<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Quarter Ended June 30, 1995 Commission File Number 0-4186
CONSOLIDATED TECHNOLOGY GROUP LTD.
(Exact name of registrant as specified in its charter)
New York 13-1948169
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
160 Broadway, New York, NY 10038
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (212) 233-4500
Indicate by check mark whether the Registrant (1) has filed all reports
required 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____
Number of common shares outstanding as of August 14, 1995: 23,707,264
----------
<PAGE> 2
CONSOLIDATED TECHNOLOGY GROUP LTD.
INDEX
Part I - Financial Information:
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1995
and December 31, 1994 2-3
Consolidated Statements of Operations -
Three Month Periods Ended June 30, 1995
and July 31, 1994 4
Consolidated Statements of Operations -
Six Month Periods Ended June 30, 1995
and July 31, 1994 5
Consolidated Statement of Shareholders'
Equity - June 30, 1995 6-7
Consolidated Statements of Cash Flows -
Six Month Periods Ended June 30, 1995
and July 31, 1994 8-10
Notes to Consolidated Financial Statements 11-18
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 19-25
Part II - Other Information:
Item 6. Exhibits and Reports on Form 8-K 26
<PAGE> 3
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Balance Sheets
June 30,
1995 December 31,
(Unaudited) 1994
----------- -----------
Assets:
Current assets:
Cash and cash equivalents $ 2,804,173 $ 1,726,796
Receivables, net of allowances 18,809,796 16,819,356
Inventories 4,227,077 3,466,328
Loans receivable 301,367 1,363,249
Prepaid expenses and other current assets 235,574 412,243
Investments in common stock 6,468 150,892
---------- ----------
Total current assets 26,384,455 23,938,864
---------- ----------
Property, plant and equipment, net 12,548,922 12,984,305
---------- ----------
Other assets:
Capitalized software development costs 928,499 1,064,418
Equipment leased to others 133,800 --
Goodwill, net 12,199,837 12,622,620
Covenants not to compete, net 2,809,505 3,450,665
Customer lists, net 12,346,548 12,770,200
Deferred offering costs 419,469 331,334
Receivables, long-term 742,140 --
Receivables, related parties 189,896 159,824
Trademark, net 385,837 --
Investments in common stock, long-term 462,660 383,345
Other assets 599,195 382,969
---------- ----------
Total other assets 31,217,386 31,165,375
---------- ----------
Total Assets $70,150,763 $68,088,544
========== ==========
See notes to consolidated financial statements.
2
<PAGE> 4
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Balance Sheets
June 30,
1995 December 31,
(Unaudited) 1994
----------- -----------
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable and accrued expenses $ 7,892,437 $ 6,741,080
Accrued payroll and related expenses 3,011,260 1,774,160
Accrued interest 233,751 112,524
Income taxes payable 158,764 20,000
Interim billings in excess of costs and
estimated profits 205,619 654,961
Notes payable, related parties 183,496 183,496
Current portion of long-term debt 8,139,871 8,109,956
Current portion of subordinated debt 3,850,284 3,437,050
Current portion of capitalized lease
obligations 1,439,389 1,206,710
---------- ----------
Total current liabilities 25,114,871 22,239,937
---------- ----------
Long-term liabilities:
Long-term debt 8,672,687 8,541,930
Capitalized lease obligations 2,764,977 2,676,085
Subordinated debt 15,997,385 17,925,868
---------- ----------
Total long-term liabilities 27,435,049 29,143,883
---------- ----------
Minority Interest 2,001,615 --
---------- ----------
Shareholders' equity:
Preferred stock 80,675 80,675
Additional paid-in-capital, preferred stock 310,852 310,852
Common stock 237,073 175,773
Additional paid-in-capital, common stock 44,094,611 39,354,391
Accumulated deficit (27,152,380) (23,044,452)
Unrealized exchange translation 166,421 (33,200)
Deferred consulting fees (2,197,657) -
Net unrealized gain (loss) on long-term
investments in common stock 59,633 (139,315)
---------- -----------
Total shareholders' equity 15,599,228 16,704,724
---------- ----------
Total Liabilities and Shareholders' Equity $70,150,763 $68,088,544
========== ==========
See notes to consolidated financial statements.
3
<PAGE> 5
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statements of Operations
For the Three Month Periods
Ended June 30, 1995 and July 31, 1994
(Unaudited)
Three Month Periods Ended
---------------------------
June 30, July 31,
1995 1994
---------- ----------
Revenues $27,733,511 $ 6,837,490
Direct Costs 22,611,341 6,516,365
---------- ----------
Gross Profit 5,122,170 321,125
Selling, General and Administrative 5,534,706 2,731,723
---------- ----------
Loss from Operations (412,536) (2,410,598)
---------- ----------
Other Income (Expense):
Interest expense (1,169,927) (30,909)
Other income (expense) (174,077) (48,326)
Losses on investment securities (10,232) (520)
---------- ----------
Total other income (expense) (1,354,236) (79,755)
---------- ----------
Loss from Continuing Operations Before
Income Taxes and Minority Interest (1,766,772) (2,490,353)
Income Taxes (65,361) --
Minority Interest 112,812 147,806
---------- ----------
Net Loss ($ 1,719,321) ($ 2,342,547)
========== ==========
Net loss per share ($0.08) ($0.29)
==== ====
Weighted average number of common shares 21,927,099 7,972,594
========== ==========
See notes to consolidated financial statements.
4
<PAGE> 6
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statements of Operations
For the Six Month Periods
Ended June 30, 1995 and July 31, 1994
(Unaudited)
Six Month Periods Ended
---------------------------
June 30, July 31,
1995 1994
---------- ----------
Revenues $56,143,712 $13,259,096
Direct Costs 45,938,122 12,281,611
---------- ----------
Gross Profit 10,205,590 977,485
Selling, General and Administration 11,931,593 4,049,543
---------- ----------
Loss from Operations (1,726,003) (3,072,058)
---------- ----------
Other Income (Expense):
Interest expense (2,154,021) (341,335)
Other income (expense) (96,143) 366,332
Losses on investment securities (130,515) (520)
Unusual items -- (115,000)
---------- ----------
Total other income (expense) (2,380,679) (90,523)
---------- ----------
Loss from Continuing Operations Before
Income Taxes and Minority Interest (4,106,682) (3,162,581)
Income Taxes (109,228) --
Minority Interest 107,982 113,838
---------- ----------
Net Loss ($ 4,107,928) ($ 3,048,743)
========== ==========
Net loss per share ($0.20) ($0.38)
==== ====
Weighted average number of common shares 20,360,328 7,972,594
========== ==========
See notes to consolidated financial statements.
