SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 7, 1997
(Date of Report [Date of earliest event reported])
TRACK DATA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24634 22-3181095
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File #) Identification #)
56 Pine Street, New York, New York 10005
(Address of Principal Executive Offices, Including Zip Code)
(212) 422-4300
(Registrant's Telephone #, Including Area Code)
<PAGE> 1
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS.
On November 7, 1997, Barry Hertz, Chairman and principal stockholder of the
Registrant ("TDC"), transferred his 100% ownership in Newsware, Inc. ("NW" or
"Newsware") to the Registrant for no consideration. NW owed Mr. Hertz
approximately $1,100,000, which was contributed to capital prior to this
transaction, and NW owed the Registrant approximately $900,000, net of
reserves, at the time of this transaction. NW is a provider of on-line news
information services. For accounting purposes, the transaction will be treated
as a combination of entities under common control similar to a
pooling-of-interests.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired
See pages F-1 through F-12
(b) For pro forma financial information, see pages PF-1 through PF-8
<PAGE> F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Newsware, Inc.
We have audited the accompanying balance sheets of Newsware, Inc. (the
"Company") as of December 31, 1996 and 1995 and the related statements of
operations, stockholders' deficiency and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Newsware, Inc. as of December
31, 1996 and 1995, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Grant Thornton LLP
Melville, New York
November 7, 1997
<PAGE> F-2
NEWSWARE, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 2,107 $ 13,669
Accounts receivable (net of allowance of $5,000 in 1996 and 1995) (Note A) 46,003 73,932
Prepaid expenses and other current assets 6,479 4,175
----------- -----------
Total current assets 54,589 91,776
FIXED ASSETS - at cost (net of accumulated depreciation) (Notes A and B) 95,118 62,845
SOFTWARE - at cost (net of accumulated amortization of $169,468 in 1996
and $120,807 in 1995) (Notes A and C) 73,939 122,389
OTHER ASSETS 1,664 2,801
----------- -----------
TOTAL $ 225,310 $ 279,811
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes payable - other (Note E) $ 8,920 $ 19,819
Current portion of license fee payable (Note C) 59,449 50,355
Accounts payable and accrued expenses 113,854 53,440
Deferred revenues (Note A) 41,952 40,696
Interest payable (Notes A and D) 308,858 139,835
----------- -----------
Total current liabilities 533,033 304,145
DUE TO RELATED PARTIES (Notes A and D) 1,987,590 1,437,591
NOTES PAYABLE - other, less current portion (Note E) - 8,920
LICENSE FEE PAYABLE, less current portion (Note C) 24,447 79,526
----------- -----------
Total liabilities 2,545,070 1,830,182
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note G)
STOCKHOLDERS' DEFICIENCY
Common stock - $.01 par value; 100,000 shares authorized; 51,670
shares outstanding (Note F) 517 517
Additional paid-in capital 209,483 209,483
Accumulated deficit (2,529,760) (1,760,371)
----------- -----------
Total stockholders' deficiency (2,319,760) (1,550,371)
----------- -----------
TOTAL $ 225,310 $ 279,811
=========== ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-3
NEWSWARE, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ---------
SERVICE FEES AND REVENUE (Note A) $ 892,196 $ 638,088 $ 231,209
---------- ---------- ---------
OPERATING COSTS AND EXPENSES (Note H):
Direct operating costs 384,685 269,727 111,430
General and administrative expenses 1,096,681 948,454 687,610
---------- ---------- ---------
Total 1,481,366 1,218,181 799,040
---------- ---------- ---------
LOSS FROM OPERATIONS (589,170) (580,093) (567,831)
INTEREST EXPENSE (PRINCIPALLY RELATED PARTIES) 180,219 126,950 59,947
---------- ---------- ---------
NET LOSS $ (769,389) $ (707,043) $(627,778)
========== ========== =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-4
NEWSWARE, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
-------- ----------- ------------- ------------
