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 JUNE 30, 1999
Commission File Number 0-24634
TRACK DATA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
22-3181095
(I.R.S. Employer Identification No.)
56 PINE STREET
NEW YORK, NY 10005
(Address of principal executive offices)
(212) 422-4300
(Registrant's telephone number)
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 July 31, 1999 there were
15,652,890 shares of common stock outstanding.
<PAGE>
1
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
--------------------
See pages 2-8
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
See pages 9-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------------
See page 12
PART II. OTHER INFORMATION
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See page 13
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<TABLE>
<CAPTION>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1999 1998
-------------- ------------
Unaudited Derived from
audited
financial
statements
<S> <C> <C>
ASSETS
CASH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,976,584 $ 883,580
ACCOUNTS RECEIVABLE - NET . . . . . . . . . . . . . . . . . . . . . 1,852,761 1,916,036
MARKETABLE SECURITIES (Note 10) . . . . . . . . . . . . . . . . . . 3,692,800 -
FIXED ASSETS - NET. . . . . . . . . . . . . . . . . . . . . . . . . 7,214,755 7,907,694
INVESTMENT IN AFFILIATE . . . . . . . . . . . . . . . . . . . . . . 1,243,285 1,067,285
EXCESS OF COST OVER NET ASSETS ACQUIRED . . . . . . . . . . . . . . 2,888,795 3,030,068
NET DEFERRED INCOME TAX ASSETS. . . . . . . . . . . . . . . . . . . 450,000 450,000
OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,506,962 3,336,357
-------------- ------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,825,942 $18,591,020
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses. . . . . . . . . . . . . $ 3,419,003 $ 3,871,702
Note payable - bank. . . . . . . . . . . . . . . . . . . . . . 1,095,574 2,138,432
Notes payable - other. . . . . . . . . . . . . . . . . . . . . 748,208 698,148
Capital lease obligations. . . . . . . . . . . . . . . . . . . 2,660,688 2,952,177
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . 370,170 318,598
-------------- ------------
Total liabilities . . . . . . . . . . . . . . . 8,293,643 9,979,057
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STOCKHOLDERS' EQUITY
Common stock - $.01 par value; 60,000,000 shares authorized;
issued and outstanding - 15,158,966 shares in 1999 and
14,796,401 shares in 1998 . . . . . . . . . . . . . . . . 151,590 147,964
Additional paid-in capital . . . . . . . . . . . . . . . . . . 19,622,290 16,199,808
Accumulated other comprehensive income . . . . . . . . . . . . 2,215,680 -
Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,457,261) (7,735,809)
-------------- ------------
Total stockholders' equity. . . . . . . . . . . 13,532,299 8,611,963
-------------- ------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,825,942 $18,591,020
============== ============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(unaudited)
1999 1998
------------ -----------
<S> <C> <C>
REVENUES. . . . . . . . . . . . . . . . . . . $23,317,070 $23,269,873
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OPERATING COSTS AND EXPENSES:
Direct operating costs . . . . . . . . . 14,059,496 12,926,913
Selling and administrative expenses. . . 10,317,057 9,771,539
Gain on real property lease buyout . . . (350,000) -
Interest expense - net . . . . . . . . . 187,969 277,942
------------ -----------
Total . . . . . . . . . . 24,214,522 22,976,394
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(LOSS) INCOME BEFORE EQUITY IN NET INCOME
OF AFFILIATE AND INCOME TAXES . . . . . . (897,452) 293,479
EQUITY IN NET INCOME OF AFFILIATE . . . . . . 176,000 146,000
------------ -----------
(LOSS) INCOME BEFORE INCOME TAXES . . . . . . (721,452) 439,479
INCOME TAXES. . . . . . . . . . . . . . . . . - 172,000
------------ -----------
NET (LOSS) INCOME. . . . . . . . . . . . . . $ (721,452) $ 267,479
============ ===========
BASIC AND DILUTED NET (LOSS) INCOME PER SHARE $(.05) $.02
====== ====
WEIGHTED AVERAGE SHARES OUTSTANDING . . . . . 14,975,000 14,400,000
============ ===========
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(unaudited)
1999 1998
------------ ------------
<S> <C> <C>
REVENUES. . . . . . . . . . . . . . . . . . . $11,661,518 $11,454,213
------------ ------------
OPERATING COSTS AND EXPENSES:
Direct operating costs . . . . . . . . . 7,017,893 6,420,740
Selling and administrative expenses. . . 5,430,054 4,920,937
Gain on real property lease buyout . . . (50,000) -
Interest expense - net . . . . . . . . . 85,643 135,190
------------ ------------
Total . . . . . . . . . . 12,483,590 11,476,867
------------ ------------
LOSS BEFORE EQUITY IN NET INCOME
OF AFFILIATE AND INCOME TAXES. . . . . . (822,072) (22,654)
EQUITY IN NET INCOME OF AFFILIATE . . . . . . 136,000 90,000