5
<PAGE> 7
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statement of Shareholders' Equity
For the Six Month Period Ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Stock
Issued Unreal- Amort- Recog-
in Lieu ized ization nized
Balance of Cash Gain on of Def- Invest- Balance
at Stock for Exchange erred ment at
December Options Services Net Trans- Consult- Security June 30,
31, 1994 Exercised Rendered Loss lation ing Fees Losses 1995
-------- --------- -------- ------ -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Preferred stock, $1.00 par value,
6% series "A", 77,713
shares authorized:
Shares 77,713 -- -- -- -- -- -- 77,713
======= ======= ======= ======= ======= ======= ======= =======
Amount $ 77,713 -- -- -- -- -- -- $ 77,713
======= ======= ======= ======= ======= ======= ======= =======
Preferred stock, $3.50 and $0.10
par value, series "B" and "E",
8,000 shares authorized each:
Shares 262 -- -- -- -- -- -- 262
======= ======= ======= ======= ======= ======= ======= =======
Amount $ 262 -- -- -- -- -- -- $ 262
======= ======= ======= ======= ======= ======= ======= =======
Preferred stock, $1.00 par value,
$8.00 subordinated, series "F",
6,000 shares authorized:
Shares 2,700 -- -- -- -- -- -- 2,700
====== ====== ======= ======= ======= ======= ======= =======
Amount $ 2,700 -- -- -- -- -- -- $ 2,700
====== ====== ======= ======= ======= ======= ======= =======
Total preferred stock:
Shares 80,675 -- -- -- -- -- -- 80,675
======= ====== ======= ======= ======= ======= ======= =======
Amount $ 80,675 -- -- -- -- -- -- $ 80,675
======= ====== ======= ======= ======= ======= ======= =======
Additional Paid- in capital,
preferred stock $ 310,852 -- -- -- -- -- -- $ 310,852
======== ======= ======= ======= ======= ======= ======= ========
(continued)
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 8
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statement of Shareholders' Equity
For the Six Month Period Ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Stock
Issued Unreal- Amort- Recog-
in Lieu ized ization nized
Balance of Cash Gain on of Def- Invest- Balance
at Stock for Exchange erred ment at
December Options Services Net Trans- Consult- Security June 30,
31, 1994 Exercised Rendered Loss lation ing Fees Losses 1995
-------- --------- -------- ------ -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock, $0.01 par value,
50,000,000 shares authorized:
Shares 17,577,260 6,000,000 130,004 -- -- -- -- 23,707,264
========== ========= ======== ======= ======= ======= ======= ==========
Amount $ 175,773 $ 60,000 $ 1,300 -- -- -- -- $ 237,073
======== ======= ====== ======= ======= ======= ======= ========
Additional paid- in capital,
common stock $ 39,354,391 $ 4,627,500 $ 112,720 -- -- -- -- $ 44,094,611
=========== ========== ======== ======== ======= ======= ======= ============
Accumulated deficit ($ 23,044,452) -- -- ($ 4,107,928) -- -- -- ($ 27,152,380)
========== ======= ======== ========== ======= ======= ======= ===========
Unrealized exchange
translation ($ 33,200) -- -- -- $ 199,621 -- -- $ 166,421
======= ======= ====== ======= ======== ======= ======= ========
Deferred consulting fees --($ 2,312,500) -- -- -- $ 114,843 -- ($ 2,197,657)
======= ========== ====== ======= ======= ======== ======= ==========
Unrealized gain (loss) on
long-term investments in
common stock ($ 139,315) -- -- -- -- -- $ 198,948 $ 59,633
======== ======= ====== ======= ======= ======= ======== =======
Total $ 16,704,724 $ 2,375,000 $ 114,020($ 4,107,928) $ 199,621 $ 114,843 $ 198,948 $ 15,599,228
=========== ========== ======== ========== ======== ======== ======== ===========
(concluded)
</TABLE>
See notes to consolidated financial statements.
7
<PAGE> 9
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Month Periods
Ended June 30, 1995 and July 31, 1994
(Unaudited)
Six Month Periods Ended
---------------------------
June 30, July 31,
1995 1994
---------- ----------
Cash Flows from Operating Activities:
Net loss ($ 4,107,928) ($3,048,743)
---------- ---------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 3,579,963 265,488
Minority interest in loss of
consolidated subsidiaries (107,982) (113,838)
Bad debt expense 427,471 22,940
Value of stock issued in lieu of cash
payments for services rendered 114,020 --
Deferred charges on option exercise 1,264,843 135,000
Loss on common stock investments 130,515 13,044
Unrealized gain on exchange translation 199,621 --
Write-down of fixed assets to fair value -- 225,000
Change in assets and liabilities:
(Increase) decrease in assets:
Receivables (2,124,868) 950,341
Inventories 50,754 611,954
Prepaid expenses and other current assets 192,016 (310,601)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 464,725 (263,888)
Accrued payroll and related expenses 1,237,100 (1,331,905)
Income taxes payable 138,764 (5,550)
Accrued interest 121,227 (270,438)
Interim billings in excess of costs
and estimated profits (449,342) --
---------- ----------
Total adjustments 5,238,827 (72,453)
---------- ----------
Net cash provided by (used in)
operating activities 1,130,899 (3,121,196)
---------- ----------
Cash Flows from Investing Activities:
Increase in other assets (20,829) (239,210)
Capital expenditures (387,133) (157,662)
Capitalized software development costs (86,995) (317,311)
Investments in common stock (7,406) (488,173)
Proceeds from sale of common
stock investments 358,110 --
Payments for loans made (1,226,384) (1,221,069)
Collections for repayment of loans made 1,378,436 --
(continued)
See notes to consolidated financial statements.
