<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 10-QSB
[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
or
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE TRANSITION PERIOD FROM ___________ TO ____________.
COMMISSION FILE NO. 0-20312
--------------------
VISTA INFORMATION SOLUTIONS, INC.
(Exact name of small business issuer as specified in its charter)
MINNESOTA 41-1293754
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
5060 SHOREHAM PLACE, #300, SAN DIEGO, CA 92122
(Address of principal executive office) (Zip Code)
(619) 450-6100
(Issuer's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Issuer (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 number of shares of the Issuer's Common Stock, $.01 par value, outstanding
on May 8, 1998 was 10,054,713.
Transitional Small Business Format (check one) YES __ NO X
<PAGE>
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
- ----- ----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 3
1998 AND 1997 (UNAUDITED)
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1998 (UNAUDITED) AND DECEMBER 4,5
31, 1997
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 6
1998 AND 1997 (UNAUDITED)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND 8-10
FINANCIAL CONDITION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 11
ITEM 2. CHANGES IN SECURITIES. 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 11
ITEM 5. OTHER INFORMATION. 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 11
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
- ----------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
Revenues $3,617,623 $1,935,953
Cost of revenues 611,799 605,205
---------- ----------
Gross margin 3,005,824 1,330,748
Operating Expenses
Sales and general and administrative 1,887,849 1,375,340
Research and development 346,695 218,097
Depreciation and amortization 458,782 1,177,056
---------- ----------
Operating income (loss) 312,498 (1,439,745)
Interest income (expense) (51,595) (284,784)
Other income (expense) (3,497) (9,677)
---------- ----------
Net income (loss) $257,406 (1,734,206)
---------- ----------
---------- ----------
Preferred stock dividends 150,000 -
Accretion of convertible preferred stock 250,000 -
---------- ----------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS (142,594) (1,734,206)
---------- ----------
---------- ----------
Basic and diluted net income (loss) per common share ($0.01) ($0.30)
---------- ----------
---------- ----------
Weighted average common shares outstanding 9,649,334 5,841,214
---------- ----------
---------- ----------
</TABLE>
See Notes to Financial Statements
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
Assets 1998 1997
- ----------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 31,983 $ 341,781
Trade accounts receivable, less allowance for doubtful accounts
of $179,141 and $191,500, respectively 3,188,207 2,589,466
Prepaid expenses and other assets 292,944 272,030
---------- ----------
TOTAL CURRENT ASSETS 3,513,134 3,203,277
EQUIPMENT, FURNITURE AND SOFTWARE, AT COST:
Equipment and furniture 4,010,945 3,767,826
Purchased software 567,005 439,884
---------- ----------
4,577,950 4,207,710
Less accumulated depreciation (2,996,592) (2,810,435)
---------- ----------
NET EQUIPMENT, FURNITURE AND SOFTWARE 1,581,358 1,397,275
ACQUIRED TECHNOLOGY AND ENVIRONMENTAL DATABASES
less accumulated amortization of $11,996,024 and $11,728,609,
respectively 318,784 593,200
DEPOSITS 197,438 185,134
---------- ----------
$5,610,714 $5,378,886
---------- ----------
---------- ----------
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
Liabilities and Stockholders' Equity 1998 1997
- ----------------------------------------------------------------------- ------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term obligations $ 417,352 $ 391,872
Accounts payable 551,605 497,744
Deferred revenue 237,050 243,967
Other current liabilities 306,846 426,323
---------- ----------
TOTAL CURRENT LIABILITIES 1,512,853 1,559,906
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 512,084 471,196
STOCKHOLDERS' EQUITY:
Preferred stock, Series B convertible, par value $.01; liquidation value
$3,000,000, authorized 200,000 shares;
200,000 shares issued and outstanding 2,000 2,000
Preferred stock, Series C convertible, par value $.01;
liquidation value $6,279,398, authorized 670,000 shares;
375,607 shares issued and outstanding 3,756 3,756
Preferred stock, Series D convertible, par value $.01;
liquidation value $2,499,977, authorized 240,000 shares;
187,124 shares issued and outstanding 1,871 1,871
Preferred stock, Series E convertible, par value $.01;
liquidation value $2,500,000, authorized, issued and
outstanding 2,500 shares 25 25
Preferred stock, Series F convertible, par value $.01;
liquidation value $2,500,000, authorized issued and
outstanding 2,500 shares 25 25
Common stock, par value $.001; authorized 43,000,000 shares;
issued and outstanding 1998; 9,649,335 and 1997; 9,440,956 189,848 188,819
Additional paid-in capital 37,327,327 37,197,769
Accumulated deficit 33,939,075 34,046,481
----------- -----------
3,585,777 3,347,784
----------- -----------
$ 5,610,714 $ 5,378,886
----------- -----------
----------- -----------
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 MARCH 31
