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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, 1997
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 September 30,
1997.
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This report consists of 13 pages
<PAGE>
Form 10-Q Quarterly Report
INDEX
PART I - Financial Information Page No.
--------
Condensed Statements of Operations -
Six and Three Months ended September 30, 1997
and 1996 .............................................. 3-4
Condensed Balance Sheets - as of
September 30, 1997 and March 31, 1997 ................. 5-6
Condensed Statements of Cash Flows -
Six Months Ended September 30, 1997
and 1996 .............................................. 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,
----------------------
1997 1996
--------- ---------
Investment income
Interest from small business concerns ...... $ 190,306 $ 202,584
Interest from invested idle funds .......... 351,761 334,847
Other income ............................... 33,944 159,428
--------- ---------
Total investment income .................. 576,011 696,859
--------- ---------
Expenses
Interest ................................... 420,469 354,638
Payroll and payroll related expenses ....... 256,251 221,673
General and administrative expenses ........ 127,107 134,382
Professional fees .......................... 87,575 50,586
Depreciation and amortization .............. 11,768 8,718
Other taxes ................................ -- 11,193
Other operating costs ...................... 24,837 14,139
--------- ---------
Total investment expenses ................ 928,007 795,329
--------- ---------
Investment loss - net .................... (351,996) (98,470)
Realized loss on disposition of investments .. (82,468) --
Change in unrealized appreciation of
investments ................................ (387,086) (253)
-------- ---------
Net decrease in shareholders' equity
resulting from operations .............. ($821,550) ($ 98,723)
========= =========
Per share net decrease in shareholders' equity
resulting from operations .................. ($ .16) ($ .02)
========= =========
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
September 30,
----------------------
1997 1996
--------- ---------
Investment income
Interest from small business concerns ...... $ 82,151 $ 123,051
Interest from invested idle funds .......... 196,716 199,792
Other income ............................... 29,420 97,967
--------- ---------
Total investment income ................ 308,287 420,810
--------- ---------
Expenses
Interest ................................... 208,551 220,125
Payroll and payroll related expenses ....... 127,433 119,700
General and administrative expenses ........ 59,369 68,689
Professional fees .......................... 72,628 27,821
Depreciation and amortization .............. 5,884 5,453
Other taxes ................................ -- 8
Other operating costs ...................... 21,739 16,606
--------- ---------
Total investment expenses .............. 495,604 458,402
--------- ---------
Investment loss - net .................. (187,317) (37,592)
Realized loss on disposition of investments .. (82,468) --
Change in unrealized appreciation of
investments ................................ (359,256) (253)
---------- ---------
Net decrease in shareholders' equity
resulting from operations ............ ($629,041) ($ 37,845)
========= =========
Per share net decrease in shareholders' equity
resulting from operations .................. ($ .12) ($ .01)
========= =========
The accompanying notes are an integral part of this statement.
-4-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
ASSETS
September 30, March 31,
1997 1997
------------ -----------
Loans and investments
Loans and notes receivable ................. $ 4,416,030 $ 2,552,030
Equity interests in small business
concerns ................................... 3,752,642 1,549,304
Assets acquired in liquidation ............... 1,177,559 807,571
----------- -----------
Total investments ...................... 9,346,231 4,908,905
Cash ......................................... 1,684,706 3,314,875
Short term marketable securities ............. 7,943,504 12,108,274
Accrued interest receivable .................. 117,145 72,088
Furniture and equipment (net of
accumulated depreciation of
$64,547 at September 30, 1997
and $61,817 at March 31, 1997) ............. 13,513 11,849
Other assets ................................. 271,844 332,691
----------- -----------
Total assets ........................... $19,376,943 $20,748,682
=========== ===========
The accompanying notes are an integral part of this statement.
