<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 September 30, 1999 Commission File No. 1-8249
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LINCORP HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 23-2161279
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3900 Park Ave., Suite 102
Edison, NJ 08820
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(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number,
Including Area Code: (732) 494-9455
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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 November 4, 1999
- --------------------------------------------------------------------------------
<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,
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.
<PAGE>
LINCORP HOLDINGS, INC.
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash ................................................. $ 6 $ 100
Investment in mortgage loans, net .................... 611 646
--------- ---------
$ 617 $ 746
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Debt secured by mortgage loans,
including accrued interest .................. $ 620 $ 620
Other borrowed funds, including accrued interest 175,181 175,099
Other liabilities ............................... 3,791 3,724
--------- ---------
179,592 179,443
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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 .............................. (332,630) 332,352)
--------- ---------
(178,975) (178,697)
--------- ---------
$ 617 $ 746
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
LINCORP HOLDINGS, INC.
STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income:
Interest income ................................ $ - $ - $ - $ 34
------- ------- ------- -------
Total income ............................ - - - 34
------- ------- ------- -------
Expenses:
Interest expense ............................... 28 27 82 5,567
General, administrative and other expenses ..... 64 24 200 131
------- ------- ------- -------
Total expenses .......................... 92 51 282 5,698
------- ------- ------- -------
Loss before income taxes .......................... (92) (51) (282) (5,664)
Income (taxes) refund ............................. (6) 4 (4) 35
------- ------- ------- -------
Net loss .......................................... $.(86) $ 55) $ (278) $(5,699)
======= ======= ======= =======
Basic loss per share of Common Stock outstanding .. $ (0.05) $ (0.03) $ (0.16) $ (3.29)
======= ======= ======= =======
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 financial statements.
4
<PAGE>
LINCORP HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................ $ (86) $ (55) $ (278) $(5,699)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Decrease (increase) in mortgage loans ..... - - 35 (34)
Increase in accrued interest payable ...... 28 27 82 5,567
Increase in other liabilities ............. 47 25 67 144
------- ------- ------- -------
Net cash used in operating activities ............... (11) (3) (94) (22)
Cash, beginning of period ........................... 17 4 100 23
------- ------- ------- -------
Cash, end of period ................................. $ 6 $ 1 $ 6 $ 1
======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest ................................. $ - $ - $ - $ -
======= ======= ======= =======
Income taxes ............................. $ - $ 4 $ 2 $ 35
======= ======= ======= =======
</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 September 30, 1999, the Company had approximately $175.8 million of
principal and accrued interest (the "Indebtedness") outstanding under its
various debt obligations. The Company's parent company, Unicorp Inc.
("Unicorp"), formerly Unicorp Energy Corporation, 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.
During 1998 and 1999, Unicorp agreed to waive substantially all
interest owing by the Company on its Indebtedness to Unicorp that would
otherwise accrue for the period July 1, 1998 through September 30, 1999. For the
three, nine and fifteen months ended September 30, 1999 the total interest
waived was approximately $2.7 million, $8.1 million and $13.8 million,
respectively.
The Company's sources of funds during the period ended September 30,
1999, and to date, have been primarily from its previously existing cash
balances and borrowings from Unicorp. Unless the Company's lender continues to
defer in realizing on the pledged collateral, the Company will be unable to
continue as a going concern.
NOTE 2 - REAL ESTATE OPERATIONS
During the fourth quarter of 1997, the Company made a $0.6 million secured
first mortgage loan to Republic Development Co. (the "Republic Mortgage Loan")
for the purpose of developing a commercial real estate property. The Republic
Mortgage Loan bears interest at 15% and was to mature on May 19, 1998. To
finance this loan, the Company borrowed funds from Unicorp. The Unicorp
borrowing was in the form of a $602,000 discounted note (the "Unicorp Republic
Note") which matured on May 19, 1998 in the amount of $620,000 and is secured by
the Republic Mortgage Loan.
The Republic Mortgage Loan was not repaid on May 19, 1998 and the Company is
currently pursuing legal action to obtain and sell the land securing the
Republic Mortgage Loan. At this time the Company cannot determine the outcome of
these legal actions, and under current accounting principles the Republic
Mortgage Loan is considered impaired. The Unicorp Republic Note, which matured
on May 19, 1998, was not repaid by the Company as its payment is dependent upon
collecting the Republic Mortgage Loan. Unico has agreed to defer the collection
of its note until the Republic Mortgage Loan issue is resolved.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND GOING CONCERN
At September 30, 1999, the Company had approximately $175.8 million of
principal and accrued interest (the "Indebtedness") outstanding under its
various debt obligations. The Company's parent company, Unicorp Inc.
("Unicorp"), formerly Unicorp Energy Corporation, 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.
During 1998 and 1999, Unicorp agreed to waive substantially all
interest owing by the Company on its Indebtedness to Unicorp that would
otherwise accrue for the period July 1, 1998 through September 30, 1999. For the
three, nine and fifteen months ended September 30, 1999 the total interest
waived was approximately $2.7 million, $8.1 million and $13.8 million,
respectively.
The Company's sources of funds during the period ended September 30,
1999, and to date, have been primarily from its previously existing cash
balances and borrowings from Unicorp. Unless the Company's lender continues to
defer in realizing on the pledged collateral, the Company will be unable to
continue as a going concern.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1999 Compared to the Nine Month Ended September
30, 1998
For the nine months ended September 30, 1999 the Company had a net loss
of $.3 million compared to a $5.7 million net loss for the nine months ended
September 30, 1998.
The Company's net loss decreased as interest expense decreased
approximately $5.5 million due to Unicorp waiving substantially all interest
owing by the Company on its Indebtedness to Unicorp that would otherwise accrue
for the period July 1, 1998 through September 30, 1999.
FINANCIAL POSITION
Material Changes Since December 31, 1998
There was no significant change in the Company's financial position
since December 31,
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 September 30, 1999, the Company had approximately $175.8
million of principal and accrued interest (the "Indebtedness")
outstanding under its various debt obligations. The Company's
parent company, Unicorp Inc. ("Unicorp"), formerly Unicorp
Energy Corporation, 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: November 12, 1999 /s/ Jack R. Sauer
-----------------
Jack R. Sauer
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 6
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 617
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 178,992
<TOTAL-LIABILITY-AND-EQUITY> 617
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82
<INCOME-PRETAX> (282)
<INCOME-TAX> (4)
<INCOME-CONTINUING> (278)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (278)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
