-----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, CjZkXUvT54hEa/p2HSEwREkfEpUoXEwVhOanXYpTEtflPU2X2jJgz0HTahJSwLre 4vGqMMB6y2wt6i5xIGXi1A== 0000950134-97-001813.txt : 19970317 0000950134-97-001813.hdr.sgml : 19970317 ACCESSION NUMBER: 0000950134-97-001813 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970314 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: XETA CORP CENTRAL INDEX KEY: 0000742550 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 731130045 STATE OF INCORPORATION: OK FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16231 FILM NUMBER: 97556793 BUSINESS ADDRESS: STREET 1: 4500 S GARNETT STE 1000 CITY: TULSA STATE: OK ZIP: 74146 BUSINESS PHONE: 9186648200 MAIL ADDRESS: STREET 1: 4500 S GARNETT SUITE 1000 CITY: TULSA STATE: OK ZIP: 74146 10QSB 1 FORM 10-Q PERIOD END JANUARY 31, 1997 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED JANUARY 31, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-16231 XETA Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Oklahoma 73-1130045 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer" incorporation or organization) Identification No.) 4500 S. Garnett, Suite 1000, Tulsa, Oklahoma 74146 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 918-664-8200 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 --- --- Number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at March 1, 1997 - -------------------------------- ---------------------------- Common Stock, $.10 par value 2,002,906 Page 1 of 16 consecutive pages Exhibit Index appears on Page 15. 2 PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page No. -------- Consolidated Balance Sheets - January 31, 1997 3 and October 31, 1996 Consolidated Statements of Operations - For the 4 Three months ending January 31, 1997 and 1996 Consolidated Statements of Shareholders' Equity - 5 November 1, 1996 through January 31, 1997 Consolidated Statements of Cash Flows - For the 6 Three months ending January 31, 1997 and 1996 Notes to Consolidated Financial Statements 7
2 3 XETA CORPORATION CONSOLIDATED BALANCE SHEETS
ASSETS January 31, 1997 October 31, 1996 ---------------- ---------------- (Unaudited) Current Assets: Cash and cash equivalents $ 3,781,482 $ 3,549,101 Current portion of net investment in sales-type leases 2,237,380 2,217,672 Other receivables, net 1,673,133 1,516,479 Inventories, net (Note 3) 1,224,848 1,041,496 Current deferred tax asset, net (Note 6) 121,173 92,897 Prepaid expenses and other assets 217,761 156,233 Prepaid taxes -- 173,785 ------------ ------------ Total current assets 9,255,777 8,747,663 ------------ ------------ Noncurrent Assets: Net investment in sales-type leases, less current portion above 2,444,102 2,737,358 Property, plant, & equipment, net (Note 4) 400,321 394,906 Capitalized software production costs, net of accumulated amortization of $283,566 at Jan 31, 1997 and $268,914 at Oct. 31, 1996 395,825 325,816 Other assets 159,733 158,677 ------------ ------------ Total noncurrent assets 3,399,981 3,616,757 ------------ ------------ Total assets $ 12,655,758 $ 12,364,420 ============ ============ LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 449,761 $ 371,473 Unearned revenue (Note 5) 2,723,680 2,274,294 Accrued liabilities 238,042 666,838 Accrued federal and state income taxes 52,920 -- ------------ ------------ Total current liabilities 3,464,403 3,312,605 ------------ ------------ Unearned service revenue (Note 5) 1,242,898 1,388,998 ------------ ------------ Noncurrent deferred tax liability, net (Note 6) 528,746 591,984 ------------ ------------ Commitments (Note 10) Shareholders' equity: Common stock; $.10 par value; 10,000,000 shares authorized, 2,187,653 and 2,182,653 issued at January 31, 1997 and October 31, 1996, respectively 218,765 218,265 Paid-in capital 4,753,951 4,736,413 Retained earnings 2,706,735 2,375,895 ------------ ------------ 7,679,451 7,330,573 Less treasury stock, at cost (259,740) (259,740) ------------ ------------ Total shareholders' equity 7,419,711 7,070,833 ------------ ------------ Total liabilities & shareholders' equity $ 12,655,758 $ 12,364,420 ============ ===========
The accompanying notes are an integral part of these statements. 3 4 XETA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended January 31, 1997 January 31, 1996 ---------------- ---------------- Sales of systems $ 1,082,792 $ 2,039,216 Installation and service revenues 1,817,937 1,542,781 ----------- ----------- Net sales and service revenues 2,900,729 3,581,997 ----------- ----------- Cost of sales 645,194 1,242,814 Installation and service cost 1,143,271 989,401 ----------- ----------- Total cost of sales and service 1,788,465 2,232,215 ----------- ----------- Gross profit 1,112,264 1,349,782 ----------- ----------- Operating expenses: Selling, general and administrative 674,378 689,285 Engineering, research and development, and amortization of capitalized software production costs 98,868 97,357 ----------- ----------- Total operating expenses 773,246 786,642 ----------- ----------- Income from operations 339,018 563,140 Interest and other income 167,822 139,903 ----------- ----------- Income before provision for income taxes 506,840 703,043 Provision for income taxes (176,000) (261,000) Net income $ 330,840 $ 442,043 =========== =========== Income per common and common equivalent share $ .14 $ .19 =========== =========== Weighted average shares outstanding 1,995,352 1,923,241 =========== =========== Weighted average shares equivalents 2,345,180 2,347,865 =========== ===========
