<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 quarterly period ended March 31, 1998
------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________________ to ________________________
Commission file number 1-10196
Dimensional Visions Incorporated
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 23-2517953
- -------------------------------- ------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2301 W. Dunlap, Suite 207, Phoenix, Arizona, 85021
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(602) 997-1990
- --------------------------------------------------------------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes _X_ No ___.
As of March 31, 1998, the number of shares of Common Stock issued and
outstanding was 3,005,261.
<PAGE>
Dimensional Visions Incorporated And Subsidiaries
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - March 31, 1998
and June 30, 1997 1
Consolidated Condensed Statements of Operations - For the three and nine
months ended March 31, 1998 and 1997 2
Consolidated Condensed Statements of Cash Flows - For the nine
months ended March 31, 1998 and 1997 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 13
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, June 30,
1998 1997
--------- ----------
(Unaudited)
Current assets
Cash and cash equivalents $ 31,771 $ 109,566
Current portion of note receivable 112,732 --
Accounts receivable, trade net
of allowances for bad debts
of $215,743 91,742 82,301
Inventory 137,375 179,127
Prepaid supplies and expenses 32,471 10,001
-------- ----------
Total current assets 406,091 380,995
-------- ----------
Equipment
Equipment 313,722 1,527,776
Furniture and fixtures 44,343 125,035
-------- ----------
358,065 1,652,811
Less accumulated depreciation
and amortization 304,070 1,562,421
-------- ----------
53,995 90,390
-------- ----------
Other assets
Patent rights, and other assets 40,794 40,889
Deferred costs 5,729 17,246
Note receivable, net of current portion 262,728 --
Deferred Offering Costs 74,564 --
-------- ----------
383,815 58,135
-------- ----------
Total assets $843,901 $ 529,520
======== ==========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
March 31, June 30,
1998 1997
----------- ----------
(Unaudited)
Current liabilities
Current portion of long-term debt $ 75,000 $ 75,000
Secured promissory notes 350,000 --
Unsecured promissory notes 96,000 --
Accounts payable, accrued
expenses and other liabilities 370,689 413,947
----------- -----------
Total current liabilities 891,689 488,947
Long-term debt, net of current portion -- 125,000
----------- -----------
Total liabilities 891,689 613,947
----------- -----------
Commitments and contingencies -- --
Stockholders' equity (deficiency)
Preferred stock - $.001 par value,
authorized 10,000,000 shares;
issued and outstanding at March 31,
1998, 137,321 shares and at June
30, 1997, 218,878 shares 137 219
Additional paid-in capital 713,273 923,209
----------- -----------
713,410 923,428
Common stock - $.001 par value,
authorized 100,000,000 shares;
issued and outstanding at March 31,
1998, 3,005,261 shares and
at June 30, 1997, 2,725,515 shares 3,005 2,726
Additional paid-in capital 18,338,295 17,909,556
Deficit (19,102,498) (18,920,137)
----------- -----------
Total stockholders'equity (deficiency) (47,788) (84,427)
----------- -----------
Total liabilities and stockholders'
equity (deficiency) $ 843,901 $ 529,520
=========== ===========
See notes to condensed consolidated financial statements.
