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UNITED STATES
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: June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 33-19980-D
CGI HOLDING CORPORATION
---------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 87-0450450
- ------------------------- ----------------------------------
State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
8400 Brookfield Avenue, Brookfield, Illinois 60513
- -------------------------------------------- ---------
(Adress of principal executive office) (Zip Code)
Issuer's telephone number, including area code (708) 387-9200
---------------
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 12 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 [ ] Yes [ ] No [x]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 8,272,779 shares of its
$0.001 par value common stock as of August 6, 1998.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]
<PAGE> 2
CGI HOLDING CORPORATION
FORM 10-QSB
For the Quarter Ended June 30, 1998
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
a) Balance Sheets
as of June 30, 1998, December 31, 1997 and June 30, 1997 3
b) Statement of Stockholders' Equity
for the Six Months Ended June 30, 1998 4
c) Statement of Operations
for the Three and Six Months Ended June 30, 1998 and 1997 5
d) Statement of Cash Flows
for the Six Months Ended June 30, 1998 and 1997 6
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Signature 8
<PAGE> 3
CGI HOLDING CORPORATION, INC.
CONDENSED COMPARATIVE CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS JUNE 30, DECEMBER 31, JUNE 30,
1998 1997 1997
------------ ------------ ------------
CURRENT ASSETS
Cash $47,465 $174,267 $128,864
Accounts Receivable 1,191,869 1,513,279 1,688,359
Inventory 172,133 238,257 204,070
Unexpired Insurance 95,333 82,262 85,638
Negotiation Deposit 110,000 0 0
Other Assets 19,509 0 3,009
Costs and Estimated Earnings in
Excess of Billings 223,689 45,000 40,494
------------ ------------ ------------
TOTAL CURRENT ASSETS $1,859,998 $2,053,065 $2,150,434
------------ ------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Leasehold Improvements $28,262 $28,262 $28,262
Fixtures and Equipment 455,693 447,025 370,698
Vehicles 162,302 147,804 149,081
Contracting Equipment 426,827 426,827 426,827
------------ ------------ ------------
Total $1,073,084 $1,049,918 $974,868
Less: Accumulated Depreciation 713,385 659,864 609,516
------------ ------------ ------------
NET PROPERTY, PLANT AND EQUIPMENT $359,699 $390,054 $365,352
------------ ------------ ------------
OTHER ASSETS $3,552 $3,552 $23,779
------------ ------------ ------------
TOTAL ASSETS $2,223,249 $2,446,671 $2,539,565
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt $270,707 $131,906 $380,381
Accounts Payable 327,898 440,741 457,311
Short-Term Borrowings 66,454 134,832 142,313
Accrued Corporate Income Taxes 43,820 331,654 176,447
Accrued Liabilities 69,327 120,066 116,516
Loan Payable-Shareholder 0 0 24,356
------------ ------------ ------------
TOTAL CURRENT LIABILITIES $778,206 $1,159,199 $1,297,324
------------ ------------ ------------
LONG TERM LIABILITIES
Long-Term Debt,Net of Current Portion $88,972 $155,336 $214,162
Deferred Income Tax 9,822 9,822 9,822
------------ ------------ ------------
TOTAL LONG-TERM LIABILITIES $98,794 $165,158 $223,984
------------ ------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.001 par value,
5,000,000 shares authorized; no
shares issued or outstanding $0 $0 $0
Common Stock, $0.001 par value,
100,000,000 shares authorized;
8,272,779 shares issued and
outstanding 8,273 8,273 7,113
Additional Paid-In Capital 363,674 363,674 211,150
Retained Earnings 974,302 750,367 799,994
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY $1,346,249 $1,122,314 $1,018,257
------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,223,249 $2,446,671 $2,539,565
============ ============ ============
The accompanying notes are an integral part of these statements.
<PAGE> 4
CGI HOLDING CORPORATION, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
COMMON COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS
----------- --------- ----------- -----------
COMMON SHARES $0.001 PAR VALUE
STOCK ACCOUNTS REFLECTED AT
POST REORGANIZATION UNIT SHARES
BALANCE: JANUARY 1, 1998 8,272,779 $8,273 $363,674 $750,367
NET PROFIT 223,935
----------- --------- ----------- -----------
BALANCE: JUNE 30, 1998 8,272,779 $8,273 $363,674 $974,302
=========== ========= =========== ===========
The accompanying notes are an integral part of these statements.
