10-K 1 t23931.txt ANNUAL REPORT OF 12/31/01 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------------------------------- FORM 10-K ----- | x | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE ----- SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 2001 ----------------- 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 no. 0-3677 DATATAB, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEW YORK 13-1917838 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 49 EAST 21ST STREET, NEW YORK, NEW YORK 10010 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 228-6800 ----------------- Securities registered pursuant to Section 12(b) of the Act: NONE -------- Securities registered pursuant to Section 12(g) of the Act: COMMON SHARES, PAR VALUE $1.00 PER SHARE -------------------------------------------------------------------------------- (Title of class) Indicate by check mark 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. ( ) ------------------------------------------------------------------------------- The aggregate market value of the voting shares of the Registrant held by non-affiliates as at August 11, 1999 (last quote available) was $3,758. The number of common shares, $1.00 par value, outstanding at March 25, 2002 was 705,836. PART I ITEM 1. BUSINESS. ----------------- (a) GENERAL DEVELOPMENT OF BUSINESS. The Registrant was incorporated on June 5, 1959 as a New Jersey corporation, commenced business operations in May, 1960, and was re-incorporated on March 29, 1965 as a New York corporation. (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. For the past three years, market research accounted for 100% of consolidated operating revenues. No other segment accounted for as much as 15% of consolidated operating revenues during the last three years. NARRATIVE DESCRIPTION OF BUSINESS. 1. SERVICES -------- The Registrant operates a data processing service center in New York City, providing a variety of services principally utilizing computer packages for the processing of data for use in market research. These packages can be marketed to many different clients with only very limited program adaptation. Market research data processing performed by the Registrant includes the processing of public opinion, readership audience, political, consumer, and general survey research data for manufacturers, market research companies, advertising agencies, governmental agencies, financial and educational institutions, and foundations. The Registrant also designs, prints, mails, and processes surveys for use in large database research. Data supplied by the Registrant's clients is refined by the Registrant into statistics designed to be of assistance to the client. The above applications utilize computer software licensed to the Registrant. (See Item 2, INFRA.) I - 1 2. SOURCES OF RAW MATERIALS ------------------------- The Registrant's major equipment suppliers are Gateway Computers, Hewlett-Packard, IBM, Megadata Corporation, and Qualstar Corporation. The Registrant has been granted a perpetual license to use copies of World Research Systems' ("WRS") UNCLE software for cross tabulations as a result of a marketing agreement between the two companies under which the Registrant was given the right to market software developed by WRS. 3. DEPENDENCE ON CERTAIN CUSTOMERS ------------------------------- In 2001, there were two clients who accounted for more than 10% of consolidated operating revenues. These clients reflected 29% and 28% of the consolidated operating revenues. Management believes that the loss of any one or a few of its largest clients would have a material adverse effect upon the Registrant. 4. COMPETITION ----------- The data processing service industry is highly competitive. The Registrant conducts business in direct competition with many companies (including both independent service bureaus and diversified companies with service divisions) which offer a wide range of general data processing services, including those performed by the Registrant. Some of the Registrant's competitors are smaller, and some are larger and possess greater financial resources. Another competitive factor in the market research data processing service business is "in-house" data processing, in which a company installs its own data processing equipment. The increasing availability and lower prices of mini- and micro-computers have permitted companies to install their own data processing equipment and to perform their own processing. I - 2 Companies in the industry compete on the basis of a number of factors, including price, quality of service, and product features. Management believes the Registrant's particular strengths are its reputation and expertise in a wide variety of applications, a well qualified staff, and its advanced software. The Registrant provides extensive staff support to its clients while maintaining a competitive price structure within the industry. 