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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 September 30, 1996
------------------
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 33-94322
WINFIELD CAPITAL CORP.
Incorporated in the IRS Employer Identification
State of New York Number 13-2704241
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237 Mamaroneck Avenue
White Plains, New York 10605
(914) 949-2600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No.
--- ---
Registrant had 5,023,361 shares of common stock outstanding as of
September 30, 1996.
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This report consists of 13 pages
<PAGE>
Form 10-Q Quarterly Report
INDEX
Page No.
--------
Part I -- Financial Information
Condensed Statements of Operations --
Six Months and Three Months ended
September 30, 1996 and 1995 ........................... 3-4
Condensed Balance Sheets -- as of
September 30, 1996 and March 31, 1996 ................. 5-6
Condensed Statements of Cash Flows --
Six Months Ended September 30, 1996
and 1995 .............................................. 7
Notes to Condensed Financial Statements ................. 8
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ......................................... 9-11
Part II -- Other Information ..................................... 12-13
-2-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF OPERATIONS
Six Months Ended
September 30,
-----------------------
1996 1995
-------- --------
Operations realized
Investment income
Interest from small business concerns ....... $202,584 $113,238
Interest from invested idle funds ........... 334,847 65,893
Other ....................................... 159,428 11,290
-------- --------
Total investment income ........... 696,859 190,421
-------- --------
Expenses
(Income) loss on assets acquired in
liquidation ............................... ( 128) 1,197
Interest .................................... 354,638 170,976
Salaries .................................... 214,002 89,930
Travel and entertainment .................... 37,527 3,408
Professional fees ........................... 50,586 21,060
Rent and office expenses .................... 25,163 20,503
Insurance ................................... 58,412 14,918
Telephone ................................... 6,708 3,104
Payroll taxes ............................... 7,671 7,431
Depreciation and amortization ............... 8,718 1,720
Directors' costs ............................ 3,056 205
Advertising and promotions .................. 3,516 86
Other taxes ................................. 11,193 --
Other ....................................... 14,267 5,858
-------- --------
Total investment and
operating expenses .............. 795,329 340,396
-------- --------
(Loss) from investments ........... ( 98,470) ( 149,975)
Realized gains on disposition of investments ........ -- 156,916
Unrealized depreciation in value of
investments ....................................... ( 253) ( 56,889)
-------- --------
Net loss .......................... ($ 98,723) ($ 49,948)
======== ========
Loss per share of common stock ...................... ($ .02) ($ .02)
======== ========
-3-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,
----------------------
1996 1995
-------- --------
Operations realized
Investment income
Interest from small business concerns ........ $123,051 $ 58,430
Interest from invested idle funds ............ 199,792 41,202
Other ........................................ 97,967 6,650
-------- --------
Total investment income ............ 420,810 106,282
-------- --------
Expenses
Loss on assets acquired in liquidation ....... 3,813 1,197
Interest ..................................... 220,125 81,181
Salaries ..................................... 115,993 48,778
Travel and entertainment ..................... 24,945 173
Professional fees ............................ 27,821 2,667
Rent and office expenses ..................... 14,003 10,164
Insurance .................................... 25,498 7,569
Telephone .................................... 3,410 1,471
Payroll taxes ................................ 3,715 3,730
Depreciation and amortization ................ 5,453 795
Directors' costs ............................. 825 ( 1,651)
Other taxes .................................. 8 --
Other ........................................ 12,793 1,763
-------- --------
Total investment and
operating expenses ............... 458,402 157,837
-------- --------
(Loss) from investments ............ ( 37,592) ( 51,555)
Realized gains on disposition of investments ......... -- 87,500
Unrealized depreciation in value of
investments ...................................... ( 253) ( 83,583)
-------- --------
Net loss ........................... ($ 37,845) ($ 47,638)
======== ========
Loss per share of common stock ....................... ($ .01) ($ .01)
======== ========
-4-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
ASSETS
September 30, March 31,
1996 1996
------------- -----------
Loans and investments
Loans and debt securities .................... $ 5,949,240 $ 3,456,794
Equity interests in small business
concerns ..................................... 747,560 42,806
Assets acquired in liquidation ................. 794,687 794,687
----------- -----------
7,491,487 4,294,287
Less unrealized depreciation on loans
and investments .............................. 316,949 316,695
----------- -----------
Loans and investments ........ 7,174,538 3,977,592
Cash ........................................... 497,122 3,410,572
Treasury bills at cost ......................... 3,750,426 8,131,149
Certificates of deposit ........................ 8,341,598 --
Accrued interest receivable .................... 103,918 76,724
Furniture and equipment (net of
accumulated depreciation of
$59,827 at September 30, 1996
and $58,146 at March 31, 1996) ............... 7,640 9,321
Other assets ................................... 337,732 246,726
----------- -----------
Total assets ................. $20,212,974 $15,852,084
=========== ===========
-5-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, March 31,
1996 1996
------------- -----------
Indebtedness to small business
