UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 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 number: 1-12856
SYNERGISTIC HOLDINGS CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 42-1358036
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
50 Laser Court, Hauppauge, New York 11788
(Address of principal executive offices)
(516) 436-5000
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
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
The number of shares of Common Stock of the issuer outstanding as of March 20,
1997 was 9,956,100.
<PAGE>
SYNERGISTIC HOLDINGS CORP.
AND SUBSIDIARIES AND AFFILIATE
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Condensed Combined Consolidated Financial Statements Page
----
Condensed Combined Consolidated Balance Sheets at January 31, 1997 (unaudited)
and April 30, 1996 .......................................................................... 3
Condensed Combined Consolidated Statements of Operations (unaudited) for the
Three Months Ended January 31, 1997 and 1996................................................. 4
Condensed Combined Consolidated Statements of Operations (unaudited) for the
Nine Months Ended January 31, 1997 and 1996.................................................. 5
Unaudited Condensed Combined Consolidated Statement of Stockholders' Equity
(Capital Deficit) for the Nine Months Ended January 31, 1997 and 1996........................ 6
Condensed Combined Consolidated Statements of Cash Flows (unaudited) for the Nine
Months Ended January 31, 1997 and 1996....................................................... 7
Notes to Condensed Combined Consolidated Financial Statements......................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................................................ 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................................ 12
SIGNATURES ................................................................................................... 12
</TABLE>
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<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
SYNERGISTIC HOLDINGS CORP.
AND SUBSIDIARIES AND AFFILIATE
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS
January 31, April 30,
1997 1996
----------- ---------
(unaudited)
ASSETS
Current Assets
Cash 82,554 74,354
Accounts Receivable 3,473,205 3,217,809
Prepaid expenses & other 113,647 122,360
Refundable Income Taxes -- 58,238
Total Current Assets 3,669,406 3,472,761
---------- ----------
Property and Equipment, Net 1,799,001 1,867,656
---------- ----------
Other Assets
Loan Receivable, officer, net of current portion -- 1,004,212
Goodwill, Net 1,235,000 1,308,125
Noncompetition and Consulting Agreements, Net 211,667 150,000
Other Income Taxes 18,635 18,635
---------- ----------
Total Other Assets 1,465,302 2,480,972
---------- ----------
6,933,709 7,821,389
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
Current Liabilities
Bank Overdrafts 895,326 445,440
Note Payable - Finance Company 1,198,020 1,456,443
Accounts Payable 3,890,640 3,323,193
Accrued Expenses & other 191,027 487,484
Current Portion of Long-Term Debt 400,000 227,820
---------- ----------
Total Current Liabilities 6,575,013 5,940,380
---------- ----------
Long-Term Debt & Capital Lease Obligations 1,688,850 1,049,696
Deferred income taxes 10,000 10,000
---------- ----------
Total Liabilities 8,273,863 7,000,349
---------- ----------
Stockholders' Equity (Capital Deficit)
Preferred Stock -Series A, $.01 par value -
shares authorized 20,000,issued and outstanding
11,375 (liquidation preference $100 per share) 1,960,125 --
Preferred Stock-Series B, $.01 par value -
shares authorized, issued and outstanding 1,000 10 --
Common Stock 91,873 79,000
Additional Paid-In Capital 2,438,663 3,951,546
Deficit and Proprietor's Capital Deficiency (5,330,825) (3,209,506)
Less: Note Receivable (500,000) --
---------- ----------
Total Stockholder's Equity (Capital Deficit) (1,340,154) 821,040
---------- ----------
6,933,709 7,821,389
========== ==========
See accompanying notes to condensed combined consolidated financial statements
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<PAGE>
SYNERGISTIC HOLDINGS CORP.
