-----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, K5v1hJAt9Z3lPIrBdGkkf7ibmvrJVX76Epty5j2o0xskRYxkalQdemIkWnWqcxTp VrrXpNwr0zDxlZSO9xML5w== 0000891020-97-000881.txt : 19970520 0000891020-97-000881.hdr.sgml : 19970520 ACCESSION NUMBER: 0000891020-97-000881 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA DIMENSIONS INC CENTRAL INDEX KEY: 0000026990 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 060852458 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-04748 FILM NUMBER: 97608335 BUSINESS ADDRESS: STREET 1: 777 108TH AVENUE NE STREET 2: SUITE 2070 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: 2066881000 MAIL ADDRESS: STREET 1: 777 108TH AVENUE NE SUITE 2070 CITY: BELLEVUE STATE: WA ZIP: 98004 10QSB 1 FORM 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 -------------------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the transition period from to -------------------- ----------------------- Commission File Number 0-4748 -------------------- Data Dimensions, Inc. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 06-0852458 - -------------------------------------------------------------------------------- (NAME OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) 2000 Skyline Tower, 10900 NE 4th Street, Bellevue, WA 98004 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (206) 688-1000 -------------------- Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO . ----- ----- Indicate the number of shares outstanding of each of the issuers classes of common stock, of the latest practicable date Common Stock 11,585,362 shares as ----------------------------------- of April 30, 1997 - ---------------- Transitional small business disclosure format (check one). YES NO X ---- ---- The index to exhibits appears on Page 10. Page 1 of 13 2 DATA DIMENSIONS, INC. --------------------- INDEX -----
PAGE NUMBER ------ PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets March 31, 3 1997 and December 31, 1996 Condensed Consolidated Statements of Operations 5 for the three month period ended March 31, 1997 and March 31, 1996 Condensed Consolidated Statements of Cash Flow 6 for the three month period ended March 31, 1997 and March 31, 1996 Notes to Condensed Consolidated Financial Statements 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS 8 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II - OTHER INFORMATION 10 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8K 10 Signatures 11
Page 2 of 13 3 DATA DIMENSIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
March 31, 1997 December 31, 1996 -------------- ----------------- CURRENT ASSETS Cash and cash equivalents $ 1,788 $ 2,616 Investments securities available for sale 7,047 7,684 Accounts receivable, less allowance for doubtful accounts 6,185 4,604 Notes and other receivables 433 699 Prepaid and other assets 1,279 917 Deferred income taxes 336 550 ------- ------- TOTAL CURRENT ASSETS 17,068 17,070 ------- ------- EQUIPMENT AND FURNITURE, NET 1,124 824 INVESTMENT SECURITIES AVAILABLE FOR SALE 310 993 INVESTMENT IN PRODUCT DEVELOPMENT 1,791 1,255 OTHER ASSETS 57 62 ------- ------- $20,350 $20,204 ======= =======
The accompanying notes are an integral part of these financial statements. Page 3 of 13 4 DATA DIMENSIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
March 31, 1997 December 31, 1996 -------------- ----------------- CURRENT LIABILITIES Advance billing .................. $ 739 $ 990 Accounts payable ................. 850 677 Accrued compensation ............. 455 519 Accrued commissions .............. 341 434 Other accrued liabilities ........ 254 243 -------- -------- TOTAL CURRENT LIABILITIES ........... 2,639 2,863 -------- -------- STOCKHOLDERS' EQUITY (DEFICIT) Common stock, $.001 par value; 20,000 shares authorized; 11,530 and 11,373 shares issued .. 12 12 Capital in excess of par value ...... 18,168 18,019 Less 12 and 6 shares held in treasury at cost ............ (158) (83) Accumulated deficit ................. (311) (607) -------- -------- Total Stockholders' Equity .......... 17,711 17,341 -------- -------- $ 20,350 $ 20,204 ======== ========
The accompanying notes are an integral part of these financial statements. Page 4 of 13 5 DATA DIMENSIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)
Three Month Period Ended March 31 1997 1996 ---- ---- REVENUE $ 6,753 $ 2,571 DIRECT COSTS 3,515 1,518 ------- ------- Gross Margin 3,238 1,053 GENERAL, ADMIN & SELLING EXPENSES 2,875 964 ------- ------- Income From Operations 363 89 OTHER INCOME (EXPENSE) 147 (85) ------- ------- INCOME BEFORE TAXES 510 4 INCOME TAXES 214 2 ------- ------- NET INCOME $ 296 $ 2 ======= ======= NET INCOME PER SHARE $ 0.03 $ 0.00(1) ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING 11,800 11,193(1) ======= =======
