SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended SEPTEMBER 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-6867
LYNTON GROUP, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 13-2688055
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9 AIRPORT ROAD
MORRISTOWN MUNICIPAL AIRPORT 07960
MORRISTOWN, NEW JERSEY (Zip Code)
(Address of principal executive
offices)
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Registrant's telephone number, including area code: (201) 292-
9000
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK ($.30 PAR VALUE)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of December 15, 1995, the aggregate market value of the
Common Stock held by non-affiliates of the Registrant (673,252
shares) was approximately $231,430 (based upon the average bid
and asked prices of such stock on October 20, 1995, the most
recent date on which bid and ask prices were available). The
number of shares outstanding of the Common Stock ($.30 par
value) of the Registrant as of the close of business on
December 15, 1995 was 1,962,177.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for the 1996 Annual
Meeting of Stockholders are incorporated by reference into
Part III hereof.
<PAGE>
PART I
ITEM 1. BUSINESS
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(a) General Development of Business
Unless otherwise indicated by the context, the terms "Company"
or "Registrant" refer to Lynton Group, Inc. and its consolidated
subsidiaries.
The Company, operating from its primary bases in the New York
and London metropolitan regions, performs aviation sales and services
for an international list of customers. Services provided by the
Company include the management, charter, maintenance, hangarage and
refueling of corporate helicopters and fixed wing aircraft. In
addition, the Company's sales operations perform aircraft sales and
brokerage services to customers located in markets throughout the
world.
Lynton Group, Inc. was incorporated in the State of Delaware in
August 1971 under the name of Decair Corporation. In June 1989, the
Company changed its name to Lynton Group, Inc. Prior to May 1989, the
Company's operations consisted primarily of performing helicopter
maintenance, management and charter services through its subsidiaries
Ramapo Helicopters, Inc. ("Ramapo") and Rockland Aviation, Inc. (later
renamed Lynton Aviation Charter, Inc. ("Lynton Aviation Charter") and
now known as LynStar Aviation, Inc.)
In May 1989, the Company acquired (the "Limited Acquisition")
all of the issued and outstanding shares of Lynton Group Limited, a
company organized under the laws of England ("Limited"). Limited, a
London based company founded in 1984, is currently a holding company
with two wholly-owned operating subsidiaries, Lynton Aviation Limited
("Aviation Limited"), a wholly-owned subsidiary at the time of the
Limited Acquisition, and European Helicopters Limited ("EHL"), a 40%
owned affiliate at the time of the Limited Acquisition, each a company
organized under the laws of England. In August 1990, the Company
acquired (the "EHL Acquisition") the remaining 60% of the capital
stock of EHL. Aviation Limited is primarily involved in the sale,
management and charter of corporate helicopters and fixed wing
aircraft while EHL is primarily involved in the rebuilding, sale and
maintenance of corporate helicopters. Since August, 1995, Limited also
owns 50% of PLM Dollar Group Limited ("PDG"), a company organized
under the laws of Scotland, which provides helicopter support services
for industrial and utility operations in the United Kingdom.
Simultaneous with the consummation of the EHL Acquisition,
Lynton Jet Centre, Inc. ("Lynton Jet"), a wholly-owned subsidiary of
the Company incorporated in April 1990 under the laws of the State of
New Jersey, acquired substantially all of the assets of the Linpro Jet
Centre (the "Jet Centre"), including its ground lease on a hangar
facility located at the Morristown Municipal Airport, Morristown, New
Jersey (the "Jet Centre Acquisition"). The financing for the Jet
Centre Acquisition was obtained from HM Holdings, Inc., a Delaware
corporation ("HM Holdings"). HM Holdings is an indirect wholly-owned
subsidiary of Hanson PLC. The Jet Centre is a fixed base operator of
approximately 132,000 square feet of hangar and office space, and
provides hangarage and fueling services to corporate helicopters and
fixed wing aircraft at the Morristown Municipal Airport. Following
the acquisition, the Jet Centre was renamed the Lynton Jet Centre.
In August 1990, the Company incorporated a wholly-owned
subsidiary, Lynton Aviation, Inc., a New Jersey corporation ("Lynton
Aviation"), to provide aviation management services to HM Industries,
Inc. ("HM Industries"), a subsidiary of HM Holdings, at the Jet
Centre.
In April 1992, the Company incorporated a wholly-owned
subsidiary, Lynton Aviation Services, Inc., a New Jersey corporation
("Lynton Services"), to provide aviation charter and management
services and corporate aircraft sales services through operations
based at the Jet Centre.
In July 1992, the Company sold its interest in Lynton Aviation
Charter to LynStar Holdings, Inc., a New Jersey corporation which is
20% owned by the Company and formed for the purpose of effecting the
acquisition of all of the shares of capital stock of Lynton Aviation
Charter. Thereafter, and also in July 1992, Lynton Aviation Charter
changed its name to LynStar Aviation, Inc.
<PAGE>
In January 1994, the Company acquired (the "Dollar Air
Acquisition") all of the issued and outstanding shares of Dollar Air
Services Limited, a company organized under the laws of England
("Dollar Air"). At the time of the Dollar Air Acquisition, the Company
owned a 75% equity interest in Black Isle Helicopters Limited, a
company organized under the laws of Scotland ("Black Isle"). In
September 1994, the remaining 25% of Black Isle's capital stock was
acquired by the Company.
In March 1994, the Company incorporated Lynton Properties, Inc.,
a New Jersey corporation and a special purpose wholly-owned subsidiary
of Lynton Jet ("Lynton Properties"), in order to effect a leasehold
mortgage financing transaction.
In August 1995, substantially all the business, assets and
liabilities of Dollar Air and Black Isle were transferred to PLM
Dollar Group Limited ("PDG"), a company organized under the laws of
Scotland, in exchange for 50% of the capital stock of PDG.
Simultaneously with the consummation of the transaction, substantially
all of the business, assets and liabilities of P.L.M. Helicopters
Limited ("PLM") were transferred to PDG and the shareholders of PLM
were issued the remaining 50% of the capital stock of PDG. PDG
operates a fleet of 15 helicopters from bases primarily in Scotland
and England, and provides helicopter support services for industrial
and utility applications in the United Kingdom.
(b) Financial Information About Industry Segments
The Company primarily operates in one industry segment, i.e.
aviation and aviation related services.
(c) Narrative Description of Business
FLIGHT OPERATIONS
In the United Kingdom, the Company through Aviation Limited,
performs charter and management services for corporate helicopters and
fixed wing aircraft. A typical management contract will require the
Company to staff an aircraft with a crew and arrange for maintenance
of the aircraft for a management fee. The Company in turn charters
the aircraft to outside customers and pays to the owner of the
aircraft a percentage of the revenues received. The Company currently
operates 7 helicopters and 4 fixed wing aircraft under such
arrangements. Contracts for management and general services may be
canceled on a short-term basis. Management believes that the loss of
any single management contract or charter customer in the United
Kingdom would not have a material adverse effect on the Company.
Also in the United Kingdom, PDG, which is 50% owned by the
Company, performs helicopter support services for the construction,
fish farming, forestry, mining and oil industries and for various
utilities. These services are primarily provided to companies under
short and medium term contracts. PDG currently owns 9 aircraft and has
an additional 6 aircraft under short term lease arrangements.
In the United States, the Company performs aircraft management
services through its subsidiaries Lynton Services and Lynton Aviation.
Lynton Jet and HM Industries are parties to an agreement whereby
Lynton Aviation provides aircraft management services for one
helicopter and three fixed wing aircraft owned by HM Industries. The
Company is required to provide fueling, catering and accounting
services. This agreement may be canceled upon 60 days notice by HM
Industries.
MAINTENANCE OPERATIONS
The Company operates two helicopter maintenance facilities
through its subsidiaries EHL, located in Denham, Middlesex, outside of
London, England and Ramapo, located at Morristown Municipal Airport,
Morristown, New Jersey. The principal maintenance activities consist
of routine and major helicopter maintenance, component overhaul, and
aircraft parts sales.
<PAGE>
EHL is one of a few facilities in the United Kingdom licensed by
the Civil Aviation Authority ("CAA") as a Repair Station entitled to
maintain, overhaul and repair helicopters. EHL's maintenance
operations are based in part on a certificate from Eurocopter
Corporation for helicopters produced by it. These certificates are of
indefinite duration but are subject to cancellation, suspension or
revocation if, in the case of the manufacturer's certificate, EHL
fails to provide satisfactory maintenance facilities and levels of
service or, in the case of the CAA certificate, EHL fails to meet
Joint Airworthiness Requirements as mandated by the Joint
Airworthiness Authorities of the European community and administered
by the CAA. EHL currently meets all requirements for both the CAA and
the manufacturer's certificates. Management believes that the loss of
any of the foregoing certificates or licenses could have a material
adverse effect on the Company.
Ramapo is one of numerous facilities in the United States
licensed by the Federal Aviation Administration ("FAA") as a Repair
Station entitled to maintain, overhaul and repair all helicopter
models with a gross weight under 12,500 pounds. Ramapo's maintenance
operation is based in part on certificates from Bell
Helicopter/Textron which cover most Bell model helicopters and
certificates from American Eurocopter Corporation for the AS350 and
AS355 Series helicopters. These certificates are of indefinite
duration but are subject to cancellation, suspension or revocation if,
in the case of the manufacturers' certificate, Ramapo fails to provide
satisfactory maintenance facilities and levels of service or, in the
case of the FAA certificate, Ramapo fails to meet FAA maintenance and
employment requirements. Ramapo currently meets all requirements for
both the FAA and manufacturers' certificates. Management believes
that the loss of any of the foregoing certificates or licenses would
not have a material adverse effect on the Company.
The Company currently services and maintains approximately 14
helicopters and 4 fixed wing aircraft for individuals and corporations
in the New York and London regions. Management believes that the loss
of any single maintenance customer would not have a material adverse
effect on the Company.
AIRCRAFT SALES OPERATIONS
The Company, through both its United States and United Kingdom
subsidiaries, performs sales and brokerage services related to the
purchase and sale of corporate helicopters and fixed wing aircraft
between owners and buyers of such aircraft located throughout the
world. The Company will generally receive a fixed commission or a
percentage of the amount of such transactions from the buyer and/or
seller of the aircraft. The Company also purchases aircraft for
resale in instances where it believes the aircraft may be resold at a
profit. For aircraft sales transactions in which the Company acts as
principal, the Company records the full sales price of the aircraft as
revenue and the cost of the aircraft as a charge to direct costs,
resulting in a relatively low gross margin percentage. In other
transactions, the Company may act strictly as a broker and record as
revenue only the commissions on these sales transactions, generating a
relatively high gross margin percentage. Consequently, the
performance of these operations can best be gauged by the gross
margins achieved for each period. Gross margins generated by aircraft
sales operations have a material impact on the operating results of
the Company and have historically varied significantly from period to
period. The level of aircraft sales transactions is, to a significant
degree, reflective of overall economic conditions.
FIXED BASE OPERATIONS
As a result of the Jet Centre Acquisition in August 1990, the
Company through Lynton Jet, and (since June 1994) through Lynton
Properties, is engaged in the operation of an aviation fixed base
operation ("FBO") at the Morristown Municipal Airport, Morristown, New
Jersey. Services performed at the FBO consist of the hangarage and
refueling of aircraft operated primarily by corporate flight
departments located in the New York/New Jersey metropolitan area, as
well as refueling of transient customers stopping at the airport. The
facility has twelve tenants with non-cancelable operating leases with
terms remaining ranging from one to eleven years. The loss of either
of the largest two tenants (with leases which expire in February 2006
and June 1999 for the largest and second largest tenant, respectively)
could have a material adverse effect on the Company.
The Company operates an additional FBO business out of a
hangar/office facility also located at the Morristown Municipal
Airport, Morristown, New Jersey. Services performed are similar to
those provided at the Jet Centre. The facility has fifteen tenants of
which seven have non-cancelable operating leases with three year terms
<PAGE>
and the remaining tenants renting on a month to month basis. In
addition, Ramapo conducts its maintenance operation from this
facility.
COMPETITION
The Company generally experiences significant competition in all
areas of its business from a number of domestic and international
competitors.
The Company competes both in the United States and United
Kingdom with numerous other organizations which perform similar
services related to the management, charter, and sales of corporate
helicopters and fixed wing aircraft, some of which are larger than the
Company in terms of the number of aircraft under management and some
of which have greater financial resources than those of the Company.
Competition in the industry is principally affected by quality of
service and price. The Company has, in the opinion of management,
maintained a reputation for excellent service in the management,
charter, and sales of aircraft and has remained price competitive for
the comparative level of service.
The Company's maintenance operations in the United States and
United Kingdom each compete with several other maintenance
organizations within their geographic regions, ranging from small sole
proprietorships to larger facilities, several of which are as large or
larger than the Company in terms of the number of helicopters under
maintenance, several of which have greater financial resources than
those of the Company, and most of which compete with the Company in
its major services. In addition, the manufacturers themselves and
certain corporate aircraft owners operate their own maintenance
facilities. Competition in the industry is principally based upon
price and the quality of the services provided. The Company has
remained price competitive and in the opinion of management has
historically maintained a reputation for excellence in its maintenance
work.
The Company's FBO operation competes with two other FBO's at
Morristown Municipal Airport, Morristown, New Jersey, as well as
numerous FBO's located at several airports within the New York/New
Jersey metropolitan region. Competition consists primarily of
obtaining tenants for the facility and attracting transient customers
to use the facility primarily for refueling. Many of the Company's
competitors are as large or larger than the Company and several have
financial resources as great or greater than the Company. Competition
in the industry is principally based upon price and the quality of
accommodation and service at the facility. The Company has remained
price competitive with the other FBO's in the area and has, in the
opinion of management, maintained a level of accommodation and service
that is as good or better than its competitors.
BACKLOG
The Company, through Aviation Limited and EHL, have entered into
contracts to provide certain aviation support services to customers.
Such contracts expire at various dates in fiscal 1996 and have
provisions which allow for early termination on a short-term basis.
A portion of the Jet Centre's operating revenue is obtained from
tenants through rental payments provided for under non-cancelable
operating leases. The leases typically provide for guaranteed minimum
rentals and other charges to cover certain operating costs in excess
of base amounts.
The following is a schedule of minimum future rentals on non-
cancelable operating leases as of September 30, 1995 (thousands of
dollars):
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1996 $2,722
1997 2,603
1998 2,433
1999 1,979
2000 1,472
Thereafter 5,889
Total $17,098
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GOVERNMENT REGULATION
The Company is subject to the jurisdiction of the FAA in the
United States and the CAA in the United Kingdom related to its
authorization to operate aircraft maintenance facilities and to the
CAA in the United Kingdom to operate as an air carrier. No
assurance can be given that the authorizations mentioned above will
be maintained in the future. Management believes that the loss of
the above mentioned authorization in the United States would not
have a material adverse effect on the Company while the loss of any
of the United Kingdom authorizations could have a material adverse
effect on the Company.
HAZARDS AND INSURANCE
The operation of helicopters and fixed wing aircraft involves
a substantial level of risk. Hazards such as aircraft accidents,
collisions and fire are inherent in the providing of aviation
services and may result in losses of life, equipment and revenues.
The Company maintains insurance of types customary to the
aviation services industry and in amounts deemed adequate by the
Company to protect the Company and its property. These policies
include aircraft liability, aviation spares/equipment, all risks,
hull, products liability, hangar keepers liability, property and
casualty, automobile and workers' compensation. The Company has not
experienced significant difficulty in obtaining insurance and has
not incurred any insured losses in excess of its property and
liability coverage. While the Company believes that its insurance
coverage is adequate for its operations, there can be no assurance
that such insurance coverage is now, or will be, adequate to cover
any claims to which it may be subject or that such levels of
insurance may be obtained at comparable rates in the future.
PERSONNEL
In addition to its principal officers, the Company presently
has approximately 41 employees in the United States, approximately
55 employees in the United Kingdom, consisting principally of
managers, pilots, mechanics, aviation services personnel and
administrative staff and which are primarily employed on a full time
basis.
ITEM 2. PROPERTIES
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The Company operates the Jet Centre business out of the
Company's hangar/office facility of approximately 132,000 square
feet, owned by the Company, located at the Morristown Municipal
Airport, Morristown, New Jersey, on a site leased pursuant to a
ground lease with an initial term expiring on December 31, 2010 and
with options to extend the term of the lease for five additional
terms of five years each. The rental payments due under the lease
are generally based upon increases in the consumer price index
through the year 2020 and based upon fair market value thereafter.
The Company maintains its executive offices at the Jet Centre
facility.
The Company expanded its FBO business in the fiscal year ended
September 30, 1995 with the lease of an additional facility of
approximately 36,000 square feet at the Morristown Municipal
Airport, Morristown, New Jersey, on a site leased with an initial
term expiring on May 31, 1998. Ramapo conducts its maintenance
operation from this facility.
The Company operates Aviation Limited and EHL principally out
of a hangar facility of approximately 20,000 square feet located in
Denham, Middlesex, which is located outside of London. The hangar
is owned by the Company and is located on a site leased pursuant to
a ground lease which expires in 2012. In addition, the Company
leases on a month-to-month basis office space of approximately 2,000
square feet from a company which is wholly-owned by the Company's
Chief Executive Officer.
Management believes that the current facilities are sufficient
to operate the Company's business at its current level.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
There are no material pending legal proceedings to which the
Company is a party or to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matter was submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
-------------------------------------
AND RELATED STOCKHOLDER MATTERS
-------------------------------
(a) The Company's Common Stock is traded, effective October
20, 1995, in the over-the-counter market and is quoted in the "pink
sheets" promulgated by the National Quotation Bureau, Inc. and
listed on the OTC Bulletin Board. Until October 20, 1995, the
Company's Common Stock was listed on the Nasdaq Small-Cap Market
under the symbol "LYNG".
The following chart sets forth the range of the high and low
bid quotations for the Company's Common Stock for each period
indicated (adjusted to give effect for the one-for-six reverse stock
split in June 1994). The quotations represent prices between
dealers and do not include retail markups, markdowns, commissions or
other adjustments and may not represent actual transactions.
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BID PRICES
PERIOD HIGH LOW
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Fiscal year ended September 30, 1994:
Oct. 1, 1993 to Dec. 31, 1993 6-3/4 3-3/4
Jan. 1, 1994 to March 31, 1994 4-1/2 3-3/4
April l, 1994 to June 30, 1994 3-3/4 1-5/8
July 1, 1994 to Sept. 30, 1994 1-5/8 3/4
Fiscal year ended September 30, 1995:
Oct. 1, 1994 to Dec. 31, 1994 15/16 7/8
Jan. 1, 1995 to March 31, 1995 1-7/16 15/16
April l, 1995 to June 30, 1995 1-1/8 3/4
July 1, 1995 to Sept. 30, 1995 3/4 1/8
</TABLE>
(b) As of December 15, 1995, there were approximately 525
record holders of the Company's Common Stock. At October 20, 1995,
the closing bid price for the Company's Common Stock was 1/8. Since
such date there have been no available bid and ask prices for the
Company's Common Stock.
(c) The Company has never declared any cash dividends on its
Common Stock and does not anticipate declaring cash dividends in the
foreseeable future. Additionally, under the terms of the Company's
Credit Agreement with HM Holdings, the Company is restricted from
declaring dividends during the term of such agreement without the
prior consent of HM Holdings. Such consent has been received from
HM Holdings to permit the payment of dividends related to the
Company's Series C Convertible Preferred Stock and the Series D
Preferred Stock. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations").
ITEM 6. SELECTED FINANCIAL DATA
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(000'S EXCEPT EARNINGS PER SHARE)
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Fiscal year ended September 30: (1)
1995 1994 1993 1992 1991
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Revenue $33,638 $33,093 $25,771 $21,493 $25,537
Net (loss) (2,320) (1,397) 119 (1,792) (846)
income
Net loss per (1.30) (.81) (.01) (1.73) (.84)
common share
(2)
Working capital (2,748) (3,790) (2,210) (2,841) (1,362)
(deficit)
Total assets 23,923 31,736 25,189 27,210 29,545
Long term debt 17,411 18,332 15,378 18,941 19,413
</TABLE>
(1) This table should be read in conjunction with Part I, Item
1(a) for information on historical acquisitions of the Company, and
in conjunction with the Consolidated Financial Statements and
related notes thereto.
