<PAGE>
IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS 10-QSB IS BEING FILED IN
PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION. WE WILL FOLLOW UP WITHIN 20
BUSINESS DAYS WITH AN ELECTRONIC FILING.
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 March 31, 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
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
<PAGE>
latest practicable date: 6,992,467 shares of the Company's common stock ($.001
par value) were outstanding as of May 12, 1995.
<PAGE>
PC QUOTE, INC.
INDEX
- ------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<C> <S> <C>
PART I. Financial Information
Item 1. Balance Sheets as of March 31, 1995
and December 31, 1994 3-4
Statements of Operations for the
three month periods ended March
31, 1995 and 1994 5
Statements of Cash Flows for three
month periods ended March 31, 1995
and 1994 6
Notes to Financial Statements 8
Item 2. Management's Discussion and
Analysis of:
Results of Operations and Financial
Condition
Liquidity and Capital Resources 10-11
PART II. Other Information
NONE
Company's Signature Page 12
</TABLE>
Page 2
<PAGE>
PC QUOTE, INC.
BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
- ------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited) (Audited)
----------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $1,105,112 $ 1,384,086
Accounts receivable, net of
allowance for doubtful
accounts of $13,224 (1995)
and $100,000 (1994) 1,238,833 555,234
Accounts receivable due from
related party 115,390 287,334
Prepaid expenses and other
current assets 290,502 314,793
----------- -------------
Total current assets 2,749,837 2,541,447
----------- -------------
Property and equipment:
Satellite receiving equipment 714,814 702,069
Computer equipment 5,754,854 5,722,462
Communication equipment 2,352,217 2,342,936
Furniture and fixtures 245,699 232,428
Leasehold improvements 340,270 326,285
----------- -------------
9,407,854 9,326,180
Less accumulated depreciation
and amortization 5,805,958 5,486,442
----------- -------------
3,601,896 3,839,738
----------- -------------
Software development costs, net
of accumulated amortization
of $2,401,915 (1995) and
$2,158,915 (1994) 2,741,867 2,514,927
Deposits and other assets 231,609 175,619
----------- -------------
Total assets $9,325,209 $ 9,071,731
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 3
<PAGE>
PC QUOTE, INC.
BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
- ------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited) (Audited)
------------ -------------
<S> <C> <C>
Liabilities and Stockholders'
Equity
Current liabilities:
Note payable to bank $ 100,000 $ 100,000
Capital lease obligations 811,978 835,913
Accounts payable 616,473 1,349,735
Unearned revenue 1,193,863 437,546
Accrued expenses 498,773 464,711
------------ -------------
Total current liabilities 3,221,087 3,187,905
------------ -------------
Note payable to bank,
noncurrent 175,000 200,000
Capital lease obligations,
noncurrent 517,011 714,361
Unearned revenue, noncurrent 195,771 139,096
------------ -------------
Total liabilities 4,108,869 4,241,362
------------ -------------
Stockholders' equity:
Common stock, par value
$.001; 10,000,000 shares
authorized; 6,992,467
(1995) and 6,969,174 (1994)
shares issued and
outstanding 6,992 6,969
Paid in capital 12,086,396 12,021,444
Cumulative foreign currency
translation adjustment 0 0
Accumulated deficit (6,877,048) (7,198,044)
------------ -------------
Total stockholders' equity 5,216,340 4,830,369
------------ -------------
Total liabilities and
stockholders' equity $ 9,325,209 $ 9,071,731
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 4
<PAGE>
PC QUOTE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
- ------------------------------------------------
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
1995 1994
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Net revenues:
Services $3,199,669 $3,195,308
Direct costs of services 1,423,985 1,535,279
----------- -----------
1,775,684 1,660,029
----------- -----------
Operating costs and expenses:
Amortization of software
development 243,000 246,000
Research and development 137,753 219,300
Selling and marketing 548,312 568,466
General and administrative 478,243 478,435
----------- -----------
1,407,308 1,512,201
----------- -----------
Operating income 368,376 147,828
Other income (expense):
Interest income 1,720 8,104
Interest expense (49,100) (64,719)
----------- -----------
Net income (loss) $ 320,996 $ 91,213
----------- -----------
----------- -----------
Net income (loss) per common
share $ 0.047 $ 0.013
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5
<PAGE>
PC QUOTE, INC
STATEMENTS OF CASH FLOWS
(UNAUDITED)
- ------------------------------------------------
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 320,996 $ 91,213
---------- ----------
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization of
property and equipment 319,516 343,232
Amortization of software
development cost 243,000 246,000
Changes in assets and
liabilities:
Accounts receivable, net of
allowance (511,655) 75,965
Prepaid expenses and other
current assets 24,290 (27,635)
Deposits and other assets (55,989) (13,391)
Accounts payable (733,261) (32,125)
Unearned revenue 812,992 25,709
Accrued expenses 34,062 (156,277)
---------- ----------
Total adjustments 132,955 461,478
---------- ----------
Net cash provided by operating
activities 453,951 552,691
---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 6
<PAGE>
PC QUOTE, INC
STATEMENTS OF CASH FLOWS
(CONTINUED)
- ------------------------------------------------
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from investing activities:
Purchase of property and equipment (81,671) (156,594)
Software development costs
capitalized (469,940) (311,061)
---------- ----------
Net cash used by investing
activities (551,611) (467,655)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common
stock 64,975 26,909
Principal payments under capital
leases obligations (221,289) (191,894)
Principal payments on note payable
to banks (25,000) (25,000)
---------- ----------
Net cash used by financing
activities (181,314) (189,985)
---------- ----------
Effect of exchange rate changes on
cash and cash equivalents 0 (1,298)
---------- ----------
Net change in cash and cash
equivalents (278,974) (106,247)
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 $1,105,112 $1,518,723
---------- ----------
---------- ----------
- -------------------------------------------------------------
- -------------------------------------------------------------
Supplemental disclosure of cash flow
information:
Interest paid $ 49,100 $ 64,719
Debt incurred under capital lease
obligations $ 208,200 $ 216,229
Income taxes paid None None
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 7
<PAGE>
PC QUOTE, INC.
