<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 JUNE 30, 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)
<TABLE>
<S> <C>
DELAWARE 41-1293754
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
5060 SHOREHAM PLACE, #300, SAN DIEGO, CA 92122
(Address of principal executive office) (Zip Code)
</TABLE>
(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, $.001 par value,
outstanding on August 11, 1998 was 12,560,019.
Transitional Small Business Format (check one) YES __ NO X
--- ---
1
<PAGE>
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
- ------ ----
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND SIX
MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) 3
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1998 (UNAUDITED) AND
DECEMBER 31, 1997 4,5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30,
1998 AND 1997 (UNAUDITED) 6
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS 8-11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $3,642,732 $2,626,267 $7,260,355 $4,562,220
Cost of revenues 865,259 567,358 1,477,058 1,172,563
---------- ----------- ---------- -----------
Gross margin 2,777,473 2,058,909 5,783,297 3,389,657
Operating Expenses
Sales and general and administrative 2,215,004 1,442,752 4,102,853 2,812,621
Research and development 274,700 215,306 621,395 433,403
Depreciation and amortization 181,952 1,196,299 640,734 2,373,355
---------- ----------- ---------- -----------
Operating income (loss) 105,817 (795,448) 418,315 (2,229,722)
Interest (expense) (32,613) (285,530) (84,208) (575,785)
Other (expense) (2,243) (1,138) (5,740) (10,815)
---------- ----------- ---------- -----------
Net income (loss) $70,961 $(1,082,116) $328,367 $(2,816,322)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Preferred stock dividends 150,000 - 300,000 -
Accretion of convertible preferred stock 250,000 - 500,000 -
---------- ----------- ---------- -----------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS $(329,039) $(1,082,116) $(471,633) $(2,816,322)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Basic and diluted net income (loss) per common
share $(0.03) $(0.17) $(0.05) $(0.45)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Weighted average common shares outstanding 10,026,876 6,346,403 9,821,445 6,256,939
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
Assets 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $151,176 $341,781
Trade accounts receivable, less allowance
for doubtful accounts of $180,000 3,566,189 2,589,466
and $190,000, respectively
Prepaid expenses and other assets 374,710 272,030
---------- ----------
TOTAL CURRENT ASSETS 4,092,075 3,203,277
EQUIPMENT, FURNITURE AND SOFTWARE:
Equipment and furniture 4,208,208 3,767,826
Purchased software 921,602 439,884
---------- ----------
5,129,810 4,207,710
less accumulated depreciation (3,138,697) (2,810,435)
---------- ----------
NET EQUIPMENT, FURNITURE AND SOFTWARE 1,991,113 1,397,275
ACQUIRED TECHNOLOGY, ENVIRONMENTAL DATABASES AND GOODWILL 520,540 593,200
less accumulated amortization of
$12,060,000 and $11,729,000, respectively
DEPOSITS 268,478 185,134
---------- ----------
$6,872,206 $5,378,886
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements
4
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
Liabilities and Stockholders' Equity 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Note payable to bank $400,000 $ -
Current maturities of long-term obligations 455,767 391,872
Accounts payable and accrued expenses 790,034 497,744
Deferred revenue 176,350 243,967
Other current liabilities 523,290 426,323
----------- -----------
TOTAL CURRENT LIABILITIES 2,345,441 1,559,906
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 451,872 471,196
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; 10,075,225 shares and 1997; 9,440,956 shares 190,232 188,819
Additional paid-in capital 38,524,245 37,197,769
Accumulated deficit (34,647,261) (34,046,481)
----------- -----------
4,074,893 3,347,784
----------- -----------
$6,872,206 $5,378,886
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
5
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 JUNE 30
1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 328,367 $(2,816,322)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 659,677 2,373,235
Amortization of SIRROM warrant value - 64,800
Changes in current assets and liabilities:
(Increase) decrease in:
Accounts receivable & trade (889,723) (417,068)
Prepaid expenses and other assets (99,680) (160,257)
Increase (decrease) in:
Trade accounts payable 271,289 190,675
Accrued compensation and employee benefits 263,886 (52,624)
Accrued interest - (433)
Deferred revenue (67,617) (32,228)
Other current liabilities (166,919) (10,728)
---------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 299,280 (860,950)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and development of equipment and software (660,005) (465,887)
Increase in other assets (83,344) (21,804)
---------- -----------
NET CASH (used in) INVESTING ACTIVITIES (743,349) (487,691)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (217,523) (227,682)
Proceeds from long-term obligations 1,021,862
Net proceeds from note payable to bank 400,000 337,058
Payments on retirements of debentures - (545,901)
Payments of preferred dividends (300,000) -
Proceeds from issuance of common stock 370,987 710,239
---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 253,464 1,295,576
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (190,605) (53,065)
Cash and cash equivalents at beginning of period 341,781 56,277
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 151,176 $ 3,212
---------- -----------
---------- -----------
</TABLE>
See notes to financial statements
6
<PAGE>
VISTA Information Solutions, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 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 and six months ended June
30, 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 and the Company's Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1998.