<PAGE> 5
CGI HOLDING CORPORATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- -------------------------
1998 1997 1998 1997
------------ ------------ ------------ -----------
SALES $1,613,438 $1,898,412 $3,305,841 $4,275,253
COST OF GOODS SOLD 952,285 1,346,142 1,946,065 2,786,233
------------ ------------ ------------ -----------
GROSS PROFIT $661,153 $552,270 $1,359,776 $1,489,020
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 477,961 426,119 966,327 898,006
------------ ------------ ------------ -----------
INCOME FROM OPERATIONS $183,192 $126,151 $393,449 $591,014
------------ ------------ ------------ -----------
OTHER INCOME (EXPENSE)
Other $93 $72,770 $93 $94,160
Interest Income 0 0 0 0
Interest Expense (9,589) (14,829) (30,208) (24,889)
------------ ------------ ------------ -----------
TOTAL OTHER INCOME (EXPENSE) ($9,496) $57,941 ($30,115) $69,271
------------ ------------ ------------ -----------
INCOME BEFORE INCOME TAXES $173,696 $184,092 $363,334 $660,285
INCOME TAX PROVISION 67,439 17,510 139,399 176,447
------------ ------------ ------------ -----------
NET INCOME $106,257 $166,582 $223,935 $483,838
============ ============ ============ ===========
NET INCOME PER COMMON
SHARE $0.01 $0.02 $0.03 $0.07
============ ============ ============ ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
8,272,779 7,112,779 8,272,779 7,112,779
============ ============ ============ ===========
<PAGE> 6
CGI HOLDING CORPORATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit $223,935 $483,837
Non-Cash Items Included in Net Profit
Depreciation 53,521 48,919
Change in Accounts Receivable 321,410 (13,464)
Change in Inventory 66,124 (8,933)
Change in Loans Receivable (19,509) (1,210)
Change in Prepaid Insurance (13,071) (5,984)
Change in Costs and Estimated Earnings
Over Billings (178,689) 31,801
Change in Deposits (110,000) (16,811)
Change in Accounts Payable (112,843) (251,199)
Change in Accrued Expenses 1,722 5,516
Change in Inter-Company Receivable 0 (2,624)
Change in Accrued Income Taxes (287,834) 82,565
Change in Billings in Excess of Costs and
Estimated Earnings (52,461) (101,182)
------------- -------------
NET CASH CHANGE FROM OPERATING
ACTIVITIES ($107,695) $251,231
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed Assets Acquired ($23,166) ($50,793)
Proceeds from Sale of Fixed Assets 0 1,143
------------- -------------
NET CASH CHANGE FROM INVESTING ACTIVITIES ($23,166) ($49,650)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Loan Payable $72,437 ($111,811)
Change in Notes Payable (68,378) 32,490
Change in Treasury Stock 0 (81,500)
Proceeds from Sale of Stock 0 48,510
Distribution to Shareholders 0 (33,640)
------------- -------------
NET CASH CHANGE FROM FINANCING
ACTIVITIES $4,059 ($145,951)
------------- -------------
NET CASH CHANGE ($126,802) $55,630
CASH BALANCE: JANUARY 1 174,267 73,234
------------- -------------
CASH BALANCE: JUNE 30 $47,465 $128,864
============= =============
Supplemental Information
Interest Paid $30,208 $24,889
Income Taxes Paid 426,864 93,882
The accompanying notes are an integral part of these statements.
<PAGE> 7
CGI Holding Corporation
Notes for Financial Statements
June 30, 1998
(Unaudited)
Note 1 - Condensed Consolidated Financial Statements
The accompanying condensed consolidated financial statements have been prepared
by the Company, and are not audited. All adjustments necessary for fair
presentation have been included. All inter-company transactions have been
eliminated. These financial statements are condensed and, therefore do not
include all the disclosures normally required by generally accepted accounting
principles.
The consolidated financial statements include the accounts of Safe Environment
Corporation, Roli Ink Corporation and CGI Holding Corporation.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Future Outlook
While the earnings for the second quarter of 1998 were down as compared to the
second quarter of 1997, we expect a good improvement in the third quarter of
1998 versus the third quarter of 1997.
Both companies (RIC and Seco) operate in industries that are somewhat seasonal
but the outlook for both companies is favorable for 1998.
Liquidity and Capital Resources
Total assets at June 30, 1998 totalled $2,223,249. Working capital at June 30,
1998 was $1,081,792 compared to the last quarter, March, 1998, of $1,010,586
representing an increase of $71,206. Long-term debt was reduced in the current
quarter by $39,879.
Results of Operations
Sales for the second quarter of 1998 were $1,613,438 compared to the second
quarter of 1997 of $1,898,412 representing a 17% decrease.
Sales for the first six months of the current fiscal year were $3,305,841 as
compared to the first six months of 1997 of $4,275,253, or a decrease of 29%.
The main reason for this decrease is the fact that a contract of $900,000
obtained by Seco in May, 1998 was postponed to a starting date of July 5, 1998.
Net operating profits for the second quarter of 1998 were $106,257 and $223,935
for the six months ended June 30, 1998. This compares to $166,582 and $483,838
respectfully for comparable periods 1997.
Future Plans
Reflected on the balance sheet on June 30, 1998 is a `Negotiation Deposit' in
the amount of $110,000. These funds represent "good faith deposit" to a
successful acquisition of a manufacturing concern.
The Company is in active negotiation phase to acquire a manufacturing concern.
Preliminary due diligence has resulted in the Company engaging in final
negotiations to purchase the assets and long term non-cancelable contracts of
the said manufacturing concern. Talks are underway to secure long term
equity/debt financing to facilitate a successful acquisition of the same.
The "good faith deposit" of $110,000 will be refunded to the Company in it's
entirety upon closing or upon CGI Holding Corporation foregoing the said
acquisition at its option. The conclusion of the said acquisition is estimated
at six to eight weeks.
<PAGE> 8
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
(a) Exhibits.
---------
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CGI HOLDING CORPORATION
Dated: August 6, 1998 By: /S/ John Giura
-------------- ------------------
John Giura, President and Director
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 47,465
<SECURITIES> 0
<RECEIVABLES> 1,191,869
<ALLOWANCES> 0
<INVENTORY> 172,133
<CURRENT-ASSETS> 1,859,998
<PP&E> 1,073,084
<DEPRECIATION> (713,385)
<TOTAL-ASSETS> 2,223,249
<CURRENT-LIABILITIES> 778,206
<BONDS> 88,972
0
0
<COMMON> 8,273
<OTHER-SE> 1,337,976
<TOTAL-LIABILITY-AND-EQUITY> 2,223,249
<SALES> 3,305,841
<TOTAL-REVENUES> 3,305,841
<CGS> 1,946,065
<TOTAL-COSTS> 1,946,065
<OTHER-EXPENSES> 966,327
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,208
<INCOME-PRETAX> 363,334
<INCOME-TAX> 139,399
<INCOME-CONTINUING> 223,935
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223,935
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
