<PAGE> 1
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, 1999
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
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(Exact name of small business issuer as specified in its charter)
Florida
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(State or other jurisdiction of incorporation or organization)
65-0420146
---------------------------------
(IRS Employer Identification No.)
1291 SW 29 Avenue, Pompano Beach, Florida 33069
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(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 11, 2000 the
registrant had issued and outstanding 8,479,920 shares of common stock.
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [X]
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INDEX TO FINANCIAL STATEMENTS
Page Number
Table of Contents 1
Condensed Consolidated Balance Sheets at December 31, 1999
and September 30, 1999 (Unaudited) 2
Condensed Consolidated Statements of Operations for the Three Months
Ended December 31, 1999 and 1998 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended December 31, 1999 and 1998 (Unaudited) 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
1
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VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $12,913,006 $15,573,644
Restricted cash 304,458 301,008
Accounts receivable, net of allowance for doubtful
accounts of $40,608 and $43,953 at December 31, 1999
and September 30, 1999, respectively 1,236,466 944,973
Prepaid expenses 559,716 565,461
Other current assets 980,147 712,654
----------- -----------
Total current assets 15,993,793 18,097,740
PROPERTY, PLANT AND EQUIPMENT, net 3,730,902 3,609,417
GOODWILL 976,329 999,475
OTHER 16,180 13,775
----------- -----------
Total assets $20,717,204 $22,720,407
=========== ===========
</TABLE>
(Continued)
2
<PAGE> 4
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1998
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,877,512 $ 1,429,808
Deferred revenue 332,605 290,225
Current portion of obligations under capital leases 8,475 11,580
Mortgage note payable 41,384 40,492
Notes payable 290,500 290,500
------------ ------------
Total current liabilities 2,550,476 2,062,605
OBLIGATIONS UNDER CAPITAL LEASES, net of current amount 2,568 4,045
MORTGAGE NOTE PAYABLE, net of current portion 880,838
891,175
COMMITMENTS AND CONTINGENCIES (Note 3)
MINORITY INTEREST 834,818 945,544
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.0001 per share; authorized
5,000,000 shares:
Series A Convertible Preferred Stock, designated 300 shares, issued and
outstanding -0- at December 31, 1999 and
September 30, 1999, respectively -- --
Series A-1 Convertible Preferred Stock, designated 150 shares, issued and
outstanding -0- at December 31, 1999 and
September 30, 1999, respectively -- --
Series B Convertible Preferred Stock, designated 1,000,000 shares,
issued and outstanding -0- at December 31, 1999 and
September 30, 1999, respectively -- --
Common Stock, par value $.0001 per share; authorized 20,000,000 shares,
8,479,920 and 8,444,870 issued and outstanding at
December 31, 1999 and September 30, 1999, respectively 848 844
Additional paid in capital 35,689,597 35,585,195
Accumulated deficit (19,241,941) (16,769,001)
------------ ------------
Total stockholders' equity 16,448,504 18,817,038
------------ ------------
Total liabilities and stockholders' equity $ 20,717,204 $ 22,720,407
============ ============
</TABLE>
The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of these consolidated balance sheets.
3
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VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
REVENUE $ 1,401,583 $ 1,104,065
COST OF REVENUE (1,620,312) (974,930)
----------- -----------
GROSS PROFIT (LOSS) (218,729) 129,135
OPERATING EXPENSES:
General and administrative 1,084,014 736,435
Sales and marketing 1,450,620 566,152
----------- -----------
Total operating costs 2,534,634 1,302,587
----------- -----------
Loss from operations (2,753,363) (1,173,452)
OTHER INCOME (EXPENSE):
Interest income 177,147 5,906
Rental income 20,027 19,592
Interest expense (31,743) (22,668)
Minority interest 114,992 48,214
----------- -----------
Total other income (expense) 280,423 51,044
----------- -----------
Net (loss) before taxes (2,472,940) (1,122,408)
Income taxes - 0 - 4,000
----------- -----------
Net loss $(2,472,940) $(1,126,408)
=========== ===========
Weighted average shares of common stock
outstanding
8,456,666 4,280,376
=========== ===========
Loss per share - basic and diluted $ (.29) $ (0.26)
=========== ===========
</TABLE>
The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of these consolidated financial statements.
