-----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, BiATzU8Ulalw/qlX0XPJS6IYrB6sEedwluxlY29wST3nRExoc2IIm/VA49Xa4Kyf jz4SGDZRKANEzC2I8kzoNQ== 0000912057-96-017922.txt : 19960816 0000912057-96-017922.hdr.sgml : 19960816 ACCESSION NUMBER: 0000912057-96-017922 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11108 FILM NUMBER: 96614819 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 10-Q 1 FORM 10-Q 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-Q _________________________________ [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 1996 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: 7,343,019 shares of the Company's common stock ($.001 par value) were outstanding as of August 8, 1996. Page 1 of 12 PC QUOTE, INC. INDEX PAGE PART I. FINANCIAL INFORMATION Item 1. Balance Sheets as of June 30, 1996 and December 31, 1995 3 Statements of Operations for the six month and quarter ended June 30, 1996 and 1995 4-5 Statements of Cash Flows for the six month periods ended June 30, 1996 and 1995 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis of: Results of Operations and Financial Condition 8-9 Liquidity and Capital Resources 10 PART II. OTHER INFORMATION Item 5. Other 11 Item 6. Exhibit 27 11 Company's Signature Page 12 Page 2 of 12 PC QUOTE, INC. BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995
JUNE DECEMBER 31, 1996 1995 ----------- ------------- ASSETS (UNAUDITED) (AUDITED) CURRENT ASSETS: Cash and cash equivalents $ 641,215 $ 1,043,478 Accounts receivable, net of allowance for doubtful accounts of $156,865 (1996) and $95,000 (1995) 896,928 1,320,508 Income tax refunds receivable 40,000 40,000 Prepaid expenses and other current assets 143,649 294,536 Deferred tax asset 158,000 158,000 ----------- ------------- Total current assets 1,879,792 2,856,522 ----------- ------------- PROPERTY AND EQUIPMENT: Satellite receiving equipment 822,810 785,718 Computer equipment 6,420,138 6,158,855 Communication equipment 2,548,905 2,437,279 Furniture and fixtures 288,257 256,260 Leasehold improvements 350,720 340,271 ----------- ------------- 10,430,830 9,978,383 Less accumulated depreciation and amortization 7,365,693 6,759,973 ----------- ------------- 3,065,137 3,218,410 ----------- ------------- Software development costs, net of accumulated amortization of $3,328,146 (1996) and $3,088,146 (1995) 5,319,380 4,172,215 Deposits and other assets 266,261 275,693 ----------- ------------- TOTAL ASSETS $10,530,570 $10,522,840 ----------- ------------- ----------- ------------- LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Note payable, bank, line of credit $500,000 $0 Note payable, bank, current 100,000 100,000 Capital lease obligations 388,804 587,731 Accounts payable 1,478,968 1,700,998 Unearned revenue 440,534 546,869 Accrued expenses 578,621 488,597 ----------- ------------- Total current liabilities 3,486,927 3,424,195 ----------- ------------- Note payable to bank, noncurrent 49,950 100,000 Capital lease obligations, noncurrent 18,224 133,176 Unearned revenue, noncurrent 146,845 254,191 ----------- ------------- Total liabilities 3,701,946 3,911,562 ----------- ------------- STOCKHOLDERS' EQUITY: Common stock, par value $.001; 10,000,000 shares authorized; 7,266,320 (1996) and 7,185,732 (1995) shares issued and outstanding 7,266 7,186 Paid in capital 12,462,522 12,289,897 Accumulated deficit (5,641,164) (5,685,805) ----------- ------------- Total stockholders' equity 6,828,624 6,611,278 ----------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,530,570 $10,522,840 ----------- ------------- ----------- -------------
The accompanying notes are an integral part of the financial statements. Page 3 of 12 PC QUOTE, INC. STATEMENTS OF OPERATIONS (UNAUDITED) FOR QUARTER ENDED JUNE 30, -------------------------- 1996 1995 (UNAUDITED) (UNAUDITED) ----------- ------------ NET REVENUES Services $4,447,828 $3,223,096 Direct costs of services 2,670,504 1,186,002 ----------- ------------ 1,777,324 2,037,094 ----------- ------------ OPERATING COSTS AND EXPENSES Amortization of software development 253,000 300,000 Research and development 194,284 165,238 Selling and marketing 728,517 568,440 General and administrative 826,981 560,698 ----------- ------------ 2,002,782 1,594,376 ----------- ------------ OPERATING INCOME (225,458) 442,718 OTHER