-----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, MLh8RRxQtQ6AcFUj/AbJHUGDtfJHLWq5dRoS/4xaoUuyJPfCFvJwTQ2c5546qQcG 3Bdv4unl0Sc8hqODWVWhFA== 0000890566-95-000650.txt : 19951212 0000890566-95-000650.hdr.sgml : 19951212 ACCESSION NUMBER: 0000890566-95-000650 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOCUCON INCORPORATED CENTRAL INDEX KEY: 0000843006 STANDARD INDUSTRIAL CLASSIFICATION: 7370 IRS NUMBER: 742418590 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10185 FILM NUMBER: 95591641 BUSINESS ADDRESS: STREET 1: 7461 CALLAGHAN RD CITY: SAN ANTONIO STATE: TX ZIP: 78229 BUSINESS PHONE: 2105259221 MAIL ADDRESS: STREET 1: 7461 CALLAGHAN ROAD CITY: SAN ANTONIO STATE: TX ZIP: 78229 10QSB 1 QUARTERLY REPORT FOR THE PERIOD ENDED 09/30/95 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended SEPTEMBER 30, 1995 OR [ ] Transition Report Under Section 13 or 15(d) of the Exchange Act For the Transition Period From to Commission File Number 1-10185 DOCUCON, INCORPORATED (Exact name of small business issuer as specified in its charter) Delaware 74-2418590 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 7461 Callaghan Road San Antonio, Texas 78229 (Address of principal executive offices) (210) 593-0183 (Issuer's telephone number) 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 November 9, 1995. 11,771,228 DOCUCON, INCORPORATED INDEX PAGE PART I. FINANCIAL INFORMATION Item 1: Balance Sheets - September 30, 1995, and December 31, 1994 3 Statements of Operations - For the Three Months and Nine Months Ended September 30, 1995 and 1994 5 Statements of Cash Flows - For the Nine Months Ended September 30, 1995 and 1994 6 Notes to Financial Statements 8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Items 1-6: Other Information 14 SIGNATURES 15 -2- PART I - FINANCIAL INFORMATION DOCUCON, INCORPORATED BALANCE SHEETS
September 30, 1995 December 31, ASSETS (UNAUDITED) 1994 ------------- ------------ CURRENT ASSETS: Cash and temporary cash investments ..................................................... $ 111,273 $ 376,798 Accounts receivable - trade, net of allowance for doubtful accounts of $4,802 and $28,093, respectively- U.S. Government ..................................................................... 70,454 119,249 Commercial .......................................................................... 1,295,711 1,347,075 Unbilled revenues ....................................................................... 1,017,620 156,305 Other receivables ....................................................................... 1,024 3,830 Prepaid expenses ........................................................................ 131,415 169,543 ---------- ---------- Total current assets ................................................... 2,627,497 2,172,800 ---------- ---------- PROPERTY AND EQUIPMENT ..................................................................... 6,494,161 6,034,459 Less- Accumulated depreciation .......................................................... 3,987,552 3,286,816 ---------- Net property and equipment ............................................. 2,506,609 2,747,643 ---------- SOFTWARE DEVELOPMENT COSTS, net ............................................................ 325,336 280,901 ---------- ---------- GOODWILL, net .............................................................................. 343,476 357,433 ---------- Total assets ........................................................... $5,802,918 $5,558,777 ========== ==========
See Notes to Financial Statements. -3- PART I - FINANCIAL INFORMATION DOCUCON, INCORPORATED BALANCE SHEETS
September 30, 1995 December 31, LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) 1994 ------------ ------------ CURRENT LIABILITIES: Accounts payable .......................................................................... $ 1,129,905 $ 755,305 Accrued liabilities ....................................................................... 712,257 597,148 Line of credit ............................................................................ 400,000 -- Note payable .............................................................................. -- 10,560 Current maturities of capital lease obligations ........................................... 7,787 20,930 Deferred revenues ......................................................................... 341,363 91,018 ----------- ----------- Total current liabilities ................................................ 2,591,312 1,474,961 ----------- ----------- LONG-TERM DEBT ............................................................................... 1,500,000 1,500,000 ----------- ----------- CAPITAL LEASE OBLIGATIONS, less current maturities ........................................... -- 3,094 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $1.00 par value, 10,000,000 shares authorized- Series A, 60 shares authorized; 21 and 23 shares outstanding as of September 30, 1995, and December 31, 1994, respectively ............................... 21 23 Common stock, $.01 par value, 25,000,000 shares authorized; 11,771,228 and 11,544,280 shares issued and outstanding as of September 30, 1995, and December 31, 1994, respectively ................................. 117,712 115,442 Additional paid-in capital ................................................................ 9,474,508 9,456,677 Accumulated deficit ....................................................................... (7,880,635) (6,991,420) ----------- ----------- Total stockholders' equity ............................................... 1,711,606 2,580,722 ----------- ----------- Total liabilities and stockholders' equity ............................... $ 5,802,918 $ 5,558,777 =========== ===========
