of financial position and cash flows
are summarized below:
Description of Business
Market Data Corp. (the Company) markets financial information systems, software
and on-line subscription financial data. The information systems are sold
under a dealer arrangement with Data Broadcast Corporation (DBC), formerly FNN
Data Broadcasting. The Company also has dealer arrangements with several
software companies to market financial information and analysis software.
The Company develops subscription based daily financial text products that are
marketed throughout the financial community. The Company also publishes a daily
financial product called "Wall Street Edge" for Prodigy Services Company.
Subscription fees are shared between the Company and the respective
provider/carrier. Fees range from $20 - $50 monthly.
Revenue Recognition
Revenue is recognized at the time of sale. Accounts receivable are written-off
when deemed uncollectible.
Cash and Cash Equivalents
The Company considers all highly-liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
Inventory
Inventory is stated at the lower of cost (first-in, first-out) or market and
consists of signal receiving equipment and software.
Property and Equipment
Property and equipment is stated as cost. The cost of ordinary maintenance and
repairs is charged to operations while renewals and replacements are
capitalized. Depreciation is computed on the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Furniture and fixtures 5 years
Computer equipment and software 3 - 5 years
Demonstration equipment 5 years
Leased equipment 3 years
</TABLE>
F-8
MARKET DATA CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1995, and March 31, 1995, 1994, and 1993
Licensing Agreement
The Company had obtained subcarrier agreements with four FM radio stations in
the cities of Detroit, Kansas City, Honolulu and Denver to broadcast the DBC
real-time market information. For this service, the Company received from DBC
a percentage of the monthly fees collected in the respective city. The License
Agreement was for a three-year term and allows the Company four, three-year
renewal options. Accordingly, the initial license fee was being amortized over
15 years. Effective March 31, 1994, the Company sold its license agreements to
DBC for $400,000.
Customer Database
The customer database, acquired by purchase, is recorded at cost and amortized
on a straight-line basis over 5 years.
Investment in Equity Securities
As of March 31, 1993, the Company had an investment in 150 shares of common
stock of Data Sport, Inc. stated at a cost of $36,000. During 1994, DBC
acquired all of the shares of Data Sport, Inc. and in exchange for its 150
shares, the Company received a warrant to purchase 9,167 share of DBC common
stock at $4.61 per share through December 31, 1998. The Company recognized a
$12,000 loss on the exchange, stating the ivestment in the DBC warrant, which is
classified as available-for-sale, at an estimated market value of $24,000 at
March 31, 1994. There was no change in estimated market value during 1995.
Federal Income Tax
Federal income tax expense in these statements is computed at prevailing tax
rates.
Effective April 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting For Income Taxes." FAS 109 requires
the recognition of deferred tax liabilities and assets for the anticipated
future tax effects of temporary differences that arise as a result of
differences in the carrying amounts and tax bases of assets and liabilities.
There was no material effect on the financial statements as a result of adopting
FAS 109.
The Company's provision for income taxes for 1993 has been calculated in
accordance with APB 11 based on income and expenses included in the Statements
of Operations.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-9
MARKET DATA CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1995, and March 31, 1995, 1994, and 1993
Note 2 - Sale of License Agreements
Effective March 31, 1994, the Company sold its license agreements to DBC for
$400,000. A gain of $378,099 is recorded in the 1994 Statement of Operations.
in addition to the $400,000, DBC will pay to the Company no later than May 1st
each year, the excess, if any, of 50% of the gross margin generated during each
twelve-month period occurring during the five-year period ending March 31, 1999,
less a specified minimum gross margin. DBC's payment obligations during the
five-year period will not exceed $400,000.
Note 3 - Property and Equipment
Property and Equipment consist of the following:
<TABLE>
<S> <C> <C> <C>
June March 31,
_______________________
1995 1995 1994
___________ ___________ ___________
Furniture and fixtures $ 18,798 $ 18,798 $ 18,429
Computer equipment and software 35,945 35,945 34,473
Demonstration equipment 3,295 3,295 3,295
Lease equipment 1,650 1,650 1,650
___________ ___________ ___________
59,688 59,688 57,847
Less: Accumulated depreciation 41,616 39,133 28,887
___________ ___________ ___________
$ 18,072 $ 20,555 $ 28,960
=========== =========== ===========
</TABLE>
Note 4 - Receivables from InfoPlan
The Company has a note receivable of $168,826, $168,826 and $152,263 at June 30,
1995, March 31, 1995, and March 31, 1994, respectively, from InfoPlan
International, Inc. The note bears interest at 9%, is secured by an
Intellectual Property Collateral Assignment, and is due February 28, 1997.
