<PAGE>
U.S. 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
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1996
Commission File Number 0-24940
PIONEER COMMERCIAL FUNDING CORP.
(Exact name of small business issuer as specified in its charter)
New York 13-3763437
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
6660 Reseda Boulevard, Reseda, California 91335
(Address and Zip Code of Principal Executive Offices)
Issuer's Telephone Number (818) 776-0590
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 registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No .
----- -----
There were 1,442,272 shares outstanding of the registrant's common stock
outstanding as of February 11, 1997.
1
<PAGE>
Part I Financial Information
Item 1 - Financial Statements
PIONEER COMMERCIAL FUNDING CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
(unaudited)
------------ -----------
<S> <C> <C>
ASSETS
Cash and temporary cash investments $ 355,293 $ 98,349
Loans receivable, mortgage warehouse lending 4,315,237 3,512,775
Accrued interest and fee receivable 33,358 30,007
Deferred cost of equity offering 222,060 445,731
Fixed Assets
Furniture and equipment 106,540 50,370
Proprietary computer software 476,215 469,655
Leasehold Improvements 10,632 0
----------- -----------
593,387 520,025
Less accumulated depreciation and amortization 378,010 302,035
----------- -----------
Net Fixed Assets 215,377 217,990
----------- -----------
Other assets 467,023 26,087
----------- -----------
Total Assets $ 5,608,348 $ 4,330,939
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Loans payable, mortgage warehouse $ 2,955,681 $ 3,254,235
Revolving lines, of credit - 79,400
Bridge financing (notes totaling $100,000 less
unamortizated discount of $37,500) - 62,500
Accrued interest payable 11,895 43,564
Due to mortgage banking companies 60,978 20,917
Accounts payable & accrued expenses 383,398 261,163
Deferred legal fees 55,971 76,743
Other liabilities 200,000 0
----------- -----------
Total Liabilities 3,667,923 3,798,522
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Common stock-$.01 par value; authorized 5,000,000 shares;
1,442,272 and 835,000 shares issued and outstanding
at September 30 and March 31, 1996 respectively 14,423 8,350
Additional paid-in capital 10,570,857 8,598,634
Accumulated deficit (8,644,855) (8,074,567)
----------- -----------
Total stockholders' equity 1,940,425 532,417
----------- -----------
Total liabilities and stockholders' equity $ 5,608,348 $ 4,330,939
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
2
<PAGE>
PIONEER COMMERCIAL FUNDING CORP.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH & NINE MONTH PERIODS ENDED DECEMBER 31, 1996 & 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
----------------------- -----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME
Interest income $ 74,379 $ 29,375 $ 177,660 $ 35,826
Commissions & fees 2,830 1,500 4,330 4,500
Processing fees 19,470 5,153 44,412 7,093
--------- --------- --------- ---------
Total income 96,679 36,028 226,402 47,419
--------- --------- --------- ---------
DIRECT COSTS
Interest expense- warehouse &
revolving lines of credit 50,728 29,806 159,409 36,010
Interest expense -bridge financing 0 6,163 42,385 63,731
Bank charges & fees 5,940 3,491 11,845 6,337
Bank processing fees 4,050 1,473 10,350 1,473
--------- --------- --------- ---------
Total direct costs 60,718 40,933 223,989 107,551
--------- --------- --------- ---------
INCOME/LOSS BEFORE OPERATING EXPENSES 35,961 (4,905) 2,413 (60,132)
OPERATING EXPENSES 209,204 125,660 412,814 319,530
LOSS DUE TO REGISTRATION STATEMENT &
IPO COSTS 153,114 - 167,883 -
--------- --------- --------- ---------
Loss from operations (326,357) (130,565) (578,284) (379,662)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income - other 4,267 1,221 13,574 24,811
Interest expense - other (1,178) (1,178) (3,534) (3,534)
--------- --------- --------- ---------
Total other income (expense) 3,089 43 10,040 21,277
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES (323,268) (130,522) (568,245) (358,385)
PROVISION FOR INCOME TAXES 652 - 2,044 1,180
--------- --------- --------- ---------
Net loss $(323,920) $(130,522) $(570,288) $(359,565)
========= ========= ========= =========
LOSS PER SHARE OF COMMON STOCK $ (0.22) $ (0.16) $ (0.50) $ (0.44)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF SHARES 1,442,272 825,000 1,145,717 825,000
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
PIONEER COMMERCIAL FUNDING CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Additional Accumulated Total
Stock Paid-in Deficit Stockholders'
Capital Equity
------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Balances
March 31, 1996 $ 8,350 $ 8,598,634 $(8,074,567) $ 532,417
Issuance of 7,272 common
shares in connection with
bridge financing 73 (73) - -
Issuance of 600,000 shares of
common stock and 690,000