AND SUBSIDIARIES AND AFFILIATE
CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended
--------------------------
January 31, January 31,
1997 1996
----------- -----------
(unaudited) (unaudited)
Net Sales 5,656,733 6,326,622
Cost of Sales 4,584,198 5,386,581
---------- ----------
Gross Profit 1,072,535 940,041
Selling, General & Administrative Expenses 1,116,851 1,416,089
---------- ----------
Loss from Operations (44,316) (476,048)
Interest Expense, Net (102,389) (105,817)
---------- ----------
Net Loss (146,705) (581,865)
========== ==========
Accretion of Preferred stock dividends attributable
to increase to conversion value 872,451 --
========== ==========
Net Loss attributable to Common Stockholders (1,019,156) (581,865)
========== ==========
Net Loss per Share of Common Stock (0.09) (0.05)
========== ==========
Weighted Average Common Shares Outstanding 11,246,366 10,635,563
========== ==========
See accompanying notes to condensed combined consolidated financial statements
-4-
<PAGE>
SYNERGISTIC HOLDINGS CORP.
AND SUBSIDIARIES AND AFFILIATE
CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended
-------------------------
January 31, January 31,
1997 1996
----------- -----------
(unaudited) (unaudited)
Net Sales 16,933,328 19,506,062
Cost of Sales 13,813,007 16,344,091
Gross Profit 3,120,321 3,161,971
Selling, General & Administrative Expenses 3,780,855 4,735,485
Operating Loss (660,534) (1,573,514)
Interest expense, Net (322,111) (310,476)
---------- ----------
Net Loss (982,645) (1,883,990)
========== ==========
Accretion of Preferred stock dividends attributable
to increase to conversion value 1,137,500 --
========== ==========
Net Loss attributable to Common Stockholders (2,120,145) (1,883,990)
========== ==========
Net Loss per Share of Common Stock (0.19) (0.20)
========== ==========
Weighted Average Shares Common Stock Outstanding 10,932,112 9,494,012
========== ==========
See accompanying notes to condensed combined consolidated financial statements
Noncash Investing and Financing Activities:
Immediately prior to the closing of the merger of Synergistic and Salex, the
Company acquired treasury stock from a principal stockholder for the purchase
price of $2,000,000, which was paid by the issuance of two promissory notes.
Subsequently, the stockholder agreed to offset approximately $1,000,000 of these
notes against the Company's loan receivable from him.
On September 19, 1996, the Company closed on a merger with Salex, the details of
which are described in the notes to Condensed Combined Consolidated Financial
Statements.
Effective at the merger date, the Company acquired from its principal
stockholder the real estate of its principal place of business, subject to the
related mortgage obligation, in exchange for a reduction of certain loans
receivable from the stockholder. Prior to the merger date, combined financial
statements were presented in order to reflect the real estate operations for all
periods reported.
-5-
<PAGE>
SYNERGISTIC HOLDINGS CORP.
AND SUBSIDIARIES AND AFFILIATE
CONDENSED COMBINED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Preferred Stock Common Stock
Series A Series B ($.01 par) ($.01 par)
-------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, April 30, 1996 -- $ -- -- 7,900,000 $79,000
Acquisition and constructive retirement of -- -- -- -- (1,453,600) (14,536)
treasury stock purchased from principal shareholder
Reverse stock split -- -- 1,000 10 (715,550) (7,155)
Acquisition of Synergistic Holding Corporation -- -- -- 3,456,410 34,564
and constructive retirement of treasury stock
Private placement of preferred stock and warrants 11,375 822,625 -- -- -- --
net of related expenses
Accretion of preferred stock to conversion value 1,137,500 -- -- -- --
Net loss for the period -- -- -- -- -- --
-------------------------------------------------------------------------
Balance, January 31, 1997 11,375 $1,960,125 1,000 $10 9,187,260 $91,873
=========================================================================
</TABLE>
[Restubbed from Table Above]
<TABLE>
<CAPTION>
Deficit and
Additional Proprietor's Less:
Paid-In Capital Note
Capital Deficiency Receivable Total
------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, April 30, 1996 $ 3,951,546 $(3,209,506) $ -- $ 821,040
Acquisition and constructive retirement of (1,985,464) -- -- (2,000,000)
treasury stock purchased from principal shareholder
Reverse stock split 7,145 -- -- --
Acquisition of Synergistic Holding Corporation 465,436 -- (500,000) --
and constructive retirement of treasury stock
Private placement of preferred stock and warrants -- -- -- 822,625
net of related expenses
Accretion of preferred stock to conversion value -- (1,137,500) -- --
Net loss for the period -- (983,819) -- (983,819)
------------------------------------------------------------
Balance, April 30, 1996 $ 2,438,663 $(5,330,825) $ (500,000) $(1,340,154)
============================================================
</TABLE>
See accompanying notes to condensed combined consolidated financial statements
-6-
<PAGE>
SYNERGISTIC HOLDINGS CORP.