(1)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue $208,526 $130,846 $380,777 $ 351,792
Cost of Sales 72,036 38,615 236,879 150,772
-------- -------- -------- ----------
Gross profit 136,490 92,231 143,898 201,020
-------- -------- -------- ----------
Operating expenses
Engineering and development costs 69,096 170,963 182,476 365,802
Marketing expenses 7,935 63,002 122,014 259,649
General and administrative expenses 161,193 264,568 463,082 735,124
-------- -------- -------- ----------
Total operating expenses 238,224 498,533 767,572 1,360,575
-------- -------- -------- ----------
Loss before other income (expenses) (101,734) (406,302) (623,674) (1,159,555)
-------- -------- -------- ----------
Other income (expenses)
Interest expense (46,861) (6,202) (76,451) (20,720)
Interest income 13,284 1,103 20,496 6,124
Forgiveness of accrued compensation -- -- 106,148 --
Loss on sale of equipment -- -- (18,881) --
Sale of product line -- -- 410,000 --
Amortization of goodwill -- (48,249) -- (144,748)
-------- -------- -------- ----------
(33,577) (53,348) 441,313 (159,344)
-------- -------- -------- ----------
Net loss ($135,311) ($459,650) ($182,361) ($1,318,899)
======== ======== ======== ==========
Net loss per share of common stock ($0.05) ($0.19) ($0.06) ($0.76)
======== ======== ======== ==========
Weighted average shares of common stock
outstanding after given effect to a 1 for 25
reverse stock split on January 15, 1998 2,991,376 2,460,366 2,918,623 1,744,561
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
(2)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended March 31,
1998 1997
-------- ----------
Cash flows from operating activities
Net loss ($182,361) ($1,318,899)
Total adjustments to reconcile net loss to net
cash used in operating activities (312,170) 497,098
-------- ----------
Net cash used in operating activities (494,531) (821,801)
-------- ----------
Cash flows from investing activities
Purchase of property and equipment (10,200) (2,730)
Proceeds from sale of equipment 10,000 --
-------- ----------
Net cash used in investing activities (200) (2,730)
-------- ----------
Cash flows from financing activities
Proceeds from long-term borrowing -- 250,000
Proceeds from secured promissory notes, net of
financing costs of $24,500 325,500 --
Proceeds from unsecured promissory notes 96,000 --
Sale of common stock, net of offering costs 135,000 489,000
Exercise of warrants to purchase common stock 10,000 --
Payment of long-term debt (75,000) --
Deferred offering costs (74,564) --
-------- ----------
Net cash provided by financing activities 416,936 739,000
-------- ----------
Net change in cash and cash equivalents (77,795) (85,531)
Cash and cash equivalents, beginning 109,566 203,073
-------- ----------
Cash and cash equivalents, ending $ 31,771 $ 117,542
======== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest -- --
======== ==========
Issuance of common stock in connection with
Compensation $ 2,750 $ 51,880
======== ==========
Consulting services $ 21,250 $ 203,675
======== ==========
Payment of an advance from Individual $ -- $ 15,000
======== ==========
(3)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATE STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Supplemental disclosure of non-cash investing and financing activities for nine
months ended March 31, 1998 and 1997 (all common share amounts have been
adjusted to give retroactive effect to a 1 for 25 reverse stock split effected
on January 15, 1998):
For the nine months ended March 31, 1998, the Company issued 72,727 shares of
the Company's common stock in connection with the conversion of $50,000 of
convertible debentures to common stock.
On October 20, 1997, the Company issued 200 shares of the Company's common stock
in connection with the conversion of 500 shares of Series P Convertible
Preferred Stock.
During the nine months ended March 31, 1997, 56,000 shares of the Company's
stock was issued as a result of the conversion of 35,000 shares of Series A
Convertible Preferred Stock valued at $350,000.
During the nine months ended March 31, 1997, 62,606 shares of the Company's
Common Stock was issued as a result of the conversion of 156,515 shares of
Series P Convertible Preferred Stock valued at $391,288.
During the nine months ended March 1997, 891,360 shares of the Company's Common
Stock was issued as a result of the conversion of 185,700 shares of Series B
Convertible Preferred Stock valued at $1,857,000.
During the nine months ended March 31, 1997, 212,300 shares of the Company's
Common Stock was issued as a result of the conversion of $400,000 of Convertible
Debenture issued pursuant to a Regulation S offering.
During the nine months ended March 31, 1997, 1,896 shares of the Company's
Common Stock was issued as a result of the conversion of 4,739 shares of Series
C Convertible Preferred Stock valued at $47,390.
See notes to condensed consolidated financial statements.
(4)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Note 1 Basis of Presentation of Interim Financial Statements
The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-QSB. The June 30, 1997 balance
sheet data were derived from audited financial statements but does not
include all disclosures required by generally accepted accounting
principles. The interim financial statements and notes thereto should be
read in conjunction with the financial statements and notes included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1997. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring nature
necessary for a fair statement of the results for the interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full
year ending June 30, 1998.
