===============================================================================
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, 2000
[ ] 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: 11,229,779 shares of its
$0.001 par value common stock as of May 10, 2000.
Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]
<PAGE> 2
CGI HOLDING CORPORATION
FORM 10-QSB
For the Quarter Ended March 31, 2000
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
a) Balance Sheet
as of March 31, 2000, December 31, 1999
and March 31, 2000 3
b) Statement of Stockholders' Equity
for the Three Months Ended March 31, 2000 4
c) Statement of Operations
for the Three Months Ended
March 31, 2000 and 1999 5
d) Statement of Cash Flows
for the Three Months Ended
March 31, 2000 and 1999 6
e) Footnotes 7,8,9
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 10,11
PART II. OTHER INFORMATION
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 Security Holders 12
Item 5. Other Information 12
Signature 12
PART I-FINANCIAL INFORMATION
ITEM I- FINANCIAL STATEMENTS
<PAGE> 3
CGI HOLDING CORPORATION, INC.
COMPARATIVE CONSOLIDATED BALANCE SHEET
MARCH 31, 2000, DECEMBER 31, 1999 AND MARCH 31, 1999
(UNAUDITED)
MARCH 31, DECEMBER 31, MARCH 31,
2000 1999 1999
------------- ------------ --------------
CURRENT ASSETS
Cash $124,634 $117,190 $78,695
Accounts Receivable 3,075,064 3,002,240 3,477,168
Allowance for Bad Debts (67,489) (167,489) (86,500)
Inventory 932,193 867,063 526,956
Other Current Assets 107,504 174,173 119,990
Costs and Estimated Earnings in
Excess of Billings 86,694 74,154 34,695
Refundable Income Taxes 211,029 211,029 0
Deferred Tax Asset 343,500 377,767 0
------------- ------------ --------------
TOTAL CURRENT ASSETS $4,813,129 $4,656,126 $4,151,004
------------- ------------ --------------
PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment $1,821,158 $1,820,165 $1,612,805
Less: Accumulated Depreciation (335,051) (273,649) (116,889)
------------- ------------ --------------
NET PROPERTY, PLANT AND EQUIPMENT $1,486,107 $1,546,516 $1,495,916
------------- ------------ --------------
OTHER ASSETS
Goodwill $510,981 $522,032 $731,821
Other Assets 96,474 98,251 56,661
------------- ------------ --------------
TOTAL OTHER ASSETS $607,455 $620,283 $788,482
------------- ------------ --------------
TOTAL ASSETS $6,906,691 $6,822,925 $6,435,402
============= ============ ==============
CURRENT LIABILITIES
Current Portion of Long-Term Debt $598,970 $622,860 $621,870
Notes Payable-Line of Credit 2,211,335 2,410,836 1,329,000
Accounts Payable 757,651 767,047 1,294,512
Short-Term Borrowings 152,050 152,050 114,918
Accrued Corporate Income Taxes 7,198 21,312 61,176
Accrued Liabilities 227,723 201,733 64,052
Loan Payable-Shareholder 315,000 315,000 0
------------- ------------ --------------
TOTAL CURRENT LIABILITIES $4,269,927 $4,490,838 $3,485,528
------------- ------------ --------------
LONG TERM LIABILITIES
Long-Term Debt, Net of Current Portion $924,771 $967,734 $541,897
Deferred Income Tax 22,665 22,665 22,665
Loan Payable-Shareholder 300,000 300,000 0
------------- ------------ --------------
TOTAL LONG-TERM LIABILITIES $1,247,436 $1,290,399 $564,562
------------- ------------ --------------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.001 par value, $0 $0 $0
5,000,000 shares authorized; no
shares issued or outstanding
Common Stock, $0.001 par value,
100,000,000 shares authorized;
11,129,779 shares issued and
outstanding 11,230 10,230 9,930
Additional Paid-In Capital 3,119,381 2,895,381 2,814,681
Retained Earnings (1,741,283) (1,863,923) (439,299)
------------- ------------ --------------
TOTAL STOCKHOLDERS' EQUITY 1,389,328 1,041,688 $2,385,312
------------- ------------ --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,906,691 $6,822,925 $6,435,402
============= ============ ==============
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, 2000
