===============================================================================
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, 1999
[ ] 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
- -------------------------------------------- ---------
(Address of principal executive offices) (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: 10,129,779 shares of its
$0.001 par value common stock as of July 26, 1999.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]
<PAGE> 2
CGI HOLDING CORPORATION
FORM 10-QSB
For the Quarter Ended June 30, 1999
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
a) Balance Sheet
as of June 30, 1999, December 31, 1998
and June 30, 1998 3
b) Statement of Stockholders' Equity
for the Six Months Ended June 30, 1999 4
c) Statement of Operations
for the Three and Six Months Ended
June 30, 1999 and 1998 5
d) Statement of Cash Flows
for the Six Months Ended June 30, 1999 and 1998 6
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 7,8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Signature 9
<PAGE> 3
PART I-FINANCIAL INFORMATION
ITEM I- FINANCIAL STATEMENTS
CGI HOLDING CORPORATION, INC.
COMPARATIVE CONSOLIDATED BALANCE SHEET
JUNE 30, 1999, DECEMBER 31, 1998 AND JUNE 30, 1998
(UNAUDITED)
JUNE 30, DECEMBER 31, JUNE 30,
1999 1998 1998
------------- ------------ --------------
CURRENT ASSETS
Cash $167,390 $147,685 $47,465
Accounts Receivable(Net of Allowance) 3,209,518 2,487,844 1,191,869
Inventory 873,232 217,535 172,133
Unexpired Insurance 61,450 83,910 95,333
Prepaid Expenses 47,164 0 0
Negotiation Deposit 0 0 110,000
Other Current Assets 68,613 19,503 19,509
Costs and Estimated Earnings in
Excess of Billings 163,482 263,775 233,689
------------- ------------ --------------
TOTAL CURRENT ASSETS $4,590,849 $3,220,252 $1,859,998
------------- ------------ --------------
PROPERTY, PLANT AND EQUIPMENT
Leasehold Improvements $28,262 $28,262 $28,262
Fixtures and Equipment 1,131,456 461,998 455,693
Vehicles 162,302 162,302 162,302
Contracting Equipment 1,063,189 478,973 426,827
------------- ------------ --------------
$2,385,209 $1,131,535 $1,073,084
Less: Accumulated Depreciation 874,786 771,740 713,385
------------- ------------ --------------
NET PROPERTY, PLANT AND EQUIPMENT $1,510,423 $359,795 $359,699
------------- ------------ --------------
OTHER ASSETS 56,419 0 3,552
------------- ------------ --------------
INTANGIBLE ASSETS
Goodwill 100,288 0 0
------------- ------------ --------------
TOTAL ASSETS $6,257,979 $3,580,047 $2,223,249
============= ============ ==============
CURRENT LIABILITIES
Current Portion of Long-Term Debt $2,296,692 $941,987 $270,707
Accounts Payable 1,059,204 723,721 327,898
Short-Term Borrowings 112,735 123,181 66,454
Accrued Corporate Income Taxes 20,865 34,761 43,820
Accrued Liabilities 115,184 69,173 69,327
Billings in Excess of Costs and
Estimated Earnings 148,800 0 0
Loan Payable-Shareholder 110,000 269,880 0
------------- ------------ --------------
TOTAL CURRENT LIABILITIES $3,863,480 $2,162,703 $768,066
------------- ------------ --------------
LONG TERM LIABILITIES
Long-Term Debt, Net of Current Portion $487,502 $16,310 $88,972
Deferred Income Tax 10,740 10,740 9,822
------------- ------------ --------------
TOTAL LONG-TERM LIABILITIES $498,242 $27,050 $138,673
------------- ------------ --------------
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;
10,129,779 shares issued and
outstanding 10,130 8,330 8,273
Additional Paid-In Capital 804,067 377,867 363,674
Retained Earnings 1,082,060 1,004,097 974,302
------------- ------------ --------------
TOTAL STOCKHOLDERS' EQUITY 1,896,257 $1,390,294 $1,346,249
------------- ------------ --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,257,979 $3,580,047 $2,223,249
============= ============ ==============
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, 1999
(UNAUDITED)
COMMON COMMON PAID-IN RETAINED TREASURY
SHARES STOCK CAPITAL EARNINGS STOCK
--------- ------ -------- ---------- ---------
COMMON SHARES $0.001 PAR VALUE
BALANCE: JANUARY 1, 1999 8,329,779 $8,330 $377,867 1,004,097 $0
ISSUED 1,600,000 SHARES OF
COMMON STOCK FOR THE PURCHASE
OF TRIFINITY ON
MARCH 5, 1999 1,600,000 1,600 366,400
ADDITIONAL ISSUANCE OF 200,000
SHARES ON JUNE 15, 1999 AT
$0.30/SHARE 200,000 200 59,800
NET PROFIT 77,963
---------- ------- -------- ---------- ---------
BALANCE: JUNE 30, 1999 10,129,779 $10,130 $804,067 $1,082,060 $0
========== ======= ======== ========== =========
The accompanying notes are an integral part of these statements.