In this report all common shares and per share amounts have been
adjusted to give retroactive effect to a 1 for 25 reverse stock split
effected on January 15, 1998.
Note 2 Accounts Payable, Accrued Expenses and Other Liabilities
March 31, 1998 June 30,1997
-------------- ------------
Accounts payable $235,444 $260,942
Accrued expenses
Interest 86,144 11,184
Salaries 44,043 117,943
Consulting fees -- 18,000
Payroll Taxes Payable 5,058 5,878
-------- --------
Total $370,689 $413,947
======== ========
Note 3 Secured Promissory Notes
As of March 31, 1998, there were $350,000 of outstanding Secured
Promissory Notes. Interest is calculated at 5% per month and is due and
payable at maturity (February 28, 1998) unless extended by the note
holders. As of March 31, 1998, accrued interest amounted to
approximately $75,000. The Company borrowed $350,000 net of financing
costs of $24,500. The Series A Convertible Secured Promissory Notes
include warrants to purchase 420,000 shares of the Company's common
stock at $1.00 per share. The warrants are exercisable over a 5 year
period through the year 2002. The notes are secured by all the assets of
the Company.
The notes are convertible into one share for each $1.00 of outstanding
debt and unpaid interest is also convertible to common stock at the rate
of one share for each $1.00 of unpaid interest.
On April 8, 1998, $325,000 of the outstanding obligation and $73,840 of
accrued interest were converted to 398,840 shares of the Company's
stock.
(5)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Note 4 Unsecured Promissory Notes
During March 1998 the Company received loans of $96,000 from Capital
West Investment Group. The notes are due June 30, 1998 and interest is
at 12% per annum. The note holders will receive one warrant for every
dollar invested to purchase the Company's common stock at $0.93, as
adjusted, for a three year period with expires on February 28, 2001. The
notes are automatically convertible into units of the private offering
in the event that the Company receives subscriptions for an aggregate of
at least $672,000 in gross proceeds. In the event that the notes convert
to units, the accrued interest due to the note holder shall be applied
towards the exercise price of the warrants on a pro rata basis. In such
event the Company shall not be obligated to make any cash payment of the
accrued interest. On April 8, 1998, these notes were converted to
equity.
Note 5 Long-Term Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
March 31, 1998 June 30, 1997
-------------- -------------
<S> <C> <C>
5% convertible debenture due August 1, 1998 $ --(1) $125,000(1)
10% secured notes due in Jan. and Feb. 1998 75,000(2)(3) 75,000(2)(3)
------- --------
75,000 200,000
Less current portion 75,000 75,000
------- --------
Long term portion $ -- $125,000
------- --------
</TABLE>
(1) During the year ended June 30,1997, $375,000 of the outstanding debentures
were converted to 274,133 shares of the Company's common stock at an average
price per share of $1.25. This debt is convertible into the Company's common
stock at 50% of the price of the Company's stock on the day prior to
conversion, but at no time shall the conversion price be greater than $3.625
a share.
During July 1997, $50,000 of the outstanding debentures were converted to
72,727 shares of the Company's common stock at an average price of $.6875
per share.
The debentures were due on August 1, 1997, and the debenture holder on
October 8, 1997 extended the due date to August 1, 1998.
During December 1997 and January 1998, the outstanding debenture of $75,000
was paid to the debenture holder.
(2) As collateral for the secured notes, the Company has given a security
interest in all of the Company's tangible and intangible assets, including
all patents and proprietary technology, which was evidenced by a Uniform
Commercial Code filing on March 24, 1994.
(3) The Company has accrued interest on this obligation, but has not paid
interest to the noteholders since January 1996. No demand for interest has
been made by the noteholders, but the notes are in technical default by
failure to pay accrued interest. As of February 15, 1998, the secured notes
are past due.
