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 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 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 May 10 , 1998 the
registrant had issued and outstanding 3,300,435 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
-----------
Condensed Consolidated Balance Sheets at March 31, 1998 (Unaudited) 1
and September 30, 1997
Condensed Consolidated Statements of Operations for the Six Months and
Three Months Ended March 31, 1998 and 1997 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 1998 and 1997 (Unaudited) 3
Notes to the Unaudited Condensed Consolidated Financial Statements 4
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
3/31/98 9/30/97
-------- --------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 1,015,335 $ 2,554,180
Accounts receivable, net of allowance for
doubtful accounts of $19,112 and $20,898
at March 31, 1998 and September 30, 1997, 390,709 62,695
Prepaid expenses 30,933 60,677
Other receivables 13,400 34,337
------------ -------------
Total current assets 1,450,377 2,711,889
------------ -------------
Property, plant and equipment, net 2,124,305 1,861,191
------------ -------------
Security deposits and other 26,053 14,812
------------ -------------
Total assets $ 3,600,735 $ 4,587,892
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 134,098 $ 215,985
Deferred revenue 2,000 94,295
Current portion of obligations under capital
leases -- 21,856
Current portion of mortgage note payable 983,503 33,765
------------ -------------
Total current liabilities 1,119,601 365,901
------------ -------------
Obligations under capital leases,
net of current portion -- 8,652
Mortgage note payable, net of current amount -- 966,235
------------ -------------
-- 974,887
------------ -------------
Stockholders' equity:
Common Stock, Par Value $.0001 Per Share;
Authorized 20,000,000 Shares; 3,155,435 and
3,037,971 Issued and outstanding at March 31,
1998 and September 30, 1997, respectively 316 304
Additional Paid - in capital 9,734,303 9,401,789
Accumulated deficit (7,253,485) (6,154,989)
------------ -------------
Total stockholders' equity 2,481,134 3,247,104
------------ -------------
Total liabilities and stockholders'
equity $3,600,735 $ 4,587,892
============ =============
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
------------------------------ ----------------------------------
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue $ 489,041 $ 139,703 $ 383,285 $ 51,386
---------- ----------- ----------- -----------
Operating Costs
Selling, general
and administrative 545,317 228,544 306,043 101,109
Compensation and
related costs 580,831 371,549 293,992 183,841
Production 31,231 37,686 17,310 17,752
Occupancy 72,180 20,900 20,333 9,005
Professional fees 401,926 73,742 308,921 32,979
---------- ----------- ----------- -----------
Total operating costs 1,631,485 732,421 946,599 344,686
---------- ----------- ----------- -----------
Loss from operations (1,142,444) (592,718) (563,314) (293,300)
---------- ----------- ----------- -----------
Other Income (Expense)
Interest income 46,700 1,002 18,016 0
Rental income 41,428 ---- 23,664 ----
Interest expense (44,180) (53,266) (21,653) (49,583)
---------- ----------- ----------- -----------
Total other income (expense) 43,948 (52,264) 20,027 (49,583)
---------- ----------- ----------- -----------
Net loss $(1,098,496) $ (644,982) $ (543,287) $ (342,883)
========== =========== =========== ===========
Weighted Average Shares Outstanding 3,078,585 1,743,337 3,099,850 1,743,337
========== =========== =========== ===========
(Loss) Per Share - Basic and
Diluted (0.36) (0.37) (0.18) (0.20)
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statments.
2
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------- -----------
<S> <C> <C>
Cash flows used in operating activities $ (1,236,991) $ (445,814)
Cash flows used in investing activities (259,598) (12,210)
Cash flows used in (provided by) financing activities (42,256) 334,027
------------- -----------
Net decrease in cash (1,538,845) (123,997)
Cash:
Beginning of period 2,554,180 158,377
------------- -----------
End of period $ 1,015,335 $ 34,380
============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED 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
Visual Data Corporation ("VDC") and its wholly-owned subsidiaries, HotelView
Corporation ("HVC"), CareView Corporation ("CVC"), Video News Wire Corporation
("VNW") and ResortView Corporation ("RVC") f/k/a as CondoView Corporation. 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 annual 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 March 31, 1998 and the results of their operations for the
six months and three months ended March 31, 1998 and 1997 and cash flows for the
six months ended March 31, 1998 and 1997. 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.
NOTE 2: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, including equipment acquired under capital
leases, consists of:
<TABLE>
<CAPTION>
March 31, 1998 Lives (years)
-------------- ------------
<S> <C> <C>
Building $1,547,049 39.5
Furniture and Fixtures 27,697 7
Equipment 182,276 5
Editing and Production Equipment 216,825 3-10
Computer Equipment 96,005 3-5
Internet Hardware & Software 230,939 3-5
------------ ---
2,300,791
Less: Accumulated Depreciation and Amortization (176,486)
------------
$2,124,305
============
</TABLE>
4
<PAGE>
NOTE 3: SUBSEQUENT EVENT
In May 1998 the Company issued 150 shares of Series A Convertible Preferred
Stock to institutional investors resulting in proceeds of $712,500, net of
directly related expenses.
