U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended February 28, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1939
For the transition period from ___________ to ___________
Commission File Number: 0-21679
HERTZ TECHNOLOGY GROUP, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-3896069
- - --------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
75 Varick Street 10013
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
212-634-4000
---------------------------------
(Issuer's telephone number)
____________________________________________________
(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 registrant 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 issuer's classes of Common
equity, as of the latest practicable date.
April 13, 1999
Common Stock, par value
$.001 per share 1,064,541
- - ----------------------- ------------------
Class Shares Outstanding
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
FEBRUARY 28, 1999
INDEX
Page
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
February 28, 1999 and August 31, 1998 3
Consolidated Statements of Operations
for the three months and six months ended
February 28, 1999 and February 28, 1998 4
Consolidated Statements of Cash
Flows for the six months ended
February 28, 1999 and February 28, 1998 5
Consolidated Statements of Stockholders
Equity for year ended August 31, 1998 and
six months ended February 28, 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of financial condition and results of
operations for the three and six months
ended February 28, 1999 8
PART II. Other Information
Item 2. Changes in securities and use of proceeds 14
Item 6. Exhibits and reports on Form 8-K 15
SIGNATURES 16
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<PAGE>
PART I
FINANCIAL INFORMATION
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
FEBRUARY 28, AUGUST 31,
------------ ----------
1999 1998
---- ----
Unaudited Audited
--------- -------
CURRENT ASSETS:
Cash $ 25,036 $ 140,254
Marketable securities 2,255,486 1,759,994
Accounts receivable, less allowance for
doubtful accounts of $98,218 and
$130,829 respectively 847,103 2,362,030
Inventories, net 640,620 709,228
Prepaid expenses and other current assets 279,109 205,229
---------- ----------
Total current assets 4,047,354 5,176,735
---------- ----------
PROPERTY AND EQUIPMENT, net 1,431,835 1,543,277
---------- ----------
GOODWILL, net of accumulated amortization
of $57,923 and $27,002 respectivelly 206,960 237,881
---------- ----------
Deferred Tax 209,963 209,963
OTHER ASSETS 195,083 148,490
---------- ----------
Total assets $6,091,195 7,316,346
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
FEBRUARY 28, AUGUST 31,
------------ ----------
1999 1998
---- ----
CURRENT LIABILITIES:
Accounts payable $ 185,910 $ 616,035
Notes payable 126,667 126,667
Accrued expenses - other
current payables 237,317 416,954
---------- ----------
Total current liabilities 549,894 1,159,656
---------- ----------
NONCURRENT LIABILITIES:
Notes payable to banks and others 131,089 260,473
---------- ----------
Total noncurrent liabilities 131,089 260,473
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value:
25,000,000 shares authorized
1,128,475 shares issued and
1,128,450 shares issued, and
1,052,141 and 1,093,016 shares
issued and outstanding as of
February 28, 1999 and
August 31, 1998, (respectively) 1,128 1,128
Additional paid-in capital 5,773,318 5,773,318
Less: Treasury Stock, 76,333 and
35,434 shares at cost as of
February 28, 1999 and
August 31, 1998, (respectively) (217,669) (108,028)
Accumulated Deficit (146,565) 229,799
---------- ----------
Total stockholders' equity 5,410,212 5,896,217
---------- ----------
Total liabilities and
stockholders' equity $ 6,091,195 $7,316,346
=========== ==========
The accompanying notes are an integral part of these consolidated statements
-3-
<PAGE>
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED FEBRUARY 28, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
FEBRUARY 28, FEBRUARY 28,
------------ ------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 1,385,404 $ 1,970,614 $ 3,272,838 $ 3,770,326
COST OF GOODS SOLD 688,736 1,340,850 1,741,066 2,440,426
----------- ----------- ----------- -----------
Gross Profit 696,668 629,764 1,531,772 1,329,900
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,009,591 1,273,502 1,971,615 1,928,438
----------- ----------- ----------- -----------
Operating loss (312,923) (643,738) (439,843) (598,538)
OTHER INCOME (EXPENSE)
Other (9,290) (18,112) (3,170) (16,957)
Interest, net 15,924 53,242 41,828 110,890
----------- ----------- ----------- -----------
Loss before provision for
income taxes (306,289) (608,608) (401,185) (504,605)
PROVISION FOR INCOME TAXES (0) (284,373) (24,821) (236,280)
----------- ----------- ----------- -----------
Net loss $ (306,289) $ (324,235) $ (376,364) $ (268,325)
=========== =========== =========== ===========
NET LOSS PER SHARE - BASIC $ (0.29) (0.31) (0.35) (0.26)