AND SUBSIDIARIES AND AFFILIATE
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
-------------------------
January 31, January 31,
1997 1996
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss (982,645) (1,883,990)
---------- ----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and Amortization 234,707 221,374
Compensation related to sale of shares -- 786,546
Changes operating assets and liabilities
Accounts Receivable (255,396) (325,361)
Prepaid expenses & other 8,713 (95,116)
Refundable Income Taxes 58,238 64,551
Other Assets -- 1,000
Accounts Payable 567,447 149,907
Accrued Expenses & other (296,457) 67,025
---------- ----------
Net Cash used in Operating Activities (665,393) (1,014,064)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (34,594) (38,757)
Loan to Officer (55,086) (225,774)
---------- ----------
Net Cash Used in Investing Activities (89,680) (264,531)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Bank Overdrafts 449,886 174,386
Net proceeds from (repayments of) -
note payable - finance company (258,423) 58,079
Principal Payments of L/T Debt and Capital Leases (250,815) (170,422)
Net Proceeds from issuance of common stock -- 1,232,000
Net Proceeds from issuance of preferred stock and warrants 822,625 --
---------- ----------
Net Cash Provided by Financing Activities 763,273 1,294,043
---------- ----------
Net Increase (Decrease) in Cash 8,200 15,448
Cash - Beginning of Period 74,354 54,915
---------- ----------
Cash - End of Period 82,554 70,363
========== ==========
</TABLE>
See accompanying notes to condensed combined consolidated financial statements
-7-
<PAGE>
SYNERGISTIC HOLDINGS CORP.
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited Combined Consolidated Financial Statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the entire year. For further
information, refer to the consolidated financial statements and notes thereto
filed with the Company's Form 8-K/A.
2. Per share data is determined based on the weighted average number of
common shares outstanding for the period. Common shares issued during the period
are treated as outstanding from the trade date of issuance. The weighted average
number of common shares outstanding has been retroactively adjusted for the
stock split that was effected in connection with the merger described in Note 3.
The terms of the Series B convertible preferred stock are such that the
preferred stock is in substance common stock. Accordingly, the common stock
issuable upon conversion of this preferred stock has been included in the
weighted average number of common shares outstanding for all periods presented.
Common stock equivalents relating to the convertible preferred stock, Series A,
and to stock options and warrants have been excluded in determining per share
data as they are antidilutive.
3. In August 1995, Synergistic Holdings Corporation (the "Company")
purchased from Salex Holding Corporation, a Delaware corporation ("Salex"), an
unrelated privately owned company, 1,580,000 shares of Salex common stock (which
represented a 20% common equity interest) for a purchase price of $1,500,000.
In January 1996, the Company purchased an additional 363,400 shares of
Salex common stock (representing a 4.6% common equity) directly from one of the
principal stockholders of Salex for a purchase price of $500,000.
On September 19, 1996 (the "Closing"), the Company's wholly-owned
subsidiary, Salex Industries, Inc., a Delaware corporation ("Subsidiary"),
consummated the merger contemplated by the Merger Agreement, dated June 27,
1996, as amended and restated on September 18, 1996 (the "Merger Agreement), by
and among the Company, Subsidiary, Salex, Salex Fleet Specialist Corp., a New
York corporation, Salex Fleet Management Corp., a New York corporation, Salex
National Account Corp., a New York corporation, Salex Salvage Disposal Corp., a
New York corporation, Salex Financial Services Corp., a New York corporation
(collectively, the "Salex Subsidiaries"), Salvatore Crimi ("Crimi"), the
Salvatore Crimi Family Limited Partnership, Pershing Sun, Michael Sun, Jennifer
Sun, Susan Tauss-Giovinco, Francis Fitzpatrick and Harrison Fitzpatrick
(collectively, the "Salex Stockholders") and T. Marshall Swartwood and Thomas M.
