SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10Q-SB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED:
JUNE 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _____ TO _____
Commission File No. 0-18303
- -----------------------------------------------------------------
LEASING EDGE CORPORATION
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware No. 11-2990598
- -------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6540 S. Pecos Road, Las Vegas, Nevada 89120
- -------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
(702) 454-7900
- --------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 [ ]
Applicable only to issuers involved in bankruptcy proceedings
during the preceding five years:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
July 31, 1996: 3,756,319 common shares.
Traditional Small Business Disclosure Format (Check one): Yes [ ];
No [X]
LEASING EDGE CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
<TABLE>
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PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1996 (Unaudited)
and December 31, 1995 3
Consolidated Statements of Operations - for the three
and six months ended June 30, 1996 and 1995 (Unaudited) 5
Consolidated Statements of Cash Flows - for the three and
and six months ended June 30, 1996 and 1995 (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
(a) Exhibits
(b) Reports on Form 8-K
</TABLE>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
LEASING EDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited) (Audited)
----------- ------------
<S> <C> <C>
ASSETS:
Cash $ 112,067 $ 209,084
Receivables - net of allowance
for doubtful accounts of $95,322
and $12,000 1,156,064 434,321
Notes receivable - employees 167,371 148,750
Inventory, net 666,255 1,336,747
Leased assets:
Operating leases 21,018,767 21,026,590
Sales-type and direct financing 2,619,466 3,165,539
Furniture and equipment - net of
accumulated depreciation of
$284,439 and $266,478 163,029 148,366
Other assets 652,877 413,847
Goodwill, net of accumulated
amortization of $66,006 and
$50,235 386,110 401,881
---------- ----------
TOTAL ASSETS $26,942,006 $27,285,125
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
(continued)
LEASING EDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited) (Audited)
----------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 1,379,303 $ 1,576,165
Accrued liabilities 424,395 311,734
Notes payable and lines of credit 3,441,064 3,236,954
Nonrecourse and recourse discounted
lease rentals 15,520,896 16,260,002
Other liabilities 58,751 25,344
---------- ----------
TOTAL LIABILITIES 20,824,409 21,410,199
---------- ----------
STOCKHOLDERS' EQUITY:
Series A convertible preferred
stock, $.01 par value; 1,000,000
shares authorized, 380,000 shares
issued; 229,016 shares outstanding 2,290 2,290
Common stock, $.01 par value;
10,000,000 shares authorized,
3,759,319 and 3,132,319 shares
issued and 3,756,319 and 3,129,319
shares outstanding at June 30, 1996
and December 31, 1995, respectively 37,594 31,324
Additional paid-in capital 9,910,121 9,526,259
Accumulated deficit (3,795,408) (3,647,947)
---------- ----------
6,154,597 5,911,926
Common stock held in treasury, at
cost; 3,000 shares (12,000) (12,000)
Note receivable from stockholder (25,000) (25,000)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 6,117,597 5,874,926
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $26,942,006 $27,285,125
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
LEASING EDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Operating leases $2,490,734 $2,631,099 $5,081,948 $5,343,265
Sales-type leases 347,949 338,838 397,001 430,569
Direct finance leases 12,417 20,150 24,503 38,230
Direct sales and other 328,649 182,810 889,106 679,769
--------- --------- --------- ---------
Total revenues from
leasing operations 3,179,749 3,172,897 6,392,558 6,491,833
Distribution sales 1,484,210 1,262,704 3,047,743 2,863,257
--------- --------- ---------
- ---------Total revenues 4,663,959 4,435,601 9,440,301
9,355,090
--------- --------- ---------
- ---------Costs and expenses:
Operating leases 1,749,313 1,901,287 3,562,021 3,728,219
Sales-type leases 210,761 213,341 210,761 213,341
Interest expense 310,002 329,960 648,512 830,460
Direct sales 399,800 196,520 782,000 612,655
--------- --------- ---------
- ---------Total costs from
leasing operations 2,669,876 2,641,108 5,203,294 5,384,675
Distribution cost of
sales 1,297,807 1,069,447 2,660,437 2,445,923
Selling, general and
administrative expenses 849,251 508,716 1,549,626 1,143,846
Interest expense 90,422 57,649 174,405 93,648
--------- --------- ---------
- ---------Total costs and expenses 4,907,356 4,276,920 9,587,762
9,068,092
--------- --------- ---------
- ---------Income (loss) before
income taxes (243,397) 158,681 (147,461) 286,998
Provision for income
taxes - 63,472 - 114,798
--------- --------- ---------
- ---------Net income (loss) $ (243,397) $ 95,209 $ (147,461)
$ 172,200
========= ========= ========= =========
Earnings per common
share $ (0.09) $ 0.01 $ (0.07) $ 0.02
========= ========= ========= =========
Weighted average common
shares outstanding 3,508,967 2,923,677 3,319,143 2,697,011
========= ========= ========= =========
</TABLE>
The accompanying notes are integral part of these consolidated financial
statements.
