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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
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 5,255,994 shares of common stock outstanding as of June 30, 1999.
This report consists of 10 pages
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<PAGE>
FORM 10-Q QUARTERLY REPORT
INDEX
Page No.
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PART I -- FINANCIAL INFORMATION
Condensed Statements of Operations --
Three Months ended June 30, 1999 and 1998 ........................ 3
Condensed Balance Sheets -- as of
June 30, 1999 and March 31, 1999 ................................. 4-5
Condensed Statements of Cash Flows --
Three Months Ended June 30, 1999
and 1998 ......................................................... 6
Notes to Condensed Financial Statements ............................ 7
Management's Discussion and Analysis
of Financial Condition and Results
of Operations .................................................... 8-9
PART II -- OTHER INFORMATION ........................................... 10
-2-
<PAGE>
<TABLE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
June 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Investment income
Interest from small business concerns ................ $ 147,993 $ 130,280
Interest from invested idle funds .................... 33,092 58,389
Other income ......................................... 23,512 42,256
------------ ------------
Total investment income ..................... 204,597 230,925
------------ ------------
Expenses
Interest ............................................. 315,458 196,392
Payroll and payroll related expenses ................. 155,241 123,963
General and administrative expenses .................. 71,907 68,180
Other operating expenses ............................. 115,395 85,321
------------ ------------
Total investment expenses ................... 658,001 473,856
------------ ------------
Investment loss -- net ...................... (453,404) (242,931)
Realized loss on investment .............................. -- (4,914)
Change in unrealized appreciation of
investments .......................................... (5,897,805) 10,288,332
------------ ------------
Net (decrease) increase in shareholders'
equity resulting from operations .......... ($ 6,351,209) $ 10,040,487
============ ============
Per share net (decrease) increase in shareholders'
equity resulting from operations
Basic .................................................... ($ 1.23) $ 2.00
============ ============
Diluted .................................................. ($ 1.23) $ 1.95
============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
-3-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
ASSETS
June 30, March 31,
1999 1999
----------- -----------
Loans and investments
Loans and notes receivable ................. $ 4,391,615 $ 5,134,357
Equity interests in small business
concerns ................................. 36,601,200 39,954,775
Assets acquired in liquidation ............. 222,086 222,086
----------- -----------
Total investments ............ 41,214,901 45,311,218
Cash ........................................... 4,985,898 3,427,719
Accrued interest receivable .................... 108,494 135,007
Receivable from broker ......................... -- 782,624
Furniture and equipment (net of
accumulated depreciation of
$75,963 at June 30, 1999
and $74,827 at March 31, 1999) ............. 11,661 12,797
Other assets ................................... 496,228 459,547
----------- -----------
Total assets ................. $46,817,182 $50,128,912
=========== ===========
The accompanying notes are an integral part of this statement.
-4-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, March 31,
1999 1999
----------- -----------
Liabilities
Debentures payable to the U.S. Small
Business Administration .................. $18,000,000 $15,300,000
Subordinated debentures payable ............ 1,034,549 1,024,340
Accrued expenses ........................... 378,926 302,958
Deferred income ............................ 19,374 24,295
----------- -----------
Total liabilities ................ 19,432,849 16,651,593
----------- -----------
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 -- 5,255,994
at June 30, 1999 and 5,023,361
at March 31, 1999 ........................ 52,560 50,234
Additional paid-in capital ................. 9,470,343 9,214,446
Accumulated earnings ....................... 17,861,430 24 212,639
----------- -----------
Total shareholders' equity ....... 27,384,333 33,477,319
----------- -----------
Total liabilities and
shareholders' equity ........... $46,817,182 $50,128,912
=========== ===========
The accompanying notes are an integral part of this statement.
-5-
<PAGE>
<TABLE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
June 30,
----------------------------
1999 1998
----------- ------------
<S> <C> <C>
Operating activities
Net (decrease) increase in shareholders'
equity resulting from operations ............... ($ 6,351,209) $ 10,040,487
Adjustments to reconcile net (decrease)
increase in shareholders' equity
resulting from operations to net cash
provided by (used in) operating activities
Amortization of deferred income .................... (4,921) (16,225)
Amortization of discount ........................... 10,209 10,210
Change in unrealized depreciation
(appreciation) on investments .................. 5,897,805 (10,288,332)
Loss on investments ................................ -- 4,914
Depreciation and amortization of
fixed assets ................................... 1,136 1,578
Amortization of debenture costs .................... 19,382 12,970
(Increase) decrease in
Receivable from broker ......................... 782,624 --
Accrued interest receivable .................... 26,513 34,221
Other assets ................................... (56,063) 21,277
Increase (decrease) in accrued expenses ............ 75,968 (33,934)
------------ ------------
Net cash provided by (used in) operating
activities ......................................... 401,444 (212,834)
------------ ------------
Investing activities
Short term marketable securities - net ............. -- 479,356
Investments originated ............................. (2,544,234) (41,493)
Proceeds from collection of loans .................. 742,746 504,339
------------ ------------
Net cash (used in) provided by investing
activities ..................................... (1,801,488) 942,202
------------ ------------
Financing activities
Proceeds from debentures payable to SBA ............ 3,000,000 --
Repayment of debentures payable to SBA ............. (300,000) --
Exercise of stock options .......................... 258,223 --
------------ ------------
Net cash provided by financing activities .............. 2,958,223 --
------------ ------------
Increase in cash ....................................... 1,558,179 729,368
Cash -- beginning of period ............................ 3,427,719 848,777
------------ ------------
Cash -- end of period .................................. $ 4,985,898 $ 1,578,145
============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
-6-
<PAGE>
WINFIELD CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE -- 1 INTERIM FINANCIAL STATEMENTS
The interim financial statements of Winfield Capital Corp. (the
"Company") have been prepared in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all information and disclosures necessary for a presentation
of the Company's financial position, results of operations and cash
flows in conformity with generally accepted accounting principles. In
the opinion of management, these financial statements reflect all
adjustments consisting only of normal recurring accruals, necessary
for a fair presentation of the Company's financial position, results
of operation and cash flows for such periods. The results of
operations for any interim periods are not necessarily indicative of
the results for the full year. These financial statements should be
read in conjunction with the financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1999.