warrants 6,000 1,972,296 - 1,978,296
Net loss for the period - - (570,288) (570,288)
------- ----------- ----------- ----------
$14,423 $10,570,857 $(8,644,855) $1,940,425
======= =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
PIONEER COMMERCIAL FUNDING CORP.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED DECEMBER 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (570,288) $ (359,565)
---------- ----------
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 75,975 75,975
(Increase) decrease in --
Accrued interest receivable (3,351) 5,595
Prepaid expenses (157,734) 1,370
Other assets (283,202) (249)
Increase (decrease) in --
Income taxes payable - -
Accrued interest payable (31,669) 5,927
Due to mortgage banking companies 40,061 (34,804)
Accounts payable & Accrued expenses 122,235 68,577
---------- ----------
Total adjustments (237,685) 122,391
---------- ----------
Net cash used in operating activities (807,973) (237,174)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in Mortgage Warehouse Loans Receivable (802,462) (471,263)
Purchase of Fixed Assets (73,362) (4,324)
---------- ----------
Net cash provided by investing activities (875,824) (475,587)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in borrowings used in operations,
net of issuance costs (298,554) 540,147
Decrease in revolving line of credit and bridge financing (141,900) 141,644
Increase (decrease) in deferred expenses 179,228
(Increase) decrease in deferred costs of equity offering 223,671 (118,277)
Proceeds from issuance of stock 1,978,296 -
---------- ----------
Net cash provided used in financing activities 1,940,741 563,514
---------- ----------
Net increase (decrease) in cash 256,944 (149,247)
CASH AND TEMPORARY CASH INVESTMENTS -
APRIL 1, 1996 and 1995 98,349 437,574
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS -
DECEMBER 31, 1996 and 1995 $ 355,293 $ 288,327
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid $ 181,195 $ 57,677
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
PIONEER COMMERCIAL FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Basis of Presentation
- ---------------------
In the opinion of management, the accompanying unaudited financial statements
for Pioneer Commercial Funding Corp. (the Company) contain all adjustments of a
recurring nature considered necessary for a fair presentation of its financial
position as of December 31, 1996 and the results of operations for three and
nine month periods ended December 31, 1996 and 1995 and its cash flows for the
nine months ended December 31, 1996 and 1995. The results of operations for the
nine month and three month periods ended December 31, 1996 and 1995 are not
necessarily indicative of the Company's results of operations to be expected for
the entire year.
The accompanying unaudited interim financial statements have been prepared in
accordance with instructions to Form 10-Q and, therefore, do not include all
information and footnotes required to be in conformity with generally accepted
accounting principles. The financial information provided herein, including the
information under the heading, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," is written with the presumption
that the users of the interim financial statements have read, or have access to,
the Company's March 31, 1996 audited financial statements and notes thereto,
together with the Managements Discussion and Analysis of Financial Condition and
Results of Operations as of March 31, 1996 and for the year then ended included
in the Company's filing on August 12, 1996 with the SEC on Form SB-2.
6
<PAGE>
2. OPERATING EXPENSES
- ---------------------
Operating expenses consisted of the following:
<TABLE>
<CAPTION>
Three Month Period Nine Month Period
Ended December 31, Ended December 31,
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Salaries & benefits $ 77,606 $ 41,018 $130,427 $107,877
Depreciation & amortization 25,325 25,326 75,975 75,975
Professional fees 38,728 13,659 64,924 38,862
Utilities 8,337 5,530 19,481 14,383
Temporary staff services 17,802 20,961 41,651 36,737
Rent 5,323 2,901 11,128 8,707
Other 36,083 16,265 69,228 36,989
-------- -------- -------- --------
Operating expenses 209,204 125,660 412,814 319,530
-------- -------- -------- --------
Costs due to Registration
and IPO 153,114 - 167,883 -
-------- -------- -------- --------
$362,318 $125,660 $580,697 $319,530
======== ======== ======== ========
</TABLE>
3. INITIAL PUBLIC OFFERING
-----------------------
The Company consummated its initial public offering (the"Offering") on August
16,1996, at which time it issued 600,000 shares of common stock (.01 par value)
for $5.00 per share and redeemable warrants to purchase 600,000 additional
shares of the Company's common stock at a price of $5.50 per share for $.10 per
warrant (the "Warrants"). The warrants are exercisable until August 12, 2000.