(1)Adjusted to give effect to a 3 for 1 stock split effective March 20, 1997. See note 3. The accompanying notes are an integral part of these financial statements Page 5 of 13 6 DATA DIMENSIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Three Month Period Ended March 31, (In thousands) 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 296 $ 2 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 71 9 Deferred income taxes 214 -- Changes in certain assets and liabilities Accounts receivable (1,581) (627) Prepaid and other assets (362) (213) Notes receivable 266 -- Advance billings (251) (114) Accounts payable 173 54 Accrued compensation and related (157) 57 Accrued expenses 11 26 ------- ------- Net Cash Used in Operating Activities (1,320) (806) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Maturities and sales of investments 1,320 -- Purchases of equipment and furniture (366) (39) Investment in product (536) -- ------- ------- Net Cash Provided by (Used in) Investing Activities 418 (39) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes and other payables to officers -- 65 Increase in advances from factor -- 760 Proceeds from issuance of common stock 74 1 ------- ------- Net Cash Provided by Financing Activities 74 826 ------- ------- NET INCREASE (DECREASE) IN CASH (828) (19) CASH, beginning of period 2,616 65 ------- ------- CASH, end of period $ 1,788 $ 46 ======= =======
The accompanying notes are an integral part of these financial statements. Page 6 of 13 7 DATA DIMENSIONS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The financial information included herein for the three month period ended March 31, 1997 and 1996 is unaudited; however, such information reflects all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the condensed consolidated financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 1996 is derived from Data Dimensions, Inc.'s Annual Report to Shareholders which is incorporated by reference into the Company's 1996 Form 10-KSB. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's 1996 Annual Report to Shareholders. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. NOTE 2: ACCOUNTING POLICIES Reference is made to Note l of Notes to Financial Statements in the Company's Annual Report on Form 10-KSB for the summary of significant accounting policies. The Company's financial statements include the accounts of Data Dimensions, Inc. and its subsidiary, Data Dimensions Ireland Limited. Significant intercompany transactions and balances have been eliminated. Product development costs are those costs relating to the conceptual formulation and design of products and processes. The Company capitalizes costs incurred to establish product and process technology for products in development which are considered to have attained technological feasibility, as such term is defined and interpreted in accordance with generally accounting principles. Capitalized costs are amortized on a straight line basis over the estimated productive life of the product. The Company considers all liquid interest-earning investments with the maturity of three months or less at the date of purchase to be cash equivalents. Short-term investments generally mature between three months and eighteen months from the purchase date and are classified as available for sale and are recorded at fair value. NOTE 3: STOCK DIVIDEND On February 19, 1997, the Company's Board of Directors declared a three-for-one stock split in the form of a stock dividend, to be effective March 20, 1997, payable to holders of record on March 5, 1997. Page 7 of 13 8 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Comparison of the Three Month Periods Ended March 31, 1997 and March 31, 1996 Revenue for the three month period ended March 31, 1997 was $6,753,000, compared to $2,571,000 for the three month period ended March 31, 1996, an increase of $4,182,000, or 163%. This increase was primarily attributable to an increase in the general awareness of the millennium problem and demand for millennium consulting services and the Company's expanded marketing efforts. Gross margin for the three month period ended March 31, 1997 was $3,238,000, compared to $1,053,000 for the three month period ended March 31, 1996, an increase of $2,185,000, or 208%. Gross margin as a percentage of revenue for the three month period ended March 31, 1997 was 48%, compared to 41% for the like period in 1996, an increase of 7%. This percentage increase was primarily the result of an increase in the amount of licensee income which has a higher gross margin contribution. Licensee income for the three month period ended March 31, 1997 was almost 10% of total revenue as compared to 3% of total revenue for the like period in 1996. General, administrative and selling expenses for the three month period ended March 31, 1997 were $2,875,000, compared to $964,000 for the three month period ended March 31, 1996, an increase of $1,911,000 or 198%. General, administrative and selling expenses as a percentage of revenue for the three month period ended March 31, 1997 were 43%, compared to 38% for the three month period ended March 31, 1996, an increase of 5%. This increase in cost was primarily attributable to the Company's rapid growth requiring investment in personnel acquisition costs, training, facilities, travel and other support services. Since March 31, 1996, the Company has hired approximately 