BALANCE, JANUARY 1, 1994 $ 500 $ 199,500 $ (425,550) $ (225,550)
Shares issued for debt (Note F) 100 9,900 10,000
Shares rescinded (Note F) (45) 45 -
Net loss (627,778) (627,778)
------- ----------- ------------ -----------
BALANCE, DECEMBER 31, 1994 555 209,445 (1,053,328) (843,328)
Shares rescinded (Note F) (38) 38 -
Net loss (707,043) (707,043)
------- ----------- ------------- -----------
BALANCE, DECEMBER 31, 1995 517 209,483 (1,760,371) (1,550,371)
Net loss (769,389) (769,389)
------- ----------- ------------- -----------
BALANCE, DECEMBER 31, 1996 $ 517 $ 209,483 $ (2,529,760) $(2,319,760)
======= =========== ============ ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-5
NEWSWARE, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
--------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(769,389) $(707,043) $(627,778)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 73,393 68,217 63,191
Changes in operating assets and liabilities:
Accounts receivable 27,929 6,750 (33,571)
Prepaid expenses and other current assets (2,304) 15,276 (10,830)
Other assets 1,137 7,504 (6,366)
Accounts payable and accrued expenses 155,691 105,895 21,588
--------- --------- ---------
Net cash used in operating activities (513,543) (503,401) (593,766)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (57,216) (15,939) (34,623)
--------- --------- ---------
Net cash used in investing activities (57,216) (15,939) (34,623)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from note payable - related parties 624,999 588,891 630,700
Net payments on notes payable - other (19,819) (17,763) 46,502
Payments on license fees (45,983) (49,688) (38,434)
--------- --------- ---------
Net cash provided by financing activities 559,197 521,440 638,768
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH (11,562) 2,100 10,379
CASH, BEGINNING OF YEAR 13,669 11,569 1,190
--------- --------- ---------
CASH, END OF YEAR $ 2,107 $ 13,669 $ 11,569
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 11,828 $ 18,201 $ 19,900
========= ========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-6
NEWSWARE, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(NOTE A) - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------------------------------------------
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION - Newsware, Inc. (the
"Company") was formed on May 18, 1993 and provides on-line news information
services to its customers (who are primarily involved in the financial service
industry) under agreements using dedicated communications lines. During 1996
two customers accounted for 17% and 14%, respectively, of the Company's
revenues.
The Company has incurred losses since inception as it seeks to further
refine its software and build market acceptance for its service. Track Data
Corporation ("TDC"), an affiliate of the Company, has funded the Company's
losses during 1997 and 1996.
On November 7, 1997 the sole stockholder of the Company, who is also the
Chairman and principal stockholder of TDC, transferred his stock ownership in
the Company to TDC. Prior to such transfer, the sole stockholder contributed
approximately $1,100,000 of principal loans and interest due to him to the
capital of the Company.
REVENUE RECOGNITION - The Company recognizes revenue as services are
performed. Revenues billed in advance of services are deferred until services
are rendered.
FIXED ASSETS - Fixed assets are depreciated on a straight-line basis over
estimated useful lives of 5 to 10 years.
SOFTWARE - Software costs are amortized on a straight-line basis over
their estimated useful lives of 5 years. Management assesses the
recoverability of its software costs based principally upon comparison of the
carrying value of the asset to the undiscounted expected future cash flows to
be generated by the asset, plus estimated salvage value less any applicable
costs. If management concludes that the asset is impaired, its carrying value
is adjusted to its fair value.
INCOME TAXES - The Company has elected to be treated as an S corporation.
As a result, federal and certain state income taxes are paid by the
shareholders rather than the corporation.