On October 4, 1996, the Company issued an additional 90,000 Warrants pursuant to
the over-allotment option granted to its underwriter with respect to the
Offering. The Company received net proceeds from the Offering of $2,683,386,
which includes, $7,830 derived from the underwriter's exercise of the over-
allotment option, and recorded an increase to stockholders' equity in the amount
of $1,978,296 which is net of $705,090 in deferred costs of the equity offering
which were paid for by the Company prior to the consummation of the transaction.
4. DEFERRED COSTS
--------------
The Company filed with the Securities and Exchange Commission a second Form SB-2
Registration Statement on December 27, 1996. The deferred costs associated with
the registration statement of $222,809, are primarily comprised of legal,
underwriting and accounting fees, of which, $95,846 have been paid as of the
date of this statement. It is uncertain at this time whether the Company will
use this registration statement.
7
<PAGE>
5. INVESTMENT IN TRANS LENDING CORPORATION
---------------------------------------
On December 23,1996, prior management of the Company signed a document to
acquire 500 shares of Trans Lending Corporation's ("Trans Lending") common stock
for $100,000 and 200 shares of Trans Lending's non-voting, non-dividend paying
preferred stock for $200,000. Trans Lending originates consumer automobile
financing transactions for non-prime borrowers by acquiring contracts from
franchised and independent car dealers. As of December 31, 1996, the Company
had distributed $100,000 to Trans Lending.
6. SUBSEQUENT EVENTS
-----------------
On January 9,1997, the Board of Directors voted to remove Arthur Goldberg as
Chief Executive Officer and Elie Housman as the President and elected M. Albert
Nissim as President. At the same meeting the Company voted to replace its legal
counsel. On January 13,1997, Mr. Goldberg and Mr. Housman resigned from the
Board of Directors.
The Company entered into a written agreement effective January 29, 1997 between
Leedan International Holding an indirect stockholder of the Company, and certain
other unaffiliated investors for a $4 million Private Placement of unregistered
and restricted common stock and convertible notes at a subscription price of
$1.00 per share of common stock and a conversion rate of one share of common
stock for each $1.00 of convertible notes. The Company anticipates that the
Private Placement will closed by the end of February 1997. Proceeds from the
Private Placement will be primarily utilized to fund mortgage warehouse lending
transactions.
On January 1,1997, United Mizrahi Bank, provider of the Company's primary bank
line of credit, merged with Safra National Bank of New York. On January 9,
1997, Safra Bank informed the Company that it would not renew Pioneer's line of
credit, however, it would consider temporary extensions until a new line is
secured. The Company is conducting ongoing discussions with several lending
institutions to secure additional credit facilities. With the infusion of $4
million by the end of February 1997, the Company expects to secure additional
financing.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
As of June 14, 1993, when the Company began its first active operations after
its emergence from Chapter 11, it had an available credit line of $1 million
from one source, United Mizrahi Bank & Trust Company ("UMB"). The Company's
lines of available credit were subsequently increased to an aggregate of $2.35
million as of March 31, 1995 and $4.2 million as of June 1996. Substantially all
of the business conducted by the Company during the years ended March 31, 1994
and 1995 was with one active mortgage banking company, who had a credit line
approved by the Company in the amount of $2 million. In April 1995, the Company
discontinued that customer's credit line when it failed to comply with the
Company's underwriting requirement to provide audited financial statements for
the year ended December 31, 1994. As a result of the death of the Company's
former Chairman and Chief Executive, the Company did not engage in any
substantial mortgage warehouse lending activities from April 1995 through August
1995. During the period from August 1995 through November 1995, the Company
developed customer relationships with three new mortgage banking companies, and
from August 1995 through March 1996, the Company generated approximately $20.4
million in mortgage warehouse lending volume from those new customers. During
the four month period September 1 through December 31, 1996, the Company added
three additional customers that generated $44.34 million in mortgage warehouse
lending volume, a 116.3% increase over the fiscal year ended March 31, 1996.