8
<PAGE> 10
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Month Periods
Ended June 30, 1995 and July 31, 1994
(Unaudited)
Six Month Periods Ended
---------------------------
June 30, July 31,
1995 1994
---------- ----------
Cash Flows from Investing Activities
(continued):
Acquisition of subsidiary -- (500,000)
Cash of companies acquired and merged 504,210 144,752
Cash of company sold -- (5,945)
Cash escrow -- (2,000,000)
Net assets of a company merged
with a subsidiary (982,822) --
Minority interest from a decrease in
ownership of consolidated subsidiaries 2,109,597 --
---------- ----------
Net cash provided by (used in)
investing activities 1,638,784 (4,784,618)
---------- ----------
Cash flows from financing activities:
Increase in deferred offering costs (88,135) (56,500)
Net advances from (payments to) a factor (707,451) --
Proceeds from issuance of long-term debt 1,686,247 22,851
Repayment of long-term debt (1,845,957) (2,108,589)
Payments on capital lease obligations (446,761) (5,743)
Repayment of subordinated debt (1,515,249) --
Issuance of common stock -- 8,161,500
Exercise of stock options 1,225,000 2,470,000
---------- ----------
Net cash provided by (used in)
financing activities (1,692,306) 8,483,519
---------- ----------
Net Increase in Cash and Cash Equivalents 1,077,377 577,705
Cash and Cash Equivalents
at Beginning of Period 1,726,796 1,195,527
---------- ----------
Cash and Cash Equivalents
at End of Period $ 2,804,173 $ 1,773,232
========== ==========
(continued)
See notes to consolidated financial statements
9
<PAGE> 11
Consolidated Technology Group Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Month Periods
Ended June 30, 1995 and July 31, 1994
(Unaudited)
Six Month Periods Ended
----------------------------
June 30, July 31,
1995 1994
---------- ----------
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest $ 2,032,794 $ 611,773
========== ==========
Income taxes $ -- $ --
========== ==========
(concluded)
During the six month period ended June 30, 1995:
Non-Cash Investing Activities:
- acquired equipment under capital lease obligations with a net present
value of $758,815.
- received common stock in lieu of cash payments for notes and accrued
interest receivable with a book value of $217,162.
- pursuant to an acquisition of another entity by one of the Company's
subsidiaries, in a transaction accounted for as a reverse merger (see
footnote 9 of the notes to the consolidated financial statements):
- reduced the Company's equity ownership in such subsidiary which resulted
in an increase in minority interest of $2,109,597.
- acquired net assets with a book value of $982,822
Non-Cash Financing Activities:
- - issued stock options and received exercise proceeds of $1,225,000 and
incurred non-cash deferred consulting costs of $2,197,657 and non-cash
consulting fee expenses of $1,264,843.
- - issued common stock with a value of $114,020 in lieu of cash payment for
services rendered
See notes to consolidated financial statements
10
<PAGE> 12
Consolidated Technology Group Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
(1) Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position of the Company as of June
30, 1995 and December 31, 1994 and the results of its operations for the three
and six months ended June 30, 1995 and July 31, 1994 and the changes in cash
flows for the six months ended June 30, 1995 and July 31, 1994.
(2) Periods Reported
Effective December 31, 1994, the Company changed to a calendar year. Prior to
December 31,1994 the Company utilized a fiscal year ending July 31 of each
year. The accompanying financial statements include interim period results for
the three months and six months ended June 30, 1995, the first and second
quarter of the new calendar year, and for the three months and six months ended
July 31, 1994, the third and fourth quarter of the prior fiscal year. The
Company's operations are not affected by significant seasonal fluctuations that
would make the periods reported herein not comparable.
(3) Accounting Policies
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements in the December 31, 1994 Form 10-K transition
report. The following additional disclosure of accounting policies reflects
items that were added during the current quarter and as such were not disclosed
in the December 31, 1994 Form 10-K.
Equipment Leased to Others - The Company's audio/visual manufacturing and
services segment leases editing equipment. Such equipment is recorded at the
net realizable value of such equipment.
Trademark - The trademark gives the Company's audio/visual manufacturing and
services segment a nonexclusive trademark license for the use of a brand name
in connection with the marketing and selling of professional loudspeakers. The
trademark is valued based on fair value and is being amortized on a
straight-line basis over 25 years.
(4) Interim Results
The results of operations for the three and six months ended June 30, 1995 and
July 31, 1994 are not necessarily indicative of the results to be expected for
the full year.
(5) Loss Per Share
Loss per share is computed by dividing the net loss for the period by the
weighted average number of common shares outstanding. Stock options and
warrants are assumed converted to common stock, when dilutive. For the three
and six month periods ended June 30, 1995, none of the Company's common stock
equivalents are assumed to be converted because they would be anti-dilutive.
11
<PAGE> 13
(6) Income Taxes
The Company's provision for income taxes for the three and six month periods
ended June 30, 1995 is related to state income and franchise taxes. Federal
and state tax benefits have not been recognized for the current losses for the
three and six months ended June 30, 1995 due to the fact that all potential
loss carry backs have been fully utilized and, under SFAS No. 109, "Accounting
for Income Taxes", the Company has determined that it is more likely than not
that the tax asset will not be realized.
(7) Industry Segments:
The Company currently classifies its operations into eight business segments:
(i) Contract Engineering Services consists of subsidiaries that provide
engineers, designers and technical personnel on a temporary basis pursuant to
contracts with major corporations; (ii) Medical Diagnostics consists of a
subsidiary that performs magnetic resonance imaging and other medical
diagnostic services; (iii) Audio/Visual Manufacturing and Services consists of
subsidiaries that develop digital signal processing and market and sell
loudspeakers and random access video tape editing technologies; (iv) Electro-
Mechanical and Electro-Optical Products Manufacturing consists of subsidiaries
that manufacture and sell products such as devices that measure distance and
velocity, instrumentation devices, debit card vending machines and industrial
lighting products; (v) Medical Information Services consists of subsidiaries
that provide medical information database services, health care industry
related software packages and the CarteSmart medical identification cards and
related software program; (vi) Telecommunications consists of a subsidiary
that, among other things, installs telephonic network systems and buys and
resells local telephone service; (vii) Three Dimensional Products and Services
consists of subsidiaries that provide three dimensional imaging services that
are used in a variety of applications, such as proto-type building and reverse
engineering; and (viii) Business Consulting Services consists of subsidiaries
that provide a variety of financial and business related services. Corporate
and Other consists of the operating activities of the holding company entities.
