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 December 31, 1997
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 number 000-22849
Visual Data Corporation.
(Exact name of small business issuer as specified in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
65-0420146
(IRS Employer Identification No.)
1291 SW 29 Avenue, Pompano Beach, Florida
33069 (Address of principal executive offices)
954-917-6655
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes (x)
No ( ).
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. As of February 6, 1998 the
registrant had issued and outstanding 3,100,435 shares of common stock.
Transitional Small Business Disclosure Format (check one);
Yes ( ) No (x)
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO FINANCIAL STATEMENTS
Page Number
Consolidated Balance Sheets at December 31, 1997 (Unaudited)
and September 30, 1997
2
Consolidated Statements of Operations for the Three Months
Ended December 31, 1997 and 1996 (Unaudited) 3
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended December 31, 1997 and 1996 (Unaudited) 4
Notes to the Unaudited Consolidated Financial Statements 5
<PAGE>
<TABLE>
<CAPTION>
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
12/31/1997 9/30/1997
(Unaudited)
----------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 1,844,770 $ 2,554,180
Accounts receivable, net of allowance for
doubtful accounts of $19,112 and $20,898
at December 31, 1997 and September 30, 1997, respectively 76,477 62,695
Prepaid expenses 54,329 60,677
Other receivables 1,942 34,337
---------------- ------------
Total current assets 1,977,518 2,711,889
---------------- ------------
Property, plant and equipment, net 2,062,997 1,861,191
---------------- ------------
Security deposits and other 5,849 14,812
---------------- ------------
Total assets $ 4,046,364 $ 4,587,892
================ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 172,675 215,985
Deferred revenue 25,500 94,295
Current portion of obligations under capital leases 24,571 21,856
Current portion of mortgage note payable 35,762 33,765
---------------- -----------
Total current liabilities 258,508 365,901
---------------- -----------
Obligations under capital leases,
net of current portion 4,326 8,652
Mortgage note payable, net of current amount 956,072 966,235
---------------- -----------
960,398 974,887
---------------- -----------
Stockholders' equity:
Common Stock, Par Value $.0001 Per Share;
Authorized 20,000,000 Shares; 3,082,150 and 3,037,971
Issued and outstanding at December 31, 1997 and
September 30, 1997, respectively 308 304
Additional Paid - in capital 9,537,347 9,401,789
Accumulated deficit (6,710,197) (6,154,989)
---------------- -----------
Total stockholders' equity 2,827,458 3,247,104
---------------- -----------
Total liabilities and stockholders' equity $ 4,046,364 $ 4,587,892
================ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
<CAPTION>
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Revenue $ 105,756 $ 88,317
--------------- --------------
Operating Costs
Selling, general and administrative 239,274 113,240
Compensation and related costs 286,839 187,708
Production 13,921 19,934
Occupancy 51,847 26,090
Professional fees 93,005 40,763
--------------- --------------
Total operating costs 684,886 387,735
--------------- --------------
Loss from operations (579,130) (299,418)
--------------- --------------
Other Income (Expense)
Interest income 28,684 1,002
Rental income 17,764 ---
Interest expense (22,527) (3,683)
--------------- --------------
Total other income (expense) 23,921 (2,681)
--------------- --------------
Net loss $ (555,209) $ (302,099)
=============== ==============
Weighted Average Shares of Common Stock Outstanding, 3,057,781 2,259,924
primary and diluted =============== ==============
Loss Per Share, primary and diluted $ (0.18) $ (0.13)
=============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
<TABLE>
<CAPTION>
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
1997 1996
---- ----
<S> <C> <C>
Cash flows used in operating activities $ (567,320) $ (108,734)
Cash flows used in investing activities (137,062) (57,073)
Cash flows used in (provided by) financing activities (5,028) 83,630
Net decrease in cash (709,410) (82,177)
---------------- -----------------
Cash:
Beginning of period 2,554,180 158,377
---------------- -----------------
End of period $ 1,844,770 $ 76,200
================ =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company is in the business of producing, marketing and distributing video
information libraries intended for use by the general public through various
distribution channels, primarily in the United States. These distribution
channels include the Internet and Interactive television ("ITV"). The
information libraries contain short concise vignettes on various topics such as
travel, medicine, nursing homes and timeshare properties.
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of VDC
and its wholly-owned subsidiaries, HotelView Corporation ("HVC"), CareView
Corporation("CVC")and CondoView Corporation("CDVC"). All significant
inter-company accounts and transactions have been eliminated in consolidation.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Interim Financial Data
The accompanying financial statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The financial statements of the Company as of September
30, 1997 should be read in conjunction with these statements. The financial
information included herein has not been audited. However, in the opinion of
management, the accompanying unaudited interim financial statements contain all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the consolidated financial position of VDC and subsidiaries as of
December 31, 1997 and the results of their operations and cash flows for the
three months ended December 31, 1997 and 1996. The results of operations and
cash flows for the periods are not necessarily indicative of the results of
operations or cash flows for a full year.
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<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 2: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including equipment acquired under capital
leases, consists of:
DECEMBER 31, LIVES
1997 (YEARS)
---- ------
Building $1,545,049 39.5
Furniture and Fixtures 27,697 7
Equipment 182,276 5
Editing Equipment 186,680 3-10
Computer Equipment 62,974 3-5
Internet Hardware & Software 196,814 3-5
----------
2,198,490
Less: Accumulated Depreciation
and Amortization (135,493)
----------
$2,062,997
==========
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<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The following discussion regarding the Company and its business and operations
contains "forward- looking statements" within the meaning of Private Securities
Litigation Reform Act 1995. Such statements consist of any statement other than
a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements. The Company does not have a policy of updating
or revising forward-looking statements and thus it should not be assumed that
silence by management of the Company over time means that actual events are
bearing out as estimated in such forward looking statements.