<PAGE> 5
CGI HOLDING CORPORATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
SALES $2,795,626 $1,613,438 $5,639,072 $3,305,841
COST OF GOODS SOLD 1,916,738 952,285 3,861,660 1,946,065
---------- ---------- --------- ----------
GROSS PROFIT $878,888 $661,153 $1,777,412 $1,359,776
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 942,392 477,961 1,599,088 966,327
---------- ---------- --------- ----------
INCOME FROM OPERATIONS ($63,504) $183,192 $178,324 $393,449
---------- ---------- --------- ----------
OTHER INCOME (EXPENSE)
Other $31,218 $93 $33,630 $93
Interest Income 1,679 0 1,679 0
Interest Expense (75,115) (9,589) (107,023) (30,208)
---------- ---------- --------- ----------
TOTAL OTHER INCOME(EXPENSE) ($42,218) ($9,496) ($71,714) ($30,115)
---------- ---------- --------- ----------
INCOME BEFORE CORPORATE
INCOME TAXES ($105,722) $173,696 $106,610 $363,334
INCOME TAX PROVISION (46,870) 67,439 28,647 139,399
---------- ---------- --------- ----------
NET INCOME ($58,852) $106,257 $77,963 $223,935
========== ========== ========= ==========
NET INCOME PER
COMMON SHARE ($0.006) $0.01 $0.008 $0.03
========== ========== ========= ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,962,746 8,272,779 9,380,608 8,272,779
========== ========== ========= ==========
The accompanying notes are an integral part of these statements.
<PAGE> 6
CGI HOLDING CORPORATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
JUNE 30, 1999 JUNE 30, 1998
--------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit $77,963 $223,935
Non-Cash Items Included In Net Loss
Depreciation 103,046 53,521
Amortization 2,396 0
Change in Accounts Receivable (550,159) 321,410
Change in Inventory (203,773) 66,124
Change in Prepaid Expenses (12,164) 0
Change in Loans Receivable (59,110) (19,509)
Change in Prepaid Insurance 22,460 (13,071)
Change in Costs and Estimated Earnings
Over Billings 100,293 (178,689)
Change in Deposits 9,675 (110,000)
Change in Other Assets (58,490) 0
Change in Accounts Payable 335,483 (112,843)
Change in Accrued Expenses 46,011 1,722
Change in Accrued Income Taxes (13,896) (287,834)
Change in Billings in Excess of Costs and
Estimated Earnings 148,800 (52,461)
--------------- -------------
NET CASH CHANGE FROM OPERATING
ACTIVITIES ($51,465) ($107,695)
--------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed Assets Acquired ($293,230) (23,166)
Proceeds from Sale of Fixed Assets 0 0
--------------- -------------
NET CASH CHANGE FROM INVESTING ACTIVITIES ($293,230) (23,166)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Shareholder Loans 110,000 0
Change in Loan Payable 204,846 72,437
Change in Notes Payable (10,446) (68,378)
Proceeds from Sale of Stock 60,000 0
--------------- --------------
NET CASH CHANGE PROVIDED BY FINANCING
ACTIVITIES 364,400 4,059
--------------- --------------
NET CASH CHANGE 19,705 ($126,802)
CASH BALANCE: JANUARY 1 147,685 174,267
--------------- --------------
CASH BALANCE: JUNE 30 167,390 47,465
=============== ==============
Supplemental Information
Interest Paid $104,246 $30,208
Income Taxes Paid $49,102 $426,864
The accompanying notes are an integral part of these statements.
Supplemental Schedule of Noncash Investing and Financing Activities
The Company issued 1,600,000 shares of common stock with a par value of $.001
and market value of 368,000 plus assumed debt of $951,171 in connection with the
purchase of the assets of Trifinity, Inc.