1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 257,406 (1,734,206)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 186,157 177,268
Write-off of acquired technology 274,416 999,669
Amortization of SIRROM warrant value - 32,400
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable - trade (598,741) (98,732)
Prepaid expenses & other assets (20,914) (37,548)
Increase (decrease) in:
Trade accounts payable 53,861 24,704
Accrued compensation and employee benefits 35,371 (20,271)
Accrued interest - 51,765
Deferred revenue (6,917) 34,183
Other current liabilities (154,848) 126,418
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 25,791 (444,350)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and software (370,240) (359,865)
Increase in other assets (12,304) (16,955)
--------- ---------
NET CASH (USED) IN INVESTING ACTIVITIES (382,544) (376,820)
--------- ---------
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (93,632) (78,868)
Proceeds from long-term obligations 160,000 621,256
Payments on note payable to bank 219,307
Proceeds from SIRROM note payable
Payments of preferred dividends (150,000)
Net proceeds from the issuance of preferred stock
Proceeds from issuance of common stock 130,587 3,751
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 46,955 765,446
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (309,798) (55,724)
Cash and cash equivalents at beginning of period 341,781 56,277
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 31,983 $553
--------- ---------
--------- ---------
</TABLE>
<PAGE>
VISTA Information Solutions, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS AND THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, the interim financial
statements include all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the results for interim periods
presented. Operating results for the three months ended March 31, 1998 are
not necessarily indicative of the operating results that will be achieved for
the year or any other period. These statements should be read in conjunction
with the Company's Annual Report on Form 10-KSB for the year ended December
31, 1997, the Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997, the Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1997 and the Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1997.
REVERSE STOCK SPLIT AND REINCORPORATION
On January 27, 1998 the Company's Board of Directors approved a
reincorporation of the Company in Delaware and a one-for-two reverse stock
split. On March 17, 1998, the Company's stockholders approved the
reincorporation and reverse stock split, which went into effect after the
close of the market on March 27, 1998. All references to common shares,
earnings (loss) per common share and conversion rates in the consolidated
financial statements and in these notes have been restated to retroactively
reflect the effect of the reverse split. In connection with the
reincorporation of the Company as a Delaware corporation the par value of the
common and preferred stock was changed to $.001 per share. The change in the
par values is not reflected in the consolidated financial statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information that the Company's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion
should be read in conjunction with the financial statements and footnotes
which appear elsewhere in this Report.
This discussion and analysis contains forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933, which are subject to the "safe
harbor" created by that section. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions
or variations of such words are intended to identify forward-looking
statements, but are not the exclusive means of identifying forward-looking
statements in this Report. Additionally, statements concerning future matters
such as the features, benefits and advantages of the Company's products, the
development of new products, enhancements or technologies, business and sales
strategies, competition and facilities needs and other statements regarding
matters that are not historical are forward-looking statements. Such
statements are subject to certain risks and uncertainties, limitation those
discussed in "Risk Factors" section of Item 6 of this and the Company's
actual future results could differ materially from those projected in the
forward-looking statements. The Company assumes no obligation to update the
forward-looking statements. Readers are urged to review and consider
carefully the various disclosures made by the Company in this Report, which
attempts to advise interested parties of the risks and factors that may
affect the Company's business, financial condition and results of operations.
VISTA provides environmental risk information and address-based
hazard and classification information to bankers, engineers, insurance
companies and corporations throughout the United States. The Company,
originally known as DataMap, Inc. ("DMI"), was founded in 1975 to develop
geographic-demographic analysis tools for business ("GIS"). Supporting this
business line, the Company has developed a proprietary service known as the
Geographic Underwriting System ("GUS(R)") which delivers address-based hazard
and classification information to property/casualty insurance underwriters.