(6)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Note 6 Commitments and Contingencies
In January 1998 the Company entered into a consulting agreement with
Capital West Investment Group, Inc. ("CWIG"). Pursuant to such
agreement, CWIG will provide the Company with, among other things,
strategic planning, advice with respect to the identification of
potential business opportunities, recommendations regarding capital
raising alternatives, and assistance in dealing with potential investors
and strategic partners. Pursuant to such consulting agreement, CWIG and
its assignees were granted warrants to acquire 1,500,000 shares of
Common Stock at $0.50 per share.
Pursuant to the terms of the letter agreement dated September 19, 1997,
CWIG will use its "best efforts" to raise funds amounting to $3,000,000
in net proceeds less expenses and commissions within six months of the
date of the letter. As of March 31, 1998, CWIG has provided the short
term financing of $446,000 (see Notes 3 and 4).
On January 1, 1998, the Company relocated its offices and entered into a
three year lease at a minimum rental of $44,950 per year.
Effective January 24, 1997, the Company vacated its studio and
production facilities in Philadelphia, Pennsylvania. There are several
disputed invoices outstanding that amount to less than $2,000 that
management expects to resolve in its favor.
During 1996, the Company's former principal distributor of its print
products refused to pay a certain sales invoice for goods shipped to,
accepted and paid for by the distributor's customer. The Company had
demanded payment and the distributor has refused to pay the invoice for
$213,522. In July 1996, the Company filed for judgment on the $213,522
invoice together with interest, costs and such other relief the court
will deem just and proper. The distributor has filed a counterclaim.
Management feels this matter will be resolved favorably and will not
have a material adverse effect on its financial position. During 1996,
the Company provided an allowance for possible bad debts for the full
amount of this sales transaction. During 1997, this matter has moved to
a deferred status while the parties engage in settlement negotiations.
There are no other legal proceedings which the Company believes will
have a material adverse effect on its financial position.
The Company has not declared dividends on Series A or B Convertible
Preferred Stock. The cumulative dividends in arrears through June 30,
1997 was approximately $68,000.
Note 7 Common Stock
The shareholders of record at the close of business on December 5, 1997,
voted on January 15, 1998, to approve a 1 for 25 reverse stock split
effective that date. In this report all common shares and per share
calculations have been adjusted to give retroactive effect to a 1 for 25
reverse stock split.
As of March 31, 1998, there are outstanding 3,571,200 of non-public
warrants to purchase the Company's common stock at prices ranging from
$0.50 to $12.50 with a weighted average price of $1.07 per share.
(7)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
As of March 31, 1998, there were 137,321 shares of various classes of
Convertible Preferred Stock outstanding which can be converted to
108,928 shares of common stock.
As of March 31, 1998, there are 7,500 Series B Warrants outstanding to
purchase Series B Convertible Preferred Stock which can be converted
into 30,000 shares of the Company's common stock.
As of March 31, 1998, there were $350,000 of secured promissory notes
which can be converted into 350,000 shares of the Company's common
stock.
The total number of shares of the Company's common stock that would have
been issuable upon conversion of the outstanding debt, warrants and
preferred stock equaled 4,060,128 shares as of March 31, 1998, and would
be in addition to the 3,005,261 shares of common stock outstanding as of
March 31, 1998.
During the nine months ended March 31, 1998, 48,000 shares of the
Company's common stock was sold to third parties in a private placement
for $60,000 (at $1.25 per share).
On September 30, 1997, the Company sold 66,667 shares of the Company's
common stock to a third party for $75,000 under a Regulation S offering.
During the nine months ended March 31, 1998, the Company issued 72,727
shares of the Company's common stock in connection with the conversion
of $50,000 of convertible debenture to common stock under a Regulation S
offering.
The Company issued 15,200 shares of the Company's common stock to
consultants for services valued at $21,250 (average price per share
$1.25).
The Company issued 2,000 shares of the Company's common stock to an
officer as a bonus valued at $1.375 per share.
A warrant holder exercised his right to purchase 40,000 shares of the
Company's common stock at $2.50 per share.
The Company issued on October 20, 1997, 200 shares of its common stock
as a result of a conversion of 500 shares of Series P convertible
Preferred Stock.
