UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended December 31, 2002
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: 001-11747
VIE FINANCIAL GROUP, INC.
(formerly The Ashton Technology Group, Inc.)
| Delaware |
22-6650372 | |
| (State of incorporation) |
(I.R.S. Employer Identification No.) |
1835 MARKET STREET, SUITE 420
PHILADELPHIA, PENNSYLVANIA 19103
(215) 789-3300
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 ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practical date:
| Common Stock $.01 par value |
691,674,817 | |
| (Title of Class) |
(No. of shares as of February 14, 2003) |
INDEX
| PART I – FINANCIAL INFORMATION |
PAGE | |||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets – December 31, 2002 (Unaudited) and March 31, 2002 |
4 | |||
| 5 | ||||
| 6 | ||||
| 8 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | ||
| 24 | ||||
| Item 3. |
32 | |||
| Item 4. |
32 | |||
| PART II – OTHER INFORMATION |
||||
| Item 1. |
32 | |||
| Item 2. |
32 | |||
| Item 3. |
33 | |||
| Item 4. |
33 | |||
| Item 5. |
33 | |||
| Item 6. |
33 | |||
| 33 | ||||
| 34 | ||||
2
PART I—FINANCIAL INFORMATION
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements included in this document constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others:
| • | our ability to become profitable; |
| • | availability, terms and deployment of capital; |
| • | our ability to develop markets for our products; |
| • | our dependence on proprietary technology; |
| • | fluctuations in securities trading volumes, prices and market liquidity; |
| • | our ability to develop intended future products; |
| • | our dependence on arrangements with our clearing firm, execution venues and self-regulatory organizations; |
| • | technological changes and costs of technology; |
| • | industry trends; |
| • | competition; |
| • | changes in business strategy or development plans; |
| • | availability of qualified personnel; |
| • | changes in government regulation; |
| • | general economic and business conditions; and |
| • | other riskfactors referred to in this Form 10-Qunder the heading “Additional Factors That May Affect Future Results”. |
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” or “continue” or other forms of or the negative of those terms or other comparable terms.
Although we believe that the expectations reflected in the forward-looking statements are based on reasonable assumptions, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. We do not have a duty to update any of the forward-looking statements after the date of this filing.
3
ITEM 1.
FINANCIAL STATEMENTS
VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, |
March 31, |
|||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ |
4,093,564 |
|
$ |
635,087 |
| ||
| Accounts receivable |
|
22,876 |
|
|
4,798 |
| ||
| Prepaid expenses and other current assets |
|
426,086 |
|
|
144,025 |
| ||
| Total current assets |
|
4,542,526 |
|
|
783,910 |
| ||
| Property and equipment, net of accumulated depreciation4 |
|
1,056,701 |
|
|
1,515,430 |
| ||
| Exchange memberships |
|
159,752 |
|
|
159,752 |
| ||
| Investments in and advances to affiliates |
|
— |
|
|
224,757 |
| ||
| Debt issuance costs |
|
29,000 |
|
|
— |
| ||
| Other assets |
|
127,373 |
|
|
102,782 |
| ||
| Total assets |
$ |
5,915,352 |
|
$ |
2,786,631 |
| ||
| Liabilities and Stockholders’ Deficiency |
||||||||
| Accounts payable and accrued expenses |
$ |
1,055,033 |
|
$ |
1,935,926 |
| ||
| Net liabilities of discontinued operations |
|
60,796 |
|
|
59,956 |
| ||
| Short-term note, net of discount |
|
— |
|
|
322,581 |
| ||
| Total current liabilities |
|
1,115,829 |
|
|
2,318,463 |
| ||
| Secured note |
|
3,987,023 |
|
|
— |
| ||
| Secured convertible note |
|
485,564 |
|
|
4,711,400 |
| ||
| Subordinated convertible notes |
|
2,057,143 |
|
|
— |
| ||
| Other liabilities |
|
87,020 |
|
|
41,044 |
| ||
| Total liabilities |
|
7,732,579 |
|
|
7,070,907 |
| ||
| Commitments and contingencies |
||||||||
| Preferred Stock – shares authorized: 3,000,000 |
||||||||
| 590,000 shares designated as Series B – (liquidation preference equals $240,000); shares issued and outstanding; 24,000 |
|
240,000 |
|
|
240,000 |
| ||
| Common stock—par value: $.01; shares authorized: 1,000,000,000; shares issued and outstanding; 691,674,817 and 68,282,250 |
|
6,916,749 |
|
|
682,823 |
| ||
| Additional paid-in capital |
|
85,357,668 |
|
|
79,217,625 |
| ||
| Accumulated deficit |
|
(94,321,749 |
) |
|
(84,414,829 |
) | ||
| Accumulated other comprehensive loss |
|
(9,895 |
) |
|
(9,895 |
) | ||
| Total stockholders’ deficiency |
|
(1,817,227 |
) |
|
(4,284,276 |
) | ||
| Total liabilities and stockholders’ deficiency |
$ |
5,915,352 |
|
$ |
2,786,631 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
4
VIE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2002 |
2001 |
2002 |
2001 |
|||||||||||||
| Revenues |
$ |
830,119 |
|
$ |
750,296 |
|
$ |
1,668,061 |
|
$ |
2,162,760 |
| ||||
| Expenses: |
||||||||||||||||
| Salaries and employee benefits |
|
1,423,891 |
|
|
1,425,213 |
|
|
4,137,918 |
|
|
4,349,846 |
| ||||
| Professional fees |
|
368,678 |
|
|
155,753 |
|
|
1,074,525 |
|
|
1,353,656 |
| ||||
| Brokerage, clearing and exchange fees |
|
403,900 |
|
|
751,152 |
|
|
1,151,915 |
|
|
2,502,942 |
| ||||
| Depreciation and amortization |
|
208,750 |
|
|
222,920 |
|
|
636,578 |
|
|
705,091 |
| ||||
| Non-cash compensation charges |
|
— |
|
|
— |
|
|
720,000 |
|
|
— |
| ||||
| Loss on trading activities |
|
114,522 |
|
|
747 |
|
|
265,866 |
|
|
375,479 |
| ||||
| Selling, general and administrative |
|
789,751 |
|
|
827,203 |
|
|
2,250,351 |
|
|
2,508,030 |
| ||||
| Total costs and expenses |
|
3,309,492 |
|
|
3,382,988 |
|
|
10,237,153 |
|
|
11,795,044 |
| ||||
| Loss from operations |
|
(2,479,373 |
) |
|
(2,632,692 |
) |
|
(8,569,092 |
) |
|
(9,632,284 |
) | ||||
| Interest income |
|
8,380 |
|
|
8,928 |
|
|
44,717 |
|
|
99,376 |
| ||||
| Interest expense |
|
(351,972 |
) |
|
(118,013 |
) |
|
(1,132,668 |
) |
|
(205,976 |
) | ||||
| Other income (expense) |
|
— |
|
|
(551,815 |
) |
|
1,087 |
|
|
(1,058,065 |
) | ||||
| Equity in (loss) income of affiliates |
|
(974 |
) |
|
262,580 |
|
|
(233,852 |
) |
|
251,485 |
| ||||
| Loss from continuing operations |
$ |
(2,823,939 |
) |
$ |
(3,031,012 |
) |
$ |
(9,889,808 |
) |
$ |
(10,545,464 |
) | ||||
| Loss from discontinued operations of eMC |
|
(121 |
) |
|
(4,977 |
) |
|
(840 |
) |
|
(6,943 |
) | ||||
| Gain on disposal of eMC |
||||||||||||||||