GUS provides insurance underwriters and loss control groups of insurance
companies with on-line or batch access to a series of reports presenting
specific classification and hazard information about the property to be
insured. The Company's geo-demographic information databases, technological
understanding and techniques of geographic information processing provide the
basis for its current products. Additional insurance information layers can
be added to the Company's current GUS service offering due to the
application's modular design.
On February 28, 1995, DMI acquired all the outstanding common stock
of VISTA Environmental Information, Inc. ("VISTA Environmental") in exchange
for newly issued common and preferred shares of DMI. The acquisition of VISTA
Environmental expanded the Company's existing product line to include
environmental risk information and significantly increased the marketing
capability within the Company. The VISTA Environmental product line provides
address and name based environmental risk information about properties and
companies in the United States to bankers, engineers and corporations. On May
23, 1995, the Company changed its name from DataMap, Inc. to "VISTA
Information Solutions, Inc."
On January 27, 1998 the Company's Board of Directors approved a
reincorporation of the Company in Delaware and a one-for-two reverse stock
split. On March 17, 1998, the Company's stockholders approved the
reincorporation and reverse stock split, which went into effect after the
close of the Market on March 27, 1998. All references to common shares,
earnings (loss) per common share and conversion rates in the consolidated
financial statements and in these notes have been restated to retroactively
reflect the effect of the reverse split. In connection with the
reincorporation of the Company as a Delaware corporation the par value of the
common and preferred stock was changed to $.001 per share. The change in the
par values is not reflected in the consolidated financial statements.
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE PERIOD ENDED MARCH 31, 1998 TO THE PERIOD ENDED MARCH 31,
1997
Revenue
Total revenues increased 87 percent from $1,936,000 for the three
months ended March 31, 1997, to $3,618,000 for the three months ended March
31, 1998. This increase resulted from an increase in GUS revenue of
$1,204,000 combined with increases in environmental revenue of $487,000. The
increase in GUS revenue was attributed to the State Farm and Prudential
agreements as well as increases in transactional revenue. Increases in
environmental revenue are primarily due to an accumulation of StarView
contracts. While the StarView service tends to reduce the revenue generated
per transaction, the Company believes that it has been able to capture
additional market share as a result of these contractual relationships.
Gross Margin
Gross margins increased 126 percent from approximately $1,331,000
for the three months ended March 31, 1997 to approximately $3,006,000 for the
three months ended March 31, 1998. Increases in GUS revenue (which has very
low costs of sales) have been the primary reason for the increase in gross
margin. Gross margins as a percentage of revenue also increased during this
period primarily as a result of the transition of customers from the
Company's traditional service bureau to the StarView desktop service, which
has lower costs of sales.
Operating Expenses
Total operating expenses decreased 3 percent from $2,770,000 for the
three months ended March 31, 1997, to $2,693,000 for the three months ended
March 31, 1998. This decrease is primarily the result of decreased
amortization associated with the acquisition of Vista Environmental due to
the termination of the VISTAEXPRESS system in September 1997 and the
completion of the amortization of the remaining asset in February 1998. This
decrease was partially offset by increases in selling, general and
administrative and research and development expenses primarily as a result of
increased costs associated with sales and marketing initiatives and the
development of new technologies.
Interest Expense
Interest expense decreased 82 percent from $285,000 for the three
months ended March 31, 1997, to $52,000 for the three months ended March 31,
1998. This decrease is generally due the the retirement of several debt
instruments in 1997. The Company currently has no long-term debt obligations
with the exception of several capital equipment leases.
The Company had no taxable income and, accordingly, recorded no
provision for income taxes during the three months ended March 31, 1998 and
1997.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the three months ended
March 31, 1998 was approximately $26,000 compared to net cash used in
operations of approximately $444,000 during the three months ended March 31,
1997. Improved profitability for this period was the primary reason for this
increase. This was partially offset by increases in accounts receivable of
approximately $599,000 during the three months ended March 31, 1998 as a
result of the increased sales for the period.
Net cash used in investing activities for the three months ended
March 31, 1998 was approximately $383,000 compared to $377,000 for the three
months ended March 31, 1997. The Company expects that investments in computer
and other technological equipment will increase during 1998 as it undertakes
significant development projects. This statement is forward-looking and is
subject to risks and uncertainties including, but not limited to, the
Company's ability to fund these projects from operations or to secure debt or
equity financing.
