U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------------
FORM 10-QSB/A No. 1
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
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 0-3743
-------------------------------
CONTINENTAL INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-0705228
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10254 Miller Road, Dallas, Texas 75238
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 691-1100
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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
As of April 30, 1996, the registrant had outstanding 9,933,660 shares
of Common Stock.
<PAGE>
Continental Investment Corporation and Subsidiaries
FORM 10-QSB REPORT INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and September 30, 1995 3
Consolidated Statement of Operations
For the periods ended March 31, 1996 and 1995 5
Consolidated Statements of Stockholders' Equity
Six months ended March 31, 1996 6
Consolidated Statements of Cash Flows
For the periods ended March 31, 1996 and 1995 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Continental Investment Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, September 30,
1996 1995
(Unaudited)
ASSETS
<S> <C> <C>
CASH $ 88 $ 18,165
PROPERTY, at cost 6,620,875 3,220,712
OTHER ASSETS
Intangibles, net of accumulated
amortization of $7,194 and $6,028 27,806 28,972
Other 8,445 8,204
---------- ----------
Total assets $6,657,214 $3,276,053
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $ 443,879 $ 200,449
Accrued expenses 158,723 90,912
Amounts due to related parties 167,216 342,105
----------- -----------
Total current liabilities 769,818 633,466
LONG-TERM LIABILITIES
Note payable 350,000 -
Deferred income taxes 747,000 747,000
----------- -----------
Total liabilities 1,866,818 1,380,466
<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Continental Investment Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Cont'd.)
<CAPTION>
March 31, September 30,
1996 1995
(Unaudited)
<S>
STOCKHOLDERS' EQUITY <C> <C>
Preferred stock, $1.00 par value;
1,000,000 shares authorized; no
shares issued or outstanding
Common stock, $0.50 par value;
25,000,000 shares authorized;
9,933,660 and 8,883,527 shares
issued at March 31, 1996 and
September 30, 1995 $2,092,831 $1,567,764
Treasury stock, 7,209 common shares (26,771) (26,771)
Additional contributed capital 4,169,063 1,396,929
Accumulated deficit (1,444,727) (1,042,335)
----------- -----------
Total stockholders' equity 4,790,396 1,895,587
----------- -----------
Total liabilities and
stockholders' equity $6,657,214 $3,276,053
<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Continental Investment Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $ 15,000 $ 78,000 $ 30,000 $ 126,000
Costs and expenses
Cost of revenues 3,000 3,000 6,000 6,000
Selling, general
and administrative
expenses 281,637 186,926 425,133 451,293
--------- --------- --------- ---------
Operating loss (269,637) (111,926) (401,133) (331,293)
Interest expense 706 13,923 1,259 33,226
--------- --------- --------- ---------
Net loss
before taxes (270,343) (125,849) (402,392) (364,519)
Income tax expense - - - -
--------- --------- --------- ---------
NET LOSS $(270,343) $(125,849) $(402,392) $(364,519)
Net loss per common
and common equivalent
share $(.07) $(.02) $(.04) $(.05)
Weighted average number
of common and common
equivalent shares
outstanding 8,278,740 7,434,838 8,956,386 7,248,624
<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Continental Investment Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six months ended March 31, 1996
(Unaudited)
<CAPTION>
Common Additional
Common stock stock contributed Treasury stock Accumulated
Shares Par value subscribed capital Shares Amount deficit Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
September 30,
1995 8,883,527 $1,567,764 - $1,396,929 7,209 $(26,771) $(1,042,335) $1,895,587
Sale of stock
in private
placement 105,000 52,500 - 397,501 - - - 450,001
Issuance of
stock for
services 11,800 5,900 - 41,300 - - - 47,200
Issuance of
stock for
land 933,333 466,667 - 2,333,333 - - - 2,800,000
Net loss - - - - - - (402,392) (402,392)
--------- ---------- --------- ---------- ----- -------- ----------- ----------
Balance,
March 31,
1996 9,933,660 $2,092,831 - $4,169,063 7,209 $(26,771) $(1,444,727) $4,790,396
<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Continental Investment Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six months ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $(402,392) $(364,519)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization expense 1,166 1,167
Common stocks issued for services 47,200 30,289
Change in operating assets and
liabilities, net of effects of
recapitalization:
Other current assets 31,841 -
Accounts payable, trade (6,570) 76,776
Accrued expenses 61,288 94,777
Accrued expenses to related parties (206,971) -
Franchising 6,524 -
--------- ---------
Net cash provided by (used in)
operating activities (467,914) (230,763)
Cash flows from investing activities:
Capital expenditures (163) (37,589)
--------- ---------
Net cash provided by (used in)
investing activities
(163) (37,589)
Cash flows from financing activities:
Advances from (repayments to) related
parties, net - 20,300
Proceeds from issuance of stock 450,000 250,100
Principal payments on debt - (2,500)
--------- ---------
Net cash provided by financing
activities 450,000 267,900
Net increase (decrease) in cash (18,077) (452)
--------- ---------
Cash, beginning of period 18,165 2,215
Cash, end of period $ 88 $ 1,763
<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
Continental Investment Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996 and 1995
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
by the Company pursuant to the rules and regulations of the U. S.
