-----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, A7vAnnlt2sCSCBf26vwz6tTcprPOGM+YLnU7vgrzYtoLRmueJUoQnIuVFwkmYFe7 pHwfmymUmwdkbuCx66Foag== 0001012895-97-000161.txt : 19971216 0001012895-97-000161.hdr.sgml : 19971216 ACCESSION NUMBER: 0001012895-97-000161 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971215 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEMSTAR ENTERPRISES INC CENTRAL INDEX KEY: 0000829323 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 870450450 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 033-19980-D FILM NUMBER: 97738629 BUSINESS ADDRESS: STREET 1: 8400 BROOKFIELD AVENUE CITY: BROOKFIELD STATE: IL ZIP: 60513 BUSINESS PHONE: 708-485-3434 MAIL ADDRESS: STREET 1: 73-251 AMBER ST CITY: PALM DESERT STATE: CA ZIP: 92260 FORMER COMPANY: FORMER CONFORMED NAME: NORTH STAR PETROLEUM INC DATE OF NAME CHANGE: 19900530 10QSB/A 1 AMENDMENT NO. 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934 Commission File Number: 33-19980-D CGI HOLDING CORPORATION -------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 87-0450450 -------------------- ------------------------------ (State or other jurisdiction (I.R.S. Employer Identification OF incorporation or organization) No.) 8400 Brookfield Avenue, Brookfield, Illinois 60513 ------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (708) 485-3434 ------------------------------- (Issuer telephone number) Gemstar Enterprises, Inc., 73-251 Amber Street, Palm Desert, California 92260 -------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 12 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 [ ] Yes [ ] No [x] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 8,272,779 shares of its $0.001 par value common stock as of November 18, 1997. Transitional Small Business Disclosure Format (check one) Yes [ ] No [X] PART I-FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CGI HOLDING CORPORATION, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS September 30, 1997 ----------- Current Assets Cash $ 28,391 Accounts receivable 2,396,101 Inventory 182,231 Other current assets 93,037 ----------- Total Current Assets 2,699,760 ----------- Property and Equipment Leasehold improvements 28,262 Fixtures and equipment 441,336 Vehicles 155,404 Contracting equipment 426,826 ----------- 1,051,828 Less: accumulated depreciation (639,643) ----------- Net Property and Equipment 412,185 ----------- Deposits and other assets 3,552 ----------- Total Assets $ 3,115,497 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 656,196 Commissions payable 50,327 Short-term borrowings 110,341 Accrued liabilities 74,092 Income taxes payable 283,110 Billings over cost and estimated earnings 111,399 Current portion of long-term debt 505,608 ----------- Total Current Liabilities 1,791,073 ----------- Long-term debt, net of current portion 185,526 Deferred Income Tax 9,822 ---------- Total Long-Term Liabilities 195,348 ---------- Stockholders' Equity Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued or outstanding - Common stock - $0.001 par value; 100,000,000 shares authorized, 8,272,779 issued and outstanding 8,273 Additional paid-in capital 407,241 Retained earnings 713,562 ----------- Total Stockholders' Equity 1,129,076 ----------- Total Liabilities and Stockholders' Equity $ 3,115,497 =========== See the accompanying notes to condensed consolidated financial statements. CGI HOLDING CORPORATION, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months For the Nine Months Ended September 30, Ended September 30, ---------------------- ---------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Sales $2,163,171 $4,309,685 $6,438,423 $7,000,075 Cost of goods sold 1,446,380 2,794,011 4,136,584 4,424,001 ---------- ---------- ---------- ---------- Gross profit 716,791 1,515,674 2,301,839 2,576,074 General and admin- istrative expense 486,093 809,170 1,472,698 1,702,032 ---------- ---------- ----------- ---------- Income from Operations 230,698 706,504 829,141 874,042 ---------- ---------- ----------- ---------- Other Income(Expense) Other (23) 4 92,901 80,647 Interest income - - 1,236 - Interest expense (16,978) (29,471) (41,867) (62,086) ---------- ---------- ----------- ---------- Total Other Income (17,001) (29,467) 52,270 18,561 ---------- ---------- ----------- ---------- Income before income taxes 213,697 677,037 881,411 892,603 Income tax provision 76,777 196,958 284,310 258,386 ---------- ----------- ----------- ---------- Net Income $ 136,920 $ 480,079 $ 597,101 $ 634,217 ========== =========== =========== ========== Net Income Per Common Share $ 0.02 $ 0.10 $ 0.10 $ 0.13 ========== =========== =========== ========== Weighted average number of common shares outstanding 7,264,863 4,961,056 5,737,431 4,961,056 ========== =========== =========== =========== See the accompanying notes to condensed consolidated financial statements. CGI HOLDING CORPORATION, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash ---------------------------- For the Nine Months Ended September 30, --------------------- 1997 1996 --------- ----------- Cash Flows From Operating Activities Net profit $ 597,101 $ 634,217 Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 79,046 70,344 Change in accounts receivable (721,206) (2,861,508) Change in employee loan 400 - Change in inventory 12,905 29,643 Change in prepaid insurance 27,755 27,917 Change