(UNAUDITED)
COMMON COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS
--------- ------ --------- ----------
COMMON SHARES $0.001 PAR VALUE
BALANCE: JANUARY 1, 2000 10,229,779 10,230 2,895,381 (1,863,923)
SOLD 1,000,000 SHARES ON 3/31/00
FOR $0.225/SHARE 1,000,000 1,000 224,000
NET PROFIT 122,640
---------- ------- --------- ----------
BALANCE: MARCH 31, 2000 11,229,779 11,230 3,119,381 (1,741,283)
========== ======= ========= ==========
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, 2000 AND 1999
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31
---------------------
2000 1999
---------- ----------
SALES $3,235,737 $2,843,446
COST OF GOODS SOLD 2,066,898 1,944,922
---------- ----------
GROSS PROFIT $1,168,839 $898,524
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 897,320 657,601
---------- ----------
INCOME FROM OPERATIONS $271,519 $240,923
---------- ----------
OTHER INCOME (EXPENSE)
Other 1,200 $2,412
Interest Income 0 0
Interest Expense (108,614) (31,908)
---------- ----------
TOTAL OTHER INCOME(EXPENSE) (107,414) ($29,496)
---------- ----------
INCOME BEFORE CORPORATE
INCOME TAXES $164,105 $211,427
---------- ----------
INCOME TAX PROVISION
Current Tax Expense 7,198 75,517
Deferred Tax Expense 34,267 0
---------- ----------
INCOME TAX PROVISION 41,465 $75,517
---------- ----------
NET INCOME $122,640 $135,910
========== ==========
NET INCOME PER
COMMON SHARE 10,262,037 8,809,779
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING $0.012 $0.015
========== ==========
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, 2000 AND 1999
(UNAUDITED)
MARCH 31, 2000 MARCH 31, 1999
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit $122,640 $135,910
Non-Cash Items Included In Net Profit
Depreciation 61,402 40,670
Amortization 11,051 8,547
Allowance for Doubtful Accounts (100,000) 0
Change in Accounts Receivable (72,824) (731,309)
Change in Inventory (65,130) (31,497)
Change in Other Current Assets 66,669 (26,576)
Change in Costs and Estimated Earnings
Over Billings (12,540) 229,080
Change in Other Assets 1,777 (11,661)
Change in Accounts Payable (9,396) 570,796
Change in Accrued Expenses 25,989 (5,124)
Change in Accrued Income Taxes (14,114) 26,415
Change in Deferred Tax Asset 34,267 0
------------------ ------------------
NET CASH CHANGE FROM OPERATING
ACTIVITIES $49,791 $205,251
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed Assets Acquired ($993) ($179,395)
------------------ ------------------
NET CASH CHANGE FROM INVESTING ACTIVITIES ($993) ($179,395)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Debt ($266,354) ($94,845)
Proceeds from Sale of Stock 225,000 0
------------------ ------------------
NET CASH CHANGE PROVIDED BY FINANCING
ACTIVITIES ($41,354) ($94,845)
------------------ ------------------
NET CASH CHANGE $7,444 ($68,989)
CASH BALANCE: JANUARY 1 117,190 147,685
------------------ ------------------
CASH BALANCE: MARCH 31 $124,634 $78,696
================== ==================
Supplemental Information
Interest Paid $108,614 $31,908
Income Taxes Paid 14,114 49,102
Supplemental Schedule of Noncash Investing and Financiang Activities
On March 5, 1999, 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.
In January of 1999, the Company assumed certain debt in the amount of $400,000
to purchase contracting equipment.
The accompanying notes are an integral part of these statements.
<PAGE> 7
CGI HOLDING CORPORATION, INC.
FOOTNOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - The company purchased the assets of Salle International on March 5,
1999 for $1,319,171. The purchase was accomplished through the issuance of
1,600,000 shares of its common stock and debt assumption of $951,171. The
company changed its name to Trifinity Inc. The nature of its business is
specializing in the manufacture and marketing of fragrance candles and liquid
fills. Please refer to 8 K/A filed on June 19, 1999 for details.