-5-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, March 31,
1997 1997
------------- ------------
Liabilities
Debentures payable to the U.S. Small
Business Administration .................. $ 8,300,000 $ 8,900,000
Subordinated debentures payable ............ 963,084 942,665
Accrued expenses ........................... 325,387 295,995
------------ ------------
Total liabilities ...................... 9,588,471 10,138,660
------------ ------------
Commitments and contingencies
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
at September 30, 1997 and
March 31, 1997 ........................... 50,234 50,234
Additional paid-in capital ................. 10,850,829 10,850,829
Accumulated deficit ........................ (990,555) (556,091)
Unrealized appreciation (depreciation)
on investments, net ...................... (122,036) 265,050
------------ ------------
Total shareholders' equity ............. 9,788,472 10,610,022
------------ ------------
Total liabilities and
shareholders' equity ................. $ 19,376,943 $ 20,748,682
============ ============
The accompanying notes are an integral part of this statement.
-6-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
September 30,
--------------------------
1997 1996
----------- -----------
Operating activities
Net decrease in shareholders' equity
resulting from operations ............... ($ 821,550) ($ 98,723)
Adjustments to reconcile net decrease
in shareholders' equity resulting
from operations to net cash used in
operating activities
Realized loss on disposition of investments 82,468 --
Amortization of debenture costs ........... 20,419 20,418
Change in unrealized appreciation
(depreciation) on investments ........... 387,086 253
Capitalized interest ...................... -- 2,911
Depreciation and amortization ............. 11,768 8,718
Amortization of bond expenses ............. 14,365 14,388
(Increase) decrease in
Accrued interest receivable ............ (45,057) (27,194)
Other assets ........................... 37,444 (115,342)
Increase in accrued expenses ............. 29,392 68,313
----------- -----------
Net cash (used in) operating activities ..... (283,665) (126,258)
----------- -----------
Investing activities
Short term marketable securities - net .... 4,164,770 (3,960,875)
Investments originated .................... (5,065,800) (3,334,754)
Proceeds from collection of loans ......... 158,920 137,554
Purchase of furniture and equipment ....... (4,394) --
(Decrease) in funds held in escrow ........ -- (24,117)
----------- -----------
Net cash (used in) investing activities ..... (746,504) (7,182,192)
----------- -----------
Financing activities
Proceeds from debentures payable to
the SBA ................................. -- 5,000,000
Repayment of debentures to SBA and
bank loan ............................... (600,000) (605,000)
----------- -----------
Net cash (used in) provided by financing
activities ................................ (600,000) 4,395,000
----------- -----------
(Decrease) in cash .......................... (1,630,169) (2,913,450)
Cash - beginning of period .................. 3,314,875 3,410,572
----------- -----------
Cash - end of period ........................ $ 1,684,706 $ 497,122
=========== ===========
The accompanying notes are an integral part of this statement.
-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, 1997 and the results of operations for the six and three months
ended September 30, 1997 and 1996 and the cash flows for the six
months ended September 30, 1997 and 1996. The operating results of the
Company on a quarterly basis may not be indicative of operating
results for the full year.
-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, 1997 AND SEPTEMBER 30, 1996
INVESTMENT INCOME
Investment income decreased from $696,859 for the six months ended September 30,
1996 to $576,011 for the six months ended September 30, 1997. This reflects a
decrease in loan commitment and processing fees of $146,985 offset by minor
increases in interest and other income. The Company's investments for the first
six months of 1997 consist principally of equity investments rather than loans.
There are often no commitment and processing fees on equity investments. These
investments are oriented towards long term appreciation and in some instances
may pay future dividends. Total investments originated in 1997 were $5,065,800
of which approximately $4,600,000 were structured as either equity or debt with
an equity component.
INTEREST EXPENSE
Interest expense increased from $354,638 for the six months ended September 30,
1996 to $420,469 for the six months ended September 30, 1997 due to an increase
in indebtedness of $5,000,000 to the Small Business Administration on June 26,
1996 with interest at 7.71% per annum.
OPERATING EXPENSES
Operating expenses increased from $440,691 for the six months ended September
30, 1996 to $507,538 for the six months ended September 30, 1997. Payroll and
payroll related expenses increased by $34,758 as a result of hiring a new
employee in July 1996. Professional fees increased by $36,989 due to legal and
consulting fees in connection with new investment opportunities.