in cost and estimated earnings over billings 32,007 (21,041) Change in deposits 941 997 Change in accounts payable (37,644) 878,716 Change in accrued expenses 204,665 414,473 Change in accrued income taxes (18,376) 217,437 Change in billing in excess of cost and estimated earnings 10,217 - Change in investment in all weather roofing - 5,000 --------- ---------- Net Cash Provided by (Used in) Operating Activities 187,811 (603,805) --------- ---------- Cash Flows From Investing Activities Purchase of property and equipment (126,610) (147,616) --------- ---------- Net Cash Used in Investing Activities (126,610) (147,616) --------- ---------- Cash Flows From Financing Activities Proceeds from sale of common stock 48,510 - Change in loan payable 11,500 880,248 Change in notes payable (50,558) (165,025) Distribution to shareholder (33,640) - Redemption of common stock (81,500) (90,000) --------- ---------- Net Cash Provided by (Used by) Financing Activities (105,688) 625,223 --------- ---------- Net Decrease in Cash (44,487) (126,198) Cash at Beginning of Period 72,878 164,075 --------- ---------- Cash at End of Period $ 28,391 $ 37,877 ========= ========== See the accompanying notes to condensed consolidated financial statements. CGI HOLDING CORPORATION, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) NOTE 1--CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The accompanying condensed consolidated financial statements have been prepared by the Company, and are not audited. All adjustments necessary for fair presentation have been included, and consist only of normal recurring adjustments, except as disclosed herein. These financial statements are condensed and, therefore, do not include all disclosures normally required by generally accepted accounting principles. These statements should be read in conjunction with the annual financial statements of Safe Environment Corporation and Roli Ink Corporation included in the Company's Form 10-QSB dated June 30, 1997. The financial position and results of operations presented in the accompanying financial statements are not necessarily indicative of the results to be generated for the remainder of 1997. The consolidated financial statements include the accounts of Safe Environment Corporation and Roli Ink Corporation for all periods presented and the accounts of CGI Holding Corporation from July 28, 1997. All intercompany accounts and transactions have been eliminated upon consolidation. NOTE 2--REORGANIZATION WITH SAFE ENVIRONMENT CORPORATION AND ROLI INK CORPORATION On July 28, 1997, the Company entered a reorganization with two privately held corporations, Safe Environment Corporation (Safe), an Illinois Corporation, and Roli Ink Corporation (Roli), a Wisconsin Corporation. As part of the reorganization, the Company changed its name to CGI Holding Corporation, and completed a 1-for-5 reverse stock split of the outstanding common shares resulting in 3,311,723 common shares being outstanding immediately before the reorganization. The Company then issued a controlling interest of 4,961,056 shares (post-split) to the shareholders of Safe and Roli. The reorganization was accounted for as the purchase of Gemstar Enterprises, Inc. under the purchase method of accounting. The 3,311,723 shares deemed issued in the acquisition were valued at$(384), which was Gemstar's net capital deficiency on the date of the reorganization. The operations of Gemstar have been included in the consolidated results of operations from July 28, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General - ------- CGI Holding Corporation, (the "Company"), was incorporated under the laws of the State of Nevada in October of 1987, under the name of North Star Petroleum, Inc. and completed a public offering of its common stock and warrants in August of 1988. Subsequent to the public offering, the Company engaged in the exploration, development and production of oil and gas on a joint venture basis with other industry partners and real estate development. The Company's prior operations proved unsuccessful and from 1993 until July 1997, the Company had essentially no operations. Since the sale of its prior business, the Company was seeking to acquire assets or to acquire or merge with an existing operating entity in order to establish business operations. On June 30, 1997, the Company signed two separate Agreements and Plan of Reorganization, (the "Reorganization Agreements") to acquire Roli Ink Corporation, a Wisconsin corporation ("RIC"), and Safe Environment Corp., an Illinois corporation ("SECO"), in a so called "reverse acquisition" transaction with a closing date of July 28, 1997. On the closing date, all shareholders of RIC and SECO approved the transaction and tendered their stock certificates in RIC and SECO in exchange for shares of the Company's Common Stock. The businesses of the two acquired corporations became the business of the Company as well as the management of the acquired corporation becoming the management of the Company. The Company changed its fiscal year end from September 30, to December 31, which is the fiscal year end of RIC and SECO. Under the terms of the Reorganization Agreements, the Company acquired all of the issued and outstanding shares of RIC and SECO for an aggregate of 4,961,056 shares of Common Stock. As a result of the purchase of RIC and SECO, shareholders