<PAGE> 1
U.S. 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
For the quarterly period ended MARCH 31, 1996
Commission File Number 0-24634
TRACK DATA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 22-3181095
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
56 PINE STREET
NEW YORK, NY 10005
(Address of principal executive offices)
(212) 422-4300
(Registrant's telephone number)
GLOBAL MARKET INFORMATION, INC.
(Former Name)
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 past 12 months (or 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 / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of April 30, 1996 there
were 14,875,272 shares of common stock outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
See pages 2-7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
See pages 8-9
PART ll. OTHER INFORMATION
See page 10
1
<PAGE> 3
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
CASH AND EQUIVALENTS $ 1,797,348 $ 2,004,827
ACCOUNTS RECEIVABLE - net 1,905,879 2,122,605
FIXED ASSETS - net 8,803,411 9,092,324
INVESTMENT IN AFFILIATE 2,815,489 2,705,155
MARKETABLE EQUITY SECURITIES (Note 1) - 324,979
DUE FROM RELATED PARTIES (Note 3) 526,142 2,609,078
EXCESS OF COST OVER NET ASSETS ACQUIRED 3,814,970 3,892,951
NET DEFERRED INCOME TAX ASSETS (Note 4) 1,580,748 1,037,419
OTHER ASSETS 2,481,487 2,461,026
------------- -------------
TOTAL $ 23,725,474 $ 26,250,364
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 4,884,097 $ 4,574,138
Note payable - bank 3,939,430 4,444,451
Notes payable - other 2,076,283 2,003,555
Capital lease obligations 4,060,730 4,528,312
Deferred compensation payable (Note 1) - 3,877,571
Other liabilities 776,675 915,123
------------- -------------
Total liabilities 15,737,215 20,343,150
------------- -------------
STOCKHOLDERS' EQUITY (Notes 1, 3 and 5)
Common stock - $.01 par value; 30,000,000 shares authorized;
issued and outstanding - 14,812,872 shares in 1996 and
13,976,967 shares in 1995 148,129 139,770
Additional paid-in capital 13,816,595 9,958,640
Unrealized gain on available-for-sale securities (Note 4) - 174,801
Foreign currency translation adjustment 59,531 59,517
Deficit (6,035,996) (4,425,514)
------------- -------------
Total stockholders' equity 7,988,259 5,907,214
------------- -------------
TOTAL $ 23,725,474 $ 26,250,364
============= =============
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE> 4
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
REVENUES $11,768,294 $11,081,133
----------- -----------
OPERATING COSTS AND EXPENSES:
Direct operating costs 6,669,614 6,304,219
Selling and administrative expenses 4,891,420 5,720,396
Deferred compensation expense (Note 1) 294,894 (61,414)
Interest expense - net 222,708 170,724
----------- -----------
Total 12,078,636 12,133,925
----------- -----------
LOSS FROM OPERATIONS (310,342) (1,052,792)
----------- -----------
OTHER INCOME:
Gain on securities 288,418 124,571
Other income - 5,055
----------- -----------
288,418 129,626
----------- -----------
LOSS BEFORE INCOME TAX BENEFIT
AND EQUITY IN NET INCOME OF AFFILIATE (21,924) (923,166)
INCOME TAX BENEFIT (Note 4) (411,058) (303,896)
----------- -----------
INCOME (LOSS) BEFORE EQUITY IN NET INCOME
OF AFFILIATE 389,134 (619,270)
EQUITY IN NET INCOME OF AFFILIATE 89,082 90,146
----------- -----------
NET INCOME (LOSS) $ 478,216 $ (529,124)
=========== ===========
NET INCOME (LOSS) PER SHARE $.03 $(.04)
==== =====
NUMBER OF SHARES OUTSTANDING 13,977,000 13,977,000
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE> 5
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(unaudited)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON FOREIGN
ADDITIONAL AVAILABLE- CURRENCY
COMMON PAID-IN FOR-SALE TRANSLATION
STOCK CAPITAL SECURITIES ADJUSTMENT DEFICIT
--------- ------------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $139,770 $ 9,958,640 $174,801 $59,517 $(4,425,514)
Foreign currency translation adjustment 14
Appreciation in investment in affiliate 21,252
Dividend paid to Track S corporation stockholder (2,088,698)
Gain on transfer of Innodata shares to Trust (174,801)
Issuance of common stock to Trust in satisfaction