During January 1998, the Company issued 30,963 shares of the Company's
common stock in connection with the conversion of 77,407 shares of
Series P Convertible Preferred Stock.
On March 30, 1998, the Company issued 4,000 shares of the Company's
common stock in connection with the conversion of 3,500 shares of Series
P Convertible Preferred Stock and 650 shares of Series S Convertible
Preferred Stock.
(8)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Note 8 Preferred Stock
The Company has authorized 10,000,000 shares of $.001 par value per
share Preferred Stock, of which the following were issued and
outstanding:
<TABLE>
<CAPTION>
Allocated Outstanding
--------- -----------
March 31, 1998 June 30, 1997
-------------- -------------
<S> <C> <C> <C>
Series A Preferred 100,000 25,500 25,500
Series B Preferred 200,000 5,000 5,000
Series C Preferred 1,000,000 18,681 18,681
Series P Preferred 600,000 86,640 168,047
Series S Preferred 50,000 1,500 2,150
--------- ------- -------
Total Preferred Stock 1,950,000 137,321 219,378
========= ======= =======
</TABLE>
The Company's Series A Convertible 5% Preferred Stock ("Series A
Preferred"), 100,000 shares authorized, is convertible into common stock
at the rate of 1.6 shares of common stock for each share of the Series A
Preferred. Dividends from date of issue, are payable from retained
earnings, and have been accumulated on June 30 each year, but have not
been declared or paid.
The Company's Series B Convertible 8% Preferred Stock ("Series B
Preferred"), is convertible at the rate of 4 shares of common stock for
each share of Series B Preferred. Dividends from date of issue are
payable on June 30 from retained earnings at the rate of 8% per annum
and have not been declared or paid.
The Company's Series C Convertible Preferred Stock ("Series C
Preferred"), is convertible at a rate of 0.4 shares of common stock per
share of Series C Preferred.
The Company's Series P Convertible Preferred Stock ("Series P
Preferred"), is convertible at a rate of 0.4 shares of common stock for
each share of Series P Preferred.
The Company's Series S Convertible Preferred Stock ("Series S
Preferred"), is convertible at the rate of 4 shares of common stock for
each share of Series S Preferred.
The Company's Series A Preferred and Series B Preferred were issued for
the purpose of raising operating funds. The Series C Preferred was
issued to certain holders of the Company's 10% Secured Notes in lieu of
accrued interest and also will be held for future investment purposes.
The Series S Preferred was issued to certain stockholders consisting
mainly of officers and directors of the Company in exchange for such
stockholders' shares of common stock. After this exchange, common stock
was sold on September 5, 1995 for the purpose of raising additional
capital.
The Series P Preferred was issued on September 12, 1995, to InfoPak
shareholders in exchange for (1) all of the outstanding capital stock of
InfoPak, (2) as signing bonuses for certain employees and a consultant
of InfoPak, and (3) to satisfy InfoPak's outstanding debt obligations to
certain shareholders.
(9)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
The 190,700 shares of Series B Preferred were issued to holders of
warrants to purchase such preferred stock. The funding for the exercise
of these warrants was the exchange of $1,907,000 of principal amount of
secured and unsecured notes. On December 3, 1996, 185,700 shares of
Series B Preferred were exchanged for 891,360 shares of the Company's
common stock.
The 26,275 shares of Series C Preferred were also issued in exchange for
$262,750 of interest due under the secured and unsecured notes. Holders
of 7,594 shares of Series C Preferred Stock have subsequently converted
their shares into the Company's common stock.
Note 9 Gain on Sale of Product Line
On September 25, 1997, the Company sold its real estate multiple listing
data delivery system. The purchase price was $450,000 plus the
assumption of a $59,247 liability to a third party. The transaction was
funded by a down payment of $40,000 which was applied to the outstanding
accounts receivable balance and the balance of $410,000 was payable in
36 monthly installments of $13,229.55 including interest at 10% per
annum commencing October 25, 1997. In February 1998 the payment terms of
the note were altered by extending the payment period to a total of
forty-eight months at 11%.
Note 10 Income Taxes
There was no provision for current income taxes for the nine months
ended March 31, 1998 and 1997.