LEASING EDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ (147,461) $ 172,200
Adjustments to reconcile net
income (loss) to cash provided
by operating activities:
Depreciation and amortization 3,595,754 3,806,379
Deferred income taxes - 114,798
Change in assets and liabilities
due to operating activities:
(Increase) decrease in
accounts receivable (740,364) 373,173
(Increase) decrease in
inventory 513,787 (98,211)
Decrease in accounts payable (196,862) (821,969)
(Decrease) increase in
accrued liabilities 112,661 (705,771)
All other operating activities (128,801) (187,455)
----------- ----------
Total adjustments 3,156,175 2,480,944
----------- ----------
Net cash provided by operating
activities 3,008,714 2,653,144
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales, transfers and disposals of
inventory and equipment 558,802 972,140
Purchases of inventory for lease (3,943,295) (2,815,725)
Purchases of furniture and equipment (32,625) (3,843)
Additions to net investment in
sales-type and direct finance leases (336,119) (288,000)
Sales-type and direct financing
lease rentals received 869,192 1,332,444
----------- ----------
Net cash used in investing activities (2,884,045) (802,984)
----------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
(Continued)
LEASING EDGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from nonrecourse and
recourse discounted lease rentals 4,508,090 2,651,650
Payments on nonrecourse and recourse
discounted lease rentals (5,247,196) (5,914,010)
Proceeds from notes payable 485,157 1,330,163
Payments on notes payable (281,047) (442,866)
Proceeds from exercise of stock
options 37,125 -
Proceeds from sale of stock 467,515 445,534
Deferred equity transaction costs (76,822) (141,134)
Preferred stock dividends paid (114,508) (115,008)
----------- ----------
Net cash used in financing activities (221,686) (2,185,671)
----------- ----------
Net decrease in cash (97,017) (335,511)
Cash at beginning of period 209,084 479,118
----------- ----------
Cash at end of period $ 112,067 $ 143,067
=========== ==========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $ 799,253 $ 892,786
=========== ==========
Income taxes $ 5,061 $ 7,750
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
LEASING EDGE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Leasing Edge Corporation (formerly, TJ Systems
Corporation) and its wholly owned subsidiaries, collectively
referred to as the "Company". All material intercompany accounts
and transactions have been eliminated. Certain reclassifications
have been made to prior years' amounts to conform with current
period presentation.
Basis of Presentation
In the opinion of the Company, the accompanying unaudited
Consolidated Financial Statements contain all adjustments necessary
to present fairly the results of its operations for the three and
six months ended June 30, 1996 and 1995 and its cash flows. It is
suggested that this report be read in conjunction with the
Company's audited financial statements included in the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1995.
The operating results and cash flows for the three and six months
ended June 30, 1996 are not necessarily indicative of the results
that will be achieved for the full fiscal year or for future
periods.
Note 2. Earnings Per Share
Earnings per common and common equivalent share are computed based
on the weighted average number of common and common equivalent
shares outstanding during the three and six month periods ending
June 30, 1996. Dilutive stock options included in the number of
common and common equivalent shares are based on the treasury stock
method.
