<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-Q
---------------------------------
[x] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended March 31, 1996
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 latest practicable date: 7,341,053 shares of the Company's
common stock ($.001 par value) were outstanding as of April 30, 1996.
Page 1 of 10
<PAGE>
PC QUOTE, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Balance Sheets as of March 31, 1996 and
December 31, 1995 3
Statements of Operations for the three month period
ended March 31, 1996 and 1995. 4
Statements of Cash Flows for three month period
ended March 31, 1996 and 1995. 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
PART II. OTHER INFORMATION
Item 5. None
Item 6. Exhibit 27 9
Company's Signature Page 10
Page 2 of 10
<PAGE>
PC QUOTE, INC.
Balance Sheets
March 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
ASSETS (Unaudited) (Audited)
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $939,560 $1,043,478
Accounts receivable, net of allowance for doubtful
accounts of $100,277 (1996) and $95,000 (1995) 1,394,911 1,320,508
Income tax refunds receivable 40,000 40,000
Prepaid expenses and other current assets 182,913 294,536
Deferred tax asset 158,000 158,000
------------ -------------
Total current assets 2,715,384 2,856,522
------------ -------------
PROPERTY AND EQUIPMENT:
Satellite receiving equipment 796,030 785,718
Computer equipment 6,286,388 6,158,855
Communication equipment 2,476,387 2,437,279
Furniture and fixtures 256,260 256,260
Leasehold improvements 342,340 340,271
------------ -------------
10,157,405 9,978,383
Less accumulated depreciation
and amortization 7,069,333 6,759,973
------------ -------------
3,088,072 3,218,410
------------ -------------
Software development costs, net of
accumulated amortization of
$3,328,146 (1996) and $3,088,146 (1995) 4,743,128 4,172,215
Deposits and other assets 340,866 275,693
------------ -------------
TOTAL ASSETS $10,887,450 $10,522,840
------------ -------------
------------- -------------
March 31, December 31,
LIABILITIES AND 1996 1995
STOCKHOLDER'S EQUITY (Unaudited) (Audited)
------------- -------------
CURRENT LIABILITIES:
Note payable, bank, line of credit $500,000 $0
Note payable, bank, current 100,000 100,000
Capital lease obligations 526,558 587,731
Accounts payable 1,255,691 1,700,998
Unearned revenue 508,222 546,869
Accrued expenses 610,108 488,597
------------- -------------
Total current liabilities 3,500,579 3,424,195
------------- -------------
Note payable to bank, noncurrent 75,000 100,000
Capital lease obligations, noncurrent 31,535 133,176
Unearned revenue, noncurrent 236,228 254,191
------------- -------------
Total liabilities 3,843,342 3,911,562
------------- -------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.001; 10,000,000
shares authorized; 7,252,320 (1996) and 7,185,732
(1995) shares issued and outstanding 7,252 7,186
Paid in capital 12,417,883 12,289,897
Cumulative foreign currency translation adjustment 0 0
Accumulated deficit (5,381,027) (5,685,805)
------------- -------------
Total stockholders' equity 7,044,108 6,611,278
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,887,450 $10,522,840
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
PC QUOTE, INC.
Statements Of Operations
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
----------------------------------
1996 1995
(Unaudited) (Unaudited)
----------------------------------
<S> <C> <C>
NET REVENUES
Services $3,974,483 $3,199,669
Direct costs of services 1,841,770 1,423,985
------------- ------------
2,132,713 1,775,684
------------- ------------
OPERATING COSTS AND EXPENSES
Amortization of software development 240,000 243,000
Research and development 151,726 137,753
Selling and marketing 719,043 548,312
General and administrative 694,796 478,243
------------- ------------
1,805,565 1,407,308
------------- ------------
OPERATING INCOME 327,148 368,376
OTHER INCOME (EXPENSE)
Interest income 1,227 1,720
Interest expense (23,597) (49,100)
------------- ------------
NET INCOME(LOSS) $304,778 $320,996
------------- ------------
------------- ------------
NET INCOME(LOSS) PER ------------- ------------
COMMON SHARE $0.042 $0.047
------------- ------------
------------- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
PC QUOTE, INC
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $304,778 $320,996
------------- -------------
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization of property and equipment 309,360 319,516
Amortization of software development cost 240,000 243,000
Changes in assets and liabilities:
Accounts receivable, net of allowance (74,403) (511,655)
Prepaid expenses and other current assets 111,623 24,290
Deposits and other assets (65,173) (55,989)
Accounts payable (445,307) (733,261)
Unearned revenue (56,610) 812,992
Accrued expenses 121,511 34,062
------------- -------------
Total adjustments 141,001 132,955
------------- -------------
Net cash provided by operating activities 445,779 453,951
------------- -------------
CASH FLOWS FROM INVESTING ACTIVTIES:
Purchase of property and equipment (179,022) (81,674)
Software development costs capitalized (810,913) (469,940)
------------- -------------
Net cash used by investing activities (989,935) (551,614)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 128,052 64,975
Principal payments under capital leases obligations (162,814) (221,286)
Principal payments on note payable to banks (25,000) (25,000)
Net borrowings under line of credit 500,000 0
------------- -------------
Net cash used by financing activities 440,238 (181,311)
------------- -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH & CASH EQUIVALENTS 0 0
------------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (103,918) (278,974)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 1,043,478 1,384,086
------------- -------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $939,560 $1,105,112
------------- -------------
------------- -------------
- ----------------------------------------------------------------------------------------------- -------------
- ----------------------------------------------------------------------------------------------- -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid $23,597 $49,100
Income taxes paid None None
- ----------------------------------------------------------------------------------------------- -------------
- ----------------------------------------------------------------------------------------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
PC QUOTE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(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, 1995 annual report. For further
information, refer to the consolidated financial statements and footnotes
included in PC Quote's annual report on Form 10-K for the year ended December
31, 1995. 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 determined to be in excess of the net realizable
value of the product are expensed at the date of such determination. It is
reasonably possible that the estimated anticipated future gross revenues, the
remaining estimated economic life of the products, or both will be reduced
significantly in the near term. Accumulated amortization and related software
development costs are removed in the year following full amortization.