Previously, the segmentation consisted of (I) Manufacturing, which is now
included in the Electro- Mechanical and Electro-Optical segment; (ii) Fees and
Services, which included the subsidiaries that are now classified in the
Contract Engineering Services, Telecommunications and Business Consulting
Services segments; and (iii) Development Stage which previously included
Medical Information Services and Three Dimensional Products and Services.
Intersegment sales and sales outside the United States are not material.
Information concerning the Company's business segments is as follows:
12
<PAGE> 14
(7) Industry Segments (continued)
Three Months Six Months
Ended Ended
------------------------ ---------------------------
June 30, July 31, June 30, July 31,
1995 1994 1995 1994
---- ---- ---- ----
Revenues:
Contract Engineering
Services $15,433,972 $ 5,158,848 $33,233,759 $10,221,120
Medical Diagnostics 7,052,149 -- 14,078,601 --
Audio/Visual Manufact-
uring and Services 815,351 -- 815,351 --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 1,368,345 861,017 2,539,518 1,727,422
Medical Information
Services 1,920,229 -- 3,347,259 --
Telecommunications 707,171 729,439 1,097,185 1,130,971
Three Dimensional
Products and Services 429,794 56,321 1,019,039 123,600
Business Consulting
Services 6,500 31,865 13,000 55,983
---------- ---------- ---------- ----------
Total Revenues $27,733,511 $ 6,837,490 $56,143,712 $13,259,096
========== ========== ========== ==========
Gross Profit:
Contract Engineering
Services $ 1,265,755 $ 712,775 $ 1,877,758 $ 946,469
Medical Diagnostics 2,914,429 -- 6,306,992 --
Audio/Visual Manufact-
uring and Services 152,149 -- 152,149 --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 54,568 (528,209) 417,546 (279,748)
Medical Information
Services 526,064 -- 894,716 --
Telecommunications 119,952 174,006 176,920 276,210
Three Dimensional
Products and Services 82,753 (69,312) 366,509 (21,429)
Business Consulting
Services 6,500 31,865 13,000 55,983
---------- ---------- ---------- ----------
Total Gross Profit $ 5,122,170 $ 321,125 $10,205,590 $ 977,485
========== ========== ========== ==========
13
<PAGE> 15
(7) Industry Segments (continued)
Three Months Six Months
Ended Ended
------------------------ ---------------------------
June 30, July 31, June 30, July 31,
1995 1994 1995 1994
---- ---- ---- ----
Income (Loss) from
Operations:
Contract Engineering
Services $ 512,270 $ (141,336) $ 217,888 $ (188,111)
Medical Diagnostics 1,346,014 -- 2,842,305 --
Audio/Visual Manufact-
uring and Services (66,202) -- (66,202) --
Electro-Mechanical and
Electro- Optical
Products Manufacturing (120,673) (790,425) (124,593) (782,617)
Medical Information
Services (196,675) (380,342) (632,599) (467,302)
Telecommunications (196,962) 16,783 (411,156) 26,939
Three Dimensional
Products and Services (412,122) (461,773) (827,101) (578,822)
Business Consulting
Services (11,797) (140,580) (18,044) (157,598)
Corporate and Other (1,266,389) (512,925) (2,706,501) (924,547)
--------- ---------- ---------- ----------
Total loss
from operations $ (412,536) $(2,410,598) $(1,726,003) $(3,072,058)
========= ========== ========== ==========
Net Income (Loss):
Contract Engineering
Services $ 105,377 $ (69,283) $ (468,681) $ (97,987)
Medical Diagnostics 627,774 -- 1,461,272 --
Audio/Visual Manufact-
uring and Services (88,690) -- (88,690) --
Electro-Mechanical and
Electro- Optical
Products Manufacturing (122,314) (941,760) (126,514) (659,180)
Medical Information
Services (309,338) (313,034) (776,034) (429,159)
Telecommunications (209,532) 24,786 (431,214) 26,939
Three Dimensional
Products and Services (471,856) (487,261) (887,354) (611,235)
Business Consulting
Services (12,403) (143,990) (21,000) (164,425)
Corporate and Other (1,238,339) (412,005) (2,769,713) (1,113,696)
---------- ---------- ---------- ----------
Total net loss $(1,719,321) $(2,342,547) $(4,107,928) $(3,048,743)
========== ========== ========== ==========
14
<PAGE> 16
(7) Industry Segments (continued)
Three Months Six Months
Ended Ended
------------------------ ---------------------------
June 30, July 31, June 30, July 31,
1995 1994 1995 1994
---- ---- ---- ----
Depreciation and
Amortization:
Contract Engineering
Services $ 128,053 $ 73,127 $ 256,089 $ 142,244
Medical Diagnostics 1,237,083 -- 2,490,273 --
Audio/Visual Manufact-
uring and Services 75,061 -- 75,061 --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 7,647 14,707 15,295 28,282
Medical Information
Services 133,519 17,524 264,987 19,535
Telecommunications 7,552 7,495 15,047 14,989
Three Dimensional
Products and Services 395,830 40,911 454,786 56,057
Business Consulting
Services 528 710 1,056 1,057
Corporate and Other 3,746 2,827 7,369 3,324
---------- ---------- ---------- ----------
Total depreciation
and amortization $ 1,989,019 $ 157,301 $ 3,579,963 $ 265,488
========== ========== ========== ==========
Capital Expenditures (i):
Contract Engineering
Services $ 9,243 $ -- $ 19,764 $ --
Medical Diagnostics 54,922 -- 102,252 --
Audio/Visual Manufact-
uring and Services 56,159 -- 56,159 --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 2,946 -- 6,473 23,191
Medical Information
Services 26,743 1,003,940 31,080 1,003,940
Telecommunications -- -- -- --
Three Dimensional
Products and Services 60,803 129,877 150,747 144,458
Business Consulting
Services -- -- -- 3,628
Corporate and Other 2,460 37,668 20,658 56,838
---------- ---------- ---------- ----------
Total capital
expenditures $ 213,276 $ 1,171,485 $ 387,133 $ 1,232,055
========== ========== ========== ==========
(i) - For the three and six month periods ended July 31, 1994, capital
expenditures includes approximately $1,075,000 for amounts allocated to
property and equipment from the acquisitions of companies.
