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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 September 30, 2000
[ ] 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
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(Exact name of small business issuer as specified in its charter)
Delaware 23-2517953
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2301 West Dunlap Avenue, Suite 207, Phoenix, Arizona, 85021
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(Address of principal executive offices)
(602) 997-1990
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(Issuer's telephone number)
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(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 September 30, 2000, the number of shares of Common Stock issued and
outstanding was 9,509,916.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
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<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
INDEX
Page
Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 2000 and June 30, 2000 1
Condensed Consolidated Statement of Operations -
For the three months ended September 30, 2000 and 1999 2
Condensed Consolidated Statement of Cash Flows -
For the three months ended September 30, 2000 and 1999 3
Notes to Condensed Consolidated Financial Statements 4
Independent Accountants' Report 7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIMENSIONAL VISIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash $ 67,131 $ 276,333
Notes receivable, net of allowance for bad debts of $443,669 -- --
Notes receivable, officers 12,000 --
Accounts receivable, trade 104,309 350,493
Prepaid expenses 12,522 9,227
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Total current assets 195,962 636,053
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Equipment
Equipment 479,672 479,372
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Furniture and fixtures 49,329 46,944
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529,001 526,316
Less accumulated depreciation 321,690 308,963
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207,311 217,353
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Other assets
Patent rights and other assets 26,508 31,627
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Total assets $ 429,781 $ 885,033
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of obligations under capital leases 53,210 50,962
Accounts payable, accrued expenses and other liabilities 197,937 379,807
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Total current liabilities 251,147 430,769
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Obligations under capital leases, net of current portion 74,167 88,343
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Total liabilities 325,314 519,112
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Commitments and contingencies -- --
Stockholders' equity
Preferred stock - $.001 par value, authorized 10,000,000
shares; issued and outstanding - 726,044 shares at
September 30, 2000, and 1,146,044 shares at June 30, 2000 726 1,146
Additional paid-in capital 1,091,269 1,474,295
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1,091,995 1,475,441
Common stock - $.001 par value, authorized 100,000,000
shares; issued and outstanding 9,509,916 shares at
September 30, 2000 and 8,934,916 shares at June 30, 2000 9,510 8,935
Additional paid-in capital 21,276,952 20,885,581
Deficit (22,154,785) (21,828,753)
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Total stockholders' equity before deferred consulting contracts 223,672 541,204
Deferred consulting contracts (119,205) (175,283)
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Total stockholders' equity 104,467 365,921
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Total liabilities and stockholders' equity $ 429,781 $ 885,033
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</TABLE>
See notes to condensed consolidated financial statements.
1
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DIMENSIONAL VISIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
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2000 1999
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Operating revenue $ 71,191 $ 129,597
Cost of sales 53,023 83,429
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Gross profit 18,168 46,168
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Operating expenses
Engineering and development costs 62,724 29,835
Marketing expenses 70,688 10,846
General and administrative expenses 206,133 180,356
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Total operating expenses 339,545 221,037
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Loss before other income (expenses) (321,377) (174,869)
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Other income (expenses)
Interest expense (6,584) (66,672)
Interest income 1,929 --
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(4,655) (66,672)
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Net loss $ (326,032) $ (241,542)
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Net loss per share of common stock $ (.04) $ (.04)
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Weighted average shares of common
stock outstanding 9,180,840 5,445,290
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See notes to condensed consolidated financial statements.
2
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DIMENSIONAL VISIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
----------------------------
2000 1999
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Cash flows from operating activities
Net loss $(326,032) $(241,542)
Total adjustments to reconcile net loss
to net cash used in operating activities 122,943 71,532
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Net cash used in operating activities (203,089) (170,010)
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Cash flows from investing activities
Purchase of furniture and equipment (2,685) --
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Net cash used in investing activities (2,685) --
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Cash flows from financing activities
Payment of obligations under capital lease (11,928) (4,772)
Proceeds from exercise of warrants 8,500 18,000
Sale of preferred stock, net of
offering costs of $37,500 -- 337,500
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Net cash (used in) provided by financing
activities (3,428) 350,728
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Net increase (decrease) in cash (209,202) 180,718
Cash, beginning 276,333 20,019
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Cash, ending $ 67,131 $ 200,737
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Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 6,584 $ 7,152
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Supplemental disclosure of non-cash investing and financing activities:
During the quarter ended September 30, 2000, 140,000 shares of the Company's
Common Stock were issued as a result of the conversion of 70,000 shares of
Series D Convertible Preferred Stock valued at $62,930.