See Notes to Financial Statements. -4- DOCUCON, INCORPORATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Nine Months Ended September 30 Ended September 30 ---------------------------------- ------------------------------- 1995 1994 1995 1994 ------------- ------------- ------------- ------------- OPERATING REVENUES ................................. $ 2,304,773 $ 2,230,335 $ 8,191,280 $ 6,500,010 ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Production ...................................... 1,400,589 1,470,127 5,305,246 4,220,457 Research and development ........................ 41,809 200,996 384,918 465,832 General and administrative ...................... 290,986 223,291 757,606 685,859 Marketing ....................................... 474,613 352,705 1,764,015 1,091,864 Depreciation and amortization ................... 240,728 302,919 773,680 864,411 Writedown of other assets ....................... -- 145,942 -- 145,942 ------------ ------------ ------------ ------------ 2,448,725 2,695,980 8,985,465 7,474,365 ------------ ------------ ------------ ------------ OPERATING LOSS ..................................... (143,952) (465,645) (794,185) (974,355) OTHER INCOME (EXPENSE): Interest expense ................................ (40,728) (35,783) (110,562) (108,187) Other, net ...................................... 2,407 4,665 15,532 21,999 ------------ ------------ ------------ ------------ LOSS BEFORE INCOME TAXES ........................... (182,273) (496,763) (889,215) (1,060,543) INCOME TAX EXPENSE ................................. -- -- -- -- NET LOSS ........................................... (182,273) (496,763) (889,215) (1,060,543) PREFERRED STOCK DIVIDEND REQUIREMENTS .............. 14,675 15,813 45,896 47,357 ------------ ------------ ------------ ------------ NET LOSS APPLICABLE TO COMMON STOCKHOLDERS .................................... $ (196,948) $ (512,576) $ (935,111) $ (1,107,900) ============ ============ ============ ============ PRIMARY LOSS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS ........................ $ (.02) $ (.04) $ (.08) $ (.10) ============ ============ ============ ============ WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS ........................ 11,722,583 11,544,280 11,662,841 11,553,202 ============ ============ ============ ============
See Notes to Financial Statements. -5- DOCUCON, INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30 ------------------------------- 1995 1994 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ................................................................................ $ (889,215) $(1,060,543) Adjustments to reconcile net loss to net cash provided by (used in) operating activities- Depreciation and amortization ....................................................... 773,680 864,411 Writedown of other assets ........................................................... -- 145,942 Changes in current assets and current liabilities- (Increase) decrease in receivables and unbilled revenues .......................... (758,350) 652,591 (Increase) decrease in prepaid expenses ........................................... 38,128 69,716 Increase (decrease) in accounts payable and accrued liabilities ................... 489,709 (423,111) Increase (decrease) in deferred revenues .......................................... 250,345 7,233 ---------- ----------- Net cash provided by (used in) operating activities ....................... (95,703) 256,239 ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................................................ (462,567) (318,929) Capitalized software development costs .............................................. (100,557) -- Net cash used in investing activities ..................................... (563,124) (318,929) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Advances under line of credit ....................................................... 400,000 -- Principal payments under capital lease obligations .................................. (16,237) (15,259) Net proceeds from exercise of stock options ......................................... 20,099 -- Principal payments on notes payable ................................................. (10,560) (424,684) Stock registration costs ............................................................ -- (7,850) ---------- ----------- Net cash provided by (used in) financing activities ....................... 393,302 (447,793) ---------- ----------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS ........................................ (265,525) (510,483) ---------- ----------- CASH AND TEMPORARY CASH INVESTMENTS, beginning of period ................................ 376,798 633,141 ---------- ----------- CASH AND TEMPORARY CASH INVESTMENTS, end of period ...................................... $ 111,273 $ 122,658 ========== ===========