of Track Phantom Stock Plan obligation 8,359 3,836,703
Net income 478,216
--------- ----------- -------- ------- -----------
BALANCE, MARCH 31, 1996 $148,129 $13,816,595 $ - $59,531 $(6,035,996)
========= =========== ======== ======= ===========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE> 6
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 478,216 $ (529,124)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 806,533 1,166,502
Equity in net income of affiliate (89,082) (90,146)
Deferred compensation 294,894 (61,414)
Profit sharing and charitable contributions paid in stock of affiliates - 289,983
Gain on contributions of stock of affiliates - (130,071)
Gain on sale and transfer of marketable securities (335,340) -
Deferred income taxes (543,329) (301,303)
Other 48,987 13,086
Changes in operating assets and liabilities:
Accounts receivable 216,726 (118,943)
Other assets 100,170 216,487
Accounts payable and accrued expenses 309,959 310,062
Other liabilities (128,947) 76,520
------------ ------------
Net cash provided by operating activities 1,158,787 841,639
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (171,816) (376,950)
Repayment of related party loans 540,264 382,760
Loans to related parties (421,372) (888,417)
Loans to others (10,000) 17,241
Purchase of marketable securities (76,931) -
Acquisition costs - (2,175,582)
------------ ------------
Net cash used in investing activities (139,855) (3,040,948)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under capital lease obligations (657,815) (553,037)
Net proceeds from note payable to bank (505,021) 111,480
Net payments on notes payable - other (51,274) (93,816)
Net (payments) proceeds on loans from employee savings program (12,315) 27,372
------------ ------------
Net cash used in financing activities (1,226,425) (508,001)
------------ ------------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH 14 28,830
------------ ------------
NET DECREASE IN CASH (207,479) (2,678,480)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 2,004,827 5,155,132
------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $1,797,348 $2,476,652
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 265,890 $ 219,449
Income taxes $ 1,509 $ -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Equipment acquisitions financed by capital leases $ 190,233 $1,274,951
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE> 7
TRACK DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(unaudited)
1. On March 31, 1996, Track Data Corporation ("Track"), a principal
stockholder of Global Market Information, Inc. ("Global"), merged into
Global and the name of Global was changed to Track Data Corporation (the
"Company"). Pursuant to the merger (the "Merger"), Global issued
12,000,000 shares of its common stock in exchange for all of the
outstanding stock of Track. The 1,599,837 shares of Global common stock
owned by Track prior to the Merger were cancelled.
Global, as the surviving corporation, assumed all of Track's assets,
liabilities and obligations. Effective March 31, 1996, the Company issued
835,905 shares of its common stock and transferred 74,281 shares of
Innodata Corporation common stock to a Trust to be held by a bank trustee
for the benefit of certain key employees and consultants of Track to
satisfy obligations under a deferred compensation plan maintained by
Track. Upon issuance of the shares to the Trust, the liability for the
deferred compensation was satisfied. These shares will be released to the
participants upon termination of employment, or earlier with approval of
the Board of Directors.
Track provided "real-time" financial market data, financial and historical
databases and analytic services through a sophisticated private data
network to the professional trading and investment community prior to the
Merger. Track also provided database services to Global pursuant to a
facilities management agreement that was to expire in 2001.
For accounting purposes the Merger is treated as a combination of entities
under common control similar to a pooling-of-interests. Accordingly, the
financial statements for all current and prior periods include the results
of operations of Global and Track.