During the quarter ended September 30, 2000, 350,000 shares of the Company's
Common Stock were issued as a result of the conversion of 350,000 shares of
Series E Convertible Preferred Stock valued at $320,096.
See notes to condensed consolidated financial statements.
3
<PAGE>
DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2000
(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, 2000, 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,
2000. 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 financial
statements as of and for the period ended September 30, 2000 and 1999 are
unaudited. The financial statements for the period ended September 30, 2000
have been reviewed by an independent public accountant pursuant to rule
10-01(d) of regulation S-X and following applicable standards for
conducting such reviews, and the report of the accountant is included as
part of this filing. The current period results of operations are not
necessarily indicative of results which ultimately will be reported for the
full year ending June 30, 2001.
The Company has incurred losses since inception of $22,154,785 and has a
working capital deficiency of $55,185 as of September 30, 2000. The future
of the Company as an operating business will depend on its ability to (1)
successfully market and sell its products, (2) obtain sufficient capital
contributions and/or financing as may be required to sustain its current
operations and to fulfill its sales and marketing activities, (3) achieve a
level of sales adequate to support the Company's cost structure, and (4)
ultimately achieve a level of profitability. Management's plan to address
these issues includes (a) redirecting its marketing efforts of the
Company's products and substantially increasing sales results, (b)
continued exercise of tight cost controls to conserve cash, (c) raising
additional long term financing.
The consolidated financial statements have been prepared on a going concern
basis which contemplates the realization and settlement of liabilities and
commitments in the normal course of business. The available funds at
September 30, 2000, plus the limited revenue is not sufficient to satisfy
the present cost structure. Management recognizes that the Company must
generate additional resources to enable it to continue operations.
Management plans include the continued expansion of the sale of its
products and the sale of additional securities.
NOTE 2 ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
September 30, 2000 June 30, 2000
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Accounts payable $171,035 $353,927
Salaries 18,532 18,523
Payroll Taxes Payable 8,369 7,357
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Total $197,936 $379,807
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NOTE 3 COMMITMENTS AND CONTINGENCIES
The Company has outstanding employment contracts of approximately $31,000
that expire in November 2000.
There are no legal proceedings that 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 September 30,
2000, was approximately $74,225.
NOTE 4 COMMON STOCK
As of September 30, 2000, there are outstanding 6,663,910 of non-public
warrants to purchase the Company's common stock at prices ranging from
$0.10 to $12.50 with a weighted average price of $0.49 per share.
As of September 30, 2000, there were 726,044 shares of various classes of
Convertible Preferred Stock outstanding which can be converted to 967,818
shares of common stock.
During the three months ended September 30, 2000, the Company issued
140,000 shares its Common Stock as a result of the conversion of 70,000
shares of Series D Convertible Preferred Stock.
During the three months ended September 30, 2000, the Company issued
350,000 shares its Common Stock as a result of the conversion of 350,000
shares of Series E Convertible Preferred Stock.
4
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NOTE 4 COMMON STOCK (CONTINUED)
During the three months ended September 30, 2000, the Company issued 85,000
shares of its stock in connection with the exercise of warrants.
NOTE 5 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:
Outstanding
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September 30, June 30,
Allocated 2000 2000
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Series A Preferred 100,000 15,500 15,500
Series B Preferred 200,000 3,500 3,500
Series C Preferred 1,000,000 13,404 13,404
Series D Preferred 375,000 282,000 352,000
Series E Preferred 1,000,000 325,000 675,000
Series P Preferred 600,000 86,640 86,640
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Total Preferred Stock 3,325,000 726,044 1,146,044
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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 D Convertible Preferred Stock ("Series D Preferred")
is convertible at a rate of 2 shares of common stock per share of Series D
Preferred.
