-----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, Q+gi42vyTdC7hqLhVzi9Th2qCFA0s9j0iFKcUCo0/bB7ixEJkyRPPsmjJsTZI7Cp z0Xbei8KxmNsbbeJYAn4rg== 0000950147-96-000426.txt : 19960917 0000950147-96-000426.hdr.sgml : 19960917 ACCESSION NUMBER: 0000950147-96-000426 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960916 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GATEWAY DATA SCIENCES CORP CENTRAL INDEX KEY: 0001002917 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 860527788 STATE OF INCORPORATION: AR FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27776 FILM NUMBER: 96630852 BUSINESS ADDRESS: STREET 1: 3410 E UNIVERSITY DR STREET 2: STE 100 CITY: PHOENIX STATE: AZ ZIP: 85034 BUSINESS PHONE: 6029687000 MAIL ADDRESS: STREET 1: 3410 E UNIVRSITY DRIVE STREET 2: SUITE 10 CITY: PHOENIX STATE: AZ ZIP: 85034 10QSB 1 FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1996 Commission File Number: 0-27776 Gateway Data Sciences Corporation ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Arizona 86-0527788 ------- ---------- (State or other jurisdiction of (IRS Employer Identification) incorporation or organization) 3410 E. University Drive, Phoenix, AZ 85034 ------------------------------------------- (Address of principal executive offices) (602) 968-7000 ------------------------------------------------ (Issuer's telephone number, including area code) 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 ---- ----- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity: 2,804,721 shares of common stock, $.01 par value (as of September 13, 1996) GATEWAY DATA SCIENCES CORPORATION AND SUBSIDIARY INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of July 31, 1996 and January 31, 1996 3 Consolidated Statements of Operations for the Six and Three months ended July 31, 1996 and 1995 4 Consolidated Statements of Cash Flows for the Six months ended July 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 12 Signatures 13
-2- PART I, ITEM 1. FINANCIAL STATEMENTS GATEWAY DATA SCIENCES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF JULY 31, 1996 AND JANUARY 31, 1996 July 31, January 31, 1996 1996 -------------- ------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,385,704 $ 93,402 Trade receivables - less allowance of $ 86,400 and $90,100, respectively 6,343,279 2,914,154 Inventories 1,466,686 388,041 Prepaid expenses and other assets 413,150 928,287 ------------- ------------- Total current assets 10,608,820 4,323,884 PROPERTY AND EQUIPMENT -- Net 1,676,177 1,139,770 NET INVESTMENT IN LEASE RESIDUALS 1,420,123 1,558,547 OTHER ASSETS 490,627 116,216 $ 14,195,747 $ 7,138,417 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 1,813,593 1,279,947 Accrued liabilities 1,333,434 2,107,207 Accrued payroll and benefits 472,346 262,719 Due to officers and employees (Note 3) - 536,172 Accrued interest 1,445 14,664 Current portion of notes payable 148,411 136,436 Current portion of capital lease obligations 72,788 58,798 Deferred revenue 1,011,497 808,731 ------------- ------------- Total current liabilities 4,853,514 5,204,674 DEFERRED REVENUE, recognized after one year 1,645,925 1,769,314 NOTES PAYABLE, less current portion 364,713 1,252,038 LINE OF CREDIT 1,295,566 311,555 CAPITAL LEASE OBLIGATIONS, less current portion 85,357 61,545 ------------- ------------- Total liabilities 8,245,074 8,599,126 ------------- ------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY (DEFICIT) : Preferred stock, $.01 par value, 5,000,000 shares authorized, no shares issued and outstanding - - Common stock, $.01 par value, 20,000,000 shares authorized, 2,804,721 shares issued and outstanding at July 31, 1996 and 1,543,199 shares issued and outstanding at January 31, 1996 28,047 15,431 Additional paid-in capital 9,158,098 2,587,848 Deferred compensation (3,900) (11,700) Accumulated deficit (3,231,573) (4,052,289) -------------- -------------- Total shareholders' equity (deficit) 5,950,672 (1,460,710) ------------- -------------- $ 14,195,747 $ 7,138,417 ============= =============
See notes to consolidated financial statements. -3- GATEWAY DATA SCIENCES CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED JULY 31, 1996 AND 1995
Six Months Ended Three Months Ended July 31, July 31, (Unaudited) (Unaudited) 1996 1995 1996 1995 ---- ---- ---- ---- REVENUE Product revenue $ 7,219,932 $ 10,850,844 $ 6,251,184 $ 3,968,366 Software license revenue 2,382,264 1,558,647 1,086,243 1,074,322 Professional services 1,154,061 692,234 623,732 464,589 -------------- ------------- ------------- -------------- Total revenues 10,756,257 13,101,725 7,961,159 5,507,277 -------------- ------------- ------------- -------------- OPERATING EXPENSES: Products sold 5,155,291 8,226,695 4,597,809 2,870,128 Software development 1,808,490 1,445,609 1,053,509 764,323 Professional services 1,197,265 856,466 708,298 431,419 Sales and marketing 872,123 846,894 529,574 464,528 General and administrative 817,520 763,939 472,921 461,696 -------------- ------------- ------------- -------------- Total expenses 9,850,689 12,139,603 7,362,111 4,992,094 -------------- ------------- ------------- -------------- INCOME FROM OPERATIONS 905,568 962,122 599,048 515,183 OTHER (INCOME) EXPENSE: Interest expense 87,036 453,260 36,052 216,638 Other, net (2,184) (3,140) (2,089) (2,817) --------------- -------------- -------------- --------------- Total other expense, net 84,852 450,120 33,963 213,821 -------------- ------------- ------------- -------------- INCOME BEFORE INCOME TAXES 820,716 512,002 565,086 301,362 PROVISION FOR INCOME TAXES -- -- -- -- -------------- ------------- ------------- -------------- NET INCOME $ 820,716 $ 512,002 $ 565,086 $ 301,362 ============= ============ ============ ============= NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (Note 2) $ .31 $ .34 $ .19 $ .20 ============== ============= ============= ============== COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (Note 2) 2,571,292 1,557,385 2,920,574 1,557,385 ============== ============= ============= ==============
