U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 - FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 1999
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO
COMMISSION FILE NUMBER 0-17394
CORFACTS INC. AND SUBSIDIARY
(Exact name of small business issuer as specified in its charter)
New Jersey 22-2478379
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
3499 Hwy. 9 No., Ste. 3B, Freehold, NJ 07728
(Address of principal executive offices)
Registrant s telephone number, including area code
(800) 696-7788
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange
Act during the past 12 months (or for such shorter period
that 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
Transitional Small Business Disclosure Format: Yes x No
The number of shares outstanding of the registrant s common
stock, no par value, at March 31, 1999 is 11,940,521.
<PAGE>
File Number
0-17394
Corfacts, Inc. & Subsidiary
Form 10-QSB
March 31, 1999
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet at March 31, 1999 3.
Consolidated Statements of Operations for the
three months ended March 31, 1999 and 1998 5.
Consolidated Statements of Cash Flows for the
three months ended March 31, 1999 and 1998 6.
Notes to Consolidated Financial Statements 7.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9.
PART II - OTHER INFORMATION 12.
Item 1. Legal Proceedings 12.
Item 2. Changes in Securities 12.
Item 3. Defaults Upon Senior Securities 12.
Item 4. Submission of Matters to a Vote of
Securityholders 12.
Item 5. Other Information 12.
Item 6. Exhibits and Reports on Form 8-K 12.
Signatures 13.<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CORFACTS, INC. & SUBSIDIARY
BALANCE SHEET
March 31,1999
------------
ASSETS
Current Assets
Cash and cash equivalents $1,322,119
Interest bearing deposits, restricted 38,280
Interest receivable 2,200
Accounts receivable, net of allowance for
bad debts of $29,010 186,410
Prepaid expenses 433
Other receivable-municipal tax liens, net 10,715
---------
Total Current Assets 1,560,157
---------
Property and equipment, at cost, less
accumulated depreciation of $88,711 285,702
Other assets
Loan receivable, officer 94,743
Investment in partnership 2,166
Customer lists, net of accumulated
amortization of $56,221 113,074
Goodwill, net of accumulated amortization
of $19,084 119,711
Security deposits 28,495
---------
Total Other Assets 358,189
---------
TOTAL ASSETS $2,204,048
=========
<PAGE>
cont'd. - Balance Sheet
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 269,057
Deferred revenue 20,000
Income taxes payable 54,277
Deferred taxes 3,065
Current portion of note payable - shareholder 34,597
Current portion of capitalized lease obligations 65,840
-------
Total Current Liabilities 446,836
Capitalized lease obligations, net of
current portion 104,407
Note payable - shareholder, net of current portion 116,788
-------
221,195
Stockholders' equity
Common stock, no par value, 20,000,000 shares
authorized; 11,940,521 shares issued and
outstanding in 1999 1,284,052
Retained earnings 251,965
---------
TOTAL STOCKHOLDERS' EQUITY 1,536,017
---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,204,048
=========
<PAGE>
CORFACTS, INC. & SUBSIDIARY
STATEMENTS OF OPERATIONS
Three months ended
March 31,
1999 1998
------------------
Revenue
Revenue telemarketing $ 1,312,127 $ 862,176
Income from tax liens, net 214 650
Interest income 10,477 9,617
--------- -------
Total revenues 1,322,818 872,443
Direct operating expenses 592,169 361,516
-------- -------
Gross Profit 730,649 510,927
Costs & expenses
General & administrative 388,825 233,702
Depreciation and amortization 27,862 14,877
Interest expense 8,061 5,360
------- -------
Total costs & expenses 424,748 253,939
------- -------
Income before income taxes 305,901 256,988
Provision for income taxes 122,360 113,100
------- -------
Net income $183,541 $143,888
======= =======
Basic earnings per common share $ .015 $ .012
======= =======
Average common shares outstanding 11,940,521 11,909,402
========== ==========
Diluted earnings per common share $ .014 $ .011
======= =======
Average common shares and equivalents
outstanding for diluted earnings
per common share 13,085,521 12,617,402
========== ==========
<PAGE>
CORFACTS, INC. & SUBSIDIARY
STATEMENTS OF CASH FLOWS
Three months ended
March 31,
1999 1998
------------------
Cash flows from operating activities:
