SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED:
MARCH 31, 1997 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
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LEC TECHNOLOGIES, INC.
_________________________________________________________________
(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
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(Address of principal executive offices) (Zip Code)
(702) 454-7900
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(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.
April 30, 1997: 4,659,919 common shares.
Traditional Small Business Disclosure Format (Check one): Yes [ ];
No [X]
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
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PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1997
(Unaudited) and December 31, 1996 3
Consolidated Statements of Operations -
for the three months ended
March 31, 1997 and 1996 (Unaudited) 5
Consolidated Statements of Cash Flows -
for the three months ended March 31, 1997
and 1996 (Unaudited) 6
Notes to Consolidated Financial Statements
(Unaudited) 8
Item 2. Management's Discussion and Analysis
of Financial Condition or Plan 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
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ITEM 1. FINANCIAL STATEMENTS
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited) (Audited)
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<S> <C> <C>
ASSETS:
Cash $ 205,861 $ 412,340
Receivables - net of allowance
for doubtful accounts of $145,699
and $170,699 1,765,179 1,096,868
Notes receivable - employees 195,069 199,185
Inventory, net 1,471,205 2,210,674
Investment in leased assets:
Operating leases, net 18,260,430 17,617,934
Sales-type and direct financing 4,605,720 4,927,894
Furniture and equipment - net of
accumulated depreciation of
$312,139 and $304,495 200,793 157,112
Other assets 180,292 397,712
Goodwill, net of accumulated
amortization of $96,941 and
$84,408 655,098 667,631
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TOTAL ASSETS $27,539,647 $27,687,350
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
(continued)
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited) (Audited)
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 2,646,994 $ 2,946,365
Accrued liabilities 385,013 401,569
Notes payable and lines of credit 3,924,349 3,881,882
Nonrecourse and recourse discounted
lease rentals 15,063,465 14,808,581
Other liabilities 212,254 410,763
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TOTAL LIABILITIES 22,232,075 22,449,160
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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;
25,000,000 shares authorized,
4,726,019 and 4,407,019 shares issued
and 4,659,919 and 4,340,919 shares
outstanding at March 31, 1997
and December 31, 1996, respectively 47,261 44,071
Additional paid-in capital 10,424,346 10,437,915
Accumulated deficit (4,966,502) (5,046,263)
---------- ----------
5,507,395 5,438,013
Common stock held in treasury, at
cost; 66,100 shares (106,073) (106,073)
Note receivable from stockholder (93,750) (93,750)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 5,307,572 5,238,190
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $27,539,647 $27,687,350
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
----------------------
March 31, March 31,
1997 1996
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<S> <C> <C>
Revenues:
Operating leases $2,225,221 $2,591,214
Finance income 78,509 61,138
Direct sales 347,406 559,324
Other 4,776 1,133
--------- ---------
Total revenues from
leasing operations 2,655,912 3,212,809
Distribution sales 4,824,787 1,590,517
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Total revenues 7,480,699 4,803,326
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Costs and expenses:
Operating leases 1,540,076 1,812,708
Interest expense 322,787 338,510
Direct sales 280,603 382,200
--------- ---------
Total costs from
leasing operations 2,143,466 2,533,418
Distribution cost of
sales 4,149,677 1,389,614
Selling, general and
administrative expenses 977,890 700,375
Interest expense 129,905 83,983
--------- ---------
Total costs and expenses 7,400,938 4,707,390
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Income before
income taxes 79,761 95,936
Provision for income
taxes - -
--------- ---------
Net income $ 79,761 $ 95,936
========= =========
Earnings per common
share $ 0.01 $ 0.01
========= =========
Weighted average common
shares outstanding 4,438,243 3,345,599
========= =========
</TABLE>
The accompanying notes are integral part of these consolidated financial
statements.