(2) Adjusted for the one-for-six reverse stock split effected in
June 1994 and the one-for-five reverse stock split effected in
August 1991.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
RESULTS OF OPERATIONS
The table below sets forth operating results information for
each of the Company's operations and on a consolidated basis for the
three years ended September 30, 1995 (thousands of dollars):
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YEAR ENDED SEPTEMBER 30,
1995 1994 1993
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Flight operations revenues $13,036 $12,954 $13,759
- - historical operations
Gross margin $1,277 $759 $1,212
Gross margin % 9.8% 5.9% 8.8%
Flight operations revenues $4,875 $6,722
- - Dollar Air
Gross margin $205 $899
Gross margin % 4.2% 13.4%
Maintenance operations $5,290 $4,502 $5,179
revenues
Gross margin $848 $879 $813
Gross margin % 16.0% 19.5% 15.7%
Aircraft sales operations $3,288 $2,526 $930
revenues
Gross margin - prior to
writedown of aircraft $488 $616 $535
held for resale
Writedown of aircraft - 180 -
held for resale
Gross margin - net $488 $436 $535
Gross margin % 14.8% 17.3% 57.5%
Fixed base operations $6,702 $6,288 $5,841
revenues
Gross margin $2,678 $2,589 $2,523
Gross margin % 40.0% 41.2% 43.2%
Other net revenues $447 $101 $62
Consolidated revenues $33,638 $33,093 $25,771
Consolidated direct costs 27,695 27,430 20,626
Consolidated gross margin 5,943 5,663 5,145
Selling, general & 3,823 4,006 2,745
administrative expenses
Depreciation 933 1,072 885
Amortization of goodwill 200 221 127
& intangible assets
Writedown of goodwill 1,338 - -
Operating (loss) income (351) 364 1,388
Amortization of debt 139 135 88
discount & issuance costs
Interest expense 1,772 1,432 1,171
Equity in earnings of 58 - -
jointly-owned company
(Loss) income before tax (2,320) (1,203) 129
provision and extraordinary
item
Income tax provision - 28 10
(Loss) income before (2,320) (1,231) 119
extraordinary item
Extraordinary item - - 166 -
Charges related to early
extinguishment of debt
Net (loss) income $(2,320) $(1,397) $119
</TABLE>
The following discussions of results of operations for the
Company include results of operations for United Kingdom ("UK")
subsidiaries translated from pounds sterling ("sterling") to US
dollars at the average rate of exchange during the respective
<PAGE>
periods. The average value of sterling increased by approximately
5% in fiscal 1995 compared to fiscal 1994 and increased by
approximately 1% in fiscal 1994 compared to fiscal 1993. The effect
on consolidated results of operations resulting from changes in the
exchange rate of sterling as compared to a constant exchange rate
from period to period has been to report higher revenues and
expenses for UK subsidiaries when the value of sterling increased
and to report lower revenues and expenses for UK subsidiaries when
the value of sterling decreased. Fluctuations in the value of
sterling will continue to have an effect on the results of
operations for UK subsidiaries as reported in US dollars and the
resulting consolidated results of operations for the Company.
1995 COMPARED TO 1994
Revenues for fiscal 1995 increased to $33,638,000 as compared
to revenues in fiscal 1994 of $33,093,000, an increase of $545,000
or 1.6%. This increase consists of increased revenues from
maintenance operations of $788,000, from aircraft sales of $762,000,
from fixed base operations of $414,000 and the excess of proceeds
from insurance policies over book value on aircraft involved in
accidents and rendered unservicable of $447,000, offset by reduced
revenues from the operations of Dollar Air Services Limited ("Dollar
Air") of $1,847,000 (see discussion of each operational area below).
The Company reported an operating loss for fiscal 1995 of
$351,000 as compared to operating income of $365,000 for fiscal
1994, a decrease of $716,000. This change resulted primarily from
the writedown in fiscal 1995 of the carrying value of the
unamortized goodwill arising on the acquisition of Dollar Air
amounting to $1,338,000, partly offset by increased operating income
from the Company's UK flight operations. Included in fiscal 1995 was
a charge of $263,000 for the loss sustained on the sale of a
Company-owned aircraft which was sold in that year. In 1994, the
Company had reclassified this aircraft from fixed assets to aircraft
held for resale and had recorded a charge of $180,000 to reduce its
carrying value to estimated fair market value.
Interest expense for fiscal 1995 increased to $1,772,000 as
compared to $1,432,000 for fiscal 1994, an increase of $340,000 or
23.7%. This increase primarily represents increased interest rates
paid on outstanding levels of borrowing, as well as an increase in
indebtedness to HM Holdings of $500,000 from October 1994.
In August 1995, substantially all the business, assets and
liabilities of Dollar Air were transferred to PLM Dollar Group
Limited ("PDG"), in exchange for 50% of the capital stock of PDG
(see details below). In connection with this transfer, the carrying
value of the unamortized goodwill arising from the acquisition of
Dollar Air was written off in fiscal 1995 and amounted to
$1,338,000.
The Company had a net loss of $2,320,000 for fiscal 1995 as
compared to a net loss of $1,397,000 for fiscal 1994, an increase in
loss of $923,000. The primary causes for this increase were the
writedown of the carrying value of unamortized goodwill in Dollar
Air, increased operating losses and associated interest costs of
Dollar Air, partially offset by increased operating income for the
Company's UK flight operations.
The Company's ability to improve earnings is primarily
dependent on the enhancement of revenues and margins from its
operations. The performance of each operation is affected by
different market conditions and varies as to stability and degree of
predictability. Below is a discussion of each of the Company's
operating areas and the factors which have historically, and will
continue, to affect performance.
FLIGHT OPERATIONS
Revenues from flight operations overall increased by $82,000
for fiscal 1995 as compared to fiscal 1994. Increases in lower
margin management revenues in the US of $685,000 from HM Industries
were offset by reduced revenue levels at the remaining operations.
Gross margin levels and percentages increased as a result of
improvements in the UK operations in the areas of management
contract margins, cost reductions put into effect and elimination of
operational costs for fixed wing aircraft owned by the Company. The
performance of these operations has been and will continue to be
primarily affected by demand for both helicopter and fixed wing
charter within the UK market and between the UK and international
destinations. Such demand may vary significantly from period to
period.
<PAGE>
Flight operations for Dollar Air decreased by $1,847,000 or
27.5%, primarily due to the cessation of operations in overseas
locations. During the first quarter of fiscal 1995, two of the
aircraft owned and operated by Dollar Air in Peru were involved in
accidents and rendered unserviceable. Revenues from flight
operations for the year were reduced as a result. The excess of
proceeds from insurance policies over book value on these aircraft
amounted to $447,000 and is shown as other net revenues for the year
ended September 30, 1995. Gross margins were reduced by $694,000
primarily as a result of reduced activity levels as well as from
costs incurred in the discontinuance of the Company's operations in
overseas locations.
In August 1995, substantially all the business, assets and
liabilities of Dollar Air was transferred to PLM Dollar Group
Limited ("PDG"), in exchange for 50% of the capital stock of PDG.
Simultaneously with the consummation of this transaction,
substantially all of the business, assets and liabilities of P.L.M.
Helicopters Limited ("PLM"), were transferred to PDG and the
shareholders of PLM were issued the remaining 50% of the capital
stock of PDG. PDG is a company which was formed for the purpose of
effecting these transactions. PDG operates a fleet of 15
helicopters from bases primarily in Scotland and England, and
provides helicopter support services for industrial and utility
applications in the United Kingdom. Accordingly, the operating
results set forth above reflect consolidated operating results for
Dollar Air, which was acquired in January 1994, for the nine months
ended September 30, 1994 and for the eleven months ended August 31,
1995. The Company's 50% share in the operating results of PDG for
the one month ended September 30, 1995 have not been consolidated
but are shown under equity in jointly-owned company. The carrying
value of the unamortized goodwill arising on the acquisition of
Dollar Air was written off in fiscal 1995 in the amount of
$1,338,000.
MAINTENANCE OPERATIONS
Revenues from maintenance operations increased by $788,000 in
fiscal 1995 as compared to fiscal 1994, primarily due to an
increased volume of maintenance sales related to customer aircraft.
Gross margin percentage from these operations declined in fiscal
1995 as compared to fiscal 1994 due to increased market
competitiveness in the helicopter maintenance area. Revenues from
maintenance operations are affected by the level of the Company's
flight operations, which impact on the maintenance requirements for
the Company's operational aircraft, thereby reducing available
capacity for maintenance of customer aircraft.
AIRCRAFT SALES OPERATIONS
Revenues from aircraft sales operations increased by $762,000
in fiscal 1995 as compared to fiscal 1994. Significant fluctuations
in revenues and gross margin percentages from aircraft sales
operations may occur from period to period based upon the role the
Company takes in such transactions in which it is involved. For
aircraft sales transactions in which the Company acts as principal,
the Company records the full sales price of the aircraft as revenue
and the cost of the aircraft as a charge to direct costs, resulting
in a relatively low gross margin percentage. In other transactions,
the Company may act strictly as a broker and record as revenue only
the commissions on these sales transactions, generating a relatively
high gross margin percentage. Consequently, the performance of
these operations can best be gauged by the gross margins achieved
for each period. Gross margins generated by aircraft sales
operations have a material impact on the operating results of the
Company and have historically varied significantly from period to
period. The level of aircraft sales transactions is, to a
significant degree, reflective of overall economic conditions.
FIXED BASE OPERATIONS
Revenues from fixed base operations increased by $414,000 or
6.6% in fiscal 1995 as compared to fiscal 1994. This change is
primarily attributable to an increase in the level of tenant
occupancy and fuel sales volume at the Company's fixed base
operation in Morristown, New Jersey. The performance of these
operations to a significant degree is based upon the level of tenant
occupancy with tenant leases ranging in term from less than a year
to twelve years. High occupancy level for such facilities in the
New York/New Jersey metropolitan area has allowed the financial
performance of these operations to consistently improve during the
last several years. Management anticipates that the financial
performance of these operations will continue to improve in fiscal
1996.
<PAGE>
1994 COMPARED TO 1993
Revenues for fiscal 1994 increased to $33,093,000 as compared
to revenues in fiscal 1993 of $25,771,000, an increase of $7,322,000
or 28.4%. This increase consisted of revenues from the operations
of Dollar Air of $6,722,000 for the period subsequent to its date of
acquisition and increased revenues from the Company's operations
existing prior to the acquisition of Dollar Air ("historical
operations") of $600,000. The increase in revenues from historical
operations represents increased revenues from aircraft sales and
fixed base operations offset by reduced revenues from historical
flight and maintenance operations.
Operating income for fiscal 1994 decreased to $364,000 as
compared to $1,388,000 for fiscal 1993, a decrease of $1,024,000.
This change resulted primarily from reductions in operating income
of approximately $489,000 from the Company's historical UK flight
operations and operating losses of approximately $343,000 from the
acquired operations of Dollar Air. Additionally, the Company
recorded a charge of $180,000 in fiscal 1994 to reduce to estimated
fair market value the carrying value of an aircraft the Company has
reclassified from fixed assets to aircraft held for resale and
subsequently sold in 1995.
Interest expense for fiscal 1994 increased to $1,432,000 as
compared to $1,171,000 for fiscal 1993, an increase of $261,000 or
22.3%. This increase primarily represents the interest costs
associated with the Debentures issued by the Company in December
1993 (see Liquidity and Capital Resources). The net proceeds
obtained from this borrowing of approximately $2.2 million were
primarily used for the acquisition and related costs of Dollar Air
and to reduce balances outstanding under credit facilities of Dollar
Air.
In fiscal 1994, the Company refinanced a portion of its
indebtedness to HM Holdings with the proceeds from the issuance of a
$9.0 million Mortgage Note (see Liquidity and Capital Resources).
In connection with this transaction, the Company recorded an
extraordinary charge of $166,000 representing that portion of
unamortized debt discount and issuance costs associated with the
repaid indebtedness.
The Company had a net loss of $1,397,000 for fiscal 1994 as
compared to net income of $119,000 for fiscal 1993, a decrease in
earnings of $1,516,000. The primary causes for this change in
earnings were the decreased operating income for the Company's UK
flight operations, operating losses and associated interest costs of
Dollar Air and charges related to the writedown of aircraft and the
refinancing of debt.
The Company's ability to improve earnings is primarily
dependent on the enhancement of revenues and margins from its
operations. The performance of each operation is affected by
different market conditions and varies as to stability and degree of
predictability. Below is a discussion of each of the Company's
operating areas and the factors which have historically, and will
continue, to affect performance.
FLIGHT OPERATIONS
Revenues from historical flight operations decreased by
$805,000 for fiscal 1994 as compared to fiscal 1993. The
performance of these operations for fiscal 1994 was hindered by
reduced demand for the Company's fixed wing charter services into
Russia and Eastern European countries. Gross margin percentages for
these operations decreased due to the allocation of the fixed cost
associated with these operations over a lower revenue base and the
mix of revenues in fiscal 1994 which included an increase in lower
margin management revenues of approximately $1.0 million offset by a
decrease in higher margin charter revenues of approximately $1.8
million.
In the second quarter of fiscal 1994, Dollar Air began to
provide support services in Venezuela to certain geological and
mineral exploration companies. The financial performance of this
operation failed to meet expectations due primarily to competition
and regulatory and administrative barriers within Venezuela and,
therefore, was discontinued in June 1994.
<PAGE>
MAINTENANCE OPERATIONS
Revenues from maintenance operations decreased by $677,000 in
fiscal 1994 as compared to fiscal 1993, primarily due to a reduced
volume of maintenance sales related to customer aircraft. Gross
margin percentage from these operations improved in fiscal 1994 as
compared to fiscal 1993 primarily representing the effect of the
allocation of certain fixed maintenance costs over the historical
maintenance operations and the additional operations initiated in
support of Dollar Air aircraft.
AIRCRAFT SALES OPERATIONS
Revenues from aircraft sales operations increased by
$1,596,000 in fiscal 1994 as compared to fiscal 1993. As discussed
above, significant fluctuations in revenues and gross margin
percentages from aircraft sales operations may occur from period to
period based upon the role the Company takes in such transactions in
which it is involved.
FIXED BASE OPERATIONS
Revenues from fixed base operations increased by $447,000 or
7.7% in fiscal 1994 as compared to fiscal 1993. This change is
primarily attributable to an increase in the level of tenant
occupancy and fuel sales volume at the Company's fixed base
operation in Morristown, New Jersey.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had a working capital
deficit of $2,748,000 and stockholders' equity of $203,000. The
Company had net cash provided by operating activities of $1,878,000
in fiscal 1995 compared to net cash used in operating activities of
$921,000 in fiscal 1994. This increase in cash flow from operating
activities is primarily due to the disposal of company owned
aircraft, reduced inventory and an increase in deferred revenue.
The Company expects to continue meeting all of its obligations
in the coming year by focusing on its established operations and
generating additional cash funding from the refinancing of Company
owned aircraft. In this regard, the Company recently transferred
substantially all of the business, assets and liabilities of its
Dollar Air subsidiary, which has incurred significant operating
losses since its acquisition in January, 1994, to a newly formed
joint venture, PDG. Additionally, it is not anticipated that any
further cash investment by the Company will be required for this
joint venture. In the coming fiscal year the Company will also seek
to restructure its debt and preferred stock obligations in order to
reduce its debt service and other fixed payment requirements and
endeavor to raise additional capital through the sale of equity
securities.
Aircraft are financed primarily through short and medium term
notes payable to banks and financing companies and are generally
collateralized by such aircraft. The Company anticipates no
material capital expenditures will be required in fiscal 1996.
In December 1993, the Company completed an off-shore placement
of $2,500,000 principal amount of 10% Senior Subordinated
Convertible Debentures due December 31, 1998 (the "Debentures"). In
January 1994, the net proceeds from this issuance of $2,186,000 were
used to acquire Dollar Air, including acquisition related costs, and
to reduce balances outstanding under credit facilities of Dollar
Air. The Debentures are convertible into shares of the Company's
Common Stock at the option of the holder at any time prior to
maturity at a price of $3.75 per share. The Debentures may also be
redeemed by the Company at any time or from time to time commencing
July 1995, at the Company's option, in whole or in part at the
redemption prices (expressed as percentages of the principal amount)
ranging from 109% to 100%. Prior to December 31 of each of the
years from 1996 to 1998, inclusive, the Company has agreed to pay to
the trustee for the Debentures, as a sinking fund payment, cash in
the amount of 1/3 of the aggregate principal amount of the issued
Debentures, provided that Debentures converted or reacquired or
redeemed by the Company may be used, at the principal amount
thereof, to reduce the amount of any sinking fund payment.
<PAGE>
Management anticipates that the initial sinking fund payment in
December 1996, will be provided mainly from the proceeds generated
from the refinancing of the Company's aircraft in September 1996.
During the period from June 30, 1995 through January 22, 1996,
the Company was not in compliance with the minimum net worth
requirements of the Debenture Agreement. As of January 23, 1996, in
connection with such requirements, a majority of the debenture
holders agreed to waive any and all such net worth requirements for
fiscal 1995 and 1996 and the first quarter of fiscal 1997. No
assurances can be given as to the Company's ability to meet future
net worth requirements under the Debenture Agreement or that
additional waivers will be received at appropriate times.
In June 1994, Lynton Properties, Inc., an indirect wholly-
owned subsidiary of the Company ("Lynton Properties"), issued to
Connecticut Mutual Life Insurance Company ("Connecticut Mutual") a
$9,000,000 mortgage note at 6.69% due January 3, 2006 (the "Mortgage
Note") with scheduled monthly payments of principal and interest.
The Mortgage Note is secured by a Leasehold Mortgage and Security
Agreement and an Assignment of Leases and Rents on a lease between a
certain tenant and Lynton Properties relating to a hangar and office
facility located at the Lynton Jet Centre.
Pursuant to a Credit Agreement, as amended, entered into in
August 1990 (the "Credit Agreement"), HM Holdings, Inc. an indirect
wholly-owned subsidiary of Hanson PLC ("HM Holdings"), had provided
secured debt financing in the aggregate amount of $17,000,000 to the
Company and Lynton Jet Centre, Inc., a wholly-owned subsidiary of
the Company ("Lynton Jet"). Specifically, in August 1990, HM
Holdings made a $2,000,000 term loan to the Company (the "Company
Term Loan"), a $10,800,000 term loan to Lynton Jet (the "Lynton Jet
Term Loan") and provided a $4,200,000 revolving credit facility to
Lynton Jet (the "Revolving Credit Loan" and, together with the
Company Term Loan and the Lynton Jet Term Loan, collectively the
"Loans"). In connection with the issuance of the Mortgage Note,
$8,000,000 of the net proceeds therefrom were applied to the
repayment of the Loans. As a result, the Company Term Loan has been
repaid in full, the principal payments on the Lynton Jet Term Loan
have been made through the remaining payment of $2,906,000 due
September 30, 1997, and the principal amount outstanding on the
Revolving Credit Loans was reduced with the proceeds from the
Mortgage Note to $3,000,000 which shall be due on September 30,
1997. At September 30, 1995, the amount outstanding under the
Revolving Credit Loan was the maximum allowable balance of
$3,200,000. Additionally, in October 1994, HM Holdings loaned the
Company $500,000 under an additional revolving credit loan which is
also repayable on September 30, 1997.
The Loans, as amended, are secured by all of the capital stock
of Lynton Jet and the Company's other domestic subsidiaries and 65%
of the capital stock of the Company's foreign subsidiaries as well
as certain of the assets and properties of the Company and each of
its domestic subsidiaries, including a leasehold mortgage and
assignment of certain rents on the Jet Centre facility. In
addition, the Company's domestic subsidiaries have guaranteed the
full and prompt payment of the Loans.
The Credit Agreement with HM Holdings, as amended, requires
prepayment of the Loans with the proceeds of certain asset sales and
sales of stock by the Company, and requires prepayment of the Loans
in the amount of any excess cash flow, as defined by the agreement,
after the first $1,000,000 thereof. The Company is restricted by
the terms of the Credit Agreement with HM Holdings, as amended, from
additional mergers or acquisitions and from issuing debt or equity
securities beyond specified levels. The Credit Agreement contains
certain negative, affirmative and financial covenants and financial
reporting requirements. During fiscal 1994, HM Holdings consented
to the Company's placement of the Debentures, the acquisition of
Dollar Air and the issuance of the Mortgage Note to Connecticut
Mutual.
On January 12, 1995, in connection with the minimum net worth
requirements under the Credit Agreement, HM Holdings agreed to waive
any and all such net worth requirements for fiscal 1994, fiscal 1995
and the first quarter of fiscal 1996. On January 5, 1996, in
connection with these requirements, HM Holdings agreed to waive any
and all such net worth requirements for the remainder of fiscal 1996
and the first quarter of fiscal 1997. Beginning in the second
quarter of fiscal 1997, the Company will again be required to
maintain a minimum net worth as specified in the Credit Agreement of
$4,000,000. In addition the Company has received waivers of the
interest coverage ratio requirements under the Credit Agreement for
each quarter of the fiscal years ended September 30, 1995 and 1996.
<PAGE>
No assurances can be given as to the Company's ability to meet
future net worth and interest coverage ratio requirements under the
Credit Agreement or that additional waivers will be received at
appropriate times.
The Company has 1,000 shares of Series C Convertible Preferred
Stock and 2,000 shares of Series D Preferred Stock outstanding as a
result of a financing transaction effected in December 1992. The
Company paid total dividends of $214,000 related to the Series C and
Series D Preferred Stocks during fiscal 1995.
The Company has unused federal net operating loss
carryforwards at September 30, 1995 of approximately $3,301,000,
which expire through September 30, 2009. As a result of the Jet
Centre acquisition and the related issuance of a warrant to HM
Holdings, utilization of approximately $1,500,000 of the Company's
net operating loss carryforwards is substantially restricted under
Section 382 of the Internal Revenue Code of 1986, as amended.
Future realization of the restricted net operating loss
carryforwards will be limited annually to an amount generally
calculated by multiplying the value of the Company immediately
preceding the issuance of the warrant to HM Holdings in August 1990,
by the long-term tax exempt rate at that date.
