<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 June 30, 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 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: 7,343,019 shares of the
Company's common stock ($.001 par value) were outstanding as of August 8,
1996.
Page 1 of 12
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PC QUOTE, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Balance Sheets as of June 30, 1996 and
December 31, 1995 3
Statements of Operations for the six month and
quarter ended June 30, 1996 and 1995 4-5
Statements of Cash Flows for the six month
periods ended June 30, 1996 and 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of:
Results of Operations and Financial Condition 8-9
Liquidity and Capital Resources 10
PART II. OTHER INFORMATION
Item 5. Other 11
Item 6. Exhibit 27 11
Company's Signature Page 12
Page 2 of 12
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PC QUOTE, INC.
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
JUNE DECEMBER 31,
1996 1995
----------- -------------
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 641,215 $ 1,043,478
Accounts receivable, net of allowance for doubtful
accounts of $156,865 (1996) and $95,000 (1995) 896,928 1,320,508
Income tax refunds receivable 40,000 40,000
Prepaid expenses and other current assets 143,649 294,536
Deferred tax asset 158,000 158,000
----------- -------------
Total current assets 1,879,792 2,856,522
----------- -------------
PROPERTY AND EQUIPMENT:
Satellite receiving equipment 822,810 785,718
Computer equipment 6,420,138 6,158,855
Communication equipment 2,548,905 2,437,279
Furniture and fixtures 288,257 256,260
Leasehold improvements 350,720 340,271
----------- -------------
10,430,830 9,978,383
Less accumulated depreciation
and amortization 7,365,693 6,759,973
----------- -------------
3,065,137 3,218,410
----------- -------------
Software development costs, net of
accumulated amortization of
$3,328,146 (1996) and $3,088,146 (1995) 5,319,380 4,172,215
Deposits and other assets 266,261 275,693
----------- -------------
TOTAL ASSETS $10,530,570 $10,522,840
----------- -------------
----------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Note payable, bank, line of credit $500,000 $0
Note payable, bank, current 100,000 100,000
Capital lease obligations 388,804 587,731
Accounts payable 1,478,968 1,700,998
Unearned revenue 440,534 546,869
Accrued expenses 578,621 488,597
----------- -------------
Total current liabilities 3,486,927 3,424,195
----------- -------------
Note payable to bank, noncurrent 49,950 100,000
Capital lease obligations, noncurrent 18,224 133,176
Unearned revenue, noncurrent 146,845 254,191
----------- -------------
Total liabilities 3,701,946 3,911,562
----------- -------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.001; 10,000,000
shares authorized; 7,266,320 (1996) and 7,185,732
(1995) shares issued and outstanding 7,266 7,186
Paid in capital 12,462,522 12,289,897
Accumulated deficit (5,641,164) (5,685,805)
----------- -------------
Total stockholders' equity 6,828,624 6,611,278
----------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,530,570 $10,522,840
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 3 of 12
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PC QUOTE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR QUARTER ENDED JUNE 30,
--------------------------
1996 1995
(UNAUDITED) (UNAUDITED)
----------- ------------
NET REVENUES
Services $4,447,828 $3,223,096
Direct costs of services 2,670,504 1,186,002
----------- ------------
1,777,324 2,037,094
----------- ------------
OPERATING COSTS AND EXPENSES
Amortization of software development 253,000 300,000
Research and development 194,284 165,238
Selling and marketing 728,517 568,440
General and administrative 826,981 560,698
----------- ------------
2,002,782 1,594,376
----------- ------------
OPERATING INCOME (225,458) 442,718
OTHER INCOME (EXPENSE)
Interest income 2,885 5,081
Interest expense (37,562) (63,909)
----------- ------------
NET INCOME(LOSS) ($260,135) $383,890
----------- ------------
----------- ------------
NET INCOME(LOSS) PER
COMMON SHARE ($0.04) $0.06
----------- ------------
----------- ------------
The accompanying notes are an integral part of the financial statements.
Page 4 of 12
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PC QUOTE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS
--------------------------
1996 1995
(UNAUDITED) (UNAUDITED)
----------- ------------
NET REVENUES
Services $8,422,311 $6,422,765
Direct costs of services 4,512,274 2,609,987
----------- ------------
3,910,037 3,812,778
----------- ------------
OPERATING COSTS AND EXPENSES
Amortization of software development 493,000 543,000
Research and development 346,010 302,991
Selling and marketing 1,447,560 1,116,752
General and administrative 1,521,777 1,038,941
----------- ------------
3,808,347 3,001,684
----------- ------------
OPERATING INCOME 101,690 811,094
OTHER INCOME (EXPENSE)
Interest income 4,112 6,801
Interest expense (61,161) (113,009)
----------- ------------
NET INCOME(LOSS) $44,641 $704,886
----------- ------------
----------- ------------
NET INCOME(LOSS) PER
COMMON SHARE $0.00 $0.10
----------- ------------
----------- ------------
The accompanying notes are an integral part of the financial statements.