USE OF ESTIMATES - In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE> F-7
(NOTE B) -FIXED ASSETS
- -------------------------
Fixed assets consists of the following at December 31, 1996 and 1995:
1996 1995
Computer and office equipment $157,489 $100,484
Less accumulated depreciation 62,371 37,639
-------- --------
Fixed assets - net $ 95,118 $ 62,845
======== ========
Depreciation expense for the years ended December 31, 1996, 1995 and 1994
was $24,732, $18,603 and $13,811, respectively.
(NOTE C) - LICENSE FEE PAYABLE
- -----------------------------------
The Company has a perpetual license for certain software to be used
to facilitate the delivery to, and utilization of the database information by
its customers. The license fee is payable monthly for 60 months commencing
June 1993 at the greater of $5,000 or 25 percent of revenues for the preceding
month, as defined. No payments are required after the sixty monthly payments.
At inception of the license agreement, the Company capitalized as
licensed software $240,867, which represents the present value of the minimum
monthly payments. The license fee payable of $83,896 at December 31, 1996 is
net of unamortized discount of $5,475. The effective interest rate is 9%.
(NOTE D) - NOTES PAYABLE - RELATED PARTIES
- -------------------------------------------------
The amounts due to related parties consist of:
1996 1995
Track Data Corporation (a) (d) $ 100,000 $ 100,000
Track Data Corporation (b) (d) 320,000 320,000
Track Data Corporation (c) (d) 702,999 153,000
Stockholders (b) (d) (e) 864,591 864,591
---------- ----------
Total $1,987,590 $1,437,591
========== =========
a) Bears interest at 4%
b) Bears interest at 1% above the prime rate
c) Convertible, bearing interest at 9%, due on December 31, 1997
d) Agreed to defer payment of interest and principal through June 30, 1997
e) In 1997 the Company paid the principal amount of approximately $9,000
to all minority stockholders in full satisfaction of their debt and in full
payment for their stock ownership in the Company. Subsequent to such
transactions, the remaining sole stockholder contributed $855,000 due to him
to the Company's capital. See Note A.
(NOTE E) - NOTE PAYABLE - OTHER
- --------------------------------------
Notes payable - other is due in equal monthly installments of $1,833
through May 1997 including interest at 11% per annum.
<PAGE> F-8
(NOTE F) - COMMON STOCK
- ---------------------------
Pursuant to an agreement among the stockholders, as amended on October
18, 1995, the Company effected a 0.5 for 1 reverse stock split. This
transaction has been reflected retroactively. Under the amended agreement, 45
shares of common stock were rescinded in 1994 and 38 shares of common stock
were rescinded in 1995 because certain performance levels were not attained.
In 1994 the Company's principal stockholder advanced the Company $400,000
(Note D) for working capital purposes and paid $10,000 in exchange for an
additional 10,000 shares of the Company's common stock.
(NOTE G) - RETIREMENT PLAN
- ------------------------------
The Company has a profit sharing plan which qualifies under Section
401(k) of the Internal Revenue Code. The plan covers substantially all
employees. Company contributions to the plan are discretionary and vest at a
rate of 20% after three years of service and 20% each year thereafter until
employees become fully vested after seven years.
(NOTE H) - RELATED PARTIES
- ------------------------------
During 1996, 1995 and 1994, TDC provided database services to the
Company's customers and additionally provided office space and accounting and
other services without charge. Further, during 1994 the Company reversed
charges of $75,000 for services which were provided in 1993 by TDC. See Note
D as to financing provided by TDC.
<PAGE> F-9
NEWSWARE, INC.
BALANCE SHEET
SEPTEMBER 30, 1997
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 20,743
Accounts receivable - net 139,781
-----------
Total current assets 160,524
FIXED ASSETS - net 80,132
SOFTWARE - net 54,321
-----------
TOTAL $ 294,977
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 519,983
Other 103,159
-----------
Total current liabilities 623,142
DUE TO RELATED PARTIES 2,467,358
-----------
Total liabilities 3,090,500
-----------
STOCKHOLDERS' DEFICIENCY
Common stock - $.01 par value; 100,000 shares authorized; 41,407
shares outstanding 414
Additional paid-in capital 209,486
Accumulated deficit (3,005,423)
-----------
Total stockholders' deficiency (2,795,523)
-----------
TOTAL $ 294,977
===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-10
NEWSWARE, INC.