<PAGE> 8
Note 2- Notes Payable
Current Long-Term
----------- --------------
a.)CIB Bank - Line of Credit
Interest rate of 8.75% and maturity
date of August 1, 2000. This
note is secured by general assets
of SECO. $1,150,000 0
b.)Marine Bank and Savings - Line of Credit
Note due on 5/1/00 with an interest
rate of 8.00%. The note guaranteed
by the general assets of Roli Ink. 142,836 0
c.)Marine Bank - Line of Credit
Note due on 7/1/2000 with an interest
rate of 9.00%. The total amount
available is $1,000,000 455,000 0
d.)CIB Bank - Line of Credit
Interest rate is 1/2 over prime. 463,500 0
----------- --------------
TOTAL LINE OF CREDIT $2,211,336 0
e.)Union Federal Savings - Equipment Loan
Note dated 8/20/99 with a 6 year
amortization and interest rate of
11.25% 72,626 438,617
f.)Clara Bendersky - Note payable due
April 1, 2001 with interest rate of
10.00% 0 150,000
g.)Otto Barth - Note payable due
June 30, 2001 with interest rate of
8.25% 0 50,000
h.)Audrey Love- Note payable due
October 31, 1999 with interest rate of
8.25% 100,000 0
i.)George Kouronos - Note payable due
July 9, 2000 with interest rate of
8.25% 100,000 0
j.)John English - Note payable dated 7/1/99
with interest rate of 8.00% 121,500 0
k.)Note Payable - Finova
Note is due on June 1, 2000 and has
an interest rate of 11.75%. 112,410 0
l.)Computer Loan
36 month noted dated September 1999 with
an interest rate of 15.99%. 612 793
m.)Marine Bank Installment Loan
Note dated 8/5/99 with interest rate of
8.00 and maturity date of 8/5/04 30,700 104,762
n.)CIB Bank - Installment Loan
Note payable for 60 months at 4,091 per
month with interest rate of 8.50%
Maturity date is 2/29/04 36,593 127,111
o.)Vehicle 3 - payment is $285.09/month.
Note is secured by the vehicle and has
an interest rate of 8.5%. 1,069 0
p.)Vehicle 5 - payment is $303.05/month.
Note is secured by the vehicle and has
an interest rate of 7.65%. 3,234 3,490
q.)Equipment Loan - 48 month note dated
11/28/99 with interest rate of 5.9% 7,180 17,086
r.)Equipment Loan - 48 month note dated
December 1999. 9,346 16,520
s.)Vehicle Loan - 60 month note dated 4/3/99
with interest rate of 7.59% 3,700 16,392
----------- -------------
Subtotal 598,970 924,771
----------- -------------
Totals $2,810,306 924,771
=========== =============
<PAGE> 9
NOTE 3 - LOAN FROM SHAREHOLDERS
The Company and SECO-Illinois borrowed funds from shareholders throughout the
year to cover operating expenses. The total outstanding principal balance due as
of December 31, 1999 was $615,000. The detail of this principal balance as of
December 31, 1999 is as follows:
Jaime Bendersky $300,000 - Principal balance due on April 1, 2001.
Interest paid quarterly at a rate of 10%
(loan to the Company).
Jim Spachman $200,000 - No repayment terms. Interest paid
quarterly at 1/2% over the prime rate (loan
to the Company).
John Giura - $115,000 - No repayment terms. No interest paid
or accrued.
NOTE 4 - The financial statements reflect all adjustments which are, in the
opinion of management, necessary to present a fair statement of the results for
the three months ended March 31, 2000 and 1999.
NOTE 5 - The results of "Trifinity" only reflect operations from the date of
acquisition, March 5, 1999. No pro-forma results of operations are reflected for
this subsidiary due to lack of financial information of prior management.
<PAGE> 10
ITEM 2
CGI HOLDING CORPORATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's total assets at March 31, 2000 were $6,906,691, which represents
an increase over the prior quarter of $83,766, and an increase over the same
period last year of $471,289. Total debt at March 31, 2000 was $5,517,363,
compared to $5,781,237 at December 31, 1999, and $4,050,090 at March 31, 1999.
Short term debt on March 31, 2000 was $2,961,455, which represents a decrease of
$224,291 from the quarter ended December 31, 1999.
Liquidity and Capital Resources
Cash flow for the quarter ended March 31, 2000 were $7,444, as compared to a
negative cash flow from tha same quarter last year of $94,845. Working capital
at March 31, 2000 was $543,202. For the same quarter last year is was $665,476.
The remaining balance the company can borrow on its line of credit at March 31,
2000 was approximately $300,000, which management believes, along with accounts
receivable collections and anticipated tax refunds in the second quarter, will
be adequate to meet its current obligations.
Results of Operations
Sales for the first quarter of 2000 were $3,235,737, compared to the same period
last year of $2,843,446, an increase of $392,291. This increase is mainly
attributable to the activities of its Trifinity subsidiary generating $533,341
in the quarter. Gross margins increased in the quarter in the amount of $270,315
over the prior year. This resulted from increased gross margin percentages from
31.60% in 1999 to 36.12% in the current year. This increase again is the result
of Trfinity's operations.
Selling and administrative expenses increased from last year in the amount of
$240,719. As a percentage of sales the increase was 4.60%.
Interest expense for the quarter was $108,614, compared to $31,908 for the same
quarter in 1999. It was necessary for the company to substantially increase its
debt during 1999 as a result of the losses it sustained during the last three
quarters of the year.