2. REVERSE STOCK SPLIT AND REINCORPOTATION
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 of its Common Stock. 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.
3. ACQUISITION OF ENSITE CORPORATION
On April 8, 1998, the Company acquired all the outstanding stock of
ENSITE Corporation of Denver (DBA "Entrac") in exchange for newly issued
common shares of the Company. Under the terms of the agreement, the
stockholder of Entrac received 67,500 shares of common stock. The Company
engaged an outside valuation consultant to determine the fair value of the
securities issued. The value was determined to be $5.63 per share, which
represented a 25% discount from the market price of the Company's common
stock on the acquisition date. The acquisition has been accounted for as a
purchase, and accordingly, the operating results of Entrac have been included
in the operating results of the Company from the date of acquisition. The
total purchase price was calculated as follows:
<TABLE>
<S> <C>
Fair value of common stock issued $ 379,688
Less excess of assets over liabilities 70,500
TOTAL PURCHASE PRICE, ALLOCATED TO GOODWILL $ 309,188
</TABLE>
3. CAPITALIZED SOFTWARE COSTS
Statement of Position No. 98-1 "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1") was adopted by
the Company on January 1, 1998. SOP 98-1 establishes the accounting practice
for the capitalization of certain costs incurred in connection with the
acquisition or development of computer software to be used for internal
purposes.
In accordance with SOP 98-1, the Company has recorded approximately
$322,000 of capitalized costs in connection with the acquisition and
development of computer software to be used by the Company solely for
internal purposes. Such costs incurred through June 30, which generally
consist of purchased software costs as well as direct payroll and related
costs incurred in the internal developmenet of computer software, are being
amortized on a straight-line basis over the estimated useful lives of the
related assets, generally three years. As of June 30, 1998, management of
the Company determined that there had been no impairment of these assets.
7
<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 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-Registered Trademark-") 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 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.
8
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 TO THE THREE AND
SIX MONTHS ENDED JUNE 30, 1997
REVENUE
Total revenues increased 39 percent from $2,626,000 for the three months
ended June 30, 1997, to $3,643,000 for the three months ended June 30, 1998
and increased 59 percent from $4,562,000 for the six months ended June 30,
1997, to $7,260,000 for the six months ended June 30, 1998. The second
quarter increase resulted from an increase in GUS revenue of $353,000
combined with increases in environmental revenue of $664,000. The increase
in GUS revenue was attributed to increases in transactional revenue as well
as revenue from testing of the GUS system by certain major insurance
underwriters. 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. The increase in revenue for the six month period
consisted of increases in GUS revenue of $1,334,000 combined with increases
in environmental revenue of $1,364,000 and were principally the result of the
factors affecting the revenue increase in the second quarter.
Gross Margin
Gross margins increased 35 percent from approximately $2,059,000 for the
three months ended June 30, 1997 to approximately $2,777,000 for the three
months ended June 30, 1998 and increased 71 percent from $3,390,000 for the
six months ended June 30, 1997 to $5,783,000 for the six months ended June
30, 1998. Previously discussed increases in GUS and StarView revenue (which
have lower costs of sales) have been the primary reason for the increase in
gross margin.
