<PAGE>
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-QSB
_________________________________
[x] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended September 30, 1995
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
-------------to--------------
_______________________________________
Commission file number 0-13093
I.R.S. Employer Identification Number 36-3131704
PC QUOTE, INC.
(a Delaware Corporation)
300 S. WACKER DRIVE
CHICAGO, ILLINOIS 60606
TELEPHONE (312) 913-2800
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past twelve months, (or for such
shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date: 7,265,355 shares of the Company's
common stock ($.001 par value) were outstanding as of November 10, 1995.
Page 1 of 13
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PC QUOTE, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Balance Sheets as of September 30, 1995 and
December 31, 1994 3
Statements of Operations for the nine month
periods ended September 30, 1995 and 1994 4
Statements of Cash Flows for the nine month
periods ended September 30, 1995 and 1994 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of:
Results of Operations and Financial Condition 7-8
Liquidity and Capital Resources 9
PART II. OTHER INFORMATION
None 10
Company's Signature Page 13
Page 2 of 13
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PC QUOTE, INC.
BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
SEPT.30 DECEMBER 31,
ASSETS 1995 1994
(UNAUDITED) (AUDITED)
-------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,041,574 $ 1,384,086
Accounts receivable, net of allowance
for doubtful accounts of $46,241 (1995) and $100,000 (1994) 1,360,258 555,234
Accounts receivable due from related party 289,011 287,334
Prepaid expenses and other current assets 344,480 314,793
----------- -----------
Total current assets 3,035,323 2,541,447
----------- -----------
PROPERTY AND EQUIPMENT:
Satellite receiving equipment 689,201 702,069
Computer equipment 6,393,164 5,722,462
Communication equipment 2,431,781 2,342,936
Furniture and fixtures 308,735 232,428
Leasehold improvements 335,274 326,285
----------- -----------
10,158,155 9,326,180
Less accumulated depreciation
and amortization 6,436,440 5,486,442
----------- -----------
3,721,715 3,839,738
----------- -----------
Software development costs, net of
accumulated amortization of
$3004915(1995) and $2,158,915 (1994) 3,200,091 2,514,927
Deposits and other assets 345,370 175,619
----------- -----------
TOTAL ASSETS $10,302,499 $ 9,071,731
----------- -----------
----------- -----------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' SEPT. 30 DECEMBER 31,
EQUITY 1995 1994
UNAUDITED (AUDITED)
-------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Note payable to bank $ 100,000 $ 100,000
Capital lease obligations 811,978 835,913
Accounts payable 894,394 1,349,735
Unearned revenue 1,228,516 437,546
Accrued expenses 498,772 464,711
----------- -----------
Total current liabilities 3,533,660 3,187,905
----------- -----------
Note payable to bank, noncurrent 141,617 200,000
Capital lease obligations, noncurrent 122,425 714,361
Unearned revenue, noncurrent 387,952 139,096
----------- -----------
Total liabilities 4,185,654 4,241,362
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, par value $.001; 10,000,000
shares authorized;7137417 (1995) and 6,969,174
(1994) shares issued and outstanding 7,137 6,969
Paid in capital 12,153,916 12,021,444
Cumulative foreign currency translation
adjustment 0 0
Accumulated deficit (6,044,208) (7,198,044)
----------- -----------
Total stockholders' equity 6,116,845 4,830,369
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,302,499 $ 9,071,731
----------- -----------
----------- -----------
</TABLE>
Page 3 of 13
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PC QUOTE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS QUARTER ENDED
ENDED SEPT. 30,1995 ENDED SEPT.30, 1995
1995 1994 1995 1994
------------------------------- --------------------------------
<S> <C> <C> <C> <C>
NET REVENUES
Services $9,812,101 $9,791,772 $3,389,336 $3,328,159
Direct costs of services 3,871,392 4,831,350 1,263,776 1,674,200
------------ ------------ ------------ ------------
5,940,709 4,960,422 2,125,560 1,653,959
------------ ------------ ------------ ------------
OPERATING COSTS AND EXPENSES
Amortization of software development 846,000 729,000 303,000 243,000
Research and development 494,979 677,596 191,989 233,329
Selling and marketing 1,656,292 1,799,093 539,540 587,762
Restructuring Expenses 304,107 304,107
General and administrative 1,607,966 1,405,830 569,175 489,929
------------ ------------ ------------ ------------
4,605,237 4,915,626 1,603,704 1,858,127
------------ ------------ ------------ ------------
OPERATING INCOME 1,335,472 44,796 521,856 (204,168)
OTHER INCOME (EXPENSE)
Interest income 18,437 34,960 11,635 18,542
Interest expense (169,682) (195,456) (56,674) (65,247)
------------ ------------ ------------ ------------
Income before income taxes 1,184,227 (115,700) 476,817 (250,873)
Provision for Income Taxes 30,392 0 30,392 0
------------ ------------ ------------ ------------
NET INCOME $1,153,835 ($115,700) $446,425 ($250,873)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET INCOME PER COMMON SHARE $0.162 ($0.017) $0.064 ($0.004)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Page 4 of 13
<PAGE>
PC QUOTE, INC
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPT.30