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion regarding the Company and its business and operations
contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 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 increase the distribution of the HotelView(R)
Library over the Internet. We have established strategic alliances to support
the sales and marketing of the HotelView product worldwide and launched an
advertising program in March 1998 that resulted in broader market coverage for
the product and increased market awareness. As part of the repositioning of the
brand, a new pricing schedule was developed to create transactional revenues as
well as hosting fees. Based on input from the HotelView advisory panel, focus
groups, our current customer base and industry consultants, significant upgrades
to the HotelView(R) website have been developed and will be implemented during
the quarter ended June 30, 1998. During the balance of fiscal 1998, management
intends to expand the HotelView(R) Library and AttractionView(TM) Library.
The CareView(TM) Library is currently being marketed in South Florida and the
New York metro area. The CareView system provides not only a video tour of
nursing homes and assisted living facilities, but brings to consumers
information about bed availability and type of insurance accepted to aid them in
the decision making process.
In March 1998, the Company signed a contract with Interval International who has
agreed to use their efforts to market the ResortView product to their
developers. The developers benefit by earning rental revenue on excess room
inventory as well as a new source of lead generation.
At the end of the quarter ended March 31, 1998, the Company signed a contract
with PR Newswire to market the products of the Company's newest subsidiary,
Video News Wire Corporation ("VNW"). VNW creates television news like
presentations of corporate press releases for distribution on the Internet.
The Company recognized revenues of $383,285 during the second quarter of fiscal
1998, representing an increase of $331,899 over revenues of $51,386 for the same
period in fiscal 1997. Visual Data Corporation recorded $250,000 of revenue as a
signing fee when it entered into a marketing agreement whereby the Company will
be marketing and distributing a database and search engine software product.
Revenues from HotelView recognized during both periods include the redemption of
room credit balances. HotelView revenues during the quarter ended March 31, 1998
also include renewal fees and customer deposits recognized as revenue as a
result of the distribution of vignettes via the Internet. The balance of the
Company's revenue, totaling $63,200 came from initial contracts signed by the
CareView, AttractionView and ResortView subsidiaries as well as the initial fees
earned by Video News Wire.
Interest expense during the first six months ended March 31, 1998, consisted
entirely of mortgage interest while interest during the same period in fiscal
1997 was due mainly to the amortization of a discount on notes payable. Interest
income increased to $46,700 from $1,002, reflecting interest earned from
temporary cash investments of portions of the proceeds from the Company's
initial public offering.
5
<PAGE>
Selling, general and administrative expenses increased approximately 139% to
$545,317 during the first six months of fiscal 1998 as compared to the same
period last year, reflecting the growth of HotelView's sales and marketing
activities and website development, as well as the rollout of the other
libraries and related websites. Increases occurred in Internet related expense,
research and marketing consulting, travel and depreciation. HotelView has spent
approximately 50% of the $75,000 budgeted for magazine advertising to the trade,
producing a newsletter aimed primarily at travel agents and producing new
collaterals for distribution to potential clients. The Company anticipates
further increases in selling, general and administrative expenses during the
remaining quarters of fiscal 1998, relative to comparative periods in fiscal
1997, as it continues to implement its business plan.
Professional fees increased for the six months ended March 31, 1998 $328,184
over the same period last year, primarily due to increased consulting fees and
legal fees. Of the legal fees, approximately $40,000 were associated with a
specific contract and are non-recurring. Non-recurring consulting fees totaling
$190,525 were paid with stock in lieu of cash. Compared to the first six months
of last year, compensation and related costs increased by 56.4% due to growth in
both sales and technical staff. The increase of occupancy costs from $20,900
to $72,180 reflects the increased expense due to the move to our 25,000 square
foot building in September 1997.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had a $1,015,335 cash balance with working
capital of $330,776, representing a decrease of $2,015,212 from working capital
of $2,345,988 as of September 30, 1997. Such decrease 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. Also reflected in this decrease is the increase in the current
portion of the mortgage note payable of $949,738 which is due March 30, 1999.
The Company is considering alternatives regarding the satisfaction of this
obligation, including refinancing, and does not anticipate having to use working
capital.
Based on the level of success of its HotelView(R) Library and the increased
activities of its other subsidiaries, the Company anticipates the acquisition of
additional capital equipment including editing facilities, a production studio
for VNW and additional computer hardware. During May 1998 the Company completed
a sale of convertible preferred stock resulting in gross proceeds of $750,000
which will be used to fund these acquisitions as well as for general working
capital. The Company 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.
6
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
In May 1998, the Company completed a sale of Series A Convertible
Preferred Stock pursuant to Regulation 506(D).
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.
7
<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: May 15, 1998 /s/ Randy S. Selman
--------------------------------------
Randy S. Selman,
President, Chief Executive Officer and
Acting Chief Financial Officer
8
<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 March
31, 1998, and is qualified in its entirety by reference to such financial
statements
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,015
<SECURITIES> 0
<RECEIVABLES> 391
<ALLOWANCES> 19
<INVENTORY> 0
<CURRENT-ASSETS> 1,450
<PP&E> 2,300
<DEPRECIATION> 176
<TOTAL-ASSETS> 3,600
<CURRENT-LIABILITIES> 1,120
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,734
<TOTAL-LIABILITY-AND-EQUITY> 3,600
<SALES> 383
<TOTAL-REVENUES> 383
<CGS> 0
<TOTAL-COSTS> 947
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> (543)
<INCOME-TAX> 0
<INCOME-CONTINUING> (543)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (543)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