Inflation has not significantly impacted the Company's
operations.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------
The financial information required by Item 8 is included
elsewhere in this report (see Part IV, Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
------------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
There is incorporated by reference herein information which
will be contained in the Registrant's definitive proxy statement to
be filed within 120 days of the Registrant's year end in connection
with the 1996 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
There is incorporated by reference herein information which
will be contained in the Registrant's definitive proxy statement to
be filed within 120 days of the Registrant's year end in connection
with the 1996 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------
There is incorporated by reference herein information which
will be contained in the Registrant's definitive proxy statement to
be filed within 120 days of the Registrant's year end in connection
with the 1996 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
There is incorporated by reference herein information which
will be contained in the Registrant's definitive proxy statement to
be filed within 120 days of the Registrant's year end in connection
with the 1996 Annual Meeting of Stockholders.
<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND
----------------------------------------------------------
REPORTS ON FORM 8-K
-------------------
(a) (1)(2) Consolidated Financial Statements and Financial Statement
Schedules.
The Consolidated Financial Statements and Schedules filed as
part of this report are listed in the Index to Consolidated
Financial Statements and Schedules annexed hereto and made a part
hereof.
(a) (3) Exhibits.
3.1 Registrant's restated certificate of incorporation (7)
3.2 Registrant's by-laws1(1)
4.1 Certificate of Designations of Series C Convertible
Preferred Stock and Series D Preferred Stock with
filing receipt (2)
4.2 Warrant dated August 14, 1990 issued to HM Holdings,
Inc. (3)
4.3 Warrant dated December 22, 1992 issued to HM Holdings,
Inc. (2)
4.4 Warrant dated December 22, 1992 issued to HM Holdings,
Inc. (2)
4.5 Indenture dated as of December 21, 1993 between the
Registrant and American Stock Transfer & Trust Company,
as Trustee, relating to Registrant's 10% Senior
Subordinated Convertible Debentures due December 31,
1998, together with form of Debenture (7)
10.1 Ground Lease for premises at Morristown Municipal
Airport, Morristown, New Jersey (4)
10.2 Employment Agreement dated June 1, 1993 with Christopher
Tennant (5)
10.3 1993 Stock Option Plan (5)
10.4 Share Purchase Agreement dated January 13, 1994 among
Lynton Group, Inc., Lynton Group Limited and all of the
shareholders of Dollar Air Services Limited (6)
21.0 Lynton Group, Inc., parent and subsidiaries (7)
99.1 Credit Agreement dated as of August 14, 1990 (the
"Credit Agreement") among the Registrant and Lynton Jet
Centre, Inc., as Borrowers and Guarantors, and HM
Holdings, Inc., as Lender (3)
99.2 Amendment to Credit Agreement dated July 26, 1991 among
Lynton Group, Inc., Lynton Jet Centre, Inc. and HM
Holdings, Inc. (1)
99.3 Second Amendment to Credit Agreement dated January 3,
1992 among Lynton Group, Inc., Lynton Jet Centre, Inc.
and HM Holdings, Inc. (1)
99.4 Third Amendment to Credit Agreement dated December 22,
1992 among Lynton Group, Inc., Lynton Jet Centre, Inc.
and HM Holdings, Inc. (2)
99.5 Fourth Amendment to Credit Agreement dated August 12,
1994 among Lynton Group, Inc., Lynton Jet Centre, Inc.,
HM Holdings, Inc. and Hanson America Inc. (7)
<PAGE>
99.6 Recapitalization Agreement dated as of December 22, 1992
by and among Lynton Group, Inc., Lynton Jet Centre,
Inc., HM Holdings, Inc., Brae Group, Inc., James G.
Niven and Task Holdings, Inc. (2)
99.7 Warrant Purchase Agreement dated December 22, 1992
between Lynton Group, Inc. and HM Holdings, Inc. (2)
99.8 Stockholders' Agreement dated as of August 14, 1990 by
and among the Registrant, HM Holdings, Inc. and
Christopher Tennant (3)
99.9 First Amendment to Stockholders' Agreement dated
December 22, 1992 by and among Lynton Group, Inc., HM
Holdings, Inc., Brae Group, Inc., James Niven and Task
Holdings, Inc. (2)
99.10 Note Agreement dated as of June 22, 1994 between Lynton
Properties, Inc. and Connecticut Mutual Life Insurance
Company relating to a $9.0 million 6.69% mortgage note
due January 3, 2006 (7)
99.11 Business Acquisition Agreement between Dollar Air
Services Limited and PLM Dollar Group Limited
_____________________
(1) Filed as an exhibit to the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1991, and
incorporated by reference herein.
(2) Filed as an exhibit to the Company's Current Report on Form 8-
K, dated December 22, 1992, and incorporated by reference
herein.
(3) Filed as an exhibit to the Company's Current Report on Form 8-
K, dated August 14, 1990, and incorporated by reference
herein.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1990, and
incorporated by reference herein.
(5) Filed as an exhibit to the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1993, and
incorporated by reference herein.
(6) Filed as an exhibit to the Company's Current Report on Form 8-
K, dated January 13, 1994, and incorporated by reference
herein.
(7) Filed as an exhibit to the Company's Current Report on Form
10-K for the fiscal year ended September 30, 1994, and
incorporated by reference herein.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the
last quarter of the period covered by this report:
<TABLE>
<CAPTION>
FINANCIAL
ITEMS STATEMENTS DATE
REPORTED FILED OF REPORT
<S> <C> <C>
Transfer of business, None September 5, 1995
assets and liabilities of
Dollar Air to PDG
</TABLE>
<PAGE>
(c) Exhibits.
See Item 14(a)(3) above.
(d) See Index to Consolidated Financial Statements and Schedules
annexed hereto and made a part hereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
LYNTON GROUP, INC.
(Registrant)
By: /S/ CHRISTOPHER TENNANT
Christopher Tennant,
President
Date: 1/15/96
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant, and in the capacities and on the dates
indicated:
SIGNATURE TITLE DATE
/S/ CHRISTOPHER TENNANT President, Chief Executive 1/15/96
Christopher Tennant Officer, Director (Principal
Executive Officer)
/S/ RICHARD HAMBRO Co-Chairman of the Board 1/15/96
Richard Hambro Director
/S/ JAMES G. NIVEN Co-Chairman of the Board 1/15/96
James G. Niven Assistant Treasurer, Director
/S/ MANUS O'DONNELL Secretary, Treasurer and 1/15/96
Manus O'Donnell Chief Financial Officer
(Principal Financial Officer)
/S/ NICHOLAS R. H. TOMS Assistant Secretary, 1/15/96
Nicholas R. H. Toms Director
/S/ MARK A. ALEXANDER Director 1/15/96
Mark A. Alexander
/S/ GEORGE H. HEMPSTEAD, III Director 1/15/96
George H. Hempstead, III
<PAGE>
Lynton Group, Inc. and Subsidiaries
Index to Consolidated Financial Statements and
Schedules
September 30, 1995
CONTENTS
Report of Independent Auditors.................F-l
Consolidated Financial Statements
Consolidated Balance Sheets....................F-2
Consolidated Statements of Operations..........F-4
Consolidated Statements of Changes in Stockholders'
Equity.........................................F-5
Consolidated Statements of Cash Flows..........F-7
Notes to Consolidated Financial Statements.....F-8
Schedules
Report of Independent Auditors................F-26
Schedule II-Valuation and Qualifying Accounts.F-27
Schedules other than those listed above are omitted since they
are not required, are not applicable or the information is
included in the consolidated financial statements and notes
thereto.
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Lynton Group, Inc.
We have audited the accompanying consolidated balance sheets
of Lynton Group, Inc. and subsidiaries as of September 30,
1995 and 1994, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for
each of the three years in the period ended September 30,
1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Lynton Group, Inc. and subsidiaries at
September 30, 1995 and 1994, and the consolidated results of
their operations and their cash flows for each of the three
years in the period ended September 30, 1995, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
MetroPark, New Jersey
December 21, 1995, except for the seventh
and seventeenth paragraphs of Note 4, as
to which the dates are January 5, 1996
and January 23, 1996, respectively
<PAGE>
Lynton Group, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30
1995 1994
<S> <C> <C>
Assets
Current assets:
Cash $137,322 $143,689
Accounts receivable (net of
allowance for doubtful accounts of 1,948,368 2,652,374
$22,000 in 1995 and $291,000 in
1994)
Due from affiliate 156,396 408,775
Inventories 1,019,810 1,595,933
Aircraft held for resale - 1,593,609
Prepaids and other current assets 299,181 287,947
Total current assets 3,561,077 6,682,327
Property, plant and equipment:
Aircraft 1,208,117 4,158,540
Buildings 14,082,497 14,077,916
Furniture and equipment 1,137.008 1,383,637
Motor vehicles 357,164 343,863
Leasehold improvements 495,892 384,678
17,280,678 20,348,634
Less accumulated depreciation and 3,453,387 2,991,865
amortization
13,827,291 17,356,769
Due from affiliate 191,308 191,308
Funds held in escrow 150,000 150,000
Investment in jointly-owned 1,201,248 -
company
Long-term ground lease, less
accumulated amortization of 2,051,351 2,110,096
$299,000 in 1995 and $240,000 in
1994
Goodwill, less accumulated
amortization of $396,000 in 1995 2,284,408 4,476,815
and $406,000 in 1994
Other assets and deferred charges,
less accumulated amortization of 656,257 768,967
$161,000 in 1995 and $57,000 in
1994
$23,922,940 $31,736,282
</TABLE>
SEE ACCOMPANYING NOTES.
F-2
<PAGE>
Lynton Group, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
SEPTEMBER 30
1995 1994
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facilities $240,533 $1,891,179
Notes payable to affiliate - 67,571
Accounts payable 2,530,548 3,264,166
Accrued expenses 1,419,380 2,175,823
Advances from customers 107,199 80,571
Current portion of capital lease 26,701 59,003
obligations
Current portion of long-term debt 924,580 2,134,247
Deferred revenue 1,059,904 799,978
Total current liabilities 6,308,845 10,472,538
Obligations under capital leases 18,487 72,012
Long-term debt 17,392,361 18,260,034
Deferred income taxes - 197,125
Commitments and contingencies
Stockholders' equity:
Preferred Stock, authorized 3,000,000
shares:
Series C Convertible Preferred Stock
par value $.01 a share; issued and 10 10
outstanding 1,000 shares
Series D Preferred Stock, par value
$.01 a share; issued and outstanding 20 20
2,000 shares
Common Stock, par value $.30 a share:
Authorized 10,000,000 shares; issued
and outstanding 1,957,177 shares in 587,153 587,153
1995 and 1994
Additional paid-in capital 8,321,055 8,321,055
Accumulated deficit (8,624,285) (6,089,708)
Translation adjustment (80,709) (83,957)
Total stockholders' equity 203,244 2,734,573
$23,922,940 $31,736,282
</TABLE>
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
Lynton Group, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
1995 1994 1993
<S> <C> <C> <C>
Net revenue:
Flight operations $17,911,051 $19,675,837 $13,759,361
Maintenance operations 5,290,253 4,501,643 5,178,737
Aircraft sales 3,287,761 2,525,779 930,435
operations
Fixed base operations 6,702,505 6,288,429 5,840,262
Other 446,751 101,800 61,877
33,638,321 33,093,488 25,770,672
Expenses:
Direct costs of
operations:
Flight operations 16,428,966 18,017,859 12,546,998
Maintenance and aircraft 7,242,413 5,533,472 4,760,699
sales operations
Fixed base operations 4,023,434 3,698,958 3,318,015
Writedown in value of - 180,000 -
aircraft held for resale
27,694,813 27,430,289 20,625,712
Selling, general and 3,823,413 4,006,147 2,745,133
administrative
Depreciation 932,603 1,071,885 885,410
Amortization of ground 200,280 220,584 126,504
lease and goodwill
Writedown of goodwill 1,338,302 - -
Operating (loss) income (351,090) 364,583 1,387,913
Amortization of debt 139,450 135,032 87,996
discount and issuance
costs
Interest expense 1,772,028 1,431,959 1,171,243
Equity in loss of 57,585 - -
jointly-owned company
(Loss) income before
income tax provision and
extraordinary item (2,320,153) (1,202,408) 128,674
Income tax provision - 28,175 9,926
(Loss) income before
extraordinary item (2,320,153) (1,230,583) 118,748
Extraordinary
item-charges related to - (166,000) -
early extinguishment of
debt
Net (loss) income (2,320,153) (1,396,583) 118,748
Less dividends on (214,424) (178,029) (135,866)
Preferred Stocks
Net loss attributable to $(2,534,577) $(1,574,612) $(17,118)
Common Stock
Average number of common 1,957,177 1,932,676 1,692,518
shares outstanding
Net loss per common $(1.30) $(.72) $(.01)
share before
extraordinary item
Extraordinary item - (.09) -
Net loss per common $(1.30) $(.81) $(.01)
share
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
Lynton Group, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders'
Equity
YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
SERIES C
CONVERTIBLE SERIES D
PREFERRED STOCK PREFERRED STOCK COMMON STOCK
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
Balance at 1,037,056 $311,117
September 30,
1992
Issuance of
Series C 1,000 $10
Convertible
Preferred Stock
Issuance of 2,000 $20
Series D
Preferred Stock
Exercise of
warrant to 848,454 254,536
purchase Common
Stock
Value of stock
warrant ("New
Warrant")
issued to HM
Holdings, Inc.
Net income for
year ended
Sept. 30, 1993
Dividends on
Preferred
Stocks
Translation
adjustment at
Sept. 30, 1993
Balance at 1,000 10 2,000 20 1,885,510 565,653
September
30,1993
Issuance of
shares of
Common Stock
related to 71,667 21,500
acquisition of
Dollar Air
Services
Limited and
related
minority
interest
Net loss for
year ended
September 30,
1994
Dividends on
Preferred
Stocks
Translation
adjustment at
Sept. 30, 1994
Balance at 1,000 10 2,000 20 1,957,177 587,153
September 30,
1994
Net loss for
year ended
Sept. 30, 1995
Dividends on
Preferred
Stocks
Translation
adjustment at
Sept. 30, 1995
Balance at 1,000 $10 2,000 $20 1,957,177 $587,153
September 30,
1995
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
Lynton Group, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders'
Equity (Continued)
YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Additional Total
Paid-In Accumulated Translation Stockholders'
Capital Deficit Adjustment Equity
<S> <C> <C> <C> <C>
Balance at $4,654,125 $(4,497,978) $15,788 $483,052
September 30, 1992
Issuance of Series
C Convertible 949,990 950,000
Preferred Stock
Issuance of Series 1,907,980 1,908,000
D Preferred Stock
Exercise of warrant
to purchase Common 597,040 851,576
Stock
Value of stock
warrant ("New 89,670 89,670
Warrant") issued to
HM Holdings, Inc.
Net income for year 118,748 118,748
ended Sept. 30,
1993
Dividends on (135,866) (135,866)
Preferred Stocks
Translation (88,078) (88,078)
adjustment at Sept.
30, 1993
Balance at 8,198,805 (4,515,096) (72,290) 4,177,102
September 30, 1993
Issuance of shares
of Common Stock
related to
acquisition of 122,250 143,750
Dollar Air Services
Limited and related
minority interest
Net loss for year (1,396,583) (1,396,583)
ended Sept. 30,
1994
Dividends on (178,029) (178,029)
Preferred Stocks
Translation (11,667) (11,667)
adjustment at Sept.
30, 1994
Balance at 8,321,055 (6,089,708) (83,957) 2,734,573
September 30, 1994
Net loss for year (2,320,153) (2,320,153)
ended Sept. 30,
1995
Dividends on (214,424) (214,424)
Preferred Stocks
Translation 3,248 3,248
adjustment at Sept.
30, 1995
Balance at $8,321,055 $(8,624,285) $(80,709) $203,244
September 30, 1995
</TABLE>
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
Lynton Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS
FROM
OPERATING
ACTIVITIES
Net (loss) $(2,320,153) $(1,396,583) $118,748
income
Adjustments
to reconcile
net (loss)
income to
net cash
provided by
(used in)
operating
activities:
Depreciation 1,272,333 1,427,501 1,099,910
and
amortization
Equity in 57,585 - -
loss of
jointly-
owned
company
Extraordinary - 166,000 -
item
Writedown in - 180,000 -
value of
aircraft
held for
resale
Writedown of 1,338,302 - -
goodwill
Changes in
certain
assets and
liabilities,
excluding
effect from
acquisitions
and
divestitures:
Accounts 20,510 (399,154) 124,845
receivable
Due from 229,530 (131,712) (153,475)
(to)
affiliates
Inventories 346,418 (16,425) (122,323)
Aircraft 1,605,635 - 297,004
held for
resale
Prepaids and (33,799) (97,904) (18,665)
other
current
assets
Accounts (923,672) (714,768) 390,934
payable and
accrued
expenses
Advances 285,793 62,437 (350,874)
from
customers
and deferred
revenue
Net cash 1,878,482 (920,608) 1,386,104
provided by
(used in)
operating
activities
CASH FLOWS
FROM
INVESTING
ACTIVITIES
Cash paid
for shares - (800,495) -
of Dollar
Air Services
Limited and
related
acquisition
costs
Capital (425,357) (747,829) (79,550)
expenditures
Disposal of 1,017,114 - -
fixed assets
Other - - (67,870)
Net cash 591,757 (1,548,324) (147,420)
provided by
(used in)
investing
activities
CASH FLOWS
FROM
FINANCING
ACTIVITIES
Dividends on (214,424) (178,029) (135,866)
Preferred
Stocks
Proceeds
from - 2,186,425 -
issuance of
senior
subordinated
convertible
debt, net of
issuance
costs
Proceeds
from - 8,359,674 -
issuance of
6.69%
mortgage
note, net of
issuance
costs and
escrow funds
Repayment of - (7,342,500) -
debt to HM
Holdings,
Inc.
Proceeds of 500,000 - -
borrowings
from HM
Holdings,
Inc.
Proceeds - - 2,900,000
from
issuance of
Series C
and D
Preferred
Stocks
Proceeds - - 851,576
from
exercise of
warrant to
purchase
Common Stock
Repayment of (2,607,396) (292,923) (4,140,984)
long-term
debt
Proceeds - 50,776 -
from notes
payable
Repayment of - - (709,828)
notes
payable
Repayment of (68,081) (91,685) (31,076)
note payable
- - affiliate
Decrease in (86,705) (345,858) (88,053)
capital
lease
obligations
Net cash (2,476,606) 2,345,880 (1,354,231)
(used in)
provided by
financing
activities
DECREASE IN
CASH (6,367) (123,052) (115,547)
Cash, 143,689 266,741 382,288
beginning of
year
Cash, end of $137,322 $143,689 $266,741
year
</TABLE>
SEE ACCOMPANYING NOTES.
F-7
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Lynton
Group, Inc. and its directly and indirectly wholly-owned subsidiaries
(the "Company"), Lynton Jet Centre, Inc. ("Lynton Jet"); Lynton
Aviation, Inc.; Lynton Aviation Services, Inc.; Ramapo Helicopters,
Inc.; LynStar Aviation, Inc. ("LynStar"); Lynton Properties, Inc.
("Lynton Properties"); Lynton Group Limited ("Limited"); Lynton
Aviation Limited; European Helicopters Limited ("EHL"); Dollar Air
Services Limited ("Dollar Air") (see Note 3); Black Isle Helicopters
Limited ("Black Isle"); Helicopters Dollar Interamericas SA and
Dollar Air's 70% owned subsidiary, Servicios de Helicopteros SA. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
PRINCIPAL BUSINESS ACTIVITY
The Company and its subsidiaries are engaged primarily in the
performance of aviation sales and services in the United States and
the United Kingdom. Services include the charter, management and
operation of aircraft for corporate, industrial and utility
applications ("flight operations"); maintenance of aircraft
("maintenance operations"); sale and brokerage of aircraft ("aircraft
sales operations"); and hangarage and refueling of aircraft ("fixed
base operations"). Additionally, as part of the Company's flight
operations, the Company provided industrial and utility helicopter
support services to customers in South America and other
international markets, until and including the first quarter of the
fiscal year ended September 30, 1995.
BASIS OF PRESENTATION
The financial statements of the Company have been prepared on a going
concern basis which contemplates the realization of assets and
liquidation of liabilities in the ordinary course of business. Net
losses, as indicated in the accompanying financial statements, have
been incurred during the years ended September 30, 1995 and 1994, and
as of September 30, 1995, the Company's current liabilities exceeded
its current assets by approximately $2,748,000.
The Company expects to continue meeting all of its obligations in the
coming year by focusing on its established operations and generating
additional cash funding from the refinancing of Company owned
aircraft. In this regard, the Company recently transferred
substantially all of the business, assets and liabilities of its
Dollar Air subsidiary, which has incurred significant operating
losses since its acquisition in January, 1994, to a newly formed
joint venture, PLM Dollar Group Limited ("PDG") (see Note 3).
Additionally, it is not anticipated that any further cash investment
by the Company will be required for this joint venture. In the coming
fiscal year the Company will also seek to restructure its debt and
preferred stock obligations in order to reduce its debt service and
other fixed payment requirements and endeavor to raise additional
capital through the sale of equity securities.