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
----------- ----------
SERVICE FEES AND REVENUE $ 740,077 $ 630,411
---------- ---------
OPERATING COSTS AND EXPENSES:
Direct operating costs 251,772 234,472
General and administrative expenses 777,969 751,155
---------- ---------
Total 1,029,741 985,627
---------- ---------
LOSS FROM OPERATIONS (289,664) (355,216)
INTEREST EXPENSE (PRINCIPALLY RELATED PARTIES) 185,999 129,513
---------- ---------
NET LOSS $ (475,663) $(484,729)
========== =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-11
NEWSWARE, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(475,663) $(484,729)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 61,009 52,718
Changes in operating assets and liabilities:
Accounts receivable (108,869) (15,733)
Prepaid expenses and other current assets 6,175 1,168
Other assets 853 853
Accounts payable and accrued expenses 119,796 34,929
--------- ---------
Net cash used in operating activities (396,699) (410,794)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (10,199) (33,523)
--------- ---------
Net cash used in investing activities (10,199) (33,523)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from note payable - related parties 479,768 479,999
Net payments on notes payable - other (8,920) (14,659)
Payments on license fees (45,214) (37,699)
Purchase of treasury stock (100) -
--------- ---------
Net cash provided by financing activities 425,534 427,641
--------- ---------
NET INCREASE (DECREASE) IN CASH 18,636 (16,676
CASH, BEGINNING OF YEAR 2,107 13,669
--------- ---------
CASH, END OF YEAR $ 20,743 $ (3,007)
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 4,960 $ 9,503
========= =========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-12
NEWSWARE, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(unaudited)
1. 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 as of September
30, 1997, and the results of operations and of cash flows for the nine months
ended September 30, 1997 and 1996. The results of operations for the nine
months ended September 30, 1997 are not necessarily indicative of results that
may be expected for any other interim period or for the full year.
2. On November 7, 1997, the sole stockholder of the Company, who is also
the Chairman and principal stockholder of TDC, transferred his stock ownership
in the Company to TDC. Prior to such transfer, the sole stockholder
contributed approximately $1,100,000 of principal loans and interest due to
him to the capital of the Company.
In 1997, the Company paid the principal amount of approximately $9,000 to all
minority stockholders in full satisfactory of their debt and in full payment
for their stock ownership in the Company. Subsequent to such transaction, the
remaining sole stockholder contributed approximately $1,100,000 of principal
loans and interest due to him to the Company's capital.
<PAGE> PF-1
TDC AND NEWSWARE
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements present the
combined financial position of TDC and Newsware as of September 30, 1997 and
combined statements of operations for each of the three years in the period
ended December 31, 1996 and for the nine month periods ended September 30,
1997 and 1996. The unaudited pro forma financial statements give effect to the
transfer of 100% ownership of Newsware to TDC by its Chairman. The transaction
will be treated as a combination of entities under common control similar to a
pooling-of-interests because the Chairman and principal stockholder of TDC is
also the Chairman and sole stockholder of Newsware.
The pro forma financial statements may not be indicative of the combined
results of operations or combined financial position that actually would have
been achieved if the transaction had been in effect as of the date and for the
periods indicated or which may be obtained in the future. The pro forma
financial statements should be read in conjunction with the notes thereto, the
financial statements (including the related notes thereto) contained elsewhere
herein and the Track Data Corporation Annual Report on Form 10-K for the year
ended December 31, 1997.