------------ ------------
(LOSS) INCOME BEFORE INCOME TAXES . . . . . . (686,072) 67,346
INCOME TAXES. . . . . . . . . . . . . . . . . - 26,709
------------ ------------
NET (LOSS) INCOME . . . . . . . . . . . . . . $ (686,072) $ 40,637
============ ============
BASIC AND DILUTED NET (LOSS) INCOME PER SHARE $(.05) $ -
====== ====
WEIGHTED AVERAGE SHARES OUTSTANDING . . . . . 15,071,000 14,505,000
============ ============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
EQUITY AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 1999
ACCUMULATED
ADDITIONAL OTHER COMPRE-
COMMON PAID-IN COMPREHENSIVE HENSIVE
STOCK CAPITAL INCOME DEFICIT INCOME
---------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1999 . . . . . $ 147,964 $16,199,808 $ - $(7,735,809)
Net loss. . . . . . . . . . . (721,452) $ (721,452)
Issuance of common stock
in exchange for investment
in Net Earnings Corp.. . . 345 499,655
Stock options and warrants
exercised. . . . . . . . . 3,298 1,467,759
Purchase and retirement of
treasury stock . . . . . . (17) (22,052)
Tax effect of stock options
exercised. . . . . . . . . 1,477,120
Unrealized gain on marketable
securities - net of taxes. 2,215,680 2,215,680
------------
Comprehensive income. . . . . $1,494,228
----------- ------------ ---------- ------------ ==========
BALANCE, JUNE 30, 1999 . . . . . . $ 151,590 $19,622,290 $2,215,680 $(8,457,261)
=========== ============ ========== ============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRACK DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(unaudited)
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income. . . . . . . . . . . . . . . . . . . . . . . . . $ (721,452) $ 267,479
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 1,924,514 1,906,570
Equity in net income of affiliate . . . . . . . . . . . . . . (176,000) (146,000)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . - 20,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,017 (12,049)
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . 63,275 456,006
Other assets. . . . . . . . . . . . . . . . . . . . . . 210,775 (142,744)
Accounts payable and accrued expenses . . . . . . . . . (452,699) (309,964)
Other liabilities . . . . . . . . . . . . . . . . . . . 6,108 (683,396)
------------ ------------
Net cash provided by operating activities . . . . . 857,538 1,355,902
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets . . . . . . . . . . . . . . . . . . . . . (254,882) (350,920)
Purchase of marketable securities. . . . . . . . . . . . . . . . . (50,929) -
Repayment of related party loans . . . . . . . . . . . . . . . . . 19,498 173,597
Loans to related parties . . . . . . . . . . . . . . . . . . . . . - (7,287)
Loans to others. . . . . . . . . . . . . . . . . . . . . . . . . . (15,850) (13,423)
------------ ------------
Net cash used in investing activities . . . . . . . (302,163) (198,033)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under capital lease obligations . . . . . . . . . . . . . (899,296) (1,007,955)
Net payments on note payable - bank. . . . . . . . . . . . . . . . (1,042,858) (1,401,238)
Net proceeds from notes payable - other. . . . . . . . . . . . . . 30,562 2,901
Net proceeds on loans from employee savings program. . . . . . . . 60,928 31,966
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . (22,069) (319,014)
Proceeds from exercise of stock options. . . . . . . . . . . . . . 2,409,481 1,318,409
------------ ------------
Net cash provided by (used in) financing activities 536,748 (1,374,931)
------------ ------------
EFFECT OF EXCHANGE RATE DIFFERENCES ON CASH . . . . . . . . . . . . . . 881 (15,802)
------------ ------------
NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . 1,093,004 (232,864)
CASH, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . 883,580 579,214
------------ ------------
CASH, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,976,584 $ 346,350
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 177,204 $ 249,410
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 9,367 783,366
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Equipment acquisitions financed by capital leases. . . . . . . . . $ 607,807 $ 924,130
Investment in Net Earnings Corp. acquired through
issuance of common stock . . . . . . . . . . . . . . . . . . . 500,000 -
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(unaudited)
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position as
of June 30, 1999, and the results of operations and of cash flows for the six
months ended June 30, 1999 and 1998. The results of operations for the six
months ended June 30, 1999 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, 1998 included in
the Company's Annual Report on Form 10-K. The accounting policies used in
preparing these financial statements are the same as those described in the
December 31, 1998 financial statements.