F-8
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994, AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenues for maintenance and flight operations are recognized when
services have been performed. Revenues related to aircraft sales and
commissions are recognized at the time title is transferred. Rental
revenues related to tenant leases are recognized pursuant to the
terms of the respective leases. Maintenance projects are accounted
for on the percentage of completion method. Revenues are recognized
based upon that percentage of the total contract price that costs
incurred bear to total estimated costs at completion. Anticipated
contract losses are recognized in full when reasonably determinable.
AIRCRAFT HELD FOR RESALE AND INVENTORIES
Aircraft held for resale and inventories (principally parts) are
valued at the lower of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and
amortization are computed on the straight-line method over the
estimated useful lives indicated below. A residual balance of 25% is
used in the calculation of depreciation for aircraft:
<TABLE>
<CAPTION>
Aircraft 10-15 years
<S> <C>
Building 40 years
Furniture and equipment 5 years
Motor vehicles 5 years
Leasehold improvements Term of lease
</TABLE>
GROUND LEASE, DEFERRED CHARGES AND GOODWILL
Ground lease and deferred charges in connection with the acquisition
of the assets of the Linpro Jet Centre in 1990 and its related
financing (as described in Note 4), are being amortized on a
straight-line basis over terms of forty and seven years,
respectively.
Goodwill resulting from the excess of the purchase price over the net
assets of businesses acquired is being amortized over a forty-year
period on the straight-line method. The carrying value of the
goodwill is reviewed if the facts and circumstances suggest that it
may be permanently impaired. Such review is based upon the
undiscounted expected future operating profit derived from such
businesses and, in the event such result is less than the carrying
value of the goodwill, the carrying value of the goodwill would be
reduced to an amount that reflects the expected future benefit.
F-9
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No.
109 ("SFAS No. 109"), "Accounting for Income Taxes", in the fourth
quarter of fiscal 1993. SFAS No. 109 requires an asset and liability
approach to accounting for income taxes and establishes less
restrictive criteria for recognizing deferred tax assets. Deferred
income tax assets and liabilities arise from differences between the
tax basis of an asset or liability and its reported amount in the
consolidated financial statements. Deferred tax balances are
determined by using the tax rates expected to be in effect when the
taxes will actually be paid or refunds received. Deferred income
taxes are provided with respect to items of income and expense which
enter into the determination of taxable income in years other than
those in which they are recognized for financial reporting purposes.
DEBT DISCOUNT
Long-term debt has been reduced by a debt discount amount of $72,000
and $108,000 at September 30, 1995 and 1994, respectively, to reflect
the difference between the interest rate related to the HM Holdings,
Inc. ("HM Holdings") financing (see Note 4) and market interest.
This discount is being amortized using the interest method over the
term of the debt.
FOREIGN CURRENCY TRANSLATIONS
Assets and liabilities of foreign subsidiaries are translated at
rates of exchange in effect at the close of the period. Revenues and
expenses are translated at the weighted average of exchange rates in
effect during the year. The effects of exchange rate fluctuations on
translating foreign currency assets and liabilities into U.S. dollars
are included as part of the foreign currency translation adjustment
component of stockholders' equity. Gains and losses realized from
foreign currency transactions resulted in gains of $152,000 and
$149,000 and a loss of $16,000 in 1995, 1994 and 1993, respectively,
and are included in the consolidated statements of operations.
EARNINGS PER SHARE
Income (loss) per common share is computed by dividing the net income
(loss) attributable to Common Stock by the weighted average number of
shares of Common Stock and other common stock equivalents outstanding
during the year, unless the effect of including such common stock
equivalents would be anti-dilutive.
F-10
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
2. STOCKHOLDERS' EQUITY
On June 1, 1994, the shareholders of the Company approved amendments
to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock, par value $.05 per share, of
the Company from 20,000,000 to 60,000,000 and to effectuate a reverse
split of one-for-six of the Company's Common Stock which reduced the
number of authorized shares from 60,000,000 to 10,000,000 and
increased the par value per share from $.05 to $.30. Such reverse
split became effective June 2, 1994. All references to shares of
Common Stock and earnings per share herein have been adjusted to
reflect the effect of the reverse stock split.
Pursuant to a Recapitalization Agreement dated as of December 22,
1992 among the Company, Lynton Jet, HM Holdings, a director of the
Company and two additional investors, (i) the Company sold in
aggregate to the director and two additional investors 1,000 shares
of Series C Convertible Preferred Stock of the Company for $1,000,000
in cash, (ii) HM Holdings (a) purchased 2,000 shares of Series D
Preferred Stock of the Company for $2,000,000 in cash to be applied
to reduce the Company's indebtedness to HM Holdings, (b) exercised a
portion of its Original Warrant (as defined in Note 4) for 848,455
shares of
Common Stock of the Company for an exercise price of $851,577 in cash
to be applied to reduce the Company's indebtedness to HM Holdings,
and (c) consented to certain amendments to the Credit Agreement in
consideration for the issuance to HM Holdings of the New Warrant to
purchase up to an additional 99,634 shares of Common Stock of the
Company for $.30 per share (see Note 4).
The Series C Convertible Preferred Stock (i) pays a semi-annual
dividend payable out of the assets of the Company legally available
therefor at the rate of $30 per share, (ii) is convertible at any
time at the option of each of the purchasers of the Series C
Convertible Preferred Stock into an aggregate of 677,779 shares of
Common Stock, (iii) has voting rights as if such shares had been
converted into Common Stock, (iv) is convertible at the Company's
option after ten years, and (v) has no mandatory or optional
redemption rights. HM Holdings waived its right to receive
prepayment of the loans from the proceeds of the sale of the Series C
Convertible Preferred Stock. The Company paid dividends on its
Series C Convertible Preferred Stock aggregating $60,000 in both
fiscal 1995 and 1994.
The Series D Preferred Stock (i) pays a quarterly cumulative dividend
out of the assets of the Company legally available therefor at a rate
equal to the average interest rate per annum borne by the Loans
outstanding under the Credit Agreement with HM Holdings, (ii) is non-
convertible, (iii) has no voting rights, and (iv) has no mandatory or
optional redemption rights. The Company paid dividends on the Series
D Preferred Stock of approximately $154,000 and $118,000 in fiscal
1995 and 1994, respectively.
F-11
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
3. ACQUISITION AND TRANSFER
ACQUISITION OF DOLLAR AIR SERVICES LIMITED
Pursuant to a Share Purchase Agreement dated January 13, 1994 (the
"Dollar Purchase Agreement") among the Company, Limited, a wholly-
owned subsidiary of the Company and all of the shareholders (the
"Dollar Shareholders") of Dollar Air, a company organized under the
laws of England, the Company through Limited acquired on such date
all of the issued and outstanding shares of capital stock of Dollar
Air. At the time of the Dollar Air acquisition, Dollar Air owned a
75% equity interest in Black Isle. In September 1994, the remaining
25% of its capital stock was acquired by the Company.
The consideration paid related to the above transactions was 424,000
Pounds Sterling (approximately $642,000) (including certain expenses
of the Dollar Shareholders) paid in cash and 71,667 shares of Common
Stock of the Company.
TRANSFER OF DOLLAR AIR SERVICES LIMITED
In August 1995, pursuant to a Business Transfer Agreement with PDG, a
company organized under the laws of Scotland, substantially all the
business, assets and liabilities of Dollar Air and Black Isle were
transferred to PDG in exchange for 50% of the capital stock of PDG.
Simultaneously with the consummation of the transaction,
substantially all of the business, assets and liabilities of P.L.M.
Helicopters Limited, a company organized under the laws of Scotland
("PLM") were transferred to PDG and the shareholders of PLM were
issued the remaining 50% of the capital stock of PDG. PDG operates a
fleet of 15 helicopters from bases primarily in Scotland and England,
and provides helicopter support services for industrial and utility
applications in the United Kingdom. Accordingly, the Company's net
investment in PDG at September 30, 1995 is shown as investment in
jointly-owned company in the accompanying consolidated balance sheet
and the Company's proportionate share of the results of operations of
PDG since the transfer date are reflected in the accompanying
consolidated statement of operations under the equity method of
accounting.
In connection with this transfer, the carrying value of the
unamortized goodwill arising on the acquisition of Dollar Air was
written off in fiscal 1995 and amounted to approximately $1,338,000.
4. FINANCING/STOCK WARRANT
Simultaneous with the acquisition of the Jet Centre in 1990 the
Company and its wholly-owned subsidiary, Lynton Jet, entered into a
Credit Agreement dated August 14, 1990 ("the Credit Agreement") with
HM Holdings in order to provide the Company and Lynton Jet with funds
to be used in part to finance the Jet Centre Acquisition and to
finance a portion of the ongoing working capital needs of the Company
and the Jet Centre. The Credit Agreement financing consisted of term
loans in the amount of $2,000,000 and $10,800,000 to the Company and
Lynton Jet, respectively, and a revolving credit facility to Lynton
Jet which provided for up to $4,200,000 in borrowings (together, the
"Loans"). The Company and Lynton Jet
F-12
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
4. FINANCING/STOCK WARRANT (CONTINUED)
have guaranteed the obligations of each other under the Credit
Agreement. HM Holdings is an indirect wholly owned subsidiary of
Hanson plc.
The Loans, as amended, are secured by all of the capital stock of
Lynton Jet and the Company's other domestic subsidiaries and 65% of
the capital stock of the Company's foreign subsidiaries, as well as
certain of the assets and properties of the Company and each of its
domestic subsidiaries, including a leasehold mortgage and assignment
of certain rents on the Jet Centre facility. In addition, the
Company's domestic subsidiaries have guaranteed the full and prompt
payment of the Loans. The Loans require compliance with certain
covenants which require, among other things, maintaining a minimum
net worth balance, interest coverage ratio and restrict capital
expenditures and prohibit the payment of dividends to stockholders.
The Credit Agreement with HM Holdings, as amended, requires
prepayment of the Loans with the proceeds of certain asset sales and
sales of stock by the Company, and requires prepayment of the Loans
in the amount of any excess cash flow, as defined in the Credit
Agreement, after the first $1,000,000 thereof. Interest on the Loans
is payable quarterly at a rate equal to Prime plus 1.51% or, at the
election of the Company, at the Eurodollar LIBOR rate plus 3.26%.
In connection with the June 22, 1994 issuance of the Mortgage Note
discussed below, $8,000,000 of the net proceeds therefrom were
applied to the repayment of the Loans. As a result, the Company term
loan has been repaid in full, the principal payments on the Lynton
Jet term loan have been made through the remaining payment of
$2,905,923 due September 30, 1997, and the principal amount
outstanding under the revolving credit facility was reduced to
$3,000,000, which is also due on September 30, 1997. The
Company recorded an extraordinary charge during the year ended
September 30, 1994 of $166,000, representing the unamortized debt
discount and issuance costs related to the repaid portion of the
Loans.
On August 12, 1994, to reflect certain agreements entered into in
connection with HM Holdings' consent to the issuance of the Mortgage
Note and Hanson America's agreement to provide the Hanson America
Guaranty, the Credit Agreement was amended pursuant to a Letter
Agreement among the Company, Jet Centre, HM Holdings and Hanson
America (the "Fourth Amendment"). The Fourth Amendment principally
provides for the reduction of the maximum aggregate amount of the
revolving credit facility from $4,200,000 to $3,200,000, unless HM
Holdings otherwise agrees in writing, and the addition of 100 basis
points to the interest rates applicable to the Loans.
In October 1994, HM Holdings loaned the Company an additional
$500,000 under an additional revolving credit facility, increasing
the aggregate amount of the revolving credit facility to $3,700,000.
On January 12, 1995, in connection with the minimum net worth
requirements under the Credit Agreement, HM Holdings agreed to waive
any and all such net worth requirements for fiscal 1994, fiscal 1995
and the first quarter of fiscal 1996. On January 5, 1996, in
connection with these requirements, HM Holdings
F-13
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
4. FINANCING/STOCK WARRANT (CONTINUED)
agreed to waive any and all such net worth requirements for the
remainder of fiscal 1996 and the first quarter of fiscal 1997.
Beginning in the second quarter of fiscal 1997, the Company will
again be required to maintain a minimum net worth as specified in the
Credit Agreement of $4,000,000. In addition the Company has received
waivers of the interest coverage ratio requirements under the Credit
Agreement for each quarter of the fiscal years ended September 30,
1995 and 1996 and the first quarter of fiscal 1997. No assurances can
be given as to the Company's ability to meet future net worth
requirements under the Credit Agreement or that additional waivers
will be received at appropriate times.
WARRANT
In connection with the execution of the Credit Agreement, the Company
issued to HM Holdings a Warrant (the "Original Warrant") to purchase
996,334 shares of Common Stock. The Original Warrant is exercisable
at any time during the period in which the Loans are outstanding, and
for a period of 90 days after repayment of the Loans, at an exercise
price of $1,000,000 in the aggregate. The Original Warrant has been
valued at the estimated fair market value of the shares, at the date
of grant, to be received, less the
exercise price. On December 22, 1992, HM Holdings exercised a
portion of the Original Warrant (see Note 2).
In connection with an amendment to the Credit Agreement, the Company
and HM Holdings entered into a warrant purchase agreement dated as of
December 22, 1992 pursuant to which the Company issued to HM Holdings
an additional warrant (the "New Warrant") to purchase up to 99,634
shares of the Company's Common Stock at a price of $.30 per share at
any time. The number of shares of Common Stock for which the New
Warrant and the price at which such shares may be purchased is
subject to adjustment upon the occurrence of certain events.
Concurrently with the delivery of the Original Warrant, HM Holdings,
the Company and Christopher Tennant, a director and Chief Executive
Officer of the Company, executed a Stockholders' Agreement that
provides for certain rights of first refusal, rights of inclusion and
rights to compel sales in connection with certain sales of securities
of the Company by HM Holdings and Mr. Tennant. The Stockholders'
Agreement further provides that upon exercise of the Original Warrant
and as long as HM Holdings beneficially owns at least 25% of the
outstanding shares of Common Stock of the Company, the Board of
Directors of the Company shall consist of nine directors and HM
Holdings shall have the right to nominate four directors. In
connection therewith, Mr. Tennant has agreed in the Stockholders'
Agreement to vote his shares for the nominees of HM Holdings, as
directors. In addition, HM Holdings has agreed to vote its shares
for Mr. Tennant, as a director, so long as Mr. Tennant owns not less
than 5% of the outstanding shares of Common Stock of the Company.
F-14
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
4. FINANCING/STOCK WARRANT (CONTINUED)
THE CONNECTICUT MUTUAL MORTGAGE NOTE
On June 22, 1994, Lynton Properties issued to Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") a $9,000,000, 6.69% mortgage
note due January 3, 2006 (the "Mortgage Note") with scheduled
monthly payments of principal and interest. The Mortgage Note is
secured by a Leasehold Mortgage and Security Agreement and an
Assignment of Leases and Rents, each dated June 22, 1994, on a lease
between a certain tenant and Lynton Properties relating to a hangar
and office facility located on the property at the Jet Centre.
In addition, the obligations of Lynton Properties under the Mortgage
Note are guaranteed by Lynton Jet pursuant to a Guaranty Agreement
dated June 22, 1994, between Lynton Jet and Connecticut Mutual (the
"Jet Centre Guaranty"). Similarly, the obligations of Lynton Jet
under the Jet Centre Guaranty, other than certain environmental and
related obligations, are guaranteed by Hanson America, Inc., an
indirect wholly-owned subsidiary of Hanson plc ("Hanson America"),
pursuant to a Guaranty Agreement dated June 22, 1994, between Hanson
America and Connecticut Mutual (the "Hanson America Guaranty").
Further, Hanson America received a one-time fee of $100,000 in
connection with the issuance of the Hanson America Guaranty.
At September 30, 1995 and 1994, the Company had $150,000 in funds
held in escrow as additional security to the Mortgage Note.
10% SENIOR SUBORDINATED CONVERTIBLE DEBENTURES
In December 1993, the Company completed an off-shore placement of
$2,500,000 principal amount of 10% Senior Subordinated Convertible
Debentures due December 31, 1998 (the "Debentures"). With regard to
the use of proceeds from such offering, the Company agreed that the
net proceeds of approximately $2,200,000 would be used for the
purpose of making acquisitions of other companies in the aviation
services industry. In January 1994, these funds were used to acquire
Dollar Air including acquisition expenses and to reduce balances
outstanding under credit facilities of Dollar Air. The Debentures are
convertible into shares of the Company's Common Stock at the option
of the holder at any time prior to maturity at a price of $3.75 per
share. The Debentures may also be redeemed by the Company at any
time or from time-to-time commencing July 1995 at the Company's
option, in whole or in part, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus accrued
and unpaid interest at the redemption date (and subject to the right
of any record holder to receive the interest payable on the
applicable interest payment date that is on or prior to the
redemption date). If redeemed during the periods indicated below,
the applicable redemption percentage will be:
F-15
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
4. FINANCING/STOCK WARRANT (CONTINUED)
<TABLE>
<CAPTION>
FROM THROUGH PERCENTAGE
<S> <C> <C>
July 1, 1995 June 30, 1996 109%
July 1, 1996 June 30, 1997 106%
July 1, 1997 June 30, 1998 103%
July 1, 1998 and thereafter 100%
</TABLE>
Prior to December 31 of each of the years from 1996 to 1998,
inclusive, the Company has agreed to pay to the trustee for the
Debentures, as a sinking fund payment, cash in the amount of 1/3 of
the aggregate principal amount of the issued Debentures, provided
that Debentures converted, reacquired or redeemed by the Company may
be used, at the principal amount thereof, to reduce the amount of any
sinking fund payment.
In connection therewith, the Company paid Value Investing Partners,
Inc., the placement agent for such offering (the "Placement Agent"),
a commission of $225,000 representing nine percent (9%) of the gross
proceeds. In addition, the Placement Agent received from the Company
warrants exercisable for a period of ten years for the purchase of
125,000 shares of the Common Stock of the Company at an exercise
price equal to $3.825 per share. In addition, the Placement Agent
was granted a right of first refusal for a period of three years from
December 1993 with respect to any private or public equity or debt
placement by the Company through an underwriter or placement agent
during such period.
During the period from June 30, 1995 through January 22, 1996, the
Company was not in compliance with the minimum net worth requirements
of the Debenture Agreement. As of January 23, 1996, in connection
with such requirements, a majority of the debenture holders agreed to
waive any and all such net worth requirements for fiscal 1995 and
1996 and the first quarter of fiscal 1997. No assurances can be given
as to the Company's ability to meet future net worth requirements
under the Debenture Agreement or that additional waivers will be
received at appropriate times.
5. FOREIGN OPERATIONS
Following is a summary of the consolidated financial position at
September 30, 1995 and 1994 and consolidated results of operations
for each of the three years ended September 30 of the Company's
wholly-owned foreign subsidiary, Limited, located in the United
Kingdom, and its subsidiaries.
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Summary of financial
position:
Current assets $1,342,944 $2,041,605
Property, plant and 1,884,302 4,311,428
equipment, net
Goodwill and other assets 1,461,967 2,386,058
Total assets $4,689,213 $8,739,091
</TABLE>
F-16
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
5. FOREIGN OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Current liabilities $3,717,942 $8,108,942
Long-term liabilities 367,566 1,035,662
Equity 603,705 (405,513)
Total liabilities and $4,689,213 $8,739,091
equity
</TABLE>
Revenues from foreign subsidiaries represented 55%, 58% and 49% of
consolidated net revenues in 1995, 1994 and 1993, respectively, and
were derived from geographic regions as specified below:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
1995 1994 1993
<S> <C> <C> <C>
Net revenues:
Domestic $15,271,115 $13,987,769 $13,244,403
Foreign:
United Kingdom and
other European 17,864,880 17,712,043 12,526,269
countries
Africa - 371,578 -
South America 502,326 1,022,098 -
$33,638,321 $33,093,488 $25,770,672
(Loss) income before
income tax provision
and extraordinary
item:
Domestic $(156,122) $(375,546) $156,512
Foreign (2,164,031) (826,862) (27,838)
$(2,320,153) $(1,202,408) $128,674
</TABLE>
There were no dividends from foreign subsidiaries during 1995, 1994
or 1993.
6. NOTES PAYABLE/LONG-TERM DEBT
Notes payable at September 30, 1995 and 1994 consist of the
following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Revolving credit facilities with
banks with interest at Sterling $240,533 $1,891,179
LIBOR rate (6.81% at September 30,
1995) plus 2.5%, due on demand.
</TABLE>
F-17
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
6. NOTES PAYABLE/LONG-TERM DEBT (CONTINUED)
Long-term debt at September 30, 1995 and 1994 consists of the
following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Term loans due to HM Holdings (see
Note 4), with interest at Eurodollar
LIBOR rate (5.88% at September 30, $2,905,923 $2,905,923
1995) plus 3.26%, maturity date
September 30, 1997.
Balance outstanding under revolving
credit facility with HM Holdings
(see Note 4), with interest at 3,700,000 3,200,000
Eurodollar LIBOR rate (5.88% at
September 30, 1995) plus 3.26%,
maturity date September 30, 1997.