Net income $183,541 $143,888
Adjustments to reconcile net
income to net cash used in operations:
Depreciation and amortization 27,862 14,877
Bad debts provision 7,500 6,000
Deferred income taxes 63,590 112,100
Increase in accounts receivable (70,881) (60,056)
Increase in interest receivable (1,151) -
Decrease in prepaid expenses 60,230 8,257
Decrease in other assets 824 -
Increase (decrease) in accounts payable
and other liabilities 8,738 (18,353)
Net cash provided by operating ------- -------
activities 280,253 206,713
------- -------
Cash flows used in investing activities:
Purchase of assets of Advanced
Marketing (30,500) -
Redemption of tax lien certificate 184 -
Purchase of equipment (31,910) (6,127)
------ -------
Net cash used in investing
activities (62,226) (6,127)
------ -------
Cash flows from financing activities:
Repayment of capitalized lease
obligations (20,947) (5,908)
Net cash used in financing ------ -------
activities (20,947) (5,908)
Net increase in cash and cash
equivalents 197,080 194,678
Cash and cash equivalents at
beginning of period 1,125,039 786,907
--------- -------
Cash and cash equivalents at
end of period $1,322,119 $981,585
========= =======
<PAGE>
CORFACTS, INC. & SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated interim financial
statements included herein have been prepared by Corfacts, Inc.
(the "Company"), without audit, in accordance with generally
accepted accounting principles for interim financial
information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the
disclosures made are adequate to make the information presented
not misleading.
In the opinion of management, the information furnished for
the three month period ended March 31, 1999 and 1998 includes
all adjustments, consisting solely of normal recurring accruals
necessary for a fair presentation of the financial results for
the respective interim periods and is not necessarily
indicative of the results of operations to be expected for the
entire fiscal year ending December 31, 1999 It is suggested
that the interim financial statements be read in conjunction
with the audited consolidated financial statements for the year
ended December 31, 1998 as filed with the Securities and
Exchange Commission on Form 10-KSB (Commission File Number 0-17394).
NOTE 2 - NATURE OF BUSINESS
Corfacts, Inc. was organized in 1983, originally as the
Business Journal of New Jersey, Inc. Since selling the
magazine business in 1990, and discontinuance and sale of the
information division in August 1991, the Company has directed
its efforts to seek potential acquisitions and investments
deemed appropriate for the Company to generate a return on equity.
On December 31, 1996 the Company entered into a merger and
acquisition plan to acquire all of the shares and assets of
Metro Marketing, Inc. a telemarketing firm, effective July 1,
1996. The Company issued 3,904,088 shares of common stock and
the balance of the purchase price in the sum of $151,385 shall
be paid pursuant to the terms of a promissory note. The
accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary.
Intercompany transactions and balances have been eliminated in
consolidation.
NOTE 3 - RELATED PARTY TRANSACTIONS
Receivables have been generated by transactions with the
President which total $ 94,743.
The Note Payable, generated by the purchase of Metro
Marketing, Inc., is payable to the Vice President and
shareholder of the Company and bears an interest rate of 7%.
During the three months ended March 31 1999 and 1998, interest
expense on this note was $2,649 and $2,649 respectively.
<PAGE>
CORFACTS, INC. & SUBSIDIARY
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The analysis of the Company's financial condition, capital
resources and operating results should be viewed in conjunction
with the accompanying financial statements, including the notes
thereto.
RESULTS OF OPERATIONS
Three months ended March 31, 1999 compared to the three months
ended March 31, 1998
The Company is reporting net income of $183,541 on total
revenues of $1,322,818 for the quarter ended March 31, 1999 as
compared to net income of $143,888 on total revenues of
$872,443 for the comparable quarter ended March 31, 1998.
Basic earnings per share for the quarter ended March 31, 1999
were $.015 as compared to basic earnings per share of $.012 for
the same quarter in 1998.