2. During the six months ended June 30, 1999, the Company purchased and
retired 1765 shares of its common stock for $22,069.
3. In January 1999, the Company granted options to purchase 390,000 shares
of its common stock at $6.00 per share. Further, during the six months ended
June 30, 1999 options and underwriter warrants to purchase 329,848 shares were
exercised at prices of $2.00-$7.63, aggregating net proceeds to the Company of
$1,471,057.
4. In April 1999, the Company's Board of Directors, with subsequent
stockholder approval, increased the authorized shares of common stock of the
Company from 30,000,000 to 60,000,000.
5. Potential dilutive shares were not material in 1998 and were
anti-dilutive in 1999.
6. On April 12, 1999, the Company began to offer online trading through its
myTrack service utilizing Track Securities Corporation ("TSC") as its broker
dealer. TSC is a broker-dealer owned and operated by Jack Spiegelman, a director
of the Company. The Company is licensing its myTrack trading system to a
subsidiary of TSC. The Company is receiving $2.25 per trade pursuant to the
agreement. In addition, TSC will pay to the Company a share of the marketing and
advertising costs incurred by the Company. Further, Mr. Spiegelman has a
five-year consulting agreement with the Company pursuant to which he is to be
paid an annual fee of the greater of $50,000 or 5% of the after-tax earnings, if
any, from trading activities. The Company intends to apply for a broker-dealer
license and, upon obtaining such license, will terminate the relationship with
TSC and transition the trading accounts from TSC to the Company's broker-dealer.
7. The Company charges all costs related to enhancing and upgrading
internally developed software to research and development expense. Research and
development expenses were $659,000 and $617,000 for the three months ended June
30, 1999 and 1998, and $1,324,000 and $1,259,000 for the six months ended June
30, 1999 and 1998, respectively.
8. Marketing and advertising costs, charged to operations when incurred,
were approximately $916,000 and $611,000 for the three months ended June 30,
1999 and 1998, and $1,209,000 and $832,000 for the six months ended June 30,
1999 and 1998, respectively.
9. Segment Information
The Company operates in one business segment providing real-time financial
market data, fundamental research, news, charting, and analytical services to
institutional and individual investors through dedicated telecommunication lines
and the Internet.
The Company's revenues are derived from the following sources:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Institutional $ 7,125,843 $ 7,253,281 $14,447,993 $14,690,166
Individual. . 4,535,675 4,200,932 8,869,077 8,579,707
----------- ----------- ----------- -----------
$11,661,518 $11,454,213 $23,317,070 $23,269,873
=========== =========== =========== ===========
</TABLE>
10. The Company owns 810,572 shares of Edgar Online, Inc. ("EOL"), an
Internet-based supplier of business, financial and competitive intelligence
derived from U.S. Securities and Exchange Commission data. EOL completed a
public offering of its common stock in May 1999. The Company classified its
investment as available for sale securities in May 1999. The Company carries
461,600 shares of its investment (the portion eligible for sale within a year)
at $3,692,800, the market value at June 30, 1999, and the remaining 348,972
shares are carried at cost of $10,000. The difference between the cost and fair
market value of these securities, net of deferred taxes, is classified as
accumulated other comprehensive income as a component of stockholders' equity.
11. In June 1999, the Company issued 34,482 shares of its common stock
valued at $500,000 to Net Earnings Corp., a privately held Internet-based
provider to the individual and professional investment communities of future
dates of public company earnings reports, dividends, conference calls,
IPO/secondary offerings and other timing information, in exchange for a 10%
ownership interest in Net Earnings. The investment is carried at cost and is
included in other assets.
