<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 AND 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15D OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission File Number 0-3825
MPEL HOLDINGS CORP.
(Formerly Computer Transceiver Systems, Inc.)
(Exact name of registrant as specified in its current charter)
NEW YORK 22-1842747
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
25 MELVILLE PARK ROAD, MELVILLE, NEW YORK 11747
(Address of principal executive offices)
(516) 364-2700
(Registrant's telephone number, including area code)
COMPUTER TRANSCEIVER SYSTEMS, INC.
23 CAROL STREET, CLIFTON, NEW JERSEY 07014
(Former Name and former Address, if Changed Since Last Report)
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months(or for such shorter period 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 .
----
As of March 31, 1998, the registrant had 8,394,142 shares outstanding of common
stock, $.01 par value. The shares of common stock represent the only class of
common stock of the registrant.
1
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
For the quarter ended March 31, 1998
Index
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Consolidated Balance Sheets at
March 31, 1998 and December 31, 1997
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 1998 and 1997
Condensed Consolidated Statement of Cash Flows for the
Three Months Ended March 31, 1998 and 1997
Notes to Unaudited Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matter to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------------- ----------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 41,016 $ 377,709
Mortgage loans held for sale 7,812,395 6,300,764
Due from investors 6,446,964 6,959,131
Other receivables and other assets 1,918,185 1,684,676
Due from stockholders 263,646 263,646
Deferred offering costs 219,481 122,283
Property and equipment-net 573,628 508,624
================ ================
$ 17,275,315 $ 16,216,833
================ ================
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Warehouse line of credit $ 10,429,506 $ 10,532,994
Loans closed to be disbursed 3,147,355 1,989,264
Notes Payable 1,386,752 1,241,652
Subordinated debt 878,000 878,000
Obligation under capital lease 178,522 193,184
Accounts payable and accrued expenses 1,247,621 786,158
---------------- ----------------
17,267,756 15,621,252
STOCKHOLDERS' EQUITY
Common stock-$.01 par value;
authorized 15,000,000 shares;
issued and outstanding 8,394,142 and 8,056,000
shares at March 31, 1998 and December 31, 1997,
respectively. 8,394 8,056
Additional paid-in capital 666,941 664,227
Accumulated deficit (667,776) (76,702)
---------------- ----------------
7,559 595,581
---------------- ----------------
$ 17,275,315 $ 16,216,833
================ ================
</TABLE>
3
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---------------- ----------------
<S> <C> <C>
REVENUE:
Mortgage origination, net $ 2,100,339 $ 1,688,120
Interest earned 277,705 174,239
---------------- ----------------
TOTAL REVENUE 2,378,044 1,862,359
---------------- ----------------
EXPENSES:
Commissions, wages and benefits 1,315,783 1,123,512
Selling and administrative 1,234,081 1,018,797
Interest expense 419,254 120,386
---------------- ----------------
TOTAL EXPENSES 2,969,118 2,262,695
---------------- ----------------
NET LOSS $ (591,074) $ (400,336)
================ ================
BASIC AND DILUTED LOSS PER SHARE $ (0.07) (0.05)
================ ================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,153,685 8,000,000
================ ================
</TABLE>
4
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---------------- ----------------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (591,074) $ (400,336)
Adjustments to reconcile net (loss)
to net cash used in operating activities
Depreciation 27,357 16,500
Amortization of notes payable discount
regarding warrants issued 113,661 0
Net changes in:
Due from investors 512,167 0
Other receivable and other assets (230,458) (61,009)
Mortgage loans held for sale (1,511,631) 1,724,787
Accounts payable and accrued liablities 461,464 (302,589)
----------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (1,218,514) 977,353
CASH FLOW USED IN INVESTING ACTIVITIES
Purchase of fixed assets (92,361) (35,020)
---------------- ----------------
CASH FLOW FROM FINANCING ACTIVITIES
Net repayments of warehouse line
of credit (103,488) (1,339,797)
Loans closed to be disbursed 1,158,091 (490,227)
Advances from related parties 0 778,793
Proceeds from sale leaseback of equipment 0 275,000
Changes in obligation under capital lease (14,662) (13,022)
Changes in notes payable 31,439 (23,470)
Deferred offering costs (97,198) (25,000)
---------------- ----------------
NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES 974,182 (837,723)
---------------- ----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (336,693) 104,610
Cash and cash equivalents at beginning of period 377,709 328,897
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 41,016 $ 433,507
================ ================
</TABLE>
5
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---------------- ----------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES:
CASH PAID FOR INTEREST $ 438,925 $ 120,386
================ ================
</TABLE>
6
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
as set forth in Article 10 of regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. It should be noted that the
registrant was involved in a reverse acquisition and that certain required
disclosures are included herein on the Company's Form 8-K, dated March 5, 1998.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
METHOD OF ACCOUNTING
The condensed financial statements of the Company are prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
effect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
EARNINGS PER SHARE
The Company computes earnings per share in accordance with statement of
Financial Accounting Standards No. 128 "Earning per Share". Basic earnings per
share is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding during the period. Shares
issued during the period and reacquired during the period shall be weighted for
the portion of the period they were outstanding.
March 31, March 31,
1998 1997
--------- ---------
Number of shares outstanding
- Start Up Period 8,056,000 8,000,000
Increase in shares 338,142 0
--------- ---------
Number of shares outstanding
- End of Period 8,394,142 8,000,000
--------- ---------
Weighted Average Number of Shares
Outstanding 8,153,685 8,000,000
--------- ---------
7
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have effected the company's financial position and operating
results during the period included in the accompanying condensed consolidated
financial statements.
