-----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, EczSxAQMoKQ2GyBjf4uJMjHwnGESik21SEyE7N5HwAqqem71ofYL1Hw5EIwSjoP3 lFSSTiMTzUNy9EH4LXV7Pw== 0000912057-95-010138.txt : 19951120 0000912057-95-010138.hdr.sgml : 19951120 ACCESSION NUMBER: 0000912057-95-010138 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951116 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PC QUOTE INC CENTRAL INDEX KEY: 0000745774 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 363131704 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11108 FILM NUMBER: 95594323 BUSINESS ADDRESS: STREET 1: 300 SOUTH WACKER DRIVE STREET 2: SUITE 300 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129132800 MAIL ADDRESS: STREET 1: 300 S WACKER STREET 2: SUITE 300 CITY: CHICAGO STATE: IL ZIP: 60606 10QSB/A 1 FORM 10-QSB/A QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB/A _________________________________ [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 30, 1995 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 0-13093 I.R.S. Employer Identification Number 36-3131704 PC QUOTE, INC. (a Delaware Corporation) 300 S. WACKER DRIVE CHICAGO, ILLINOIS 60606 TELEPHONE (312) 913-2800 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 twelve months, (or for such shorter period that the Company 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 issuers classes of common equity, as of the latest practicable date: 7,265,355 shares of the Company's common stock ($.001 par value) were outstanding as of November 10, 1995. Page 1 of 13 PC QUOTE, INC. INDEX PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Balance Sheets as of September 30, 1995 and December 31, 1994 3 Statements of Operations for the nine month periods ended September 30, 1995 and 1994 4 Statements of Cash Flows for the nine month periods ended September 30, 1995 and 1994 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of: Results of Operations and Financial Condition 7-8 Liquidity and Capital Resources 9 PART II. OTHER INFORMATION Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 12 Company's Signature Page 13 Page 2 of 13 PC QUOTE, INC. BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
SEPT.30 DECEMBER 31, ASSETS 1995 1994 (UNAUDITED) (AUDITED) -------------- -------------- CURRENT ASSETS: Cash and cash equivalents $ 1,041,574 $ 1,384,086 Accounts receivable, net of allowance for doubtful accounts of $46,241 (1995) and $100,000 (1994) 1,360,258 555,234 Accounts receivable due from related party 289,011 287,334 Prepaid expenses and other current assets 344,480 314,793 ----------- ----------- Total current assets 3,035,323 2,541,447 ----------- ----------- PROPERTY AND EQUIPMENT: Satellite receiving equipment 689,201 702,069 Computer equipment 6,393,164 5,722,462 Communication equipment 2,431,781 2,342,936 Furniture and fixtures 308,735 232,428 Leasehold improvements 335,274 326,285 ----------- ----------- 10,158,155 9,326,180 Less accumulated depreciation and amortization 6,436,440 5,486,442 ----------- ----------- 3,721,715 3,839,738 ----------- ----------- Software development costs, net of accumulated amortization of $3004915(1995) and $2,158,915 (1994) 3,200,091 2,514,927 Deposits and other assets 345,370 175,619 ----------- ----------- TOTAL ASSETS $10,302,499 $ 9,071,731 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' SEPT. 30 DECEMBER 31, EQUITY 1995 1994 UNAUDITED (AUDITED) -------------- -------------- CURRENT LIABILITIES: Note payable to bank $ 100,000 $ 100,000 Capital lease obligations 811,978 835,913 Accounts payable 894,394 1,349,735 Unearned revenue 1,228,516 437,546 Accrued expenses 498,772 464,711 ----------- ----------- Total current liabilities 3,533,660 3,187,905 ----------- ----------- Note payable to bank, noncurrent 141,617 200,000 Capital lease obligations, noncurrent 122,425 714,361 Unearned revenue, noncurrent 387,952 139,096 ----------- ----------- Total liabilities 4,185,654 4,241,362 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock, par value $.001; 10,000,000 shares authorized;7137417 (1995) and 6,969,174 (1994) shares issued and outstanding 7,137 6,969 Paid in capital 12,153,916 12,021,444 Cumulative foreign currency translation adjustment 0 0 Accumulated deficit (6,044,208) (7,198,044) ----------- ----------- Total stockholders' equity 6,116,845 4,830,369 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,302,499 $ 9,071,731 ----------- ----------- ----------- -----------
Page 3 of 13 PC QUOTE, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS QUARTER ENDED ENDED SEPT. 30,1995 ENDED SEPT.30, 1995 1995 1994 1995 1994 ------------------------------- -------------------------------- NET REVENUES Services $9,812,101 $9,791,772 $3,389,336 $3,328,159 Direct costs of services 3,871,392 4,831,350 1,263,776 1,674,200 ------------ ------------ ------------ ------------ 5,940,709 4,960,422 2,125,560 1,653,959 ------------ ------------ ------------ ------------ OPERATING COSTS AND EXPENSES Amortization of software development 846,000 729,000 303,000 243,000 Research and development 494,979 677,596 191,989 233,329 Selling and marketing 1,656,292 1,799,093 539,540 587,762 Restructuring Expenses 304,107 304,107 General and administrative 1,607,966 1,405,830 569,175 489,929 ------------ ------------ ------------ ------------ 4,605,237 4,915,626 1,603,704 1,858,127 ------------ ------------ ------------ ------------ OPERATING INCOME 1,335,472 44,796 521,856 (204,168) OTHER INCOME (EXPENSE) Interest