of the Acquired Corporations own approximately 59.9% of the Company. The RIC shareholders represent 26.6% and the SECO shareholders represent 33.3% of the Company. After the acquisition, individuals associated with the Acquired Corporations purchased, from existing shareholders of the Company, an additional 1,160,000 shares of Common Stock. Pursuant to the Reorganization Agreement, RIC's and SECO's business became the business of the Company and John Giura and Ann K. Knaack, who were appointed directors of the Company on the Closing Date, will manage the operations of the Company as well as the operations of RIC and SECO. RIC was incorporated in the State of Wisconsin in 1985 for the purpose of manufacturing and selling water based printing inks to industrial printers. After some initial problems finding acceptance for water based inks versus solvent inks, RIC developed, in-house, a new ink product line. With its new product line, RIC began focusing on the corrugated box manufactures who were producing display grade boxes. This area represented potentially good volume and the box manufactures could pay the prices required by RIC's ink products. RIC primarily concentrates its efforts on the Wisconsin and Northern Illinois ink market due to limited capital for expansion. In addition to specialty corrugated ink, RIC sells ink to envelope and label manufacturers and medical packaging plants. It also sells a conductive and static dissipative coating used in electronics packaging. SECO was formed in November 1987 to provide asbestos abatement services. SECO has been involved in the asbestos abatement industry since its formation. SECO provides asbestos abatement services to industrial and government concerns desiring to remove asbestos in the workplace or other environments in order to remedy the health risks associated with asbestos and to return the plants and or office facilities to operation on a timely basis. The asbestos abatement industry developed out of concern for the health of workers who may be exposed to asbestos. SECO's services involve the removal of the asbestos and the transportation of asbestos to a site where it can be disposed. Asbestos abatement is performed in accordance with SECO's operating procedures and applicable federal, state, and local guidelines. Because of the health hazards posed by asbestos, the need to comply with applicable requirements of the Occupational Safety and Health Administration ("OSHA") and similar state agencies and local regulations relating to workplace safety, asbestos abatement has to be performed by trained personnel using approved techniques. SECO employees engaged in asbestos abatement obtain required certification that they meet or exceed minimal competence requirements of applicable authorities. Liquidity and Capital Resources - ------------------------------- For the quarter ended September 30, 1997, the Company had assets of $3,115,497 and liabilities of $1,986,421. As of September 30, 1997, the Company had working capital of $908,687 consisting primarily of accounts receivable from its subsidiary SECO. The Company feels these receivables are collectible and that all liabilities will be able to be paid in a timely manner. Through the acquisition of SECO and RIC the Company increased its property, plant and equipment by $412,185. The Company's operations with the addition of the new subsidiaries, Roli and SECO, are profitable and able to cover ongoing expenses. Currently, the Company has the plants and equipment needed to carry on its existing operations and to expand sales in its current geographical coverage areas. The Company does want to expand its operations in both subsidiaries and may seek outside sources of financing including potentially equity and/or debt financing as warranted. Results of Operations - --------------------- Through the reorganization of RIC and SECO into the Company, combined operations produced net income of $136,920 (($0.03 per share) for the quarter ended September 30, 1997 and $597,101 ($0.10 per share) for the nine months then ended. Net income from combined operations was $480,079 ($0.10 per share) for the three months ended September 30, 1996 and $634,217 ($0.13 per share) for the nine months then ended. For the quarter ended September 30, 1997, SECO produced income of $82,907, on sales of $1,505,879 and RIC produced income of $54,013 on sales of $657,292. Without the acquisition of RIC and SECO, the Company would have had no revenue. Although the Company produced income for the quarter ended September 30,1997, as opposed to the same time frame in 1996, its operating subsidiary SECO experienced decreased net income over the same period in 1996. For the quarter ended September 30, 1996, SECO had income of $428,127 as opposed to the $82,907 produced in 1997. This decrease was the result of one major annual project which took place in August - September 1996 but in 1997, the same project was delayed to the fourth quarter. Accordingly, the fourth quarter of 1997 should be more profitable than the fourth quarter of 1996. The company is confident that its earnings for all of 1997 will show an improvement over 1996. RIC experienced only slight gains over its income in 1996 having produced income of $51,952 for the quarter ended September 30, 1996, as opposed to the $54,013 for the 1997 quarter. For the nine months ended September 30, 