<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission File No. 1-8249
------------- ------
LINCORP HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2161279
------------------------------------- -------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
245 Park Avenue
New York, New York 10167
------------------------------------- -------------------------------------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number,
Including Area Code: (212) 867-3800
-------------------------------------
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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
--- ---
Indicate the number of shares outstanding or each of the issuer's classes of
common stock, as of the latest practicable date.
1,730,559 Shares of Common Stock Outstanding at August 1, 1997
--------------------------------------------------------------
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by the registrant from the books of Lincorp Holdings, Inc. without audit (except
for the Balance Sheet as of December 31, 1996), pursuant to the rules and
regulations of the Securities and Exchange Commission. This information, which
is subject to year-end adjustments, reflects all adjustments which are, in the
opinion of management, necessary to present fairly the results for the interim
periods. Although the registrant believes that the disclosures are adequate to
make the information presented not misleading, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto included in the registrant's latest Annual Report on Form
10-K.
2
<PAGE>
LINCORP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash ...................................................... $ 22 $ 210
Investment in real estate assets, net ..................... 10,776 23,608
Other assets .............................................. 5 160
------------ ------------
$ 10,803 $ 23,978
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C>
Liabilities:
Debt on real estate, including accrued interest ...... $ 3,778 $ 16,812
Other borrowed funds, including accrued interest ..... 176,851 171,045
Increase (decrease) in other liabilities ........ 3,906 3,776
------------ ------------
184,535 191,633
------------ ------------
Commitments and contingent liabilities
Stockholders' deficit:
Preferred stock, Series A;
200 shares authorized;
no shares issued and outstanding ................... -- --
Preferred stock, $.01 par value;
10,000 shares authorized;
no shares issued and outstanding ................... -- --
Common stock, $.01 par value;
1,990,000 shares authorized;
1,730,559 shares issued and outstanding ............ 17 17
Capital contributed in excess of par value ............ 153,638 153,638
Accumulated deficit ................................... (327,387) (321,310)
------------ ------------
(173,732) (167,655)
------------ ------------
$ 10,803 $ 23,978
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
LINCORP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income:
Rental income ................................................ $ 89 $ 384 $ 357 $ 499
Equity in operating results of real estate joint ventures .... -- 47 60 87
Interest Income .............................................. -- -- -- 23
Gain on sale of subsidiary ................................... 146 -- 146 --
Other income ................................................. 8 15 8 104
--------- --------- --------- ---------
Total icome ........................................... 243 446 571 713
--------- --------- --------- ---------
Expenses:
Interest Expense ............................................. 3,230 3,542 6,557 6,832
General and administrative expense ........................... 28 31 85 87
--------- --------- --------- ---------
Total expenses ........................................ 3,258 3,573 6,642 6,919
--------- --------- --------- ---------
Loss before income taxes ........................................ $ (3,015) $ (3,127) $ (6,071) $ (6,206)
Provision for income taxes ...................................... 4 4 6 13
--------- --------- --------- ---------
Net loss ........................................................ $ (3,019) $ (3,131) $ (6,077) $ (6,219)
========= ========= ========= =========
Loss per share of Common Stock outstanding ...................... $ (1.74) $ (1.81) $ (3.51) $ (3.59)
========= ========= ========= =========
Weighted average shares of Common Stock outstanding ............. 1,731 1,731 1,731 1,731
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
LINCORP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ................................................ $ (3,019) $ (3,131) $ (6,077) $ (6,219)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Gain on sale of subsidiary ..................... (146) -- (146) --
Equity in operating results of real estate
joint ventures ............................. -- (47) (60) (87)
Decrease in other assets ....................... 1 1 66 1
Increase in accrued interest payable ........... 2,989 3,560 5,982 6,850
Increase (decrease) in other liabilities ....... 130 (12) 130 (412)
-------- -------- -------- --------
Net cash provided by (used in) operating activities ..... (45) 371 (105) 133
-------- -------- -------- --------
INVESTING ACTIVITIES
Proceeds from sale of subsidiary ........................ 50 -- 50 --
Investment in real estate assets ........................ (39) (221) (133) (329)
-------- -------- -------- --------
Net cash provided by (used in) investing activities ..... 11 (221) (83) (329)
-------- -------- -------- --------
Net increase (decrease) in cash ......................... (34) 150 (188) (196)
Cash, beginning of period ............................... 56 314 210 660
-------- -------- -------- --------
Cash, end of period ..................................... $ 22 $ 464 $ 22 $ 464
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest ....................................... $ 240 $ -- $ 574 $ --
Income taxes ................................... $ 4 $ 4 $ 6 $ 13
Non cash investing and financing activities:
Assets sold .................................... $ 13,114 $ -- $ 13,114 $ --
Liabilities sold ............................... $ 13,210 $ -- $ 13,210 $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
NOTE 1 - LIQUIDITY AND GOING CONCERN
At June 30, 1997, the Company had approximately $176.9 million of
principal and accrued interest (the"Indebtedness") outstanding under its various
debt obligations which are not secured by its real estate assets. The Company's
parent company, Unicorp Energy Corporation ("UEC") holds $162.2 million of the
Indebtedness. The Company is in payment default under each of the debt
obligations comprising the Indebtedness. The Indebtedness is secured by a senior
security interest in all of the Company's non real estate assets and a junior
security interest in all the real estate assets.