INCOME (EXPENSE) Interest income 2,885 5,081 Interest expense (37,562) (63,909) ----------- ------------ NET INCOME(LOSS) ($260,135) $383,890 ----------- ------------ ----------- ------------ NET INCOME(LOSS) PER COMMON SHARE ($0.04) $0.06 ----------- ------------ ----------- ------------ The accompanying notes are an integral part of the financial statements. Page 4 of 12 PC QUOTE, INC. STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS -------------------------- 1996 1995 (UNAUDITED) (UNAUDITED) ----------- ------------ NET REVENUES Services $8,422,311 $6,422,765 Direct costs of services 4,512,274 2,609,987 ----------- ------------ 3,910,037 3,812,778 ----------- ------------ OPERATING COSTS AND EXPENSES Amortization of software development 493,000 543,000 Research and development 346,010 302,991 Selling and marketing 1,447,560 1,116,752 General and administrative 1,521,777 1,038,941 ----------- ------------ 3,808,347 3,001,684 ----------- ------------ OPERATING INCOME 101,690 811,094 OTHER INCOME (EXPENSE) Interest income 4,112 6,801 Interest expense (61,161) (113,009) ----------- ------------ NET INCOME(LOSS) $44,641 $704,886 ----------- ------------ ----------- ------------ NET INCOME(LOSS) PER COMMON SHARE $0.00 $0.10 ----------- ------------ ----------- ------------ The accompanying notes are an integral part of the financial statements. Page 5 of 12 PC QUOTE, INC STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, -------------------------- 1996 1995 ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $44,641 $704,886 ----------- ------------ Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization of property and equipment 605,720 613,410 Amortization of software development cost 493,000 543,000 Changes in assets and liabilities: Accounts receivable, net of allowance 423,580 (228,945) Prepaid expenses and other current assets 150,887 (61,516) Deposits and other assets 9,432 (117,299) Accounts payable (222,030) (657,676) Unearned revenue (213,681) 877,275 Accrued expenses 90,024 38,127 ----------- ------------ Total adjustments 1,336,932 1,006,376 ----------- ------------ Net cash provided by operating activities 1,381,573 1,711,262 ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (452,447) (360,690) Software development costs capitalized (1,640,165) (1,043,378) ----------- ------------ Net cash used by investing activities (2,092,612) (1,404,068) ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 172,705 64,975 Principal payments under capital leases obligations (313,879) (423,660) Principal payments on note payable to banks (50,050) (58,383) Net borrowings under line of credit 500,000 0 ----------- ------------ Net cash used by financing activities 308,776 (417,068) ----------- ------------ NET CHANGE IN CASH AND CASH EQUIVALENTS (402,263) (109,874) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 1,043,478 1,384,086 ----------- ------------ CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $641,215 $1,274,212 ----------- ------------ ----------- ------------
- ------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest Paid $61,161 $113,009 Income taxes paid None None - ------------------------------------------------------------------- The accompanying notes are an integral part of the financial statements. Page 6 of 12 PC QUOTE, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 (1) BASIS OF PRESENTATION The accompanying interim 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, 1995 annual report. For further information, refer to the consolidated financial statements and footnotes included in PC Quote's annual report on Form 10-K for the year ended December 31, 1995. 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. Amortization is provided over an estimated life of the software products and commences when the product is available for general release to customers. Unamortized capitalized costs determined to be in excess of the net realizable value of the product are expensed at the date of such determination. It is reasonably possible that the estimated anticipated future gross revenues, the remaining estimated economic life of the products, or both will be reduced significantly in the near term. Accumulated amortization and related software development costs are removed in the year following full amortization. (2) INCOME