RESULTS OF OPERATIONS - MARCH 31, 1998 VS. MARCH 31, 1997
REVENUE. Mortgage origination, net, increased $412,219, or 24.4% to $2,100,339.
The increase was due to increased volume of operations and the expansion
program. Interest income increased $103,466, or 59.4% to $277,705. The increase
was due to increased volume of operations and higher percentage of "B/C"
credit-rated mortgage loans.
EXPENSES. Commissions, wages and benefits increased $206,959, or 18.4% to
$1,330,471 and selling and administrative expenses increase $215,284, or 21.1%
to $1,234,081. Both increases were due to increased volume of operations and the
expansion program. Interest expense increased $298,868, or 248.3% to $419,254.
The increase was due to increased volume of operations and amortization of notes
payable discount regarding warrants issued.
Under the expansion program, the Company opened several new branch offices in
Arkansas, Ohio and Illinois.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to meet its short-term and long-term liquidity requirements
generally through its cash flow provided by operations and common stock
offering. The Company filed Registration Statement SB-2 with The Securities and
Exchange Commission, on March 17, 1998, for the purpose of offering 1,300,000
shares of common stock at $2.50 per share. Based on the Company's currently
proposed plans and assumptions relating to the implementation of its business
strategy, the Company anticipates that the net proceeds of the offering (at the
minimum number of shares sold) will supplement the cash provided by operations
and be sufficient to satisfy its contemplated cash requirements for expansion
and working capital for at least twelve months, following the consummation of
the offering. The effective date of the offering was May 15, 1998.
8
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB/A
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
MPEL is involved as a party to certain legal proceedings incidental
to its business. MPEL believes that the outcome of such proceedings
will not have a material effect upon its business or financial
condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 5, 1998, the Company merged with a wholly owned subsidiary
of Computer Transceiver Systems, Inc. ("CTSI"), a nonoperating public
company which had 338,142 shares of common stock outstanding prior to
the merger after giving effect to a 1 for 25 reverse stock split on
March 3, 1998 and a 2 for 1 stock dividend on March 4, 1998. Pursuant
to the merger, CTSI acquired all of the outstanding common stock of
the Company in exchange for 8,056,000 shares of CTSI common stock.
The merger has been accounted for as a purchase of CTSI by the
Company. The 338,142 shares of CTSI outstanding have been valued at
$1,407,896 with corresponding charges to paid in capital of
$1,404,844 resulting in an increase in the Company's stockholders'
equity of $3,052 represents the estimated fair value of the net
assets of CTSI at March 5, 1998. Immediately following the merger
CTSI changed its name to MPEL Holdings Corp.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
DESCRIPTION
a) Exhibits
1 Pro Forma Stockholders' Equity as of December 31, 1997
27 Financial Data Schedule
b) Reports
* Form 8-K dated March 5, 1998
* Incorporated by reference.
9
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 7, 1998 By: /s/ STEVEN M. LATESSA
-----------------------------------
STEVEN M. LATESSA - President,
Principal Executive Officer
Dated: August 7, 1998 By: /s/ CARY WOLEN
------------------------------------
CARY WOLEN - Chief Operating Officer,
Treasurer and Principal Financial Officer
10
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MPEL HOLDINGS CORP. (FORMERLY COMPUTER TRANSCEIVER SYSTEMS, INC.) AND SUBSIDIARY
FORM 10 - QSB (Exhibit 1)
CAPITALIZATION
The following table sets forth the debt and capitalization of the Company as of
December 31, 1997 pro forma giving effect to the merger. This table should be
read in conjunction with the Consolidated Financial Statements, including the
Notes thereto, included in the Pre-effective Amendment No.4 to Form SB-2.
<TABLE>
<CAPTION>
December 31, 1997
Actual Pro Forma
---------------- ----------------
<S> <C> <C>
Debt:
Warehouse lines of credit $ 10,532,994 $ 10,532,994
Subordinated debt 878,000 878,000
Notes payable 1,241,652 1,241,652
Obligation under capital lease 193,184 193,184
---------------- ----------------
Total Debt $ 12,845,830 $ 12,845,830
Stockholders' Equity:
Common Stock, $.01 par value, 15,000,000 shares
authorized, 8,056,000 shares outstanding actual,
8,394,142 shares outstanding pro forma 8,056 8,394
Additional paid-in capital 664,227 666,941
Accumulated deficit -76,702 -76,702
---------------- ----------------
Total stockholders' equity 595,581 598,633
================ ================
Total capitalization $ 13,441,411 $ 13,444,463
================ ================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS DATED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 41,016
<SECURITIES> 0
<RECEIVABLES> 8,628,795
<ALLOWANCES> 0
<INVENTORY> 7,812,395
<CURRENT-ASSETS> 16,701,687
<PP&E> 573,628
<DEPRECIATION> 27,357
<TOTAL-ASSETS> 17,275,315
<CURRENT-LIABILITIES> 16,949,650
<BONDS> 0
0
0
<COMMON> 8,394
<OTHER-SE> (835)
<TOTAL-LIABILITY-AND-EQUITY> 17,275,315
<SALES> 0
<TOTAL-REVENUES> 2,378,044
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,549,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 419,254
<INCOME-PRETAX> (591,074)
<INCOME-TAX> 0
<INCOME-CONTINUING> (591,074)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (591,074)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