The Company's Series E Convertible Preferred Stock ("Series E Preferred")
is convertible at a rate of 1 share of common stock per share of Series E
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 A Preferred, Series B Preferred, Series D Preferred
and Series E 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 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.
5
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NOTE 6 INCOME TAXES
There was no provision for current income taxes for the three months ended
September 30, 2000 and 1999.
The federal net operating loss carry forwards of approximately $19,070,000
expire in varying amounts through 2020. In addition the Company has state
carryforwards of approximately $3,175,000.
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.
6
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INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and stockholders,
We have reviewed the accompanying condensed consolidated balance sheet of
Dimensional Visions, Incorporated, Phoenix, AZ as of September 30, 2000, and the
related statements of operations and cash flows for the three months period then
ended. These financial statements are the responsibility of the management of
the Company.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
Kopple & Gottlieb, LLP
Certified Public Accountants
Jenkintown, Pennslyvania
November 14, 2000
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion and financial statements contained herein are for the three
months ended September 30, 2000 and 1999. The following discussion
regarding the financial statements of the Company should be read in
conjunction with the financial statements of the Company included herewith.
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
RESULTS OF OPERATIONS
The net loss for the quarter ended September 30, 2000, was $326,032
compared to a net loss of $241,542 for the quarter ended September 30,
1999. The loss before other income and expenses for the quarter ended
September 30, 2000 was $321,337 compared to a loss before other income and
expenses for the quarter ended September 30, 1999, of $174,869. The
Company's marketing expenses for the three months ended September 30, 2000
increased by approximately $60,000 over the same period last year. This
increase was due to the addition of two salesmen to our staff along with
their traveling expenses. The Company's engineering and development
expenses increased in the three months ended September 30, 2000 by
approximately $30,000 over the three months ended September 30, 1999. This
increase was due to the salary expenses of hiring four new employees.
Revenue for the quarter ended September 30, 2000, was $71,191 compared to
revenue of $129,597 for the quarter ended September 30, 1999. Management
primarily attributes the low revenue for these quarters to the seasonality
of revenue that normally occurs towards the last half of the Company's
fiscal year. Revenue for the quarter ended September 30, 1999 was boosted
by $46,000 through the sale of Pokemon products which are no longer being
ordered.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Company had a working capital deficiency of
$55,185, compared with a working capital deficiency of $310,828 as of
September 30, 1999. During the quarter ended September 30, 2000, the
Company decreased their accounts payable by approximately $182,000.
Approximately $51,000 was for the settlement of outstanding legal fees. As
of September 30, 2000 the accounts payable was $171, 035 compared to $287,
600 as of September 30, 1999.
During the quarter ended September 30, 2000, the Company collected
approximately $246,000 of accounts receivable. The cash received plus
approximately $200,000 on hand was used to reduce accounts payable and pay
current period expenses.
As of September 30, 2000 the Company's financial position is precarious.
The Company needs funding in order to maintain current operations and to
support growth and sales. In the month following the quarter ended
September 30, 2000, the Company received approximately $90,000 from
investors that exercised their warrants. The Company is negotiating a
$500,000 line of credit that would be obtained by an investor group secured
by the Company's assets. Additionally, the Company is attempting to
finalize an equity line with an institution to provide funding through the
sale of the Company's common stock. The Company shall have the right at its
sole discretion to put common stock to the investment banking firm, subject
to certain amount limitations and conditions based upon tracing volume of
the Company. However, there can be no assurance that the Company will be
successful in realizing the line of credit or the institutional equity line
and if sufficient funding is not secured, the Company may be forced to
cease part or all of its operations.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Incorporated by reference from registrant's latest report on Form 10-KSB.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following document are filed as part of this report:
1. The following Exhibits are filed herein: 27.1 Financial Data Schedules
2. Reports on Form 8-K filed: The Company filed a current report on
Form 8K dated July 18, 2000, with the
Securities and Exchange Commission
reporting that the Company terminated
Gitomer & Berenholz, P.C. as its
principal accountant as of July 13,
2000. The Company engaged the firm of
Kopple & Gottlieb, LLP as its new
accounting firm.
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: November 14, 2000 By: /s/ John D. McPhilimy
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John D. McPhilimy, Chairman,
President and Chief Executive
Officer
9