TAXES At December 31, 1995, the Company had federal income tax net operating loss carryforwards of approximately $7,327,400 federal income tax purposes and approximately $4,753,400 for alternative minimum tax purposes. The net operating loss carryforwards will expire in the years 1999 to 2007. Page 7 of 12 ITEM 2 _____________________________________________ MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: FOR THE SIX MONTHS AND QUARTER ENDED JUNE 30, 1996 Service revenues for the six months and quarter ended June 30, 1996 increased 31.1% and 37.9%, respectively, from the same periods of 1995. The increase in service revenue continues from the release of a new product, PCW 6.0, in the Company's core and internet business. Selling and marketing costs increased 29.6% and 28.2% respectively, for the six months and quarter ended June 30, 1996, over the same periods in 1995. The increase was due to the increase in commissions and advertising costs which correlates to the increase in service revenues. Direct costs of services for the six months and quarter ended June 30, 1996 increased 72.8% and 125% respectively, over the same periods last year. This reflects an increase in staffing levels in customer support and operations and communications costs related to the increase in volume. Additional technological infrastructure costs, principally staffing and equipment, were incurred to invest in the growth of the internet operations. Research and Development costs increased 14.2% and 17.6% respectively, for the six months and quarter ended June 30, 1996 from the corresponding periods in 1995. There was a increase in research costs related to additional staffing. Page 8 of 12 ITEM 2 _____________________________________________ MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) RESULTS OF OPERATIONS (CONTINUED): FOR THE SIX MONTH AND QUARTER ENDED JUNE 30, 1996 General and administrative expenses increased 46.5% and 47.5%, respectively, for the six months and quarter ended June 30, 1996, from the same periods in 1995. The main increases were in salaries and related costs, due to additional staffing and reallocation of personnel to support major business opportunities. There was also an increase in the provision for doubtful accounts and shareholders services as compared to the same period in 1995. Interest income decreased 39.5% and 43.2%, respectively, for the six months and quarter ended June 30, 1996, from the corresponding periods in 1995. Interest income decreased due to our use of cash over credit for some equipment needs. Interest expense decreased 45.9% and 41.2%, respectively, for the six months and quarter ended June 30, 1996 over the same periods in 1995. This reflects the switch to operating leases from capital leases. Page 9 of 12 ITEM 2 _____________________________________________ MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES: FOR THE SIX MONTHS AND QUARTER ENDED JUNE 30, 1996 The company established a $1,000,000 line of credit with the its' lender and borrowed $500,000 from the credit facility. Investments in software development increased substantially due to the the Company's targeted effort to launch more products on the internet. Financing activities used cash for capital lease obligations. 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 10 of 12 PART II OTHER INFORMATION _________________ ITEM 5: OTHER Effective June 1996, Howard C. Meltzer assumed the position of President and Chief Operating Officer of the Company and Michael A. Press assumed the position of Chief Financial Officer in August 1996. ITEM 6: (a) EXHIBIT 27 (b) REPORT ON FORM 8-K-NONE Page 11 of 12 SIGNATURES __________ Pursuant to the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, there unto duly authorized. PC QUOTE, INC. (Company) Date: August 8, 1996 By: /s/ Louis J. Morgan -------------------------- Louis J. Morgan Chairman By: /s/ Michael A. Press -------------------------- Michael A. Press Chief Financial Officer Page 12 of 12 EX-27 2 FDS
5 6-MOS DEC-31-1996 JAN-21-1996 JUN-30-1996 641,215 0 896,928 156,865 0 1,879,792 10,430,830 7,365,693 10,530,570 3,486,927 0 7266 0 0 10,523,304 10,530,570 0 4,447,828 0 2,670,504 2,002,782 210,000 37,562 (260,135) 0 (260,135) 0 0 0 (260,135) (.04) (.04)
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