1995 1994
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,153,834 ($115,700)
------------- ------------
Adjustments to reconcile net income to cash
provided by operating activities:
Restucturing charges 304,107
Depreciation and amortization of property and equipment 949,998 821,889
Amortization of software development cost 846,000 729,000
Changes in assets and liabilities:
Accounts receivable, net of allowance (806,701) (199,522)
Prepaid expenses and other current assets (29,687) (186,187)
Deposits and other assets (169,751) (27,107)
Accounts payable (455,341) 191,080
Unearned revenue 1,039,827 244,081
Accrued expenses 34,061 (199,242)
------------- ------------
Total adjustments 1,408,406 1,678,099
------------- ------------
Net cash provided by operating activities 2,562,240 1,562,399
------------- ------------
CASH FLOWS FROM INVESTING ACTIVTIES:
Purchase of property and equipment (831,975) (608,453)
Software development costs capitalized (1,531,163) (904,895)
------------- ------------
Net cash used by investing activities (2,363,138) (1,513,348)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 132,640 42,603
Principal payments under capital leases obligations (615,871) (613,714)
Principal payments on note payable to banks (58,383) (75,000)
------------- ------------
Net cash used by financing activities (541,614) (646,111)
------------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH & CASH EQUIVALENTS 0 (2,785)
------------- ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (342,512) (599,845)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 1,384,086 1,624,970
------------- ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $1,041,574 $1,025,125
------------- ------------
------------- ------------
- -------------------------------------------------------------------------------------------- ------------
- -------------------------------------------------------------------------------------------- ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid $113,009 $196,857
Debt incurred under capital lease obligations $208,200 $898,287
Capital improvements through facilities lease $220,986
Income taxes paid None $7,350
- -------------------------------------------------------------------------------------------- ------------
- -------------------------------------------------------------------------------------------- ------------
</TABLE>
Page 5 of 13
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PC QUOTE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(1) BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in conjunction with the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The interim financial statements include all adjustments
which, in the opinion of management, are necessary in order to make the
financial statements not misleading. The amounts indicated as "audited" have
been extracted from the Company's December 31, 1994 annual report. For further
information, refer to the consolidated financial statements and footnotes
included in PC Quote's annual report on Form 10-KSB for the year ended December
31, 1994. Certain reclassifications have been made to conform to the current
presentation.
Costs associated with the planning and designing phase of software development,
including coding and testing activities necessary to establish technological
feasibility of computer software products to be sold, leased or otherwise
marketed, are charged to research and development costs as incurred. Once
technological feasibility has been determined, costs incurred in the
construction phase of software development, including coding, testing and
product quality assurance, are capitalized.
(2) INCOME TAXES
At December 31, 1994, the Company had domestic net operating loss carryforwards
of approximately $7,079,000 for federal income tax purposes, approximately
$5,112,000 for alternative minimum tax purposes, and approximately $67,000 of
investment tax credit carryforwards. The net operating loss carryforwards will
expire in the years 1999 to 2006 and the investment tax carryforwards will
expire in the years 1999 to 2000, if not previously utilized.
Page 6 of 13
<PAGE>
ITEM 2
_____________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS:
FOR THE NINE MONTHS AND QUARTER ENDED SEPTEMBER 30, 1995
Service revenues for the nine months and quarter ended September 30, 1995
slightly increased .1% and 1.8%, respectively, from the same periods of 1994.
New sales and additional services increased slightly over the first three
quarters vs. cancellations.
Selling and marketing costs decreased 7.9% and 8.2%, respectively, for the nine
months and quarter ended September 30, 1995, over the same periods in 1994.
Sales have increased during this period with fewer sales people due to our
increased focus on platform and data feed sales.
Direct costs of services for the nine months and quarter ended September 30,
1995 decreased 19.9% and 24.5%, respectively, over the same periods last year.
This reflects the overall decrease in costs mainly related to the reallocation
of resources into the developmental capitalized costs.
Research and Development costs decreased 26.9% and 27.7%, respectively, for the
nine months and quarter ended September 30, 1995, from the corresponding periods
in 1994. There was a substantial increase in development costs versus research
and design which is reflected in the overall increase in the capitalized
software costs.
