===============================================================================
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: March 31, 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: 9,929,779 shares of its
$0.001 par value common stock as of May 12,1999.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]
<PAGE> 2
CGI HOLDING CORPORATION
FORM 10-QSB
For the Quarter Ended March 31, 1999
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
a) Balance Sheet
as of March 31, 1999 3
b) Statement of Stockholders' Equity
for the Three Months Ended March 31, 1999 4
c) Statement of Operations
for the Three Months Ended
March 31, 1999 and 1998 5
d) Statement of Cash Flows
for the Three Months Ended March 31, 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
MARCH 31, 1999 AND 1998
(UNAUDITED)
MARCH 31, MARCH 31,
1999 1998
------------- --------------
CURRENT ASSETS
Cash $78,696 152,301
Accounts Receivable(Net of Allowance) 3,390,668 1,210,763
Inventory 526,956 219,082
Unexpired Insurance 82,834 96,506
Negotiation Deposit 10,000 100,000
Other Current Assets 71,850 0
------------- --------------
TOTAL CURRENT ASSETS $4,161,004 $1,778,652
------------- --------------
PROPERTY, PLANT AND EQUIPMENT
Leasehold Improvements $28,262 $28,262
Fixtures and Equipment 1,024,354 447,825
Vehicles 162,302 147,804
Contracting Equipment 1,054,756 426,827
------------- --------------
2,269,674 1,050,718
Less: Accumulated Depreciation 820,052 686,191
------------- --------------
NET PROPERTY, PLANT AND EQUIPMENT 1,449,622 364,527
------------- --------------
OTHER ASSETS 46,661 3,552
------------- --------------
INTANGIBLE ASSETS
Goodwill 275,988 0
------------- --------------
TOTAL ASSETS $5,933,275 $2,146,731
============= ==============
CURRENT LIABILITIES
Current Portion of Long-Term Debt $1,950,869 $234,317
Accounts Payable 1,294,512 258,691
Short-Term Borrowings 114,918 156,102
Accrued Corporate Income Taxes 61,176 71,960
Accrued Liabilities 64,054 46,996
Loan Payable-Shareholder 0 0
------------- --------------
TOTAL CURRENT LIABILITIES $3,485,529 $768,066
------------- --------------
LONG TERM LIABILITIES
Long-Term Debt, Net of Current Portion $541,897 $128,851
Deferred Income Tax 10,740 9,822
------------- --------------
TOTAL LONG-TERM LIABILITIES 552,637 138,673
------------- --------------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.001 par value,
5,000,000 shares authorized; no
shares issued or outstanding $0 $0
Common Stock, $0.001 par value,
100,000,000 shares authorized;
8,272,779 shares issued and
outstanding 9,930 8,273
Additional Paid-In Capital 744,267 363,674
Retained Earnings 1,140,912 868,045
------------- --------------
TOTAL STOCKHOLDERS' EQUITY 1,895,109 $1,239,992
------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,933,275 $2,146,731
============= ==============
The accompanying notes are an integral part of these statements.
<PAGE> 4
CGI HOLDING CORPORATION, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 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 PERSONAL CARE PRODUCTS ON
MARCH 5, 1999 1,600,000 1,600 366,400
NET PROFIT 136,815
--------- ------ -------- --------- ---------
BALANCE: MARCH 31, 1999 9,929,779 $9,930 $744,267$1,140,912 $0
========= ====== ======== ========= =========
The accompanying notes are an integral part of these statements.
<PAGE> 5
CGI HOLDING CORPORATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
SALES $2,843,446 $1,692,403
COST OF GOODS SOLD 1,944,922 993,780
-------------- --------------
GROSS PROFIT $898,524 $698,623
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 656,696 488,366
-------------- --------------
INCOME FROM OPERATIONS $241,828 $210,257
-------------- --------------
OTHER INCOME (EXPENSE)
Other $2,412 $0
Interest Income 0 0
Interest Expense (31,908) (20,619)
--------------- --------------
TOTAL OTHER INCOME ($29,496) ($20,619)
--------------- --------------
INCOME BEFORE CORPORATE
INCOME TAXES $212,332 $189,638
INCOME TAX PROVISION 75,517 71,960
-------------- --------------
NET INCOME $136,815 $117,678
============== ==============
NET INCOME PER
COMMON SHARE $0.016 $0.014
============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 8,809,779 8,272,779
============== ==============
The accompanying notes are an integral part of these statements.
<PAGE> 6
CGI HOLDING CORPORATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
MARCH 31, 1999 MARCH 31, 1998
--------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit $136,815 $117,678
Non-Cash Items Included In Net Loss
Depreciation 48,312 26,327
Change in Accounts Receivable (731,309) 302,516
Change in Inventory (31,497) 19,175
Change in Prepaid Expenses (27,652) 0
Change in Prepaid Insurance 1,076 (14,244)
Change in Costs and Estimated Earnings
Over Billings 229,080 45,000
Change in Deposits (11,661) (100,000)
Change in Accounts Payable 570,796 (182,050)
Change in Accrued Expenses (5,124) (20,609)
Change in Accrued Income Taxes 26,415 (259,694)
Change in Billings in Excess of Costs and
Estimated Earnings 0 (52,461)
--------------- --------------
NET CASH CHANGE FROM OPERATING
ACTIVITIES $205,251 ($118,362)
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed Assets Acquired ($179,395) ($800)
Proceeds from Sale of Fixed Assets 0 0
--------------- --------------
NET CASH CHANGE FROM INVESTING ACTIVITIES ($179,395) ($800)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Shareholder Loans (269,880) 0
Change in Loan Payable $183,298 $75,926
Change in Notes Payable (8,263) 21,270
--------------- --------------
NET CASH CHANGE PROVIDED BY FINANCING
ACTIVITIES ($94,845) $97,196
--------------- --------------
NET CASH CHANGE ($68,989) ($21,966)
CASH BALANCE: JANUARY 1 147,685 174,267
--------------- --------------
CASH BALANCE: MARCH 31 $78,696 $152,301
=============== ==============
Supplemental Information
Interest Paid $31,908 $20,619
Income Taxes Paid $49,102 $251,449
The accompanying notes are an integral part of these statements.