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 79,761 $ 95,936
Adjustments to reconcile net
income to cash provided
by operating activities:
Depreciation and amortization 1,560,253 1,829,887
Change in assets and liabilities
due to operating activities:
(Increase) decrease in
accounts receivable (668,311) (273,858)
Decrease in inventory 432,784 345,066
Decrease in accounts
payable (299,371) (165,110)
(Decrease) increase in
accrued liabilities (16,556) 254,800
All other operating activities (203,214) (15,049)
----------- ----------
Total adjustments 805,585 1,975,736
----------- ----------
Net cash provided by operating
activities 885,346 2,071,672
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales, transfers and disposals of
inventory and equipment 798,048 339,096
Purchases of inventory for lease (2,776,510) (1,512,390)
Purchases of furniture and equipment (51,325) (1,145)
Decrease in notes receivable 4,116 -
Sales-type and direct financing
lease rentals received 424,749 419,227
----------- ----------
Net cash used in investing activities (1,600,922) (755,152)
----------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
(Continued)
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from nonrecourse and
recourse discounted lease rentals 2,376,707 1,541,046
Payments on nonrecourse and recourse
discounted lease rentals (2,121,823) (2,783,248)
Proceeds from notes payable 477,886 61,697
Payments on notes payable (435,419) (86,257)
Proceeds from exercise of warrants 269,000 -
Preferred stock dividends paid (57,254) (57,254)
----------- ----------
Net cash provided by (used in)
financing activities 509,097 (1,324,019)
----------- ----------
Net decrease in cash (206,479) (7,499)
Cash at beginning of period 412,340 209,084
----------- ----------
Cash at end of period $ 205,861 $ 201,585
=========== ==========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $ 397,122 $ 412,770
=========== ==========
Income taxes $ - $ 5,061
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
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 LEC Technologies, Inc. (formerly, Leasing Edge
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 and its cash flows
for the three months ended March 31, 1997 and 1996. 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, 1996.
The operating results and cash flows for the three months ended
March 31, 1997 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 month period ended March 31,
1997. Dilutive stock options included in the number of common and
common equivalent shares are based on the treasury stock method.
Note 3. Notes Payable and Lines of Credit
On October 31, 1996, the Company revolving line of credit agreement
with Bank of America matured and was subsequently replaced with a
term loan agreement (the "Amended Agreement") effective February
28, 1997. The Amended Agreement expires on August 15, 1997 (the
"Initial Expiration Date"); however, the Initial Expiration Date
may be further extended, at the Company's option, to January 1,
1998 (the "Optional Expiration Date") subject to the Company's
satisfaction of certain conditions. Terms of the Amended Agreement
require the Company to make monthly graduated principal repayments
in an aggregate of $500,000 through August 15, 1997 or, if the
Company exercises its extension option, in an aggregate of
$1,110,000 through January 1, 1998. The Amended Agreement provides
for interest at Bank of America's prime rate plus four percentage
points and is collateralized by certain personal property.
Restrictive covenants under the Amended Agreement include the
maintenance of consolidated tangible net worth, as defined, of at
least $4.5 million; restrictions on the payment of cash dividends
on shares of the Company's common stock; and limitations on
unfinanced capital expenditures, as defined.
At March 31, 1997, the Company had outstanding borrowings under the
Amended Agreement of $2,256,365 and the applicable interest rate
12.5 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 May 31, 1997.
At March 31, 1997, PMCPI had outstanding borrowings under the
Merrill Line of $484,937 and the interest rate with respect to the
line was 9.5 percent. Average borrowings outstanding under the
revolving credit agreement during the three months ended March 31,
1997 were approximately $504,000 and the weighted average interest
rate was approximately 9.26 percent. Maximum borrowings
outstanding under the revolving credit agreement during such period
were $510,000.
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%. On July 18, 1996, UCNB increased the amount available
under the Equity Line to $1,000,000.
At March 31, 1997, the Company had outstanding term notes under the
Equity Line of $1,000,000.
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. In March, 1997, the
Company's shareholders approved a change in the Company's name to
LEC Technologies, Inc. Unless the context otherwise requires, the
term the "Company" as used herein refers to LEC Technologies, Inc.
and its wholly-owned subsidiaries.
The Company's services are organized into three groups of
related businesses, and are provided generally through separate
business units, although there is a significant amount of
interrelated activities. The three business groups are as follows:
Leasing Services: Leasing, remarketing, financial
engineering, consulting and third-party maintenance and
systems integration services for midrange systems,
telecommunications equipment, point-of-sale systems and
system peripherals. The Company conducts its leasing
services under the trade name Leasing Edge Corporation.
Distribution Serveices: Sales of terminals, printers,
communication controllers and routers, supplies,
technical consulting and third-party maintenance
services. Business units comprising distribution
services are Superior Computer Systems, Inc. ("SCS") and
Pacific Mountain Computer Products, Inc. ("PMCPI"),
wholly-owned subsidiaries of LEC Technologies, Inc.
Remarketing Services: Remarketing of previously leased
equipment, displaced equipment, and used equipment
purchased from other lessors or brokers. This unit also
has consignment relationships with certain customers to
assist such organizations in the sale of their used
equipment. Business units comprising remarketing
services include Leasing Edge Corporation, SCS, PMCPI and
Atlantic Digital International ("ADI"), a division of
Leasing Edge Corporation. ADI specializes in the
acquisition and remarketing of Digital Equipment
Corporation equipment on both a domestic and an
international basis.