The federal net operating loss carry forwards of approximately
$16,469,000 expire in varying amounts through 2012.
The Company has had numerous transactions in its common stock. Such
transactions may have resulted in a change in the Company's ownership,
as defined in the Internal Revenue Code Section 382. Such change may
result in an annual limitation on the amount of the Company's taxable
income which may be offset with its net operating loss carry forwards.
The Company has not evaluated the impact of Section 382, if any, on its
ability to utilize its net operating loss carry forwards in future
years.
Note 11 Events Subsequent to March 31, 1998
During April 1998, the Company received additional short term financing
of $153,000 from CWIG prior to the initial closing of the Private
Placement on April 8, 1998.
On April 8, 1998, the Company closed on the minimum of its Private
Placement. A total of 35.3 units comprising of 564,840 common shares and
282,417 warrants to purchase common stock at $1.50 per share were issued
in exchange for $325,000 of Series A Convertible Secured Promissory
Notes and the accrued interest thereon and $249,000 of the Company's
Unsecured 12% Convertible Promissory Notes. The remaining $25,000 of
Series A Convertible Secured Promissory Notes were paid in full on April
8, 1998.
Pursuant to the letter agreement dated September 19, 1997, CWIG will
continue to use its "best efforts" to raise additional funding for the
Company.
(10)
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
Below is the pro forma effect of the conversion of the $421,000 in short
term borrowings and accrued interest of $63,910 as of March 31, 1998,
into units described in the Private Placement. Each unit consists of
16,000 shares of common stock and 8,000 three year warrants to purchase
8,000 shares of common stock at $1.50 for the first year and at $2.00
for the remaining two years.
Balance Sheet Data: (in thousands) As of March 31, 1998 As Adjusted
-------------------- -----------
Total current assets $406 $406
Total assets 844 769
Total current liabilities 892 407
Working capital (deficiency) (486) (1)
Stockholder's equity (deficiency) (48) 362
(11)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three months ended March 31, 1998 and 1997
Liquidity and Capital Resources
As of March 31, 1998 the Company had a working capital deficiency of
$485,598, compared with a working capital deficiency of $212,723 as of
March 31, 1997. The current working capital deficiency as of March 31,
1998, included short term financing and related interested of
approximately $485,000 which was converted on April 8, 1998, as part of
the Private Placement to equity of the Company.
During January 1998 the Company received $106,500 less financing charges
of $7,455 pursuant to its agreement with Capital West Investment Group,
Inc. ("CWIG") as short term bridge loan financing in the form of Series
A Convertible Secured Promissory Notes. In addition, the Company
received $96,000 in the form of Unsecured 12% Convertible Promissory
Notes.
Results of Operations
The net loss for the quarter ended March 31, 1998, was $135,311 compared
to a net loss of $459,650 for the quarter ended March 31, 1997. The
decrease in the loss was caused primarily by a decrease in compensation
and consulting expenses and increased gross profit. Revenues for the
quarter ended March 31, 1998, were $208,526 compared to revenues of
$130,846 for the quarter ended March 31, 1997. The increase in revenues
was the result of substantial increases in the sales of the Company's
print products. For the quarter ended March 31, 1998, the Company
recorded sales totaling approximately $135,000 of its DV3D(R)
AnimotionTM print products compared to sales of approximately $17,500
for the quarter ended March 31, 1997.
Nine months ended March 31, 1998 and 1997
Liquidity and Capital Resources
For the nine months ended March 31, 1998, the Company raised $145,000
through private placement of its securities and the exercise of
warrants. In addition $446,000 was lent to the Company through short
term financing arrangements. In April 1998 an additional $153,000 of
Unsecured 12% Convertible Promissory Notes were received by the Company.
The Company needs additional funding in order to maintain current
operations. The Company is not to the point of generating sufficient
revenues from operations to cover its cost structure. The Company has
been funding its operations by selling its securities in private
placements, offshore transactions, short-term borrowing, and sale of its
products. Although the Company was able to complete the minimum offering
set forth in the Private Placement Memorandum, the Company is continuing
to work to complete the raising of funds amounting to $3,000,000 from
accredited investors. The Company was able to close on April 8, 1998,
the mini portion of the Private Placement. On April 8, 1998, the Secured
and Unsecured Note holders converted their notes and related accrued
interest into units of the Private Placement comprising of 564,840
shares of Common stock.