Gross margin as a percent of revenue decreased from 78 to 76 percent of
revenue for the three months ended June 30, 1997 and June 30, 1998,
respectively and increased from 74 to 80 percent of revenue for the six
months ended June 30, 1997 and June 30, 1998, respectively. The decrease in
gross margin as a percent of revenue in the second quarter was primarily due
new, "whole product" selling strategies in 1998, which resulted in increased
revenue from resale products, particularly in the second quarter. These
products typically have substantially lower gross margins than the Company's
traditional information services. The increase in gross margin as a percent
of revenue for the six month period is due to a dramatic increase in GUS
revenue following the State Farm Agreement in March 1997.
Operating Expenses
Total operating expenses decreased 6 percent from $2,854,000 for the
three months ended June 30, 1997, to $2,672,000 for the three months ended
June 30, 1998 and decreased 5 percent from $5,619,000 for the six months
ended June 30, 1997, to $5,365,000 for the six months ended June 30, 1998.
This decrease is primarily the result of decreased amortization of acquired
technology associated with the acquisition of Vista Environmental due to the
completion of the amortization 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 89 percent from $286,000 for the three months
ended June 30, 1997, to $33,000 for the three months ended June 30, 1998 and
decreased 85 percent from percent from $576,000 for the six months ended June
30, 1997 to $84,000 for the six months ended June 30, 1998. This decrease is
generally due to the retirement of several debt instruments in 1997.
As of December 31, 1997, the Company has net operating loss
carryforwards for federal income tax purposes of approximately $26,149,000 of
which $19,500,000 is available at December 31, 1997 to offset future taxable
income and, accordingly, recorded no provision for income taxes during the
three months and six months ended June 30, 1998 and 1997.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended June
30, 1998 was approximately $299,000 compared to net cash used in operations
of approximately $861,000 during the six months ended June 30, 1997.
Improved profitability for this period was the primary reason for this
increase. This was partially offset by increases in accounts receivable of
approximately $890,000 during the six months ended June 30, 1998 as a result
of the increased sales for the period.
Net cash used in investing activities for the six months ended June 30,
1998 was approximately $743,000 compared to $488,000 for the six months ended
June 30, 1997. Substantial investments in computer systems combined with
the capitalized development of internal-use software were the primary reasons
for the increase. 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 $253,000
during the six months ended June 30, 1998, compared to $1,296,000 during the
six months ended June 30, 1997. Borrowings on the Silicon Valley Bank loan
and proceeds from the exercise of employee stock options were the primary
source of cash from financing activities during the first half of 1998.
The Company has entered into an agreement for a commercial credit
facility of $1,500,000 with Silicon Valley Bank in March 1998. Borrowings
under this facility bear interest at 0.5 percent above the Prime Lending Rate
published by Silicon Valley Bank. If the Company earns a positive after-tax
net profit,, for one quarter, the interest rate will 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.
The Company believes that cash provided by operations combined with
borrowing facilities 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.
10
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS REPORT, THE FOLLOWING
FACTORS (AS WELL AS OTHER FACTORS NOT LISTED) HAVE THE POTENTIAL TO
MATERIALLY AFFECT THE COMPANY'S FUTURE OPERATIONS.
COMPETITION. The Company's environmental risk information service
operates in a highly competitive environment. The ability of competitors to
gain market share from VISTA or to drive down prices for environmental risk
information may affect the profitability of the Company.
TECHNOLOGICAL CHANGE. The Company is dependent upon advanced software
development tools to maintain and upgrade its various database and reporting
systems. As currently popular operating systems and software development
tools are changed or replaced, the Company must continually evaluate the need
to migrate its existing applications to these systems and respond
accordingly. The ability to respond to these changes may affect the
performance, compatibility, level of support and market acceptance the
Company is able to achieve for its services. Furthermore, the cost of
maintaining and upgrading technological software and hardware may affect the
profitability and working capital of the Company.
DEPENDENCE ON ISO FOR GUS REVENUES. The Company's 15 year agreement
with ISO grants ISO the exclusive sales and marketing rights for GUS
services. Sales of the Company's GUS product line are dependent upon ISO's
ability to penetrate this industry segment.