Note 3. Revolving Line of Credit
On July 11, 1995, the Company entered into a Revolving Line of
Credit Agreement (the "Agreement") with Bank of America Nevada.
Borrowings under the Agreement, as amended, are limited to the
lesser of $2.5 million ($2.7 million through May 10, 1996); sixty
percent (60%) of the Company's Equity Position in approved leases,
as defined; or twenty-five percent (25%) of the residual value of
leased equipment, as defined. Borrowings under the Agreement bear
interest at the Bank's prime rate plus two percentage (2.0%)
points, are collateralized by certain personal property of the
Company and require the Company to pay an unused commitment fee
equal to one-half of one percent of the unused portion of the line,
calculated on a weighted-average basis. Restrictive covenants
under the Agreement include the maintenance of consolidated
tangible net worth, as defined, of at least $6.5 million; a
consolidated ratio of total liabilities, as defined, to tangible
net worth of no greater than 1.0:1.0; and a restriction on the
payment of cash dividends on shares of the Company's common stock.
The Agreement, as amended, expires on August 31, 1996. At June 30,
1996, the Company did not meet the consolidated tangible net worth
covenant. Bank of America has granted the Company a waiver of this
covenant through August 31, 1996 (the expiration date of the
Agreement).
At August 31, 1996, the Company had outstanding borrowings under
the Agreement of $2.5 million and the interest rate with respect to
the Agreement was 10.25 percent. Average and maximum borrowings
under the revolving line of credit during 1996 were $2.6 million
and $2.7 million, respectively, and the weighted average interest
rate was 10.26 percent.
In January 1995, PMCPI entered into a revolving credit agreement
(the "Merrill Line") with Merrill Lynch Financial Services, Inc.
Borrowings under the Merrill Line are limited to the lesser of
$500,000 or an amount equal to 80 percent of PMCPI's accounts
receivable, as defined, plus 60 percent of inventory, as defined.
The Merrill Line is secured by accounts receivable and inventory of
PMCPI and is guaranteed by the Company and expires August 31, 1996.
At June 30, 1996, PMCPI had outstanding borrowings under the
Merrill Line of $429,438 and the interest rate with respect to the
line was 9.25 percent. Average borrowings outstanding under the
revolving credit agreement during 1996 were approximately $375,000
and the weighted average interest rate was approximately 9.30
percent. Maximum borrowings outstanding under the revolving credit
agreement during 1996 were $429,438.
In November 1995, the Company entered into a letter agreement with
Union Chelsea National Bank (UCNB) whereby UCNB agreed to make
available to the Company a $250,000 line of credit (the "Equity
Line") to be used to fund the Company's equity investment in
certain leases discounted by UCNB (ie., the difference between the
cost of the leased equipment and the discounted present value of
the minimum lease payments assigned to UCNB). Borrowings under the
Equity Line are evidenced by term notes and require monthly
payments of principal and interest over a period equal to the term
of the related discounted lease with a final balloon payment of
between 30 and 50 percent depending on the lease term. Interest
rates on the term notes are at the applicable discounted lease rate
plus 1.25%. At June 30, 1996, the Company had outstanding term
notes and available credit under the Equity Line of $234,105 and
$15,895, respectively. In a separate transaction, UCNB advanced
the Company $200,000 to fund the Company's equity investment in a
$2.2 million lease transaction. The $200,000 advance was issued
under the same terms as borrowings under the Equity Line. UCNB and
the Company have agreed that this advance will be included under an
amended Equity Line which the parties are currently negotiating.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
Overview
The Company was originally founded in 1980 under the name TJ
Computer Services, Inc. ("TJCS"). In 1989, all of the outstanding
common stock of TJCS was acquired by Harrison Development, Inc., an
inactive public corporation organized in Colorado, which then
changed its name to TJ Systems Corporation. In October 1991, the
Company reincorporated in the State of Delaware and in June 1995,
changed its name to Leasing Edge Corporation. Unless the context
otherwise requires, the term the "Company" as used herein refers to
Leasing Edge Corporation and Pacific Mountain Computer Products,
Inc.