Net cash provided by financing activities was approximately $47,000
during the three months ended March 31, 1998, compared to $765,000 during the
three months ended March 31, 1997. Proceeds from capital leases and from the
exercise of employee stock options were the primary source of cash from
financing activities.
The Company has entered into an agreement for a commercial credit
facility of $1,500,000 with Silicon Valley Bank. Borrowings under this
facility would bear interest at 0.5 percent above the Prime Lending Rate
published by Silicon Valley Bank. If the Company earns a positive net profit,
after taxes, for one quarter the interest rate would be adjusted to 0.25
percent above the Prime Lending Rate. Borrowings under this agreement are
secured by substantially all the assets of the Company. To date, the Company
has made no borrowings under this facility.
The Company believes that cash provided by operations combined with
borrowing instruments discussed above will be sufficient to fund its
operations through 1998. Factors impacting this forward looking information
are the levels of the Company's overall revenues and overhead expenses and
changes in the Company's accounts receivable and accounts payable turnover.
If revenues do not increase as anticipated, the Company may need to raise
additional debt or equity financing to meet its operating capital needs. In
addition, the Company may need to raise additional capital in the future to
meet various strategic growth and research and development initiatives. There
can be no assurance that the Company will be able to obtain any required
additional funding on satisfactory terms, if at all. If the additional
funding is not obtained, the Company will seek alternative sources of debt
and/or equity financing and, to the extent necessary, will reduce overhead
expenditures.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
After the close of business on March 27, 1998, the Company
reincorporated as a Delaware corporation and effected a 1-for-2 reverse
stock of its Common Stock.
ITEM 2. CHANGES IN AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 17, 1998, the Company held a special meetng of shareholders
to: (i) consider proposals to reincorporate in Delaware, (ii) effect a
one-for-two reverse stock split of its outstanding shares of Common Stock and
(iii) approve form of Indemnification Agreements with its directors and
officers. These proposals received the following number of votes:
<TABLE>
<CAPTION>
For Against Abstain Unvoted
--------- ------- ------- ---------
<S> <C> <C> <C> <C>
i) Reincorporation in Delaware 5,301,942 29,618 341,167 4,475,387
ii) One for two reverse stock split 7,749,391 333,460 292,368 1,772,896
iii) Approval of Indemnification Agreements 7,800,345 214,644 360,230 1,772,896
</TABLE>
ITEM 5. OTHER INFORMATION
On January 27, 1998, the Board of Directors for the Company elected
Mr. Earl Gallegos as a Member of the Board.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
The exhibits to this Form 10-QSB are listed in the Exhibit Index on
page 15 of this Report.
b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
VISTA INFORMATION SOLUTIONS, INC.
(REGISTRANT)
DATE: March 15, 1998 By /s/ E. Stevens Hamilton
-------------- --------------------------
E. Stevens Hamilton
Chief Financial Officer
(Principal Financial Officer)
DATE: March 15, 1998 By /s/Brian Dean Conn
--------------- ---------------------------
Brian Dean Conn
Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<S> <C> <C>
3.1 Certificate of Incorporation Incorporated by reference to the
exhibits to the Definitive Proxy
Statement for the Special Meeting
of Shareholders held on March 17,
1998
Bylaws Incorporated by reference to the
exhibits to the Definitive proxy
Statement for the Special Meeting
of Shareholders held on March 17,
1998
27.1 Financial Data Schedule Filed electronically
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 31,983
<SECURITIES> 0
<RECEIVABLES> 3,367,348
<ALLOWANCES> (179,141)
<INVENTORY> 0
<CURRENT-ASSETS> 3,513,134
<PP&E> 4,577,950
<DEPRECIATION> (2,996,592)
<TOTAL-ASSETS> 5,610,714
<CURRENT-LIABILITIES> 1,512,853
<BONDS> 0
0
7,677
<COMMON> 189,848
<OTHER-SE> 3,388,252
<TOTAL-LIABILITY-AND-EQUITY> 5,610,714
<SALES> 3,617,623
<TOTAL-REVENUES> 3,617,623
<CGS> 611,799
<TOTAL-COSTS> 3,305,125
<OTHER-EXPENSES> 58,072
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,595
<INCOME-PRETAX> 257,406
<INCOME-TAX> 0
<INCOME-CONTINUING> 257,406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 257,406
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