=========== =========== =========== ===========
NET LOSS PER SHARE - DILUTED $ (0.29) (0.31) (0.35) (0.26)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 1,063,303 1,051,982 1,069,020 1,047,409
=========== =========== =========== ===========
Diluted 1,063,303 1,051,982 1,069,020 1,047,409
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements
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<PAGE>
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED FEBRUARY 28, 1999 AND 1998
(UNAUDITED)
SIX MONTHS ENDED
----------------
FEBRUARY 28,
------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (376,364) $ (268,325)
Adjustments to reconcile net income to
net cash provided by activities-
Depreciation and amortization 208,367 123,416
Allowance for doubtful accounts (32,611) 70,000
Issuance of stock to Employees 79,725
Issuance of stock options 0 18,750
Changes in operating assets and
liabilities-
Accounts receivable 1,547,539 (76,357)
Inventories 68,608 209,154
Due from related parties -- --
Prepaid expenses and other
current assets (73,880) (331,088)
Other assets (46,592) (33,523)
Accounts payable and accrued
expenses (609,765) 226,417
Other liabilities (2,717) (2,245)
----------- -----------
Net cash provided by
operating activities 682,585 15,925
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (66,004) (307,587)
(Purchase) Sale of Marketable Securities (495,491) 782,369
Acquisition of Business Acquired, net 0 (624,190)
----------- -----------
Net cash used in investment
activities (561,495) (149,407)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (109,641) (47,459)
Repayment of notes payable to
related party (126,667)
-----------
Net cash used in financing
activities (236,308) (47,459)
----------- -----------
Net decrease in cash and
cash equivalents (115,218) (180,942)
CASH and cash equivalents,
beginning of period 140,254 326,121
----------- -----------
CASH and cash equivalents,
end of period $ 25,036 $ 145,180
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Business Acquired
Assets Acquired 850,925
Goodwill 163,860
less:
Liabilities Assumed 390,595
-----------
624,190
===========
Issuance of stock to Employees $ 79,725
Issuance of stock options $ $ 18,750
Interest paid $ 11,782 $ 1,895
Income taxes paid $ 24,579 $ 94,370
The accompanying notes are an integral part of these consolidated statements
-5-
<PAGE>
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR YEAR ENDED AUGUST 31,1998 AND SIX MONTHS ENDED FEBRUARY 28,1999
(UNAUDITED)
<TABLE>
<CAPTION>
Retained
Additional Earnings
Common Paid- in Treasury (Accumulated
Stock Capital Stock Deficit) Total
----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, August 31,1997 $ 1,055 5,593,666 -- $ 1,040,079 $ 6,634,800
Net Loss -- -- -- (810,280) (810,280)
Issuance of stock to Employees 25 79,700 -- -- 79,725
Issuance of shares to related party in
connection with purchase of Edutec 48 99,952 100,000
Repurchase of Treasury stock -- -- $ (108,028) -- (108,028)
----------- ----------- ----------- ----------- -----------
BALANCE, August 31, 1998 1,128 5,773,318 (108,028) 229,799 5,896,217
Net Loss -- -- -- (376,364) (376,364)
Repurchase of Treasury stock -- -- (109,641) -- (109,641)
BALANCE, February 28, 1999 $ 1,128 $ 5,773,318 $ (217,669) $ (146,564 $ 5,410,212
=========== =========== =========== =========== ===========
</TABLE>
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<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
FEBRUARY 28, 1999
1. BASIS OF PRESENTATION AND OPERATIONS
The accompanying consolidated financial statements are unaudited and in
the opinion of management, reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation in
accordance with generally accepted accounting principles and with the
instructions to Form 10-QSB. Operating results for the six-month period ended
February 28, 1999 are not necessarily indicative of the results that may be
expected for the year ended August 31, 1999. For further information, refer to
the financial statements and footnotes thereto included in the Hertz Technology
Group, Inc. ("Hertz" or the "Company") audited financial statements for the year
ended at August 31, 1998.
2. EARNINGS PER SHARE
For the periods ended November 30 , 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". In
Accordance with the requirements of SFAS No. 128, net earnings per common share
Amounts ("basic EPS") were computed by dividing net earnings by the weighted
average number of common shares outstanding and contingently issueable shares
(which satisfy certain conditions) and excluding any potential dilution. Net
earnings per common share amounts - assuming dilution ("diluted EPS") were
computed by reflecting potential dilution from the exercise of stock options.
SFAS No. 128 requires the presentation of both basic EPS and diluted EPS on the
face of the income statement. Earnings per share amounts for the same prior-year
periods have been restated to conform with the provisions of SFAS No. 128.