Securities and Exchange Commission. Certain information and
disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. In the opinion of management, all adjustments and
disclosures necessary to a fair presentation of these financial
statements have been included. Such adjustments consist of normal
recurring adjustments. These financial statements should be read
in conjunction with the financial statements and notes thereto
included in the Form 10-KSB Report of Continental Investment
Corporation (the "Company" or "CICG") for the year ended September
30, 1995, as filed with the U. S. Securities and Exchange Commission.
The results of operations for the periods ended March 31,1996 are
not necessarily indicative of the results that may be expected for
the full year.
NOTE B - NET INCOME (LOSS) PER SHARE
Net income (or loss) per share has been computed using the weighted
average number of common and common equivalent shares outstanding
for each period. The exercise of stock options would be
antidilutive and has not been reflected in the calculation of loss
per common share.
NOTE C - ACQUISITION OF REAL ESTATE
In February 1995, the Company entered into a contract to acquire 75
acres adjacent to its Atlanta, Georgia property. On March 29,
1996, the Company acquired the 75 acres for a purchase price of
$3,400,000. The purchase price consisted of 933,333 shares of
Continental Investment Corporation common stock ($2,800,000),
$250,000 cash at closing and a Promissory Note for $350,000, which
is convertible at the sole option of the seller into 116,667 shares
of restricted common stock of the Company. This option is for a
period of two years from closing date. In addition, the seller has
been granted a 5-year option to purchase 500,000 shares of the
Company's common stock at a price of $5.00 per share.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The primary source of capital during the six months ended March
31, 1996 was provided by the sale of shares of common stock of the
Company in private sales. Capital resources continue to be utilized
primarily to fund the operating losses of the Company, which have been
created primarily by costs associated with planning for the
development of the Company's granite quarry site in Atlanta, Georgia
as a waste disposal landfill. The Company also invested $3,400,000
during the six months ended March 31, 1996 in additional land at the
quarry site in Atlanta, Georgia (see Note C above).
In order to satisfy the liquidity needs of the Company for the
following twelve months, the Company will be primarily dependent upon
proceeds from the sale of the Company's stock and, to a lesser extent,
revenues generated from the operation of its fabric care business.
Historically, revenues from the fabric care operation have not been
adequate to fund the operations of the Company overall. The Company
raised $450,000 through private sales of newly-issued shares of its
common stock during the first six months of fiscal 1996 and another
$500,000 subsequent to the close of the first half of fiscal 1996. If
the Company is unable to obtain adequate funds from the sale of its
stock in public offerings, private placements or alternative financing
arrangements, it may be necessary to delay the timetable for the
development and permitting of its Atlanta real estate as a municipal
solid waste landfill. Should this delay occur, the Company may pursue
one or more of its potential alternative plans to produce revenues
from the Atlanta site, which include possibly re-opening the site as a
granite quarry, and/or using the site for the disposal of inert debris
and/or the storage of recyclable materials. Implementation of one or
more of these alternatives could possibly occur in less than one year
utilizing present zoning for the property, while the time frame for
obtaining permits to use the site for municipal solid waste disposal
would be a more lengthy process.
The Company has issued shares of its Common Stock from time to
time in the past to satisfy certain obligations, and expects in the
future to also acquire certain services, satisfy indebtedness and/or
make acquisitions utilizing authorized shares of stock of the Company.
Results of Operations
Six Months Ended March 31, 1996
Compared to Six Months Ended March 31, 1995
Revenues of the Company are currently derived solely from the
licensing and franchising of its fabric care and treatment business
through FIBER-SEAL Holdings, Inc. The revenue of the fabric care
business is composed solely of royalties received from FIBER-SEAL
Services International, Inc., which is the greater of 5% of sales or
$5,000 per month.