The Company assumed certain debt in the amount of $400,000 to purchase
contracting equipment.
<PAGE> 7
ITEM 2
CGI HOLDING CORPORATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company experienced a net loss for the quarter ended June 30, 1999 in the
amount of ($58,852) resulting in a net operating profit for the six months ended
June 30, 1999 of $77,963 (or $0.008 per share). Sales for the quarter ended June
30, 1999 were $2,795,626 and $5,639,072 for the six months ended June 30, 1999
compared to $1,613,438 and $3,305,841 for the respective periods of 1998. The
operating results for 1999, ($58,852) loss for the quarter and $77,963 profit
for the six months of 1999 compared to the operating results of 1998 of $106,257
($.01 per share) for the second quarter and $223,925 ($.03 per share) six months
result.
Management attributes the negative earnings for the quarter primarily due to the
acquisition of Trifinity, Inc. (formally named Personal Care Products, Inc.).
The activities of Trifinity, Inc. during the quarter were primarily new product
development, establishing a national network sales force and refining the
manufacturing capabilities. The operating loss of this subsidiary was ($149,184)
for the June 30, 1999 quarter. The Company experienced non-recurring expenses,
mostly professional fees, relating to this acquisition of approximately
$100,000. Management is confident that the outlook for Trifinity is positive and
this acquisition will contribute to the Company's sales and earnings prior to
the end of the year.
Financial Condition
At June 30, 1999, the Company's current assets were $4,590,849 compared to
current liabilities of $3,753,480 resulting in net working capital of $837,369.
This compares to net working capital for same period last year of $1,081,792 a
decrease of $244,423.
Total assets at June 30, 1999 were $6,257,979 compared to June 30, 1998 of
$2,223,249 an increase of $4,034,730. This increase is primarily due to the
acquisition of Trifinity, Inc. and the creation of two contracting subsidiaries,
Safe Environment Corporation of Indiana and Safe Environment Corporation of
Missouri.
<PAGE> 8
Liquidity and Capital Resources
The Company's cash flow for the first six months of 1999 reflected a net cash
increase of $19,705 resulting in a net cash position at June 30, 1999 in the
amount of $147,685. During the quarter ended June 30, 1999, the Company sold
200,000 additional shares for $60,000 to help fund the acquisition of Trifinity,
Inc. Additionally, the Company increased its long-term debt in the amount of
$204,846 plus it borrowed on a short-term basis $110,000 from its majority
shareholder and CEO.
Forward-Looking Statements
This report included forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements contain information regarding growth and earnings expectations based
on the Company's current assumptions involving a number of risks and
uncertainties. There are certain important factors that can cause actual results
to differ materially from the forward-looking statements, including, without
limitation, adverse business or market conditions; the ability of the Company to
secure and satisfy customers; and adverse competitive developments. Readers are
cautioned not to place undue reliance on forward-looking statements.
<PAGE> 9
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
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
CGI Holding Corporation
Dated: July26, 1999 By: /s/ John Giura
----------------------------------
John Giura, Director, President
and Chief Financial Officer
Dated: July 26, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Ann K. Knaack
- ------------------------
Ann K. Knaack, Director and Vice President
Date: July 26, 199
/s/ Chander Jadhwani
- ------------------------
Chander Jadhwani, Director
Date: July 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of June 30, 1999 and consolidated statements of
operations for the six months ended June 30, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 167,390
<SECURITIES> 0
<RECEIVABLES> 3,285,576
<ALLOWANCES> 76,058
<INVENTORY> 873,232
<CURRENT-ASSETS> 4,590,849
<PP&E> 2,385,209
<DEPRECIATION> (874,786)
<TOTAL-ASSETS> 6,257,979
<CURRENT-LIABILITIES> 3,863,480
<BONDS> 0
0
0
<COMMON> 10,130
<OTHER-SE> 1,886,127
<TOTAL-LIABILITY-AND-EQUITY> 6,257,979
<SALES> 5,639,072
<TOTAL-REVENUES> 5,672,702
<CGS> 3,861,660
<TOTAL-COSTS> 3,861,660
<OTHER-EXPENSES> 1,599,088
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,023
<INCOME-PRETAX> 106,610
<INCOME-TAX> 28,646
<INCOME-CONTINUING> 77,963
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,963
<EPS-BASIC> .008
<EPS-DILUTED> .008
</TABLE>
