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 June 30, 2000
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 5,346,084 shares of common stock outstanding as of June 30, 2000.
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This report consists of 11 pages
<PAGE>
INDEX
Part I - Financial Information Page No.
--------
Condensed Statements of Operations -
Three Months ended June 30, 2000 and 1999 3
Condensed Balance Sheets - as of
June 30, 2000 and March 31, 2000 4-5
Condensed Statements of Cash Flows -
Three Months Ended June 30, 2000
and 1999 6
Notes to Condensed Financial Statements 7-8
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-10
Part II - Other Information 11
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
----------- -----------
<S> <C> <C>
Investment income
Interest from small business concerns $ 116,135 $ 147,993
Interest from invested idle funds 223,087 33,092
Other income 7,805 23,512
----------- -----------
Total investment income 347,027 204,597
----------- -----------
Expenses
Interest 462,946 315,458
Payroll and payroll related expenses 164,471 155,241
General and administrative expenses 103,562 71,907
Other operating expenses 44,664 115,395
----------- -----------
Total investment expenses 775,643 658,001
----------- -----------
Investment loss - net ( 428,616) ( 453,404)
Realized gain on investments 6,211,426 --
Change in unrealized appreciation of
investments ( 32,803,273) ( 5,897,805)
----------- -----------
Net (decrease) in shareholders'
equity resulting from operations ($27,020,463) ($ 6,351,209)
=========== ===========
Per share net (decrease) in shareholders'
equity resulting from operations
Basic ($ 5.05) ($ 1.23)
=========== ===========
Diluted ($ 5.05) ($ 1.23)
=========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
----------- ------------
<S> <C> <C>
Loans and investments
Loans and notes receivable $ 3,211,936 $ 6,573,132
Equity interests in small business
concerns 65,512,050 95,943,961
Assets acquired in liquidation 222,086 222,086
----------- ------------
Total investments 68,946,072 102,739,179
Cash 19,262,221 23,314,112
Accrued interest receivable 71,595 142,243
Furniture and equipment (net of
accumulated depreciation of
$24,818 at June 30, 2000
and $23,313 at March 31, 2000) 18,583 12,580
Other assets 617,229 659,507
----------- ------------
Total assets $88,915,700 $126,867,621
=========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED BALANCE SHEETS
============================
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
----------- ------------
<S> <C> <C>
Liabilities
Debentures payable to the U.S. Small
Business Administration $20,550,000 $ 20,850,000
Subordinated debentures payable 1,075,387 1,065,177
Income taxes payable -- 10,690,254
Accrued expenses 584,980 535,472
Deferred income 3,690 4,612
----------- ------------
Total liabilities 22,214,057 33,145,515
----------- ------------
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 - 5,346,084
shares at June 30, 2000 and
at March 31, 2000 53,461 53,461
Additional paid-in capital 26,915,076 26,915,076
Accumulated earnings 39,733,106 66,753,569
----------- ------------
Total shareholders' equity 66,701,643 93,722,106
----------- ------------
Total liabilities and
shareholders' equity $88,915,700 $126,867,621
=========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
-5-
<PAGE>
WINFIELD CAPITAL CORP.
CONDENSED STATEMENTS OF CASH FLOWS
============================
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net decrease in shareholders'
equity resulting from operations ($27,020,463) ($ 6,351,209)
Adjustments to reconcile net decrease
in shareholders' equity
resulting from operations to net cash
provided by (used in) operating activities
Amortization of deferred income ( 922) ( 4,921)
Change in unrealized depreciation
(appreciation) on investments 32,803,273 5,897,805
Gain on sale of investments ( 6,211,426) --
Depreciation and amortization 1,505 1,136
Amortization of debenture costs 33,472 29,591
Changes in assets and liabilities
Receivable from broker -- 782,624
Accrued interest receivable 56,481 26,513
Other assets 19,015 ( 56,063)
Accrued expenses 49,508 75,968
Income taxes payable ( 10,690,254) -
----------- -----------
Net cash (used in) provided by operating
activities ( 10,959,811) 401,444
----------- -----------
Cash flows from investing activities
Proceeds from sale of investments 6,547,326 -
Investments originated - ( 2,544,234)
Proceeds from collection of loans 668,102 742,746
Purchase of furniture and equipment ( 7,508) -
----------- -----------
Net cash provided by (used in) investing
activities 7,207,920 ( 1,801,488)
----------- -----------
Cash flows from financing activities
Proceeds from debentures payable to SBA - 3,000,000
Repayment of debentures payable to SBA ( 300,000) ( 300,000)
Exercise of stock options - 258,223
----------- -----------
Net cash (used in) provided by financing
activities ( 300,000) 2,958,223
----------- -----------
(Decrease) increase in cash ( 4,051,891) 1,558,179
Cash - beginning of period 23,314,112 3,427,719
----------- -----------
Cash - end of period $19,262,221 $ 4,985,898
=========== ===========
The accompanying notes are an integral part of these financial statements.