The accompanying notes are an integral part of these statements. 4 5 XETA CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY NOVEMBER 1, 1996 THROUGH January 31, 1997 (Unaudited)
Common Stock Treasury Stock --------------------------- ------------------------- Number of Shares Issued Paid-in Retained & Outstanding Par Value Shares Amount Capital Earnings ------------- --------- -------- --------- ---------- --------- Balance - October 31, 1996 2,182,653 $218,265 (189,747) $(259,740) $4,736,413 $2,375,895 Stock options exercised 5,000 500 6,063 Tax benefit of stock options 11,475 Net Income 330,840 --------- -------- -------- --------- ---------- ---------- Balance - January 31, 1997 2,187,653 $218,765 (189,747) $(259,740) $4,753,951 $2,706,735 ========= ======== ======== ========= ========== ==========
The accompanying notes are an integral part of these statements. 5 6 XETA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For The Three Months Ending ----------------------------- Jan. 31, 1997 Jan. 31, 1996 ------------- ------------- Cash flows from operating activities: Net income $ 330,840 $ 442,043 ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 43,245 32,815 Amortization of capitalized software production costs 14,652 13,728 (Gain) loss on sale of assets -- 5,064 Provision for doubtful accounts receivable 9,000 15,000 Change in assets and liabilities: (Increase) decrease in net investment in sales-type leases 273,548 (662,741) (Increase) in other receivables (165,654) (91,666) (Increase) decrease in inventories (183,352) 230,710 Decrease in prepaid income taxes 173,785 -- (Increase) decrease in deferred tax asset (28,276) 58,786 (Increase) in prepaid expenses and other assets (62,583) (97,898) Increase (decrease) in accounts payable 78,288 (60,282) Increase in unearned revenue 303,286 233,992 Increase in accrued income taxes 52,920 -- (Decrease) in accrued liabilities (417,321) (503,569) Increase (decrease) in deferred tax liabilities (63,238) 112,578 ----------- ----------- Total adjustments 28,300 (713,483) ----------- ----------- Net cash provided by (used in) operating activities 359,140 (271,440) ----------- ----------- Cash flows from investing activities: Additions to capitalized software (84,662) (44,276) Additions to property, plant & equipment (48,660) (43,890) ----------- ----------- Net cash used in investing activities (133,322) (88,166) ----------- ----------- Cash flows from financing activities: Exercise of stock options 6,563 166,500 ----------- ----------- Net cash provided by financing activities 6,563 166,500 ----------- ----------- Net increase (decrease) in cash and cash equivalents 232,381 (193,106) Cash and cash equivalents, beginning of period 3,549,101 2,788,709 Cash and cash equivalents, end of period $ 3,781,482 $ 2,595,603 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 282 $ -- Cash paid during the period for income taxes $ 108,462 $ 296,286
The accompanying notes are an integral part of these statements. 6 7 XETA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS January 31, 1997 (Unaudited) (1) BASIS OF PRESENTATION The consolidated financial statements included herein include the accounts of XETA Corporation and its wholly-owned subsidiary, Xetacom, Inc. Xetacom's operations have been insignificant to date. All significant intercompany accounts and transactions have been eliminated. The consolidated financial statements have been prepared by the Company, without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made in these financial statements are adequate to make the information presented not misleading when read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest financial statements filed as part of the Company's Annual Report on Form 10-KSB, Commission File No. 0-16231. Management believes that the financial statements contain all adjustments necessary for a fair statement of the results for the interim periods presented. All adjustments made were of a normal recurring nature. (2) REVOLVING CREDIT AGREEMENT The company maintains a $1,000,000 revolving line of credit with its bank. To date, no advances have been made under this agreement. (3) INVENTORIES The following are the components of inventories:
January 31, October 31, 1997 1996 ---------- ---------- (Unaudited) Raw materials $ 706,673 $ 577,054 Finished goods and spare parts 677,423 623,690 ---------- ---------- 1,384,096 1,200,744 Less reserve for excess and obsolete inventory (159,248) (159,248) ---------- ---------- $1,224,848 $1,041,496 ========== ==========
7 8 (4) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following:
January 31, October 31, 1997 1996 ----------- ----------- (Unaudited) Computer field equipment $ 829,254 $ 797,825 Office furniture 114,096 112,976 Other 158,114 147,001 ----------- ----------- 1,101,464 1,057,802 Less accumulated depreciation (701,143) (662,896) ----------- ----------- $ 400,321 $ 394,906 =========== ===========
(5) UNEARNED INCOME Unearned income consists of the following:
January 31, October 31, 1997 1996 ---------- ---------- (Unaudited) Service contracts $1,518,661 $1,570,872 Warranty service 384,482 379,753 Systems shipped, but not installed 164,864 63,829 Customer deposits 608,036 209,357 Other deferred revenues 47,637 50,483 ---------- ---------- Total current deferred revenue 2,723,680 2,274,294 Noncurrent unearned service revenues 1,242,898 1,388,998 ---------- ---------- $3,966,578 $3,663,292
(6) INCOME TAXES The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
January 31, October 31, 1997 1996 --------- --------- (Unaudited) Deferred tax assets: Prepaid service contracts $ 36,774 $ 51,083 Nondeductible reserves 217,597 198,822 Book depreciation in excess of tax 15,902 15,902 Other 85,026 50,675 --------- --------- Total deferred tax asset 355,299 316,482 --------- --------- Deferred tax liabilities: Unamortized capitalized software development costs (134,581) (110,778) Tax income to be recognized on sales-type lease contracts (562,331) (638,831) Other (65,960) (65,960) --------- --------- Total deferred tax liability (762,872) (815,569) --------- --------- Net deferred tax liability $(407,573) $(499,087) ========= =========
8 9 (7) INTEREST AND OTHER INCOME Interest and other income for the three months ending January 31, 1997, consists primarily of interest income earned from sales-type leases and cash investments. (8) FOOTNOTES INCORPORATED BY REFERENCE Certain footnotes are applicable to the consolidated financial statements, but would be substantially unchanged from those presented in the Company's Annual Report on Form 10-KSB, Commission File No. 0-16231, filed with the Securities and Exchange Commission on January 29, 1997. Accordingly, reference should be made to those statements for the following:
Note Description ---- ----------- 1 Business and summary of significant accounting policies 3 Cash and cash equivalents 4 Income taxes 6 Accrued liabilities 8 Stock options 9 Commitments 10 Major customers and concentrations of credit risk 11 Employment agreements 12 Contingency 13 Earnings per share 15 Retirement plan
9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the first quarter of fiscal 1997, ending January 31, 1997, XETA Corporation (the "Company"), reported net income of $331,000 or $.14 per share compared to $442,000 or $.19 for the first quarter of fiscal 1996. This decrease is primarily the result of lower systems sales, including both call accounting and PBX related products. These decreases are more fully explained in the analysis below. The discussion that follows provides analysis of the major factors and trends which management believes had the most significant impact on the financial condition of the Company as of January 31, 1997, and the results of its operations for the quarter ending January 31, 1997 as compared to the quarter ending January 31, 1996. Also included in this discussion are the major factors, trends and risks which management believes will affect the outlook for the Company. This analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in this report. FINANCIAL CONDITION During the quarter ending January 31, 1997, the Company's cash balances increased $232,000. This increase included increases in cash from operations of $359,000 and from exercises of stock options of $6,000. These increases were partially offset by investments in capitalized software and equipment totaling $133,000. Management considers the Company's financial condition to be strong with cash balances representing approximately 30% of total assets, working capital of $5.8 million and a current ratio of 2.7. Management believes that its present working capital and future operating cash flows will be sufficient to meet anticipated operating needs and planned capital expenditures. These needs include continued investment in research and development activities and expansion of the Company's service and sales staffs as the customer base expands and as opportunities present themselves. Beyond management's plans to utilize its healthy financial condition to expand its current operations, other alternatives are continually evaluated to effectively utilize the Company's cash balances and to enhance shareholder value. These opportunities include expansion of the Company's Xetaplan program and a stock repurchase program, both of which have been done in the last three years and could be utilized in the future. In addition, management has evaluated potential synergistic acquisitions and continues to do so. RESULTS OF OPERATIONS Net sales and service revenues decreased $681,000 or 19% during the first quarter of fiscal 1997 compared to the first quarter of fiscal 1996. By product line, this decrease consisted of decreases in call accounting systems sales of $223,000 or 33% and in PBX systems sales of 10 11 $733,000 or 54%. These decreases were offset by an increase in installation and