Supplemental Schedule of Noncash Investing and Financiang 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 Personal Care Products, Inc.
The Company assumed certain debt in the amount of $400,000 to purchase
contracting equipment.
<PAGE> 7
ITME 2
CGI HOLDING CORPORATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company had net income for the quarter ended March 31, 1999 of $136,815
compared to a net income of $117,678 for the three months ended March 31, 1998.
Revenues increased during the three months ended March 31, 1999, resulting in an
increase in net income of $19,137, as compared to the three months ended March
31, 1998.
Total revenues for the three months ended March 31, 1999 were $2,843,446 an
increase of $1,151,043 or approximately 68%, from the three months ended March
31, 1998. The increase in revenues is primarily attributable to the increase of
SECO contract sales activities.
During the three months ended March 31, 1999 and 1998, direct costs of
(production and services) were $1,944,922 and $993,780 or 68% and 59% of
revenues, respectively. This represents an increase in costs of approximately 9%
over the three months ended March 31, 1998. Due to competition increasing in the
industry a percentage of SECO's work had been done as joint ventures with
minorities, which was about 30-40% of SECO's work. For this work, gross profit
margins are in the range of 20-25%.
Total operating expenses for the three months ended March 31, 1999 were
$656,696, an increase of $168,330 over the three months ended March 31, 1998.
The 34% increase in operating expenses is primarily attributable to increases in
costs related to new expansion and acquisitions.
Financial Condition
At March 31, 1999, the Company's current assets exceeded its current liabilities
by $675,475 as compared with current assets exceeding current liabilities by
$1,010,586 at March 31, 1998 representing a decrease of $335,111. The Company's
short-term borrowings increased by $1,675,368 since the same period last year.
This was due to the increase in Seco's accounts receivable and the assumption of
debt during the acquisition of Personal Care Products.
Total assets were $5,565,275 at March 31, 1999 as compared to $3,580,047 at
December 31, 1998. The increase of $1,985,228 is attributable to an increase in
(i) Accounts Receivable, and (ii) assets acquired through acquisitions.
The Company endeavors to achieve a positive cash flow from operations, although
there can be no assurance that the Company will be successful in achieving that
objective.
<PAGE> 8
Liquidity and Capital Resources
Cash flow decreased from ($21,966) in the first three months of 1998 to
($68,989) in the first three months of 1999. As of March 31, 1999, the Company
had $78,696 in cash. The Company uses its working capital to fund ongoing
operations.
Management anticipates that the acquisition of Personal Care Products will
result in greater liquidity to the Company.
The Company anticipates that existing cash will be sufficient to fund the
Company's operations and capital requirements for the foreseeable future.
However, no assurance can be given that changing business circumstances will not
require additional capital for reasons that are not currently anticipated or
that the necessary capital will then be available to the Company on favorable
terms, or at all.
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
On Mrach 5, 1999, CGI Holding Corporation acquired substantially all the assets
of Personal Care Products, Inc. for approxiamately $1,300,000. These financial
statements reflect the activities from March 5, 1999 through March 31, 1999 in
their consolidated totals. Reference is made to Form 8-K filed on March 19,
1999, subsequently amended.
Additionally during the quarter, CGI formed two subsidiaries, SECO of Indiana,
Inc. and SECO of Missouri, Inc. to expand their asbestos removal and lead
mitigation activities into new markets.
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: May 17, 1999 By: /s/ John Giura
----------------------------------
John Giura, Director, President
and Chief Financial Officer
Dated: May 17, 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: May 17, 1999
/s/ Chander Jadhwani
- ------------------------
Chander Jadhwani, Director
Date: May 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 1999 and consolidated statements of
operations for the three months ended March 31, 1999, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 78,696
<SECURITIES> 0
<RECEIVABLES> 3,477,168
<ALLOWANCES> 86,500
<INVENTORY> 526,956
<CURRENT-ASSETS> 4,161,004
<PP&E> 2,269,674
<DEPRECIATION> (820,052)
<TOTAL-ASSETS> 5,933,275
<CURRENT-LIABILITIES> 3,485,529
<BONDS> 0
0
0
<COMMON> 9,930
<OTHER-SE> 1,885,179
<TOTAL-LIABILITY-AND-EQUITY> 5,933,275
<SALES> 2,843,446
<TOTAL-REVENUES> 2,845,858
<CGS> 1,944,922
<TOTAL-COSTS> 1,944,922
<OTHER-EXPENSES> 656,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,908
<INCOME-PRETAX> 212,332
<INCOME-TAX> 75,517
<INCOME-CONTINUING> 136,815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 136,815
<EPS-PRIMARY> .016
<EPS-DILUTED> .016
</TABLE>