Additionally, the Company has advances to InfoPlan of $189,399, $190,732 and
$101,366 at June 30, 1995, March 31, 1995, and March 31, 1994, respectively.
These advances are unsecured and bear no interest.
InfoPlan signed an Agreed Judgement for actual damages in the amount of
$358,395, plus attorney fees, pre-judgement interest and post-judgement
interest. The Agreed Judgement was final as of December 27, 1995. On February
12, 1996, the Company received a payment from InfoPlan in the amount of
$147,000. The balance of the principal plus other fees is to be paid in
installments on May 31, 1996, July 31, 1996, and September 30, 1996. If
InfoPlan fails to meet any of the installments, the Agreed Judgement may be
executed without notice.
F-10
MARKET DATA CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1995, and March 31, 1995, 1994, and 1993
Note 5 - Federal Income Tax
The following is a reconciliation of federal income taxes computed at the
statutory rate with income taxes recorded in the Statement of Operations for the
three months ended June 30, 1995, and the years ended March 31, 1995, 1994, and
1993:
<TABLE>
<S> <C> <C> <C> <C>
For the
Three Months
Ended Year Ended March 31,
___________________________________
6/30/95 1995 1994 1993
___________ ___________ ___________ ___________
Federal income tax
(expense) benefit at the
statutory rate of 34% $ (91) $ 18,546 $ (173,998) $ 5,914
Nondeductible items (161) (71)
Net operating loss
carryforward 5,914 (5,914)
Other 91 155
___________ ___________ ___________ ___________
$ 0 $ 18,385 $ (168,000) $ 0
=========== =========== =========== ===========
</TABLE>
Note 6 - Operating Leases
The Company leases office space under an operating lease agreement which expires
November 30, 1997.
Future minimum lease payments as of June 30, 1995, are as follows:
<TABLE>
<S> <C> <C>
Year Ending
March 31,
_____________
1996 $ 18,870
1997 26,866
1998 18,620
___________
$ 64,356
===========
</TABLE>
During the two years ended March 31, 1994, the Company also leased four radio
station frequencies to transmit information to its customers. Those leases were
assigned to DBC effective March 31, 1994.
Total lease expense for the three-month period ended June 30, 1995, and the
years ended March 31, 1995, 1994, and 1993, was approximately $6,400, $24,000,
168,000, and $124,800 respectively.
F-11
MARKET DATA CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1995, and March 31, 1995, 1994, and 1993
Note 7 - Stock Options
Effective August 20, 1992, options to purchase 105,000 shares of stock were
granted to employees of the Company. The options may be exercised at $.05 per
share, the market price of the common stock at August 20, 1992, over a three-
year period. Options to purchase 50,000 and 30,000 shares were exercised during
1995 and 1994, respectively.
Effective October 15, 1992, options to purchase 300,000 shares of common stock
at $.005 were granted to an officer of the Company. The difference between the
option price of $.005 and market value at the time of the grant of $.05 was
recorded as compensation expense. The options were exercised on May 4, 1993.
Effective March 24, 1993, options to purchase 250,000 shares of common stock
were granted to officers of the Company. The options may be exercised at $.50
per share, the market price of the stock at March 24, 1993, over a three-year
period.
Note 8 - Subsequent Event
On March 1, 1996, the Company acquired Renet Financial Corporation (RENET) of
Anaheim, California. RENET is a franchisor of financial services to real estate
brokerages, developers and financial planners who want to provide mortgage and
consumer loans, insurance and securities services to their clients. The
acquisition will be accounted for as a pooling-of-interests in accordance with
generally accepted accounting principles. As a result of the acquisition, the
Company will be changing its year end to June 30 to conform to RENET's year end.
F-12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 74,702
<SECURITIES> 0
<RECEIVABLES> 59,352
<ALLOWANCES> 0
<INVENTORY> 6,607
<CURRENT-ASSETS> 358,509
<PP&E> 59,688
<DEPRECIATION> 41,616
<TOTAL-ASSETS> 629,567
<CURRENT-LIABILITIES> 22,742
<BONDS> 0
0
0
<COMMON> 5,589
<OTHER-SE> 601,236
<TOTAL-LIABILITY-AND-EQUITY> 629,567
<SALES> 118,307
<TOTAL-REVENUES> 118,307
<CGS> 48,745
<TOTAL-COSTS> 118,039
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 268
<INCOME-TAX> 0
<INCOME-CONTINUING> 268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