4
<PAGE> 6
VISUAL DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Cash flows used in operating activities $ (2,393,902) $ (112,020)
Cash flows used in investing activities (357,115) (33,500)
Cash flows provided by financing activities 90,379 869,307
------------ ------------
Net (decrease) increase in cash and cash equivalents (2,660,638) 723,787
Cash and cash equivalents, beginning of period 15,573,644 590,848
------------ ------------
Cash and cash equivalents, end of period $ 12,913,006 $ 1,314,635
============ ============
</TABLE>
The accompanying notes to unaudited condensed consolidated financial statements
are an integral part of these consolidated financial statements.
5
<PAGE> 7
VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Visual Data Corporation ("VDC" or the "Company") and its wholly owned
subsidiaries are 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, eventually, Interactive television. The
information libraries contain short concise vignettes on various topics such as
travel, medicine and health care and corporate information. Currently, the
primary distribution channel for all of VDC's libraries is the Internet.
EDnet, Inc. ("EDnet") a 51% owned subsidiary of VDC purchased in June 1998,
develops and markets integrated systems for the delivery, storage, and
management of professional quality digital communications for media-based
applications, including audio and video production for the U. S. entertainment
and advertising industries. EDnet, through strategic alliances with
long-distance carriers, regional telephone companies, satellite operators, and
independent fiber optic telecommunications providers, has established a
worldwide network that enables the exchange of high quality audio, video,
multimedia, and data communications. It provides engineering services and
application-specific technical advice, audio, video, and networking hardware and
software as part of its business.
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of VDC
and its subsidiaries, HotelView Corporation ("HotelView"), CareView Corporation
("CareView"), Video News Wire Corp., ResortView Corporation ("ResortView"),
AttractionView Corporation , MedicalView Corporation and EDnet, Inc., a 51%
owned subsidiary. EDnet's results have been included in the accompanying
consolidated financial statements from the date of acquisition. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Revenue Recognition
Our HotelView, CareView and ResortView libraries recognize a portion of their
contract revenue at the time of completion of video production services with the
remaining revenue recognized over the term of the contracts. Per view charges
are recognized when users watch a video on the Internet. Commissions on
ResortView bookings are recognized when the stays are completed. Currently, our
Video News Wire and MedicalView divisions recognize revenue when a project is
completed and our client is billed. A significant component of EDnet's revenue
relates to the sale of equipment, which is recognized when equipment is
installed or upon signing of a contract after a free trial period. EDnet
recognizes revenues from equipment installation, Webcasting and bridging when
service is performed. Network usage revenue is recognized based on an estimate
of customers' monthly usage. EDnet leases some equipment to customers under
terms that are accounted for as operating leases. Under the operating method,
rental revenue from leases is recognized ratably over the life of the lease and
the related equipment is depreciated over its estimated useful life.
6
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VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Interim Financial Data
In the opinion of management, the accompanying unaudited financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. These 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, 1999 should be read in conjunction with these
statements. The financial information included herein has not been audited.
However, management believes 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, 1999 and the results of their operations
and cash flows for the three months ended December 31, 1999 and 1998. The
results of operations and cash flows for the period are not necessarily
indicative of the results of operations or cash flows for the year ending
September 30, 2000.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Property and equipment under
capital leases is stated at the lower of the present value of the minimum lease
payments at the beginning of the lease term or the fair value at the inception
of the lease. Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. Amortization expense on assets
acquired under capital leases is included with depreciation expense. The costs
of leasehold improvements are amortized over the lesser of the lease term or the
life of the improvement.