<PAGE> PF-2
TRACK DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
TDC NEWSWARE ADJUSTMENTS BALANCE
------------ ------------ ------------- ------------
ASSETS
CASH $ 126,376 $ 20,743 $ 147,119
ACCOUNTS RECEIVABLE - net 1,562,650 139,781 1,702,431
FIXED ASSETS - net 9,046,745 80,132 9,126,877
INVESTMENT IN AFFILIATE 1,447,662 - 1,447,662
DUE FROM RELATED PARTIES 960,760 - $ (1,749,258)(A) 111,502
900,000(B)
EXCESS OF COST OVER NET ASSETS
ACQUIRED 3,379,717 - 3,379,717
OTHER ASSETS 2,453,318 54,321 2,507,639
----------- ----------- ------------ -----------
TOTAL $18,977,228 $ 294,977 $ (849,258) $18,422,947
=========== =========== ============ ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 4,547,056 $ 519,983 $ (137,339)(A) $ 4,578,240
(244,831)(D)
(106,629)(E)
Note payable - bank 2,383,810 - 2,383,810
Notes payable - other 1,100,984 2,467,358 (1,611,919)(A) 1,100,984
(855,439)(D)
Capital lease obligations 3,419,035 - 3,419,035
Other liabilities 727,769 103,159 120,000(C) 950,928
----------- ----------- ------------ -----------
Total liabilities 12,178,654 3,090,500 (2,836,157) 12,432,997
----------- ----------- ------------ -----------
STOCKHOLDERS' EQUITY
Common stock - 14,422,737 shares 144,228 - 144,228
Additional paid-in capital 13,322,054 209,900 1,100,270(D) 14,632,224
Foreign currency translation adjustment 29,030 - 29,030
Deficit (6,696,738) (3,005,423) 900,000(B) (8,815,532)
(120,000)(C)
106,629(E)
----------- ----------- ------------ -----------
Total stockholders' equity 6,798,574 (2,795,523) 1,986,899 5,989,950
----------- ----------- ------------ -----------
TOTAL $18,977,228 $ 294,977 $ (849,258) $18,422,947
=========== =========== ============ ===========
<FN>
See Notes to Pro Forma Consolidating Financial Statements
</TABLE>
<PAGE> PF-3
TRACK DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
TDC NEWSWARE ADJUSTMENTS BALANCE
------------ ----------- ------------- ------------
SERVICE FEES AND REVENUE $34,833,451 $ 740,077 $35,573,528
----------- ---------- -----------
OPERATING COSTS AND EXPENSES
Direct operating costs 19,181,506 251,772 19,433,278
Selling and administrative expenses 13,679,352 777,969 $ (300,000)(a) 14,157,321
Interest expense - net 550,032 185,999 (106,629)(c) 629,402
----------- ---------- ------------ -----------
Total 33,410,890 1,215,740 (406,629) 34,220,001
----------- ---------- ------------ -----------
INCOME (LOSS) FROM OPERATIONS 1,422,561 (475,663) 406,629 1,353,527
OTHER INCOME 5,755 - 5,755
----------- ---------- ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES
AND EQUITY IN NET (LOSS) OF AFFILIATE 1,428,316 (475,663) 406,629 1,359,282
INCOME TAXES 543,303 - 120,000(b) 663,303
----------- ---------- ------------ -----------
INCOME (LOSS) BEFORE EQUITY IN NET
LOSS OF AFFILIATE 885,013 (475,663) 286,629 695,979
EQUITY IN NET LOSS OF AFFILIATE (1,130,000) - (1,130,000)
----------- ---------- ------------ -----------
NET LOSS $ (244,987) $ (475,663) $ 286,629 $ (434,021)
=========== ========== ============ ===========
NET LOSS PER SHARE $(.03)
=====
WEIGHTED AVERAGE SHARES 14,610,000
===========
<FN>
See Notes to Pro Forma Consolidating Financial Statements
</TABLE>
<PAGE> PF-4
TRACK DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
TDC NEWSWARE ADJUSTMENTS BALANCE