The Company's sources of operating funds during the six months ended
June 30, 1997, and to date have been primarily from it's previously existing
cash balances. The assets being utilized to fund the Company's operations are
part of collateral package securing the above described credit facilities.
Unless the Company's lenders are prepared to continue to defer in realizing on
the pledged collateral and allow the Company to utilize the proceeds from such
collateral to fund its ongoing operations, the Company will be unable to
continue as a going concern.
NOTE 2 - SALE OF SUBSIDIARY
On April 30, 1997, the Company sold its wholly-owned subsidiary, DB
Holdings, Inc. ("DBH") for $50,000. At the time of sale, DBH's liabilites
exceeded its assets by approximately $96,000 resulting in a pre-tax gain on the
sale of approximately $146,000.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND GOING CONCERN
At June 30, 1997, the Company had approximately $176.9 million of
principal and accrued interest (the"Indebtedness") outstanding under its various
debt obligations which are not secured by its real estate assets. The Company's
parent company, Unicorp Energy Corporation ("UEC") holds $162.2 million of the
Indebtedness. The Company is in payment default under each of the debt
obligations comprising the Indebtedness. The Indebtedness is secured by a senior
security interest in all of the Company's non real estate assets and a junior
security interest in all the real estate assets.
The Company's sources of operating funds during the six months ended
June 30, 1997, and to date have been primarily from it's previously existing
cash balances. The assets being utilized to fund the Company's operations are
part of collateral package securing the above described credit facilities.
Unless the Company's lenders are prepared to continue to defer in realizing on
the pledged collateral and allow the Company to utilize the proceeds from such
collateral to fund its ongoing operations, the Company will be unable to
continue as a going concern.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1997 Compared to the Six Month Ended June 30, 1996
The Company's net loss for the six months ended June 30, 1997 and June 30,
1996, was $6.1 million and $6.2 million, respectively. On April 30, 1997, the
Company sold its wholly-owned subsidiary, DB Holdings, Inc.
FINANCIAL POSITION
Material Changes Since December 31, 1996
On April 30, 1997, the Company sold its wholly-owned subsidiary, DB
Holdings, Inc., thus reducing its consolidated asssets and liabilities by $13.1
million and $13.2 million, respectively.
There were no other significant changes in the Company's financial
position since December 31, 1996.
7
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments with respect to litigation.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) At June 30, 1997, the Company had approximately $176.9 million of
principal and accrued interest (the"Indebtedness") outstanding under
its various debt obligations which are not secured by its real estate
assets. The Company's parent company, Unicorp Energy Corporation
("UEC") holds $162.2 million of the Indebtedness. The Company is in
payment default under each of the debt obligations comprising the
Indebtedness. The Indebtedness is secured by a senior security interest
in all of the Company's non real estate assets and a junior security
interest in all the real estate assets.
(b) Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable.
(b) None filed.
8
<PAGE>
SIGNATURE
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.
LINCORP HOLDINGS, INC.
Dated: August 13, 1997 /s/ Jack R. Sauer
---------------------
President
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,803
<CURRENT-LIABILITIES> 0
<BONDS> 0
17
0
<COMMON> 0
<OTHER-SE> (173,749)
<TOTAL-LIABILITY-AND-EQUITY> 10,803
<SALES> 0
<TOTAL-REVENUES> 243
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,230
<INCOME-PRETAX> (3,015)
<INCOME-TAX> 4
<INCOME-CONTINUING> (3,019)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,019)
<EPS-PRIMARY> (1.74)
<EPS-DILUTED> (1.74)
</TABLE>