Accounting Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Income Taxes
In accordance with Financial Accounting Standards Board Statement on Financial
Accounting Standards ("SFAS") Statement No. 109, "Accounting for Income Taxes"
deferred tax assets or liabilities are computed based upon the difference
between the financial statement and income tax basis of assets and liabilities
using the enacted marginal tax rate applicable when the related asset or
liability is expected to be realized or settled. Deferred income tax expense or
benefit is based on the changes in the asset or liability from period to period.
If available evidence suggests that it is more likely than not that some portion
or all of the deferred tax assets will not be realized, a valuation allowance is
required to reduce the deferred tax assets to the amount that is more likely
than not to be realized. Because of the uncertainty regarding the realizability
of the Company's net operating loss carryforwards, the Company has provided a
100% valuation allowance on its deferred tax assets at December 31, 1999 and
September 30, 1999. Future changes in such valuation allowance would be included
in the provision for deferred income taxes in the period of change.
7
<PAGE> 9
VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings Per Share
For the three months ended December 31, 1999 and 1998, net loss per share is
based on the weighted average number of shares of common stock outstanding.
Since the effect of common stock equivalents was anti-dilutive, all such
equivalents were excluded from the calculation of net loss per share.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash, accounts
receivable, accounts payable, accrued expenses, mortgage notes payable, notes
payable and obligations under capital leases approximate fair value due to the
short maturity of the instruments.
Concentration of Credit Risk
The Company at times has cash in banks in excess of FDIC insurance limits and
places its temporary cash investments with high credit quality financial
institutions. The Company performs ongoing credit evaluations of its customers'
financial condition and does not require collateral from them. Reserves for
credit losses are maintained at levels considered adequate by management.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense for the three
months ended December 31, 1999 and 1998 totaled approximately $616,000 and
$14,000, respectively.
NOTE 2: SEGMENT INFORMATION
In 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". This Statement establishes standards for
the way public business enterprises report information about operating segments
in annual financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports. SFAS No. 131
also establishes standards for related disclosures about products and services,
geographic areas of operation and major customers.
The Company's operations are comprised of two segments. One segment, consisting
of Visual Data and its wholly owned subsidiaries primarily produces, markets and
distributes video information libraries intended for use by the general public
through various distribution channels, currently via the Internet. Our EDnet
subsidiary develops and markets integrated audio and video production
applications for the entertainment industry. The Company's management relies on
reports generated by two separate management accounting systems which present
various data for management to run the business.
Company management makes financial decisions and allocates resources based on
the information it receives from these systems.
8
<PAGE> 10
VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 2: SEGMENT INFORMATION (CONTINUED)
All material balances related to Company sales, primary business activities, and
location of property, plant and equipment are within the United States. For the
three months ended December 31, 1999 and 1998, no single customer accounted for
10% or more of the Company's net sales
Detailed below are the results of operations by segment for the three months
ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999
----------------------------------------------
VDC EDnet Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue $ 383,768 $ 1,017,815 $ 1,401,583
Cost of revenue 678,022 942,290 1,620,312
------------ ------------ ------------
Gross profit (loss) (294,254) 75,525 (218,729)
General and administrative 747,108 336,906 1,084,014
Sales and marketing 1,335,383 115,237 1,450,620
------------ ------------ ------------
Total operating costs 2,082,491 452,143 2,534,634
------------ ------------ ------------
Loss from operations (2,376,745) (376,618) (2,753,363)
------------ ------------ ------------
