-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OO4ZTF7Sh5yvt+suoOwJZw2nUfAMyyFK4zBVTimvnSbz8okDr9op+aXpOO0OWktT cXF0+aT4sx+RyfXRQ8wNhg== 0000912057-96-016950.txt : 19960813 0000912057-96-016950.hdr.sgml : 19960813 ACCESSION NUMBER: 0000912057-96-016950 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA DIMENSIONS INC CENTRAL INDEX KEY: 0000026990 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 060852458 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04748 FILM NUMBER: 96607681 BUSINESS ADDRESS: STREET 1: 777 108TH AVENUE NE STREET 2: SUITE 2070 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: 2066881000 MAIL ADDRESS: STREET 1: 777 108TH AVENUE NE SUITE 2070 CITY: BELLEVUE STATE: WA ZIP: 98004 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 June 30, 1996 -------------------------------------------- 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 0-4748 ---------------------- Data Dimensions, Inc. - ------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 06-0852458 - ------------------------------------------------------------------------------- (NAME OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 777 - 108th Avenue NE, Suite 2070, Bellevue, WA 98004 - ------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (206) 688-1000 ----------------------------- Indicate by check whether the registrant (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______. Indicate the number of shares outstanding of each of the issuers classes of common stock, of the latest practicable date Common Stock 3,778,890 shares as of July 31, 1996 --------------------------------------------------- Transitional small business disclosure format (check one). YES_____ NO___X___. The index to exhibits appears on Page 10. DATA DIMENSIONS, INC. INDEX PAGE PART I - FINANCIAL INFORMATION NUMBER - ------------------------------ ------ ITEM 1 - FINANCIAL STATEMENTS - ------ Condensed Balance Sheets 3 June 30, 1996 and December 31, 1995 Condensed Statements of Operations 5 for the three and six month period ended June 30, 1996 and June 30, 1995 Condensed Statements of Cash Flow 6 for the six month period ended June 30, 1996 and June 30, 1995 Notes to Condensed Financial Statements 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS 8 - ------ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II - OTHER INFORMATION 11 - --------------------------- ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF - ------ SECURITY HOLDERS 11 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8K 11 - ------ Signatures 12 Page 2 of 13 DATA DIMENSIONS, INC. CONDENSED BALANCE SHEETS (In thousands) ASSETS June 30, 1996 December 31, 1995 ------------- ----------------- CURRENT ASSETS Cash $14,438 $ 65 Accounts receivable, less allowance for doubtful accounts of $2,500 in 1996, 1995 2,374 1,448 Due from officer -0- 35 Prepaid and other assets 637 90 Deferred income taxes 358 450 ------- ------ TOTAL CURRENT ASSETS 17,807 2,088 ------- ------ EQUIPMENT, FURNITURE AND LEASEHOLD IMPROVEMENTS Computers and Equipment 344 222 Furniture 38 16 Leasehold improvements 21 21 ------- ------ 403 259 Less accumulated depreciation 111 93 ------- ------ EQUIPMENT AND FURNITURE, NET 292 166 ------- ------ $18,099 $2,254 ------- ------ ------- ------ The accompanying notes to the financial statements are an integral part of these balance sheets. Page 3 of 13 DATA DIMENSIONS, INC. CONDENSED BALANCE SHEETS LIABILITIES AND (In thousands) STOCKHOLDERS EQUITY (DEFICIT) June 30, 1996 December 31, 1995 ------------- ----------------- CURRENT LIABILITIES Advance billing 417 655 Advances from factor -0- 824 Accrued compensation 255 221 Accounts payable 508 211 Accrued payroll taxes 240 121 Accrued commissions 137 143 Dividends payable -0- 70 Accrued expenses 26 37 Notes and other payable to officers -0- 0 ------- ------- TOTAL CURRENT LIABILITIES $ 1,583 $ 2,282 ------- ------- ------- ------- STOCKHOLDERS' EQUITY (DEFICIT) Common stock, $.001 par value; 20,000,000 shares authorized; 3,501,826 and 2,171,821 shares issued 4(1) 2(1) Capital in excess of par value 17,979 1,524 Accumulated deficit (1,416) (1,554) Less shares held in treasury at cost; 1,328 shares and 0 shares at June 30, 1996 and December 31, 1995 respectively (51) -0- ------- ------- Total Stockholders' Equity (Deficit) 16,516 (28) ------- ------- $18,099 $ 2,254 ------- ------- ------- ------- (1) Adjusted to give effect to a 1 for 3 reverse stock split. The accompanying notes to the financial statements are an integral part of these balance sheets. Page 4 of 13 DATA DIMENSIONS, INC. CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Month Period Six Month Period Ended June 30, Ended June 30, 1996 1995 1996 1995 ------ ------ ------ ------ REVENUE $3,018 $1,349 $5,589 $2,387 DIRECT COSTS 1,657 814 3,175 1,446 ------ ------ ------ ------ Gross Margin 1,361 535 2,414 941 GENERAL, ADMIN & SELLING EXPENSES 1,309 370 2,273 701 ------ ------ ------ ------ Income From Operations 52 165 141 240 OTHER EXPENSE (INCOME) (174) 57 (89) 108 ------ ------ ------ ------ INCOME BEFORE TAXES 226 108 230 132 INCOME TAXES 90 -0- 92 -0- ------ ------ ------ ------ NET INCOME $136 $108 $138 $132 ------ ------ ------ ------ NET INCOME PER SHARE $.04 $0.05(1) $0.04 $0.06(1) ------ ------ ------ ------ WEIGHTED AVERAGE SHARES OUTSTANDING 3,864 2,376(1) 3,902 2,366(1) ------ ------ ------ ------ (1) Adjusted to give effect to a 1 for 3 reverse stock split. The accompanying notes to the financial statements are an integral part of these balance sheets. Page 5 of 13 DATA DIMENSIONS, INC. CONDENSED STATEMENTS OF CASH FLOW Six Month Period Ended June 30 (In thousands) 1996 1995 ------- ------ CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 138 $ 132 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 18 14 Changes in assets and liabilities Accounts receivable (926) (198) Prepaid and other assets (455) (43) Advance billings (238) 90 Accounts payable 297 26 Accrued compensation 28 (52) Accrued and withheld payroll taxes 119 (113) Accrued expenses (11) 2 ------- ------ Net Cash Provided by (Used in) Operating Activities (1,030) (142) ------- ------ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of equipment and furniture (134) (9) Leasehold improvements (10) (15) Due from officer 0 124 ------- ------ Net Cash Provided by (Used in) Investing Activities (144) 100 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes and other payables to officers -0- (135) Payments on dividend (35) 0 Decrease in advances from factor (824) 110 Issuance of common stock 16,406 37 ------- ------ Net Cash Provided by (Used in) Financing Activities 15,547 12 ------- ------ NET CHANGE IN CASH 14,373 (30) CASH, beginning of year 65 42 ------- ------ CASH, June 30, 1996 and June 30, 1995 $14,438 $ 12 ------- ------ ------- ------ The accompanying notes to the financial statements are an integral part of these statements. Page 6 of 13 DATA DIMENSIONS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The financial information included herein for the six month periods ended June 30, 1996 and 1995 is unaudited; however, such information reflects all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation for the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 1995 is derived from Data Dimensions, Inc.'s Annual Report to Shareholders which is incorporated by reference into the Company's 1995 Form 10-KSB. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's 1995 Annual Report to Shareholders. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. NOTE 2: ACCOUNTING POLICIES Reference is made to Note l of Notes to Financial Statements in the Company's Annual Report on Form 10-KSB for the summary of significant accounting policies. Page 7 of 13 Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 Revenue for the three months ended June 30, 1996 was $3,018,000, compared to $1,349,000 for the three months ended June 30, 1995, an increase of $1,669,000, or 124%. This increase was primarily attributable to an increase in the general awareness of the millennium problem and demand for millennium consulting services and the Company's expanded marketing efforts. Gross margin for the three months ended June 30, 1996 was $1,361,000, compared to $535,000 for the three months ended June 30, 1995, an increase of $826,000, or 154%. Gross margin as a percentage of revenue for the three months ended June 30, 1996 was 45.1%, compared to 39.7% for the like period in 1995, an increase of 5.4%. This percentage increase was primarily the result of an increase in the amount of licensee income. General, administrative and selling expenses for the three months ended June 30 , 1996 were $1,309,000, compared to $370,000 for the three months ended June 30, 1995, an increase of $939,000 or 254%. General, administrative and selling expenses as a percentage of revenue for the three months ended June 30, 1996 were 43.4%, compared to 27.4% for the three months ended June 30, 1995, an increase of 16.0%. Approximately $650,000 of this increase in cost was the result of additions to the Company's administrative and support staff and related operating costs and the reorganization of its domestic operations into three regions in the last six months of 1995. The remaining increase in cost was related to adding support and sales staff and the acquisition and training cost of increased sales and technical staff.. Other income for the three months ended June 30, 1996 was $174,000, compared to other expense of $57,000 for the three months ended June 30,1995. The income for the three months in 1996 was attributable to interest earned from investments. The other expense for the three months in 1995 was attributable to accounts receivable factored and the related finance charges. The Company reported a net income of $136,000 for the three months ended June 30, 1996, compared to a net income of $108,000 for the three months ended June 30, 1995. Page 8 of 13 COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 Revenue for the six months ended June 30, 1996 was $5,589,000, compared to $2,387,000 for the six months ended June 30, 1995, an increase of $3,202,000, or 134%. This increase was primarily attributable to an increase of the general awareness of the millennium problem and demand for millennium consulting services and the Company's expanded marketing efforts. Gross margin for the six months ended June 30, 1996 was $2,414,000, compared to $941,000 for the six months ended June 30, 1995, an increase of $1,473,000, or 157% Gross margin as a percentage of revenue for the six months ended June 30, 1996 was 43.2%, compared to 39.4% for the like period in 1995, an increase of 3.8%. This percentage increase was primarily the result of an increase in the amount of licensee