12. In July 1999, the Company sold pursuant to private placements 483,334
shares of its common stock and realized net proceeds, after expenses, of
$5,201,258. The Company filed a Form S-3 to register these shares. In
connection with such sales, the Company also issued three-year warrants to
purchase 155,833 shares of its common stock at $16.88 per share.
<PAGE>
TRACK DATA CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company provides real-time financial market data, news, fundamental
research, charting and analytical services to institutional and individual
investors through dedicated telecommunication lines and the Internet. On April
12, 1999, the Company began to offer online trading through its myTrack
Internet-based personal investment service. myTrack is an Internet-based
software application that is not restricted by the limitations of an HTML
browser-based static system offered by virtually all of its well-known
competitors. myTrack delivers a continuous dynamic stream of live market data
and investors' real-time online trading activity. The system is always
connected and is an order of magnitude faster than competing browser-based
systems.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
Revenues for the three months ended June 30, 1999 and 1998 were $11,661,518
and $11,454,213, respectively.
Direct operating costs were $7,017,893 for the second quarter of 1999 and
$6,420,740 for the similar period in 1998. Direct operating costs as a
percentage of revenues was 60% in 1999 and 56% in 1998. The dollar and
percentage increase primarily reflects an increase in payroll, stock exchange
and database fees. 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 $5,430,054 and $4,920,937 in the
1999 and 1998 periods, respectively. Selling and administrative expenses as a
percentage of revenues was 47% in the 1999 period and 43% in the 1998 period.
The increase in 1999 is due to advertising and payroll costs. Selling expenses
are expected to increase during the remainder of 1999 as there has been recent
additions to sales and customer support personnel and substantially increased
media advertising for the Company's myTrack Internet-based online trading and
market data system.
In 1999, the Company relocated certain of its personnel to other office
space and realized a gain on the landlord buy-out of the lease of approximately
$350,000, of which $50,000 was realized in the second quarter.
Interest expense decreased to $85,643 in the 1999 period compared to
$135,190 in the 1998 period due to decreased borrowings.
As a result of the above mentioned factors, the Company realized a loss
before equity in net income of affiliate of $(822,072) in 1999 and $(22,654) in
1998.
The equity in income from an affiliate was $136,000 in the 1999 period as
compared to $90,000 in the 1998 period.
Net loss was $(686,072) for the 1999 quarter as compared to net income of
$40,637 for the 1998 quarter.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Revenues for the six months ended June 30, 1999 and 1998 were $23,317,070
and $23,269,873, respectively.
Direct operating costs were $14,059,496 for the first six months of 1999
and $12,926,913 for the similar period in 1998. Direct operating costs as a
percentage of revenues was 60% in 1999 and 56% in 1998. The dollar and
percentage increase primarily reflects an increase in payroll, stock exchange
and database fees.
Selling and administrative expenses were $10,317,057 and $9,771,539 in the
1999 and 1998 periods, respectively. Selling and administrative expenses as a
percentage of revenues was 44% in 1999 and 42% in 1998. The increase in 1999 is
due to advertising and payroll costs. Selling expenses are expected to increase
during the remainder of 1999 as there has been recent additions to sales and
customer support personnel and increased media advertising for the Company's
myTrack Internet-based online trading and market data system.
In 1999, the Company relocated certain of its personnel to other office
space and realized a gain on the landlord buy-out of the lease of approximately
$350,000.
Interest expense decreased to $187,969 in the 1999 period compared to
$277,942 in 1998 due to decreased borrowings.
As a result of the above mentioned factors, the Company realized a loss
before equity in net income from an affiliate of $(897,452) in the 1999 period
compared to income before equity in net income of an affiliate of $293,479 in
1998.
The equity in income from an affiliate was $176,000 in the 1999 period
compared with $146,000 in the 1998 period.
