-----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, VQIytokmr4gaG53nKZ2CetRPB4dbg2uFZIehEi6amnNRLEQ39VQI0fVRqQnXu7M4 uUkXw4WkFrul8HlxmaemGA== 0001047469-97-002200.txt : 19971103 0001047469-97-002200.hdr.sgml : 19971103 ACCESSION NUMBER: 0001047469-97-002200 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19971031 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/A SEC ACT: SEC FILE NUMBER: 001-11108 FILM NUMBER: 97705080 BUSINESS ADDRESS: STREET 1: 300 S WACKER DR STREET 2: STE 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/A 1 10Q/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-Q/A _________________________________ [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 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 0-13093 I.R.S. Employer Identification Number 36-3131704 PC QUOTE, INC. (a Delaware Corporation) 300 S. WACKER 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: 12,384,245 shares of the Company's common stock ($.001 par value) were outstanding as of October 29, 1997. Page 1 PC QUOTE, INC. INDEX PAGE PART I. FINANCIAL INFORMATION ---- Item 1. Balance Sheets as of June 30, 1997 and December 31, 1996 3 Statements of Operations for the six month periods ended June 30, 1997 and 1996 4 Statements of Operations for the quarters ended ended June 30, 1997 and 1996 5 Statements of Cash Flows for six month periods ended June 30, 1997 and 1996 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis of: Results of Operations and Financial Condition 9 Liquidity and Capital Resources 11 PART II. OTHER INFORMATION Item 2. Changes in Securities 12 Item 6. Exhibits and Reports on Form 8-K 14 Page 2 PC QUOTE, INC. Balance Sheets June 30, 1997 and December 31, 1996
June 30, December 31, 1997 1996 ASSETS (Unaudited) (Audited) -------------- -------------- CURRENT ASSETS: Cash and cash equivalents $258,709 $1,321,512 Accounts receivable, net of allowance for doubtful accounts of $300,000 (1997) and $234,000 (1996) 1,018,067 1,100,253 Income tax refunds receivable 40,000 Prepaid expenses and other current assets 167,296 185,071 -------------- -------------- Total current assets 1,444,072 2,646,836 -------------- -------------- PROPERTY AND EQUIPMENT Satellite receiving equipment 865,454 865,454 Computer equipment 6,503,467 6,382,179 Communication equipment 2,669,721 2,656,057 Furniture and fixtures 293,240 293,240 Leasehold improvements 366,326 359,126 -------------- -------------- 10,698,208 10,556,056 Less accumulated depreciation and amortization 8,355,849 7,791,849 -------------- -------------- 2,342,359 2,764,207 -------------- -------------- Software development costs, net of accumulated amortization of $3,966,542 (1997) and $3,600,204 (1996) 5,170,896 5,789,845 -------------- -------------- Deposits and other assets 353,263 353,182 -------------- -------------- TOTAL ASSETS $ 9,310,590 $11,554,070 -------------- -------------- -------------- -------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Note payable, bank, current $300,000 $300,000 Note payable, credit facility, net of deferred costs 447,830 Capital lease obligations 21,848 142,685 Accounts payable 3,802,676 1,774,390 Unearned revenue 1,238,583 995,600 Accrued expenses 1,773,421 918,918 Deferred tax liability 6,265 6,264 -------------- -------------- Total current liabilities 7,590,623 4,137,857 -------------- -------------- LONG-TERM LIABILITIES Note payable to bank, noncurrent 950,000 1,100,000 Convertible Subordinated Debenture Bond Payable Net of Unamortized Discount of $1,513,921 (1997) and $1,650,000 (1996) 986,079 850,000 Unearned revenue, noncurrent 48,406 134,636 -------------- -------------- Total liabilities 9,575,108 6,222,493 -------------- -------------- STOCKHOLDERS' EQUITY Common stock, par value $.001; 10,000,000 shares authorized: 7,365,254 (1997) and 7,355,621 (1996) shares issued and outstanding 7,365 7,356 Paid in capital 12,636,166 12,615,995 Paid in capital-Convertible Subordinated Debenture and Warrants 2,120,000 1,650,000 Accumulated deficit (15,028,049) (8,941,774) -------------- -------------- Total stockholders' equity (264,518) 5,331,577 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,310,590 $11,554,070 -------------- -------------- -------------- --------------
The accompanying notes are an integral part of the financial statements Page 3 PC QUOTE, INC. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, -------------------------------- 1997 1996 (UNAUDITED) (UNAUDITED) -------------------------------- NET REVENUES Services $8,226,404 $8,422,311 Direct costs of services 7,326,226 4,512,274 ----------- ---------- 900,178 3,910,037 ----------- ---------- OPERATING COSTS AND EXPENSES Amortization of software development 831,114 493,000 Research and development 552,709 346,010 Selling and marketing 1,969,876 1,447,560 General and administrative 1,945,153 1,521,777 Restructure expense 1,146,677 ------------ ---------- 6,445,529 3,808,347 ------------ ---------- OPERATING INCOME (LOSS) (5,545,351) 101,690 OTHER INCOME (EXPENSE) Interest income 13,134 4,112 Interest expense (554,059) (61,161) ------------ ----------- Net income(loss) ($6,086,276) $44,641 ------------ ----------- ------------ ----------- NET INCOME(LOSS) PER COMMON SHARE ------------ ----------- ($0.83) $0.01 ------------ ----------- ------------ ----------- The accompanying notes are an integral part of the financial statements. Page 4 PC QUOTE, INC. STATEMENTS OF OPERATIONS FOR QUARTER ENDED JUNE 30, ------------------------------- 1997 1996 (UNAUDITED) (UNAUDITED) --------------------------------- NET REVENUES Services $4,171,337 $4,447,828 Direct costs of services 3,887,527 2,670,504 -------------- ---------- 283,810 1,777,324 -------------- ---------- OPERATING COSTS AND EXPENSES Amortization of software development 426,114 253,000 Research and development 316,013 194,284 Selling and marketing 1,138,862 728,517 General and administrative 1,054,676 826,981 Restructure expense 1,146,677 -------------- ----------- 4,082,342 2,002,782 -------------- ----------- OPERATING INCOME (LOSS) (3,798,532) (225,458) OTHER INCOME (EXPENSE) Interest income 3,792 2,885 Interest expense (390,781) (37,562) -------------- ----------- NET INCOME(LOSS) ($4,185,521) ($260,135) -------------- ----------- -------------- ----------- NET INCOME(LOSS) PER -------------- ----------- COMMON SHARE ($0.57) ($0.04) -------------- ----------- -------------- ----------- The accompanying notes are an integral part of the financial statements. Page 5 PC QUOTE, INC Statements of Cash Flows (Unaudited)
For The Six Months Ended June 30 1997 1996 ----------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(6,086,276) $44,641 ----------- ------- Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities Depreciation and amortization of property and equipment 564,000 605,720 Amortization of software development cost 831,114 493,000 Amortization of discount on convertible subordinated debenture bond payable 136,079 Amortization of deferred debt on warrants 177,830 Writeoff of capitalized software development costs 571,647 Changes in assets and liabilities: Accounts receivable, net of allowance 82,186 423,580 Prepaid expenses and other current assets 17,775 150,887 Deposits and other assets (81) 9,432 Accounts payable 2,028,286 (222,030) Unearned revenue 156,753 (213,681) Accrued expenses 854,503 90,024 Income tax refund 40,000 ----------- --------- Total adjustments 5,460,092 1,336,932 ----------- --------- Net cash provided by (used in) operating activities (626,184) 1,381,573 ----------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (142,152) (452,447) Software development costs capitalized (783,810) (1,640,165) ---------- --------- Net cash used in investing activities (925,962) (2,092,612) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 20,180 172,705 Principal payments under capital leases obligations (120,837) (313,879) Principal payments on note payable to banks (150,000) (50,050) Net borrowings under line of credit-Bank 500,000 Net borrowings under credit facility, PICO 740,000 ---------- --------- Net cash provided by financing activities 489,343 308,776 ---------- --------- ----------- ------- NET CHANGE IN CASH AND CASH EQUIVALENTS (1,062,803) (402,263) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 1,321,512 1,043,478 ---------- --------- CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $258,709 $641,215 ---------- --------- ---------- --------- - ----------------------------------------------------------------------------- --------- - ----------------------------------------------------------------------------- --------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest Paid $142,149 $61,161 Income taxes paid None None SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: Issuance of warrants $470,000 None - ----------------------------------------------------------------------------- --------- - ----------------------------------------------------------------------------- ---------
The accompanying notes are an integral part of the financial statements. Page 6 PC QUOTE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (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 that, 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, 1996 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, 1996. 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. The anticipated future gross revenues and remaining economic life of the products are based on estimates which are subject to change. Accumulated amortization and related software development costs are removed in the year following full amortization. (2) INCOME TAXES At December 31, 1996, the Company had federal income tax net operating loss carryforwards of approximately $12,059,000 for federal income tax purposes and approximately $9,794,000 for alternative minimum tax purposes. The net operating loss carryforwards will expire in the years 1999 to 2011. Page 7 PC QUOTE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (3) RESTRUCTURE EXPENSE In June 1997, the company underwent a significant management reorganization and restructuring of operations. As a result, the company wrote off approximately $572,000 representing the unamortized portion of previously capitalized software development costs. The write-off relates to development efforts which new management has decided for economic reasons not to pursue. The management reorganization resulted in the company incurring employment termination costs of $425,000 and $150,000 was paid to terminate a contractual