-6- DOCUCON, INCORPORATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) Nine Months Ended September 30 ----------------------------- 1995 1994 ------------- ------------ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for- Interest $ 80,156 $ 108,929 Income taxes - 22,447 ------------- ------------ $ 80,156 $ 131,376 ============= ============ SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Inconnection with an acquisition discussed in Note 6, during the first quarter of 1994, the Company acquired approximately $1,015,000 in assets, assumed approximately $1,179,000 in liabilities and recorded approximately $372,000 in goodwill. DISCLOSURE OF ACCOUNTING POLICY: The Company considers funds invested in highly liquid investments having a maturity of 90 days or less to be temporary cash investments. See Notes to Financial Statements. -7- DOCUCON, INCORPORATED NOTES TO FINANCIAL STATEMENTS NOTE 1 The financial statements included herein have been prepared by Docucon, Incorporated (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. However, all adjustments have been made which are, in the opinion of the Company, necessary for a fair presentation of the results of operations for the periods covered. 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, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is recommended that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994. Since its inception, the Company has incurred losses of approximately $7.9 million which have been funded primarily through a public offering, issuances of preferred stock, the exercise of warrants and debt financing. Unless results of operations improve over those experienced thus far in 1995, the Company will be unable to ensure its continuing operations independent of additional capital infusions. The Company has taken actions including the expansion of its customer base, improvements in operating efficiencies, cost cutting measures and exploring the potential of forming strategic marketing partnerships with one or more firms that provide products and services to the legal community. The Company believes that it is likely that its operating results during the balance of 1995 will generate sufficient working capital to sustain its operations throughout the year. See "Liquidity and Capital Resources" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations." NOTE 2 Organization and description of the Company- Docucon, Incorporated, was incorporated in June 1986 to engage in the business of providing technical services to its customers for the conversion of paper and microform documents to computer-accessible media. Paper or microform documents are scanned by sophisticated computer equipment and stored and indexed on optical disks or magnetic media. NOTE 3 Summary of significant accounting policies- Property and equipment- Property and equipment are recorded at original cost or the present value of the capital lease payments for assets under capital lease arrangements. Maintenance and repairs are charged to expense as incurred and betterments which increase the value or extend the useful life of the property are capitalized. Gains or losses on sales or other dispositions of property and equipment are credited or charged to income. -8- DOCUCON, INCORPORATED NOTES TO FINANCIAL STATEMENTS (Continued) Depreciation is provided using the straight-line method over the lesser of the capital lease term or estimated useful lives of the related assets. The Company's fixed assets are currently depreciated over periods ranging from two to five years beginning in the month the property is placed in service. The Company's building is being depreciated over 40 years. Revenue recognition- Revenues from conversion service contracts are recognized at the time services are provided and are based upon the number of documents converted and the conversion rates established in the contracts. Revenues from software licensing fees are recognized upon delivery of the software. Revenues from maintenance and telephone support contracts are recognized ratably over the term of the contract, typically one year. Software development costs- The Company capitalizes software development costs and amortizes those costs over the estimated useful life of the software. The Company incurred approximately $417,000 related to the development of software (WIN.LAW), which was to be used to supplement the Company's litigation support services. During 1994, the Company wrote off the unamortized cost of WIN.LAW when it became apparent that the carrying value would not be realized. Included in software development costs is $250,000 for advanced litigation support software (Litigator's Notebook(TM)) which was acquired during March 1994. Also included in software development costs is approximately $101,000 of costs which were incurred during 1995 to develop software which will support and complement Litigator's Notebook(TM). These costs are being amortized over a five-year period. Goodwill- In connection with the acquisition discussed in Note 6 below, the Company recognized goodwill of approximately $372,000. This goodwill is being amortized on a straight-line basis over 20 years. NOTE 4 Common stock and preferred stock- Each share of the Company's Preferred Stock ($25,000 stated value) is convertible into 33,333 shares of Common Stock and earns cash dividends of 11 percent per annum. As of September 30, 1995, cumulative undeclared dividends on the Preferred Stock approximated $303,000. As these dividends are undeclared, they have not been recorded as a reduction of the Company's equity. During the first nine months of 1994 and 1995, one share and two shares of Preferred Stock were converted into Common Stock, respectively. Stock options- During the first quarter of 1995, the Company reduced the exercise price of all outstanding options granted under the 1988 Stock Option Plan and the 1991 Director Non-Statutory Stock Option Plan to $.5625 per share. -9- DOCUCON, INCORPORATED NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 5 Long-term debt- In December 1992, permanent financing for the Company's office building was obtained from a venture capital company. In connection with such financing, the Company issued a four-year, 8 percent promissory note in the principal amount of $1,500,000 secured by the building, paid a loan origination fee of $60,000 and issued 900,000 warrants to purchase an equivalent number of shares of Common Stock at an exercise price of $2.00 per share. As the exercise price exceeded the current market price and the financing terms of the debt were at market, no value was recorded for the warrants issued. The principal balance matures December 15, 1996, and interest is due quarterly. Line of credit- The Company's bank credit agreement consists of a $400,000 revolving line of credit which bears interest at prime plus 1.25 percent and matures in November 1995. Borrowings pursuant to the revolving line of credit are subject to a borrowing base limitation and are secured by the Company's accounts receivable. The Company pays a commitment fee of .5 percent per annum on the unused portion of the working capital line of credit. The line of credit is subject to various financial covenants including working capital and net worth requirements. As of September 30, 1995, and subsequent to that date, the Company was not in compliance with certain of the financial covenants. The Company is currently negotiating with the bank for an extension of the line of credit and a waiver of the covenant defaults. The Company had borrowed the maximum amount available under this line as of September 30, 1995. NOTE 6 J. Feuerstein Systems, Inc.- In March 1994, the Company acquired substantially all of the assets of J. Feuerstein Systems, Inc. (JFS), for $200,000 and the assumption of selected liabilities. JFS provides consulting and support services and software products to the legal profession. The acquisition resulted in the Company's recording goodwill of approximately $372,000 and assets and liabilities of approximately $1,015,000 and $1,179,000, respectively. -10- DOCUCON, INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's operations during the quarter and nine months ended September 30, 1995, resulted in a net loss applicable to common stockholders of $196,948 and $935,111 compared to a net loss of $512,576 and $1,107,900 for the comparable periods in 1994. The Company's future success depends on its ability to generate new business within the framework of its existing business lines. Revenues remained relatively constant for the three months ended September 30, 1995, and increased by 26 percent, or $1,691,000 for the nine months ended September 30, 1995, as compared to the same periods in 1994. Revenues earned under Department of Defense (DOD) contracts increased slightly in the third quarter of 1995 as compared to the 1994 quarter but were 17 percent lower in the first nine months of 1995 than in the first nine months of 1994. The Company began work late in the first quarter of 1995 on new 1995 DOD contract awards. Revenues earned from non-DOD, commercial and litigation support service contracts decreased by 46 percent for the quarter ended September 30, 1995, as compared to the third quarter of 1994 as a result of the Company's decision to limit production under litigation support service contracts. However, non-DOD conversion service revenues increased by 33 percent during the 1995 nine-month period as compared to the 1994 period due to the Company's performance under additional contracts. Additionally, revenues earned from sales of the Company's software products, JFS Litigator's Notebook(TM) and the related product lines contributed to the increase in total revenues. While production costs decreased 5 percent for the quarter ended September 30, 1995 as compared to the comparable quarter of 1994, they increased 26 percent for the nine-month comparable period. The decrease