PLAN OF OPERATION
The Company's current plan of operation includes continuing to expand its base
of travel agencies as well as to establish the distribution of the HotelView(R)
Library over the Internet. In November, 1997, Volume 2 of the HotelView(R)
Library was distributed to the approximately 200 travel agencies nationwide
which comprise the equipped HotelView travel agency network. The Company intends
to continue the development of additional content and, during the first quarter
of fiscal 1998, acquired the hardware and software necessary to link the Company
to the Internet and provide links to other websites. This was made possible by
the acquisition of certain assets of Armigeron Information Services, Inc., as
well as two software development agreements that were entered into by the
Company; one with Advanced Media Developers, Inc. and one with Cyber Publishing,
Inc. The HotelView(R) website became operational in November, 1997 showcasing
Volumes I and II of the Hotelview(R) Library as well as the initial volume of
Attraction View (TM) and management anticipates the Company's Internet links to
other websites will become operational during the second quarter of fiscal 1998.
The Company further intends to complete the development of certain additional
content libraries for travel related topics as well as other topics of general
consumer interest. During fiscal 1998, management intends to expand the
HotelView(R) Library and Attraction View(TM) Library as well as complete initial
volumes of the CondoView(TM), AttractionView(TM) and CareView(TM) libraries. The
Company, however, does not anticipate reporting significant revenues from any of
these libraries, except HotelView(R), during the balance of fiscal 1998.
The Company has currently budgeted additional dollars to be spent on advertising
the HotelView(R) Library to the trade (including hotel chains, travel agencies
and travel industry associations) as well as to consumers to expand product
awareness and will finalize development of its advertising campaign in the
second quarter of fiscal 1998.
The Company will seek to increase the number of hotels participating in its
library through joint ventures and alliances with travel service companies
having the ability to penetrate the corporate hotel chain and management company
markets. The immediate focus will be on highly regarded hotels in the top 25
leisure markets.
In January 1998, Pegasus Systems, Inc., which provides transaction processing
services between travel agents, airline reservation systems and to hotels,
resorts and hotel chains, agreed to expand its relationship with the Company by
creating links and supplying data for the hotels in the current HotelView(R)
Library to their website, Travelweb, one of the world's premiere travel
websites, thus enabling Travelweb visitors to view HotelView video vignettes.
Discussions with several other companies are expected to, though there can be no
assurance, result in marketing and sales agreements during subsequent quarters
of fiscal 1998.
The Company recognized revenues of $105,756 during the first quarter of fiscal
1998, representing an increase of $17,439, from revenues of $88,317 during the
first quarter of fiscal 1997. Revenues recognized during both periods reflect
the redemption of room credit balances. Revenues during the first quarter of
fiscal 1997 also included deposits recognized as revenues as a result of the
distribution of Volume 1 of the HotelView(R) Library and revenues
-7-
<PAGE>
during the first quarter of fiscal 1998 included deposits recognized as revenues
as a result of the distribution of Volume 2 of the HotelView(R) Library, as well
as renewal fees from hotel clients.
Interest expense increased to $22,527 during the first quarter of fiscal 1998,
from $3,683 during the same period in fiscal 1997, due solely to mortgage
interest expenses related to the Company's purchase in September 1997 of a
25,000 square foot facility in Pompano Beach, Florida which now serves as its
corporate headquarters and houses all of its production, marketing and
distribution activities. Interest income increased to $28,684 from $1,002,
reflecting interest earned from temporary cash investments of portions of the
proceeds from the Company's initial public offering.
Selling, general and administrative expenses increased approximately 111% to
$239,274 during the first quarter of fiscal 1998, reflecting additions to its
staff and corporate infrastructure undertaken as part of the continued roll-out
of its HotelView(R) library and website, the continued development of its other
libraries and related websites, and an expansion of its sales and marketing
activities. The Company anticipates further increases in selling, general and
administrative expenses during the remaining quarters of fiscal 1998, relative
to both the first quarter of fiscal 1998 and comparative periods in fiscal 1997,
as it continues to implement its business plan.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had $1,719,010 of working capital,
representing a decrease of $626,978 from working capital of $2,345,988 as of
September 30,1997. Such decrease primarily reflects cash used for ongoing
operating activities, as well as for the initial development and continued
expansion of the Company's various web sites, the acquisition of certain of the
assets of Armigeron Information Services, Inc., and the acquisition of
additional computer hardware, and video editing and production equipment.
Based on the level of success of its HotelView(R) Library and expected
introduction of additional libraries that the Company believes can be used in
conjunction with most forms of media now conceived or developed in the future,
the Company anticipates the acquisition of additional capital equipment
including editing facilities and an additional computer hardware. The Company
believes it has sufficient working capital to provide for such acquisitions.
The Company also believes it has sufficient working capital to fund its current
plan of operations for the balance of fiscal 1998. In the event however,
management should determine to either accelerate their business plan or seek
additional acquisitions, the Company may be required to raise additional
capital. There are no assurances that such capital will be available to the
Company on terms and conditions it finds acceptable.
-8-
<PAGE>
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.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) None.
(b) None.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Visual Data Corporation,
a Florida corporation
Date: February ___, 1998 By:___________________________________
Randy S. Selman,
President, Chief Executive Officer and
Acting Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Visual Data Corporation for the three months ended
December 31, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
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<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
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