arrangement related to unprofitable operations. (4) BORROWING FROM SHAREHOLDER On May 5, 1997, the Company and PICO Holdings, Inc. ("Holdings") entered into a Loan and Security Agreement (the "Loan Agreement"), under which Holdings agreed to make a secured loan to the Company in an aggregate principal amount of up to $1.0 million at a fixed rate equal to 14% per annum. Unless otherwise extended, the entire principal balance and all accrued interest due under the Loan Agreement were payable on September 30, 1997. All advances under the Loan Agreement are secured by a pledge of substantially all of the assets of the Company. These liens are subject to the prior lien of the Company's primary lender, Lakeside Bank. Holdings will be paid a "facility fee" of $40,000, plus interest at a rate equal to 14% per annum, on the maturity date of the loan contemplated by the Loan Agreement. Also on May 5, 1997, in consideration of the loan by Holdings to the Company, the Company issued a Common Stock Purchase Warrant (the "Warrant") to Holdings entitling Holdings to purchase a minimum of 640,000 shares of the Company's Common Stock at a price per share equal to the lesser of (a) the mean of the closing bid price per share for the 20 trading days preceding exercise of the Warrant or (b) $1.5625 per share (the market value of the Company's Common Stock on the date the Warrant was issued). The Warrant expires on April 30, 2000. (5) SUBSEQUENT EVENTS In August 1997, the Company and Holdings agreed to amend the Loan Agreement and related documents to increase the amount of the secured loan from Holdings to the Company from $1.0 million up to $2.0 million. In connection with the increase of the loan amount pursuant to such amendment, the Company granted Holdings an additional Common Stock Purchase Warrant for a minimum of 500,000 shares of the Company's Common Stock. The terms of the additional warrant are substantially the same as those contained in the Warrant, except that the conversion price is the lesser of (a) $2.00 per share or (b) the mean of the closing bid price per share for the 20 trading days preceding exercise of the additional warrant. On September 22, 1997 the Company and Holdings executed a second amendment to the Loan Agreement to further increase the amount of the secured loan from Holdings to the Company from $2.0 million to $2.25 million. The terms of the Loan Agreement otherwise remained substantially the same, except that the maturity date was extended to December 31, 1997. In consideration of the amendment to the Loan Agreement, the Company granted Holdings another Common Stock Purchase Warrant for up to 129,032 shares of Common Stock. The term of such warrant are substantially the same as contained in the Warrant, except that the conversion price s the lesser of (a) $1.9375 per share or (b) the mean of the closing bid price per share for the 20 trading days preceding exercise of this warrant Page 8 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION INTRODUCTION The statements made herein that are not historical facts may contain forward-looking information that involve substantial risks and uncertainties. The Company's actual results, performance or achievements could differ materially from the results, performance or achievements expressed in, or implied by, these forward-looking statements. Among the factors that could cause or contribute to such differences include the Company's ability to (i) obtain adequate financing to fund its current and future business strategies, (ii) refinance, extend or pay the up to $2 million loan from PICO Holdings on or before September 30, 1997, (iii) attract and retain its key employees, (iv) compete successfully against competitive products and services and (v) the effect of economic and business conditions generally. RESULTS OF OPERATIONS: FOR THE SIX MONTHS AND QUARTER ENDED JUNE 30, 1997 Service revenue for the six months and quarter ended June 30,1997 decreased 2% and 6%, respectively, from the same periods of 1996. The decrease is due to the loss of two major customers in the Company's traditional direct data feed business. The lost revenue, $3.4 million and $1.4 million for the six months and quarter respectively, was substantially offset by increases in service revenue in the Company's traditional and internet businesses, as well as revenue from the sale of advertising on the internet. Direct costs of services increased 62% and 46% for the six months and quarters ended June 30, 1997, respectively, over the same periods in 1996. Principal components of these increases were royalties, leased equipment, communication costs, and compensation directly attributable to internet operations and sales of PCW6.0, as well as maintenance of and enhancements to the Company's traditional direct data feed systems. Page 9 Amortization of software development for the six months and quarter ended June 30, 1997 increased 69% and 68%, respectively, from the same periods of the prior year, reflecting the investment in internet and direct data feed products and delivery mechanisms Similarly, research and development costs increased 60% and 63%, respectively, for the six months and quarter ended June 30, 1997 as compared to the same periods in 1996. The increase was due to additional