Three Months Ended March 31, 1997 Compared to Three Months Ended
March 31, 19965
Revenues
Total revenues from leasing operations decreased $ 556,897,
or 17.3%, during the first three months of 1997 compared to the
prior year period due primarily to a decrease in revenue from the
portfolio portfolio base of operating leases of $365,993, or 14.1%,
and a decrease in direct sales revenues of $211,918, or 17.3%. The
decrease in operating lease revenues resulted from the expiration
of certain month-to-month leases which were not replaced by similar
lease transactions.
Distribution sales increased from $1,590,517 for the first
quarter of 1996 to $4,824,787 for the 1997 period due primarily to
the acquisition of SCS in November, 1996 and the formation of ADI
in January, 1997.
Costs and Expenses
Total costs from leasing operations as a percentage of leasing
revenue was 80.7% for the three months ended March 31, 1997,
compared with 78.9% for the prior year quarter. Gross profit from
leasing operations (total revenues from leasing operations less
total costs from leasing operations) decreased $166,945, or 24.6%.
Gross margin from leasing operations (gross profit from leasing
operations as a percentage of total revenues from leasing
operations) declined to 19.3% from 21.1%.
Leasing costs associated with the portfolio base of operating
leases decreased $272,632, or 15.0%. Gross profit on operating
leases decreased by $93,361 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) decreased $101,597, or 26.6% and increased as a
percentage of the related revenue to 80.8% from 68.3%. The
increase in the cost to revenue percentage is due to residual value
realization more closely matching stated values in 1997 as compared
to 1996.
Distribution cost of sales of $4,149,677 represents a
$2,760,063 increase over the prior year period due to the
aforementioned acquisition of SCS and the formation of ADI. Gross
margin on distribution sales increased to 14.0% in 1997 from 12.6%
in 1996 due to an increase in comparative sales volume of certain
higher margin products.
Selling, general and administrative expenses increased
$277,515 in the 1997 period compared to the prior year period due
primarily to increased staffing levels resulting from the
acquisition of SCS.
Interest expense on non-lease related indebtedness increased
$45,922, or 54.7% due to higher average debt levels and interest
rates.
The 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 March 31, 1997, the Company had unexpired net operating loss
carryforwards of approximately $3,900,000 which can be utilized to
offset future taxable income, if any.
Net Earnings
As a result of the foregoing, the Company recorded net income
of $79,761 during the quarter ended March 31, 1997 as compared to
net income of $95,936 in 1996.
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 March 31, 1997, the Company had
approximately $206,000 in cash and availability under its credit
lines.
On October 31, 1996, the Company revolving line of credit
agreement with Bank of America matured and was subsequently
replaced with a term loan agreement (the "Amended Agreement")
effective February 28, 1997. The Amended Agreement expires on
August 15, 1997 (the "Initial Expiration Date"); however, the
Initial Expiration Date may be further extended, at the Company's
option, to January 1, 1998 (the "Optional Expiration Date") subject
to the Company's satisfaction of certain conditions. Terms of the
Amended Agreement require the Company to make monthly graduated
principal repayments in an aggregate of $500,000 through August 15,
1997 or, if the Company exercises its extension option, in an
aggregate of $1,110,000 through January 1, 1998. The Amended
Agreement provides for interest at Bank of America's prime rate
plus four percentage points and is collateralized by certain
personal property. Restrictive covenants under the Amended
Agreement include the maintenance of consolidated tangible net
worth, as defined, of at least $4.5 million; restrictions on the
payment of cash dividends on shares of the Company's common stock;
and limitations on unfinanced capital expenditures, as defined.
At March 31, 1997, the Company had outstanding borrowings
under the Amended Agreement of $2,256,365 and the applicable
interest rate 12.5 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 May
31, 1997.
At March 31, 1997, PMCPI had outstanding borrowings under the
Merrill Line of $484,937 and the interest rate with respect to the
line was 9.5 percent. Average borrowings outstanding under the
revolving credit agreement during the three months ended March 31,
1997 were approximately $504,000 and the weighted average interest
rate was approximately 9.26 percent. Maximum borrowings
outstanding under the revolving credit agreement during such period
were $510,000.
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%. On July 18, 1996, UCNB increased the amount available
under the Equity Line to $1,000,000.
At March 31, 1997, the Company had outstanding term notes
under the Equity Line of $1,000,000.
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 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 March 31, 1997, the Company
had a total net investment in lease transactions of $22.9 million
compared to $22.5 million as of December 31, 1996. The estimated
residual value of the Company's portfolio of leases expiring
between April 1, 1997 and December 31, 2001 totals $10,218,812,
although there can be no assurance that the Company will be able to
realize such residual value in the future. As of March 31, 1997,
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>
1997 $ 4,314,260
1998 1,877,652
1999 1,592,800
2000 1,823,000
2001 611,100
----------
Total $10,218,812
==========
</TABLE>
Leased equipment expenditures of $2,776,510 for the quarter
ended March 31, 1997 were financed through the discounting of
$2,376,707 of noncancelable lease rentals to various financial
institutions, borrowings under the Company's Equity Line and
available cash.