Leasing Edge Corporation (the "Company") buys, sells, leases
and remarkets a wide variety of information processing and
communication equipment, including midrange computers,
telecommunications systems, peripherals, point-of-sale systems,
local area networks and select high technology and other capital
equipment produced by a variety of manufacturers, such as IBM,
Unisys, AT&T, Sun Microsystems, DEC and Tandem. The Company's
customers are primarily large corporations that meet the Company's
high credit standards and that possess significant and continuing
information processing and telecommunications needs.
Through its wholly-owned subsidiary, Pacific Mountain Computer
Products, Inc. ("Pacific Mountain"), the Company is an authorized
distributor of IBM and other manufacturer's terminal, controller,
printer and protocol converter products. Pacific Mountain's main
business is sales of those products to retail customers and
wholesalers. The Company also leases such products to customers
who desire to lease by acquiring the products at favorable
discounts facilitated by its relationship with Pacific Mountain.
Six Months Ended June 30, 1996 Compared to Six Months Ended June
30, 1995
Revenues
Total revenues from leasing operations decreased $99,275, or
1.5%, during the first six months of 1996 compared to the prior
year period due primarily to a decrease in revenue from the
portfolio base of operating leases of $261,317, or 4.9%, partially
offset by an increase in direct sales revenues of $209,337, or
30.8%. The decrease in operating lease revenue resulted from the
expiration of certain month to month leases which were not replaced
with new lease transactions.
Distribution sales increased 6.4%, to $3,047,743 for the 1996
period as compared to $2,863,257 for 1995. The increase in
distribution sales resulted from increased unit sales due to the
addition of certain new products.
Costs and Expenses
Total costs from leasing operations as a percentage of leasing
revenue was 81.4% for the six months ended June 30, 1996, compared
with 82.9% for the prior year period. Gross profit from leasing
operations (total revenues from leasing operations less total costs
from leasing operations) increased $82,106, or 7.4%. The decrease
in leasing costs is primarily due to a decrease in interest expense
on recourse and non-recourse indebtedness between periods of
$181,948, or 21.9%. This decrease results from the use of the
effective interest method to record interest expense on such
indebtedness. Gross margin (gross profit from leasing operations
as a percentage of total revenues from leasing operations) improved
to 18.6% from 17.1% due to the foregoing.
Leasing costs associated with the portfolio base of operating
leases decreased $166,198, or 4.5%. Gross profit on operating
leases decreased by $95,119 to 29.9% from 30.2%. The decrease in
gross profit is due primarily to the expiration of certain
month-to-month leases. Such leases generally have a higher profit
margin
than other operating leases since the equipment has often already
been depreciated to zero.
Direct sales costs (leasing costs with respect to the sale of
equipment off lease and leases with dollar buyout options treated
as sales) increased $169,345, or 27.6% but decreased as a
percentage of related revenue to 88.0% from 90.1%. The decrease in
costs as a percentage of revenue is due to residual value
realization more closely matching stated values in 1996 as compared
to 1995.
Distribution cost of sales of $2,660,437 relates to
distribution sales of Pacific Mountain and represent a $214,514, or
8.8%, increase over the prior year period. Gross margin on
distribution sales decreased to 12.7% in 1996 from 14.6% in 1995
due to a decrease in comparative sales volume of certain higher
margin products.
Selling, general and administrative expenses increased
$405,780 in the 1996 period compared to the prior year period due
primarily to the write-off of a lease receivable from a new
customer who subsequently declared bankruptcy and to increased
staffing levels.
Interest expense on non-lease related indebtedness increased
$80,757, or 86.2% due to higher average debt levels partially
offset by slightly lower interest rates.
Three Months Ended June 30, 1996 Compared to Three Months Ended
June 30, 1995
Revenues
Total revenues from leasing operations increased $6,852, or
0.2%, in the second quarter of 1996 compared to the prior year
quarter due primarily to an increase in direct sales revenues of
$145,839, or 79.8%, partially offset by a decrease in revenue from
the portfolio base of operating leases of $140,365, or 5.3%. The
decrease in operating lease revenue resulted from the expiration of
certain month to month leases which were not replaced with new
lease transactions.