2. In the opinion of the Company, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of March 31, 1996, and the results of operations and of cash flows for the
three months ended March 31, 1996 and 1995. The results of operations for
the three months ended March 31, 1996 are not necessarily indicative of
results that may be expected for any other interim period or for the full
year.
These financial statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31,
1995 included in the Company's Current Report on Form 8-K/A dated as of
March 26, 1996. The accounting policies used in preparing these financial
statements are the same as those described in the December 31, 1995 Track
financial statements.
3. On March 26, 1996, in accordance with the Merger Agreement, a dividend in
the amount of $2,088,698 was paid to Track's sole stockholder, who is the
Company's Chairman of the
6
<PAGE> 8
Board, representing the undistributed earnings of Track as an S
corporation. The dividend was paid to the stockholder by assigning
amounts due from him or entities controlled by him.
4. Effective upon the Merger, deferred taxes which were previously provided
at state and local rates and which related to Track temporary differences
were recalculated based on the changed status to a C corporation. This
resulted in a recognition of additional deferred tax assets deemed
realizable by management of approximately $500,000 in the three months
ended March 31, 1996.
5. On April 23, 1996, the Company granted options to purchase 479,400 shares
of the Company's common stock at $4.00 per share to employees ($3.75
market price at date of grant). Further, the Company issued 62,400 shares
of its common stock (60,000 shares to its president) to satisfy certain
bonus payments for 1995.
7
<PAGE> 9
TRACK DATA CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
The Company provides real-time financial market data, fundamental
research, charting and analytical services to both institutional and individual
investors. The Company also disseminates news and third party data base
information from more than 100 sources worldwide. The Company's lead products
include MarkeTrack MX and MarkeTrack NT, Dial/Data, Track OnLine and InfoVest.
Its AIQ Systems division provides expert systems software, including artificial
intelligence products for market timing and stock selection.
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
For the three months ended March 31, 1996 the Company's revenues were
$11,768,294, an increase of 6% over revenues for the similar period in 1995 of
$11,081,133. The increase in revenues is primarily attributable to an increase
in the subscriber base for the Company's Dial/Data division.
Direct operating costs were $6,669,614 for the first three months of 1996
and $6,304,219 for the similar period in 1995, an increase of 6%. Direct
operating costs as a percentage of revenues was 57% in each period. Direct
operating costs include direct payroll, direct telecommunication costs,
computer supplies, depreciation and equipment lease expense and the
amortization of software development costs.
Selling and administrative expenses were $4,891,420 and $5,720,396 in the
1996 and 1995 periods, respectively, a decrease of 14% in the 1996 period from
the 1995 period. Selling and administrative expenses as a percentage of
revenues was 42% in 1996 and 52% in 1995. The dollar and percentage decrease
primarily reflects a contribution expense of approximately $200,000 in the 1995
period and a reduction of approximately $400,000 in salary expense for the
Company's Chairman in 1996 as compared to the 1995 period.
The Company incurred deferred compensation expense of $294,894 in 1996,
while recognizing a reduction in such expense of $61,414 in 1995. These
changes relate to the Company's phantom stock plan which was discontinued as of
March 31, 1996. The underlying 835,905 shares of the Company's common stock
and 74,281 shares of Innodata Corporation common stock to which certain
employees were vested have been placed in a trust for the benefit of the
participants. Accordingly, future changes in the market price of the
respective stocks will not be reflected as changes in deferred compensation
expense.
Interest expense increased to $222,708 in the 1996 period compared to
$170,724 in 1995 due to increased borrowings.
8
<PAGE> 10
The loss from operations for the three months ended March 31, 1996 of
$310,342 was due principally to the deferred compensation expense described
above. The loss of $1,052,792 in the 1995 period was due principally to the
higher selling and administrative expenses described above.
Other income was $288,418 and $129,626 for the three months ended March
31, 1996 and 1995, respectively, principally from gains in each period from
Innodata Corporation common stock placed in a trust to satisfy obligations to
employees in 1996 and for charitable contributions in 1995. In each period the
gain represents the difference between the carrying value of such securities
and the market price at date of disposition.