Net income for the quarter was $122,640 or $0.012/share compared to $135,910 or
$0.015/share for the first quarter of 1999.
<PAGE> 11
Segment Analysis
INDUSTRY SEGMENT
THREE MONTHS ENDED MARCH 31, 2000
SECO ROLI TRIFINITY* CGI CONSOLIDATED
SALES 1,979,262 723,134 533,341 0 3,235,737
COST OF SALES 1,374,989 387,101 304,808 0 2,066,898
GROSS PROFIT 604,273 336,033 228,533 0 1,168,839
SELLING AND
ADMINISTRATION 482,564 225,565 169,491 19,700 897,320
INCOME FROM
OPERATIONS 121,709 110,468 59,042 (19,700) 271,519
OTHER INCOME(EXPENSE)
OTHER INCOME 0 0 1,200 0 1,200
INTEREST INCOME 0 0 0 0 0
INTEREST EXPENSE (52,788) (7,642) (24,455)(23,729) (108,614)
TOTAL (52,788) (7,642) (23,255)(23,729) (107,414)
INCOME BEFORE TAXES 68,921 102,826 35,787 (43,429) 164,105
* The results of TRIFINITY INC include activities from the purchase date of
March 5, 1999 forward.
INDUSTRY SEGMENT
THREE MONTHS ENDED MARCH 31, 1999
SECO ROLI TRIFINITY* CGI CONSOLIDATED
SALES 2,073,122 735,129 35,195 0 2,843,446
COST OF SALES 1,548,845 362,359 33,718 0 1,944,922
GROSS PROFIT 524,277 372,770 1,477 0 898,524
SELLING AND
ADMINISTRATION 339,204 210,329 62,596 45,472 657,601
INCOME FROM
OPERATIONS 185,073 162,441 (61,119) (45,472) 240,923
OTHER INCOME(EXPENSE)
OTHER INCOME 2,412 0 0 0 2,412
INTEREST INCOME 0 0 0 0 0
INTEREST EXPENSE (25,864) (1,087) 0 (4,957) (31,908)
TOTAL (23,452) (1,087) 0 (4,957) (29,496)
INCOME BEFORE TAXES 161,621 161,354 (61,119) (50,429) 211,427
* The results of TRIFINITY INC include activities from the purchase date of
March 5, 1999 forward.
<PAGE> 12
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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
People of the State of Illinois, Plaintiff, v. Robert Larsen, Et. Al.,
Defendants, No. 96 CH 1033.
This action is pending in the Circuit Court of the Nineteen Judicial Circuit,
Lake County, Illinois. The Company is not a party to this action. However,
SECO-Illinois is a defendant. This action, filed in 1996, was brought by the
State of Illinois to compel defendant Larsen to conduct an environmental
clean-up of his property. SECO-Illinois was thereafter named an additional
defendant, from whom the State sought the imposition of unspecified penalties as
the result of certain asbestos removal work which it had conducted on the
subject property. In the summer of 1999, Larsen filed a counterclaim against
SECO-Illinois, seeking unspecified damages against it for sums Larsen was
allegedly caused to expend by reason of improper remediation work performed by
SECO-Illinois. The matter remains pending and undetermined, and currently is in
the process of discovery. Discovery to date has indicated that Larsen is seeking
damages in excess of $200,000.
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: May 10, 2000 By: /s/ John Giura
----------------------------------
John Giura, Director, President
and Chief Financial Officer
Dated: May 10, 2000
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 10, 2000
/s/ Chander Jadhwani
- ------------------------
Chander Jadhwani, Director
Date: May 10, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 2000 and consolidated statements of
operations for the three months ended March 31, 2000, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 124,634
<SECURITIES> 0
<RECEIVABLES> 3,075,064
<ALLOWANCES> (67,489)
<INVENTORY> 932,193
<CURRENT-ASSETS> 4,813,129
<PP&E> 1,821,158
<DEPRECIATION> 335,051
<TOTAL-ASSETS> 6,906,691
<CURRENT-LIABILITIES> 4,269,927
<BONDS> 0
0
0
<COMMON> 11,230
<OTHER-SE> 1,378,098
<TOTAL-LIABILITY-AND-EQUITY> 6,906,691
<SALES> 3,235,737
<TOTAL-REVENUES> 3,235,737
<CGS> 2,066,898
<TOTAL-COSTS> 2,066,898
<OTHER-EXPENSES> 897,320
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108,614
<INCOME-PRETAX> 164,105
<INCOME-TAX> 41,465
<INCOME-CONTINUING> 122,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122,640
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