------------ ----------- ----------- ------------
SERVICE FEES AND REVENUE $35,173,529 $ 630,411 $35,803,940
----------- ---------- -----------
OPERATING COSTS AND EXPENSES
Direct operating costs 19,251,148 234,472 19,485,620
Selling and administrative expenses 14,982,603 751,155 15,733,758
Deferred compensation expense 294,894 - 294,894
Interest expense - net 638,997 129,513 768,510
----------- ---------- -----------
Total 35,167,642 1,115,140 36,282,782
----------- ---------- -----------
INCOME (LOSS) FROM OPERATIONS 5,887 (484,729) (478,842)
OTHER INCOME 288,418 - 288,418
----------- ---------- -----------
INCOME (LOSS) BEFORE INCOME TAX
BENEFIT AND EQUITY IN NET LOSS
OF AFFILIATE 294,305 (484,729) (190,424)
INCOME TAX BENEFIT (279,058) - (279,058)
----------- ---------- -----------
INCOME (LOSS) BEFORE EQUITY IN NET
LOSS OF AFFILIATE 573,363 (484,729) 88,634
EQUITY IN NET LOSS OF AFFILIATE (23,391) - (23,391)
----------- ---------- -----------
NET INCOME (LOSS) $ 549,972 $ (484,729) $ 65,243
=========== ========== ===========
NET INCOME PER SHARE $ -
===
WEIGHTED AVERAGE SHARES 14,574,000
===========
<FN>
See Notes to Pro Forma Consolidating Financial Statements
</TABLE>
<PAGE> PF-5
TRACK DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
TDC NEWSWARE ADJUSTMENTS BALANCE
------------ ----------- ------------- ------------
SERVICE FEES AND REVENUE $47,138,539 $ 892,196 $48,030,735
----------- ---------- -----------
OPERATING COSTS AND EXPENSES
Direct operating costs 25,898,461 384,685 26,283,146
Selling and administrative expenses 19,632,953 1,096,681 $ (200,000)(a) 20,529,634
Deferred compensation expense 294,893 - 294,893
Interest expense - net 827,864 180,219 1,008,083
----------- ---------- ------------ -----------
Total 46,654,171 1,661,585 (200,000) 48,115,756
----------- ---------- ------------ -----------
INCOME (LOSS) FROM OPERATIONS 484,368 (769,389) 200,000 (85,021)
OTHER INCOME 288,419 - 288,419
----------- ---------- ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES
AND EQUITY IN NET LOSS OF AFFILIATE 772,787 (769,389) 200,000 203,398
INCOME TAXES 525,969 - 525,969
----------- ---------- ------------ -----------
INCOME (LOSS) BEFORE EQUITY IN NET
LOSS OF AFFILIATE 246,818 (769,389) 200,000 (322,571)
EQUITY IN NET LOSS OF AFFILIATE (184,355) - (184,355)
----------- ---------- ------------ -----------
NET INCOME (LOSS) $ 62,463 $ (769,389) $ 200,000 $ (506,926)
=========== ========== ============ ===========
NET LOSS PER SHARE $(.03)
=====
WEIGHTED AVERAGE SHARES 14,622,000
===========
<FN>
See Notes to Pro Forma Consolidating Financial Statements
</TABLE>
<PAGE> PF-6
TRACK DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
TDC NEWSWARE ADJUSTMENTS BALANCE
------------ ----------- ------------- ------------
SERVICE FEES AND REVENUE $44,523,762 $ 638,088 $45,161,850
----------- ---------- -----------
OPERATING COSTS AND EXPENSES
Direct operating costs 25,138,844 269,727 25,408,571
Selling and administrative expenses 22,724,632 948,454 $ (400,000)(a) 23,273,086
Deferred compensation expense 2,946,128 - 2,946,128
Interest expense - net 823,134 126,950 950,084
----------- ---------- ------------ -----------
Total 51,632,738 1,345,131 (400,000) 52,577,869
----------- ---------- ------------ -----------