(2) INCOME TAXES
At December 31, 1995, the Company had federal income tax net operating loss
carryforwards of approximately $7,327,400 federal income tax purposes and
approximately $4,753,400 for alternative minimum tax purposes. The net
operating loss carryforwards will expire in the years 1999 to 2007.
Page 6 of 10
<PAGE>
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, 1996
Service revenues for the first quarter ended March 31,1996 increased
24.2% from the first quarter in 1995. The increase in service revenues
primarily resulted from the release of a new product PCW 6.0 in the Company's
core business.
Direct costs increased for the quarter 29.3% from the first quarter in 1995.
Direct cost increases were mainly due to increased service revenues, the
expansion of customer support and the establishment of the Internet department.
Net income for the first quarter of 1996 was $304,778 as compared to $320,996
for the same period in 1995. Such decrease is due to the additional costs
related to the launch of the new Internet services.
Research and development costs increased 10.1% for the quarter ended March 31,
1996 from the same quarter last year. The increase was due to the Company's
commitment to identifying potential new products.
Selling and marketing costs increased 31.1% for the quarter ended March 31, 1996
from the same quarter last year. The increase was mainly due to commissions and
marketing which correlates to the increase in service revenues.
General and administrative expenses increased 45.3% for the quarter ended March
31, 1996. The main increases were in salaries and related benefits, due to
additional staffing and reallocation of personnel to support major business
opportunities. There was also an increase in the provision for doubtful
accounts compared to the same quarter in 1995.
Interest income decreased slightly for the quarter ended March 31, 1996 from the
corresponding period in 1995.
Interest expense decreased 51.9% for the three months ended March 31, 1996 from
the same period in 1995. This reflects the reduction of the capital leases and
the switch to operating leases.
Page 7 of 10
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES:
FOR THE THREE MONTHS AND QUARTER ENDED MARCH 31, 1996
The company established a $1,000,000 line of credit with the its' lender and
borrowed $500,000 from the credit facility. The proceeds from such borrowing
were used to reduce payables which had increased in the last quarter of 1995
mainly due to the Internet projects. Software development costs increased
substantially due to the the Company's targeted effort to launch more
products on the internet. Financing activities used cash principally for
payments on a bank note and for capital lease obligations.
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 8 of 10
<PAGE>
PART II . OTHER INFORMATION
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT 27
(b) REPORT ON FORM 8-K - NONE
Page 9 of 10
<PAGE>
SIGNATURES
----------
Pursant to the requirements of the Exchange Act of 1934, the Company caused this
report to be signed on its behalf by the undersigned, there unto duly
authorized.
PC QUOTE, INC.
Date: May 6, 1996 By: /s/ Louis J. Morgan
----------------------------
Louis J. Morgan
Chairman and Treasurer
By: /s/ Richard F. Chappetto
----------------------------
Richard F. Chappetto
Chief Financial Officer
Page 10 of 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 939,560
<SECURITIES> 0
<RECEIVABLES> 1,394,911
<ALLOWANCES> 100,277
<INVENTORY> 0
<CURRENT-ASSETS> 2,715,384
<PP&E> 10,157,405
<DEPRECIATION> 7,069,333
<TOTAL-ASSETS> 10,887,450
<CURRENT-LIABILITIES> 3,500,579
<BONDS> 0
0
0
<COMMON> 7,252
<OTHER-SE> 10,880,198
<TOTAL-LIABILITY-AND-EQUITY> 10,887,450
<SALES> 0
<TOTAL-REVENUES> 3,974,483
<CGS> 0
<TOTAL-COSTS> 1,841,770
<OTHER-EXPENSES> 1,805,565
<LOSS-PROVISION> 90,000
<INTEREST-EXPENSE> 23,597
<INCOME-PRETAX> 304,778
<INCOME-TAX> 0
<INCOME-CONTINUING> 304,778
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 304,778
<EPS-PRIMARY> .042
<EPS-DILUTED> .042
</TABLE>