administration ............................... $ 8,900,000 $ 4,500,000
6.5% subordinated debenture payable ............ 922,246 901,828
Notes payable -- bank .......................... -- 5,000
Accrued liabilities ............................ 223,649 155,336
Funds in escrow ................................ 333 24,450
----------- -----------
10,046,228 5,586,614
----------- -----------
Commitments and contingent liabilities
Shareholders' equity
Preferred stock -- .001 par value;
Authorized 1,000,000 shares
Issued and outstanding -- none
Common stock -- $.01 par value;
Authorized -- 10,000,000 shares;
Issued and outstanding -- 5,023,361
shares at September 30, 1996 and
March 31, 1996 ........................... 50,234 50,234
Additional paid-in capital ................... 10,850,829 10,850,829
Realized earnings (deficit) .................. ( 417,368) ( 318,898)
Net unrealized depreciation on
loans and investments .................. ( 316,949) ( 316,695)
----------- -----------
Total shareholders' equity ... 10,166,746 10,265,470
----------- -----------
Total liabilities and
shareholders' equity ....... $20,212,974 $15,852,084
=========== ===========
-6-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
September 30,
--------------------------
1996 1995
---------- ----------
Operating activities
Net (loss) .................................... ($ 98,723) ($ 49,948)
Adjustments to reconcile net loss to net
cash used in operating activities
Amortization of bond discount ................. 20,418 --
Amortization of bond issuance costs ........... 14,388 --
Gains on sale of equity interests ............. -- ( 156,916)
Change in unrealized depreciation on
loans and investments ....................... 253 56,889
Capitalized interest .......................... 2,911 --
Depreciation and amortization ................. 8,718 1,720
(Increase) decrease in
Accrued interest receivable ................. ( 27,194) 34,357
Other assets ................................ ( 115,342) ( 101,840)
Increase in accrued liabilities ............... 68,313 103,996
---------- ----------
Net cash used in operating activities ........... ( 126,258) ( 111,742)
---------- ----------
Investing activities
Sale of capital stock ......................... -- 2,878,682
Treasury bills and certificates of
deposits acquired -- net .................... ( 3,960,875) --
Proceeds from sale of equity interests ........ -- 156,916
Loans and investments originated .............. ( 3,334,754) ( 121,967)
Proceeds from collection of loans ............. 137,554 353,845
Acquisition of fixed assets ................... -- ( 4,217)
Proceeds on sale of assets acquired in
liquidation ................................. -- 2,250
(Decrease) in funds held in escrow ............ ( 24,117) ( 163)
---------- ----------
Net cash (used in) provided by investing
activities .................................... ( 7,182,192) 3,265,346
---------- ----------
Financing activities
Repayment of borrowings ....................... ( 605,000) ( 495,000)
Proceeds from borrowings ...................... 5,000,000 750,000
---------- ----------
Net cash provided by financing activities ....... 4,395,000 255,000
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(Decrease) increase in cash ..................... ( 2,913,450) 3,408,604
Cash -- beginning ............................... 3,410,572 441,699
---------- ----------
Cash -- end ..................................... $ 497,122 $3,850,303
========== ==========
-7-
<PAGE>
WINFIELD CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note - 1 In the opinion of the Company, the accompanying
unaudited condensed financial statements contain all
adjustments necessary to present fairly the
financial position of the Company as of September
30, 1996 and 1995 and the results of operations for
the six and three months then ended and the cash
flows for the six months ended September 30, 1996
and 1995. The operating results of the Company on a
quarterly basis may not be indicative of operating
results for the full year.
Note - 2 The Company obtained additional financing from the
Small Business Administration by issuing $5,000,000
of debentures due June 1, 2006 with interest at
7.71%. On September 1, 1996 the Company repaid a
$600,000 8.75% debenture to the Small Business
Administration.
-8-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
INVESTMENT INCOME
Investment income increased by $506,438 from $190,421 for the six months
ended September 30, 1995 to $696,859 for the six months ended September 30,
1996. Interest from loans to small business concerns increased by $89,346,
principally due to the increase in the loan portfolio. Interest from temporarily
invested funds increased by $268,954 as a result of the proceeds received from
the public offering completed in November 1995 and the issuance of $5,000,000 of
debentures on June 26, 1996 to the Small Business Administration. Other
investment income increased by $148,138 principally from processing and
commitment fees generated by new investments.
INTEREST EXPENSE
Interest expense increased from $170,976 for the six months ended September
30, 1995 to $354,638 for the six months ended September 30, 1996. This increase
is due to the issuance of 6.5% subordinated debentures in conjunction with the
public offering of equity securities and an increase in indebtedness to the
Small Business Administration.
OPERATING EXPENSES
The Company's operating expenses increased from $169,420 for the six months
ended June 30, 1995 to $440,691 for the six months ended June 30, 1996. Salaries
increased by $124,072 as a result of a salary increase and the hiring of two new
employees. Insurance expense increased by $43,494 which includes a new policy
covering officers and directors liability. Travel increased by $34,119 primarily
in connection with due diligence and negotiating new investment opportunities
with small business concerns. Professional fees increased by $29,526 due to
legal and consulting costs in connection with new investments and additional
accounting and legal costs in connection with the reporting requirements of a
publicly held company. Franchise taxes based on capital increased by $11,193.