<PAGE>
Operating revenues decreased by $96,000 in the first half of
fiscal 1996 as compared with the same period in 1995. Such decrease
was due primarily to a $30,000 non-recurring sale of mined rock from
the quarry site in Atlanta during the first half of fiscal year 1995.
Revenues from the fabric care segment were $96,000 in the first half
of fiscal 1995 and $30,000 for the first half of fiscal 1996. The
decline in fabric care revenues is expected to be a temporary
situation. Such decline resulted from the Company's strategic
decision to convert its fabric care business from a licensing mode to
a potentially far more lucrative franchising operation.
The cost of revenues remained constant during the six-month
period ended March 31, 1996 as compared to the same period in fiscal
1995, and is expected to maintain this level in the near-term future.
Selling, general and administrative (SG&A) costs decreased
$26,160 during the six-month period ended March 31, 1996 as compared
to the same period in the prior year. The costs are lower primarily
because of lower expenses pertaining to the study of alternative
revenue-generating activities for the Atlanta real estate. Lower costs
were also experienced for the analysis and planning for the Atlanta
quarry site as a municipal solid waste disposal site.
Interest expense decreased $31,967 in the six-month period ended
March 31, 1996 as compared to the same period in 1995 primarily
because of the February 1995 conversion of an $800,000 note into
common stock of the Company.
The net loss for the six-month period ended March 31, 1996 was
$37,873 higher than the loss for the previous year's first half. Such
increase was due primarily to the higher expenses discussed in the
preceding paragraphs and by the lower revenues in the fiscal 1996
period.
Three Months Ended March 31, 1996
Compared to Three Months Ended March 31, 1995
Revenues of the Company are currently derived solely from the
licensing and franchising of its fabric care and treatment business
through FIBER-SEAL Holdings, Inc. The revenue of the fabric care
business is composed solely of royalties received from FIBER-SEAL
Services International, Inc., which is the greater of 5% of sales or
$5,000 per month.
Operating revenues decreased by $63,000 in the second quarter of
fiscal 1996 as compared with the same period in fiscal 1995. Such
decrease was due primarily to a $30,000 non-recurring sale of mined
rock from the quarry site in Atlanta during fiscal year 1995.
Revenues from the fabric care segment were $48,000 in the second
quarterly period in 1995 and $15,000 for the second quarterly period
in 1996. The decline in fabric care revenues is expected to be a
temporary situation. Such decline resulted from the Company's
strategic decision to convert its fabric care business from a
licensing mode to a potentially far more lucrative franchising
operation.
<PAGE>
The cost of revenues remained constant during the three-month
period ended March 31, 1996 as compared to the same period in fiscal
1995, and is expected to maintain this level in the near-term future.
Selling general and administrative expenses increased by $94,711
in the second quarter of Fiscal 1996 as compared to the same period of
1995. The costs are higher primarily because of higher expenses
pertaining to the study of alternative revenue-generating activities
for the Atlanta real estate. Higher costs were also experienced for
the analysis and planning for the Atlanta quarry site as a municipal
solid waste disposal site.
Interest expense decreased $13,217 in the three-month period
ended March 31, 1996 as compared to the same period in 1995 primarily
because of the February 1995 conversion of an $800,000 note into
common stock of the Company.
The net loss for the three-month period ended March 31, 1996 was
$144,494 higher than the loss for the previous year's second quarter.
Such increase was due primarily to the lower revenues in the fiscal
1996 period and by decreased expenses.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Furnish the exhibits required by Item 601 of Regulation S-B.
None
(b) Reports on Form 8-K.
The following reports were filed during the quarter for which
this Form 10-QSB is filed:
1. Report dated March 29, 1996. This Report contained an Item 5
event "Other Events," pertaining to the purchase of land
adjacent to the Atlanta, Georgia property for $3,400,000.
SIGNATURES
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.
CONTINENTAL INVESTMENT CORPORATION
(Registrant)
By: Thomas F. Snodgrass
Thomas F. Snodgrass,
President and Treasurer
(Principal Financial Officer
and Duly Authorized Officer)
DATED: August 2, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 88
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 88
<PP&E> 6,620,875
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,657,214
<CURRENT-LIABILITIES> 769,818
<BONDS> 0
0
0
<COMMON> 2,092,831
<OTHER-SE> 2,697,565
<TOTAL-LIABILITY-AND-EQUITY> 6,657,214
<SALES> 15,000
<TOTAL-REVENUES> 15,000
<CGS> 3,000
<TOTAL-COSTS> 284,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 706
<INCOME-PRETAX> (270,343)
<INCOME-TAX> 0
<INCOME-CONTINUING> (270,343)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (270,343)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