Distribution sales increased to $1,484,210 from $1,262,704 due
to increased unit sales.
Costs and Expenses
Total costs from leasing operations as a percentage of leasing
revenue increased to 84.0% for the quarter ended June 30, 1996, as
compared with 83.2% for the prior year quarter. Gross profit from
leasing operations decreased $21,916, or 4.1%, due primarily to an
increase in direct cost of sales of $203,280, partially offset by
decreases in operating lease potfolio costs and portfolio interest
expense of $151,974 and $19,958, respectively. Gross margin from
leasing operations decreased slightly, to 16.0% from the prior
year's 16.8% due to the foregoing.
Leasing costs associated with the portfolio base of operating
leases decreased $151,974, or 8.0%. Gross profit on operating
leases increased by $11,609 to 29.8% from 27.7%. Direct sales
costs increased $203,280, or 103.44%, and increased as a percentage
of related revenue to 121.6% from 107.5%. The increase in costs as
a percentage of revenue was due primarily to the early termination
of certain leases with an existing customer in exchange for new
leases on the replacement equipment. Although the Company recorded
a loss of approximately $33,000 upon the sale of the old equipment,
such loss was factored into the lease payments related to the new
equipment and will be recovered over the term of the leases.
Distribution cost of sales of $1,297,807 relates to
distribution sales of Pacific Mountain and represent a $228,360, or
21.4%, increase over the prior year quarter. Gross margin on
distribution sales decreased to 12.6% in 1996 from 15.3% in 1995
due to a decrease in comparative sales volume of certain higher
margin products.
Selling, general and administrative expenses increased
$340,535 in the 1996 period compared to the prior year period due
primarily to the write-off of a lease receivable from a new
customer who subsequently declared bankruptcy and to increased
staffing levels.
Interest expense on non-lease related indebtedness increased
$32,773, or 56.8%, due to higher average debt levels partially
offset by slightly lower interest rates.
The 1996 consolidated financial statements do not reflect a
provision for income taxes due to the utilization of net operating
loss carryforwards and changes in the related valuation allowance.
At June 30, 1996, the Company had unexpired net operating loss
carryforwards of approximately $4,100,000 which can be utilized to
offset future taxable income, if any.
Net Earnings
As a result of the foregoing the Company recorded a net loss
for the three and six month periods ending June 30, 1996 of
$243,397 and $147,461,respectively, as compared to net income of
$95,209 and $172,200 for the corresponding 1995 periods.
Liquidity and Capital Resources
Since equipment the Company leases must be paid for by the
Company prior to leasing, the Company requires a substantial amount
of cash for its leasing activities. The Company's growth has been
significantly dependent upon its ability to borrow funds or raise
equity or debt financing to acquire additional equipment for
lease.
Historically, the Company has derived most of the funds necessary
for the purchase of equipment from nonrecourse financing and the
remainder from internally generated funds, recourse indebtedness
and existing cash. At June 30, 1996, the Company had approximately
$198,524 in cash and in availability under its bank lines.
At the inception of each lease, the Company establishes the
residual value of the leased equipment, which is the estimated
market value of the equipment at the end of the initial lease
term.
The Company's cash flow depends to a great extent on its ability to
realize the residual value of leased equipment after the initial
term of its leases with its customers. Historically, the Company
has realized its recorded investment in residual values through (i)
renegotiation of the lease during its term to add or modify
equipment; (ii) renewal or extension of the original lease; (iii)
leasing equipment to a new user after the initial lease term; or,
(iv) sale of the equipment. Each of these alternatives impacts the
timing of the Company's cash realization of such recorded residual
values. Equipment may be returned to the Company at the end of an
initial or extended lease term when it may not be possible for the
Company to resell or re-lease the equipment on favorable terms.