income. General, administrative and selling expenses for the six months ended June 30, 1996 were $2,273,000, compared to $701,000 for the six months ended June 30, 1995, an increase of $1,572,000 or 224%. General, administrative and selling expenses as a percentage of revenue for the six months ended June 30, 1996 was 40.7%, compared to 29.4% for the six months ended June 30, 1995, an increase of 11.3%. Approximately $1,275,000 of this increase in cost was the result of additions to the Company's administrative and support staff and related operating costs and the reorganization of its domestic operations into three regions in the last six months of 1995. In addition, during the second quarter of 1996, additional support staff and personnel training and acquisition costs were incurred to support the Company's continued growth. Other income for the six months ended June 30, 1996 was $89,000, compared to other expense of $108,000 for the like six months in 1995. The other income for the six months in 1996 was attributable to investment income during the second quarter of 1996, offset by costs related to accounts receivable factored during the first quarter of 1996. The other expense for the six months in 1995 was attributable to accounts receivable factored and related finance charges for six months. The Company reported a net income of $138,000 for the six months ended June 30, 1996, compared to a net income of $132,000 for the six months ended June 30, 1995. LIQUIDITY AND CAPITAL COMMITMENTS During the six months ended June 30, 1996, the company generated its cash needs through factoring its accounts receivable and proceeds from an underwritten public offering of Common Stock. The net proceeds to the Company were approximately $16,300,000. The Company used a portion of the proceeds to eliminate reliance on advances from its accounts receivable factor and to pay accrued dividends on previously outstanding Preferred Stock. In addition, the Company initiated the establishment of an international production facility in Ireland, where code and data conversion is being performed. Page 9 of 13 At June 30, 1996, the Company had working capital of $16,224,000 compared to a working capital deficit of $194,000 on December 31, 1995. During the next twelve months, the Company plans to invest up to approximately $1,500,000 in personnel, equipment, and other related expenses to develop and market an advance Year 2000 product based upon its current proprietary Year 2000 methodology. The product will be available to third-party providers, including computer and software companies, systems integrators, and consultants. These expenses will be deferred and amortized over a 4 to 5 year period. The funds for this investment will be taken from available working capital. Page 10 of 13 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The annual meeting of the shareholders of the Company was held on June 3, 1996 at which the shareholders elected the two nominees for director to the Board of Directors of the Company. The two directors elected, along with the voting results are as follows: No. of Shares No. of Shares Name Voting For Withheld Voting ----- ------------- --------------- Philip N. Newbold 2,846,886 2,755 (Class II) Thomas W. Fife 2,846,853 2,788 (Class III) The terms of Larry W. Martin and William H. Parsons as directors continued after the annual meeting of shareholders. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K There were no reports on Form 8-K filed during the quarter June 30, 1996. The exhibits filed as a part of this report are listed below. EXHIBIT NO. 11. Calculations of Net Income Per Share Page 11 of 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Data Dimensions, Inc. -------------------------- (Registrant) By: /s/ Larry W. Martin - ------------------------------- ------------------------------- Date Larry W. Martin, President and Chief Executive Officer (Principal Executive Officer) By: /s/ William H. Parsons - ------------------------------- ------------------------------- Date William H. Parsons, CFO (Principal Financial and Accounting Officer) Page 12 of 13 EX-11 2 EXHIBIT 11 EXHIBIT 11 DATA DIMENSIONS, INC. CALCULATIONS OF NET INCOME PER SHARE (1) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 ------ ------ ------ ------ Actual weighted average shares outstanding for period 3,773,000 2,201,000 3,773,000 2,201,000 Dilutive common stock options using the treasury stock method 91,000 175,000 129,000 165,000 --------- --------- --------- --------- Total shares used in per share calculations 3,864,000 2,376,000(1) 3,902,000 2,366,000 --------- --------- --------- --------- Net Income $136,000 $108,000 $138,000 $132,000 --------- --------- --------- --------- Net income per share (2) $0.04 $0.05(1) $0.04 $0.06(1) --------- --------- --------- --------- (1) Adjusted to give effect to a 1 for 3 reverse stock split (2) Fully diluted earnings per share is not disclosed on the consolidated statement of operations for the three month and six month periods ended June 30, 1996 and 1995, since it is not more than three percent different from primary earnings per share. Page 13 of 13 EX-27 3 EXHIBIT 27
5 6-MOS DEC-31-1996 JUN-30-1996 14,438 0 2,374 0 0 17,807 403 111 18,099 1,583 0 0 0 4 0 18,099 5,589 5,589 3,175 3,175 2,273 0 (89) 230 92 0 0 0 0 138 .04 .04
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