Swartwood.
Pursuant to the Merger Agreement, Subsidiary was merged with and into Salex
and (i) all of the shares of common stock of Salex (the "Salex Common Stock")
held by the Company were cancelled and extinguished and (ii) all of the
4,503,000 issued and outstanding shares of Salex Common Stock owned by the Salex
Stockholders were converted into (a) 4,003,165 shares of common stock, par value
$.01 per share, of the Company ("Synergistic Common Stock") and (ii) 1,000
shares of Series B Convertible Preferred Stock ("Synergistic Preferred Stock").
Upon the filing by the Company of a Certificate of Amendment to its Certificate
of Incorporation increasing the authorized capital stock of the Company, each
share of Synergistic Preferred Stock shall be converted into 2,059.106 shares of
Synergistic Common Stock. The shares of Synergistic Common Stock delivered at
the closing, together with the shares of Synergistic Common Stock into which the
shares of Synergistic Preferred Stock are convertible,
-8-
<PAGE>
represent, in the aggregate, 51% of the fully-diluted, issued and outstanding
shares of the Synergistic Common Stock.
The amount of consideration paid by Company for the shares of Salex Common
Stock was determined by negotiations among the representatives of the Company
and Salex.
Salex, through the Salex Subsidiaries, provides automobile asset management
services and manages, on a nationwide basis, the maintenance and repair of
fleets of automobiles and small trucks which are owned, leased and operated by
corporate customers (the "Business"). Following the Merger, the Company changed
its principal place of business from 405 Sixth Avenue, Des Moines, Iowa to 50
Laser Court, Hauppauge, New York.
I. Actions Taken Immediately Prior to the Closing.
Immediately prior to the Closing, Crimi sold to the Company 1,453,600
shares of Salex Common Stock owned by him for the purchase price of $2,000,000
which was paid by the issuance of the Company of two promissory notes - one for
$1,055,562.19 (the "Warrant Promissory Note") and one for $944,437.81 (the "Alex
Promissory Note"). Both the Warrant Promissory Note and the Alex Promissory Note
were amended by a Letter Agreement dated September 18, 1996.
II. Actions Taken Immediately After the Closing.
Immediately after the Closing, the Company and Dickinson Holding
Corporation ("Dickinson"), a Delaware corporation, entered into (i) a Stock and
Asset Purchase Agreement pursuant to which the Company sold (the "Divestiture")
of (x) all of the outstanding shares of its subsidiary, Dickinson & Co., Inc., a
registered broker/dealer and (y) its investment in Electronic Designs, Inc.
("EDIX"); (ii) an Indemnification Agreement whereby Dickinson is obligated to
indemnify and hold the Company harmless from and against any and all liabilities
(including any alleged or threatened claims) relating to or arising out of, or
in any matter related to (a) the ownership, operation or conduct of Dickinson &
Co., Inc. and/or the EDIX Assets (as defined in the Indemnification Agreement)
and any liability under the EDIX Notes (as defined in the Indemnification
Agreement), (b) the profit participation agreements between the Company and the
holders of the EDIX Notes, and (c) any other obligation or liability arising in
connection with the solicitation and issuance of the EDIX Notes, in each case,
whether occurring prior to or after the Divestiture (the "Divestiture
Liabilities") and for all losses or damages incurred by the Company with respect
to the Divestiture Liabilities and (iii) a Tax Indemnity Agreement pursuant to
which Dickinson has agreed to reimburse the Company for 50% of any Additional
Income Taxes (as defined in the Tax Indemnity Agreement) paid as a result of the
Divestiture. As consideration for the stock and assets that were transferred
pursuant to the Divestiture, Dickinson transferred to the Company 750,000 shares
of its Synergistic Common Stock and a $500,000 promissory note (the "Divestiture
Promissory Note") secured by 250,000 shares of its Synergistic Common Stock
pursuant to a Pledge Agreement between Dickinson and the Company. Dickinson is
owned by T. Marshall Swartwood and Thomas M. Swartwood who were directors and
officers of Synergistic.
