================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
----------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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
----------
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
December 31, 1996.
================================================================================
This report consists of 13 pages
<PAGE>
Form 10-Q Quarterly Report
INDEX
Part I -- Financial Information Page No.
--------
Condensed Statements of Operations --
Nine Months and Three Months ended
December 31, 1996 and 1995 ............................ 3-4
Condensed Balance Sheets -- as of
December 31, 1996 and March 31, 1996 .................. 5-6
Condensed Statements of Cash Flows --
Nine Months Ended December 31, 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
Nine Months Ended
December 31,
-----------------------
1996 1995
---------- --------
Operations realized
Investment income
Interest from small business concerns .... $ 374,872 $150,709
Interest from invested idle funds ........ 491,086 190,219
Other .................................... 169,107 16,784
---------- --------
Total investment income ........ 1,035,065 357,712
---------- --------
Expenses
(Income) loss on assets acquired in
liquidation ............................ ( 2,561) 4,515
Interest ................................. 568,129 276,001
Salaries ................................. 326,531 170,288
Travel and entertainment ................. 45,843 17,221
Professional fees ........................ 60,124 32,708
Rent and office expenses ................. 36,259 32,455
Insurance ................................ 89,202 32,402
Telephone ................................ 9,179 6,063
Payroll taxes ............................ 11,587 10,519
Depreciation and amortization ............ 14,170 2,581
Directors' costs ......................... 4,661 2,855
Advertising and promotions ............... 5,652 858
Other taxes .............................. 11,193 --
Loss on loans receivable ................. -- 79,366
Transfer agent expenses and sundry ....... 20,457 10,837
---------- --------
Total investment and
operating expenses ........... 1,200,426 678,669
---------- --------
(Loss) from investments ........ ( 165,361) ( 320,957)
Realized gains on disposition of investments ..... 124,960 156,916
Unrealized appreciation (depreciation) in
value of investments ......................... 22,246 ( 46,889)
---------- --------
Net loss ....................... ($ 18,155) ($210,930)
========== ========
Loss per share of common stock ................... ($ -- ) ($ .07)
========== ========
-3-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
December 31,
----------------------
1996 1995
-------- --------
Operations realized
Investment income
Interest from small business concerns ....... $172,288 $ 37,471
Interest from invested idle funds ........... 156,239 124,326
Other ....................................... 9,679 5,494
-------- --------
Total investment income ........... 338,206 167,291
-------- --------
Expenses
Income (loss) on assets acquired
in liquidation ............................ ( 2,433) 3,318
Interest .................................... 213,491 105,025
Salaries .................................... 112,529 80,358
Travel and entertainment .................... 8,316 13,813
Professional fees ........................... 9,538 11,648
Rent and office expenses .................... 11,096 11,952
Insurance ................................... 30,790 17,484
Telephone ................................... 2,471 2,959
Payroll taxes ............................... 3,916 3,088
Depreciation and amortization ............... 5,452 861
Directors' costs ............................ 1,605 2,650
Advertising and promotion ................... 2,136 -
Other taxes ................................. -- 772
Loss on loans receivable .................... -- 79,366
Transfer agent expenses and sundry .......... 6,190 4,979
-------- --------
Total investment and
operating expenses .............. 405,097 338,273
-------- --------
(Loss) from investments ........... ( 66,891) ( 170,982)
Realized gains on disposition of investments ........ 124,960 --
Unrealized appreciation in value of
investments ..................................... 22,499 10,000
-------- --------
Net income (loss) ................. $ 80,568 ($160,982)
======== ========
Income (loss) per share of common stock ............. $ .02 ($ .04)
======== ========
-4-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
ASSETS
December 31, March 31,
1996 1996
----------- -----------
Loans and investments
Loans and debt securities .................. $ 5,797,268 $ 3,456,794
Equity interests in small business
concerns ................................... 747,560 42,806
Assets acquired in liquidation ................. 899,594 794,687
----------- -----------
7,444,422 4,294,287
Less unrealized depreciation on loans
and investments ............................ 294,449 316,695
----------- -----------
Loans and investments ........ 7,149,973 3,977,592
Cash ........................................... 807,504 3,410,572
Treasury bills at cost ......................... 3,782,062 8,131,149
Certificates of deposit ........................ 8,029,117 --
Accrued interest receivable .................... 122,409 76,724
Furniture and equipment (net of
accumulated depreciation of