Other income (expense)
Interest income 173,968 3,179 177,147
Rental income 20,027 -- 20,027
Interest expense (22,022) (9,721) (31,743)
Minority interest 114,992 -- 114,992
------------ ------------ ------------
Total other income (expense) 286,965 (6,542) 280,423
------------ ------------ ------------
Loss before taxes (2,089,780) (383,160) (2,472,940)
Income taxes -- -- --
------------ ------------ ------------
Net loss $ (2,089,780) $ (383,160) $ (2,472,940)
============ ============ ============
Assets $ 18,264,051 $ 2,453,153 $ 20,717,204
============ ============ ============
</TABLE>
9
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VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 2: SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
1998
-------------------------------------------
VDC EDnet Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenue $ 76,507 $ 1,027,558 $ 1,104,065
Cost of revenue 270,048 704,882 974,930
----------- ----------- -----------
Gross profit (loss) (193,541) 322,676 129,135
General and administrative 599,594 136,841 736,435
Sales and marketing 286,420 279,732 566,152
----------- ----------- -----------
Total operating costs 886,014 416,573 1,302,587
----------- ----------- -----------
Income (loss from operations) (1,079,555) (93,897) (1,173,452)
----------- ----------- -----------
Other income (expense)
Interest income 5,906 -- 5,906
Rental income 19,592 -- 19,592
Interest expense (22,170) (498) (22,668)
Minority interest 48,214 -- 48,214
----------- ----------- -----------
Total other income (expense) 51,542 (498) 51,044
----------- ----------- -----------
Income (loss) before taxes (1,028,013) (94,395) (1,122,408)
Income taxes -- 4,000 4,000
----------- ----------- -----------
Net income (loss) $(1,028,013) $ (98,395) $(1,126,408)
=========== =========== ===========
Assets $ 5,656,854 $ 1,419,626 $ 7,076,480
=========== =========== ===========
</TABLE>
NOTE 3: LEGAL PROCEEDING
On or about October 18, 1999, Peter Bisulca instituted an action against Visual
Data and Randy Selman, our Chief Executive Officer and President, individually,
entitled BISULCA V. VISUAL DATA CORPORATION AND RANDY S. SELMAN, Case No. CL
99-9971 AD, in the 15th Judicial Circuit in and for Palm Beach County, Florida.
The Complaint alleged breach of contract and conversion against Visual Data and
tortious interference with contract against Randy S. Selman, seeking damages in
excess of $2,000,000 in connection with a Consulting Agreement dated May 1,
1998, allegedly entered into between Visual Data and Peter Bisulca. A Motion to
Dismiss was filed on behalf of Visual Data and Randy S. Selman, the hearing on
which was cancelled as a result of the Complaint being amended. The Complaint
was amended to no longer include Randy S. Selman as a defendant and the claim
for conversion was dropped. The Company intends to vigorously defend itself in
this action and, in the opinion of management, the ultimate outcome of this
matter will not have a material impact on the Company's financial position or
results of operations.
10
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VISUAL DATA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 4: SUBSEQUENT EVENT
In March, 1999, we announced an agreement with Telestream, the manufacturer of a
high quality video delivery system, ClipMail(TM) Pro (which can send video over
data networks using high-speed wide-band, Internet networks). Through our
subsidiary EDnet, we became the first OEM dealer for this video appliance.
On January 21, 2000, we completed a new agreement with Telestream to become the
Master Distributor of all of their Clip(TM)Mail Pro products in the United
States for the entertainment and advertising community. We plan to add regional
sales offices in Detroit, New York City and Atlanta as well as independent sales
representatives during the fiscal year.
11
<PAGE> 13
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Read the following discussion together with the information contained in the
Unaudited Condensed Consolidated Financial Statements and related Notes included
elsewhere in this prospectus.
OVERVIEW
We produce and own original video content specifically developed for the
Internet and interactive television. We are also a full service production and
distribution company capable of broadcasting and globally transmitting rich
media (audio and video) content. Our growing portfolio of full-motion video
information libraries on topics such as travel, corporate information and
healthcare is designed to target specific audiences in order to generate
revenues from advertising, subscriptions, viewership, e-commerce and
sponsorships.