LOSS FROM OPERATIONS (7,108,976) (707,043) 400,000 (7,416,019)
OTHER INCOME 468,145 - - 468,145
----------- ---------- ------------ -----------
LOSS BEFORE INCOME TAX BENEFIT AND
EQUITY IN NET INCOME OF AFFILIATE (6,640,831) (707,043) 400,000 (6,947,874)
INCOME TAX BENEFIT (707,926) - - (707,926)
----------- ---------- ------------ -----------
LOSS BEFORE EQUITY IN NET INCOME
OF AFFILIATE (5,932,905) (707,043) 400,000 (6,239,948)
EQUITY IN NET INCOME OF AFFILIATE 421,627 - - 421,627
----------- ---------- ------------ -----------
NET LOSS $(5,511,278) $ (707,043) $ 400,000 $(5,818,321)
=========== ========== ============ ===========
NET LOSS PER SHARE $(.42)
=====
WEIGHTED AVERAGE SHARES 13,911,000
===========
<FN>
See Notes to Pro Forma Consolidating Financial Statements
</TABLE>
<PAGE> PF-7
TRACK DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
TDC NEWSWARE ADJUSTMENTS BALANCE
------------ ---------- ----------- ------------
SERVICE FEES AND REVENUE $40,594,191 $ 231,209 $40,825,400
----------- --------- -----------
OPERATING COSTS AND EXPENSES
Direct operating costs 21,578,501 111,430 21,689,931
Selling and administrative expenses 18,509,639 687,610 19,197,249
Deferred compensation expense 900,522 - 900,522
Interest expense - net 568,748 59,947 628,695
----------- --------- -----------
Total 41,557,410 858,987 42,416,397
----------- --------- -----------
LOSS FROM OPERATIONS (963,219) (627,778) (1,590,997)
OTHER INCOME 93,237 - 93,237
----------- --------- -----------
LOSS BEFORE INCOME TAX BENEFIT AND
EQUITY IN NET INCOME OF AFFILIATE (869,982) (627,778) (1,497,760)
INCOME TAX BENEFIT (61,889) - (61,889)
----------- --------- -----------
LOSS BEFORE EQUITY IN NET INCOME
OF AFFILIATE (808,093) (627,778) (1,435,871)
EQUITY IN NET INCOME OF AFFILIATE 89,244 - 89,244
----------- --------- -----------
NET LOSS $ (718,849) $(627,778) $(1,346,627)
=========== ========= ===========
NET LOSS PER SHARE $(.10)
=====
WEIGHTED AVERAGE SHARES 12,849,000
===========
<FN>
See Notes to Pro Forma Consolidating Financial Statements
</TABLE>
<PAGE> PF-8
TDC AND NEWSWARE
NOTES TO PRO FORMA CONSOLIDATING FINANCIAL STATEMENTS
The pro forma adjustments below relate principally to the changes
resulting from the elimination of inter-corporate receivables and payables,
certain reserves on receivables recognized by TDC and related tax effects.
Pro Forma Balance Sheet Adjustments
- ---------------------------------------
(A) To eliminate inter-corporate receivables and payables, including
interest.
(B) To eliminate reserves previously provided on receivables by TDC.
(C) To recognize tax effects on reversal of reserves.
(D) To recognize contributions of debt and interest due to sole
stockholder to capital.
(E) To eliminate interest expense on debt to TDC not recognized by TDC.
Pro Forma Statement of Operations Adjustments
- --------------------------------------------------
(a) To eliminate reserves provided by TDC on amounts due from Newsware.
(b) To recognize tax effects on (a) above.
(c) To eliminate interest expense on debt to TDC not recognized by TDC.
<PAGE>
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
/s/
- ------------------------
By Barry Hertz, Chairman
/s/ Chairman and Chief Executive Officer December 12, 1997
- ---------------------
Barry Hertz