NOTE -- 2 EARNINGS (LOSS) PER COMMON SHARE:
The reconciliation of basic and diluted (loss) earnings per common
share computation is as follows:
Three Months Ended
June 30,
--------------------------
1999 1998
---------- -----------
Net (loss) earnings available for
common stock equivalent shares
deemed to have a dilutive effect ($6,351,209) $10,040,487
========== ===========
(Loss) earnings per common share
Basic ($ 1.23) $ 2.00
========== ===========
Diluted ($ 1.23) $ 1.95
========== ===========
Shares used in computation:
Basic:
Weighted average common shares 5,166,669 5,023,361
========== ===========
Diluted:
Weighted average common shares 5,166,669 5,023,361
Common stock equivalents A 134,735
---------- -----------
5,166,669 5,158,096
========== ===========
- ----------
(A) For the three months ended June 30, 1999 the effect of exercising the
outstanding stock options would have been anti-dilutive and therefore,
the use of common stock equivalent shares was not considered.
-7-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
INVESTMENT INCOME
Investment income decreased from $230,925 for the three month period ended June
30, 1998 to $204,597 for the same period ended June 30, 1999. This primarily
reflected $25,297 in decreased earnings from invested idle funds due to the
increased investment activity in fiscal 1999. There was also an increase of
$17,713 in interest earned from the Company's investment portfolio due to new
loans generated in fiscal 1999. Other investment income, principally
amortization of deferred commitment and application fees, and income from both
notes receivable and assets acquired in liquidation, decreased by $18,744.
INTEREST EXPENSE
Interest expense increased from $196,392 for the three months ended June 30,
1998 to $315,458 for the same period ended June 30, 1999 due to additional net
borrowings of $9,700,000 from the Small Business Administration (the "SBA").
OPERATING EXPENSES
The Company's operating expenses increased from $277,464 for the three months
ended June 30, 1998 to $342,543 for the three months ended June 30, 1999.
Payroll and payroll related expenses increased by $31,278. Professional fees
increased by $8,667, stock record costs and financial printing increased by
$8,514, amortization of finance costs increased by $6,412 and increases in other
expenses were offset by a decrease of $7,297 in appraisal costs.
REALIZED LOSS ON DISPOSITION OF INVESTMENTS
The Company realized a loss of $4,914 on the disposition of one of its
investments in fiscal 1998. There was no realized loss in fiscal 1999.
-8-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CHANGES IN UNREALIZED APPRECIATION OF INVESTMENTS
There was a decrease in unrealized appreciation of investments of $5,897,805 for
the three months ended June 30, 1999 compared to an unrealized appreciation of
$10,288,332 for the same period ended June 30, 1998, principally related to the
decline in market price of two publicly traded portfolio securities.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999 the Company had cash totaling $4,985,898 invested with banks
which meet the Federal Deposit Insurance Corporation's definition of well
capitalized financial institutions.
The Company believes that its cash at June 30, 1999 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 or sale of equity securities.
YEAR 2000
Many computer software systems in use today cannot properly process date-related
information from and after January 1, 2000. This is not an exposure for the
Company since it does not currently rely on any particular software program to
track either its investment portfolio or to provide accounting functions. In
addition, the Company has inquired of its commercial banks and other service
providers as well as of its major portfolio companies to determine if they will
be prepared for the year 2000. While all have indicated they are taking the
necessary steps to be in compliance, there can be no assurance that all exposure
will be eliminated. It is anticipated that the Company will incur no material
expenses related to the Year 2000 issue.
-9-
<PAGE>
WINFIELD CAPITAL CORP.
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBIT INDEX
None.
b. REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the first
quarter of the registrant's fiscal year ended March 31,
2000
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: August 6, 1999
-10-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 22,598,633
<INVESTMENTS-AT-VALUE> 41,214,901
<RECEIVABLES> 0
<ASSETS-OTHER> 5,602,281
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,817,182
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 19,034,549
<OTHER-ITEMS-LIABILITIES> 398,300
<TOTAL-LIABILITIES> 19,432,849
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,522,903
<SHARES-COMMON-STOCK> 5,255,994
<SHARES-COMMON-PRIOR> 5,023,361
<ACCUMULATED-NII-CURRENT> (754,838)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,616,268
<NET-ASSETS> 27,384,333
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 181,085
<OTHER-INCOME> 23,512
<EXPENSES-NET> 658,001
<NET-INVESTMENT-INCOME> (453,404)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (5,897,805)
<NET-CHANGE-FROM-OPS> (5,897,805)
<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> (6,351,209)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 315,458
<GROSS-EXPENSE> 658,001
<AVERAGE-NET-ASSETS> 30,430,826
<PER-SHARE-NAV-BEGIN> 6.66
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> (1.14)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.21
<EXPENSE-RATIO> 2.16
[AVG-DEBT-OUTSTANDING] 17,679,445
[AVG-DEBT-PER-SHARE] 3.36
</TABLE>