Using the latest technology in video editing, combined with a global network of
veteran camera crews, we are able to maintain high quality and consistency in
our video productions. Our digital video production/editing component, working
in tandem with our management/storage/serving component, produce what we believe
to be a seamless infrastructure. Our goal is to deliver a level of expertise not
currently found elsewhere in the market, and our vertically integrated structure
allows us to price our services lower than other content developers and
providers as we do not need to outsource our editing services. We utilize the
latest available technology for distribution of our content, and therefore, we
are partners, not competitors, with streaming video Internet companies and
network providers.
PLAN OF OPERATION
Our current plan of operation includes continuing to expand the marketing of our
video libraries through the development of certain strategic partnerships and
the building of domestic and international sales channels, developing new
products and continuing to look for synergistic acquisition opportunities. We
continue to invest in the enhancement of our existing video libraries, as well
as the creation of new video libraries.
In conjunction with our Video News Wire service, we've developed an
Internet-based audio information service for the investment community called
TheFirstNews.com (http://www.thefirstnews.com) which launched at the end of
November 1999. The new site provides a continuous audio stream of breaking
corporate and industry news announcements as they are released from various news
services. Users of TheFirstNews.com are able to listen to audio excerpts from
all press releases of the day or set preferences of specific industries or
individual stocks they wish to be informed about. The patent pending software
used allows TheFirstNews.com player to be set in quiet mode or at low volume
continuously on the users' desktop. When an audio excerpt is released concerning
a company or industry that the user has pre-selected, the player automatically
raises the volume. Archived text of the entire release is also available on the
site. We are currently expanding the service to include the latest business
information from the top corporate news sources, just minutes after it is
released.
12
<PAGE> 14
REVENUE RECOGNITION
Our HotelView, CareView and ResortView libraries recognize a portion of their
contract revenue at the time of completion of video production services with the
remaining revenue recognized over the term of the contracts. Per view charges
are recognized when users watch a video on the Internet. Commissions on
ResortView bookings are recognized when the stays are completed. Currently, our
Video News Wire and MedicalView divisions recognize revenue when a project is
completed and our client is billed. A significant component of EDnet's revenue
relates to the sale of equipment, which is recognized when the equipment is
installed or upon signing of a contract after a free trial period. EDnet
recognizes revenues from equipment installation, webcasting and bridging when
service is performed. Network usage revenue is recognized based on an estimate
of customers' monthly usage. EDnet leases some equipment to customers under
terms that are accounted for as operating leases. Under the operating method,
rental revenue from leases is recognized ratably over the life of the lease and
the related equipment is depreciated over its estimated useful life.
Results of Operations
Quarter ended December 31, 1999 compared to quarter ended December 31, 1998.
The Company recognized revenue of approximately $1,402,000 during the first
quarter of fiscal 2000, representing an increase of $298,000 (27%) over revenues
of approximately $1,104,000 for the same period in fiscal 1999. Revenues from
EDnet accounted for approximately $1,018,000 as compared to approximately
$1,028,000 for the same period in fiscal 1999 which represents a decrease of
approximately $10,000 (1%). This change is comprised of an increase of $170,000
in revenues from equipment sales, installation and monthly fees, webcasting and
rental fees from approximately $418,000 to approximately $588,000 for the three
months ending December 31, 1998 and 1999, respectively, and an offsetting
decrease of approximately $190,000 from web design and consulting revenue lost
due to the sale of EDnet's subsidiary, IBS, for the same periods. Video News
Wire revenue was approximately $243,000 during the first quarter of fiscal 2000
as compared to approximately $45,000 for the same period in the prior year, an
increase of $198,000 (440%). Additionally, revenue from new and renewal
contracts signed by CareView increased by approximately $61,000 (678%) to
approximately $70,000 in the first quarter of fiscal 2000 from approximately
$9,000 during the corresponding period last year. The balance of the Company's
revenue for the first quarter of fiscal 2000, approximately $71,000, was derived
from new and renewal contracts signed by HotelView and ResortView, and new
contracts signed by MedicalView.