III. Actions Taken Simultaneously with the Closing
1. All of the officers of the Company resigned, effective as of the
Closing. The following persons were appointed to the positions set forth
opposite their names:
Salvatore Crimi - Chief Executive Officer and Chairman of the Board
Jeffrey Dickson - Chief Operating Officer and President
Pershing Sun - Senior Vice President and Chief Information Officer
Chris Cucuzza - Chief Accounting Officer
Angelo Crimi - Secretary
-9-
<PAGE>
2. The Company increased the authorized number of directors constituting
the Board of Directors to seven (7) members and the following were elected as
directors: Franklin Pinter, Sal Crimi, Jeffrey Dickson, Angelo Crimi, Pershing
Sun, Thomas Swartwood and Francis Fitzpatrick. Crimi was nominated and appointed
Chairman of the Board.
3. Each issued and outstanding share of 8.5% Series A Preferred Convertible
Stock of Salex, liquidation value $100 per share ("Salex Preferred"), and each
warrant of Salex, exercisable for one share of Salex Common Stock ("Salex
Warrants"), was converted into an identical share of preferred stock of the
Company, in the case of the Salex Preferred, and into a warrant of the Company
bearing identical terms and conditions as the Salex Warrants.
4. The Company granted Crimi an option to purchase 500,000 shares of
Synergistic Common Stock at an exercise price of $1.50 per share, with a
three-year term and exercisable in the event that the net income of the Company
(before taxes) equals or exceeds $2.7 million for the year ended April 30, 1997.
Crimi's option (and the underlying common stock) has piggy-back registration
rights.
5. The Company granted options to the Salex Stockholders to purchase
179,333 shares of Synergistic Common Stock at an exercise price of $2.125 per
share. The options are exercisable 20% per year over the next five years. The
options granted thereunder (and the underlying common stock) have piggy-back
registration rights.
6. The Salex Stockholders entered into a Registration Rights Agreement with
the Company, granting them registration rights with respect to the shares of
Synergistic Common Stock they received pursuant to the Merger.
7. The Company assumed the mortgage of Salex and released Crimi from any
obligation he may have with respect to such mortgage.
8. The Registrant also assumed from Salex (i) its employment agreement with
Crimi and (ii) its employment agreement with Pershing Sun.
Since the Company's only asset after the Divestiture was its investment in
Salex, the Company was deemed to be a public shell at the Closing of the Merger.
The SEC believes that shells are not businesses and, therefore, that they cannot
participate in business combinations. Accordingly, whenever a private operating
company merges with a public shell, for accounting purposes the SEC views the
transaction as an equity transaction by the private operating company (i.e., a
transaction in which the private operating company "sells" shares in exchange
for the net assets of the public shell). The SEC requires that the net assets of
the public shell be recorded at carryover basis. No goodwill arises on the
transaction. Thus, the merger transaction has been accounted for as a
recapitalization of Salex (stock split, distribution of (voting, automatically
converting) preferred stock, and treasury stock purchase (for debt)) followed by
an issuance of common stock by Salex in exchange for treasury stock and
Synergistic's note receivable. The note receivable, which is collateralized by
Synergistic stock, has been recorded as a reduction of additional paid-in
capital.
-10-
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
Results of Operations
Net sales of $5,657,000 and $16,933,000 for the three and nine months ended
January 31, 1997 decreased by 10.6% and 13.2%, respectively, from $6,327,000 and
$19,506,000, respectively, in the comparable prior year periods. The loss of
major corporate fleet customers in the Company's core operations is the primary
factor for the decline in sales.