charges for equipment leased to upgrade systems' design and testing equipment, in addition to costs of maintaining and enhancing previously developed products and services. Selling and marketing costs increased 36% and 56%, respectively, for the six months and quarter ended June 30, 1997 over the same periods in 1996. The increase was mainly due to commissions. General and administrative expenses increased 28% for both the six months and the quarter ended June 30, 1997 from the same periods in 1996. The main increases were principally due to increases in the provision for doubtful accounts and an increase in professional fees. In June 1997, the Company underwent a significant management reorganization and restructuring of operations. As a result, the Company wrote off approximately $572,000 of unamortized software development costs for previously capitalized software projects that were discontinued. The management reorganization resulted in the Company incurring termination costs of $425,000 and $150,000 was paid to terminate a contractual arrangement related to unprofitable operations. Interest expense increased 806% and 940%, respectively, for the six months and quarter ended June 30. 1997 over the same periods in 1996. This reflects the increase in the term loan amount outstanding and the $2.5 million convertible debenture issued in December 1996. Also included is amortization of an aggregate of $470,000 beginning in May and ending September 30, 1997 for warrants issued in connection with a May 1997 financing arrangement in addition to interest on financing arrangement borrowings. See Part II for additional information with respect to the debenture and financing arrangement. Page 10 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, 1997 Net cash declined by 80% for the six months ended June 30, 1997 as compared to 39% for the six months ended June 30, 1996. New equipment and capitalized software costs were 56% lower than last year. New direct borrowings of $740,000 from the May 1997 loan facility with PICO Holdings, discussed below, were also incurred. Agreements were reached with various vendors to extend payments under negotiated payment plans. The Company's $1.0 million line of credit with Lakeside Bank expired in February 1997. The Company is experiencing working capital constraints which has placed limitations on management's flexibility. To lessen such constraints, on May 5, 1997 the Company entered into a loan and security agreement with its principal shareholder, PICO Holdings ("PICO"), to provide working capital loans of up to $1.0 million. In connection with the extension by PICO of such $1.0 million facility, the Company and PICO restructured the terms of its $2.5 million subordinated convertible debenture ("Debenture") and agreed to postpone the previously contemplated rights offering to a time, and upon such terms, as PICO and the Company shall agree. Additionally, in August 1997, the Company and PICO amended the loan and security agreement increasing the facility by $1.0 million to $2.0 million. See Part II of this report for additional information regarding the loan facility and debenture. All borrowings on the facility, plus accrued interest, are due on September 30, 1997. The Company will enter into discussions with PICO to extend the due date if it is unable to obtain alternative sources of capital with which to repay the amounts due. 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 11 PART II ITEM 2. CHANGES IN SECURITIES On November 14, 1996, the Company entered into an agreement (the "Debenture Agreement") with the Physicians Insurance Company of Ohio, ("PICO"), which then owned approximately 30% of the Company's outstanding shares of common stock. Pursuant to the Debenture Agreement, PICO invested $2.5 million in the Company in exchange for a Subordinated Convertible Debenture (the "Debenture") in the principal amount of $2.5 million with interest at 1% over prime. PICO made the investment and the Debenture was issued on December 2, 1996. The Debenture was to mature on December 31, 2001 and is convertible at any time by PICO into 1.25 million shares of common stock of the Company (subject to adjustment in certain cases). On May 5, 1997, the Company and PICO entered into a Loan and Security Agreement (the "Loan Agreement"), under which PICO agreed to make a secured loan to the Company in an aggregate principal amount of up to $1.0 million at a fixed rate equal to 14% per annum. Unless otherwise extended, the entire principal balance and all accrued interest due under the Loan Agreement are payable on September 30, 1997. All advances under the loan agreement are secured by a pledge of substantially all of the assets of the Company. These liens are subject to the prior lien of the Company's primary lender, Lakeside Bank. PICO will be paid a "facility fee" of $40,000, plus interest at a rate equal to 14% per annum, on the maturity date of the loan contemplated by the Loan Agreement. In connection with the Loan Agreement, the Company and PICO entered into a First Amendment to the Debenture and Debenture Agreement (the "Debenture Amendment"), pursuant to which the terms of the Debenture were restructured as follows: (a) the maturity date of the Debenture is now April 30, 1999 