</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 operations and cash flows for such periods. The results of
operations for any interim period 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, 2000.
Note - 2 Loss per Common Share:
The computation of basic and diluted loss per common share is as
follows:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net loss available for common
stock equivalent shares deemed
to have a dilutive effect ($27,020,463) ($ 6,351,209)
=========== ===========
Loss per common share
Basic ($ 5.05) $ 1.23
=========== ===========
Diluted ($ 5.05) $ 1.23
=========== ===========
Shares used in computation:
Basic:
Weighted average common shares 5,346,084 5,166,669
=========== ===========
Diluted:
Weighted average common shares 5,346,084 5,166,669
Common stock equivalents A A
----------- -----------
5,346,084 5,166,669
=========== ============
</TABLE>
(A) For the three months ended June 30, 2000 and 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.
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<PAGE>
WINFIELD CAPITAL CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
==============================
Note - 3 Subsequent Events
During July 2000, the Company sold 10,000 shares of Commerce One, Inc.
and 15,000 shares of Bluestone Software, Inc. for total proceeds of
approximately $1,200,000. After these sales, the Company had 690,146
shares of Commerce One, Inc. and 57,170 shares of Bluestone Software,
Inc.
During July 2000, the Company also made two equity investments
totalling approximately $2,785,000.
-8-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
==============================
Results of Operations
Three Months Ended June 30, 2000 and June 30, 1999
Investment Income
Investment income increased by $142,430 from $204,597 for the three month period
ended June 30, 1999 to $347,027 for the same period ended June 30, 2000, an
increase of 69.6%. This primarily reflected $189,995 in increased earnings from
temporarily invested funds as a result of proceeds received from the sale of
investments (non-income producing equity investments) and higher prevailing
interest rates. Other investment income, principally amortization of deferred
commitment and application fees, and income from both notes receivable and
assets acquired in liquidation, decreased by $15,707.
Interest Expense
Interest expense increased from $315,458 for the three months ended June 30,
1999 to $462,946 for the same period ended June 30, 2000 due to additional net
borrowings of $2,550,000 from the Small Business Administration (the "SBA").
Operating Expenses
The Company's operating expenses decreased from $342,543 for the three months
ended June 30, 1999 to $312,697 for the three months ended June 30, 2000, a
decrease of 8.7%. Payroll and payroll related expenses increased by $9,230.
Professional fees decreased by $58,324 primarily due to decreases in both legal
and consulting fees, stock record costs and financial printing decreased by
$5,069, amortization of finance costs increased by $3,880, advertising increased
by $30,225 due to the costs involved in setting up a web site. There were
miscellaneous increases and decreases with a net decrease of $1,747.
-9-
<PAGE>
WINFIELD CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
==============================
Realized Gain on Disposition of Investments
The Company realized a $6,211,426 gain on the sale of a portion of its equity
position in three portfolio companies in fiscal 2001. There was no realized gain
in fiscal 2000.
Changes in Unrealized Appreciation of Investments
There was a decrease in unrealized appreciation of investments of $32,803,273
for the three months ended June 30, 2000 compared to $5,897,805 for the same
period ended June 30, 1999, principally related to the decline in market price
of ten publicly traded portfolio securities in fiscal year 2001 and two publicly
traded portfolio securities in fiscal year 2000.
Liquidity and Capital Resources
At June 30, 2000 the Company had cash and short term bank money market
investments totaling $19,262,221 invested with banks which meet the Federal
Deposit Insurance Corporation's definition of well capitalized financial
institutions.
The Company believes that its cash and its short term investments, along with
both its possible use of additional SBA debenture funding and ability to sell
certain of its publicly traded portfolio investments will be adequate to meet
both the investment opportunities that the Company anticipates and its working
capital needs through March 31, 2001.
This analysis may contain forward-looking information within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities and
Exchange Act of 1934 and is subject to the Safe Harbor created by those
sections.
Reporting on Disposition of Investments
From time to time, in the ordinary course of business, the Company may liquidate
all or a portion of its portfolio investments. In this regard, the Company may
sell a portion of a single investment or sell portions of various investments it
has made. The Company's policy is to publicly report the results of such
transactions in its Form 10-K and Form 10-Q Reports filed with the Securities
and Exchange Commission under the Securities Exchange Act and as otherwise
required by applicable regulations and laws.
-10-
<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
None.
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/ R. SCOT PERLIN
------------------------
R. Scot Perlin
Chief Financial Officer
Dated: August 8, 2000
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