Mortgage due to bank with interest
at Sterling LIBOR rate (6.81% at
September 30, 1995) plus 2.0%, due 408,608 463,728
in monthly installments through
April 2001.
Mortgage Note payable to Connecticut
Mutual (see Note 4) with an interest 8,501,447 8,840,813
rate of 6.69% due in monthly
installments through January 3,
2006.
Senior Subordinated Convertible
Debentures (see Note 4) with
interest at 10%, payable in the 2,500,000 2,500,000
amount of 1/3 of the aggregate
principal amount prior to December
31 of each of the years from 1996 to
1998.
Note payable to finance company with
interest at Sterling LIBOR rate
(6.81% at September 30, 1995) plus 372,914 154,589
3.0% payable in monthly installments
through September 1996.
Notes payable to finance company
with interest at Eurodollar LIBOR - 740,345
rate plus 2.5%, transferred to PDG
on August 31, 1995.
Notes payable due to finance company
with interest at Eurodollar LIBOR - 1,124,507
rate plus 2.5%, repaid in full in
April, 1995.
Note payable to finance company with
interest at Sterling LIBOR rate plus - 126,824
2.5%, repaid in full in December,
1994.
Note payable to finance company with
interest at Sterling LIBOR rate plus - 339,055
4.5%, transferred to PDG on August
31, 1995.
Note payable to finance company with
interest at Sterling LIBOR rate - 106,448
repaid in full in January, 1995
$18,388,892 $20,502,232
Less:
Unamortized discount (71,951) (107,951)
Amount due within one year (924,580) (2,134,247)
$17,392,361 $18,260,034
</TABLE>
F-18
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
6. NOTES PAYABLE/LONG-TERM DEBT (CONTINUED)
Maturities of long-term debt for the fiscal years ending September 30
are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $924,580
1997 8,073,542
1998 1,511,490
1999 1,558,226
2000 774,844
Thereafter 5,546,210
$18,388,892
</TABLE>
Note payable due to financing company of $373,000 is secured by
aircraft with an aggregate book value of approximately $780,000.
Notes payable to bank of $240,000 are secured by accounts receivable
and inventory of United Kingdom subsidiaries. The mortgage of
$409,000 is secured by buildings with a net book value of
approximately $702,000.
At September 30, 1995 and 1994, the weighted average interest rates
on short-term borrowings was 9.3% and 7.9%, respectively.
7. LEASES/CONTINGENCIES
OPERATING LEASES
Minimum future obligations under operating leases in effect at
September 30, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year Ending September 30:
1996 $488,669
1997 340,941
1998 274,220
1999 147,220
2000 147,220
Thereafter 1,496,840
Total minimum lease payments $2,895,110
</TABLE>
Rental expense for the years ended September 30, 1995, 1994 and 1993
was approximately $456,000, $442,000 and $367,000, respectively.
A portion of Lynton Jet's and Lynton Properties' operating revenue is
obtained from tenants through rental payments as provided for under
noncancellable operating leases. The leases typically provide for
guaranteed minimum rentals and other charges to cover certain
operating costs in excess of base amounts.
F-19
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
7. LEASES/CONTINGENCIES (CONTINUED)
The following is a schedule, by fiscal year, of minimum future rental
income under noncancellable tenant operating leases as of September
30, 1995:
<TABLE>
<CAPTION>
<S> <C>
1996 $2,722,084
1997 2,603,658
1998 2,432,788
1999 1,978,827
2000 1,472,196
Thereafter 5,888,843
Total minimum future rentals $17,098,396
</TABLE>
CAPITAL LEASES
Subsidiaries of the Company in the United Kingdom lease automobiles
which have been accounted for as capital leases.
Aggregate future minimum lease payments under capital leases at
September 30, 1995, by fiscal year, are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $31,511
1997 21,283
Total minimum lease payments 52,794
Less interest portion 7,606
Present value of net minimum $45,188
lease payments
</TABLE>
ENVIRONMENTAL CLEANUP
In connection with the cleanup of fuel contaminated soil at a
facility previously leased by the Company, the Company recorded a
charge to operations of $100,000 in fiscal 1992 and credits to
operations for reversals of $15,000 and $45,000 of this provision in
fiscal 1994 and 1993, respectively. The removal of such soil was
completed in fiscal 1992.
AIRCRAFT LEASE GUARANTEE
In fiscal 1994, the Company acted as broker in an aircraft leasing
transaction between an aircraft leasing company and a customer of the
Company. Under the terms of the transaction, the Company has
guaranteed to the leasing company that the Company will fund any
shortfall if the aircraft is sold below a specified sales price at
the termination of the lease. Management believes that the fair
market value of the aircraft at the termination of the lease will
exceed the specified sales price and thus no provision for such
guarantee has been made in the accompanying financial statements.
F-20
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
8. INCOME TAXES
The Company and its wholly-owned United States subsidiaries file
federal income tax returns on a consolidated basis. Limited and its
subsidiaries file separate tax returns in the United Kingdom.
As discussed in Note 1, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income
Taxes", during fiscal 1993. In accordance with the provisions of
SFAS No. 109, the Company elected not to restate prior years'
consolidated financial statements and has determined that the
cumulative effect of the change in accounting for income taxes was
insignificant.
Deferred income taxes recorded in the consolidated balance sheet at
September 30, 1995 and 1994 include deferred tax assets related to
net operating loss carryforwards of $1,122,000 and $1,543,000,
respectively, which have been fully offset by valuation allowances.
The valuation allowances have been established equal to the full
amount of the deferred tax assets, as the Company is not assured at
either September 30, 1995 and 1994, that it is more likely than not
that these benefits will be realized. Included in the consolidated
balance sheet at September 30, 1994 are deferred tax liabilities
related to differences between the book and tax basis of certain
fixed assets of Dollar Air.
The income tax provision for the year ended September 30, 1994
represents foreign withholding taxes. The income tax provision for
the year ended September 30, 1993 represents state income taxes
related to the operations of LynStar.
The Company's effective tax rate differs from the U.S. statutory rate
(34%) due to the following:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
1995 1994 1993
<S> <C> <C> <C>
Expected provision
(benefit) at
34% $(788,852) $(465,259) $43,749
State income taxes - - 9,926
Foreign withholding - 28,175 -
taxes
Benefit not recognized
on operating losses:
Domestic 53,082 184,126 -
Foreign 735,770 281,133 9,465
Benefit from - - (53,214)
utilization of NOL
carryforwards
Total tax provision $0 $28,175 $9,926
</TABLE>
The Company has unused federal net operating loss carryforwards at
September 30, 1995 of approximately $3,301,000 which expire through
September 30, 2009. As a result of the Jet Centre acquisition and
the related issuance of the Original Warrant to HM Holdings (see Note
4), utilization of approximately $1,500,000 of the Company's net
operating loss carryforwards is substantially restricted under
Section 382 of the Internal Revenue Code of 1986, as amended. Future
realization of the restricted net operating loss carryforwards will
be limited annually to an amount generally calculated by multiplying
the value of the
F-21
<PAGE>
LYNTON GROUP. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
8. INCOME TAXES (CONTINUED)
Company immediately preceding the issuance of the Original Warrant by
the long-term tax exempt rate at that date.
9. EMPLOYMENT AGREEMENT/STOCK OPTIONS
The Company has an employment agreement with its Chief Executive
Officer extending through September 30, 1996 providing for a base
salary of $180,000 annually. In August 1993, the Board of Directors
adopted the 1993 Stock Option Plan (the "1993 Plan") for employees,
officers, consultants or directors of the Company or its subsidiaries
to purchase up to 250,000 shares of Common Stock of the Company.
Options granted under the 1993 Plan may either be "incentive stock
options" as defined in Section 422 of the Code, or non-statutory
stock options. Any incentive stock options granted under the 1993
Plan shall be granted at no less than 100% of the fair market value
of the Common Stock of the Company at the time of the grant. As of
September 30, 1995, options to acquire 60,002 shares of Common Stock
have been granted under the 1993 Plan and 189,998 options were
available for future grant.
Information with respect to the 1993 Plan and other options granted
to certain directors and officers of the Company is summarized as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30
1995 1994 1993
<S> <C> <C> <C>
Outstanding at 75,842 110,842 60,005
beginning of year
Granted 26,668 - 52,504
Cancelled (8,334) (35,000) (1,667)
Exercised - - -
Outstanding at end of 94,176 75,842 110,842
year
Exercisable at end of 74,176 75,842 71,674
year
Average price of $2.34 $2.84 $3.84
options outstanding
</TABLE>
10. RELATED PARTY TRANSACTIONS
Lynton Jet and HM Industries, Inc. ("HM Industries"), a subsidiary of
HM Holdings, which provided the financing for the Jet Centre
Acquisition (see Note 4), are parties to a Management Agreement (the
"Management Agreement") and an Agreement of Lease (the "Lease"), each
as amended July 1, 1994.
Pursuant to the terms of the Lease, Lynton Jet agreed to lease to HM
Industries office and hangar space at the Jet Centre for the purpose
of repair and operation of certain aircraft of HM Industries and its
affiliates. The term of the Lease is ten years, provided that HM
Industries has the right to terminate the Lease upon termination of
the Management Agreement. For the nine months ended June 30, 1994
and the fiscal year
F-22
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
10. RELATED PARTY TRANSACTIONS (CONTINUED)
ended September 30, 1993, the annual rent under the lease was
$325,000, which was reduced in the July 1, 1994 amendment to $250,000
per annum.
Under the Management Agreement in effect to June 30, 1995, the
Company was obligated to provide complete aviation management
services, including flight scheduling, aircraft utilization
management, provision of pilots, repair and maintenance, fueling,
catering and bookkeeping and accounting. Since June 30, 1995, under
this agreement, the Company is obligated to provide fueling, catering
and bookkeeping and accounting services. HM Industries will reimburse
the Company for actual costs of performing these services, less
$125,000 per annum through June 30, 1994. Subsequent to June 30,
1994, in accordance with the amendment to the lease dated July 1,
1994, there is no deduction in the reimbursement amount. HM
Industries' reimbursements to the Company for the years ended
September 30, 1995, 1994, and 1993 were $6,417,000, $5,732,000, and
$4,650,000 respectively, which are reflected in flight operations
revenues in the accompanying consolidated statements of operations.
Such reimbursements represent approximately 19%, 17% and 18% of the
Company's revenues for the years ended September 30, 1995, 1994 and
1993, respectively. No other customer represented more than 10% of
the Company's revenues for any of the years presented. At September
30, 1995, 1994 and 1993, reimbursements receivable from HM Industries
were $141,000, $409,000 and $425,000, respectively. Such amounts are
included in amounts due from affiliates in the accompanying
consolidated balance sheets.
See Note 6 for amounts due under long-term debt agreements to HM
Holdings at September 30, 1995 and 1994. Interest expense related to
these borrowings was approximately $607,000, $735,000 and $839,000
for the years ended September 30, 1995, 1994 and 1993, respectively.
The Company rents office space in London from a company which is
wholly-owned by the Company's Chief Executive Officer. For the years
ended September 30, 1995, 1994 and 1993, rental expense for this
space was $48,000, $64,000 and $63,000, respectively. At September
30, 1995 and 1994, the Company had non-interest bearing receivables
from a company owned by the Chief Executive Officer of the Company in
the amount of $191,308. Such amounts are included in amounts due
from affiliates in the accompanying consolidated balance sheets.
At September 30, 1994, the Company had notes payable of $67,000 due
to a company owned by a stockholder of the Company. These notes bear
interest at Sterling LIBOR plus 2% and are payable on demand. These
notes were paid by the Company in fiscal 1995. At September 30,
1995, the Company had receivables from this company in the amount of
$15,000. Such amount is included in amounts due from affiliates in
the accompanying consolidated balance sheets.
The Company paid $27,000 and $50,000 in 1995 and 1994, respectively,
to a company owned by one of the Company's directors for management
and advisory services rendered.
F-23
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
11. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
In connection with the acquisition of Dollar Air in 1994, the Company
acquired assets and assumed liabilities as follows:
<TABLE>
<CAPTION>
<S> <C>
Fair value of assets acquired (including $5,467,345
goodwill of $2,115,848)
Value of Common Stock issued (140,000)
Liabilities assumed (4,526,850)
Cash paid $800,495
</TABLE>
Other non-cash investing and financing activities for the years
ended September 30 are as follows:
<TABLE>
<CAPTION>
1995
<S> <C>
Transfer of assets to jointly-owned company $3,533,893
Liabilities assumed by jointly-owned company (2,275,060)
Investment in jointly-owned company $1,258,833
1994
Transfer of fixed assets to aircraft held for $1,529,757
resale
Value of Common Stock issued in connection
with the acquisition of Dollar Air and $143,750
related minority interest
</TABLE>
Cash paid for interest and income taxes during the fiscal years were
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Interest $1,768,959 $1,949,048 $1,235,093
Income taxes $- $28,175 $9,926
</TABLE>
F-24
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995, 1994 AND 1993
12. ACCRUED EXPENSES
As of September 30, 1995 and 1994, accrued expenses are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Payroll and payroll taxes $166,888 $196,454
Interest 183,064 179,996
Sales taxes 319,807 129,141
Professional fees 129,313 176,193
Dividends on preferred stocks 57,945 45,379
Aircraft management and 187,025 814,277
charter costs
Site cleanup cost 40,000 40,000
Other 335,338 594,383
$1,419,380 $2,175,823
</TABLE>
13. EMPLOYEE BENEFIT PLANS
The Company has a voluntary savings plan covering substantially all
of its domestic employees. The plan qualifies under Section 401(k)
of the Internal Revenue Code. Eligible employees may elect to
contribute up to 15% of their salaries to an investment trust.
Effective October 1, 1990, the Company contributes an amount equal to
100% of the first 4% of employee contributions. Contributions
related to this plan were $68,000, $73,000 and $65,000 for fiscal
1995, 1994 and 1993, respectively.
The Company also has a voluntary savings plan covering eligible
employees of its subsidiaries in the United Kingdom. Eligible
employees may elect to contribute up to 17.5% of their salaries to an
investment trust. The Company contributes an amount equal to 100% of
the first 4% of employee contributions. Contributions related to
this plan were approximately $68,000, $66,000 and $69,000 for fiscal
1995, 1994 and 1993, respectively.
F-25
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Lynton Group, Inc.
In connection with our audits of the consolidated financial
statements of Lynton Group, Inc. and subsidiaries as of September 30,
1995 and 1994, and for each of the three years in the period ended
September 30, 1995, we have also audited the consolidated schedule
included in this Annual Report (Form l0-K).
In our opinion, the consolidated schedule referred to above presents
fairly, in all material respects, the information required to be
stated therein.
/s/ Ernst & Young LLP
MetroPark, New Jersey
December 21, 1995
F-26
<PAGE>
Lynton Group, Inc. and Subsidiaries
Schedule II-Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Balance at Balance at
Beginning of End of
Period Additions Deductions Period
<S> <C> <C> <C> <C>
Year ended September (1)
30, 1995:
Allowance for doubtful $291,103 $15,917 $(285,211) $21,808
accounts
Year ended September
30, 1994:
Allowance for doubtful $10,874 $284,267 $(4,038) $291,103
accounts
Year ended September
30, 1993:
Allowance for doubtful $25,169 $- $(14,295) $10,874
accounts
</TABLE>
(1) Represents the write off of $285,211 as a result of the
transaction described in Note 3.