service revenues of $275,000 or 18% The decrease in call accounting systems sales was expected as sales of these systems has declined to historical levels from the inflated levels experienced during the first quarter of fiscal 1996 related to the mandated changes in the North American Numbering Plan ("NANP"). The Company will have one more quarter in which to compare to these inflated call accounting sales. Revenues from sales of new PBX systems during the first quarter of fiscal 1997 were lower than in the first quarter of fiscal 1996 and lower than management's expectations. Management believes this decline is primarily the result of the timing of customer decisions and not a deficiency in the Company's PBX product offering. As evidence of this belief, orders received during the first quarter of fiscal 1997 surged to more than $2 million. This backlog, which is approximately 5 times the normal level, represents systems which are scheduled to be installed and recorded as revenues during the Company's second and third fiscal quarters. The increase in installation and service revenues is due primarily to the continued expansion of the Company's PBX customer base. Recurring PBX contract revenue increased by more than 50% during the first quarter when compared to the first quarter of the prior year. These revenues are earned from customers with existing Hitachi PBX systems who contract with the Company for monthly service and from customers who purchased new Hitachi systems directly from the Company and whose systems are currently under warranty. Revenues earned from call accounting installation and service activities also increased during the quarter, although at a much more modest rate of 3%. These revenues, which are also primarily recurring in nature, reflect the fact that although the call accounting product line has matured, the Company is very successful at maintaining its customer base by providing a high level of quality service to its customers. Gross margins earned on net sales and service revenues was 38% for the first quarter of both fiscal 1997 and fiscal 1996. Gross margins earned on systems sales, which differ significantly by product line between higher margin call accounting sales and lower margin PBX sales, were relatively unchanged at 40%. If, as expected, a greater percentage of the Company's systems sales come from sales of PBX systems, gross margins earned on systems sales will decline slightly from their current levels. The gross margin of 37% earned on installation and service revenues is within management's target for these revenues and is relatively unchanged from the previous year. Operating expenses decreased $15,000 or 2% during the first quarter of fiscal 1997 compared to fiscal 1996. This slight decrease included increases in sales and marketing costs related to an increase in personnel and office costs and increases in general and administrative expenses, primarily legal fees associated with pending litigation. These increases were offset by a decrease in expenses directly related to sales and profitability, such as commissions and executive bonuses. Interest and other income increased $28,000 or 20%. This increase resulted from increases in interest income earned from Xetaplan sales-type leases. Since many of the call accounting systems installed during 11 12 the surge in orders from the mandated changes in the NANP were installed under the Company's Xetaplan sales-type lease program, the interest income from these contracts has grown steadily for several quarters. The Company has recorded a provision for federal and state income taxes of $176,000 representing an effective tax rate of 35% compared to 37% for the first quarter fiscal 1995. The lower tax rate reflects a reduction in the estimated state tax provision for fiscal 1997. OUTLOOK AND RISK FACTORS The statements contained in this section entitled "Outlook and Risk Factors" are based on current expectations. The statements are forward-looking and actual results may differ materially. Despite the decline in revenues and operating results in the first quarter, management believes that the Company is well-positioned to exceed fiscal 1996's total revenues and net income. This belief is founded on the basis of the excellent order activity for new PBX systems during the first quarter and the continued growth in the Company's service base. The Company's distributorship agreement with Hitachi Telecom (USA), Inc. ("Hitachi") is renewable on March 31, 1997. The Company considers its relationship with Hitachi to be very good and strongly believes that the agreement will be renewed on mutually beneficial terms; however, if such a renewal cannot be achieved, the Company's operating results could be lower than those expected. The Company continues to commit the majority of its research and development resources into development of XPANDER, its first PBX related proprietary product. Management believes the market for XPANDER is continuing to grow, but that it is still too early to predict when demand will be strong enough to forecast significant revenues from sales of this product. The Company has applied for a patent on XPANDER, but it is too early in the application process to determine whether the Company will receive a patent and the protections associated therewith. The Company is involved in two matters of pending litigation (See "Legal Proceedings" in Part II below). In both cases, management believes its legal position is strong and no loss contingencies have been recorded in the financial statements. Should the outcome of either of these matters be unfavorable however, the Company may have to record expenses which might cause operating results to be materially lower than those expected. The Company's Form 10KSB for the year ended October 31, 1996 contains an expanded discussion of risk factors which should be read in conjunction with this report. 