The Company is in the process of evaluating the creditworthiness of several
other potential customers. Although the Company expects to conduct business in
the future with a greater number of mortgage banking customers, and thereby
reduce the risks attendant in relying upon a small number of sources to support
its business, no assurance can be given that it will receive such applications,
or that such applicants will thereafter engage in a large enough volume of
mortgage warehouse lending transactions to sustain the Company's operations.
The cessation of business of any of the Company's active customers or the
inability of its customers to provide the Company with an increased level of
loan volume could materially adversely affect the Company's ability to generate
sufficient revenues to operate profitably and to continue to meet its cash
obligations in future periods.
During the nine month periods December 31 1995 and 1996, the Company incurred
net losses of $ 359,565 and $570,288 respectively. Such losses were partly
attributed to noncash expenses (primarily depreciation, amortization and debt
discount expenses) totaling $139,706 and $118,360 during 1995 and 1996,
respectively, and the inability of the Company to generate a sufficient volume
of loan transactions with its customers.
9
<PAGE>
RESULTS OF OPERATIONS
NINE MONTH PERIOD ENDED DECEMBER 31, 1995 COMPARED WITH THE NINE MONTH PERIOD
ENDED DECEMBER 31, 1996
REVENUES. During the nine month period ended December 31 1996 revenues
increased to $226,402 compared to $47,419 for the nine month period ended
December 31, 1995. Such revenue was generated from the three customers added
during the period August, 1995 through November, 1995, and three additional
customers were added between September 20, 1996 and December 24, 1996. 569,
loans totaling $44,336,000 were funded during this period which represented 183%
and 116.3%, respectively, of the total number of loans and fundings reported for
the fiscal year ended March 31, 1996. The interest and processing fee component
of such revenues reported for the nine months ended December 31 1996 amounted to
$177,660 and $48,742, respectively, compared to $35,826 in interest and $11,593
in processing fees for the nine months ended December 31 1995.
Due primarily to the death of the Company's former Chairman and Chief Executive
in March, 1995, the shrinkage, and ultimate cessation of mortgage lending
operations which took place during the first half of the fiscal year ended March
31, 1996 by reason thereof, and the restructuring of the Company's management
and operations which took place during that period, for the nine months ended
December 31, 1995, the Company only financed a total of 88 loans totaling
$8,543,840, in the weighted average principal amount of $97,089 for an average
duration of 17 days per borrowing. During the nine month period ended December
31, 1996, the Company financed a total of 569 loans totaling $44,336,228 in the
weighted average principal amounts of $77,920 for an average duration of 16 days
per borrowing, which amounts include 412 loans funded through bank borrowings
aggregating $33,352,067 in weighted average principal amounts of $80,952. Such
increase in loan activity was due to the Company's above mentioned addition of
six customers.
DIRECT COSTS. The Company's direct costs consist of the interest and other
charges which it must pay to its revolving credit line providers and the
interest which it paid to the lenders who had provided bridge financing to the
Company ("The Bridge Financing") in connection with the initial public offering
of securities which the Company completed in August 1996 (the "Offering").
During the nine month period ended December 31, 1995 and 1996, the Company's
interest expense and other bank charges paid to revolving line of credit
providers amounted to $43,820 and $181,604, Respectively. The increase in
interest expense and bank fees was due to the increase in loan funding
operations and the use of the Company's bank credit facility.
Interest expense on the bridge financing for the nine month period ended
December 31, 1995 and 1996 amounted to $20,988 and $4,885 respectively and debt
discount amortization of $46,277 and $37,500 respectively. In February, 1996
Company paid the sum of $122,492 in full satisfaction of its indebtedness to two
of the Bridge Finance lenders. Upon the closing of the public offering the
remaining Bridge Financing obligation of $128,356 (which includes $28,356 in
accrued interest) was retired in full.
10
<PAGE>
OPERATING EXPENSES. The Company's operating expenses of $319,530 during the
nine month period ended December 31, 1995 consisted primarily of depreciation
and amortization of $75,975, the primary component of which is the Collateral
Tracking System ($69,234); salaries and benefits to the Company's former
Chairman & Chief Executive and to its Senior Vice President ($107,877); legal
and accounting fees ($38,862); telephone ($14,383); office rent ($8,707);
temporary staff ($36,737) and miscellaneous expenses of $36,989. The Company's
operating expenses of $580,697 during the nine month period ended December 31,
1996 consisted primarily of depreciation and amortization of ($75,975); the
primary component of which is the Collateral Tracking System ($69,234); salary
and benefits to the Company's Chief Executive, its President, Its Senior Vice
President and office staff ($130,427); accounting and legal fees ($64,924):
telephone ($19,481); office rent ($11,128); Temporary staff, including the
services of an outside consultant for customer risk analysis, Dr. Teodore E.
