<PAGE>
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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, 1999 Commission File No. 1-8249
------------- ------
LINCORP HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 23-2161279
------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3900 Park Ave., Suite 102
Edison, NJ 08820
------------------------------- ----------------------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number,
Including Area Code: (732) 494-9455
----------------------
- --------------------------------------------------------------------------------
(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 2, 1999
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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, 1998), 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
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LINCORP HOLDINGS, INC.
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30 December 31,
1999 1998
------------------ ------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash....................................................................... $ 17 $ 100
Investment in mortgage loans, net.......................................... 611 646
------------------ ------------------
$ 628 $ 746
================== ==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Debt secured by mortgage loans,
including accrued interest........................................ $ 620 $ 620
Other borrowed funds, including accrued interest...................... 175,153 175,099
Other liabilities..................................................... 3,744 3,724
------------------ ------------------
179,517 179,443
------------------ ------------------
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.................................................... (332,544) (332,352)
------------------ ------------------
(178,889) (178,697)
------------------ ------------------
$ 628 $ 746
================== ==================
</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 Six Months
Ended June 30, Ended June 30,
---------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Income:
Interest income............................................. $ - $ 13 $ - $ 34
------------- ------------- ------------- --------------
Total income......................................... - 13 - 34
------------- ------------- ------------- --------------
Expenses:
Interest expense............................................ 26 2,778 54 5,540
General, administrative and other expenses.................. 77 87 136 107
------------- ------------- ------------- --------------
Total expenses....................................... 103 2,865 190 5,647
------------- ------------- ------------- --------------
Loss before income taxes....................................... (103) (2,852) (190) (5,613)
Provision for income taxes..................................... - - 2 31
------------- ------------- ------------- --------------
Net loss....................................................... $ (103) $ (2,852) $ (192) $ (5,644)
============= ============= ============= ==============
Basic loss per share of Common Stock outstanding............... $ (0.06) $ (1.65) $ (0.11) $ (3.26)
============= ============= ============= ==============
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 Six Months
Ended June 30, Ended June 30,
---------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................................... $ (103) $ (2,852) $ (192) $ (5,644)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Decrease (increase) in other assets...................... 35 (13) 35 (34)
Increase in accrued interest payable..................... 26 2,778 54 5,540
Increase in other liabilities............................ 26 90 20 119
------------- ------------- ------------- --------------
Net cash provided by (used in) operating activities................ (16) 3 (83) (19)
Cash, beginning of period.......................................... 33 1 100 23
------------- ------------- ------------- --------------
Cash, end of period................................................ $ 17 $ 4 $ 17 $ 4
============= ============= ============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest................................................ $ - $ - $ - $ -
============= ============= ============= ==============
Income taxes............................................ $ - $ - $ 2 $ 31
============= ============= ============= ==============
</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 June 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 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.
During 1998 and 1999, UEC agreed to waive substantially all interest owing
by the Company on its Indebtedness to UEC that would otherwise accrue for the
period July 1, 1998 through June 30, 1999. For the three, six and twelve months
ended June 30, 1999 the total interest waived was approximately $2.7 million,
$5.4 million and $11.0 million, respectively.
The Company's sources of funds during the period ended June 30, 1999, and
to date, have been primarily from its previously existing cash balances and
borrowings from UEC. 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 UEC. The UEC borrowing was in the form of
a $602,000 discounted note (the "UEC 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 UEC 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. UEC 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 June 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 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.
During 1998 and 1999, UEC agreed to waive substantially all interest owing
by the Company on its Indebtedness to UEC that would otherwise accrue for the
period July 1, 1998 through June 30, 1999. For the three, six and twelve months
ended June 30, 1999 the total interest waived was approximately $2.7 million,
$5.4 million and $11.0 million respectively.
The Company's sources of funds during the period ended June 30, 1999, and
to date, have been primarily from its previously existing cash balances and
borrowings from UEC. 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
- ---------------------
Six Months Ended June 30, 1999 Compared to the Six Month Ended June 30, 1998
- ----------------------------------------------------------------------------
For the six months ended June 30, 1999 the Company had a net loss of $.2
million compared to a $5.6 million net loss for the six months ended June 30,
1998.
The Company's net loss decreased as interest expense decreased
approximately $5.4 million due to UEC waiving substantially all interest owing
by the Company on its Indebtedness to UEC that would otherwise accrue for the
period January 1, 1999 through June 30, 1999.
FINANCIAL POSITION
- ------------------
Material Changes Since December 31, 1998
- ----------------------------------------
There was no significant change in the Company's financial position since
December 31, 1998.
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, 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 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: August 12, 1998 /s/ Jack R. Sauer
--------------------------------
Jack R. Sauer
President
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 628
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 178,906
<TOTAL-LIABILITY-AND-EQUITY> 628
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> (190)
<INCOME-TAX> 2
<INCOME-CONTINUING> (192)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (192)
<EPS-BASIC> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