5. RESEARCH AND DEVELOPMENT ------------------------ The Registrant did not engage in any research and development activities during the last fiscal year and Registrant has not engaged in any customer-sponsored research activities relating to the development or improvement of products or services during such period. 6. EMPLOYEES --------- As of March 25, 2002, the Registrant had 4 full-time employees. Part-time personnel are employed as needed. (c) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC ------------------------------------------------ OPERATIONS AND EXPORT SALES. ------------------------------------------------- Not applicable. ITEM 2. PROPERTIES. -------------------- The Registrant maintains its executive offices and data center operations at 49 East 21st Street, New York, New York. The Registrant's parent company, Data Probe, Inc. acquired a lease for this location, and the Registrant will be renting space there on a month-to-month basis. (See Item 13, INFRA.) The Registrant owns two Megadata 8300 Model 4's, a Megadata 8300 Model 6, 3 Gateway2000 Pentium PCs, and various IBM display terminals and Hewlett Packard Printers. ITEM 3. LEGAL PROCEEDINGS. --------------------------- NONE. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. ------------------------------------------------------------- No matter was submitted to a vote of security holders during the fourth quarter. I - 3 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER ----------------------------------------------------------------------- MATTERS. ------------ a) MARKET INFORMATION. ------------------- The Registrant's common shares are traded in the over-the-counter market and listed on the National Quotation Bureau's "Pink Sheets" (symbol: "DTAB"). The following table sets forth the range of high and low closing bid quotations for the Registrant's common shares for each quarterly period during the Registrant's last two fiscal years, as reported by the National Quotation Bureau: PERIOD CLOSING BID PRICES --------- ------------------ Fiscal Year Ended December 31, 2001 HIGH LOW ------- ------- First Quarter N/A * N/A * Second Quarter N/A * N/A * Third Quarter N/A * N/A * Fourth Quarter N/A * N/A * Fiscal Year Ended December 31, 2000 HIGH LOW -------- ------- First Quarter N/A * N/A * Second Quarter N/A * N/A * Third Quarter N/A * N/A * Fourth Quarter N/A * N/A * --------------- * Quotations were not available for the period indicated. (b) HOLDERS. ----------- The number of equity security holders of record at March 23, 2000 was 568. (c) DIVIDENDS. -------------- The Registrant has never paid cash dividends on its shares. The Registrant does not anticipate paying cash dividends in the foreseeable future. II - 1

II - 2 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ---------------------------------------------------------- CONDITION AND RESULTS OF OPERATION. ----------------------------------------------------------- RESULTS OF OPERATIONS: ------------------------------------- Operating revenue for the three most recent fiscal years ended December 31, was $357,204 in 2001, $432,869 in 2000, and $383,047 in 1999. During fiscal year ending December 31, 2001 operating revenues decreased by 17.0%, or $75,665. During fiscal year 2000 operating revenues increased by 13.0% when compared to the revenues in fiscal year 1999. The decrease in revenue during fiscal year 2001 was due to reduction in revenue from the Registrant's largest customer a general after the September 11, 2001 terrorists attack in New York. Revenue in fiscal year 2000 was higher than the revenue during fiscal year 1999. The increase in revenue during fiscal year 2000 was due to an increase in revenue from existing customers. In fiscal year 2001 the Registrant's largest client accounted for 29%, or $101,986, of the Registrant's revenue. In fiscal year 2000 the largest client accounted for 40% of Registrant's revenue. This decrease in revenue was the main reason for the decrease in overall Revenue during fiscal year 2001. During fiscal years 2001 and 2000 the Registrant was successful in adding two new clients, however a few other clients either did not repeat their studies