During the first quarter of 1999, the Company purchased the
assets of a local telemarketing company which specializes in
custom script writing tailored to any industry. This
transaction further diversifies the services provided by Metro
Marketing, the wholly owned subsidiary of Corfacts. The
customer base of this new acquisition, when combined with the
existing resources and personnel of the Company will provide
the opportunity for immediate growth.
The Company is currently negotiating the purchase of the assets
of an answering service which would enable the Company to enter
the inbound telemarketing side of the teleservices industry.
The Company recorded $10,477 in interest income for the three
months ended March 31, 1999 as compared to interest income of
$9,617 for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $1,113,321 at March 31, 1999,
as compared to $1,084,556 at December 31, 1998. The primary
reason for this increase in working capital is the profitability of
the Company.
Management is continually considering various additional equity
funding alternatives to increase its already positive working
capital to further support its planned acquisitions and improve
the value of the Company for its shareholders. To this end, the
Board of Directors has authorized management, if and when it
deems appropriate, to purchase back for the Company's treasury,
shares of the Company's common stock when it feels the current
market price is under valued. The Board of Directors has also
authorized management, as market conditions permit, to
undertake selective warrant programs to provide incentives to
market makers. The Company feels with the right combination of
capital, marketing assistance and management support it will be
an attractive parent company which can support the acquisition
of additional subsidiaries, while maintaining the current
growth rate in its existing subsidiary.
Management believes that the pending answering service
acquisition described above will not require a substantial
amount of working capital from the Company because it is
currently operating independently and current negotiations
indicate that a significant deposit will be not required to
commence the transaction.
FORWARD LOOKING AND OTHER STATEMENTS
Forward looking statements above and elsewhere in this report
that suggest that the Company will increase revenues, become
profitable and achieve significant growth through acquisitions
are subject to risks and uncertainties. Forward-looking
statements include the information concerning possible or
assumed future results of operations and cash flows. These
statements are identified by words such as believes,
expects, anticipates or similar expressions. Such forward
looking statements are based on the beliefs of Corfacts, Inc.
and its Board of Directors in which they attempt to analyze the
Company s competitive position in its industry and the factors
affecting its business. Stockholders should understand that
each of the foregoing risk factors, in addition to those
discussed elsewhere in this document and in the documents which
are incorporated by reference herein, could affect the future
results of Corfacts, Inc. and could cause those results to
differ materially from those expressed in the forward-looking
statements contained or incorporated by reference herein. In
addition there can be no assurance that Corfacts, Inc. and its
Board have correctly identified and assessed all of the factors
affecting the Company s business.
<PAGE>
CORFACTS, INC. & SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Legal proceedings:
None
Item 2. Changes in securities:
None
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:
None<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
May 17, 1999 /s/ Larry Finkelstein
Larry Finkelstein,
President, Chairman and CFO
May 17, 1999 /s/ Ariel Freud
Ariel Freud,
Vice President, Director
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
May 17, 1999 /s/ Larry Finkelstein
Larry Finkelstein,
President, Chairman and CFO
May 17, 1999
/s/ Ariel Freud
Ariel Freud,
Vice President, Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,322,119
<SECURITIES> 0
<RECEIVABLES> 215,420
<ALLOWANCES> 29,010
<INVENTORY> 0
<CURRENT-ASSETS> 1,560,157
<PP&E> 374,413
<DEPRECIATION> 88,711
<TOTAL-ASSETS> 2,204,048
<CURRENT-LIABILITIES> 446,836
<BONDS> 0
0
0
<COMMON> 1,284,052
<OTHER-SE> 251,965
<TOTAL-LIABILITY-AND-EQUITY> 2,204,048
<SALES> 1,312,127
<TOTAL-REVENUES> 1,322,818
<CGS> 592,169
<TOTAL-COSTS> 424,748
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,061
<INCOME-PRETAX> 305,901
<INCOME-TAX> 122,360
<INCOME-CONTINUING> 183,541
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 183,541
<EPS-PRIMARY> .015
<EPS-DILUTED> .014
</TABLE>