See notes to consolidated financial statements. -4- GATEWAY DATA SCIENCES CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JULY 31, 1996 AND 1995
Six Months Ended July 31, ----------------------------- 1996 1995 ---- ---- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income...................................................................... $ 820,716 $ 512,002 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization............................................... 266,017 144,580 Amortization of deferred compensation....................................... 7,800 -- Effect of changes in assets and liabilities: Trade receivables........................................................... (3,429,125) (941,521) Inventories................................................................. (1,078,645) 1,625,804 Prepaid expenses and other assets........................................... 140,726 (320,168) Accounts payable............................................................ 533,646 (579,514) Accrued liabilities......................................................... (773,774) (153,514) Accrued payroll and benefits................................................ 209,627 638,094 Accrued interest............................................................ (13,219) 43,797 Deferred revenue............................................................ 79,377 (120,848) ------------- -------------- Net cash (used in) provided by operating activities.............. (3,236,854) 848,712 -------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment.............................................. (802,424) (139,050) Net investment in lease residuals............................................... 138,424 61,811 ------------- ------------- Net cash used in investing activities............................ (664,000) (77,239) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from initial public offering....................................... 6,531,809 -- Proceeds from issuance of common stock.......................................... 51,057 -- Principal payments on notes payable............................................. (875,350) (62,146) Principal payments on capital lease obligations................................. (28,543) (161,417) Additional borrowings on capital lease obligations.............................. 66,344 -- Net proceeds from borrowings on line of credit.................................. 984,011 -- Net (payments to) borrowings from officers and employees........................ (536,172) 111,129 -------------- ------------- Net cash provided by (used in) financing activities.............. 6,193,156 (112,434) ------------- -------------- NET INCREASE IN CASH AND CASH EQUIVALENTS.......................................... 2,292,302 659,039 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..................................... 93,402 311,916 ------------- ------------- CASH AND CASH EQUIVALENTS, END OF PERIOD........................................... $ 2,385,704 $ 970,955 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest........................................ $ 87,036 $ 236,622 ============= ============= Cash paid during the period for income taxes.................................... $ 39,500 $ -- ============= =============
See notes to consolidated financial statements -5- GATEWAY DATA SCIENCES CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1996 1. INTERIM FINANCIAL REPORTING The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods presented have been made. The results of operations for the three-month and six-month periods ended July 31, 1996 are not necessarily indicative of the operating results that may be expected for the entire year ending January 31, 1997. These financial statements should be read in conjunction with the Company's Form 10-KSB for the fiscal year ended January 31, 1996. 2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is computed using the weighted average number of common and common equivalent shares outstanding during each period. Common stock equivalents consist of stock options and warrants. 3. TRANSACTIONS WITH RELATED PARTIES During the six months ended July 31, 1996, the Company used a portion of the proceeds of its initial public offering (Note 4) to retire $536,172 of accrued liabilities due to certain officers and employees and $660,000 of bridge notes payable due to certain of the Company's officers, members of the Board of Directors, and an affiliated party. 4. INITIAL PUBLIC OFFERING In March 1996 the Company completed an initial public offering of its common stock. The Company sold 1,250,000 shares of its common stock at $6.75 per share, resulting in net proceeds to the Company of approximately $6.5 million. The Company used the proceeds to pay down its line of credit and retire the bridge notes payable (Note 3). The Company also intends to use a portion of the net proceeds to develop new software applications and enhancements to existing applications, to modify its software products to operate on open architecture platforms, to expand marketing and sales operations, to make additional capital investments, and for working capital purposes. -6- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operations The Company designs, develops, markets and implements software products and provides related customer support services and hardware for point-of-sale, retail merchandising, and warehouse automation systems. The Company also provides professional services, including