<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period Ending: July 31, 1997
-------------
Commission File Number: 0-17623
---------
Database Technologies Inc.
_________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 02-0429620
__________________________________________________________________________
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
20 Commerce Park North Bedford, NH 03110
__________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(603) 628-2888
___________________________________________________________________________
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
Number of shares outstanding of the issuer's classes of
common stock, as of July 31, 1997;
Common stock $.001 par value............................2,466,082
Total Pages: 14
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES INC.
FORM 10-Q July 31, 1997
_________________________________________________________________________
PART I: FINANCIAL INFORMATION
ITEM 1 - Financial Statements
___________________________________________________________________________
(following pages)
2
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES INC.
BALANCE SHEET
July 31, 1997
<TABLE>
____________________________________________________________________________
<CAPTION>
July 31, 1997 April 30, 1997
(Unaudited) (*)
_____________________________________________________________________________
A S S E T S
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,654 $ 3,805
Receivables 5,235 9,161
----------- ---------
7,889 12,966
___________ _________
PROPERTY AND EQUIPMENT (Note 1 ):
Equipment,Furniture & Fixtures $ 14,027 $ 14,027
Less: Accumulated depreciation 14,027 14,027
____________ ___________
Net property and equipment 0 0
___________ _____________
Total assets $ 7,889 $ 12,966
============= ===========
</TABLE>
Continued - 1
3
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
BALANCE SHEET
July 31, 1997
<TABLE>
_____________________________________________________________________________
<CAPTION>
July 31, 1997 April 30, 1997
(Unaudited) (*)
_____________________________________________________________________________
L I A B I L I T I E S A N D
S T O C K H O L D E R S' E Q U I T Y
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable
- officer/stockholder (Note 2) $ 184,322 $ 184,322
Accounts payable
- trade 7,828 7,635
Deffered licensing income 4,968 8,388
Line of credit 5,402 6,080
Accrued payroll 589 840
Payroll taxes payable 466 0
Accrued Interest 2,696 0
___________ _________
Total current liabilities $ 206,271 $ 207,265
___________ ________
STOCKHOLDERS' DEFICIT
Common stock - par value $0.001,
authorized 2,500,00 shares,
issued and outstanding
2,466,082 shares in 1997
and 1996 $ 2,466 $ 2,466
Additional paid-in capital 12,179 12,179
Accumulated Deficit ( 208,944) (208,944)
NET LOSS ( 4,083)
____________ __________
Total stockholders' equity ($ 198,382) ($ 194,299 )
___________ __________
$ 7,889 $ 12,966
========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
Concluded - 2
_______________________________________________________________________________
(*) Condensed from the Company's audited financial statements.
4
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDING JULY 31, 1997 and JULY 31, 1996
<TABLE>
___________________________________________________________________________
<CAPTION>
Three Months Three Months For the Year
Ending Ending Ended
July 31,1997 July 31,1996 April 30, 1997
(Unaudited) (Unaudited) (*)
____________________________________________________________________________
<S> <C> <C> <C>
REVENUE (Note 1) $ 26,152 $ 18,174 $ 98,312
COST OF REVENUE 4,519 2,702 33,389
___________ _____________ _____________
Gross Revenue 21,633 15,472 64,923
____________ _____________ ____________
OPERATING EXPENSES :
Selling and Delivery 1,903 2,261 9,475
General and Admin. 21,118 25,035 105,691
_____________ _____________ ____________
23,021 27,296 115,166
Gain (LOSS)
from Operations (1,388) (11,824) (50,243)
____________ _____________ ___________
OTHER INCOME/(EXPENSE)
Nonoperating (Expense)
Interest expense (2,696) (2,939) (14,203)
____________ ______________ ___________
NET PROFIT (LOSS)
Before Provision (4,083) (14,763) (64,446)
For Income Tax
Provision For Income
Taxes ( Note 1) 0 0 0
State Income Tax 0 0 0
============= ============= ============
Net Income (Loss)
After Income Taxes ($4,083) ($14,763) ($64,446)
NET PROFIT (LOSS)
PER SHARE (Note 6) $(0.0016) $(0.0059) $(0.03)
============= ============= ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
- -----------------------------------------------------------------------------
(*) Condensed from the Company's audited financial statements.