instead of December 31, 2001; (b) the Debenture may not be prepaid or redeemed without the consent of PICO; (c) the conversion rate on the Debenture has been changed from $2.00 per share to the lower of (i) the mean of the closing bid price per share for the 20 trading days preceding exercise of the Debenture or (ii) $1.5625 per share (the market price of the Company's common stock on the date of the Debenture Amendment); (d) certain negative covenants were added to the Debenture Agreement; and (e) the rights offering contemplated by the Debenture Agreement will be at such time and at a price as PICO and the Company shall agree. Interest under the Debenture will continue to be payable in cash or, at the option of PICO, in shares of the Company's common stock at the market value of such shares at the time of payment. Also on May 5, 1997, in consideration of the loan by PICO to the Company, the Company issued a Common Stock Purchase Warrant (the "Warrant") to PICO entitling PICO to purchase a minimum of 640,000 shares of the Company's common stock at a price per share (the "Warrant Price") equal to the lesser of (a) the mean of the closing bid price per share for the 20 trading days preceding exercise of the Warrant or (b) $1.5625 per share (the market value of the Company's common stock on the date the Warrant was issued). The Warrant expires on April 30, 2000. In lieu of exercising the Warrant for cash, PICO may elect to receive shares of the Page 12 Company's common stock equal to the "value" of the Warrant determined in accordance with a formula specified in the Warrant (the "Conversion Value"). The number of shares of the Company's common stock subject to the Warrant and the Warrant Price will be adjusted to reflect stock dividends; reclassifications or changes of outstanding securities of the Company; any consolidation, merger or reorganization of the Company; stock splits; issuances of rights, options or warrants to all holders of shares of the Company's common stock exercisable at less than the current market price per share; and other distributions to all holders of shares of the Company's common stock. In the event of any sale, license or other disposition of all or substantially all of the assets of the Company or any reorganization, consolidation or merger involving the Company in which the holders of the Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity (an "Acquisition"), if the successor entity does not assume the obligations of the Warrant and PICO has not fully exercised the Warrant, the unexercised portion of the Warrant will be deemed automatically converted into shares of the Company's common stock at the Conversion Value. Alternatively, PICO may elect to cause the Company to purchase the exercised portion of the Warrant for cash upon the closing of any Acquisition for an amount equal to (a) the fair market value of any consideration that would have been received had PICO exercised the unexercised portion of the Warrant immediately before the record date for determining stockholders entitled to particpate in the proceeds of the Acquisition, less (b) the aggregate Warrant Price. The Warrant also provides for certain piggyback registration rights and a one-time demand registration right. In August 1997, the Company and PICO agreed to amend the Loan Agreement and related documents to increase the amount of the secured loan from PICO to the Company from $1.0 million up to $2.0 million. The terms of the Loan Agreement otherwise remained substantially the same, except that the "facility fee" of $40,000 was eliminated for new advances. In connection with the increase of the loan amount pursuant to such amendment, the Company granted PICO an additional Common Stock Purchase Warrant for a minimum of 500,000 shares of the Company's common stock. The Warrant terms are substantially the same as those contained in the May 1997 Warrant, except that the conversion price is the lesser of (a) $2.00 per share or (b) the mean of the closing bid price per share for the 20 trading days preceding exercise of the additional Warrant. The additional Warrant also provides for certain piggyback registration rights and a one-time demand registration right. Page 13 Item 6. Exhibits and Reports on Form 8-K a. The following Exhibits are filed herein: Exhibit 10.1* Form of Loan and Security Agreement dated as of May 5, 1997 between the Company and PICO Holdings, Inc. Exhibit 10.2* Form of First Amendment to Convertible Subordinated Debenture and Debenture Agreement Exhibit 10.3* Form of Common Stock Purchase Warrant for 640,000 shares of the Company's Common Stock Issued to PICO Holdings, Inc. Exhibit 10.4* Form of Promissory Note Made by the Company to the order of PICO Holdings, Inc. Exhibit 10.5* Form of Amendment to Loan and Security Agreement Exhibit 10.6* Form of Common Stock Purchase Warrant for 500,000 shares of the Company's Common Stock Exhibit 27* Financial Data Schedule b. No reports on Form 8-K were filed by the Company during the quarter ended June 30, 1997. * Previously filed 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. PC Quote, INC. /s/ John E. Juska - ---------------- ----------------------------- October 30, 1997 By: John E. Juska Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----