NOTES TO
FINANCIAL STATEMENTS
MARCH 31, 1995
------------------------------------------------
(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
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 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.
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
Page 8
<PAGE>
PC QUOTE, INC.
NOTES TO
FINANCIAL STATEMENTS
MARCH 31, 1995
------------------------------------------------
determined to be in excess of the net realizable value of the product are
expensed at the date of such determination. Accumulated amortization and related
software development costs are removed in the year following full amortization.
(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 credit carryforwards
will expire in the years 1999 to 2000, if not previously utilized.
Page 9
<PAGE>
PC QUOTE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- ------------------------------------------------
RESULTS OF OPERATIONS:
FOR THE THREE MONTHS AND QUARTER ENDED MARCH 31, 1995
During the first quarter the Company has instituted a change in its billing
system. The Company has been billing customers during the month the service is
being provided. The industry traditionally bills for service in advance and
expects payment the month before the service is provided. This change will bring
the Company's billing cycle in line with the industry standard. The result of
this change is an increase in accounts receivable of $759,495 for April service.
This change in billing cycle and the increase in deposits resulted in an
increase in unearned revenue of $756,317.
The allowance for doubtful accounts is stated as $13,224 in the first quarter as
opposed to $100,000 for 1994. This resulted from a write off of $95,135 in the
fourth quarter of 1994 based on closing the foreign subsidiary.
Service revenues for the three months and quarter ended March 31, 1995 increased
slightly to $3,199,669 from $3,195,308 in the same quarter last year.
Net income for the first quarter of 1995 increased to $320,996 from $91,213 for
the same period in 1994.
Direct costs of services for the three month period and quarter ended March 31,
1995 decreased 7.2% from the same quarter last year.
Research and development costs decreased 37.2% for the three month period and
quarter ended March 31, 1995 from the same quarter last year.
Selling and marketing costs decreased 3.5% for the quarter ended March 31, 1995
from the same quarter last year.
Page 10
<PAGE>
General and administrative expenses remained basically unchanged for the quarter
ended March 31, 1995.
Interest income decreased for the three months ended March 31, 1995 from the
corresponding period in 1994.
Interest expense decreased 24.1%, for the three months ended March 31, 1995 from
the same period in 1994.
LIQUIDITY AND CAPITAL RESOURCES:
FOR THE THREE MONTHS AND QUARTER ENDED MARCH 31, 1995
Operating activities provided the principal source of cash for the Company for
the three months ended March 31, 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 on 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 11
<PAGE>
SIGNATURES
------------------------------------------------
In accordance with Section 13 or 15(d) 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)
<TABLE>
<S> <C>
Date: May 12, 1995
By: /s/LOUIS J. MORGAN
Louis J. Morgan
Chairman and Treasurer
By: /s/RICHARD F. CHAPPETTO
Richard F. Chappetto
Chief Financial Officer
</TABLE>
Page 12
<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> MAR-31-1995
<CASH> 1,105,112
<SECURITIES> 0
<RECEIVABLES> 1,367,447
<ALLOWANCES> 13,224
<INVENTORY> 0
<CURRENT-ASSETS> 2,749,837
<PP&E> 9,407,854
<DEPRECIATION> 5,805,958
<TOTAL-ASSETS> 9,325,209
<CURRENT-LIABILITIES> 3,221,087
<BONDS> 0
<COMMON> 6,992
0
0
<OTHER-SE> 6,097,130
<TOTAL-LIABILITY-AND-EQUITY> 9,325,209
<SALES> 0
<TOTAL-REVENUES> 3,199,669
<CGS> 0
<TOTAL-COSTS> 1,423,985
<OTHER-EXPENSES> 1,377,308
<LOSS-PROVISION> 30,000
<INTEREST-EXPENSE> 49,100
<INCOME-PRETAX> 320,996
<INCOME-TAX> 0
<INCOME-CONTINUING> 320,996
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,996
<EPS-PRIMARY> .047
<EPS-DILUTED> .047
</TABLE>