Reingold, CPA, a professor of management and accounting ($41,651); costs due to
registration and IPO ($167,883 including, legal, public relations and printing
costs) and miscellaneous of ($69,228). The increase in such expenses during the
nine month period ended December 31, 1996 as comparable period during 1995, was
due to the increase in lending activity and the increased costs associated with
the professional, financial consulting and similar services which the Company
has incurred by reason of its change in status from a privately owned to a
publicly held company.
NET LOSS.
During the nine month period ended December 31, 1995 and 1996 the Company
incurred a net losses of $359,565 and $570,288, respectively. Such losses were
primarily due to the Company's inability during the former period, and its lack
of success following the completion of the Offering in August, 1996 during the
latter period, to attract additional warehouse loan lines of credit which it
needs in order to operate profitably. Expenses attributed to the registration
statement including printing costs. Such non-cash expenses as depreciation,
amortization and debt discount totaling $139,706 and $118,360 respectively, were
also contributing factors to such losses.
CASH FLOWS FROM OPERATIONS.
The Company generated negative cash flow from operations of $237,174 and
$807,973 for the nine month periods ended December 31,1995 and 1996,
respectively. The negative cash flow generated for the nine month period ended
December 31,1995 was primarily due to a net loss of $359,565 less non-cash
expenses of depreciation and amortization of $75,975. The negative cash flow
generated for the nine month period ended December 31,1996 was primarily due to
a net loss of $570,288 and decreases in prepaid expenses ($157,734) and other
assets ($283,202) less depreciation and amortization ($75,975) and increases in
accounts payable and accrued expenses ($122,235).
In order to operate profitably, the Company needs to increase its warehouse loan
lines of credit beyond its current level of $ 4 million. Accordingly,
immediately after the closing of its Offering in August, 1996, the Company began
to focus its efforts on acquiring such additional credit lines. In that regard
the Company has sought warehouse lending lines of credit from numerous financial
institutions. Several of such lenders have declined to extend credit to the
Company for a variety of reasons including but not limited to, the relatively
small size of the Company's asset and equity bases.
11
<PAGE>
REALIZABILITY OF LONG-LIVED ASSETS. Management has evaluated the realization of
its long-lived assets (primarily furniture and equipment and proprietary
computer software) having a net book value of $215,377 at December 31, 1996 in
accordance with the provisions of Statement of Financial Accounting Standards
No. 121 "Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed of." Based on such evaluation and taking into consideration the
positive cash flows and earnings the Company believes it will be able to
generate in future periods, management does not believe that there is an
impairment of its long-lived assets at December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES.
On September 10, 1996 the company paid UMB a $40,000 renewal fee in connection
with the extension of the $4,000,000 credit facility, a pro-rata share of these
funds will be returned to the Company when the credit line ceases.
Management believes the addition of the $4 million Private Placement of
unregistered and restricted common stock and convertible notes will enable it to
obtain the warehouse lines of credit necessary for its growth.
The Company has been conducting ongoing discussions with several lending
institutions to secure additional bank lines of credit.
NET OPERATING LOSS CARRYFORWARDS
As of December 31, 1996, Pioneer had available, in aggregate, net operating loss
Carryforwards of approximately $2.8 million. As a result of changes in common
stock ownership, the Company is subject to annual limitations pertaining to the
use of such operating loss carryforwards. The Company expects that the amount of
net operating loss carryforward which may be utilized in any future period will
be limited to an amount not to exceed approximately $100,000 per year.
Management believes that the losses that it has incurred since the 1994 merger
of Pioneer Commercial Funding Corp, with the Company are not subject to these
limitations. The Company's ability to use such net operating loss carryforwards
is dependent upon its ability to generate taxable income in the future.
RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED DECEMBER 31, 1995 COMPARED WITH THE THREE MONTH
PERIOD ENDED DECEMBER 31, 1996
REVENUES. During the three month period ended December 31,1996 revenues
increased to $ 96,679 compared to $36,027 for the three month period ended
December 31,1995. The volume of loan fundings during the three month periods
ended December 31, 1995 and 1996 totaled approximately $7,310,604 and
$17,539,958 respectively. Such increases in revenues, loan fundings and interest
and processing fees were due to the increase in loan activity experienced by the
Company during the latter period.