No diluted EPS is presented, for the three months six month periods ending on
February 28, 1999 and 1998, as the effect of dilutive securities would be
anti-dilutive on loss per common share.
3. REVERSE STOCK SPLIT
At a special meeting held on September 4, 1998, the Board of Directors of the
Company approved a one-for-three reverse split of both the Company's common
stock and Class A Warrants .On November 2, 1998, the holders of a majority of
the common stock of the Company approved by written consent the inverse stock
split which became effective on November 2, 1998. All share and per share data
included in this report and as well as in the annual financial statements have
been restated to reflect this reverse stock split.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Company offers full service Internet, communication and networking services
under the name "RemoteIT.com" through its RemoteIT.com subsidiary. The Company
markets ergonomically engineered modular technical office furniture, open
racking systems, enclosure cabinets, personal workstations, training desks and
other space-saving products under the "Hergo" name through its Hergo subsidiary.
The Company, through its LAN Metal subsidiary, provides custom specialty metal
manufacturing and fabrication products and manufactures the line of Hergo
products. The Company custom designs and assembles PCs and related products
under the "Hertz" name through its Hertz Computer subsidiary. Through its Edutec
subsidiary, the Company offers customizable state-of-the-art training rooms at
its New York City offices that are equipped with the latest PC workstations and
A/V presentation technology.
Three Months and Six Months Ended February 28, 1999 compared to Three Months and
Six Months Ended February 28, 1999
Revenues
Company sales for the three months ended February 28, 1999, were $1.39 million,
compared to $1.97 million for the period ended February 28, 1998, a 29%
decrease. Net sales for the six months ended February 28, 1999 were $3.27
million compared to $3.77 million in the six month period ended February 28,
1998 a 13% decrease. A substantial portion of the reduction in sales was
attributed to the decline in computer sales. For the three months ended February
28, 1999 Hergo and LAN sales combined were $1,197,000 compared to sales of
$1,282,000 last year for the comparable period, a decrease of $85,000 (7%).
Combined Hergo and LAN sales for the six months ended February 28, 1999 were
$2,624,000 compared to $2,251,000 for the six month period ended February 28,
1998, a $373,000 (17%) increase. Edutec sales were $27,000 for the three months
and $64,000 for the six months ended February 28,1999. Hertz Computer sales for
the quarter ended February 1999 were $160,000 compared to $689,000 for the
comparable period in the previous year. For the six months ended February 28,
1999 computer sales were $584,000 compared to $1,520,000 for the six months
ended February 28, 1998.
The Company believes that the newly formed subsidiary RemoteIT.com currently
offers one of the two best opportunities for future growth. This division will
be providing networking and communications products and services, Internet
connectivity, web development, and other value- added services. The PC hardware
market has become increasingly competitive and over saturated. The Company
therefore will be directing its efforts in computer hardware manufacturing
primarily as a synergistic product for the benefit that this business can bring
to RemoteIT.com's computer systems integration and networking offerings. The
Company is also directing its efforts in relation to expansion of the Hergo
product line and is focusing its marketing efforts on expanding and developing
this line.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Gross Profit
Gross profit was $697,000 (50% of net sales) for the three months ended February
28, 1999 as compared with $630,000 (32% of net sales) for the three months ended
February 28, 1998, an increase of $67,000. Gross profit was $1,532,000 (47% of
net sales) and $1,330,000 (35% of net sales) for the six months ended February
28, 1999 and February 28,1998, respectively, an increase of $202,000.
Improved profit margins from Hergo and LAN for the current three month and six
month periods were the result of efficiencies gained by new machinery and the
reduction of the initial costs that were needed to start the LAN production
operation when the division was acquired in the quarter ended February 28, 1998.
Combined Gross profit generated for Hergo and LAN for the three months and six
months ended February 28, 1999 was $665,000 (55% of net sales) and $1,415,000
(54% of net sales) compared to $567,000 (44% of net sales) and $1,132,000 (50%
of net sales) for the three months and six months ended February 28, 1998.
Gross profit generated from Hertz Computer for the six months ended February 28,
1999 was 9% of computer sales compared to 13% of sales for the same period last
year. Although Hertz experienced a significant reduction in sales, it has
retained some of its skilled and trained integration personnel in place. Fixed
expenses such as rent and utilities could not yet be adjusted downward
proportionally. The Company will pursue its efforts to recover some of its
rental cost at the New York City facility by offering some of the available
space for rent.
Selling, General and Administrative
Selling, general, and administrative expenses decreased for the quarter ended
February 28, 1999 as compared to the preceding period by $264,000 and increased
by $43,000 for the six months ended February 28, 1999 compared to the six months
ended February 28, 1998 .