5
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES INC.
STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDING JULY 31, 1997
<TABLE>
__________________________________________________________________________
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
__________________________________________________________________________
BALANCE AT
April 30, 1997 2,466,082 $2,466 $12,179 $ (208,944) $ (194,299)
Net Loss (4,083) (4,083)
----------- ---------- --------- ---------- ----------
BALANCE AT
July 31,1997 2,466,082 $2,466 $12,179 $ (213,027) $ (198,382)
============= ========= ========== ========= ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
6
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY,31,1997 AND
FOR THE YEAR ENDED APRIL 30,1997
<TABLE>
_____________________________________________________________________________
<CAPTION>
Three Months For the year
Ending Ended
July 31, 1997 April 30, 1997
(Unaudited) (*)
____________________________________________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(4,083) $(64,446)
Adjustments to reconcile net income (loss)
to net cash provided by
operating activities:
Depreciation and amortization 0 89
(Increase) decrease in the following
Assets:
Accounts receivable - 3,926 (5,412)
Other current assets 725
Increase (decrease) in the following
Liabilities:
Accounts payable-trade 193 3,392
Accrued expenses (251) 150
Customer deposits 0 (1,663)
Deferred License income (3,420) 0
Payroll Taxes Payable 466 0
Accrued Interest 2,696 0
---------- ----------
Net cash Used In
Operating Activities (473) (67,165)
________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment Furniture & Fixtures 0 0
_________ _________
Cash Flows from Financing Activities:
Increase in Retained Earnings 0 0
Notes Payable-stockholder 0 56,792
Line of credit advance (677) 6,079
Net Cash Provided By Financing Activities (677) 62,871
NET INCREASE (DECREASE)CASH (1,150) (4,294)
CASH, Beginning of Period 3,805 8,099
__________ _________
CASH, End of Period $ 2,654 $ 3,805
========== =========
Spplemental Disclosures of Cash Flow Information
Cash Payments For:
State Taxes 300 0
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
_______________________________________________________________________
(*) Condensed from the Company's audited financial statements.
7
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 and 1996
BACKGROUND
__________
Database Technologies, Inc. (the Company) was incorporated under the laws of
the State of Delaware on November 4,1988.The company operates a computerized
database containing current prices of certain electronic merchandise from
various vendors. The Company provides this information to assist insurance
company adjusters in processing claims. The Company's sources of revenue are
licensing fees obtained from various insurance companies for the use of its
database and sale of merchandise to its customers for the purposes of
settling claims with their policyholders.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
___________________________________________
REVENUE AND EXPENSE RECOGNITION
__________________________________
The financial statements are prepared on the accrual basis of accounting;
revenue is recognized when earned and expenses are recognized when goods and
services are received. Licensing fee income for the use of its database may
be on an annual, monthly,or per use basis.Revenue is recognized when earned.
Customer payments received but not earned are reflected as deferred licensing
fee income, a current liability.
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.
CASH AND CASH EQUIVALENTS
__________________________
For purposes of reporting the statements of cash flows, the Company considers
all cash accounts, which are not subject to withdrawal restrictions or
penalties, and all highly liquid investments with a maturity of three months
or less to be cash equivalents.
EQUIPMENT
_________
Property and equipment purchased is depreciated by the straight-line method
over the estimated useful lives of the respective assets. Equipment acquired
under capital leases is amortized by the straight-line method over the
estimated useful lives of the respective assets.
8
</PAGE>
<PAGE.
DATABASE TECHNOLOGIES,INC.
Notes to Financial Statements
April 30, 1997 and 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)
______________________________________________________
INCOME TAXES
____________
Deferred income taxes are provided for the expected tax effects of differences
between the financial statement and tax basis of assets and liabilities.
The Company has a deferred tax asset which is attributable primarily to net
operating loss carryforwards. Since it is more probable than not that the
deferred tax asset will not be realized, a valuation allowance for the entire
amount has been recorded as of April 30, 1997 and 1996.