157 technical and support staff to produce the increase in revenue and to add to the Company's support infrastructure. Approximately 60 of the 157 employees were hired during the three month period ended March 31, 1997. In addition, the Company moved into its expanded corporate facilities in January 1997. Other income for the three month period ended March 31, 1997 was $147,000, compared to other expense of $85,000 for the three month period ended March 31, 1996. The income for the three month period in 1997 was primarily attributable to interest earned from investments. The other expense for the three month period in 1996 was attributable to accounts receivable factored and the related finance charges. The Company reported a net income of $296,000 for the three month period ended March 31, 1997, compared to a net income of $2,000 for the three month period ended March 31, 1996. Page 8 of 13 9 Liquidity and Capital Resources The Company has experienced significant growth since 1993 and continues to experience significant growth each quarter. During this period and up to April 1996, the Company financed its cash requirements primarily through factoring its accounts receivable and obtaining advance payment for services to be rendered to certain clients. In April 1996, the Company generated approximately $16,000,000 additional cash through proceeds from an underwritten public offering of Common Stock. At March 31, 1997, the Company had working capital of $14,429,000 compared to a working capital of $14,207,000 on December 31, 1996. During the last six months of 1996 and the quarter ended March 31, 1997, the Company invested approximately $1,255,000 and $536,000 respectively, in capitalized product development cost in personnel and other related operating expenses to develop an advanced Year 2000 product based upon its current proprietary Year 2000 process. The product, named Ardes 2k, will be sold directly to clients and to third-party providers, including computer and software companies, systems integrators, and consultants. The Company released the product to the commercial market on April 1, 1997 and stopped product cost capitalization. Net cash used in operating activities was $1,320,000 for the three month period ended March 31, 1997 and $806,000 for the three month period ended March 31, 1996, an increase of $514,000. Cash provided by net income was more than offset by the increases in accounts receivable and other assets which accounted for most of the use of cash by operating activities. Net cash provided from investing activities was $418,000 during the three month period ended March 31, 1997, and net cash used during the three month period ended March 31, 1996 was $39,000. The increase in cash provided by investment activities was due primarily to the proceeds from maturity and sale of investments offset by purchases of equipment and furniture and investment in product. The Company has no significant commitments for capital expenditures and believes that based upon its current operating plan, cash generated from operations and its cash and investments will be adequate to finance its current working capital requirements. Page 9 of 13 10 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 1997. The exhibits filed as a part of this report are listed below.
Exhibit No. - ----------- 11. Calculations of Net Income Per Share 27. Summary Profile
Page 10 of 13 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Data Dimensions, Inc. ------------------------- (Registrant) By: /s/ Larry W. Martin - ------------ ---------------------------------- Date Larry W. Martin, President and Chief Executive Officer (Principal Executive Officer) By: /s/ William H. Parsons - ------------ ---------------------------------- Date William H. Parsons, CFO (Principal Financial and Accounting Officer) Page 11 of 13 12 EXHIBIT INDEX
Exhibit No. - ----------- 11. Calculations of Net Income Per Share 27. Summary Profile
EX-11 2 CALCULATIONS OF NET INCOME PER SHARE 1 EXHIBIT 11 DATA DIMENSIONS, INC. CALCULATIONS OF NET INCOME PER SHARE(1) (Unaudited)
Three Months Ended March 31, 1997 1996 ---------- ------------- Actual weighted average shares outstanding for period 11,459,000 10,506,000 Dilutive common stock options using the treasury stock method 341,000 687,000 ---------- ---------- Total shares used in per share calculations 11,800,000 11,193,000(1) ========== ========== Net Income $296,000 $2,000 ========== ========== Net income per share(2) $0.03 $0.00(1) ========== ==========
(1) Adjusted to give effect to a 3 for 1 stock split effective March 20, 1997. (2) Fully diluted earnings per share is not disclosed on the consolidated statement of operations for the three month periods ended March 31, 1997 and 1996, since it is not more than three percent different from primary earnings per share. Page 12 of 13 EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 MAR-31-1997 1,788 7,357 6,185 0 0 17,068 1,384 260 20,350 2,639 0 0 0 12 0 20,350 6,753 6,753 3,515 3,515 2,875 0 0 510 214 0 0 0 0 296 .03 .03
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