or reduced the amount of work sent to the Registrant. For the past three years market research accounted for 100% of Registrant's consolidated revenue. Cost of sales in fiscal year 2001 decreased by 22%, or $98,056 as compared to fiscal year 2000. In fiscal 2000 these costs increased by 13%, or $52,236. The Registrant is continuously monitoring its operating cost structure and implementing cost saving programs wherever appropriate. II - 3 Selling and administrative expenses were 22% lower in fiscal year 2001. These costs were also lower in fiscal year 2000 by 7% when compared to selling and administrative costs during fiscal year 1999. The Registrant operated at a loss in fiscal years 2001 and 2000. These losses were a result of a revenue base that was not sufficient to cover Registrant's costs. The Registrant had no capital expenditures in 2001 and 2000 and it does not anticipate any capital expenditures in the near future. In the opinion of management, inflation has not had a material impact on the operations of the Registrant. THE YEAR 2000 ISSUE ------------------------------- The Registrant has studied the impact of the year 2000 on the software and services it sells as well as its own internal systems. It was concluded that all software and services provided by the Registrant are Year 2000 compliant. The Registrant has not experienced any Year 2000 compliance problems with either its internal systems or outside providers. LIQUIDITY AND CAPITAL RESOURCES. ------------------------------------------------------- As of December 31, 2001 the Registrant's working capital decreased by approximately $67,342, creating a negative balance of ($228,414). Working capital at the end of fiscal year 2000 was lower by $104,263 compared to the working capital at the end of fiscal year 1999. The Registrant's balance sheet at December 31, 2001 reflects a receivable from its parent company, Data Probe, Inc., which represents a significant portion of its current assets and therefore its working capital. The collectability of this receivable is uncertain. The Registrant's continued losses have greatly reduced its working capital. If the loss trends continue, or if additional revenues cannot be generated, or if significant operating costs cannot be reduced, the Registrant's ability to continue to operate would be severely affected in the absence of securing some type of supplemental financing, the availability of which there can be no assurance. II - 4 GHASSEMI, PHOEL & COMPANY CERTIFIED PUBLIC ACCOUNTANTS 23 Langdon Place Lynbrook, NY 11563 Phone: 516-887-4444 Fax: 516-887-4450 INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholders Datatab, Inc.: We have audited the accompanying consolidated balance sheet of Datatab, Inc. and subsidiaries as of December 31, 2001 and 2000 and the related consolidated statements of operations, retained earnings (deficit) and cash flows for each of the years in the three-years period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Datatab, Inc. and subsidiaries at December 31, 2001, and 2000, and result of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /S/ GHASSEMI, PHOEL & CO. ------------------------- Certified Public Accountants Lynbrook, New York February 28, 2002 II - 5 DATATAB, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET

(CONTINUED) II - 6 DATATAB, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET

The notes to financial statements are made a part hereof. II - 7 DATATAB, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS

The notes to financial statements are made a part hereof. II - 8 DATATAB, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF RETAINED EARNINGS (DEFICIT)

The notes to financial statements are made a part hereof. II - 9 DATATAB, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS

(CONTINUED) II - 10 DATATAB, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS

The notes to financial statements are made a part hereof. II - 11 DATATAB, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ------------------------------------------- Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its subsidiaries (all of which are wholly-owned) after elimination of inter-company investments, advances and transactions. Inventory - Inventoried costs of uncompleted jobs represents unbilled labor and overhead charges. Inventories of supplies are stated at the lower of cost (first-in, first-out method) or market. Furniture, Fixtures, Equipment and Improvements - Furniture, fixtures, equipment and improvements are recorded at cost. At the time assets are sold or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and depreciation accounts; profits and losses on such dispositions are reflected in current operations. Expenditures for maintenance and repairs are charged to operations; replacements, renewals and betterments are capitalized. Depreciation for financial accounting purposes is computed on the Straight-line method to amortize the cost of various classes of assets over their estimated useful lives. Leasehold improvements are amortized over the shorter of the life of the related asset or the life of the lease. Depreciation for income tax purposes is computed substantially on accelerated methods; deferred income taxes have been provided on the difference between depreciation expense for financial accounting and income tax purposes; however, deferred taxes previously provided were eliminated as a result of accumulated net losses. Systems Development Costs - Systems development costs are charged to operations as incurred. (Continued) II - 12 DATATAB, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): ------------------------------------------------------- Earnings or Loss per Share - Earnings or loss per share is based on the average number of shares of common stock outstanding each year after deducting treasury shares. Cash and Cash Equivalents - All highly liquid investments with a maturity of three months or less at date of purchase are carried at fair value and are considered to be cash equivalents. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain report amounts and disclosures. Accordingly, actual results could differ from those estimates. Fair Value of Financial Instruments - The carrying value of financial instruments approximate their fair value. RECEIVABLE FROM DATA PROBE, INC.: ---------------------------------- Data Probe, Inc., the majority stockholder, is indebted to the Company for advances made. For the year ended December 31, 2001 and 2000 total interest earned on the advances amounted to $10,586 and $21,589 respectively. INVENTORIES: ------------ Inventories are summarized as follows: DECEMBER 31, -------------------- 2001 2000 ----- ----- Work in process $ 1,100 $ 1,175 ======= ======= (Continued) II - 13 DATATAB, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 FURNITURE, FIXTURES, EQUIPMENT AND IMPROVEMENTS: ------------------------------------------------ Furniture, fixtures, equipment and improvements comprise the following: COST AND BOOK VALUE DECEMBER 31, ----------------------------- ESTIMATED USEFUL 2001 2000 LIVES ------ ----- ------- Computer data processing equipment ...................$118,033 $118,033 7 to 10 years Furniture, fixtures and improvements ................ 8,647 8,647 5 to 10 years -------- -------- ------------- 126,680 126,680 Less accumulated Depreciation ................ 126,446 125,890 -------- -------- Net ......................$ 234 $ 790 ======== ======== INCOME TAXES: ------------ At December 31, 2001, the Company has available net operating loss Carry-forwards in excess of $1,326,000, of which $199,000 expires in 2002, $120,000 in 2003, $87,000 in 2004, $ 94,000 in 2005, $84,000 in 2006, $99,000 in 2007 and the balance in 2008 and thereafter. The Company has provided a valuation allowance in its entirety to offset potential benefit derived with the utilization of the net operating loss carry-forwards and tax credits available. The consolidated federal income tax returns of the Company and its subsidiaries have been examined by the Treasury Department through 1977. (Continued) II - 14 DATATAB, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 TRANSACTIONS WITH RELATED PARTIES: ---------------------------------- Data Probe, Inc. charged the Company for the following: TOTAL SERVICES RENT ----- --------- -------- 2001 .................. $346,407 $278,260 $ 68,147 2000 .................. 284,151 212,306 71,845 1999 .................. 237,574 168,887 68,687 In addition, the Company charged Data Probe, Inc. for the following: TOTAL SERVICES INTEREST SALES -------- ---------- --------- -------- 2001 .............$270,251 $206,500 $ 10,586 $ 53,165 2000 ............. 185,764 120,000 21,589 44,175 1999 ............. 