income 18,437 34,960 11,635 18,542 Interest expense (169,682) (195,456) (56,674) (65,247) ------------ ------------ ------------ ------------ Income before income taxes 1,184,227 (115,700) 476,817 (250,873) Provision for Income Taxes 30,392 0 30,392 0 ------------ ------------ ------------ ------------ NET INCOME $1,153,835 ($115,700) $446,425 ($250,873) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ NET INCOME PER COMMON SHARE $0.162 ($0.017) $0.064 ($0.004) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Page 4 of 13 PC QUOTE, INC STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPT.30 1995 1994 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,153,834 ($115,700) ------------- ------------ Adjustments to reconcile net income to cash provided by operating activities: Restucturing charges 304,107 Depreciation and amortization of property and equipment 949,998 821,889 Amortization of software development cost 846,000 729,000 Changes in assets and liabilities: Accounts receivable, net of allowance (806,701) (199,522) Prepaid expenses and other current assets (29,687) (186,187) Deposits and other assets (169,751) (27,107) Accounts payable (455,341) 191,080 Unearned revenue 1,039,827 244,081 Accrued expenses 34,061 (199,242) ------------- ------------ Total adjustments 1,408,406 1,678,099 ------------- ------------ Net cash provided by operating activities 2,562,240 1,562,399 ------------- ------------ CASH FLOWS FROM INVESTING ACTIVTIES: Purchase of property and equipment (831,975) (608,453) Software development costs capitalized (1,531,163) (904,895) ------------- ------------ Net cash used by investing activities (2,363,138) (1,513,348) ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 132,640 42,603 Principal payments under capital leases obligations (615,871) (613,714) Principal payments on note payable to banks (58,383) (75,000) ------------- ------------ Net cash used by financing activities (541,614) (646,111) ------------- ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH & CASH EQUIVALENTS 0 (2,785) ------------- ------------ NET CHANGE IN CASH AND CASH EQUIVALENTS (342,512) (599,845) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 1,384,086 1,624,970 ------------- ------------ CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $1,041,574 $1,025,125 ------------- ------------ ------------- ------------ - -------------------------------------------------------------------------------------------- ------------ - -------------------------------------------------------------------------------------------- ------------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest Paid $113,009 $196,857 Debt incurred under capital lease obligations $208,200 $898,287 Capital improvements through facilities lease $220,986 Income taxes paid None $7,350 - -------------------------------------------------------------------------------------------- ------------ - -------------------------------------------------------------------------------------------- ------------
Page 5 of 13 PC QUOTE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (1) BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The interim financial statements include all adjustments which, in the opinion of management, are necessary in order to make the financial statements not misleading. The amounts indicated as "audited" have been extracted from the Company's December 31, 1994 annual report. For further information, refer to the consolidated financial statements and footnotes included in PC Quote's annual report on Form 10-KSB for the year ended December 31, 1994. Certain reclassifications have been made to conform to the current presentation. Costs associated with the planning and designing phase of software development, including coding and testing activities necessary to establish technological feasibility of computer software products to be sold, leased or otherwise marketed, are charged to research and development costs as incurred. Once technological feasibility has been determined, costs incurred in the construction phase of software development, including coding, testing and product quality assurance, are capitalized. (2) INCOME TAXES At December 31, 1994, the Company had domestic net operating loss carryforwards of approximately $7,079,000 for federal income tax purposes, approximately $5,112,000 for alternative minimum tax purposes, and approximately $67,000 of investment tax credit carryforwards. The net operating loss carryforwards will expire in the years 1999 to 2006 and the investment tax carryforwards will expire in the years 1999 to 2000, if not previously utilized. Page 6 of 13 ITEM 2 _____________________________________________ MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: FOR THE NINE MONTHS AND QUARTER ENDED SEPTEMBER 30, 1995 Service revenues for the nine months and quarter ended September 30, 1995 slightly increased .1% and 1.8%, respectively, from the same periods of 1994. New sales and additional services increased slightly over the first three quarters vs. cancellations. Selling and marketing costs decreased 7.9% and 8.2%, respectively, for the nine months and quarter ended September 30, 1995, over the same periods in 1994. Sales have increased during this period with fewer sales people due to our increased focus on platform and data feed sales. Direct costs of services for the nine months and quarter ended September 30, 1995 decreased 19.9% and 24.5%, respectively, over