INTEGRATION OF OPERATIONS. The Company may embark on future strategic
initiatives such as acquisitions, joint ventures or other alliances, which
may require significant integration of operations to realize the anticipated
benefits of such initiatives. Integration of operations may include research
and development, sales and marketing, finance and administration and product
lines and would present significant challenges to the management of the
Company. There can be no assurance that any integration process will be
successful or that the anticipated benefits of an integration would be
realized. Similarly, there can be no assurance that the stockholders of the
Company would achieve value through share ownership greater than they would
have achieved as stockholders of the Company had no integration process been
undertaken. Difficulties encountered in any integration process may include
coordinating geographically-separated operations, retention of key management
or staff personnel and the integration of different technologies.
Furthermore, the dedication of management resources to an integration process
may detract attention from the day-to-day operations of the company.
YEAR 2000 COMPLIANCE. Many currently installed computer systems and
software products are coded to accept only two digit entries in the date code
field. Beginning in the year 2000, these date codes fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, computer systems and/or software used by organizations
may need to be upgraded to comply with the "Y2K" requirements. There is
significant uncertainty in the software and information services industries
concerning the potential effects associated with such compliance. While the
Company believes that its systems are compatible with Y2K applications, there
can be no assurance that all Company systems will function properly in all
operating environments and on all platforms. The failure of a customer's
system could involve the Company in costly repair activities and affect
future revenues, both of which would have an adverse effect on the Company's
business, financial condition and results of operations. Moreover, other
software or systems used by the Company's customers may not be Y2K compliant,
which could cause system failures for those or other sources or interactions
between the various systems. As a result, the Company may be involved in
disputes with vendors to various customers concerning the responsibility for
any system failures. Additionally, any revenues associated with the number of
uses of the Company's information services could be adversely affected by
operating system failures affecting those potential customers and users. As
a result, the failure to comply with Y2K requirements by systems not designed
by the Company may also have a material adverse effect on the Company's
business, financial condition and results of operations. The Company is
currently developing and implementing a plan to identify and address
potential difficulties and associated Y2K issues and does not expect to
expend any significant funds as a result of these issues.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) On April 8, 1998, the Company issued 67,500 shares of Common Stock
to the single shareholder of ENSITE Corporation of Denver ("Entrac") as part
of a merger transaction in which Entrac became a wholly-owned subsidiary of
the Company. These shares were issued pursuant to the exemption from
registration provided by section 4(2) of the Securities Act, in reliance in
part on the investment representations of the shareholder of Entrac.
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
a) Exhibits:
The exhibits to this Form 10-QSB are listed in the Exhibit Index on
page 14 of this Report.
b) Reports on Form 8-K.
None
12
<PAGE>
SIGNATURES
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: August 14, 1998 By /s/ E. Stevens Hamilton
--------------- -------------------------------
E. Stevens Hamilton
Chief Financial Officer
(Principal Financial Officer)
DATE: August 14, 1998 By /s/ Brian Dean Conn
--------------- -------------------------------
Brian Dean Conn
Controller
(Principal Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ----------- --------
<S> <C> <C>
27.1 Financial Data Schedule......... Filed electronically
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 151,176
<SECURITIES> 0
<RECEIVABLES> 3,744,815
<ALLOWANCES> 178,626
<INVENTORY> 0
<CURRENT-ASSETS> 4,092,075
<PP&E> 5,129,810
<DEPRECIATION> 3,138,697
<TOTAL-ASSETS> 6,872,206
<CURRENT-LIABILITIES> 2,345,441
<BONDS> 0
0
10,775,540
<COMMON> 27,946,614
<OTHER-SE> (34,647,261)
<TOTAL-LIABILITY-AND-EQUITY> 6,872,206
<SALES> 7,190,244
<TOTAL-REVENUES> 7,260,355
<CGS> 1,477,058
<TOTAL-COSTS> 6,842,040
<OTHER-EXPENSES> 89,948
<LOSS-PROVISION> 2,214
<INTEREST-EXPENSE> 84,208
<INCOME-PRETAX> 328,367
<INCOME-TAX> 0
<INCOME-CONTINUING> 328,367
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 328,367
<EPS-PRIMARY> (0.048)
<EPS-DILUTED> (0.048)
</TABLE>