F-27
<PAGE>
(a) (3) Exhibits
99.11 Business Acquisition Agreement between Dollar Air Services
Limited and PLM Dollar Group Limited
BUSINESS TRANSFER AGREEMENT between:-
(1) PLM DOLLAR GROUP LIMITED, incorporated under the Companies Acts
with Number 157532 and having its Registered Office at Redwood,
19 Culduthel Road, Inverness IV2 4AA (hereinafter referred to as
"Group");
(2) DOLLAR AIR SERVICES LIMITED, incorporated under the Companies
Acts with Number 1340897 and having its Registered Office at
Denham Airport, Hangar Road, Uxbridge, Middlesex UB9 5DF
(hereinafter referred to as "Dollar");
(3) BLACK ISLE HELICOPTERS LIMITED, incorporated under the Companies
Acts with Number 106270 and having its Registered Office at St
Martins Farm, Culbokie, Dingwall IV7 8JT (hereinafter referred
to as "Black Isle"); and
(4) LYNTON GROUP LIMITED, incorporated under the Companies Acts with
Number 1755460 and having its Registered Office at Denham
Airport, Hangar Road, Uxbridge, Middlesex UB9 5DF (hereinafter
referred to as "Lynton")
DEFINITIONS
<PAGE>
In this Agreement:-
*1."THE BLACK ISLE/BARCLAYS FLOATING CHARGE" MEANS THE FLOATING
CHARGE, DATED 16 JANUARY 1995 AND REGISTERED WITH THE
REGISTRAR OF COMPANIES ON 3 FEBRUARY 1995, GRANTED BY
BLACK ISLE IN FAVOUR OF BARCLAYS BANK PLC OVER THE WHOLE
PROPERTY AND UNDERTAKING OF BLACK ISLE;
*2."THE BLACK ISLE BUSINESS" MEANS THE BUSINESS OF OPERATING AND
SERVICING HELICOPTERS CARRIED ON BY BLACK ISLE IN THE
UNITED KINGDOM DOWN TO 30 AUGUST 1995 WHEN SUCH BUSINESS
AND THE ASSETS AND LIABILITIES THEREOF WERE ACQUIRED BY
AND TRANSFERRED TO DOLLAR;
*3."BUSINESS DAY" MEANS A DAY IN WHICH THE OFFICES OF THE BANK
OF SCOTLAND ARE OPEN IN SCOTLAND FOR BUSINESS;
*4."THE BUSINESS NAMES" MEANS THE TRADING NAMES "DOLLAR",
"DOLLAR HELICOPTERS", "DOLLAR AIR SERVICES" AND "BLACK
ISLE HELICOPTERS";
*5."THE BUSINESS PREMISES" MEANS THE COVENTRY PREMISES, THE
CUMBERNAULD PREMISES AND THE INVERNESS PREMISES;
*6."THE BVLG DEBT" MEANS THE OBLIGATIONS AND LIABILITIES OF
LYNTON GROUP INC. AND/OR LYNTON AVIATION LIMITED AND/OR
LYNTON AND/OR DOLLAR (INCLUDING THE OBLIGATIONS TO REPAY
PRINCIPAL AND TO PAY INTEREST) IN RESPECT OF THE LOAN
MADE BY CUBE AIR FINANCE LIMITED IN RESPECT OF (AND
SECURED OVER) THE AEROSPATIALE AS355F1 HELICOPTER,
SERIAL NUMBER 5011 AND REGISTRATION MARK G-BVLG;
*7."THE BTWW DEBT" MEANS THE OBLIGATIONS AND LIABILITIES OF
DOLLAR (INCLUDING THE OBLIGATIONS TO REPAY PRINCIPAL AND
TO PAY INTEREST) IN RESPECT OF THE LOAN MADE BY CLOSE
BROTHERS LIMITED AND/OR AIR AND GENERAL FINANCE LIMITED
IN RESPECT OF (AND SECURED OVER) THE AUGUSTA BELL 206B
HELICOPTER, SERIAL NUMBER 8567 AND REGISTRATION MARK G-
BTWW;
*8."THE BEWY DEBT" MEANS THE OBLIGATIONS AND LIABILITIES OF
DOLLAR (INCLUDING THE OBLIGATIONS TO REPAY PRINCIPAL AND
TO PAY INTEREST) IN RESPECT OF THE LOAN MADE BY CLOSE
BROTHERS LIMITED AND/OR AIR AND GENERAL FINANCE LIMITED
IN RESPECT OF (AND SECURED OVER) THE AUGUSTA BELL 206B
HELICOPTER, SERIAL NUMBER 0348 AND REGISTRATION MARK G-
BEWY;
*9."THE COMPLETION DATE" MEANS 5 SEPTEMBER 1995 (OR SUCH OTHER
DATE AS MAY BE AGREED IN WRITING BY OR ON BEHALF OF
GROUP AND BY OR ON BEHALF OF DOLLAR);
*10."CONSIDERATION SHARES" MEANS "B" ORDINARY SHARES OF POUNDS 1
EACH IN THE SHARE CAPITAL OF GROUP;
*11."THE COVENTRY PREMISES" MEANS SITE 27 AT COVENTRY AIRPORT
LEASED BY DOLLAR FROM THE COUNCIL OF THE CITY OF
COVENTRY (AT AN ANNUAL RENT OF POUNDS 1,000 PAYABLE
QUARTERLY IN ADVANCE) FOR A PERIOD OF THREE YEARS
COMMENCING ON 8 OCTOBER 1994 (SUBJECT TO EITHER PARTY
HAVING THE RIGHT TO BREAK THE LEASE AT ANY TIME AFTER 25
DECEMBER 1995 ON THREE MONTHS PRIOR NOTICE);
*12."THE CUMBERNAULD PREMISES" MEANS THE OFFICE ACCOMMODATION
AND HANGAR SPACE LEASED BY DOLLAR FROM CORMACK AIRCRAFT
SERVICES LIMITED IN TERMS OF A LEASE DATED 29 MAY 1992,
12 OCTOBER 1992 AND 10 NOVEMBER 1992 (AND REGISTERED IN
THE BOOKS OF COUNCIL AND SESSION ON 21 DECEMBER 1992)
BETWEEN CORMACK AIRCRAFT SERVICES LIMITED (AS LANDLORD),
CUMBERNAULD DEVELOPMENT CORPORATION (AS HEAD LANDLORD)
AND DOLLAR (AS TENANT);
*13."THE CURRENT CONTRACTS" MEANS ALL CONTRACTS AND AGREEMENTS
ENTERED INTO BY BLACK ISLE IN THE ORDINARY COURSE OF THE
BLACK ISLE BUSINESS AND ALL CONTRACTS AND AGREEMENTS
ENTERED INTO BY DOLLAR IN THE ORDINARY COURSE OF THE
DOLLAR BUSINESS, INCLUDING (BUT NOT RESTRICTED TO) (A)
THE LONG TERM CONTRACTS, (B) OTHER CONTRACTS AND
AGREEMENTS BETWEEN BLACK ISLE AND CUSTOMERS OF AND
SUPPLIERS TO BLACK ISLE, (C) OTHER CONTRACTS AND
AGREEMENTS BETWEEN DOLLAR AND CUSTOMERS OF AND SUPPLIERS
TO DOLLAR, (D) THE LEASING, HIRE PURCHASE AND CONTRACT
HIRE AGREEMENTS ENTERED INTO BY BLACK ISLE OR DOLLAR IN
RESPECT OF THE LEASED ASSETS, (E) THE AGREEMENTS ENTERED
INTO BY BLACK ISLE FOR THE LEASE OF PHOTOCOPIERS,
FRANKING MACHINES, FAX MACHINES AND TELEPHONE EQUIPMENT,
(F) THE AGREEMENTS ENTERED INTO BY DOLLAR FOR THE LEASE
OF PHOTOCOPIERS, FRANKING MACHINES, FAX MACHINES AND
TELEPHONE EQUIPMENT, (G) ANY MAINTENANCE AGREEMENTS
ENTERED INTO BY BLACK ISLE, (H) ANY MAINTENANCE
AGREEMENTS ENTERED INTO BY DOLLAR, (I) ANY CONTRACTS
ENTERED INTO BY BLACK ISLE FOR THE PROVISION TO BLACK
ISLE OF SECURITY SERVICES, EQUIPMENT OR SYSTEMS AND (J)
ANY CONTRACTS ENTERED INTO BY DOLLAR FOR THE PROVISION
TO DOLLAR OF SECURITY SERVICES, EQUIPMENT OR SYSTEMS
(BUT THERE SHALL BE EXCLUDED FROM THE CURRENT CONTRACTS
ANY CONTRACT OR AGREEMENT WHICH HAS BEEN FULLY SATISFIED
OR COMPLETED PRIOR TO THE TRANSFER DATE AND ANY CONTRACT
OR AGREEMENT (OTHER THAN THE LONG TERM CONTRACTS AND THE
LEASING, HIRE PURCHASE AND CONTRACT HIRE AGREEMENTS
ENTERED INTO BY BLACK ISLE OR DOLLAR IN RESPECT OF THE
LEASED ASSETS) WHICH WILL NOT IN ITS ORDINARY COURSE
TERMINATE OR BE COMPLETED OR IMPLEMENTED WITHIN THE
PERIOD OF 60 DAYS COMMENCING ON (AND INCLUDING) THE
TRANSFER DATE OR WHICH CANNOT BE TERMINATED BY EITHER
BLACK ISLE OR DOLLAR (AND THEREFORE BY GROUP) WITHOUT
COST OR PENALTY BY GIVING 60 DAYS' NOTICE OR LESS OF
TERMINATION);
*14."THE DENHAM STOCK" MEANS THE STOCK OF SPARE AND REPLACEMENT
PARTS HELD BY DOLLAR FOR JET RANGER 206 HELICOPTERS
(WHICH STOCK IS NOT LOCATED AT ANY OF THE BUSINESS
PREMISES);
*15."THE DOLLAR/BARCLAYS FLOATING CHARGE" MEANS THE FLOATING
CHARGE, DATED 11 APRIL 1986 AND REGISTERED WITH THE
REGISTRAR OF COMPANIES ON 21 APRIL 1986, GRANTED BY
DOLLAR IN FAVOUR OF BARCLAYS BANK PLC OVER THE WHOLE
UNDERTAKING AND ASSETS OF DOLLAR;
*16."THE DOLLAR BUSINESS" MEANS THE BUSINESS OF OPERATING AND
SERVICING HELICOPTERS CARRIED ON BY DOLLAR IN THE UNITED
KINGDOM (AND WHICH BUSINESS INCLUDES THE BLACK ISLE
BUSINESS);
*17."THE DOLLAR OWNED HELICOPTERS" MEANS THOSE HELICOPTERS BRIEF
DETAILS OF WHICH ARE SET OUT IN PART 2 OF THE SCHEDULE;
*18."THE EXCLUDED EMPLOYEES" MEANS THOSE PRESENT OR FORMER
EMPLOYEES OF BLACK ISLE AND THOSE PRESENT OR FORMER
EMPLOYEES OF DOLLAR WHO ARE NOT INCLUDED IN THE
TRANSFERRING EMPLOYERS;
*19."THE FIXED ASSETS" MEANS ALL THE ITEMS OR PARTS OF
MACHINERY, EQUIPMENT, TOOLS, WORK SHOP EQUIPMENT AND
OFFICE FURNITURE AND EQUIPMENT SPECIFIED IN PART 1 OF
THE SCHEDULE AND ALL OTHER MACHINERY, EQUIPMENT AND
TOOLS OWNED BY DOLLAR;
*20."THE INVERNESS PREMISES" MEANS HANGAR BUILDING NUMBER 124 AT
INVERNESS AIRPORT LEASED BY BLACK ISLE FROM HIGHLANDS
AND ISLANDS AIRPORTS LIMITED IN TERMS OF A LEASE DATED
17 FEBRUARY 1994 BETWEEN HIGHLANDS AND ISLANDS AIRPORTS
LIMITED (AS LANDLORD) AND BLACK ISLE (AS TENANT);
*21."THE LEASED ASSETS" MEANS THE LEASED HELICOPTERS, THE LEASED
VEHICLES AND THE OTHER ITEMS SPECIFIED IN PART 3 OF THE
SCHEDULE;
*22."THE LEASED HELICOPTERS" MEANS THOSE HELICOPTERS BRIEF
DETAILS OF WHICH ARE SET OUT IN PART 4 OF THE SCHEDULE;
*23."THE LEASED VEHICLES" MEANS THOSE VEHICLES BRIEF DETAILS OF
WHICH ARE SET OUT IN PART 5 OF THE SCHEDULE;
*24."THE LONG TERM CONTRACTS" MEANS THOSE CONTRACTS BRIEF
DETAILS OF WHICH ARE SET OUT IN PART 6 OF THE SCHEDULE;
*25."THE LYNTON GROUP" MEANS LYNTON AND THE SUBSIDIARIES OF
LYNTON, AND "MEMBER OF THE LYNTON GROUP" SHALL BE
CONSTRUED ACCORDINGLY;
*26."THE OWNED VEHICLES" MEANS THE VANS AND TRAILERS USED BY
DOLLAR IN FORESTRY (SUCH VANS AND TRAILERS HAVING AN
AGREED AGGREGATE VALUE OF POUNDS 3,000) AND THE
PORTACABINS AT COVENTRY AND SERCO USED BY DOLLAR AND THE
PORTACABINS USED BY DOLLAR IN FORESTRY (SUCH PORTACABINS
HAVING AN AGREED AGGREGATE VALUE OF POUNDS 11,300);
*27."SALE ITEMS" MEANS THE DOLLAR BUSINESS AND THE PROPERTY AND
ASSETS THEREOF SPECIFIED IN CLAUSES 2.2.2 TO 2.2.21
INCLUSIVE OF THIS AGREEMENT;
*28."THE SCHEDULE" MEANS THE SCHEDULE COMPRISING EIGHT PARTS
ANNEXED AND SIGNED AS RELATIVE TO THIS AGREEMENT;
*29."THE STOCKS" MEANS THE STOCK (INCLUDING THE DENHAM STOCK) OF
SPARE PARTS, REPLACEMENT PARTS, FUEL, OIL, LUBRICANTS
AND STATIONERY HELD BY DOLLAR AS AT MIDNIGHT ON 31
AUGUST 1995;
*30."SUBSIDIARY" HAS THE MEANING ASCRIBED TO IT IN SECTION 736
OF THE COMPANIES ACT 1985;
*31."THE TRANSFER DATE" MEANS 1 SEPTEMBER 1995;
*32."THE TRANSFERRING EMPLOYEES" MEANS THOSE EMPLOYEES OF DOLLAR
EMPLOYED IN THE DOLLAR BUSINESS WHOSE RESPECTIVE NAMES,
CURRENT ANNUAL SALARIES, DATES OF BIRTH AND COMMENCEMENT
DATES OF EMPLOYMENT ARE SET OUT IN PART 7 OF THE
SCHEDULE (AND WHO ARE TO BECOME EMPLOYEES OF GROUP ON
THE COMPLETION DATE PURSUANT TO THE TRANSFER OF
UNDERTAKINGS (PROTECTION OF EMPLOYMENT) REGULATIONS
1981);
*33.THE DOLLAR OWNED HELICOPTERS INCLUDE THE ENGINES AND
GEARBOXES (AND ANY SPARE ENGINES OR GEARBOXES) AND ALL
THE COMPONENTS, EQUIPMENT, ACCESSORIES, INSTRUMENTS,
PARTS AND FITTINGS OF SUCH HELICOPTERS;
*34."IN THE AGREED TERMS" MEANS IN TERMS AGREED BY OR ON BEHALF
OF THE PARTIES TO THIS AGREEMENT; AND
*35."THE OPENING OF BUSINESS ON THE TRANSFER DATE" MEANS ONE
SECOND PAST MIDNIGHT ON 31 AUGUST 1995.
SALE OF THE DOLLAR BUSINESS
2.1 Black Isle and Dollar hereby confirm and warrant to Group that
the business of Black Isle and the assets and liabilities of
such business have been acquired by and transferred to Group
with effect from 30 August 1995, and Black Isle hereby:-
2.1.1 warrants to Group that Black Isle ceased trading on 30
August 1995;
2.1.2 agrees to Group and any third party authorised by Group
using all or any of the Business Names; and
2.1.3 recognises the obligations of Black Isle in terms of
Clause 22 of this Agreement.
2.2 Dollar hereby agrees to sell to Group, and Group hereby agrees
to purchase from Dollar, with effect from the Completion Date
and as a going concern the Dollar Business and the property and
assets thereof comprising:-
2.2.1 the goodwill of the Black Isle Business together with
whatever rights each of Black Isle and Dollar has to the
current telephone and fax numbers used by Black Isle
and/or Dollar in connection with the Black Isle Business
and the exclusive right to Group to represent itself as
carrying on the Black Isle Business in continuation of
and in succession to Black Isle and/or Dollar with effect
from and after the Completion Date;
2.2.2 the goodwill of the Dollar Business together with
Dollar's right to use the Business Names in connection
with the Dollar Business and whatever right Dollar has to
the current telephone and fax numbers used by Dollar in
connection with the Dollar Business and the exclusive
right to Group to represent itself as carrying on the
Dollar Business in continuation of and in succession to
Dollar with effect from and after the Completion Date;
2.2.3 the Fixed Assets;
2.2.4 the Dollar Owned Helicopters;
2.2.5 the Owned Vehicles;
2.2.6 the Stocks;
2.2.7 the interest of Black Isle and/or Dollar in, and the
obligations of Black Isle and/or Dollar under, the lease
of the Inverness Premises;
2.2.8 the interest of Dollar in, and the obligations of Dollar
under, the lease of the Cumbernauld Premises;
2.2.9 the interest of Dollar in, and the obligations of Dollar
under, the lease of the Coventry Premises;
2.2.10 the interest of Black Isle and/or Dollar in and to the
tenants' improvements to the Inverness Premises;
2.2.11 the interest of Dollar in and to the tenants'
improvements to the Cumbernauld Premises;
2.2.12 the interest of Dollar in and to the tenants'
improvements to the Coventry Premises;
2.2.13 the interests of Black Isle and Dollar in, and the
benefit (but subject always to the burden attaching
thereto) of, the Current Contracts;
2.2.14 whatever interests Black Isle and/or Dollar has or have
in any trade marks or logos and all design rights,
knowhow and other intellectual property rights of Dollar
and/or Black Isle;
2.2.15 all licences and consents held by Black Isle with respect
to or for the purposes of the Black Isle Business (but
only in so far as Black Isle and/or Dollar can assign
such rights and consents);
2.2.16 all licences and consents held by Dollar with respect to
or for the purposes of the Dollar Business (but only in
so far as Dollar can assign such rights and consents);
2.2.17 the book debts of Black Isle as at midnight on 31 August
1995 (but excluding any sum as at that time due to Black
Isle by any other member of the Lynton Group);
2.2.18 the book debts of Dollar as at midnight on 31 August 1995
(but excluding any sum as at that time due to Dollar by
any other member of the Lynton Group);
2.2.19 cash in hand and at bank of Dollar as at midnight on 31
August 1995;
2.2.20 all rights and claims of Black Isle against third parties
with respect to the Black Isle Business, the Business
Premises, the Fixed Assets, the Owned Vehicles, the
Stocks, the Leased Assets, the Current Contracts and the
book debts of Black Isle (but only in so far as Black
Isle and/or Dollar can assign such rights and claims);
2.2.21 all rights and claims of Dollar against third parties
with respect to the Dollar Business, the Business
Premises, the Fixed Assets, the Dollar Owned Helicopters,
the Owned Vehicles, the Stocks, the Leased Assets, the
Current Contracts and the book debts of Dollar (but only
in so far as Dollar can assign such rights and claims)
but always excluding any item, asset, goods, property,
right, interest or benefit not specifically listed in
paragraphs 2.2.1 to 2.2.21 inclusive above.
PRICE
3.1 The price payable by Group to Dollar for the goodwill of the
Dollar Business shall be Pounds 1, exclusive of value added tax.
3.2 The aggregate price payable by Group for the Sale Items (
including the goodwill of the Dollar Business) shall be
satisfied by the allotment and issue of 500,000 Consideration
Shares credited as fully paid up, such shares to be allotted and
issued on the direction of Dollar (which is hereby given) to
Lynton.
3.3 Any amount in excess of Pounds 500,000 which is credited as
fully paid up on the 500,000 Consideration Shares allotted and
issued in terms of this Agreement shall be credited to the share
premium account of Group.
COMPLETION
4.1 Completion of the sale and purchase of the Dollar Business and
the Sale Items shall take place on the Completion Date, when the
following shall take place:-
4.1.1 the Fixed Assets, the Leased Assets, the Dollar Owned
Helicopters, the Owned Vehicles and the Stocks shall be
delivered or constructively delivered to Group by Dollar
(providing always that there shall be no requirement to
deliver to Group any items of the Stocks used in the
ordinary course of the Dollar Business after midnight on
31 August 1995);
4.1.2 there shall be delivered to Group by Dollar searches
against each of the Dollar Owned Helicopters showing
that Dollar is the registered owner of each of the
Dollar Owned Helicopters (or, in the case of the
Aerospatiale AS355F1 helicopter serial number 5011
registration mark G-BVLG, that Lynton Aviation Limited
is the registered holder of that helicopter) and showing
no outstanding charge or mortgage (other than any charge
or mortgage of which a validly executed effective
discharge, in the agreed terms, is delivered to Group at
Completion);
4.1.3 there shall be delivered to Group by Dollar searches
against each of Lynton, Black Isle and Dollar showing no
deed or diligence (other than the Black Isle/Barclays
Floating Charge, the Dollar/Barclays Floating Charge and
any other charge or mortgage of which a validly executed
effective discharge, in the agreed terms, is delivered
to Group at Completion) prejudicial to the respective
rights of Lynton, Black Isle and Dollar to enter into
and complete this Agreement and, in the case of Dollar,
to sell the Sale Items (including the Dollar Owned
Helicopters) to Group;
4.1.4 there shall be delivered to Group by Dollar evidence
satisfactory to Group (acting reasonably) that each of
the Dollar Owned Helicopters and each of the Leased
Helicopters is registered in the United Kingdom and has
a current certificate of airworthiness;
4.1.5 all documents of title if any (and including
certificates of registration of ownership in respect of
the Dollar Owned Helicopters and vehicle registration
documents, tax discs and "MOT" certificates in respect
of the Owned Vehicles to the Fixed Assets, the Dollar
Owned Helicopters and the Owned Vehicles will be
delivered by Dollar to Group (having been, where so
required by Group, signed and endorsed by Black Isle, or
as the case may require, Dollar or Lynton Aviation
Limited in favour of Group), and a letter from Dollar
to the Civil Aviation Authority confirming that Group is
the owner of, and should be registered by the Civil
Aviation Authority as the owner of, each of the Dollar
Owned Helicopters shall be delivered by Dollar to Group;
4.1.6 Dollar shall deliver to Group (a) a validly executed
assignation (in the agreed terms) in favour of Group of
the tenant's interest in respect of the lease under
which Dollar is the tenant of the Cumbernauld Premises,
(b) a validly executed assignation (in the agreed terms)
in favour of Group of the tenant's interest in respect
of the lease under which Dollar is the tenant of the
Coventry Premises, and (c) a validly executed
assignation (in the agreed terms) in favour of Group of
the tenant's interest in respect of the lease under
which Black Isle is the tenant of the Inverness
Premises;
4.1.7 Dollar shall deliver to Group (a) a letter from the
holder of each outstanding floating charge (if any)
granted by Black Isle and by Lynton Aviation Limited
confirming that the floating charge has not crystallised
and that no steps have been or will be taken on or prior
to the Completion Date by the holder of the floating
charge to appoint a receiver or receivers of the whole
of any part of the property and undertaking of Black
Isle or of Lynton Aviation Limited and (b) a letter from
the holder of each outstanding floating charge (if any)
granted by Dollar confirming that the floating charge
has not crystallised and that no steps have been or will
be taken on or prior to the Completion Date by the
holder of the floating charge to appoint a receiver or
receivers of the whole or any part of Dollar's property
and undertaking;
4.1.8 Lynton shall deliver to Group a letter from the holder
of each outstanding floating charge (if any) granted by
Lynton confirming that the floating charge has not
crystallised and that no steps have been or will be
taken on or prior to the Completion Date by the holder
of the floating charge to appoint a receiver of the
whole or any part of Lynton's property and undertaking;
4.1.9 Dollar shall deliver to Group (a) a mandate from Black
Isle instructing Barclays Bank PLC to pay and make over
to Group any sum or payment paid to or received by
Barclays Bank PLC for the account of Black Isle
forthwith upon Barclays Bank PLC holding or receiving
cleared funds in respect of such receipt or payment and
authorising Barclays Bank PLC to credit to an account of
Group any cheque or other payment in favour of Black
Isle and (b) a mandate from Dollar instructing Barclays
Bank PLC to pay and make over to Group any sum or
payment paid to or received by Barclays Bank PLC for the
account of Dollar forthwith upon Barclays Bank PLC
holding or receiving cleared funds in respect of such
receipt or payment and authorising Barclays Bank PLC to
credit to an account of Group any cheque or other
payment in favour of Dollar;
4.1.10 Dollar shall grant to Group vacant leasehold possession
and actual occupation of (a) the Cumbernauld Premises,
(b) the Coventry Premises and (c) the Inverness
Premises;
4.1.11 Dollar shall pay to Group, or otherwise account to Group
for, the cash in hand and at bank of Dollar as at
midnight on 31 August 1995;
4.1.12 Dollar shall (or shall undertake to) deliver or provide
to Group any third party consents (including consents of
landlords, head landlords, customers and finance, hire
purchase and leasing companies) to the transfer to Group
of the benefit and burden of the Current Contracts;
4.1.13 500,000 Consideration Shares shall be allotted and
issued, credited as fully paid up, to Lynton (on the
direction of Dollar which is hereby given), Lynton shall
be entered in the Register of Members of Group as the
holder of such shares and a Certificate for such shares
shall be signed and issued to Lynton; and
4.1.14 Group shall pay to Barclays Bank PLC such amount as is
required to repay the overdraft of Dollar with Barclays
Bank PLC.
4.2 Group shall not be obliged to complete the purchase of the
Dollar Business or of the Sale Items in accordance with this
Agreement unless the purchases of the Dollar Business and each
of the Sale Items are each completed on the Completion Date.
CESSATION AND CONTINUATION OF THE DOLLAR BUSINESS
5.1 Dollar shall wholly discontinue the Dollar Business with effect
from the Completion Date and Group shall carry on the Dollar
Business from and after the Completion Date and Group shall have
the exclusive right from and after the Completion Date to
represent itself as carrying on the Dollar Business in
continuation of and in succession to Dollar and to use the
Business Names in connection with the Dollar Business; and,
subject always to Clause 5.7 and 5.11 below, all revenues,
costs, liabilities and expenses in respect of the Dollar
Business arising from and after the commencement of business on
the Transfer Date shall be for the account of Group (except in
respect of any such costs, liabilities and expenses to the
extent that it is provided elsewhere in this Agreement that they
are to remain the responsibility and liability of Black Isle
and/or of Dollar).