Selling general and administrative expenses were impacted by the purchase of the
LAN Metal division in December 1997 with its associated expenses, establishment
of a shipping and warehousing facility for the Hergo line, as well as increases
in selling expenses both in Hergo and in Hertz Computer. Selling expense
increases included expenses in advertising and sales salaries as well as
increased marketing costs. Administrative expense increases included additional
costs associated with investigating possible business ventures.
Administrative expenses that were incurred in the quarter and six months ended
February 28, 1998 and which are not repeated in the current quarter and six
month period included issuance of stock to an employee, and some additional
legal and accounting costs. Additionally, during the period a year ago,
additional reserves were established for resolution of an IRS audit, payment of
final income taxes in reference to the Hertz Israel entity, and increased
reserves for bad debts.
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Other Income (Expense):
Other expense for the three months and six months ended February 28, 1999 was
$9,000 and $3,000 compared to $18,000 and $17,000 for the comparable periods
last year.
Net interest income for the three months and six months ended February 28, 1999
decreased by $37,000 and $69,000 for the comparable periods last year. The
decrease in interest income was primarily due to the reduction of marketable
securities balances during the twelve months. This was further reduced by
interest expense generated by the deferred payments of the purchase price of the
LAN Metal acquisition.
Provision for Income Taxes
The Company recorded no tax benefit for the three-month period ended February
28, 1999. The tax benefit for the six months ended February 28, 1999 was
$25,000. The tax benefit for the three months and six months ended February 28,
1998 was $284,000 and $236,000 respectively.
Net Income and Earnings Per Share
Operations for the three months ended February 28, 1999 resulted in a loss of
approximately $306,000 or $.29 per share compared to a loss of $324,000 or $.31
per share for the three months ended February 28, 1998.
Operations for the six months ended February 28, 1999 resulted in a loss of
approximately $376,000 or $.35 per share compared to a loss of approximately
$268,000 or $.26 per share for the comparable period last year.
Loss before provision for income taxes, however, for the three months and six
months ended February 28,1999 was $306,000 ($.29 per share) and $401,000 ($.38
per share) respectively compared to a loss for the three months and six months
ended February 28, 1998 of $609,000 ($.58 per share) and $505,000 ($.48 per
share).
Increased sales by Hergo and the LAN Metal division, together with greater gross
profit margins attributable to them as compared to the Computer division,
resulted in a gross profit increase of $67,000 and $202,000 for the three months
and six months ended February 28, 1999.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the six months ended February 28, 1999, the Company had cash provided by
operations of $683,000, as compared to cash provided by operations of $16,000,
for the comparable period last year. The collections of the relatively high
August 1998 accounts receivable net of the accounts payable that was
attributable to the August 1998 sales was the principal reason for the increase.
Net purchases of fixed assets for the six months ended February 28, 1999, were
$66,000 as compared to $308,000 for the six months ended February 28, 1998.
During the six months ended February 28, 1999, the Company purchased $495,000 in
marketable securities. The purchase of these securities was initiated to buy
back securities which were sold in the last quarter of fiscal 1998 in order to
provide the Company with a temporary cash flow during the period that the
Company had unusually high receivables.
During the six months ended February 28, 1999, the Company purchased on the open
market a total of 40,900 shares of its stock for a total of $110,000.
Working capital for the three months ended November 30, 1998 was $3,497,000
compared to $4,017,000 for the year ended August 31, 1998, a $520,000 decline.
The Company as of February 28, 1999 had $2,280,000 in cash and marketable
securities, which are available to fund the Company's operations and expansion
plan.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
Certain statements under the caption "Management's Discussion and Analysis" and
elsewhere in this Form 10-QSB constitute "forward-looking statements" within the
meaning of Section 21E of the Securities and Exchange Act of 1934. Words
"believe," "expect," "future," "intend," "plan," and similar expressions as they
relate to the Company or the Company's management identify forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions, competition, success of new product
development, effect of advertising and promotional efforts, brand awareness, the
existence of or adherence to development schedules, continued patronage by
existing customers, the ability to attract qualified managerial personnel, the
existence or absence of adverse publicity, changes in business strategy or
development plans, quality of management and terms and deployment of capital,
business abilities and judgment of personnel and success in acquiring
businesses.