15
<PAGE> 17
(7) Industry Segments (continued)
At At
June 30, July 31,
1995 1994
---- ----
Identifiable Assets:
Contract Engineering
Services $10,685,061 $ 5,508,858
Medical Diagnostics 40,863,889 --
Audio/Visual Manufact-
uring and Services 2,396,511 --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 4,760,250 4,646,551
Medical Information
Services 6,316,741 6,822,124
Telecommunications 1,225,056 1,041,712
Three Dimensional
Products and Services 2,017,129 1,445,557
Business Consulting
Services 287,095 444,204
Corporate and Other 1,599,031 5,161,357
---------- ----------
Total identifiable
assets $70,150,763 $25,070,363
========== ==========
(8) Capital Stock Transactions
During the period reported, the following capital stock transactions occurred:
Stock Issued for Services Rendered:
On February 28, 1995 and April 10, 1995, the Company issued 75,000 and 25,004
common shares, respectively, pursuant to a financing agreement with a creditor
of the Company. The value of the stock ($88,520) was expensed.
On April 10, 1995, the Company issued 30,000 common shares in lieu of cash
payment for services rendered to the Company. The value of the stock ($25,500)
was expensed.
16
<PAGE> 18
(8) Capital Stock Transactions (continued)
Non-Employee Directors, Consultants and Advisors Stock Plan:
On August 20, 1993, the Company authorized a stock option plan for Non-
Employee Directors, Consultants and Advisors to provide compensation for
services rendered to the Company in lieu of cash payments. At various times,
the Company has registered and granted options pursuant to the plan. During
the six months ended June 30, 1995, options to purchase 3,500,000 shares were
granted and exercised of which 1,000,000 were exercised at $0.50 per share,
1,000,000 were exercised at $0.35 per share and 1,500,000 were exercised at
$0.25 per share. Additionally, 2,500,000 shares were granted for which no cash
consideration was received. The above transactions resulted in $3,462,500 of
consulting costs, computed as follows:
Shares 6,000,000
Value of stock at date of grant
(weighted average) $ 0.9766
---------
Aggregate fair market value of stock issued 5,859,375
20% discount (1,171,875)
---------
Discounted value of stock issued 4,687,500
Exercise proceeds (1,225,000)
---------
Total consulting costs 3,462,500
Portion expensed at the time of exercise 1,150,000
---------
Portion deferred at the time of exercise $2,312,500
=========
In accordance with the agreements relating to the various parties involved,
$662,500, $137,500, and $350,000 were charged as consulting services, public
relation services and non-cash compensation, respectively, in the determination
of income from operations for the six months ended June 30, 1995.
Additionally, amortization of the deferred portion in the amount of $114,843
was charged to income from operations for the six months ended June 30, 1995.
The unamortized deferred consulting expense is recorded in the equity section
of the balance sheet. Such deferred charges are being amortized over four
years, the term of the related contracts. A 20% discount was utilized because
the shares issued represent large blocks of stock.
(9) Reverse Merger
On May 8, 1995, SIS Capital Corp. ("SISC"), a wholly-owned subsidiary of the
Company, transferred all of its equity ownership in Trans Global Services, Inc.
("Trans Global") to Concept Technologies Group, Inc. ("Concept"), pursuant to
an agreement dated as of March 31, 1995. The transaction was accounted for as
a reverse merger, with Trans Global being the surviving company. As a result
of the transaction, the Company's ownership in Trans Global decreased which
increased minority interest by $2,109,597. The statement of operations for the
three and six month periods ended June 30, 1995 and the cash flow statement for
the six month period ended June 30, 1995 reflect the operations of Trans Global
from the beginning of the respective periods and Trans Global includes
Concept's operations from the date of the reverse merger. The consolidated
balance sheet as of June 30, 1995 includes the net book value of Concept's
assets and
17
<PAGE> 19
(9) Reverse Merger (continued)
liabilities. The net assets of Concept at the date of the reverse merger were
as follows:
Cash $ 504,210
Receivables, net 293,043
Inventories, net 811,503
Prepaid expenses and other assets 94,891
Property, plant and equipment, net 373,473
Equipment leased to others, net 171,600
Trademark, net 389,389
Other long-term assets 68,695
Accounts payable and accrued expenses (686,632)
Long-term debt (1,027,833)
Capital lease obligations (9,517)
---------
Net assets at book value $ 982,822
=========
(9) Pro Forma Results
The following pro forma unaudited results assume that the reverse merger with
Concept Technologies (as disclosed herein and in the March 31, 1995 10-Q) and
the acquisitions of Creative Socio-Medics, International Magnetic Imaging,
Inc., Job Shop Technical Services and Computer Engineering Services (as
disclosed in the December 31, 1994 10-K) had occurred at the beginning of the
indicated periods:
Three Months Six Months
Ended Ended
------------------ ------------------
June 30, July 31, June 30, July 31,
1995 1994 1995 1994
---- ---- ---- ----
(in 000's except per share data))
Net revenues $27,734 $26,070 $56,800 $52,010
====== ====== ====== ======
Net loss $(1,719) $(2,227) $(4,170) $(1,270)
====== ====== ====== ======
Loss per share $ (0.08) $ (0.16) $ (0.20) $( 0.09)
====== ====== ====== ======
The pro forma information is not necessarily indicative of either the results
of operations that would have occurred had the acquisition been effective at
the beginning of the indicated periods or of the future results of operations.
. . . . . . . . . . . . . . . . . . . . . . . . . .
18
<PAGE> 20
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Condition:
Liquidity and Capital Resources:
As of June 30, 1995 working capital at June 30, 1995 was $1,269,584 compared to
$1,698,927 at December 31, 1994. The Company's principal working capital
consists of cash and cash equivalents which was $2,804,173 at June 30, 1995
compared to $1,726,796 at December 31, 1994. During the six months ended June
30, 1995, the Company's principal source of cash was from the operations of the
medical diagnostics segment company, International Magnetic Imaging, ("IMI"),
proceeds from the issuance of long-term debt and proceeds from the exercise of
stock options. Certain restrictions exist with regards to the ability of the
Company to use IMI's cash for purposes other than IMI operations, pursuant to
an IMI financing arrangement with a creditor. During the same period, the
principal use of cash was to purchase capital assets and to repay scheduled
debt maturities.