Developments in the high technology equipment market tend to occur
at rapid rates, adding to the risk of obsolescence and shortened
product life cycles which could affect the Company's ability to
realize the residual value of such equipment. In addition, if the
lessee defaults on a lease, the financial institution that provided
nonrecourse financing may foreclose on its security interest in the
leased equipment and the Company may not realize any portion of
such residual value. If the residual value in any equipment cannot
be realized after the initial lease term, the recorded investment
in the equipment must be written down, resulting in lower cash flow
and reduced earnings. There can be no assurance that the Company
will not experience material residual value or inventory
write-downs in the future.
The Company intends to continue to retain residual ownership
of all the equipment it leases. As of June 30, 1996 the Company
had a total net investment in lease transactions of $23.6 million
compared to $24.2 million as of December 31, 1995. The estimated
residual value of the Company's portfolio of leases expiring
between July 1, 1996 and December 31, 2001 totals $10,730,400,
although there can be no assurance that the Company will be able to
realize such residual value in the future. As of June 30, 1996,
the estimated residual value of the Company's portfolio of leases
by year of lease termination is as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1996 $ 2,440,900
1997 3,933,100
1998 1,883,900
1999 515,500
2000 1,492,000
2001 465,000
----------
Total $10,730,400
==========
</TABLE>
Leased equipment expenditures of $4,279,414 for the six months
ended June 30, 1996 were financed through the discounting of
$4,508,090 of noncancelable lease rentals to various financial
institutions.
The Company believes that inflation has not been a significant
factor in its business.
Based on the Company's anticipated residual value realization
and distribution sales, management believes that it will have
adequate capital resources to continue its operations at the
present level for at least the next twelve months. Management
further believes that its existing credit lines will be renewed as
they come due.
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement re Computation of Per Share
Earnings.
(b) Reports on Form 8-K
None.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
LEASING EDGE CORPORATION
(Registrant)
Date: August 12, 1996 /s/Michael F. Daniels
Michael F. Daniels, President
and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1996 /s/ William J. Vargas
William J. Vargas, V.P.- Finance
(Principal Financial and
Accounting Officer)
ITEM 6
- ------
EXHIBIT 11
- ----------
LEASING EDGE CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE
EARNINGS - PRIMARY
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
Shares outstanding at beginning
of period 3,129,319 2,703,420
Effect of common shares issuable
upon exercise of dilutive stock
options net of shares assumed to
be repurchased (at the average
market price) out of exercise
proceeds 258,754 54,781
Effect of issuance of common stock 379,648 165,476
---------- ----------
Weighted average shares outstanding 3,767,721 2,923,677
Less: anti-dilutive common stock
equivalents (258,754) -
----------
- ---------Weighted average shares - primary 3,508,967
2,923,677
========== =========
Net income (loss) (243,397) 95,209
Preferred stock dividends (57,254) (57,504)
----------
- ----------Net earnings available to
common shareholders (300,651) 37,705
========== ==========
Primary earnings per common
share (0.09) 0.01
========== ==========
</TABLE>
Fully diluted earnings per share is not presented because the
effect of such calculation is anti-dlutive.
(Continued)
ITEM 6
- ------
EXHIBIT 11
- ----------
LEASING EDGE CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE
EARNINGS - PRIMARY (Continued)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------
June 30, June 30,
1996 1995
---------- ----------
<S> <C> <C>
Shares outstanding at beginning
of period 3,129,319 1,903,421
Effect of common shares issuable
upon exercise of dilutive stock
options net of shares assumed to
be repurchased (at the average
market price) out of exercise
proceeds 234,298 55,700
Effect of issuance of common stock 189,824 737,890
---------- ----------
Weighted average shares outstanding 3,553,441 2,697,011
Less: anti-dilutive common stock
equivalents (234,298) -
----------
- ---------Weighted average shares - primary 3,319,143
2,697,011
========== =========
Net income (loss) (147,461) 172,200
Preferred stock dividends (114,508) (115,008)
----------
- ----------Net earnings available to
common shareholders (261,969) 57,192
========== ==========
Primary earnings per common
share (0.07) 0.02
========== ==========
</TABLE>
Fully diluted earnings per share is not presented because the
effect of such calculation is anti-dlutive.