5.2 It is hereby agreed that Group shall be entitled to receive and
recover payment for Group's own account for (and, where
appropriate, to render invoices in respect of) any work carried
out or services provided by Black Isle on or prior to midnight
on 31 August 1995 for which Black Isle or Dollar as at midnight
on 31 August 1995 has not received payment.
5.3 It is hereby agreed that Group shall be entitled to receive and
recover payment for Group's own account for (and, where
appropriate, to render invoices in respect of) any work carried
out or services provided by Dollar on or prior to midnight on 31
August 1995 for which Dollar as at midnight on 31 August 1995
has not received payment.
5.4 Group shall from and after the Completion Date implement and
fulfil Black Isle's part in all of the Current Contracts and
shall keep Black Isle and/or Dollar on demand freed and relieved
from, and indemnified against, all loss or damage which Black
Isle and/or Dollar may suffer or incur arising out of or in
connection with Group's failure to implement and fulfil Black
Isle's part in respect of any of the Current Contracts.
5.5 Group shall from and after the Completion Date implement and
fulfil Dollar's part in all of the Current Contracts and shall
keep Dollar on demand freed and relieved from, and indemnified
against, all loss or damage which Dollar may suffer or incur
arising out of or in connection with Group's failure to
implement and fulfil Dollar's part in respect of any of the
Current Contracts.
5.6 Subject always to Clause 8.1 below, Group shall be responsible
for, and shall free and relieve and indemnify Black Isle from
and against, all debts, liabilities, obligations and other
outgoings and expenses which have accrued or arisen in the
ordinary course of the Black Isle Business on or prior to 31
August 1995 and which remain outstanding as at midnight on 31
August 1995, except that Group shall not be responsible for (and
shall not be bound to free and relieve and indemnify Black Isle
from and against) (a) any value added tax, corporation tax,
national insurance contributions or income tax payable by Black
Isle and (b) any liability of Black Isle for or arising in
respect of any loss of life or any injury or damage to any
person or property; and Group shall not be or become responsible
for any debt, liability, obligation or other outgoing or expense
of Black Isle except for those debts, liabilities, obligations,
other outgoings and expenses of Black Isle for which Group
expressly agrees to become responsible in terms of this
Agreement or which by law become the responsibility of Group.
5.7 Subject always to Clause 8.1 below and Clause 5.12 below, Group
shall be responsible for, and shall free and relieve and
indemnify Dollar from and against the BVLG Debt, the BTWW Debt
and the BEWY Debt and all other debts, liabilities, obligations
and other outgoings and expenses which have accrued or arisen in
the ordinary course of the Dollar Business on or prior to
midnight on 31 August 1995 and which remain outstanding as at
midnight on 31 August 1995, except that Group shall not be
responsible for (and shall not be bound to free and relieve and
indemnify Dollar from and against) (a) any value added tax,
corporation tax, national insurance contributions or income tax
payable by Dollar and (b) any liability of Dollar for or arising
in respect of any loss of life or any injury or damage to any
person or property; and Group shall not be or become responsible
for any debt, liability, obligation or other outgoing or expense
of Dollar except for those debts, liabilities, obligations,
other outgoings and expenses of Dollar for which Group expressly
agrees to become responsible in terms of this Agreement or which
by law become the responsibility of Group.
5.8 Except in so far as otherwise provided in this Agreement, Black
Isle and Dollar shall be jointly and severally responsible for
all debts, liabilities, taxes, obligations, other outgoings and
expenses payable by, and claims outstanding or accrued against,
Black Isle in respect of the Black Isle Business as at midnight
on 31 August 1995; and Lynton, Black Isle and Dollar shall
jointly and severally keep Group on demand freed and relieved
from, and indemnified against, all of such debts, liabilities,
taxes, obligations, other outgoings and expenses.
5.9 Except in so far as otherwise provided in this Agreement, Dollar
shall be responsible for all debts, liabilities, taxes,
obligations, other outgoings and expenses payable by, and claims
outstanding or accrued against, Dollar in respect of the Dollar
Business as at midnight on 31 August 1995; and Lynton, Black
Isle and Dollar shall jointly and severally keep Group on demand
freed and relieved from, and indemnified against, all of such
debts, liabilities, taxes, obligations, other outgoings and
expenses.
5.10 Except as expressly provided in this Agreement, Group shall not
be or become responsible or liable for the payment or repayment
of any debt, loan or obligation secured by any mortgage or
charge over all or any of the Dollar Owned Helicopters, or for
any interest, costs, charges or expenses (including any
prepayment fee, penalty, cost or expense) in respect of any such
debt, loan or obligation.
5.11 For the avoidance of doubt, Group shall not be or become
responsible for any liability of either Dollar or Black Isle
which has been or is incurred by Dollar or Black Isle prior to
Completion in terms of Clause 4 of this Agreement if Dollar
and/or Black Isle has or have (or should in the ordinary course
of business have had or have) insurance against such liability.
5.12 Group shall not be or become responsible for, and shall not be
obliged to free and relieve Dollar from and against the BVLG
Debt, if Group notifies Dollar in writing on or before 5pm on 12
September 1995 that the terms and conditions of the BVLG Debt,
or the terms and conditions of any loan offered by Cube Air
Finance Limited to refinance the BVLG Debt, are not acceptable
to Group (acting reasonably). In the event of Group giving any
such notice to Dollar (a) Group shall immediately thereafter
retransfer to Dollar title to the Aerospatiale AS355F1, serial
number 5011 and registration mark G-BVLG, (b) take an operating
lease (at the rate of US $15,000 per month) of that helicopter
from Dollar until at least 30 September 1996 and on such other
terms and conditions as may be agreed between Group and Dollar
both acting reasonably and (c) Dollar shall have the right to
require Group to purchase from Dollar, and Group shall have the
right to require Dollar to sell to Group, such helicopter on 30
September 1996 at a price equal to US $495,108.22 plus 50 PER
CENT of the amount by which the final payment (including accrued
interest) by Dollar in respect of the BVLG Debt exceeds US
$495,108.22 and less 50 PER CENT of the amount by which such
final payment (and accrued interest) is less than US $495,108.22
(on the assumption that the amount of such final payment is
calculated in accordance with the terms and conditions of the
BVLG Debt disclosed to Group on or before the date of this
Agreement and that all payments in respect of the BVLG Debt have
been and shall be timeously paid).
NET ASSET VALUE STATEMENT
6.1 A Net Asset Value Statement shall be prepared by Angus MacKenzie
& Company. The Net Asset Value Statement shall be in the form
set out in Part 8 of the Schedule and shall (subject always to
Clause 8.1 of this Agreement) specify the aggregate amount or
value as at midnight on 31 August 1995 of, at that time:-
6.1.1 the Dollar Owned Helicopters;
6.1.2 the Fixed Assets;
6.1.3 the Owned Vehicles and the Leased Vehicles;
6.1.4 the Stocks (insofar as the Stocks are sold to Group in
terms of this Agreement);
6.1.5 the cash in hand and at bank of Black Isle and of Dollar
sold to Group in terms of this Agreement (to the extent
that such cash is received by or accounted for to
Group);
6.1.6 the book debts of Black Isle and Dollar sold to Group in
terms of this Agreement; and
6.1.7 the current assets of Black Isle and Dollar sold,
transferred or assigned to Group in terms of this
Agreement;
less (a) the amount paid by Group to Barclays Bank PLC in
payment of the outstanding principal amount and accrued interest
in respect of Dollar's overdraft with Barclays PLC, (b) the
amounts of the BVLG Debt, the BTWW Debt and the BEWY Debt and
(c) the cash value or amount of the other debts, liabilities,
obligations, other outgoings and expenses of Dollar and/or of
Black Isle transferred to, or which become the responsibility or
liability of, Group in terms of this Agreement (the net total
brought out in the Aggregate Net Asset Value Statement being
referred to in this Agreement as "the Aggregate NAV").
6.2 In the preparation of the Net Asset Value Statement:-
6.2.1 the value of the Dollar Owned Helicopters shall be shown
as Pounds 1,065,000;
6.2.2 the value of the Fixed Assets shall be shown as Pounds
306,593;
6.2.3 the value of the Owned Vehicles and the Leased Vehicles
shall be shown as Pounds 64,300;
6.2.4 the Stocks shall be valued in accordance with the list
of the stocks of Black Isle and Dollar as at 22 July
1995 agreed between Angus MacKenzie & Company (acting on
behalf of Group) and Dollar, with (a) the value of any
of the Stocks which are included in such list being the
value attributed thereto in such list, (b) the value of
any of the Stocks purchased by Black Isle and/or Dollar
in the ordinary course of business since 22 July 1995
being the cost price thereof, (c) the value of any of
the Stocks purchased by Black Isle or Dollar otherwise
than in the ordinary course of business since 22 July
1995 being nil and (d) the value of any item of the
Stocks which has been or is agreed to be obsolete shall
be nil; and
6.2.5 the value of the cash in hand, cash in bank, book debts
and other current assets sold, transferred or assigned
to Group in terms of this Agreement shall be in the
amount or value thereof agreed between Angus MacKenzie &
Company (acting on behalf of Group) and Dollar or,
failing such agreement, the amount or value thereof
determined in accordance with Clause 7 of this
Agreement, subject always, in the case of the book
debts, to Clause 6.5 of this Agreement.
6.3 The fuel tanks of Dollar have been dipped in order to determine
the amount of fuel in the tanks.
6.4 The Stocks shall be determined by reference to the stock records
of Black Isle and Dollar and by reference to the records of the
stocks acquired, utilised and disposed of by Black Isle and
Dollar since 22 July 1995 and shall be subject to such checking
or verification (including any physical counting of the Stocks
and dipping of fuel tanks) as Angus MacKenzie & Company (on
behalf of Group) may require.
6.5 No account shall (unless otherwise agreed between Dollar and
Angus MacKenzie & Company (on behalf of Group)) be taken in Net
Asset Value Statement or in the determination of the Aggregate
NAV of any of the book debts sold, transferred or acquired by
Group in terms of this Agreement to the extent that the amount
thereof has not been received by Group on or before 31 January
1996.
6.6 Dollar shall be entitled to such access to the working papers of
Group relating to the preparation of the draft Net Asset Value
Statement as is reasonably required by Dollar. Dollar shall be
entitled to make submissions in connection with the preparation
of the draft Net Asset Value Statement, and reasonable
consideration shall be given by Angus MacKenzie & Company and
by Group to any such submission.
6.7 The parties to this Agreement shall use all reasonable
endeavours to procure that by no later than 30 September 1995:-
6.7.1 a draft of the Net Asset Value Statement has been
prepared by Angus MacKenzie & Company; and
6.7.2 Dollar has received (by delivery to Dollar care of
Lynton Group Limited at Denham Airport, Hangar Road,
Uxbridge, Middlesex UB9 5DF marked for the attention of
"Christopher Tennant or Manus O'Donnell") a copy of the
draft Net Asset Value Statement.
6.8 Within the period of 21 days immediately following the receipt
by Dollar of the draft Net Asset Value Statement in accordance
with Clause 6.7 above, Dollar shall notify Angus MacKenzie &
Company (on behalf of Group) in writing as to whether or not
Dollar disputes the draft Net Asset Value Statement and/or the
determination of the Aggregate NAV as disclosed in the draft Net
Asset Value Statement.
6.9 In the event that Dollar does not give notice in accordance
with, and within the period specified in, Clause 6.8 above or
does not state in any such notice that Dollar disputes the draft
Net Asset Value Statement and/or the determination of the
Aggregate NAV as disclosed in the draft Net Asset Value
Statement, then the draft Net Asset Value Statement shall
(except in the case of manifest error) be and become conclusive
and binding as to the amount of the Aggregate NAV.
6.10 In the event that Dollar gives notice in accordance with Clause
6.8 above that Dollar disputes the draft Net Asset Value
Statement and/or the determination of the Aggregate NAV as
disclosed in the draft Net Asset Value Statement, and such
dispute has not been resolved between Angus MacKenzie & Company
(on behalf of Group) and Dollar within 30 days after the date of
such notification, then the determination of such dispute shall
forthwith (unless Angus MacKenzie & Company (on behalf of Group)
and Dollar otherwise agree) thereafter be referred to an
independent chartered accountant and settled in accordance with
Clause 7 of this Agreement.
6.11 If Angus MacKenzie & Company (on behalf of Group) and Dollar
resolve any dispute between them as to the draft Net Asset Value
Statement and/or the determination of the Aggregate NAV, and
the draft Net Asset Value Statement is amended in such way as is
agreed by Angus Mackenzie & Company (on behalf of Group) and
Dollar, then the draft Net Asset Value Statement as so amended
and agreed shall (except in the case of manifest error) be
conclusive and binding as to the amount of the Aggregate NAV.
6.12 Forthwith upon the determination in accordance with Clause 7 of
this Agreement of any dispute regarding the preparation of the
Net Asset Value Statement and/or regarding the determination of
the Aggregate NAV which remains unresolved between Angus
MacKenzie & Company (on behalf of Group) and Dollar (and subject
always to Clause 8.1 of this Agreement), there shall be made
such amendments (if any) to the draft Net Asset Value Statement
as (i) shall be necessary to effect and take account of such
determination and (ii) shall otherwise have been agreed between
Angus MacKenzie & Company (on behalf of Group) and Dollar, and
the draft Net Asset Value Statement as so amended and agreed
shall (except in the case of manifest error) be conclusive and
binding as to the amount of the Aggregate NAV.
6.13 Group and Dollar shall be responsible for their respective own
fees, costs and expenses in connection with the preparation and
adjustment of the Net Asset Value Statement and in connection
with the determination of the Aggregate NAV.
RESOLUTION OF DISPUTES
7.1 In the event of there being any dispute between Angus MacKenzie
& Company (on behalf of Group) and Dollar as to the preparation
of the Net Asset Value Statement and/or the determination of the
Aggregate NAV, such dispute shall be referred by either Angus
MacKenzie & Company (on behalf of Group) or by Dollar to the
decision of an independent chartered accountant in accordance
with the following provisions of this Clause.
7.2 The independent chartered accountant referred to in Clause 7.1
above shall act as an expert and not as an arbiter or arbitrator
and shall be mutually nominated by Angus MacKenzie & Company (on
behalf of Group) and Dollar or, failing agreement as to
nomination, shall be nominated by the President for the time
being of The Institute of Chartered Accountants of Scotland on
the application of either Angus MacKenzie & Company (on behalf
of Group) or Dollar. The costs of such independent chartered
accountant shall be payable by Group.
7.3 The independent chartered accountant referred to in Clause 7.1
above shall be appointed on terms that he shall require one set
of submissions in writing to be made to him by Angus MacKenzie &
Company (on behalf of Group) and by Dollar within such time
(being not more than 30 days) as the independent chartered
accountant shall determine. Such independent chartered
accountant shall be entitled in his discretion to accept
counter-submissions from Angus MacKenzie & Company (on behalf of
Group) or Dollar (or their respective professional advisers),
and such independent chartered accountant shall further be
appointed on the terms that he shall lay down in writing and
give a decision on the matter or matters in dispute not later
than 30 days after the dispute shall have been referred to him
in accordance with this Clause.
AGGREGATE NAV ADJUSTMENT
8.1 Group shall be entitled (with the agreement of Dollar) to have
excluded from the determination of the Aggregate NAV such one or
more of the debts, liabilities, obligations, other outgoings or
expenses of Dollar and/or of Black Isle which:-
(a) but for the exclusion thereof in terms of this Clause
8.1 from the determination of the Aggregate NAV, would
have been included and taken into account in such
determination; and
(b) if included and taken into account in the determination
of the Aggregate NAV would result in the Aggregate NAV
being less than Pounds 500,000.
Group shall (with the agreement of Dollar) be entitled to
determine which of the debts, liabilities, obligations, other
outgoings or expenses of Dollar and/or of Black Isle is or are
so excluded from the determination of the Aggregate NAV in terms
of this Clause 8.1, and Group shall not assume or be responsible
or liable for any debt, liability, obligation, other outgoing or
expense of Black Isle or of Dollar which is so excluded from the
determination of the Aggregate NAV. Group shall, for the
purposes of this Clause 8.1, act through and be represented by
Angus Mackenzie & Company.
8.2 If, subject always to Clause 8.1 above, the amount of the
Aggregate NAV is less than Pounds 500,000, then Lynton and
Dollar shall jointly and severally pay in cash to Group, within
seven days following the determination of the Aggregate NAV, a
sum (exclusive of Value Added Tax) equal to the amount by which
the Aggregate NAV is less than Pounds 500,000, provided that the
obligation and liability of Lynton and Dollar to pay cash to
Group in terms of this Clause may, subject to the prior
agreement in writing of Group, be satisfied by the transfer to
Group of such asset or assets the net value or aggregate net
value of which is agreed in writing by Angus MacKenzie & Company
(on behalf of Group) to equal so much of such obligation or
liability as is not satisfied by a cash payment to Group.
PASSING OF RISK AND TITLE
9.1 Risk of loss or damage to each of the Sale Items, the Business
Premises, the Leased Assets and the Lynton Owned Helicopter
shall pass to Group on the Completion Date.
9.2 Where title to any of the Sale Items can pass to Group on the
delivery or constructive delivery of that one of the Sale Items
to Group, then title to that one of the Sale Items shall pass to
Group on the delivery or constructive delivery thereof to Group.
ASSETS SOLD AND TRANSFERRED FREE OF ENCUMBRANCES
10.1 The Sale Items (but for the avoidance of doubt, excluding each
of the Leased Assets) are sold and transferred to Group in terms
of this Agreement free from any lien, charge, encumbrance or
claim whatsoever, so that Group shall acquire a good and
unencumbered title thereto.
10.2 The Leased Assets are transferred to Group subject to the
agreements on which they are held by Black Isle or, as the case
may be, Dollar; and Group has satisfied itself as to the terms
and conditions of such agreements.
10.3 The tenant's interest in the Inverness Premises is transferred
to Group subject to the lease under which such interest has been
granted to or is held by Black Isle; and Group has satisfied
itself as to the terms and conditions of such lease.
10.4 The tenant's interests in the Cumbernauld Premises and in the
Coventry Premises are transferred to Group subject to the leases
by which such interests have been granted to or are held by
Dollar; and Group has satisfied itself as to the terms and
conditions of such leases.
10.5 Subject always to Clause 8.1 of this Agreement, Group hereby
agrees to pay the rental charges, finance charges, insurance
charges and any maintenance charges in respect of the Leased
Assets in respect of any period commencing after 31 August 1995;
and Group shall keep Black Isle and Dollar on demand freed and
relieved from, and indemnified against, any liability which
Black Isle and/or Dollar may suffer or occur in connection with
any such charges.
10.7 Group hereby agrees to pay the tenants or occupier's expenses in
respect of the Business Premises in respect of any period
commencing after 31 August 1995; and Group shall keep Black Isle
and Dollar on demand freed and relieved from, and indemnified
against, any liability which Black Isle or Dollar may suffer or
occur in connection with any such expenses.
NO WARRANTY AS TO CONDITION OF REPAIR OR OF FITNESS FOR PURPOSE OR
USE
11.1 The Sale Items are sold by Dollar to Group, and the Leased
Assets are transferred by Dollar to Group, without any warranty
as to condition, repair or merchantable quality and without any
warranty as to fitness for purpose or use; and Group hereby
acknowledges and confirms that Group has inspected each of the
Sale Items and each of the Leased Assets which is corporeal and
moveable and that Group is purchasing such of the Sale Items and
is accepting such of the Leased Assets in their respective
conditions and states of repair as at the Completion Date.
11.2 No warranty is given by Dollar to Group as to the condition or
state of repair of any of the Business Premises (including any
buildings thereon). Group confirms that it has inspected each
of the Business Premises (including any buildings thereon) and
that Group in becoming tenant of each of the Business Premises
accepts each of the Business Premises (including all buildings
thereon) in its respective condition and state of repair as at
the Completion Date.
THE DENHAM STOCK
12. Lynton and Dollar shall jointly and severally set aside each
item of the Denham Stock from any other property or assets of
any member of the Lynton Group or any third party and, until
such time as any item of the Denham Stock is used or sold by or
on behalf of Group, Lynton and Dollar shall jointly and
severally keep such item clearly identified and identifiable as
being the property of Group.
CONTRACT TERMS
13. Dollar hereby warrants to Group that no notice has been given or
received by any of Lynton, Black Isle or Dollar terminating any
of the Current Contracts (and, in particular but without
prejudice to the generality, terminating (a) the lease of any of
Leased Helicopters, (b) the lease of the Cumbernauld Premises,
(c) the lease of the Inverness Premises, (d) the lease of the
Coventry Premises or (e) any of the agreements with customers
specified in Section V of Part 6 of the Schedule).
COLLECTION OF DEBTS
14.1 If after 31 August 1995 any third party has paid or shall pay to
Black Isle any amount due to Group (including any of the book
debts sold to Group in terms of this Agreement), then Black Isle
shall hold such amount in trust for Group and shall immediately
on or the later of the Completion Date and the receipt of such
amount by Black Isle pay such amount to Group without any
deduction or set off and shall so far as possible pay or account
to Group for such monies without Black Isle having first banked
such amount.