$60,667 at December 31, 1996
and $58,146 at March 31, 1996) ............. 6,800 9,321
Other assets ................................... 373,536 246,726
----------- -----------
Total assets ................. $20,271,401 $15,852,084
=========== ===========
-5-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31,
1996 1996
----------- -----------
Indebtedness to small business
administration ................................ $ 8,900,000 $ 4,500,000
6.5% subordinated debentures payable ............ 932,456 901,828
Notes payable -- bank ........................... -- 5,000
Accrued liabilities ............................. 191,297 155,336
Funds in escrow ................................. 333 24,450
----------- -----------
10,024,086 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 December 31, 1996 and
March 31, 1996 .......................... 50,234 50,234
Additional paid-in capital .................. 10,850,829 10,850,829
Realized earnings (deficit) ................. ( 359,299) ( 318,898)
Net unrealized depreciation on
loans and investments ................... ( 294,449) ( 316,695)
----------- -----------
Total shareholders' equity .... 10,247,315 10,265,470
----------- -----------
Total liabilities and
shareholders' equity ........ $20,271,401 $15,852,084
=========== ===========
-6-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
December 31,
--------------------------
1996 1995
---------- -----------
Operating activities
Net (loss) .................................... ($ 18,155) ($ 210,930)
Adjustments to reconcile net loss to net
cash used in operating activities
Amortization of bond discount ................. 30,628 6,806
Amortization of bond issuance costs ........... 21,570 4,790
Gains on sale of equity interests ............. ( 124,960) ( 156,916)
Losses on loans and debt securities ........... -- 79,366
Change in unrealized (appreciation)
depreciation on loans and investments ..... ( 22,246) 46,889
Capitalized interest .......................... 2,911 --
Depreciation and amortization ................. 14,171 2,581
(Increase) decrease in
Accrued interest receivable ............... ( 45,685) 44,394
Other assets .............................. ( 162,941) 38,098
Increase in accrued liabilities ............... 35,961 96,906
---------- -----------
Net cash used in operating activities ............. ( 268,746) ( 48,016)
---------- -----------
Investing activities
Sale of capital stock ......................... -- 10,670,130
Treasury bills and certificates of
deposit acquired -- net ................... ( 3,680,030) --
Proceeds from sale of equity interests ........ 124,960 156,916
Loans and investments originated .............. ( 3,584,754) ( 137,076)
Proceeds from collection of loans ............. 434,619 499,327
Acquisition of fixed assets ................... -- ( 4,217)
Proceeds on sale of assets acquired in
liquidation ............................... -- 2,250
(Decrease) increase in funds held in
escrow ................................... ( 24,117) 9,449
---------- -----------
Net cash (used in) provided by investing
activities ...................................... ( 6,729,322) 11,196,779
---------- -----------
Financing activities
Repayment of borrowings ....................... ( 605,000) ( 495,000)
Proceeds from borrowings ...................... 5,000,000 1,491,142
---------- -----------
Net cash provided by financing activities ......... 4,395,000 996,142
---------- -----------
(Decrease) increase in cash ....................... ( 2,603,068) 12,144,905
Cash -- beginning ................................. 3,410,572 441,699
---------- -----------
Cash -- end ....................................... $ 807,504 $12,586,604
========== ===========
-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 December 31,
1996 and 1995 and the results of operations for the
nine and three months then ended and the cash flows
for the nine months ended December 31, 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
NINE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
INVESTMENT INCOME
Investment income increased by $677,353 from $357,712 for the nine months
ended December 31, 1995 to $1,035,065 for the nine months ended December 31,
1996. Interest from loans to small business concerns increased by $224,163
principally due to the increase in the loan portfolio. Interest from temporarily
invested funds increased by $300,867 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 $152,323 principally from processing and
commitment fees generated by new investments.
INTEREST EXPENSE
Interest expense increased from $276,001 for the nine months ended December
31, 1995 to $568,129 for the nine months ended December 31, 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 $402,668 for the nine
months ended December 31, 1995 to $632,297 for the nine months ended December
31, 1996. Salaries increased by $156,243 as a result of a salary increase and
the hiring of two new employees. Insurance expense increased by $56,800 which
includes a new policy covering officers and directors liability and health
insurance for new employees. Travel increased by $28,622 primarily in connection
with due diligence and negotiating new investment opportunities with small
business concerns. Professional fees increased by $27,416 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. Loss on loans
receivable decreased by $79,366.