12 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings PHONOMETRICS Following a hearing on February 13, 1997 in the Phonometrics patent infringement litigation in Florida, on February 20, 1997 the United States District Court for the Southern District of Florida entered an order in each of the Florida cases against hotels (including those involving the Company's customers), to stay the proceedings pending the outcome of Phonometrics' appeal of its loss in the Northern Telecom case. In its order, the Court stated that it would enter final judgment in favor of all of the hotels in the event of a decision by the appeals court in favor of Northern Telecom. In positioning these cases for dismissal pending the outcome of the Northern Telecom appeal, the Court noted that Phonometrics is pursuing a theory of the scope of its patent that is "fundamentally at odds with the Federal Circuit's decision" in several other cases against telecommunications equipment manufacturers, including Northern Telecom. As of March 4, 1997, the Northern Telecom appeal had not yet been set for oral argument, but it is expected that the hearing date will be scheduled soon. There has been no movement in the California Phonometrics litigation, since the California litigation was stayed pending the outcome of the Florida litigation. ABTS The trial date in the action brought by Associated Business Telephone Systems, Inc. ("ABTS") against the Company has been rescheduled for August, 1997. Recently the Company filed a counterclaim against ABTS and a third-party claim against D&P Investments and Communication Equipment Brokers for breach of contract, pursuant to which the Company seeks damages in an amount in excess of $75,000. The parties are continuing with discovery. The Company intends to vigorously defend the claim brought by ABTS and pursue its counterclaim and third party claim. Items 2 through 5 of Part II have been omitted because they are inapplicable or the response thereto is negative. Item 6. (a) Exhibits - See the Exhibit Index at Page 15. (b) Reports on Form 8-K - During the quarter for which this report is filed, the Registrant did not file any reports with the Securities and Exchange Commission on Form 8-K. 13 14 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. XETA CORPORATION (Registrant) Dated: March 14, 1997 By: --------------------------------- Jack R. Ingram President Dated: March 14, 1997 By: --------------------------------- Robert B. Wagner Vice President of Finance 14 15 EXHIBIT INDEX
SEC. NO. Description - -------- ----------- (2) Plan of acquisition, reorganization, arrangement, liquidation or succession - None. (3) Articles of Incorporation and Bylaws - previously filed as Exhibits 3.1, 3.2, and 3.3 to the Registrant's Registration Statement on Form 5.1, Registration No. 33-7841. (4) Instruments defining rights of security holders, including indentures - previously filed as Exhibits 3.1, 3.2 and 3.3 to the Registrant's Registration Statement on Form S-1, Registration No. 33-7841. (11) Material Contracts-none (11) Statement re: computation of per share earnings - Inapplicable. (15) Letter re: unaudited interim financial information - Inapplicable. (18) Letter re: change in accounting principles - Inapplicable. (19) Report furnished to security holders - None. (22) Published report regarding matters submitted to a vote of security holders - None. (23) Consents of experts and counsel 23.1 Consent of Arthur Andersen LLP (24) Power of attorney - None. (27) Financial Data Schedule (99) Additional exhibits - None.
EX-23.1 2 CONSENT OF ARTHUR ANDERSEN 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report and to all references to our Firm included in or made a part of the Form S-8 made by Xeta Corporation on August 28, 1995. It should be noted that we have not audited any financial statements of the Company subsequent to October 31, 1996 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP Tulsa, Oklahoma March 14, 1997 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF COMPANY'S 10QSB FOR THE YEAR TO DATE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS OCT-31-1997 JAN-31-1997 3,781,482 0 1,673,133 0 1,224,848 9,255,777 400,321 0 12,655,758 3,464,403 0 0 0 218,765 7,460,686 12,655,758 2,900,729 2,900,729 1,788,465 1,788,465 0 0 0 506,840 176,000 330,840 0 0 0 330,840 .14 .14
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