in the comparable quarters was a result of higher margin software sales. Although the increase for the nine-month period was commensurate with the increase in revenues, higher margin software sales offset abnormally high production costs in the litigation support area. Research and development costs decreased 79 percent and 17 percent for the third quarter and nine months ended September 30, 1995, compared to the same periods in 1994 due to the Company working on a software development project in 1995. Additionally, the Company devoted a portion of its resources normally devoted to research and development to production during the second and third quarters of 1995. The Company continued to devote resources to the expansion of the capabilities of its JFS Litigator's Notebook(TM) and related software products, as well as development and enhancement of its document conversion capabilities. Marketing expenses increased 35 percent and 62 percent during the third quarter and first nine months of 1995 as compared to the same periods in 1994. The Company built national marketing teams in the latter part of 1994 to support new and aggressive marketing efforts for litigation support services and its line of software products. As part of the Company's decision to limit production of litigation support services, related marketing efforts were curtailed and expenses increased at a lower rate in the third quarter of 1995. Depreciation and amortization expenses decreased 21 percent and 10 percent for the third quarter and first nine months of 1995 as compared to the same periods in 1994. The Company continues to add and replace capital equipment as necessary, and the decrease in depreciation and amortization charges is due to a previous large addition of equipment that is now fully depreciated. -11- DOCUCON, INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) LIQUIDITY AND CAPITAL RESOURCES Since its inception, the Company's operations have been supplemented through bank borrowings, capital contributions, borrowings from affiliated and unaffiliated lenders, capital lease agreements, an initial public offering of the Company's Common Stock in 1989, the conversion of warrants into Common Stock and Preferred Stock placements. The Company was awarded a $12.3 million contract by the DOD in 1991 which was subsequently increased by $1.5 million. Although the Company was not the successful bidder on a new 1994 contract similar to the 1991 contract, the 1994 contract ultimately was terminated at the convenience of the government. The Company received various awards totaling $3 million through the third quarter of 1995 as extensions to the 1991 contract. Early in the fourth quarter of 1995, the Company received an additional $2 million award from the DOD. The Company is optimistic that it will receive additional awards for conversion services from the DOD in the future. The Company continues to perform conversion services under various contracts and service orders with commercial corporations, corporate legal departments and law firms. A major contract for litigation support services has been terminated which has resulted in a substantial reduction to the size of the Company's litigation support service backlog. With the addition of J. Feuerstein Systems, Inc. (JFS), in 1994, the Company has made a significant investment in the marketing and development areas of its litigation support products and services. To date, these investments have resulted in substantially increased revenues in both the services and product areas but has not yet resulted in profitability. Disappointing margins in the litigation support area have resulted in the Company's decision to limit its efforts in this area to users of its software product. During the latter part of the second quarter, the Company consolidated its litigation support marketing efforts with the software product marketing efforts, which has resulted in reduced selling expenses. The Company has an 8 percent promissory note due December 1996 in the principal amount of $1,500,000. This note is secured by the Company's office building. In connection with the purchase of the Company's office building in 1992, the Company issued 900,000 warrants to purchase an equivalent number of shares of Common Stock at an exercise price of $2.00 per share. The Company now occupies approximately 80 percent of the building; the remaining space is currently leased to outside tenants. The Company believes that the building will fulfill its needs for the foreseeable future. Accounts receivable and unbilled revenues increased by approximately $761,000 from December 31, 1994, to September 30, 1995. Subsequent to September 30, a significant portion of the unbilled revenues has been billed, and the Company expects to receive payment in the near future. Accounts payable and accrued expenses increased by approximately $490,000 from December 31, 1994, to September 30, 1995. This increase is a result of increased sales volume and the coordination of payments with the collection of accounts receivable. -12- DOCUCON, INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Company expects to fund