Net loss was $(721,452) for the six months ended June 30, 1999 compared
with net income of $267,479 for the six months ended June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1999 and 1998 cash provided by
operating activities was $857,538 and $1,355,902, respectively. The decrease in
1999 was due primarily to the loss from operations in that period. Cash flows
used in investing activities was $302,163 and $198,033 for the six months ended
June 30, 1999 and 1998, respectively. Cash flows from financing activities was
$536,748 in the six months ended June 30, 1999 compared with cash used in
financing activities of $1,374,931 for the six months ended June 30, 1998. The
1999 period includes an increase in proceeds from exercise of stock options and
lower payments of bank loans and purchases of treasury stock.
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 line of
credit is sufficient for the Company's cash requirements, however, the Company
plans to spend substantial amounts for advertising its myTrack Internet-based
market data system and online trading. In July, 1999 the Company sold 483,334
shares of its common stock in private placements, receiving net proceeds of
approximately $5,200,000. The Company plans to seek additional financing for
such efforts. There are no major capital expenditures anticipated beyond the
normal replacement of equipment and additional equipment to meet customer
requirements.
Most of the Company's products and networks are substantially Year 2000
compliant already. There is presently certain data provided to customers from
mainframe hardware, which is in the process of moving to a Year 2000 compliant
server environment. This is substantially completed. The Company has sought
compliance statements from each of its significant suppliers, most of which have
provided positive assurances regarding their compliance. The Company will
continue to work with those who are not yet Year 2000 compliant. In the normal
course of business, the Company is replacing certain administrative systems and
hardware. The new systems will be Year 2000 compliant and will cost
approximately $500,000, most of which will be capitalized as fixed assets. These
costs are capitalized because they relate to the implementation of new systems,
which include substantial new functionality, speed and scalability, in addition
to being Year 2000 compliant. All historical and future costs have been and will
continue to be funded out of existing cash and cash flows from operations.
The Company is considering certain contingency plans that are available in
the event of a Year 2000 failure. For example, if any of the direct lines that
are used by the Company's financial network were to fail, it is possible that
the Company could shift customers to its Internet-based products. In another
example, if one data provider fails, it is possible that there is another data
provider that provides substantially similar information that could be
integrated into the Company's data feed. The Company will continue to develop
potential solutions so that it is as prepared as possible in the event of a
failure.
Based upon currently available information, management has no reason to believe
that the Company will not meet its compliance goals and does not anticipate that
the cost of effecting Year 2000 compliance will have a material impact on the
Company's financial condition or results of operations. Nevertheless, achieving
Year 2000 compliance is dependent upon many factors, some of which are not
completely within the Company's control. Should either the Company's internal
systems or the internal systems of one or more of its critical vendors fail to
achieve Year 2000 compliance, the Company's business and its results of
operations could be adversely affected.
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.
Disclosures in this Form 10-Q contain certain forward-looking statements,
including without limitation, statements concerning the Company's operations,
economic performance and financial condition, including in particular, Year 2000
information. These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
words "believe," "expect," "anticipate" and other similar expressions generally
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. These forward-looking statements are based largely on the Company's
current expectations and are subject to a number of risks and uncertainties,
including without limitation, changes in external market factors, changes in the
Company's business or growth strategy or an inability to execute its strategy
due to changes in its industry or the economy generally, the emergence of new or
growing competitors, various other competitive factors and other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's Forms 10-K, S-3 and
S-8. Actual results could differ materially from the results referred to in the
forward-looking statements. In light of these risks and uncertainties, there can
be no assurance that the results referred to in the forward-looking statements
contained in this Form 10-Q will in fact occur.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate change market risk with respect to its
credit facility with a financial institution which is priced based on the prime
rate of interest. Borrowings have not been material during the past year.
<PAGE>
- ------
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings. Not Applicable
-----------------
Item 2. Changes in Securities and Use of Proceeds. See Notes 11 and 12 in
-----------------------------------------
connection with the issuance of common stock and warrants in private placements
under Section 4(2).
Item 3. Defaults upon Senior Securities. Not Applicable
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable.
---------------------------------------------------
Item 5. Other Information. Not Applicable.
-----------------
Item 6. (a) Exhibits.
--------
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the
-------------------
second quarter of 1999.
<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
Date: 8/12/99 /s/
------- -------------------------
Barry Hertz
Chairman of the Board
Chief Executive Officer
Date: 8/12/99 /s/
------- -------------------------
Martin Kaye
V.P. Finance, Principal Financial Officer
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<PERIOD-END> JUN-30-1999
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