The Company believes that inflation has not been a significant
factor in its business.
Based on the Company's anticipated residual value realization,
distribution sales, and the refinancing of the Bank of America
credit line, management believes that it will have adequate capital
resources to continue its operations level for at least the next
twelve months, although, as stated above, should the Company fail
to receive adequate debt or equity financing, the Company's growth
will be materially and adversely affected.
Safe Harbor Statement under the
Private Securities Litigation Reform Act of 1995
Certain statements herein and in future filings by the Company with
the Securities and Exchange Commission and in the Company's written
and oral statements made by or with the approval of an authorized
executive officer constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, and the Company
intends that such forward-looking statements be subject to the safe
harbors created thereby. The words and phrases "looking ahead",
"we are confident", "should be", "will be", "predicted", "believe",
"expect" and "anticipate" and other similar expressions identify
forward-looking statements. These and other similar
forward-looking statements reflect the Company's current views
with respect
to future events and financial performance, but are subject to many
uncertainties and factors relating to the Company's operations and
business environment which may cause the actual results of the
Company to be materially different from any future results
expressed or implied by such forward-looking statements. Examples
of such uncertainties include, but are not limited to, changes in
customer demand and requirements, the mix of leases written, the
availability and timing of external capital, the timing of the
Company's realization of its recorded residual values, new product
announcements, continued growth of the semiconductor industry,
trend of movement to client/server environment, interest rate
fluctuatiuons, changes in federal income tax laws and regulations,
competition, unanticipated expenses and delays in the integration
of newly-acquired businesses, industry specific factors and
worldwide economic and business conditions. With respect to
economic conditions, a recession can cause customers to put off new
investments and increase the Company's bad debt experience. The
mix of leases written in a quarter is a direct result of many
factors, including, but not limited to, changes in customer demands
and/or requirements, new product announcements, price changes,
changes in delivery dates, changes in maintenance policies and the
pricing policies of equipment manufacturers, and price competiotion
from other lessors. The Company undertakes no obligation to
publicly update or revise any forward-looking statements whether as
a result of new information, future events or otherwise.
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
Report dated January 10, 1997 regarding the
acquisition of Superior Computer Systems, Inc.
Signatures
Pursuant to the requirements of the Securities 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: May 14, 1997 /s/Michael F. Daniels
Michael F. Daniels, President
and Chief Executive Officer
(Principal Executive Officer)
Date: May 14, 1997 /s/ William J. Vargas
William J. Vargas, V.P.- Finance
(Principal Financial and
Accounting Officer)
ITEM 6
- - ------
EXHIBIT 11
- - ----------
LEC TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE
EARNINGS - PRIMARY
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
1997 1996
---------- ----------
<S> <C> <C>
Shares outstanding at beginning
of period 4,340,919 3,129,319
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 35,285 216,280
Effect of issuance of common stock
for services 6,028 -
Exercise of "B" warrants 56,011 -
---------- ----------
Weighted average shares - primary 4,438,243 3,345,599
========== =========
Net earnings $ 79,761 $ 95,936
Preferred stock dividends (57,254) (57,254)
----------
- - ----------Net earnings available to
common shareholders $ 22,507 $ 38,682
========== ==========
Primary earnings per common
share $ 0.01 $ 0.01
========== ==========
</TABLE>
Fully diluted earnings per share is not presented because the
effect of such calculation is anti-dlutive.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 205,861
<SECURITIES> 0
<RECEIVABLES> 1,910,878
<ALLOWANCES> 145,699
<INVENTORY> 1,471,205
<CURRENT-ASSETS> 0
<FN-1> UNCLASSIFIED BALANCE SHEET
<PP&E> 512,932
<DEPRECIATION> 312,139
<TOTAL-ASSETS> 27,539,647
<CURRENT-LIABILITIES> 0
<FN-1> UNCLASSIFIED BALANCE SHEET
<BONDS> 3,924,349
0
2,290
<COMMON> 47,261
<OTHER-SE> 5,457,844
<TOTAL-LIABILITY-AND-EQUITY> 27,539,647
<SALES> 5,172,193
<TOTAL-REVENUES> 7,480,699
<CGS> 4,430,280
<TOTAL-COSTS> 6,293,143
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (25,000)
<INTEREST-EXPENSE> 129,905
<INCOME-PRETAX> 79,761
<INCOME-TAX> 0
<INCOME-CONTINUING> 79,761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,761
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0
<FN-2> FULLY DILUTED EPS NOT PRESENTED AS
RESULT OF CALCULATION IS ANTI-
DILUTIVE
</TABLE>