installation, training, maintenance, customization, and modifications in conjunction with sales of its software products. The Company markets its products and services entirely through an internal sales force. Founded in 1985, the Company historically derived its revenue primarily from sales of hardware and software products developed by third parties, primarily International Business Machines Corp. ("IBM"). The Company's dependence on the resale of third parties' products adversely affected the Company's competitive position, gross profit margins, and operating results. As a result, in 1991 the Company changed its business strategy to emphasize the development and sale of its own software products. The Company intends to use a substantial portion of the proceeds from its initial public offering completed in March 1996 to significantly accelerate the transition of its business focus during the next 12 months. As a result, the Company anticipates that revenue from third-party hardware and software products will continue to decrease from historical levels and that revenue from software licenses and professional services will increase in dollar amounts as well as a percentage of total revenue during the next several years. The Company believes that, although the change in revenue mix will initially result in lower total revenue, it will also result in a more favorable gross profit margin for the Company, reduced borrowing requirements, and a higher net margin as sales of software and services become a higher percentage of total revenue. Product revenue includes hardware, third-party software, and third-party maintenance sold to the Company's customers. Software license revenue includes revenue from the licensing of the Company's proprietary software offerings as well as revenue from the customization and modification of the Company's software for its customers. Professional services revenue includes services to install the Company's software products and third-party hardware and software products, and services to train customers in the use of the Company's software products and third-party hardware and software products. Cost of products sold includes costs of those products (software and hardware) not manufactured by the Company and maintenance resold by the Company. The Company does not capitalize any software development costs associated with the development of its proprietary software products and has expensed all payroll and related costs for software development as incurred. Sales and marketing expenses consist primarily of salaries, commissions and related benefits, and general and administrative costs associated with or allocated to the Company's sales and marketing personnel. General and administrative expenses include the cost of finance and accounting, human resources, corporate information systems and other administrative functions of the Company. Results of Operations of the Company for the Three Months ended July 31, 1996 Revenue. Total revenue increased by 45% from approximately $5.5 million in the three months ended July 31, 1995 to approximately $8.0 million in the three months ended July 31, 1996. Product revenue increased by 58% from approximately $4.0 million to approximately $6.2 million during the same periods. As a percentage of total revenue, product revenue increased from 72% -7- during the three months ended July 31, 1995 to 79% during the three months ended July 31, 1996. Software license revenue remained constant at approximately $1.1 million in the three months ended July 31, 1995 and 1996. As a percentage of total revenue, software license revenue decreased from 20% to 14% during the same period. Professional services revenue increased 34% from approximately $465,000 to approximately $624,000 during the three month periods ending July 31, 1995 and 1996, respectively. As a percentage of total revenue, professional services revenue remained constant at 8% during the three months ended July 31, 1995 and 1996. The increase in product revenue is attributed to increased sales of third-party hardware products, principally those manufactured by IBM, including the IBM AS/400. IBM had delayed shipment on its new AS/400 line of RISC (Reduced Instruction Set Computing) processors during the first quarter of fiscal 1997, with shipments beginning in the Company's second quarter. The increase in professional services revenue resulted from the Company's continued focus on providing professional services to implement its software products. Cost of Products Sold. Cost of products sold increased 60% from approximately $2.9 million during the three months ended July 31, 1995 to approximately $4.6 million during the three months ended July 31, 1996. This increase is attributed to the corresponding increase in sales of third-party hardware products during the same period. As a percentage of product revenue, cost of products sold was approximately 73% and 72% during the three months ended July 31, 1996 and 1995, respectively. Software Development Expense. Software development expense increased from approximately $764,000 during the three months ended July 31, 1995 to approximately $1.0 million during the three months ended July 31, 1996. The 38% increase is attributed to increased research and development effort associated with the development of the Company's proprietary software products. Professional Services Expense. Professional services expense increased by 64% from approximately $431,000 during the three months ended July 31, 1995 to approximately $708,000 during the three months ended July 31, 1996. Additional personnel contributed to this increase. As a percentage of professional services revenue, professional services expense increased from 93% in the three months ended July 31, 1995 to 