the same periods last year. This reflects the overall decrease in costs mainly related to the reallocation of resources into the developmental capitalized costs. Research and Development costs decreased 26.9% and 27.7%, respectively, for the nine months and quarter ended September 30, 1995, from the corresponding periods in 1994. There was a substantial increase in development costs versus research and design which is reflected in the overall increase in the capitalized software costs. Page 7 of 13 ITEM 2 _____________________________________________ MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS (CONTINUED): FOR THE NINE MONTH AND QUARTER ENDED SEPTEMBER 30, 1995 General and administrative expenses increased 14.4% and 16.2%, respectively, for the nine months and quarter ended September 30, 1995, from the same periods in 1994. The main increase was due to the decrease of chargeable costs to software development to be capitalized. Interest income decreased 47.3% and 37.3%, respectively, for the nine months and quarter ended September 30, 1995, from the corresponding periods in 1994. Interest income decreased due to our use of cash over credit for some equipment needs. Expenditures for capital needs decreased the cash available for investment. Interest expense decreased 13.2% and 13.1%, respectively, for the nine months and quarter ended September 30, 1995 over the same periods in 1994. A switch to operating leases versus capital leases, lower interest rates, and an increase in cash purchases of equipment resulted in the decrease. Page 8 of 13 ITEM 2 _____________________________________________ MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES: FOR THE NINE MONTHS AND QUARTER ENDED SEPTEMBER 30, 1995 Operating activities provided the principal source of cash for the Company for the nine months ended September 30, 1995. Receivables increased as the result of the change in the billing cycle to industry standard advance billing. The Company believes that the advanced billing cycle instituted during the first quarter will increase positive cash flow over the balance of this year. With regard to investing activities, the Company's investing activities were for purchases of equipment and costs associated with the development of software. Financing activities used cash principally for payments of a bank note and for capital and operating lease obligations. The Company expects existing cash and cash generated by operations will be sufficient to finance the Company's operations through the remainder of 1995. The Company believes general inflation does not materially impact its sales and operating results nor is it expected that the effect of existing tax reform will significantly affect the Company's future position, liquidity or operating results. Page 9 of 13 PART II OTHER INFORMATION _________________ ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULT UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Page 10 of 13 ITEM 5 OTHER INFORMATION Effective November 8, 1995, the Registrant dismissed Coopers & Lybrand L.L.P. which previously was engaged as the principal accountant to audit the Registrant's financial statements. The reports of Coopers & Lybrand L.L.P. on the financial statements of the Registrant during the past two years did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to change independent accountants was recommended and approved by the Audit Committee of the Registrant's Board of Directors. During the Registrant's two most recent fiscal years and the subsequent interim periods, there have not been any disagreements with Coopers & Lybrand L.L.P. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Coopers & Lybrand L.L.P. would have caused it to make a reference to the subject matter of the disagreements in connection with its reports, nor were there any reportable events. Effective November 8, 1995, the Registrant engaged McGladrey & Pullen L.L.P. as its principal accountant to audit the Registrant's financial statements. As of October 31, 1995, the Company's Common Stock was included in the list of securities eligible to be traded on the American Stock Exchange under the trading symbol "PQT" (AMEX). Prior to inclusion in the AMEX primary listing, the Company's stock had been traded on the AMEX' list of Emerging Companies. Page 11 of 13 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K The following exhibit is filed herewith: (a) Exhibit 16 - Letter from Coopers & Lybrand L.L.P. (former independent accountants) located on sequential page 14 of this report. (b) There were no reports on Form 8-K filed during the quarter ended September 30, 1995. Page 12 of 13 SIGNATURES __________ In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PC QUOTE, INC. (Company) Date: November 16, 1995 By: /s/ Louis J. Morgan -------------------------- Louis J. Morgan Chairman By: /s/ Richard F. Chappetto -------------------------------- Richard F. Chappetto Chief Financial Officer Page 13 of 13 EX-16 2 EXHIBIT 16 [Coopers & Lybrand Letterhead] November 16, 1995 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Gentlemen: We have read the statements made by PC Quote (copy attached), which we understand will be filed with the Commission, pursuant to Item 5 of part 2 of Form 10QSB, as part of the Company's Form 10QSB report for the Quarter ended September 30, 1995. We agree with the statements concerning our Firm in such Form 10QSB. Very truly yours, -----END PRIVACY-ENHANCED MESSAGE-----