In September 1997, the Company sold its real estate multiple listing
data delivery system. The purchase price was $450,000 plus the
assumption of a $59,427 liability. The purchase price was payable
$40,000 at closing, which was applied against outstanding accounts
receivable trade and the balance to be paid ratably over a thirty-six
month period commencing October 25, 1997 at $13,229.55 per month
including interest at 10%. In February 1998 the payment terms of the
note were altered by extending the payment
(12)
<PAGE>
period to a total of forty-eight months at 11%. In connection with the
sale the Company agreed to provide consulting services for a period of
one hundred and twenty days at no cost and thereafter at certain
prescribed rates.
Results of Operations
The net loss for the nine months ended March 31, 1998, was $182,300
compared to $1,318,899 for the nine months ended March 31, 1997. The
reduction of the net loss is the result of the gain recognized from the
sale of the product line of $410,000, the elimination of the
amortization of good will of approximately $144,750, the forgiveness of
accrued compensation of $106,148, and the reductions in compensation,
related travel expenses and outside consultants of approximately
$300,000. Although operating revenues for the nine months ended March
31, 1998, are comparable to the nine months ended March 31, 1997, the
product mix is significantly different. Prior to the sale of the real
estate product line the majority of the revenues was generated by
InfoPak. Beginning in January 1998, the majority of the revenue was
generated through the sale of the Company's print products.
In December 1997 the Company sold all of its photographic equipment
resulting in a loss of $18,881. Currently all DV3D(R) and Animotion(TM)
print products are processed on a graphics work station to improve the
quality, time to market, and repeatability of these images.
The Company implemented a newly focused business plan which will
concentrate on offering and delivering integrated and systematic
Promotion Marketing Solutions to innovative business leaders to help
them increase their sales by offering two primary products, namely
MarketingLenses(TM) (a new trade name for all of the Company's print
products) and InfoPak. In December 1997 the Company moved into its new
office in Phoenix, Arizona and has begun to close sales from its
concentrated marketing efforts.
During the past six months, the Company has successfully implemented
many new strategies to better position the Company to become profitable.
A 1 for 25 reverse stock split was effected on January 15, 1998. All new
corporate identity materials were designed and produced including a
presence on the World Wide Web (www.dv3d.com). A completely new
management team and Board of Directors has been installed. As a result
of the new management marketing efforts, the sales of the Company's
print products have significantly increased beginning in January 1998.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The following documents are filed as part of this report:
1. The following Exhibits are filed herein: 27.0 Financial Data Schedule
2. Reports on Form 8-K filed: None
Signatures
In accordance with the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, duly authorized.
DIMENSIONAL VISIONS INCORPORATED
DATED: April 27, 1998 By: /s/ John D. McPhilimy
---------------------------------
John D. McPhilimy, Chairman,
President and Chief Executive
Officer
(13)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000836809
<NAME> DIMENSIONAL VISIONS INCORPORATED
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1,000
<CASH> 31,771
<SECURITIES> 0
<RECEIVABLES> 360,217
<ALLOWANCES> (215,743)
<INVENTORY> 137,375
<CURRENT-ASSETS> 406,091
<PP&E> 358,065
<DEPRECIATION> (304,070)
<TOTAL-ASSETS> 843,901
<CURRENT-LIABILITIES> 891,689
<BONDS> 0
0
713,410
<COMMON> 3,005
<OTHER-SE> (764,203)
<TOTAL-LIABILITY-AND-EQUITY> 843,901
<SALES> 380,777
<TOTAL-REVENUES> 380,777
<CGS> 236,879
<TOTAL-COSTS> 236,879
<OTHER-EXPENSES> 767,572
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,451
<INCOME-PRETAX> (182,361)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (182,361)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> 0
</TABLE>