The income tax benefit in the 1996 period of $411,058 is due to the
recognition of the anticipated realizable amount of tax benefits from a change
in tax status, effective upon the merger of Track at March 31, 1996, from an S
corporation, for which the majority of taxes were paid by the former sole
stockholder, to a C corporation.
As a result of the above mentioned factors, the Company realized net
income of $478,216 in the 1996 period compared to a loss of $529,124 in 1995.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1996 and 1995 cash provided by
operating activities was $1,158,787 and $841,639, respectively. Cash flows
used in investing activities was $139,855 and $3,040,948 for the three months
ended March 31, 1996 and 1995, respectively. The 1995 amount included the
acquisition of the All-Quotes business and certain loans to related parties.
Cash used in financing activities was $1,226,425 and $508,001 for the three
months ended March 31, 1996 and 1995, respectively. The increase in 1996 is
primarily due to a repayment of bank loans.
The Company has a line of credit with a bank. The line is collateralized
by the assets of the Company and is guaranteed by its principal stockholder.
Interest is charged at 1.75% above the bank's prime rate and is due on demand.
The Company may borrow up to 80% of eligible accounts receivable and is
required to maintain a compensating balance of 10% of the outstanding loans.
The Company did not meet this requirement from time to time prior to the
Merger. The line of credit is sufficient for the Company's cash requirements.
There are no major capital expenditures anticipated beyond the normal
replacement of equipment and additional equipment to meet increased customer
demand.
Prior to the Merger, Track paid a dividend to its sole stockholder, Mr.
Hertz, of approximately $2,100,000, equivalent to the previously taxed income
to Mr. Hertz as the sole stockholder of Track, a subchapter S corporation. The
dividend was paid by assigning to Mr. Hertz receivables from him or entities
controlled by him. Further, Mr. Hertz has agreed to reduce compensation paid
to him by the Company from approximately $1,500,000 in 1995 to $350,000 for
each of 1996 and 1997.
INFLATION AND SEASONALITY
To date, inflation has not had a significant impact on the Company's
operations. The Company's revenues are not affected by seasonality.
9
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable
Item 2. Changes in Securities. Not Applicable
Item 3. Defaults upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. The Company
held a Special Meeting of Stockholders on March 19, 1996. The
results of the voting were as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NOT VOTED
--- ------- ------- ---------
<S> <C> <C> <C> <C>
APPROVAL OF AGREEMENT AND PLAN OF
MERGER 2,193,303 35,300 10,075 39,750
ISSUANCE OF GLOBAL STOCK TO MR. HERTZ 2,176,673 39,730 22,275 39,750
APPROVAL OF RESTATED CERTIFICATE OF
INCORPORATION 2,215,553 50,900 11,975
</TABLE>
Item 5. Other Information. Not Applicable.
Item 6. (a) Exhibits. None.
(b) Reports on Form 8-K. During the three months ended March 31,
1996 a Form 8-K was filed dated as of March 26, 1996 with
respect to the Merger of Track Data Corporation into Global
Market Information, Inc.
10
<PAGE> 12
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.
TRACK DATA CORPORATION
Date: 5/8/96 /s/ Barry Hertz
-------------------- -------------------------------------
Barry Hertz
Chairman of the Board
Chief Executive Officer
Date: 5/8/96 /s/ Martin Kaye
-------------------- -------------------------------------
Martin Kaye
V.P. Finance, Principal Financial
Officer
11
<PAGE> 13
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000922811
<NAME> TRACK DATA CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,797,348
<SECURITIES> 0
<RECEIVABLES> 1,905,879
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,725,474
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 148,129
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,725,474
<SALES> 0
<TOTAL-REVENUES> 11,768,294
<CGS> 6,669,614
<TOTAL-COSTS> 12,078,636
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 222,708
<INCOME-PRETAX> (21,924)
<INCOME-TAX> (411,058)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 478,216
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