In 1996, subordinated debt, payable to the former owners of IMI, require
principal and interest payments of approximately $2,500,000 and balloon
payments due in September of 1996 of approximately $10,500,000. Management is
currently negotiating terms with financing sources to extend the repayment
terms on the subordinated debt prior to the due date of the balloon payments,
however it cannot be currently determined whether such negotiation efforts will
be successful. Debt service due on the subordinated debt subsequent to 1996
approximates $5,250,000 of which approximately $3,900,000, $784,000 and
$566,000, respectively, is due in 1997, 1998 and 1999. Management anticipates
that if the refinancing negotiations are successful that debt service related
to these years will also be extended over a longer time period. If the Company
is not successful in refinancing the subordinated debt, it will be in default
on these commitments.
Results of Operations:
Consolidated revenues, gross profit and selling, general and administrative
expenses for the three and six months ended June 30, 1995 compared to the three
and six months ended July 31, 1994 increased significantly due primarily to
the acquisition of companies in various industry segments. The percentage of
relative contribution to revenues, gross profit, and selling general and
administrative expenses by industry segment is shown in the following tables.
Changes within the individual industry segments themselves is discussed further
within the respective industry segment discussions.
19
<PAGE> 21
Managements Discussion and Analysis (continued):
Percentage of Total
-------------------
Three Months Ended Six Months Ended
---------------------- ---------------------
June 30, July 31, June 30, July 31,
Revenues: 1995 1994 1995 1994
- -------- ---- ---- ---- ----
Contract Engineering
Services 55.7% 75.4% 59.1% 77.1%
Medical Diagnostics 25.4% -- 25.0% --
Audio/Visual Manufact-
uring and Services 2.9% -- 1.5% --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 4.9% 12.6% 4.5% 13.0%
Medical Information
Services 6.9% -- 6.0% --
Telecommunications 2.5% 10.7% 2.0% 8.5%
Three Dimensional
Products and Services 1.5% 0.8% 1.8% 0.9%
Business Consulting
Services 0.2% 0.5% 0.1% 0.5%
Percentage of Total
-------------------
Three Months Ended Six Months Ended
---------------------- ---------------------
June 30, July 31, June 30, July 31,
Gross Profit: 1995 1994 1995 1994
- ------------ ---- ---- ---- ----
Contract Engineering
Services 24.7% 222.0% 18.4% 96.8%
Medical Diagnostics 56.9% -- 61.8% --
Audio/Visual Manufact-
uring and Services 3.0% -- 1.5% --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 1.1% (164.5%) 4.1% (28.6%)
Medical Information
Services 10.3% -- 8.8% --
Telecommunications 2.3% 54.2% 1.7% 28.3%
Three Dimensional
Products and Services 1.6% (21.6%) 3.6% (2.2%)
Business Consulting
Services 0.1% 9.9% 0.1% 5.7%
20
<PAGE> 22
Managements Discussion and Analysis (continued):
Percentage of Total
-------------------
Three Months Ended Six Months Ended
---------------------- ---------------------
Selling, General and June 30, July 31, June 30, July 31,
Administrative Expenses 1995 1994 1995 1994
- ------------------------ ---- ---- ---- ----
Contract Engineering
Services 13.6% 31.3% 13.9% 28.0%
Medical Diagnostics 28.3% -- 29.0% --
Audio/Visual Manufact-
uring and Services 3.9% -- 1.8% --
Electro-Mechanical and
Electro- Optical
Products Manufacturing 3.2% 9.6% 4.5% 12.4%
Medical Information
Services 13.1% 13.9% 12.8% 11.5%
Telecommunications 5.7% 5.8% 4.9% 6.2%
Three Dimensional
Products and Services 8.9% 14.4% 10.0% 13.8%
Business Consulting
Services 0.4% 6.2% 0.4% 5.3%
Corporate and Other 22.9% 18.8% 22.7% 22.8%
Discussion of Operations by Segment:
Contract Engineering Services - This segment consists of two companies, ARC
Acquisition and Resource Management International, ("RMI"), which are a part of
Trans Global Services. Revenues and gross profit increased 199% and 78%,
respectively, when comparing the three month periods ended June 30, 1995 and
July 31, 1994, and increased 225% and 98%, respectively, when comparing the
six month periods ended June 30, 1995 and July 31, 1994. These significant
increases are attributed to the operations of RMI, which was acquired in
November 1994. Income (loss) from operations went from a loss of ($141,336)
and ($188,111), respectively, for the three and six month periods ended July
31, 1994 to income of $512,270 and $217,888, respectively, for the three and
six month periods ended June 30, 1995. These increases in profitability are
due primarily to significantly increased volume trends while selling, general
and administrative expenses have increased only marginally. Interest expense
has increased significantly for both comparative periods due to the higher debt
balances at RMI. During the current period, the companies operating in this
segment have negotiated more favorable terms for trade receivable financing,
which will reduce interest expense in the remaining quarters of 1995. This
segment operates in a highly competitive environment with low margins.
However, management anticipates that the reduced cost of the receivable
financing along with an increase in volume will allow this segment to increase
profitability for the remainder of 1995. The ultimate long-term profitability
of this segment cannot be determined and if the current quarter's trends were
to continue, combined with the significant losses in the first quarter,
profitability would only marginally increase from prior periods.
Medical Diagnostics - This segment consists of a medical diagnostic imaging
company, which performs MRI and other diagnostic modalities, that was purchased
in September 1994 and as such there is no comparable period of operations for
this filing. During the three and six month periods ended June 30, 1995, this
21
<PAGE> 23
Managements Discussion and Analysis (continued):
segment operated at a gross margin percent of approximately 41% and 45%,
respectively, and generated income from operations of approximately $1,346,000
and $2,842,000, respectively. Selling, general and administrative expense for
the three and six month periods ended June 30, 1995 approximated $1,568,000 and
$3,465,000, respectively, and interest expense approximated $671,000 and
$1,325,000, for the same respective periods. Revenue in the second quarter
remained relatively level from the first quarter while gross margins decreased
14%. The decrease in gross margin is due to the fact that scans performed in
the second quarter carried lower reimbursement rates than those in the first
quarter while direct costs remained constant. Interest expense remained
relatively level; however, additional interest expense will be incurred during
the remainder of the year due to financing of equipment upgrades for some of
the MRI equipment. The profitability of this segment for the remaining
quarters of 1995 will depend heavily on the ability of management to perform
scans with higher reimbursement rates than those in the second quarter.
Overall, management anticipates that overall revenue and expense levels will
remain relatively level with the second quarter.