114% in the three months ended July 31, 1996. This increase as a percentage is attributed to lower utilization of professional services personnel. Sales and Marketing Expense. Sales and marketing expense increased 14% from approximately $465,000 during the three months ended July 31, 1995 to approximately $530,000 during the three months ended July 31, 1996. The increase can be attributed to costs incurred for new marketing literature. General and Administrative Expense. General and administrative expense increased from approximately $462,000 in the three months ended July 31, 1995 to approximately $473,000 in the three months ended July 31, 1996. This increase is attributed to additional personnel and associated costs. Other Income (Expense). Interest expense was approximately $36,000 during the three months ended July 31, 1996, as compared with approximately $217,000 during the three months ended July 31, 1995. In September 1995, the Company converted approximately $1.2 million of debt into shares of common stock. Interest expense related to this debt, together with interest expense due to vendor late payments that were incurred during the three months ended July 31, 1995, were not incurred during the three month period ended July 31, 1996. Net Income. Net income increased 88% from approximately $301,000, or $.20 per share, in the three months ended July 31, 1995 to approximately $565,000, or $.19 per share, in the three months ended July 31, 1996. The Company attributes this increase to the 83% decrease in interest -8- expense during the comparable period and the 16% increase in income from operations. The decrease in net income per share is primarily a result of the additional shares issued in the Company's initial public offering in March 1996. Results of Operations of the Company for the Six Months ended July 31, 1996 Revenue. Total revenue decreased by 18% from approximately $13.1 million in the six months ended July 31, 1995 to approximately $10.8 million in the six months ended July 31, 1996. Product revenue decreased by 33% from approximately $10.8 million to approximately $7.2 million during the same periods. As a percentage of total revenue, product revenue decreased from 83% during the six months ended July 31, 1995 to 67% during the six months ended July 31, 1996. Software license revenue increased by 53% from approximately $1.6 million in the six months ended July 31, 1995 to approximately $2.4 million in the six months ended July 31, 1996. As a percentage of total revenue, software license revenue increased from 12% to 22% during the same period. Professional services revenue increased 67% from approximately $692,000 to approximately $1.2 million during the six month periods ending July 31, 1995 and 1996, respectively. As a percentage of total revenue, professional services revenue increased from 5% to 11% during the six months ended July 31, 1995 and 1996, respectively. The overall decrease in total revenue is attributed to significantly lower product revenue during the first three months of fiscal 1997. The decrease in product revenue is a result of reduced sales of third-party hardware products, principally those manufactured by IBM, including the IBM AS/400. IBM had delayed shipment on its new AS/400 line of RISC (Reduced Instruction Set Computing) processors, thus delaying sales to many of the Company's customers during that period. Product revenue increased during the three months ended July 31, 1996 when IBM shipped those products. The increase in software license and professional services revenue resulted from the Company's continued focus on sales of its proprietary software products, as well as the Company's continuing efforts to provide professional services to implement its software products. Although revenue from third-party product rebounded during the three months ended July 31, 1996, the Company continues to believe that revenue from sales of third-party products will decrease as a percentage of total revenue. Cost of Products Sold. Cost of products sold decreased 37% from approximately $8.2 million during the six months ended July 31, 1995 to approximately $5.2 million during the six months ended July 31, 1996. This decrease is attributed to the corresponding decrease in sales of third-party hardware products during the same period. As a percentage of product revenue, cost of products sold was approximately 71% and 76% during the six months ended July 31, 1996 and 1995, respectively. Software Development Expense. Software development expense increased from approximately $1.4 million to approximately $1.8 million during the six months ended July 31, 1995 and 1996, respectively. The 25% increase is attributed to increased research and development efforts associated with the development of the Company's proprietary software products. As a percentage of total revenue, software development costs increased from 11% in the six months ended July 31, 1995 to 17% in the six months ended July 31, 1996. Professional Services Expense. Professional services expense increased by 40% from approximately $856,000 to approximately $1.2 million during the six months ended July 31, 1995 and 1996, respectively. Additional personnel contributed to this increase. As a percentage of professional services revenue, professional services expense decreased from 124% in the six months ended July 31, 1995 to 104% in the six months ended July 31, 1996. This decrease as a percentage is attributed to better utilization of professional services personnel. -9- Sales and Marketing Expense. Sales and marketing expense increased 3% from approximately $847,000 to approximately $872,000 in the six months ended July 31, 1995 and 1996, respectively. The increase can be attributed to costs incurred for marketing