-9-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REALIZED GAINS AND UNREALIZED APPRECIATION OR DEPRECIATION IN
VALUE OF INVESTMENTS
There was a realized gain net of unrealized depreciation in the value of
investments of $100,027 for the six months ended September 30, 1995 compared to
a $253 unrealized depreciation in the value of investments for the six months
ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996 the Company had cash, certificates of deposit and
treasury bills, totaling $12,589,146. The cash and certificates of deposit are
principally invested with banks which all meet the Federal Deposit Insurance
Corporation's definition of well capitalized financial institutions.
During the period the Company sold $5,000,000 of debentures to the Small
Business Administration due June 1, 2006 with an interest rate of 7.71%.
The Company believes that its cash and short term investments at September
30, 1996 will be adequate to meet both its working capital needs and the long
term investment opportunities that it seeks through September 30, 1997.
-10-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
INVESTMENT INCOME
Investment income increased by $314,528 from $106,282 for the three months
ended September 30, 1995 to $420,810 for the three months ended September 30,
1996. Interest from loans to small business concerns increased by $64,621
principally due to the increase in the loan portfolio. Interest from temporarily
invested funds increased by $158,590 as a result of proceeds available from the
Company's public offering and the issuance of debentures to the Small Business
Administration. Other income increased by $91,317 resulting principally from
processing and commitment fees generated by new investments.
INTEREST EXPENSE
Interest expense increased from $81,181 for the three months ended
September 30, 1995 to $220,125 for the three months ended September 30, 1996 due
to the increase in debt to the Small Business Administration and the issuance of
6.5% subordinated debentures to the public.
OPERATING EXPENSES
The Company's operating expenses increased from $76,656 for the three
months ended September 30, 1995 to $238,277 for the three months ended September
30, 1996. Salaries increased by $67,215 as a result of a salary increase and the
hiring of two new employees. The increases in insurance, professional fees and
travel are due to costs and expenses associated with the review of new
investment opportunities and the cost of reporting requirements of a publicly
held company.
REALIZED GAINS AND UNREALIZED APPRECIATION OR DEPRECIATION IN
VALUE OF INVESTMENTS
There was a realized gain net of unrealized depreciation in the value of
investments of $3,917 for the three months ended September 30, 1995 compared to
a $253 unrealized depreciation in the value of the investments for the three
months ended September 30, 1996.
-11-
<PAGE>
WINFIELD CAPITAL CORP.
PART II -- OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8K
a. EXHIBIT INDEX
Exhibit II -- Computation of Loss Per Share
b. REPORTS ON FORM 8K
There were no reports on Form 8K filed for the six
months ended September 30, 1996.
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.
WINFIELD CAPITAL CORP.
(Registrant)
By: /s/ PAUL A. PERLIN
---------------------------------
Paul A. Perlin
Chief Executive Officer
Dated: November 12, 1996
-12-
WINFIELD CAPITAL CORP.
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT II
Three Months Ended
September 30,
---------------------------
1996 1995
--------- -------
PRIMARY AND FULLY DILUTED LOSS PER SHARE
Weighted average number of
shares outstanding ...................... 5,023,361 3,183,361
--------- ---------
Net loss .................................. ($37,845) ($47,638)
--------- ---------
Net loss per share ........................ ($ .01) ($ .01)
========= =========
Six Months Ended
September 30,
----------------------------
1996 1995
--------- -------
PRIMARY AND FULLY DILUTED LOSS PER SHARE
Weighted average number of
shares outstanding ...................... 5,023,361 2,470,005
--------- ---------
Net loss .................................. ($98,723) $ 49,948)
--------- ----------
Net loss per share ........................ ($ .02) ($ .02)
========= ==========
-13-
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 20,080,633
<INVESTMENTS-AT-VALUE> 19,763,684
<RECEIVABLES> 0
<ASSETS-OTHER> 449,290
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,212,974
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 9,822,246
<OTHER-ITEMS-LIABILITIES> 223,982
<TOTAL-LIABILITIES> 10,046,228
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,901,063
<SHARES-COMMON-STOCK> 5,023,361
<SHARES-COMMON-PRIOR> 5,023,361
<ACCUMULATED-NII-CURRENT> (417,368)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (316,949)
<NET-ASSETS> 10,166,746
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 537,431
<OTHER-INCOME> 159,428
<EXPENSES-NET> 795,329
<NET-INVESTMENT-INCOME> (98,470)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (253)
<NET-CHANGE-FROM-OPS> (98,723)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (98,723)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 354,638
<GROSS-EXPENSE> 795,329
<AVERAGE-NET-ASSETS> 10,216,108
<PER-SHARE-NAV-BEGIN> 2.04
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.02
<EXPENSE-RATIO> 7.78
<AVG-DEBT-OUTSTANDING> 8,466,065
<AVG-DEBT-PER-SHARE> 1.69
</TABLE>