its operations and marketing activities through utilization of cash on hand and cash generated from operations. While the Company is in technical default of the line-of-credit covenants, it has borrowed $400,000 to fund short-term cash needs and is currently negotiating with the bank to extend the line of credit beyond the current maturity date of November 1995. These funds are expected to be adequate for the Company's needs for at least the next 12 months. The Company has not entered into any agreements with respect to future acquisitions. Should the Company enter into any such agreements, the Company would, in all likelihood, be required to raise outside capital to consummate such transactions. -13- 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 (a) The Annual Meeting of Shareholders was held on May 16, 1995. (b) The following directors were elected to serve until the next Annual Meeting of Shareholders, and until their successors are elected and qualified: Ralph Brown Edward P. Gistaro Allan H. Hobgood Al Ireton Philip Romano Chauncey Schmidt (c) None. (d) None. Item 5. Other Matters - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11 - Computation of Earnings Per Share (b) Reports on Form 8-K - None -14- PART II - OTHER INFORMATION (Continued) 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. DOCUCON, INCORPORATED (Registrant) By ___________________________ Edward P. Gistaro, Chief Executive Officer and Principal Financial Officer By ___________________________ Lori Turner, Controller and Treasurer Dated: -15- EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 DOCUCON, INCORPORATED COMPUTATION OF EARNINGS PER SHARE (Unaudited)
Three Months Nine Months Ended September 30 Ended September 30 ---------------------------- ----------------------------- 1995 1994 1995 1994 ------------ ------------ ------------ ------------ COMPUTATION OF PRIMARY EARNINGS PER SHARE: Net loss .................................................. $ (182,273) $ (496,763) $ (889,215) $ (1,060,543) Less- Preferred stock dividend requirements ................... (14,675) (15,813) (45,896) (47,357) ------------ ------------ ------------ ------------ Net loss applicable to common stockholders used for computation ............................. $ (196,948) $ (512,576) $ (935,111) $ (1,107,900) ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING ..................................................... 11,722,583 11,544,280 11,662,841 11,542,082 WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON ASSUMED CONVERSION OF OPTIONS AND WARRANTS ...................... -- -- -- -- ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS USED FOR COMPUTATION ................................ 11,722,583 11,544,280 11,662,841 11,542,082 ============ ============ ============ ============ PRIMARY EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENT ...................................................... $ (.02) $ (.04) $ (.08) $ (.10) ============ ============ ============ ============ COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE: Net loss .................................................. $ (182,273) $ (496,763) $ (889,215) $ (1,060,543) Preferred stock dividend requirements ..................... (14,675) (15,813) (45,896) (47,357) Decrease in net loss applicable to common stock for- Preferred stock dividends not incurred upon assumed conversion of preferred stock ........................ -- -- -- -- ------------ ------------ ------------ ------------ Net loss applicable to common stockholders used for computation ............................. $ (196,948) $ (512,576) $ (935,111) $ (1,107,900) ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING ..................................................... 11,722,583 11,544,280 11,662,841 11,542,082 WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON ASSUMED CONVERSION OF OPTIONS AND WARRANTS ...................... -- -- -- -- WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON ASSUMED CONVERSION OF THE PREFERRED STOCK ....................... -- -- -- -- ------------ ------------ ------------ ------------ WEIGHTED AVERAGE SHARES USED FOR COMPUTATION ....................... 11,722,583 11,544,280 11,662,841 11,542,082 ============ ============ ============ ============ EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENT ASSUMING FULL DILUTION ............................... $(.02) (a) $(.04) (a) $(.08) (a) $(.10) (a) ============ ============ ============ ============
(a) This calculation is submitted in accordance with Item 601(b)(11) of Regulation S-K although it is not required by APB Opinion No. 15 because it results in dilution of less than 3 percent. EX-27 3 FINANCIAL DATA SCHEDULE
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM [Identify from last specific financial statements] AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1995 SEP-30-1995 111,273 0 1,370,967 4,802 28,782 2,627,497 6,494,161 3,987,552 5,802,918 2,591,312 0 117,112 0 21 1,593,873 5,802,918 2,304,773 2,304,773 1,400,589 2,448,725 (2,407) 0 40,728 (182,273) 0 (182,273) 0 0 0 (182,273) (.02) (.02)
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