Year 2000 Compliance
The Company is on schedule with a project that addresses the Year 2000 (Y2K)
issue of computer systems and other equipment with embedded chips or processors
not being able to properly recognize and process date-sensitive information
after December 31, 1999. Many systems use only two digits rather than four to
define the year and these systems will not be able to distinguish between the
year 1900 and the year 2000. This may lead to disruptions in the operations of
business and governmental entities resulting from miscalculations or system
failures. The project is designed to ensure the compliance of all of the
Company's applications, operating systems and hardware platforms, and to address
the compliance of key business partners. Key business partners are those
customers and vendors that have a material impact on the Company's operations.
All phases of the project should be completed by mid-1999 thus minimizing the
impact of the Y2K problem on the Company's operations.
The total estimated cost of the required modifications to become Y2K compliant
should not be material to the Company's financial position.
Failure to make all internal business systems Y2K compliant could result in an
interruption in, or a failure of, some of the Company's business activities or
operations. Y2K disruptions in the operations of key vendors could impact the
Company's ability to obtain components necessary for the manufacture of products
and fulfillment of contractual obligations. If one or more of these situations
occur, the Company's results of operations, liquidity and financial condition
could be materially and adversely affected. The Company is unable to determine
the readiness of its key business partners at this time and is therefore unable
to determine whether the consequences of Y2K failures will have a material
impact on the Company's results of operations, liquidity or financial condition.
The Y2K project is expected to significantly reduce the Company's level of
uncertainty about the Y2K problem and reduce the possibility of significant
interruptions of normal business operations.
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
New Accounting Standards
In June 1997, the FASB issued SFAS No. 131, "Disclosure about segments of an
Enterprise and Related Information," which changes the way public companies
report information about operating segments. SFAS No. 131, which is based on the
management approach to segment reporting, establishes requirements to report
selected segment information quarterly and to report entity-wide disclosures
about products and services, major customers, and the material countries in
which the entity holds assets and reports revenue. The Company will adopt SFAS
No. 131 for reporting on the 10K for fiscal year end 1999.
-13-
<PAGE>
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) As a result of the one for three reverse stock split on November 2,
1998, the 2,530,000 outstanding Class A Warrants were reduced to
approximately 843,334. Each Warrant after the split will be
exercisable to purchase one share of Common Stock at $16.50. The
price of the Company's Common Stock at which the Class A Warrant
becomes redeemable by the Company has been adjusted upward from
$8.75 to $26.25. The Warrants are exercisable through November 11,
2001.
(b) The Company registered Common Stock and Warrants in an initial
public offering on Form SB-2 which became effective on November 12,
1996. After deducting $1,488,778 in expenses incurred in connection
with the offering, an aggregate of $5,468,721 of net proceeds was
realized by the Company. The use of these net proceeds was reported
on Forms SR filed with the Securities and Exchange Commission on
February 11, 1997 and on August 18, 1997 in the Company's annual
report on Form 10-KSB for the years ended August 31, 1997, and
August 31, 1998 and in its quarterly reports on Form 10-QSB for the
quarters ended February 28, 1998 , May 31, 1998, and November 30,
1998. Updating these reports, as of February 28, 1999 the
disposition of the proceeds was as follows:
Construction of plant building and facilities $ 360,140
Purchases and installation of machinery and
equipment $ 642,933
(a) Acquisition of Landau Metal Products $ 624,190
(b) Improvement to physical facilities $ 52,199
(c) Equipment purchases $ 60,281
(d) Edutec acquisition and initial
funding expenses $ 152,000
Repayment of Indebtedness $1,315,058
S Corporation Distribution $ 688,034
Marketing Plan $ 312,972
To be used to fund marketing plan, acquire
equipment, product development and
working capital $1,260,914
Grand Total: $5,468,721
-14-
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K
A report on Form 8-K was filed on January 19, 1999 covering "Item 4:
Changes in Registrant's Certifying Accountant."
A report on Form 8-K was filed on January 25, 1999 covering "Item 4:
Changes in Registrant's Certifying Accountant."
A report on Form 8-K was filed on January 25, 1999 covering "Item 7:
Financial Statements, Pro Forma Financial Statements and Exhibits." A
letter from Arthur Andersen LLP dated January 25, 1999 was filed as an
exhibit under the cover of this report.
-15-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant,
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Hertz Technology Group, Inc
/s/ Eli E. Hertz
Dated: 04/14/99 -------------------------------------
Eli E. Hertz, Chairman, President
And Chief Executive Officer
/s/ Barry J. Goldsammler
Dated: 04/14/99 -------------------------------------
Barry J. Goldsammler, Chief Financial
and Accounting Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> FEB-28-1999
<CASH> 25,036
<SECURITIES> 2,255,486
<RECEIVABLES> 945,321
<ALLOWANCES> 98,218
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0
0
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</TABLE>