Audio/Visual Manufacturing and Services - This segment consists of three
companies, Audio Animation, Inc., which has developed certain unique digital
signal processing technologies, WWR Technology, Inc. (d/b/a Klipsch
Professional), which markets and sells loudspeakers and Prime Access, Inc.
which leases and/or rents a variety of post-production video editing equipment.
This segment was acquired via a reverse merger in the second quarter and as
such there is no comparable period of operations for this filing. During the
three month period ended June 30, 1995, WWR Technology, Inc. was the only
company in this group to have significant operating activity. During the three
months ended June 30, 1995, WWR Technology, Inc. had revenues and gross margins
of approximately, $811,000 and $191,000, respectively, while the other entities
in this segment had revenues of only $4,000 and other direct costs of $43,000,
which consisted primarily of depreciation and amortization of equipment leased
to others. Overall, this segment had losses from operations and net losses of
approximately, $66,202 and $88,690, respectively, although WWR Technology, Inc.
had income from operations and net income of approximately, $38,000 and
$17,000, respectively. The ability of this segment to become profitable on an
overall basis would require a significant increase in sales volume or the
closure of the inactive companies, and it cannot be determined at this time
whether future profitability will, if ever, be realized.
Electro-Mechanical and Electro-Optical Products Manufacturing - This segment
consists of three companies, Sequential Electronic Systems, ("Sequential"),
S-Tech and Televend. Televend, which started in 1995, markets telephone debit
cards and products manufactured by S-Tech. Revenues and gross profit increased
59% and 110%, respectively, when comparing the three month periods ended June
30, 1995 and July 31, 1994, and increased 47% and 249%, respectively, when
comparing the six month periods ended June 30, 1995 and July 31, 1994. The
increase in revenues is due in large part to S-Tech which in itself accounts
for approximately 66% of the total increase for the six months. In prior
periods S-Tech was in a development period, designing and marketing its new
debit card vending machines, and has recently started to increase sales of its
telephone debit card machines and instrumentation devices. The significant
increase in gross margin is due to large inventory obsolescence write-offs that
occurred in the prior comparable periods, while such write-offs in the current
period were not as significant. During both, the three and six month periods
ended June 30, 1995, losses from operations decreased by 85% from the
22
<PAGE> 24
Managements Discussion and Analysis (continued):
comparable periods because while revenues and margins increased, operating
costs remained level. A portion of the revenues in this segment are generated
from government sales and while there exists a possibility that there will be
reversals in government spending cutbacks, it is more likely that defense and
military spending will remain sluggish through 1995. Management plans to
continue placing more emphasis on sales to the private sector and overall it is
anticipated that revenues and operating profits will incur a modest increase in
the remaining quarters for 1995.
Medical Information Services - This segment's operations are accounted for in
one group referred to as CSMC which consists of two companies, CSMC and
Creative Socio-Medics, ("CSM"), which was acquired in June 1994. This segment
did not have revenue or gross profit activity in the prior comparable period.
Revenues during the three and six months ended June 30, 1995 approximated
$1,920,229 and $3,347,259, respectively, and generated gross profits of
approximately $526,064 and $894,716. Of such revenues, the Smart Card
generated $91,000 and $104,000 for the three and six months ended June 30, 1995
from three different projects. The first project consisted of add-on work from
a prior existing contract, the second project consisted of initial funds
received on a signed contract which will generate revenues in the remaining
quarters of 1995, and the third project consisted of initial funds collected
pursuant to a letter of intent which the Company anticipates will lead to the
signing of a final agreement which could generate future revenues for this
segment. All other revenues and gross profits were generated from the on-going
operations of CSM. Selling, general and administrative expenses for the three
and six month periods ended June 30, 1995 included approximately $179,000 and
$335,000, respectively, of product enhancement expenses incurred by CSM and
approximately $21,000 and $91,000, respectively, of financing costs and $53,000
and $105,000, respectively, of amortized software development costs incurred by
Carte. For the three and six month periods ended July 31, 1994 all operations
in this segment related to Carte's start-up costs which were charged to
selling, general and administrative expenses. During the remainder of 1995,
management anticipates that the revenues and gross margins of CSM will remain
relatively level.
Telecommunications - In December of 1993 the Company acquired ARC Networks
which is the only entity operating in this segment. Comparing the three and
six months ended June 30, 1995 to the three and six months ended July 31, 1994,
revenues remained relatively level while gross profit decreased 31% and 36%.
Selling, general and administrative expenses, which consist primarily of
salaries and commissions, increased approximately $160,000 and 340,000 from the
prior comparable periods. The telecommunications segment operates in a highly
competitive industry and management believes that in order for this segment to
become profitable, it will have to distinguish itself from other
telecommunications service companies. In order to become profitable this
segment's volume will need to increase significantly and although management
anticipates that revenues and overall profitability on an annualized basis will
marginally increase during the remainder of 1995, the ultimate profitability of
this segment remains uncertain.
Three Dimensional Products and Services - This segment consists of three
companies, 3D Technology, Inc., ("3D Tech"), 3D Imaging International, Inc.,
("3DI") and Computer Design Services, ("CDS"), which was acquired in November
1994. For the three and six months ended June 30, 1995 compared to the three
and six months ended July 31, 1994, revenues have increased 663% and 725%,
23
<PAGE> 25
Managements Discussion and Analysis (continued):
respectively, and gross profits have increased 219% and 1,810%, respectively,
due to the addition of CDS and increased revenues of 3D Tech of approximately
$127,000 and $464,000 for the respective periods. Losses from operations
approximated $412,000 and $827,000, respectively for the three and six months
ended June 30, 1995. Although this segment has significantly increased
revenues and gross profit, they have not yet reached a level to cover selling,
general and administrative expenses. Additionally, included in selling,
general and administrative expense is approximately $118,000 of amortized
software development costs. During the remainder of 1995, management
anticipates that this segment will continue to have increasing sales based on
current sales orders for the segment's surfacer software, optical laser scanner
and lazer tracer and visicam and visicad products which will result in higher
gross margins. Additionally, selling, general and administrative expenses are
expected to decrease based on a reduction of overhead costs from the combining
of resources functions of 3D Tech and CDS. Although the current trend is
expected to result in a higher level of revenues and gross margins, it can not
be determined at this time whether profit levels, if any, will be significant
on a long-term basis.
