<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 March 31, 1998 Commission File No. 1-8249
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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
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- ------------------------------------------------------------------------------
(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 May 4, 1998
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<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, 1997), 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.
BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash .............................................................. $ 1 $ 23
Investment in real estate and mortgage loans, net ................. 1,533 1,512
------------- -------------
$ 1,534 $ 1,535
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Debt secured by real estate and mortgage loans,
including accrued interest ............................... $ 620 $ 606
Other borrowed funds, including accrued interest ............. 172,927 170,179
Other liabilities ............................................ 3,815 3,786
------------- -------------
177,362 174,571
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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 ........................................... (329,483) (326,691)
------------- -------------
(175,828) (173,036)
------------- -------------
$ 1,534 $ 1,535
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
LINCORP HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Income:
Rental income ........................................................ $ - $ 268
Equity in operating results of real estate joint ventures............. - 60
Interest income ...................................................... 21 -
------------ ------------
Total income .................................................. 21 328
------------ ------------
Expenses:
Interest expense ..................................................... 2,762 3,327
General and administrative expense ................................... 20 57
------------ ------------
Total expenses ................................................ 2,782 3,384
------------ ------------
Loss before income taxes ................................................ (2,761) (3,056)
Provision for income taxes .............................................. 31 2
------------ ------------
Net loss ................................................................ $ (2,792) $ (3,058)
============ ============
Basic loss per share of Common Stock outstanding ........................ $ (1.61) $ (1.77)
============ ============
Weighted average shares of Common Stock outstanding ..................... 1,731 1,731
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
LINCORP HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ..................................................... $ (2,792) $ (3,058)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Equity in operating results of real estate
joint ventures .................................. - (60)
Decrease (increase) in other assets ................ (21) 65
Increase in accrued interest payable ............... 2,762 2,993
Increase in other liabilities ...................... 29 -
------------ ------------
Net cash used in operating activities ........................ (22) (60)
------------ ------------
INVESTING ACTIVITIES
Investment in real estate assets ............................. - (94)
------------ ------------
Net decrease in cash ......................................... (22) (154)
Cash, beginning of period .................................... 23 210
------------ ------------
Cash, end of period .......................................... $ 1 $ 56
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest .......................................... $ - $ 334
============ ============
Income taxes ...................................... $ 31 $ 2
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
LINCORP HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - LIQUIDITY AND GOING CONCERN
At March 31, 1998, Lincorp Holdings, Inc. (the "Company") had approximately
$173.5 million of principal and accrued interest (the "Indebtedness")
outstanding under its various debt obligations. The Company's parent company,
Unicorp Energy Corporation ("UEC") holds all of the Company's Indebtedness.
The Company is in payment default under several of the debt obligations
comprising the Indebtedness. The Indebtedness is secured by a senior security
interest in all of the Company's assets.
The Company's sources of operating funds during the period ended March 31,
1998, and to date, have been primarily from it's previously existing cash
balances and borrowings from UEC. 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 lender continues 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.
6
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND GOING CONCERN
At March 31, 1998, Lincorp Holdings, Inc. (the "Company") had
approximately $173.5 million of principal and accrued interest (the
"Indebtedness") outstanding under its various debt obligations. The Company's
parent company, Unicorp Energy Corporation ("UEC") holds all of the Company's
Indebtedness. The Company is in payment default under several of the debt
obligations comprising the Indebtedness. The Indebtedness is secured by a
senior security interest in all of the Company's assets.
The Company's sources of operating funds during the period ended March
31, 1998, and to date, have been primarily from it's previously existing cash
balances and borrowings from UEC. 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 lender continues 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
Three Months Ended March 31, 1998 Compared to the Three Month Ended March 31,
1997
For the three months ended March 31, 1998 the Company had a net loss of $2.8
million compared to a $3.1 million net loss for the three months ended March
31, 1997.
Total income decreased $.3 million in 1998 compared to 1997 as the Company had
no rental income in 1998 as it sold it's rent producing property in April
1997.
Interest expense decreased approximately $.5 million in 1998 compared to 1997
reflecting a 1997 decrease in debt of approximately $24.8 million.
FINANCIAL POSITION
Material Changes Since December 31, 1997
There was no significant change in the Company's financial position since
December 31, 1997.
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 March 31, 1998, Lincorp Holdings, Inc. (the "Company") had
approximately $173.5 million of principal and accrued interest
(the "Indebtedness") outstanding under its various debt
obligations. The Company's parent company, Unicorp Energy
Corporation ("UEC") holds all of the Company's Indebtedness. The
Company is in payment default under several of the debt
obligations comprising the Indebtedness. The Indebtedness is
secured by a senior security interest in all of the Company's
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: May 12, 1998 /s/ Jack R. Sauer
-----------------------------
Jack R. Sauer
President
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,534
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> (175,845)
<TOTAL-LIABILITY-AND-EQUITY> 1,534
<SALES> 0
<TOTAL-REVENUES> 21
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,762
<INCOME-PRETAX> (2,761)
<INCOME-TAX> 31
<INCOME-CONTINUING> (2,792)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,792)
<EPS-PRIMARY> (1.61)
<EPS-DILUTED> (1.61)
</TABLE>