Cost of revenue includes video production costs, a percentage of the Company's
Internet Technologies Group's ("ITG") expenses, and related overhead costs, as
well as network fees and equipment costs associated with EDnet's revenue. Cost
of revenue increased approximately $645,000 (66%) from approximately $975,000 to
$1,620,000 for the first quarter of fiscal 2000 as compared to the same period
last year. This increase includes additional video production expenses related
to the growth of our video content libraries, including an increase in camera
crew expense of approximately $46,000 (219%) from approximately $21,000 in the
first quarter of fiscal 1999 to approximately $67,000 during the same period of
fiscal 2000. Expenses for ITG increased approximately $255,000 (236%) from
$108,000 to $363,000 for the first quarter fiscal 2000 as compared to the same
period last year due to the increase of the technical staff and the necessity of
utilizing temporary help for the continuation and acceleration of website
development, as well as increased depreciation and Internet access expenses
associated with our expansion. EDnet's cost of sales increased approximately
$237,000 (25%) from approximately $705,000 to approximately $942,000, primarily
because the video products that have been introduced this year have a higher
cost of sales than the audio equipment and the costs associated with web design
and consulting that comprised the prior years cost of revenue figure.
General and administrative expenses increased approximately $348,000 (47%) from
approximately $736,000 to approximately $1,084,000 for the three months ending
December 31, 1998 and 1999, respectively. Of this increase, approximately
$200,000 was a result of an expansion in Ednet's infrastructure to handle the
newly introduced video transmission product. Sales and marketing expenses
13
<PAGE> 15
increased approximately $885,000 (156%) from approximately $566,000 to
approximately $1,451,000 for the three months ending December 31, 1998 and 1999
respectively. Sales and marketing salaries and related expenses increased
approximately $250,000 (184%) from approximately $136,000 to approximately
$386,000 for the three months ending December 31, 1998 and 1999 respectively,
due to an increase in personnel. Advertising expenses for the three months
ending December 31, 1999 were approximately $616,000, an increase of
approximately $602,000 (4300%) from approximately $14,000 for the same period
last year, primarily as a result of increased marketing activities for our
existing libraries and the rollout of new websites.
We continue to implement our plan of operation to build critical mass in the
vertical markets we serve and expand the marketing of our multi-media
information libraries in order to generate revenues from various sources such as
advertising, subscriptions, viewership, and sponsorships. As part of this
expansion, we will continue to "bundle" our travel content by destination,
including hotels, resorts, golf courses, and attractions, and distribute them
via links to high traffic websites. We also plan to introduce our CruiseView
library during the current fiscal year, as well as expand the services available
at TheFirstNews.com.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999 the Company had working capital of approximately
$13,443,000. The Company believes it has sufficient working capital to fund its
current plan of operations until its subsidiaries begin producing revenues
sufficient to sustain operations. However in the event 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.
14
<PAGE> 16
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.
Reports on Form 8-K
None
Exhibits
Exhibit 27 - Financial Data Schedule
15
<PAGE> 17
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 14, 2000 /s/ Randy S. Selman
-------------------------------------
Randy S. Selman,
President and Chief Executive Officer
/s/ Pauline Schneider
-------------------------------------
Chief Financial Officer and
Principal Accounting Officer
16
<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, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 12,913
<SECURITIES> 0
<RECEIVABLES> 345
<ALLOWANCES> 41
<INVENTORY> 0
<CURRENT-ASSETS> 15,994
<PP&E> 5,770
<DEPRECIATION> 2,039
<TOTAL-ASSETS> 20,717
<CURRENT-LIABILITIES> 2,550
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,449
<TOTAL-LIABILITY-AND-EQUITY> 20,717
<SALES> 1,402
<TOTAL-REVENUES> 1,402
<CGS> 1,620
<TOTAL-COSTS> 2,535
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> (2,473)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,473)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,473)
<EPS-BASIC> (.29)
<EPS-DILUTED> (.29)
</TABLE>