-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 and unrealized appreciation in value of
investments totaling $147,206 for the nine months ended December 31, 1996
compared to a realized gain and unrealized depreciation in value of investments
of $110,027 for the nine months ended December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996 the Company had cash, certificates of deposit and
treasury bills, totaling $12,618,683. 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 December
31, 1996 will be adequate to meet both its working capital needs and the long
term investment opportunities that it seeks through December 31, 1997.
-10-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
INVESTMENT INCOME
Investment income increased by $170,915 from $167,291 for the three months
ended December 31, 1995 to $338,206 for the three months ended December 31,
1996. Interest from loans to small business concerns increased by $134,817
principally due to the increase in the loan portfolio. Interest from temporarily
invested funds increased by $31,913 as a result of proceeds available from the
Company's public offering and the issuance of debentures to the Small Business
Administration.
INTEREST EXPENSE
Interest expense increased from $105,025 for the three months ended
December 31, 1995 to $213,491 for the three months ended December 31, 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 decreased by $41,642 from $233,248 for the
three months ended December 31, 1995 to $191,606 for the three months ended
December 31, 1996. Salaries increased by $32,171 as a result of a salary
increase and the hiring of two new employees. The increase in insurance is due
to a new policy for officers and directors liability and health insurance for
new employees. The loss on loans receivable was $-0- and $79,366 respectively
for the three months ended December 31, 1996 and 1995.
REALIZED GAINS AND UNREALIZED APPRECIATION OR DEPRECIATION IN
VALUE OF INVESTMENTS
There was a realized gain and unrealized appreciation in value of
investments totaling $147,459 for the three months ended December 31, 1996
compared to unrealized appreciation in value of investments of $10,000 for the
three months ended December 31, 1995.
-11-
<PAGE>
WINFIELD CAPITAL CORP.
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBIT INDEX
Exhibit II -- Computation of Earnings Per Share
b. REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the nine
months ended December 31, 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: February 12, 1997
-12-
WINFIELD CAPITAL CORP.
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11
Three Months Ended
December 31,
-------------------------
1996 1995
--------- ---------
Primary and Fully Diluted Loss Per Share
- ----------------------------------------
Weighted average number of
shares outstanding ............................. 5,023,361 4,083,361
--------- ---------
Net income (loss) ................................ $80,568 ($160,982)
------- --------
Net income (loss) per share ...................... $ .02 ($ .04)
======= ========
Nine Months Ended
December 31,
-------------------------
1996 1995
--------- ---------
Primary and Fully Diluted Loss Per Share
- ----------------------------------------
Weighted average number of
shares outstanding ........................... 5,023,361 3,023,010
--------- ---------
Net loss ......................................... ($18,155) ($210,930)
------- --------
Net loss per share ............................... ($ -- ) ($ .07)
======= ========
-13-
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 20,063,105
<INVESTMENTS-AT-VALUE> 19,768,656
<RECEIVABLES> 0
<ASSETS-OTHER> 502,745
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,271,401
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 9,832,456
<OTHER-ITEMS-LIABILITIES> 191,630
<TOTAL-LIABILITIES> 10,024,086
<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> (359,299)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (294,449)
<NET-ASSETS> 10,247,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 865,958
<OTHER-INCOME> 169,107
<EXPENSES-NET> 1,200,426
<NET-INVESTMENT-INCOME> (165,361)
<REALIZED-GAINS-CURRENT> 124,960
<APPREC-INCREASE-CURRENT> 22,246
<NET-CHANGE-FROM-OPS> (18,155)
<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> (18,155)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 568,129
<GROSS-EXPENSE> 1,200,426
<AVERAGE-NET-ASSETS> 10,256,393
<PER-SHARE-NAV-BEGIN> 2.04
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 2.04
<EXPENSE-RATIO> 11.70
<AVG-DEBT-OUTSTANDING> 8,919,827
<AVG-DEBT-PER-SHARE> 1.78
</TABLE>