Page 5 of 12
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PC QUOTE, INC
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------------
1996 1995
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $44,641 $704,886
----------- ------------
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization of property and equipment 605,720 613,410
Amortization of software development cost 493,000 543,000
Changes in assets and liabilities:
Accounts receivable, net of allowance 423,580 (228,945)
Prepaid expenses and other current assets 150,887 (61,516)
Deposits and other assets 9,432 (117,299)
Accounts payable (222,030) (657,676)
Unearned revenue (213,681) 877,275
Accrued expenses 90,024 38,127
----------- ------------
Total adjustments 1,336,932 1,006,376
----------- ------------
Net cash provided by operating activities 1,381,573 1,711,262
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (452,447) (360,690)
Software development costs capitalized (1,640,165) (1,043,378)
----------- ------------
Net cash used by investing activities (2,092,612) (1,404,068)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 172,705 64,975
Principal payments under capital leases obligations (313,879) (423,660)
Principal payments on note payable to banks (50,050) (58,383)
Net borrowings under line of credit 500,000 0
----------- ------------
Net cash used by financing activities 308,776 (417,068)
----------- ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (402,263) (109,874)
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 $641,215 $1,274,212
----------- ------------
----------- ------------
</TABLE>
- -------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid $61,161 $113,009
Income taxes paid None None
- -------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
Page 6 of 12
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PC QUOTE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 7 of 12
<PAGE>
ITEM 2
_____________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS:
FOR THE SIX MONTHS AND QUARTER ENDED JUNE 30, 1996
Service revenues for the six months and quarter ended June 30, 1996 increased
31.1% and 37.9%, respectively, from the same periods of 1995. The increase in
service revenue continues from the release of a new product, PCW 6.0, in the
Company's core and internet business.
Selling and marketing costs increased 29.6% and 28.2% respectively, for the
six months and quarter ended June 30, 1996, over the same periods in 1995.
The increase was due to the increase in commissions and advertising costs
which correlates to the increase in service revenues.
Direct costs of services for the six months and quarter ended June 30, 1996
increased 72.8% and 125% respectively, over the same periods last year. This
reflects an increase in staffing levels in customer support and operations
and communications costs related to the increase in volume. Additional
technological infrastructure costs, principally staffing and equipment, were
incurred to invest in the growth of the internet operations.
Research and Development costs increased 14.2% and 17.6% respectively, for
the six months and quarter ended June 30, 1996 from the corresponding periods
in 1995. There was a increase in research costs related to additional
staffing.
Page 8 of 12
<PAGE>
ITEM 2
_____________________________________________
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED):
FOR THE SIX MONTH AND QUARTER ENDED JUNE 30, 1996
General and administrative expenses increased 46.5% and 47.5%, respectively,
for the six months and quarter ended June 30, 1996, from the same periods in
1995. The main increases were in salaries and related costs, due to
additional staffing and reallocation of personnel to support major business
opportunities. There was also an increase in the provision for doubtful
accounts and shareholders services as compared to the same period in 1995.
Interest income decreased 39.5% and 43.2%, respectively, for the six months
and quarter ended June 30, 1996, from the corresponding periods in 1995.
Interest income decreased due to our use of cash over credit for some
equipment needs.
Interest expense decreased 45.9% and 41.2%, respectively, for the six months
and quarter ended June 30, 1996 over the same periods in 1995. This reflects
the switch to operating leases from capital leases.
Page 9 of 12
<PAGE>
ITEM 2
_____________________________________________
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES:
FOR THE SIX MONTHS AND QUARTER ENDED JUNE 30, 1996
The company established a $1,000,000 line of credit with the its' lender and
borrowed $500,000 from the credit facility. Investments in software
development increased substantially due to the the Company's targeted effort
to launch more products on the internet. Financing activities used cash 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 10 of 12
<PAGE>
PART II
OTHER INFORMATION
_________________
ITEM 5: OTHER
Effective June 1996, Howard C. Meltzer assumed the position of President and
Chief Operating Officer of the Company and Michael A. Press assumed the
position of Chief Financial Officer in August 1996.
ITEM 6:
(a) EXHIBIT 27
(b) REPORT ON FORM 8-K-NONE
Page 11 of 12
<PAGE>
SIGNATURES
__________
Pursuant to the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, there unto duly
authorized.
PC QUOTE, INC.
(Company)
Date: August 8, 1996 By: /s/ Louis J. Morgan
--------------------------
Louis J. Morgan
Chairman
By: /s/ Michael A. Press
--------------------------
Michael A. Press
Chief Financial Officer
Page 12 of 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-21-1996
<PERIOD-END> JUN-30-1996
<CASH> 641,215
<SECURITIES> 0
<RECEIVABLES> 896,928
<ALLOWANCES> 156,865
<INVENTORY> 0
<CURRENT-ASSETS> 1,879,792
<PP&E> 10,430,830
<DEPRECIATION> 7,365,693
<TOTAL-ASSETS> 10,530,570
<CURRENT-LIABILITIES> 3,486,927
<BONDS> 0
7266
0
<COMMON> 0
<OTHER-SE> 10,523,304
<TOTAL-LIABILITY-AND-EQUITY> 10,530,570
<SALES> 0
<TOTAL-REVENUES> 4,447,828
<CGS> 0
<TOTAL-COSTS> 2,670,504
<OTHER-EXPENSES> 2,002,782
<LOSS-PROVISION> 210,000
<INTEREST-EXPENSE> 37,562
<INCOME-PRETAX> (260,135)
<INCOME-TAX> 0
<INCOME-CONTINUING> (260,135)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (260,135)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