No provision for income taxes was required due to the current year loss. The
following are net operating losses available and their expiration dates.
Year Carryforward
Amount Expires
_______ _________
$13,161 2008
36,149 2009
48,293 2010
62,010 2011
PENSION AND PROFIT SHARING PLANS
________________________________
The Company established a profit sharing plan which covers all employees of
the Company. No contributions were made in fiscal years ended 1997 or 1996.
COMPANY'S FUTURE PLANS
_____________________
The Company's future operations are effected by its current financial position.
Specifically, its low level of cash, total assets and its negative capital.
The Company anticipates operating cash flow will be insufficient to finance
operations. It anticipates cash to be provided from its principal stockholder/
officer,in the form of loans to enable the Company to meet operating cash flow
requirements. The Company intends to explore possible asset sales and/or a
merger transaction.
9
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
Note to Financial Statements
April 30, 1997 and 1996
2. Notes Payable - Stockholder
____________________________
Notes payable - stockholder totaled $184,322 and $127,530 as of April 30, 1997
and 1996, respectively. These notes bear interest at 5.85% and 12% for the
years ended April 30, 1997 and 1996, respectively. All notes payable to
stockholder are due April 30, 1998.
3.OPERATING LEASES
__________________
Facilities
__________
The Company leases its facilities from a trust controlled by the majority
stockholder. The lease agreement requires monthly payments of approximately
$350 plus insurance, maintenance,and operating expenses. The initial term of
the lease expires December 1997. Rent expense for the year ended April 30,
1997 amounted to $5,400.
Vehicles and Equipment
______________________
The Company currently leases a vehicle and a computer from the majority
stockholder. The monthly lease payments are $450 and $175, respectively.
Vehicle and equipment lease expenses for the year ended April 30, 1997 are
$5,400 and $1750, respectively, and expire in May 1999 and June 1998,
respectively.
Future minimum lease payments under a noncancelable operating leases as of
April 30, 1997 are:
1998 $5,350
1999 350
4. MAJOR CUSTOMER
________________
The Company had one major cutomer who accounted for 21% of the total revenue
during the year ended April 30, 1997. No major customer accounted for more
than 10% of the total revenue during the year ended April 30, 1996.
5. LICENSING AND MARKETING AGREEMENTS
____________________________________
On February 28, 1994,the Company entered into a licensing agreement with ADP
Property Claims Services, Inc. (ADP). This agreement was to continue in
effect until December 31, 1998. However on October 30, 1995, ADP terminated
the contract with the Company. Under this agreement, ADP was to market the
Company's database products combined with its own products.The companies are
attempting to reach a new agreement.
On December 13, 1993, the Company entered into a marketing agreement with
David A. Johnson & Associates. This agreement will continue in effect until
December 12, 1998 and may be extended for an additional five years. Under
this agreement, David A. Johnson & Associates will market the Company's
database products combined with its own products.
10
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
Note to Financial Statements
April 30, 1997 and 1996
6. INCOME (LOSS) PER SHARE
_______________________
The loss per common share for the years ended April 30, 1997 and 1996 has
been computed based on the weighted average number of shares outstanding of
2,466,082.
7. PRIOR PERIOD ADJUSTMENTS
_________________________
The statement of changes in stockholders' deficit contains a 110,000 share
adjustment to common stock. This transaction arose as a result of
litigation settlement in a prior year. The common stock adjustment was not
recorded in that prior year and is reflected in the reconciliation of
stockholders' deficit for the year ended April 30, 1996 and subsequent.
The April 30, 1996 accumulated deficit was restated for a correction of an
error in the prior year's revenue recognition, which caused the Company to
recognize deferred licensing fee income as income instead of a liability.