literature. General and Administrative Expense. General and administrative expense increased from approximately $764,000 in the six months ended July 31, 1995 to approximately $818,000 in the six months ended July 31, 1996. This 7% increase is attributed to additional personnel and associated costs. Other Income (Expense). Interest expense was approximately $87,000 during the six months ended July 31, 1996, as compared with approximately $453,000 during the six months ended July 31, 1995. In September 1995, the Company converted approximately $1.2 million of debt into shares of common stock. Interest expense related to this debt, together with interest expense due to vendor late payments that were incurred during the six months ended July 31, 1995, were not incurred during the six month period ended July 31, 1996. Net Income. Net income increased 60% from approximately $512,000, or $.34 per share, in the six months ended July 31, 1995 to approximately $821,000, or $.31 per share, in the six months ended July 31, 1996. The Company attributes this increase to the 81% decrease in interest expense during the comparable periods. The decrease in net income per share is primarily a result of the additional shares issued in the Company's initial public offering in March 1996. Liquidity and Capital Resources The Company's working capital position increased from a deficit of approximately ($880,000) at January 31, 1996 to approximately $5.8 million at July 31, 1996. In March 1996, the Company completed an initial public offering of 1,250,000 shares of common stock and raised net proceeds of approximately $6.5 million. The Company used a portion of the proceeds from this offering to retire $810,000 of bridge notes and related accrued interest, to purchase approximately $500,000 of capital equipment, to retire approximately $536,000 of debt to officers and employees, to fund additional development for new software products, and to develop new marketing collateral material. The Company used net cash of approximately $3.2 million for operations during the six months ended July 31, 1996, primarily as a result of the increase in accounts receivable, the reduction in other accrued liabilities, and the investment in inventories related to large retail point-of-sale transactions, partially offset by an increase in accounts payable. Capital expenditures for the six-month period ended July 31, 1996 totaled approximately $802,000, of which approximately $545,000 was for the purchase of computer hardware and software needed for the continued efficient development of proprietary software products. The balance of $257,000 was used for the expansion of physical office space and related purchases of furniture and fixtures. A reduction in investments made by the Company in customer lease transactions provided approximately $138,000 in cash. Financing activities provided net cash of approximately $6.2 million in the six months ended July 31, 1996. The Company completed its initial public offering in March 1996, which, together with additional borrowings of $1.3 million on the Company's line of credit, generated approximately $7.5 million, partially offset by retirement of approximately $810,000 in bridge notes payable, and payments to officers and employees of approximately $536,000. The Company currently has an agreement with Concord Growth Corporation ("Concord") providing for a line of credit that expires August 22, 1997, in the amount that is the lower of $2.0 million or 75% of eligible accounts receivable. The line of credit bears interest at the prime rate of -10- interest quoted in the Wall Street Journal on the first day of each month plus 8% and requires a monthly minimum payment of $5,000. The Company is currently re-negotiating that line of credit with Concord to obtain a more favorable borrowing facility. The Company believes that existing cash balances, cash generated from operations, and available borrowings will be sufficient to meet the Company's liquidity needs for the next 12 months at its current level of operations. However, the Company may be required to obtain additional capital to fund its planned growth in the future, particularly to provide funds required to finance the Company's planned software development programs and increased sales and marketing efforts. Potential sources of such capital may include the proceeds from the exercise of outstanding options and warrants, bank financing, strategic alliances, and additional offerings of the Company's equity or debt securities. There can be no assurance that such capital will be available on acceptable terms from these or other potential sources, and the lack of such capital could have a material adverse effect on the Company's operations. -11- PART II OTHER INFORMATION Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities Not applicable Item 3. Defaults Upon Securities Not Applicable Item 4. Submissions of Matter to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K Not applicable -12- SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Signature: - ----------
GATEWAY DATA SCIENCES CORPORATION /s/ Michael M. Gordon Chairman of the Board, September 13, 1996 - -------------------------------------------- President, and Chief Michael M. Gordon Executive Officer (Principal Executive Officer) /s/ Vickie B. Jarvis - -------------------------------------------- Vice President, Finance and September 13, 1996 Vickie B. Jarvis Chief Financial Officer (Principal Financial and Accounting Officer)
-13- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS JAN-31-1997 FEB-01-1996 JUL-31-1996 1 2,386 0 6,257 86 1,467 10,609 2,934 1,258 14,196 4,854 0 0 0 28 0 14,196 10,756 10,756 5,155 9,851 0 0 87 821 0 821 0 0 0 821 .31 .31
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