1997, Roli experienced substantial gains over 1996, having produced $249,524 in income as opposed to $132,188 for the same time frame in 1996. SECO on the other hand decreased to $347,577 for the nine months ended September 30, 1997, from the $502,029 in 1996, for the reasons explained above. The Company is hopeful to reduce some of the administrative expenses by combining certain functions which can be handled at the parent company level. As the acquisition has only recently been completed, it is difficult to determine how the combined entities will perform. As the Company is able to streamline its general and administrative expenses, it is hopeful that it can expand the geographical service area for SECO and RIC to increase revenue. The Company is hopeful that with the cash flow generated by the two operations, the Company will be able to expand its new subsidiaries service areas and thereby expand their business. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES The board of directors adopted resolutions and a majority of the Company's shareholders approved such resolutions providing for a recapitalization (the "Recapitalization") pursuant to which the issued and outstanding shares of Common Stock, were reversed split, or consolidated, on a 1-for-5 basis, so that shareholders will own one (1) share of common stock (hereinafter the "Consolidated Common Stock") for each five (5) shares of Common Stock held by the shareholder prior to the "effective date" of the Recapitalization. No fractional shares were issued in connection with such Recapitalization and any fractional shares were rounded down to the nearest whole number. For purposes of the Recapitalization of the Common Stock in the OTC Electronic Bulletin Board, the Recapitalization was effective on August 4, 1997. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS In July 1997, pursuant to a shareholder consent of certain shareholders of the Company, who collectively represent in excess of fifty percent (50%) of the votes eligible to be cast as of the record date of June 30, 1997, the following resolutions were approved and through actions of the Company's officers the relevant transactions were closed on July 28, 1997: 1. A recapitalization pursuant to which the issued and outstanding shares of the Company's common stock were reverse split, or consolidated, on a 1-for-5 basis so that shareholders will own one share of Common Stock for each 5 shares now held. 2. a) An Agreement and Plan of Reorganization dated June 30, 1997, between the Company and RIC, pursuant to which the Company acquired RIC in a corporate reorganization with RIC becoming a wholly owned subsidiary of the Company, and the shareholders of RIC receiving an aggregate of 2,200,056 post-split shares of the Common Stock after giving effect to the Recapitalization described above. b) An Agreement and Plan of Reorganization dated June 30, 1997, between the Company and SECO, pursuant to which the Company acquired SECO in a corporate reorganization with SECO becoming a wholly owned subsidiary of the Company, and the shareholders of SECO receiving an aggregate of 2,761,000 post-split shares of Common Stock after giving effect to the Recapitalization described above. 3. An amendment to the Company's Certificate of Incorporation changing the name of the Company to CGI Holding Corporation. 4. The election of John Giura and Ann K. Knaack as directors of the Company, effective as of the date of the closing of the above reorganization agreements, to serve in accordance with the provisions of the Company's Certificate of Incorporation and bylaws and until their successors are elected and qualified. Management solicited the Shareholder Consent from holders of record of the Common Stock outstanding as of June 30, 1997. Each shareholder had the right to one vote for each share of Common Stock owned. There was no cumulative voting. Holders of 6,634,750 shares representing 61.67% of the 10,758,614 issued and outstanding shares of Common Stock approved the above actions. As a result of the acquisition of the two companies, RIC and SECO, the Company changed its fiscal year end from September 30 to December 31 the fiscal year end of the two new subsidiaries. The fiscal year end was changed to better match the operations of the Company. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. ---------- None (b) Reports on From 8-K. --------------------- None. Information required to be reported pursuant to Item 1,2, and 6 of Form 8-K has been included or reference in the Form 10-QSB for the Quarter ended June 30, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CGI HOLDING CORPORATION Dated: December 9, 1997 By: /S/ John Giura ----------------- ------------------ John Giura, Principal Accounting, and Chief Financial Officer EX-27 2 FINANICAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the condensed consolidated balance sheet as of September 30, 1997, and condensed consolidated statements of operations fro the nine months ended September 30, 1997, and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 SEP-30-1997 28,391 0 2,396,101 0 182,231 2,699,760 1,051,828 (639,643) 3,115,497 1,791,073 195,348 0 0 8,273 1,120,803 3,115,497 6,438,423 6,438,423 4,136,584 4,136,584 1,472,698 01,867 41,8671 881,411 284,310 597,101 0 0 097,101 597,101 0.10 0.10
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