REALIZED LOSS ON DISPOSITION OF INVESTMENTS
The Company realized a loss of $82,468 on the sale of an investment. In prior
periods, the Company had recorded unrealized depreciation of $80,000 on this
investment.
-9-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UNREALIZED APPRECIATION OR DEPRECIATION OF INVESTMENTS
The unrealized depreciation of investments of $387,086 was principally related
to the decline in the market price of one investment in a publicly held company.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997 the Company had cash and short term marketable securities,
totaling $9,628,210 invested with banks which meet the Federal Deposit Insurance
Corporation's definition of well capitalized financial institutions.
The Company believes that its cash and short term investments at September 30,
1997 will be adequate to meet both its working capital needs and short term
investment opportunities. Given the current pace of investment opportunities,
the Company may seek additional funds through borrowings from the Small Business
Administration to satisfy its long-term investment objectives. There is no
assurance that such fundings will be available.
-10-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
INVESTMENT INCOME
Investment income decreased from $420,810 for the three months ended September
30, 1996 to $308,287 for the three months ended September 30, 1997. Interest
from loans to small business concerns decreased by $40,900 due to new equity
rather than loan investments. Other income decreased by $68,547 resulting from a
decrease in new loans which normally generate processing and commitment fees.
INTEREST EXPENSE
Interest expense decreased from $220,125 for the three months ended September
30, 1996 to $208,551 for the three months ended September 30, 1997 due to the
repayment of $600,000 with interest at 8.75% to the Small Business
Administration on September 1, 1996.
OPERATING EXPENSES
Operating expenses increased from $238,277 for the three months ended September
30, 1996 to $287,053 for the three months ended September 30, 1997. Professional
fees increased by $44,807 due to legal and consulting fees in connection with
new investment opportunities. There were no material increases or decreases in
other operating expenses.
-11-
<PAGE>
WINFIELD CAPITAL CORP.
PART II - OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibit Index
Exhibit II - Computation of Loss Per Share
b. Reports on Form 8-K
There were no reports on Form 8-K filed for the three monhts
ended September 30, 1997.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WINFIELD CAPITAL CORP.
(Registrant)
By: /s/ PAUL A. PERLIN
---------------------------
Paul A. Perlin
Chief Executive Officer
Dated: November 14, 1997
-12-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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11 Computation of Earnings Per Share
27 Financial Data Schedule
WINFIELD CAPITAL CORP.
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT II
Six Months Ended
September 30,
-------------------------
1997 1996
---------- -----------
PRIMARY AND FULLY DILUTED LOSS PER SHARE
Weighted average number of
shares outstanding ................... 5,023,361 5,023,361
----------- -----------
Net decrease in shareholders' equity
resulting from operations ............ ($ 821,550) ($ 98,723)
----------- -----------
Per share net decrease in shareholders'
equity resulting from operations ..... ($ .16) ($ .02)
=========== ===========
Three Months Ended
September 30,
-------------------------
1997 1996
---------- -----------
PRIMARY AND FULLY DILUTED LOSS PER SHARE
Weighted average number of
shares outstanding ................... 5,023,361 5,023,361
----------- -----------
Net decrease in shareholders' equity
resulting from operations ............ ($ 629,041) ($ 37,845)
----------- -----------
Per share net decrease in shareholders'
equity resulting from operations ..... ($ .12) ($ .01)
=========== ===========
-13-
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 19,096,477
<INVESTMENTS-AT-VALUE> 18,974,441
<RECEIVABLES> 0
<ASSETS-OTHER> 402,502
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,376,943
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<SENIOR-LONG-TERM-DEBT> 9,263,084
<OTHER-ITEMS-LIABILITIES> 325,387
<TOTAL-LIABILITIES> 9,588,471
<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> (990,555)
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<OTHER-INCOME> 33,944
<EXPENSES-NET> 928,007
<NET-INVESTMENT-INCOME> (351,996)
<REALIZED-GAINS-CURRENT> (82,468)
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<AVG-DEBT-OUTSTANDING> 9,652,874
<AVG-DEBT-PER-SHARE> 1.92
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