Business Consulting Services operations were not significant for the three and
six months ended June 30, 1995 and July 31, 1994 which is consistent with
management's decision to concentrate time and resources managing internal
operations of the pre-existing and newly acquired companies. During the
remainder of 1995, management anticipates that consulting revenues and related
expenses will not be a significant portion of the Company's operations.
Corporate and Other selling, general and administrative expenses for the three
and six months ended June 30, 1995 compared to the comparable prior periods
increased $779,000 and $1,782,000 due primarily to the expenses resulting from
the issuance and exercise of stock options for payment of consulting services
which accounted for approximately, $526,000 and $1,265,00, respectively, of the
increase. Other increases were due to increased legal and accounting fees to
outside firms related to the reverse merger with Concept Technologies and an
increase in the number of financial support staff. During the remainder of
1995, it is anticipated that corporate selling, general and administrative
expense levels will be a factor of the activity of additional acquisitions and
capitalization activities. The Company will need to raise additional capital
in the short-term and it is anticipated that corporate and other costs will
increase.
Discussion of Other Significant Financial Line Items
Interest Expense for the three and six months ended June 30, 1995 compared to
the three and six months ended July 31, 1994 increased by approximately,
$1,139,000 and $1,813,000 which is primarily attributed to the issuance of debt
instruments in connection with the acquisition of IMI. During the three and
six month periods ended June 30, 1995, interest expense related to IMI was
approximately, $671,000 and $1,325,000, respectively. The remaining increase
in interest expense is from the contract engineering services segment which,
for the three and six month periods ended June 30, 1995, had interest expense
of approximately $295,000 and $582,000.
Unusual item - For the six months ended July 31, 1994, the unusual item
consists of expenses of $115,000 resulting from the issuance and exercise of
stock options pursuant to a stock option plan for Non-Employee Directors,
24
<PAGE> 26
Managements Discussion and Analysis (continued):
Consultants and Advisors. Such expenses for similar transactions during the
current year have been charged to selling, general and administrative expenses.
Income taxes - The Company has not provided for income taxes for the three and
six month periods ended June 30, 1995 due to current period losses. Federal
and state tax benefits have not been recognized for the three and six month
periods ended June 30, 1995 due to the fact that all potential loss carry backs
have been fully utilized and, under SFAS No. 109, "Accounting for Income
Taxes", the Company has determined that it is more likely than not, that the
deferred tax asset will not be realized.
Impact of Inflation
The Company is subject to normal inflationary trends and anticipates that any
increased costs would be passed on to its customers.
. . . . . . . . . . . . . . . . . . . . . . . . . .
25
<PAGE> 27
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
1. EX-11 Calculation of earnings per share.
2. EX-27 Financial Data Schedules.
(b)The following reports on Form 8-K were reported during the quarter:
1. On April 26, 1995, the Company filed a Form 8-K, dated April 19, 1995,
reporting as Item 2. and Item 7., the reverse merger between Trans Global
Services, Inc., (a subsidiary of the Company) and Concept Technologies
including terms of agreement and related financial statements and Exhibits. On
May 9, 1995, the Company filed Amendment No. 1 to the above 8-K.
26
<PAGE> 28
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.
CONSOLIDATED TECHNOLOGY GROUP LTD.
(Registrant)
Date: August 18, 1995 /S/ Lewis S. Schiller
---------------------
LEWIS S. SCHILLER
(President & Chief Executive Officer)
Date: August 18, 1995 /S/ George W. Mahoney
---------------------
GEORGE W. MAHONEY
(Chief Financial Officer)
<PAGE> 29
Consolidated Technology Group Ltd. and Subsidiaries
Index to Exhibits
June 30, 1995
EX-11 Calculation of earnings per share.
EX-27 Financial Data Schedule
(filed only to the SEC in electronic format)
<PAGE> 30
Consolidated Technology Group, Ltd. and Subsidiaries
EX-11 Calculation of Earnings per Share
- --------------------------------------------------------------------------------
Three Six
Month Month
Period Period
Ended Ended
June 30, June 30,
1995 1995
---- ----
Net Loss $(1,719,321) $(4,107,928)
========= =========
Loss per Share:
Loss per share - Note 1 $(0.08) $(0.20)
==== ====
Loss per Share - assuming full
dilution - Note 2 $(0.05) $(0.12)
==== ====
Note 1:
Computed by dividing the net loss for the period by the weighted average number
of common shares outstanding (21,927,099 and 20,360,328 for the three and six
months ended June 30, 1995). No stock options, warrants or preferred
convertible stock are assumed to be exercised because they are anti-dilutive
for the periods. The weighted average number of common shares outstanding is
calculated by weighting common shares issued during the period by the actual
number of days that such shares are outstanding for the period.
Note 2:
(i) Assumes that the 6,000,000 common shares issued pursuant to the exercise
of stock options were outstanding as of the beginning of the respective
periods.
(ii) Assumes that a warrant to purchase 1,000,000 common shares at $0.75 per
share was exercised at the beginning of the respective periods, and that all
proceeds from such exercise were used to purchase treasury stock at a price
equal to the average market price of the Company's common shares for the
respective period as quoted on the NASD.
(iii) Assumes that at the beginning of the respective periods, the 77,713
shares of preferred convertible stock, were converted to common shares at the
conversion rate of 130.20833 shares of common for each share of convertible
preferred stock.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS
FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,804,173
<SECURITIES> 469,128
<RECEIVABLES> 22,824,526
<ALLOWANCES> 2,971,223
<INVENTORY> 4,227,077
<CURRENT-ASSETS> 26,384,455
<PP&E> 18,010,465
<DEPRECIATION> 5,461,543
<TOTAL-ASSETS> 70,150,763
<CURRENT-LIABILITIES> 25,114,871
<BONDS> 0
<COMMON> 237,073
0
80,675
<OTHER-SE> 15,281,480
<TOTAL-LIABILITY-AND-EQUITY> 70,150,763
<SALES> 4,373,908
<TOTAL-REVENUES> 56,143,712
<CGS> 3,437,704
<TOTAL-COSTS> 45,938,122
<OTHER-EXPENSES> 12,158,251
<LOSS-PROVISION> 427,471
<INTEREST-EXPENSE> 2,154,021
<INCOME-PRETAX> (4,106,682)
<INCOME-TAX> 109,228
<INCOME-CONTINUING> (4,215,910)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,107,928)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> (.20)