Page 7 of 13
<PAGE>
ITEM 2
_____________________________________________
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED):
FOR THE NINE MONTH AND QUARTER ENDED SEPTEMBER 30, 1995
General and administrative expenses increased 14.4% and 16.2%, respectively, for
the nine months and quarter ended September 30, 1995, from the same periods in
1994. The main increase was due to the decrease of chargeable costs to software
development to be capitalized.
Interest income decreased 47.3% and 37.3%, respectively, for the nine months and
quarter ended September 30, 1995, from the corresponding periods in 1994.
Interest income decreased due to our use of cash over credit for some equipment
needs. Expenditures for capital needs decreased the cash available for
investment.
Interest expense decreased 13.2% and 13.1%, respectively, for the nine months
and quarter ended September 30, 1995 over the same periods in 1994. A switch to
operating leases versus capital leases, lower interest rates, and an increase in
cash purchases of equipment resulted in the decrease.
Page 8 of 13
<PAGE>
ITEM 2
_____________________________________________
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES:
FOR THE NINE MONTHS AND QUARTER ENDED SEPTEMBER 30, 1995
Operating activities provided the principal source of cash for the Company for
the nine months ended September 30, 1995. Receivables increased as the result
of the change in the billing cycle to industry standard advance billing. The
Company believes that the advanced billing cycle instituted during the first
quarter will increase positive cash flow over the balance of this year. With
regard to investing activities, the Company's investing activities were for
purchases of equipment and costs associated with the development of software.
Financing activities used cash principally for payments of a bank note and for
capital and operating lease obligations. The Company expects existing cash and
cash generated by operations will be sufficient to finance the Company's
operations through the remainder of 1995.
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 9 of 13
<PAGE>
ITEM 5
OTHER INFORMATION
Effective November 8, 1995, the Registrant dismissed Coopers & Lybrand L.L.P.
which previously was engaged as the principal accountant to audit the
Registrant's financial statements. The reports of Coopers & Lybrand L.L.P. on
the financial statements of the Registrant during the past two years did not
contain any adverse opinion or a disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
The decision to change independent accountants was recommended and approved by
the Audit Committee of the Registrant's Board of Directors.
During the Registrant's two most recent fiscal years and the subsequent interim
periods, there have not been any disagreements with Coopers & Lybrand L.L.P. on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Coopers & Lybrand L.L.P. would have caused it to make a
reference to the subject matter of the disagreements in connection with its
reports.
Effective November 8, 1995, the Registrant engaged McGladrey & Pullen L.L.P. as
its principal accountant to audit the Registrant's financial statements.
As of October 31, 1995, the Company's Common Stock was included in the list of
securities eligible to be traded on the American Stock Exchange under the
trading symbol "PQT" (AMEX). Prior to inclusion in the AMEX primary listing,
the Company's stock had been traded on the AMEX' list of Emerging Companies.
Page 10 of 13
<PAGE>
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
The following exhibit is filed herewith:
(a) Exhibit 16 - Letter from Coopers & Lybrand L.L.P. (former independent
accountants) located on sequential page of this report.
(b) There were no reports on Form 8-K filed during the quarter ended
September 30, 1995.
Page 11 of 13
<PAGE>
PART II
OTHER INFORMATION
_________________
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Page 12 of 13
<PAGE>
SIGNATURES
__________
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
PC QUOTE, INC.
(Company)
Date: November , 1995 By:____________________________
Louis J. Morgan
Chairman
By:____________________________
Richard F. Chappetto
Chief Financial Officer
Page 13 of 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,041,574
<SECURITIES> 0
<RECEIVABLES> 1,695,510
<ALLOWANCES> 46,241
<INVENTORY> 0
<CURRENT-ASSETS> 3,035,323
<PP&E> 10,158,155
<DEPRECIATION> 6,436,440
<TOTAL-ASSETS> 10,302,499
<CURRENT-LIABILITIES> 3,533,660
<BONDS> 0
<COMMON> 7,137
0
0
<OTHER-SE> 6,109,708
<TOTAL-LIABILITY-AND-EQUITY> 10,302,499
<SALES> 0
<TOTAL-REVENUES> 9,812,101
<CGS> 0
<TOTAL-COSTS> 3,871,392
<OTHER-EXPENSES> 4,471,721
<LOSS-PROVISION> 133,516
<INTEREST-EXPENSE> 169,682
<INCOME-PRETAX> 1,184,227
<INCOME-TAX> 30,392
<INCOME-CONTINUING> 1,153,835
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,153,835
<EPS-PRIMARY> .162
<EPS-DILUTED> .162
</TABLE>