12
<PAGE>
During the three month period ended December 31,1995, the company financed a
total of 71 loans totaling $7,310,604 with a weighted average principal amount
of $102,966 for an average duration of 17 days per borrowing. During the three
month period ended December 31, 1996, the Company financed a total of 238 loans
totaling $17,539,958 with a weighted average principal amount of $73,697 for a
duration of 18 days per borrowing which amounts included 135 loans funded
through bank borrowings aggregating $11,003,512 in weighted average principal
amounts of $81,507.
DIRECT COSTS. During the three month periods ended December 31,1995 and 1996,
interest expense and other bank charges paid to the Company's revolving line of
credit providers amounted to $34,770 and $60,718, respectively. The increase in
interest expense and bank fees was due to an increase in the use of the
Company's bank credit facility engendered by the above-described increase in
loan activity.
Interest expense on the bridge financing for the three month periods ended
December 31, 1995 amounted to $6,163.
OPERATING EXPENSES. The Company's operating expenses of $125,660 during the
three month period ended December 31, 1995 consisted primarily of depreciation
and amortization of $25,326, the primary component of which is the Collateral
Tracking System ($23,078); salary and benefits to the company's former Chairman
and Chief Executive and to its Senior Vice President ($41,018); Accounting and
Legal fees ($13,659); telephone ($5,530); office rent ($2,901); temporary staff,
including the services of an outside consultant for customer risk analysis, Dr.
Teodore E. Reingold, CPA, a professor of management, ($20,961) and miscellaneous
of $16,265. The Company's operating expenses of $362,318 during the three month
period ended December 31,1996 consisted primarily of depreciation and
amortization of $25,325 the primary component of which is the Collateral
Tracking System ($23,078); salaries and benefits to the Company's Chief
Executive, its President, Its Senior Vice President and office staff ($77,606);
legal and accounting fees ($38,728); telephone ($8,337); office rent ($5,323);
temporary staff, including the services of an outside consultant for customer
risk analysis, Dr. Teodore E. Reingold, CPA, a professor of management,
($17,802); costs due to registration and IPO ($153,114, including, legal, public
relations and printing costs) and miscellaneous of ($36,083). The increase in
such expenses for the three month period ended December 31, 1996 are due to the
increase in lending activity and the increased costs associated for
professional, financial consulting and similar services which the Company has
incurred by reason of its change in status from a privately owned to a publicly
held company.
NET LOSS. During the three month periods ended December 31, 1995 and 1996 the
Company incurred a net loss of $130,522 and $323,920, respectively. The
Company's lack of sufficient warehouse loan credit availability negatively
impacted net income for the above mentioned periods. In addition, increased
costs associated with the professional, financial consulting and similar
services which the Company has incurred by reason of its change in status from a
privately owned to a publicly held company have also negatively impacted net
income.
13
<PAGE>
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following document has been filed exclusively with the Securities
and Exchange Commission.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter for
which this report has been filed.
14
<PAGE>
Signature
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Pioneer Commercial Funding Corp.
By /s/ Glenda S. Klein
--------------------------------------
Glenda S. Klein, Sr. Vice President
And Principal Financial Officer
Dated: February 11, 1997
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and statements of operations filed as part of the Company's quarterly
report on Form 10-QSB and is qualified in its entirety by reference to such
report.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> $355,293
<SECURITIES> 0
<RECEIVABLES> $4,315,237
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> $378,010
<TOTAL-ASSETS> $5,608,348
<CURRENT-LIABILITIES> 0
<BONDS> $2,955,681
0
0
<COMMON> $14,423
<OTHER-SE> $10,570,857
<TOTAL-LIABILITY-AND-EQUITY> $5,608,348
<SALES> 0
<TOTAL-REVENUES> $226,402
<CGS> 0
<TOTAL-COSTS> $223,989
<OTHER-EXPENSES> $580,697
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> ($568,245)
<INCOME-TAX> $2,044
<INCOME-CONTINUING> ($570,288)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> ($570,288)
<EPS-PRIMARY> ($0.50)
<EPS-DILUTED> ($0.50)
</TABLE>