14.2 If after 31 August 1995 any third party has paid or shall pay to
Dollar any amount due to Group (including any of the book debts
of Dollar sold to Group in terms of this Agreement), then Dollar
shall hold such amount in trust for Group and shall immediately
on the later of the Completion Date and the receipt of such
amount by Dollar pay such amount to Group without any deduction
or set off and shall in so far as possible pay or account for
such monies to Group without Dollar having first banked such
amount.
14.3 Dollar shall, if requested in writing by Group so to do, collect
for and on behalf of and as agent for Group any of the book
debts sold to Group in terms of this Agreement and/or payment
for any work carried out or services provided by Black Isle
and/or Dollar on or prior to midnight on 31 August 1995 for
which Black Isle and/or Dollar has not received payment as at
midnight on 31 August 1995, and the provisions of Clause 14.2
above shall apply to any payment recovered by Dollar as such
agent for and on behalf of Group.
VALUE ADDED TAX
15.1 Any value added tax payable by Group to Dollar pursuant to the
sale by Dollar to Group in terms of this Agreement shall be paid
by Group to Dollar on Dollar's demand in writing or, if later,
on the submission of a relevant value added tax invoice by
Dollar to Group.
15.2 Dollar and Group agree to use all reasonable endeavours to
procure that the sale by Dollar to Group in terms of this
Agreement is treated neither as a supply of goods nor as a
supply of services but as a going concern for the purposes of
value added tax and that Section 49(1) of the Value Added Tax
Act 1994 and paragraph 5 of the Value Added Tax (Special
Provisions) Order 1992 will apply thereto.
EMPLOYEES
16.1 Dollar and Group acknowledge and agree that, pursuant to The
Transfer of Undertakings (Protection of Employment) Regulations
1981, the contracts of employment between Dollar and each of the
Transferring Employees will have and be deemed to have effect
from and after the Completion Date as if originally made with
Group.
16.2 Lynton and Dollar hereby jointly and severally undertake that
they shall jointly and severally be responsible for, and shall
accordingly jointly and severally free and relieve and hold
Group indemnified from and against, all liability which Group
may suffer or incur in respect of any of the Excluded Employees
including, without prejudice to the generality, any liability in
respect of remuneration, pay in lieu of notice, profit sharing
entitlement, compensation for loss of office, compensation for
unfair or wrongful or constructive dismissal, redundancy pay or
compensation, pension contributions, pensions benefits or
otherwise.
16.3 All liabilities (both contractual and delictual and including
remuneration and other benefits, national insurance
contributions, PAYE and pension contributions) in respect of the
Transferring Employees down to midnight on 31 August 1995 are
for the account of and shall be discharged jointly and severally
by Lynton and Dollar; and Lynton and Dollar shall jointly and
severally keep Group on demand freed and relieved from, and
indemnified against, any such liability.
16.4 All liabilities (both contractual and delictual and including
remuneration and other benefits, national insurance
contributions, PAYE and pension contributions) in respect of the
Transferring Employees after midnight on 31 August 1995 and in
respect of all accrued holiday pay of the Transferring Employees
and any claims on the ground of unfair dismissal, constructive
dismissal or redundancy by any of the Transferring Employees are
for the account of and shall be discharged by Group; and Group
shall keep Dollar on demand freed and relieved from, and
indemnified against, any such liability.
THE BUSINESS PREMISES
17. It shall be the obligation of Dollar to obtain (a) a release by
the landlord of the Inverness Premises of Black Isle from the
tenant's obligations under the lease of the Inverness Premises,
(b) a release by the landlord and head landlords of the
Cumbernauld Premises of Dollar from the tenant's obligations
under the lease of the Cumbernauld Premises and (c) a release by
the landlord of the Coventry Premises of Dollar from the
tenant's obligations under the lease of the Coventry Premises.
THIRD PARTY AND LANDLORDS' CONSENTS
18. Until Group is vested in any of the Sale Items, Dollar (or, as
the case may require, Black Isle) shall hold that one of the
Sale Items in trust for and as trustee of Group.
BOOKS AND RECORDS
19.1 The books and records of the Dollar Business (including the
books and records of the Black Isle Business) shall be (if so
required by law) delivered by Dollar to Group and Group shall
retain all the books and records which are so delivered by
Dollar to Group until 31 August 2001; and until 31 August 2001
those books and records shall at all reasonable times during
business hours be open (at premises within a radius of 20 miles
from Redwood, 19 Culduthel Road, Inverness IV2 4AA or at such
other location as Dollar may agree in writing) to the inspection
and use of Dollar and its employees and agents and such other
persons as may be authorised in writing by Dollar, who shall be
entitled to take (at the expense of Dollar) such copies and
extracts therefrom as Dollar may reasonably require.
19.2 Until 31 October 1995 (or such later date as may be agreed
between Group and PLM), each of Dollar and Group shall make
available to the other (free of charge) all books, records,
operating manuals and certificates as are required to enable
Dollar to retain the air operator's certificate of Dollar and as
are required to enable Group to operate helicopters under the
authority of that certificate.
19.3 Until 31 October 1995, Dollar shall maintain in force the air
operator's certificate of Dollar and shall permit Group free of
charge to operate helicopters under the authority of that
certificate.
NAME CHANGES
20.1 On 31 October 1995 (or such other date as may be agreed in
writing by Lynton, Dollar and Group) Lynton and Dollar shall
jointly and severally deliver to Group:-
20.1.1 the principal copy (signed by a Director or by of the
Secretary of Black Isle) of a special resolution, duly
passed at a duly convened and held general meeting of
the members of Black Isle, changing the name of Black
Isle to a name which does not include any of the
initials or words "PLM", "Helicopter", "Helicopters",
"Dollar", "Air", "Services", "Black" or "Isle", together
with a cheque for Pounds 20 payable to the Registrar of
Companies and confirmation that Group can deliver such
principal copy and cheque to the Registrar of Companies;
20.1.2 the principal copy (signed by a Director or by the
Secretary of Dollar) of a print of a special resolution,
duly passed at a duly convened and held general meeting
of the members of Dollar, changing the name of Dollar to
a name which does not include any of the initials or
words "PLM", "Helicopter", "Helicopters", "Dollar",
"Air", "Services", "Black" or "Isle", together with a
cheque for Pounds 20 payable to the Registrar of
Companies and confirmation that Group can deliver such
principal copy and cheque to the Registrar of Companies;
20.1.3 the principal copy (signed by a Director or by the
Secretary of Dollar Helicopters Limited) of a print of a
special resolution, duly passed at a duly convened and
held general meeting of the members of Dollar
Helicopters Limited, changing the name of Dollar
Helicopters Limited to a name which does not include any
of the initials or words "PLM", "Helicopter",
"Helicopters", "Dollar", "Air", "Services", "Black" or
"Isle", together with a cheque for Pounds 20 payable to
the Registrar of Companies and confirmation that Group
can deliver such principal copy and cheque to the
Registrar of Companies;
20.1.4 the principal copy (signed by a Director or by the
Secretary of DollarAir Trading Limited) of a print of a
special resolution, duly passed at a duly convened and
held general meeting of the members of DollarAir Trading
Limited, changing the name of DollarAir Trading Limited
to a name which does not include any of the initials or
words "PLM", "Helicopter", "Helicopters", "Dollar",
"Air", "Services", "Black" or "Isle", together with a
cheque for Pounds 20 payable to the Registrar of
Companies and confirmation that Group can deliver such
principal copy and cheque to the Registrar of Companies.
INTEREST ON LATE PAYMENTS
21. If any sum payable by one party to any other party in terms of
this Agreement is not paid on the due date for payment thereof,
interest shall be paid on demand by the party in default to the
party to whom such sum is payable on the balance of such sum
which is from time to time and for the time being outstanding at
the rate of five PER CENT PER ANNUM above the base rate from
time to time and for the time being of the Bank of Scotland.
Such interest shall be calculated on a daily basis and on the
basis of 365 day year.
FURTHER ASSURANCE
22. Upon and after the Completion Date, Lynton, Dollar and Black
Isle shall (subject always to the due and punctual performance
by Group of Group's obligations under this Agreement) jointly
and severally do and execute all necessary acts, deeds,
documents and things for effectively vesting in Group each of
the Sale Items (excluding, for the avoidance of doubt, the
Leased Assets) in accordance with this Agreement.
EXERCISE OF RIGHTS
23. No failure to exercise and no delay in exercising on the part of
any party to this Agreement of any right, power or privilege
under this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further
exercise of any right, power or privilege under this Agreement.
STAMP DUTY AND EXPENSES
24. All legal fees and expenses and any stamp duty or value added
tax payable in respect of or pursuant to this Agreement or the
sale and transfer to Group in terms of this Agreement shall be
the responsibility of, and shall be paid by, Group.
ANNOUNCEMENT
25. No press announcement or circular relating to the sale and
transfer to Group in terms of this Agreement or to any other
matter referred to or contained in this Agreement shall be made
or issued at any time by:-
25.1 Group without the prior written approval of Lynton (but
such approval shall not be unreasonably withheld or
delayed); or
25.2 any of Lynton, Black Isle or Dollar without the prior
written approval of Group (but such approval shall not
be unreasonably withheld or delayed).
NOTICES
26.1 Any notice under this Agreement shall be in writing and shall be
signed by or on behalf of the party giving the notice.
26.2 Any such notice shall be served by leaving it or sending by pre-
paid recorded delivery post or (subject to Clause 26.4 below)
facsimile:-
26.2.1 in the case of any of Lynton, Black Isle or Dollar, at
or to Denham Airport, Hangar Road, Oxbridge, Middlesex
UB9 5DF facsimile number 01895-832564 (marked for the
attention of Christopher Tennant or Manus O'Donnell) or
to any other address or facsimile number or marked for
the attention of any other person as Lynton, Black Isle
or Dollar (as the case may be) may notify in writing to
Group for the purposes of this Clause; and
26.2.2 in the case of Group, at or to Angus MacKenzie &
Company, 19 Culduthel Road, Inverness IV2 4AA, facsimile
number 01463-235171 (marked for the attention of "J.
Francis") or to any other address or facsimile number or
marked for the attention of any other person as Group
may notify in writing to Lynton for the purposes of this
Clause.
26.3 Any notice served by post shall (unless the contrary is proved)
be deemed to have been served 48 hours from the time of posting
and any notice served by facsimile shall be deemed to have been
served at the time of despatch; in proving such service it
shall be sufficient to prove, in the case of a letter, that such
letter was properly addressed and was posted in accordance with
Clause 26.2 above and in the case of a facsimile that such
facsimile was duly despatched to a current facsimile of the
addressee.
26.4 A copy of any notice served by facsimile shall (within 24 hours
after transmission thereof by facsimile) be sent by pre-paid
recorded delivery post in accordance with Clause 26.2 above to
the addressee thereof.
ASSIGNATIONS
27.1 None of Lynton, Black Isle or Dollar shall be entitled to assign
or otherwise transfer all or any of its rights or obligations
under this Agreement without the prior consent in writing of
Group.
27.2 Group shall not be entitled to assign or otherwise transfer all
or any of its rights or obligations under this Agreement without
the prior consent in writing of Lynton.
GOVERNING LAW
28. This Agreement shall be governed by and construed in accordance
with the Law of Scotland and each of Lynton and Dollar hereby
submit to the non-exclusive jurisdiction of the Scottish Courts:
IN WITNESS WHEREOF
<PAGE>
SCHEDULE to the foregoing Agreement between (1) PLM DOLLAR GROUP
LIMITED, (2) DOLLARAIR SERVICES LIMITED, (3) BLACK ISLE HELICOPTERS
LIMITED AND (4) LYNTON GROUP LIMITED
<PAGE>
PART 1
THE FIXED ASSETS
See pages 36A, 36B and 36C, 36D and 36E which follow
<PAGE>
PART 2
THE DOLLAR OWNED HELICOPTERS
1. Lama SA 315B, serial number 2591, registration mark G-BNNF.
2. Augusta Bell 206B, serial number 8567, registration mark G-BTWW.
3. Augusta Bell 206B, serial number 0348, registration mark G-BEWY.
4. Aerospatiale AS355F1, serial number 5011, registration mark G-
BVLG.
<PAGE>
PART 3
THE LEASED ASSETS
1. The Leased Helicopters.
2. The Leased Vehicles.
3. Sopho K308 telephone system (located at the Cumbernauld
Premises) leased by Dollar from Schroderlease Limited.
4. NP 1215 copier and Canon T301 facsimile machine leased by Dollar
from Lloyds Bowmaker Leasing Limited.
<PAGE>
PART 4
THE LEASED HELICOPTERS
1. Aerospatiale Twin Squirrel, serial number 5223, registration
mark G-PLAX leased by Dollar from IS & G Steel Stockholders
Limited.
2. Aerospatiale Squirrel AS350B1, serial number 1991, registration
mark G-BVJE leased by Dollar from IS & G Steel Stockholders
Limited.
3. Augusta Bell 206B, serial number 587, registration mark G-AYMW
leased by Dollar from Richard J K Belmont.
4. Aerospatiale Squirrel AS355F1, serial number 5201 registration
mark G-BPRJ leased by Dollar from Gilbert Greenall.
5. Aerospatiale Squirrel AS350B1, serial number 1963, registration
mark G-BWFY leased by Dollar from Penelope Pilkington and Karen
Marie Armitage.
6. Augusta Bell 206BIII, serial number 8596, registration mark G-
BHXV leased by Dollar from Penelope Pilkington and Karen Marie
Armitage.
<PAGE>
PART 5
THE LEASED VEHICLES
1. Ford Transit 190 (Crew Cab) registration number L61 WSM leased
by Dollar from Ford Credit Europe plc.
2. Toyota Hi-Lux diesel pickup registration number K728 HJS leased
by Black Isle from General Guarantee Corporation Limited.
3. Rover 820i Fastback registration number J60 DJM leased by Black
Isle from Farming and Agricultural Finance Limited.
4. Renault Safrane 2.2 Executive Hatchback registration number M81
ASM leased by Dollar from RFS Limited.
5. Mitsubishi L200 pick-up leased from Farm and Agricultural
Finance Limited.
<PAGE>
PART 6
THE LONG TERM CONTRACTS
I HELICOPTER LEASES
(a) Lease by Dollar from IS & G Steel Stockholders Limited
of Aerospatiale Twin Squirrel, serial number 5223,
registration mark G-PLAX.
(b) Lease by Dollar from IS & G Steel Stockholders Limited
of Aerospatiale Squirrel AS350B1, serial number 1991,
registration mark G-BVJE.
(c) Lease by Dollar from Michael J K Belmont of Augusta Bell
206B, serial 587, registration mark G-AYMW.
(d) Lease by Dollar from Gilbert Greenall of Aerospatiale
Squirrel AS355F1, serial number 5201, registration mark
G-BPRJ.
(e) Lease by Dollar from Penelope Pilkington and Karen Marie
Armitage of Aerospatiale Squirrel AS350B1, serial number
1963, registration mark G-BWFY.
(f) Lease by Dollar from Penelope Pilkington and Karen Marie
Armitage of Augusta Bell 206B III, serial number 8596,
registration mark G-BHXV.
II VEHICLE LEASES
1. The Lease by Dollar from Ford Credit Europe plc of Ford
Transit 190 (Crew Cab) registration number L61 WSM.
2. The Lease by Black Isle from General Guarantee
Corporation Limited of Toyota Hi-Lux diesel pickup
registration number K728 HJS.
3. The Lease by Black Isle from Farming and Agricultural
Finance Limited of Rover 820i Fastback registration
number J60 DJM.
4. The Lease by Dollar from RFS Limited of Renault Safrane
2.2 Executive Hatchback registration number M81 ASM.
5. Lease by Dollar from Farm and Agricultural Finance
Limited of Mitsubishi L200 pick-up.
III OFFICES EQUIPMENT LEASES/RENTALS
1. Lease (Agreement Number 023-6646) by Dollar from
Schroderlease Limited of Sopho K308 telephone system
(being the telephone system in the Cumbernauld
Premises).
2. Lease by Dollar from Lloyds Bowmaker Leasing Limited of
(a) one NP 1215 copier and (b) one Canon T301 facsimile
machine.
IV BUSINESS PREMISES
1. Lease by Dollar from Cormack Aircraft Services Limited
(as landlord) and Cumbernauld Development Corporation
(as head landlord) of premises at Cumbernauld Airport.
2. Lease by Black Isle from Highlands and Islands Airports
Limited of Hanger Building Number 124 at Inverness
Airport.
3. THE LEASE OF THE COVENTRY PREMISES.
V AGREEMENTS WITH CUSTOMERS
1. Agreement (Contract Number 1811A/RFW/86/A/HELI'93) dated
16 October 1992 between Dollar and British Gas plc.
2. Agreement Number F94773B dated 1 April 1994 between
Dollar and British Nuclear Fuels plc.
3. Agreement Number SC940294 between Black Isle and British
Telecommunications plc.
4. Colillte Teoranta arrangements.
5. Agreement between Dollar and Manweb plc pursuant to
Purchase Order No. NCP1300374 of Manweb plc.
6. Agreement between Dollar and Northern Ireland
Electricity plc pursuant to Purchase Order No. Q306853D
of Northern Ireland Electricity plc.
7. Agreement dated 3 February 1992 between Dollar and
Norweb plc (following on Engineering Specification
400H1).
8. Agreement dated 1 July 1995 between Serco Limited and
Dollar pursuant to the tender by Dollar for the
provision of helicopter services at Raasay Ranges.
9. Agreement between Dollar and Scotphos Limited as set out
in the letter dated 25 May 1995 from Dollar to Scotphos
Limited.
10. Agreement (being Contract No. CP000250) with Scottish
Hydro-Electric plc.
11. Agreement between Dollar and Scottish Power plc relating
to Scottish Power plc's specification 0049/91/1.
<PAGE>
PART 7
THE TRANSFERRING EMPLOYEES
<TABLE>
<CAPTION>
Names Current Annual Date of Birth Date of
Salary Commencement
of Employment
<S> <C> <C> <C>
(A) Pilots Pounds 25,602.00
Connolly 29,682.00 29/01/45 01/10/89
Durston 25,000.00 27/09/44 01/07/86
MacCallum 25,520.04 24/07/47 01/07/94
Salt 23,900.04 09/04/63 03/04/89
Sutton 27/01/46 01/03/94
(B)Operations
Kilgour 14,499.96 18/05/51 02/04/91
(C)Engineering
Marr 13,800.00 28/09/62 15/08/94
Patrick 20,400.00 22/11/45 03/12/90
Riggans 12,000.00 17/03/65 15/08/94
Strain 19,446.96 22/01/60 12/09/90
Vautier 14,446.04 15/05/45 01/02/78
Slattery 20,420.00 22/02/47 01/03/78
Matheson 10,400.00 25/02/69 24/04/92
Marshall 19,000.00 00/00/00 17/07/95
(D)Administratio
S J McCallum 11,000.00 12/04/51 13/07/89
(E)Ground Crew
M Dobie 8,580.00 13/02/65 06/09/94
(F)Management
S G Hogarth 40,500.00 26/02/50 21/12/87
D J McCallum 33,000.00 04/05/51 01/06/89
(G)Sales and Marketing
J G Simpson 29,600.04 20/01/49 01/01/78
(H)Forestry Loaders
Sutherland 3,800.00 22/12/74 13/03/95
Davis 3,800.00 14/07/56 25/07/95
Smith 3,800.00 02/01/67 29/05/95
</TABLE>
<PAGE>
PART 8
THE AGGREGATE NET ASSET VALUE STATEMENT
The Dollar Owned Helicopters Pounds
1,065,000
The Fixed Assets Pounds 306,593
The Owned Vehicles and the Leased Vehicles Pounds 64,300
The Stocks Pounds l
Book debts, cash in hand and at bank and other
current assets Pounds l
Less
Amount (including principal and accrued interest)
of Dollar's overdraft with Barclays Bank PLC repaid
by Group Pounds l
Trade and other creditors and liabilities (including
the BVLG Debt, the BTWW Debt and the BEWY Debt)Pounds L
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LYNTON
GROUP, INC.'S AUDITED ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30
, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1994
<PERIOD-START> Oct-01-1994
<PERIOD-END> Sep-30-1995
<CASH> 137,322
<SECURITIES> 0
<RECEIVABLES> 1,970,177
<ALLOWANCES> 21,809
<INVENTORY> 1,019,810
<CURRENT-ASSETS> 3,561,077
<PP&E> 17,280,678
<DEPRECIATION> 3,453,387
<TOTAL-ASSETS> 23,922,940
<CURRENT-LIABILITIES> 6,308,845
<BONDS> 17,410,848
<COMMON> 587,153
0
30
<OTHER-SE> (383,939)
<TOTAL-LIABILITY-AND-EQUITY> 23,922,940
<SALES> 33,638,321
<TOTAL-REVENUES> 33,638,321
<CGS> 27,694,813
<TOTAL-COSTS> 27,694,813
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,808,028
<INCOME-PRETAX> (2,320,153)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,320,153)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,320,153)
<EPS-PRIMARY> (1.30)
<EPS-DILUTED> (1.30)
</TABLE>