Additionally, 25,000 shares of treasury stock was acquired in a prior year
at no cost to the Company. Accordingly, common stock, additional paid-in
capital, and accumulated deficit are restated as follows:
Additional
Common Paid-In Accumulated
Stock Capital Deficit
--------- --------- -----------
April 30, 1996,as previously reported $ 2,381 $12,154 $ (136,000)
Correction of error 110 - (8,498)
Treasury stock (25) 25 -
-------- -------- -----------
April 30, 1996, as restated $2,466 $12,179 $ (144,498)
======= ======== ==========
8. LINE OF CREDIT
_______________
The Company has a revolving line of credit in the form of a corporate credit
card with an interest rate of 15.4%. The line of credit was established to
cover the operating expenses of the business. The Company remits minimum
principal and interest payments directly to the credit card company on a
monthly basis. Amounts above the minimum are remitted as cash flow allows.
9. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
_______________________________________________________
The Company's financial instruments consist of cash, short-term trade
receivables and payables, and short term debt. The carrying value of all
instruments approximates their fair market value.
11
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES,INC.
FORM 10-Q JULY 31, 1997
- -------------------------------------------------------------------------------
PART I: FINANCIAL INFORMATION
ITEM 2- Management's Discussion and Analysis of Financial
Condition and Results of Operations.
_______________________________________________________________________________
REVENUES
The Registrant's revenues for the first quarter ended July 31,1997
were $26,152. an increase of $7,978. from the same quarter of the
prior year.
OPERATING EXPENSES
The Registrant's total operating expenses in the quarter ended
July 31, 1997 were $23,021., and when compared to the same quarter
of the prior year represents a decrease in expenses of $4,275. It
appears the operating expenses are under control and probably at a
bare minimum level. The Registrant was able to increase sales and
reduce expenses during this period.
When a comparison is made between the selling expenses and general
and administrative expenses between the quarter ended July 31,1997
and the same quarter of the prior year, it indicates the selling
expense decreased by $300. and G & A expenses decreased by $4,000.
INCOME
In the current quarter ended July 31, 1997 the Registrant had an
operating loss of $1,388. which was $10,437. less than the loss
incurred in the same quarter of the prior year. The increase in
revenues in the quarter ended July 31, 1997 plus the decrease in
expenses were factors that allowed the Registrant this decrease
in operating loss for the period. Until revenues can be increased
sufficiently in future quarters the Registrant will continue to
sustain losses in the coming quarters.
INCOME TAX
No provision for Federal or State corporate income taxes has been
made due to the tax loss carryforward from prior tax years.
LIQUIDITY and CAPITAL RESOURCES
The Registrant is of the opinion new revenues must be generated
or the liquidity problem will worsen. Thus far the Registrant has
relied on it's major stockholder/officer to provide funds for the
Company when the need arises. There is a limit to these resources
and the Registrant's financial problems will not improve unless
revenues improve.
12
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES INC.
FORM 10-Q JULY 31, 1997
- --------------------------------------------------------------------------------
PART II: OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
None
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
None
ITEM 5 _ Other Information
Not Applicable
ITEM 6 - Exhibits and Reports on Form 8 - K
a. Exhibits
None
b. Reports on Form 8-K ( all incorporated by reference )
None
13
</PAGE>
<PAGE>
DATABASE TECHNOLOGIES INC.
FORM 10-Q JULY 31, 1997
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DATABASE TECHNOLOGIES INC.
____________________________
(Registrant)
December 9,1997 s/Allan S. Wolfe
- --------------------------------------------------------------------------------
( Date ) ( Signature )
Allan S. Wolfe:
Chairman of the Board, President,
Chief Executive Officer, Chief
Financial Officer, and a Director
14
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 2,654
<SECURITIES> 0
<RECEIVABLES> 5,235
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,889
<PP&E> 14,027
<DEPRECIATION> 14,027
<TOTAL-ASSETS> 7,889
<CURRENT-LIABILITIES> 206,271
<BONDS> 0
0
0
<COMMON> 2,466
<OTHER-SE> 12,179
<TOTAL-LIABILITY-AND-EQUITY> 198,382
<SALES> 26,152
<TOTAL-REVENUES> 26,152
<CGS> 4,519
<TOTAL-COSTS> 23,021
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,696
<INCOME-PRETAX> (4,084)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,084)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,084)
<EPS-PRIMARY> $(.01)
<EPS-DILUTED> $(.01)
</TABLE>