The Company's gross margin increased to 19.0% for the three months ended
January 31, 1997 and 18.4% for the nine months ended January 31, 1997 compared
to 14.9% and 16.2% in the comparable prior year periods. This increase was
attributable to the below average gross margin resulting from one of the lost
corporate fleet accounts.
Selling, general and administrative expenses for the three months and nine
months ended January 31, 1997 decreased to $1,117,000 and $3,781,000
respectively, from $1,416,000 and $4,735,000, respectively, in the comparable
prior year periods. These decreases were attributable to significant
expenditures incurred in the prior year in connection with the development of
services and products by the Company to be provided by insurance companies,
financial institutions, and retail consumers. The Company has also sought
successfully during the current year to restructure its operations and
management in order to minimize its expenditures for general and administrative
expenses.
Interest expense remained constant at $102,000 and $322,000 for the three
and nine months ended January 31, 1997, respectively, from $106,000 and
$310,000, respectively, in the comparable prior year periods.
Accretion of preferred stock dividends of $872,451 and $1,137,500 were
recorded for the three months and nine months ended January 31, 1997. The Series
A convertible preferred stock is convertible to common stock valued at twice the
liquidation preference of the preferred stock at any time after December 31,
1996. Based on the preferred stock outstanding at January 31, 1997, total
accretion of $1,137,500 was recorded of which $265,049 was reflected during the
prior quarter and the remaining amount of $872,451, in the current quarter. The
effect of such accretion is to increase the loss attributable to common
stockholders for the purpose of calculating net loss per share.
Liquidity and Capital Resources
Net cash flows used in operating activities were $665,000 for the nine
months ended January 31, 1997 compared with $1,014,110 for the comparable prior
year period. The decrease in net cash used in operations resulted from changes
in accounts receivable, prepaid expenses, accounts payable, accrued expenses and
compensation expense in the prior year relating to the sale of shares.
Cash used in investing activities for the nine months ended January 31,
1997 totaled $90,000 compared with $265,000 for the comparable prior year
period. Net cash flows used in investing activities decreased due to a reduction
in loans to officers in the current period.
Net cash provided by financing activities was $763,000 for the nine months
ended January 31, 1997 compared with $1,294,000 provided by financing activities
for the comparable prior year period. Financing activity for the nine months
ended January 31, 1997 resulted from the sale of preferred stock.
The Company has suffered losses during the 1997 fiscal year and has
negative working capital. The Company has limited availability under its
existing credit facility and the Company will need additional capital to have
sufficient liquidity to meet its working capital and capital expenditure needs
for the foreseeable future. There
-11-
<PAGE>
can be no assurance that the Company will be successful in obtaining such
additional capital.
As a result of the accounting treatment of the merger transaction the
Company may not be able to meet initial listing requirements of the Nasdaq Stock
Market. The Company may be subject to the delisting of its securities from such
exchange.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of Sections 13 or 15(d) of the Exchange
Act of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SYNERGISTIC HOLDINGS CORP.
Date: March 21, 1997 By: /s/ Salvatore Crimi
---------------------------------
Salvatore Crimi, Chief Executive Officer
Date: March 21, 1997 By: /s/ Jeffrey Dickson
-------------------
Jeffrey Dickson (as Chief Accounting
Officer and Chief Financial Officer)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q AT NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JAN-31-1997
<CASH> 83
<SECURITIES> 0
<RECEIVABLES> 3,473
<ALLOWANCES> 188
<INVENTORY> 0
<CURRENT-ASSETS> 3,699
<PP&E> 1,799
<DEPRECIATION> 235
<TOTAL-ASSETS> 6,934
<CURRENT-LIABILITIES> 6,575
<BONDS> 0
0
1,960
<COMMON> 92
<OTHER-SE> (3,392)
<TOTAL-LIABILITY-AND-EQUITY> 6,934
<SALES> 16,933
<TOTAL-REVENUES> 16,933
<CGS> 13,813
<TOTAL-COSTS> 13,813
<OTHER-EXPENSES> 3,781
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 322
<INCOME-PRETAX> (983)
<INCOME-TAX> 0
<INCOME-CONTINUING> (983)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (983)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