218,569 135,000 19,988 63,581 COMMITMENTS: ------------ As of January 1, 1997, Data Probe, Inc. acquired a lease for new office space, and the Company will be renting its offices from them on a month to month basis. GOING CONCERN: -------------- As reflected in the accompanying financial statements, the Company incurred net operating losses of $67,928 and $103,414 for each of the two years ended December 31, 2001 and 2000. Adverse economic conditions have limited the ability of the Company to market its services at amounts sufficient to recover operating and administrative cost. Continued losses have exhausted the remaining net working capital. Because of the conditions surrounding the Company and its inability to generate profit, there is doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. II - 15 ITEM #9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE: -------- ------------------------------------------------------ Not applicable. II - 16 Part III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (a), (b) IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS. DIRECTOR OFFICER NAME AGE POSITION SINCE SINCE ---- ----- --------------- ---------------------- Yitzhak N. Bachana 69 President, Treasurer, 1983 1983 and Director James R. Sheridan 56 Executive Vice President, 1983 1983 Secretary, and Director Each director is elected to serve as a director until the next succeeding annual meeting of shareholders and until his successor is duly elected and qualified. Each executive officer is elected to serve at the pleasure of the Board of Directors. (c) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES. None. (d) FAMILY RELATIONSHIPS. None. (e) BUSINESS EXPERIENCE. The following sets forth the business experience during the past five years of each director and officer: Mr. Bachana has been President, Treasurer, and a director of Data Probe, Inc., a publicly-traded, New York based computer service bureau and parent of Data Probe Acquisition Corp., for more than the past five years. Mr. Bachana has been a director of the Board of Megadata Corporation since April 20, 1976 and has been President and Chief Executive Officer of Megadata Corporation since June 3, 1980. On October 2, 1998, Mr. Bachana has resigned his post as President of Megadata. Megadata Corporation's securities are registered under Section 12(g) of the Securities Exchange Act of 1934, as amended. Mr. Sheridan has been Executive Vice President and served as a supervisor and operations manager of Data Probe, Inc. for more than the past five years. (f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS. The Registrant knows of no event which occurred during the past five years and which is described in Item 401(f) of Regulation S-K relating to any director or officer of the Registrant. III - 1 ITEM 11. EXECUTIVE COMPENSATION. (a) COMPENSATION. The following table sets forth all compensation paid to the executive officers of the Registrant as a group for such fiscal year. SUMMARY COMPENSATION TABLE -------------------------------------------------------------------------------- (A) (B) (C) (D) (E) -------------------------------------------------------------------------------- NAME AND PRINCIPAL OTHER POSITION YEAR SALARY BONUS COMPENSATION ------------------ -------------------------------------------------- Yitzhak N. Bachana - President .............. 2001 $50,769 -- $65,577(1) 2000 52,885 -- $61,346(2) 1999 55,000 -- 62,305(3) James R. Sheridan ......... 2001 $48,500 -- $32,695(4) James R. Sheridan ......... 2000 $48,500 -- $32,695(5) Executive Vice President 1999 58,500 -- 32,695(6) ------- (1) Represents earned but unpaid salary as of December 31, 2001. (2) Represents earned but unpaid salary as of December 31, 2000. (3) Does not include earned but unpaid salary of $48,654 as of December 31, 1998. (4) Represents earned but unpaid commission as of December 31, 2001. (6) Represents earned but unpaid commission as of December 31, 2000. (7) Does not include earned but unpaid commission of $37,362 as of December 31, 1999. III - 2 (b) (1) COMPENSATION PURSUANT TO PLANS. The Registrant's employees (including officers) are all employed on a month-to-month basis. (2) PENSION TABLE. Not applicable. (3) ALTERNATIVE PENSION PLAN DISCLOSURE. Not applicable. (4) STOCK OPTION AND STOCK APPRECIATION RIGHT PLANS. Not applicable. (c) OTHER COMPENSATION. None. (d) COMPENSATION OF DIRECTORS. 1. STANDARD ARRANGEMENTS. None. 2. OTHER ARRANGEMENTS. None. (e) TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT. None. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following chart sets forth the name and address of the person known to the Registrant to be the beneficial owner of more than 5% of the Registrant's common shares, par value $1.00, at March 20, 2001. AMOUNT OF NAME AND ADDRESS OF BENEFICIAL PERCENT BENEFICIAL OWNER OWNERSHIP OF CLASS ------------------- ----------------- --------------- Data Probe Acquisition Corp. 517,959(1)(2) 73.38 49 East 21 Street NEW YORK, NEW YORK 10010 ---------- (1) All shares are owned of record and beneficially. (2) Yitzhak N. Bachana, President of the Registrant, owns 57.22% of the outstanding shares of Data Probe, Inc., the parent of Data Probe Acquisition Corp., and by virtue thereof may be deemed to be the beneficial owner of more than 5% of the Registrant's outstanding shares. III - 3 (b) SECURITY OWNERSHIP OF MANAGEMENT. The following chart sets forth the number of the Registrant's common shares, $1.00 par value, beneficially owned by all of the directors of the Registrant and by the directors and officers of the Registrant as a group at March 20, 2001: NAME OF AMOUNT OF BENEFICIAL BENEFICIAL PERCENT OWNER OWNERSHIP (1) OF CLASS -------------- --------------- ------------ Yitzhak N. Bachana 0 (2) 0 James R. Sheridan 0 0 Officers and Directors as a Group (2 PERSONS) 0 (2) 0 ---------------------------- (1) All shares are owned of record and beneficially. (2) Yitzhak N. Bachana is the President, Chairman of the Board, and majority shareholder of Data Probe, Inc., the parent of Data Probe Acquisition Corp., which owns 517,959 common shares of the Registrant (or 73.38% of all issued and outstanding shares) which are excluded from the foregoing table. (c) CHANGES IN CONTROL. Not applicable. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (a) TRANSACTIONS WITH MANAGEMENT AND OTHERS. Since December 27, 1996 The Registrant, located its executive offices at 49 East 21 Street, New York, New York, where it shares space with its parent company, Data Probe, Inc. Data Probe acquired a lease for this location, and the Registrant has been renting space pursuant to an allocation arrangement providing that the Registrant pay Data Probe, Inc. on a month to month basis approximately $5,500. (See Item 13, INFRA.) III - 4 From time to time the Registrant and Data Probe, Inc. hire each other's employees for specific projects. For the fiscal year ended December 31, 2000, the Registrant incurred expenses of $278,260 with respect to these transactions. The Registrant was charged $68,147 for rent pursuant to an allocation arrangement. The Registrant charged Data Probe, Inc. $206,500 for sales and services and $10,586 for interest in 2001. All fees are determined on a project-by-project basis and, in the opinion of Registrant's management, are no less favorable to the Registrant than those which could be obtained from unrelated third parties. (b) CERTAIN BUSINESS RELATIONSHIPS. None. (c) INDEBTEDNESS OF MANAGEMENT. None. (d) TRANSACTIONS WITH PROMOTERS. Not applicable. III - 5 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K. PAGE ------- (a) 1. FINANCIAL STATEMENTS Included in Part II of this report: Selected Financial Data at December 31, 2001, 2000, 1999, 1998, 1997 II-2 Report of Independent Certified Public Accountants II-5 Consolidated Balance Sheets at December 31, 2001 and 2000 II-7 Consolidated Statements of Operations for the years ended December 31, 2001, 2000, and 1999 II-8 Consolidated Statements of Retained Earnings (Deficit) for the years ended December 31, 2001, 2000, and 1999 II-9 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000, and 1999 II-10 Notes to Consolidated Financial Statements II-12 2. Financial Statements Schedules Included in Part IV of this report: Accountant's report on financial statement schedules IV-4 Schedule V-Equipment and Improvements for the years ended December 31, 2001, 2000, and 1999 IV-5 Schedule VI-Depreciation and Amortization of Equipment and Improvements for the years ended December 31, 2001, 2000, and 1999 IV-6 IV - 1 Schedules, other than those listed above, have been omitted since they are not required or the information required therein has been presented elsewhere in the financial statements. Separate financial statements of Datatab, Inc. (parent) have been omitted since the conditions for omission have been met. (b) REPORTS FILED ON FORM 8-K. None (c) EXHIBITS None IV - 2 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. DATATAB, INC. Dated: March 27, 2002 By: /S/ YITZHAK N. BACHANA ---------------------- Yitzhak N. Bachana, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Dated: March 27, 2002 /S/ YITZHAK N. BACHANA ---------------------- Yitzhak N. Bachana, President, Treasurer, Principal Executive Officer, Principal Financial Officer, Director Dated: March 27, 2002 /S/ JAMES R. SHERIDAN --------------------- James R. Sheridan, Executive Vice President, Director IV - 3

DATATAB INC 10-K