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<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 0-9083
Enercorp, Inc.
(Exact name of Registrant as specified in its Charter)
Colorado 84-0768802
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
7001 Orchard Lake Road, Suite 424
West Bloomfield, Michigan 48322
(Address of principal executive offices) (Zip Code)
(810) 851-5654
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Number of shares of common stock outstanding at November 12, 1996: 590,897
1
<PAGE>
Enercorp, Inc.
Form 10-Q Filing for the First Quarter Ended September 30, 1996
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Statements of Assets and Liabilities
September 30, 1996 (Unaudited) and June 30, 1996 4
Schedule of Investments (Unaudited), September 30, 1996 5-6
Schedule of Investments June 30, 1996 7-8
Statements of Operations (Unaudited) for the Three
Months Ended September 30, 1996 and 1995 9
Statements of Cash Flows (Unaudited) for the Three
Months Ended September 30, 1996 and 1995 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature Page 13
2
<PAGE>
Enercorp, Inc.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim unaudited condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q
and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of the management, all adjustments
(consisting of normal recurring adjustments) considered necessary for
a fair presentation have been included, and the disclosures are
adequate to make the information presented not misleading. Operating
results for the three months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the
year ended June 30, 1997. These statements should be read in
conjunction with the financial statements and notes thereto included
in the Annual 10-K Report (filed with the Securities and Exchange
Commission) for the year ended June 30, 1996.
3
<PAGE>
Enercorp, Inc.
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
---------- ----------
<S> <C> <C>
ASSETS
Investments, at fair value, cost of $1,532,388 at
September 30, 1996 and June 30, 1996 $5,127,091 $3,966,631
Cash 12,437 495
Accounts receivable - related parties 128,523 125,000
Accrued interest receivable - net of allowance for
uncollectible interest receivable of $10,656 and $10,045
at September 30, 1996 and June 30, 1996, respectivel 3,707 3,350
Note receivable, net of allowance for uncollectible note
receivable of $23,147 at September 30, 1996 and
June 30, 1996 7,715 7,715
Note receivable - related party 200,000 -0-
Furniture and fixtures, net of accumulated depreciation
of $4,359 and $3,840 at September 30, 1996 and
June 30, 1996, respectively 6,525 3,530
Other assets 13,660 17,035
---------- ----------
$5,499,658 $4,123,756
========== ==========
LIABILITIES AND NET ASSETS
Liabilities
Note payable - bank $1,737,021 $1,454,721
Accounts payable and accrued liabilities 19,277 6,145
Deferred tax liability 728,000 360,000
---------- ----------
2,484,298 1,820,866
---------- ----------
Net assets
Common stock, no par value: 10,000,000 shares
authorized, 590,897 shares issued and outstanding
September 30, 1996 and June 30, 1996 1,468,251 1,468,251
Preferred stock, no par value: 1,000,000 shares
authorized, -0- issued and outstanding -0- -0-
Accumulated deficit (825,595) (772,605)
Unrealized net gain on investments, net of deferred
income taxes of $1,222,000 and $827,000 at
September 30, 1996 and June 30, 1996, respectively 2,372,704 1,607,244
---------- ----------
3,015,360 2,302,890
---------- ----------
$5,499,658 $4,123,756
========== ==========
</TABLE>
4
<PAGE>
Enercorp, Inc.
Schedule of Investments
September 30, 1996
<TABLE>
<CAPTION>
Restriction Number Cost
Expiration as to of and/or Fair
Company Description of Business Date Resale Shares Owned Equity Value
<S> <C> <C> <C> <C> <C>
AFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
CompuSonics Video CorporatiDigital Video Product Development 1,751 $ - $ 2
10,000,000 106,477 9,000
Williams Controls, Inc.* Manufacturer of automotive electronics, (f) 400,000 60,000 990,000
components and consumer products (f) 850,000 127,500 2,103,750
(f) 330,000 412,500 816,750
(b)4/98(f) 100,000 34,000 247,500
(b)5/97(f) 30,000 108,750 66,000
Ajay Sports, Inc.* Golf & Casual Furniture Manufacturer (b)10/96 1,764,706 600,000 529,411
(b)12/97 100,000 37,500 30,000
Preferred Stocks - Public Market Method of Valuation (d)
Ajay Sports, Inc.* Golf & Furniture Manufacturer 2,000 20,000 13,950
Warrants and Stock Options - Board Appraisal Method of Valuation (d)
CompuSonics Video CorporatiDigital Video Product Development (c) 300,000 - -
Williams Controls, Inc.* Manufacturer of automotive electroni 11/08/97 (c) 150,000 - 315,900
components and consumer products 08/04/99 (c)(e) 25,000 - -
05/03/00 (c) 25,000 - -
--------- ---------
1,506,727 5,122,263
</TABLE>
(Continued)
5
<PAGE>
Enercorp, Inc.
Schedule of Investments (Continued)
September 30, 1996
<TABLE>
<CAPTION>
Restriction Number Cost
Expiration as to of and/or Fair
Date Resale Shares Owned Equity Value
Company Description of Business
<S> <C> <C> <C> <C>
UNAFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
Immune Response, Inc. Holding Company 10,000,000 5,000 -
Vitro Diagnostics Diagnostic Test Kits 300 1,500 38
Proconnextions, Inc. Sports Memorabilia Marketing (a) 191,610 19,161 4,790
Sub-total - UNAFFILIATED COMPANIES 25,661 4,828
--------- ---------
Total - ALL COMPANIES $1,532,388 $5,127,091
========= =========
</TABLE>
(a) Non-public company whose securities are privately owned.
(b) May be sold under the provisions of Rule 144 of the Securities Act of
1933 after a holding period which expires in the mon (c) No public market for
this security exists. (d) A discount factor as determined by the Company's
Board of Directors has been applied to those stocks valued by the public
market method which have restrictions as to resale.
(e) 25% vesting at 8/94, 8/95, 8/96 and 8/97.
(f) Pledged as collateral against a line of credit with NBD Bank.
* This entity is considered an affiliated company since the Company owns
more than 5% but less than 25% of the Investee compa outstanding common
stock. Because of this, the Company would be affected by a sales
limitation of one percent of the inve outstanding common stock during any
three-month period, or the average of the last four weeks' trading
volume, whichever is greater
6
<PAGE>
Enercorp, Inc.
Schedule of Investments
June 30, 1996
<TABLE>
<CAPTION>
Restriction Number Cost
Expiration as to of and/or Fair
Company Description of Business Date Resale Shares Owned Equity Value
------- ----------------------- ---------- ----------- ------------ ------ -----
<S> <C> <C> <C> <C> <C>
AFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
CompuSonics Video Corporation* Digital Video Product Development 1,751 $ - $ 2
10,000,000 106,477 9,000
Williams Controls, Inc.* Manufacturer of automotive (f) 400,000 60,000 720,000
electronics, components and (f) 850,000 127,500 1,530,000
consumer products (f) 330,000 412,500 594,000
(b)4/98(f) 100,000 34,000 180,000
(b)5/97(f) 30,000 108,750 48,000
Ajay Sports, Inc.* Golf, Billiard & Casual Furniture (b)10/96 1,764,706 600,000 617,647
Manufacturer (b)12/97 100,000 37,500 35,000
Preferred Stocks - Public Market Method of Valuation (d)
Ajay Sports, Inc.* Golf, Billiard & Furniture 2,000 20,000 13,500
Manufacturer
Warrants and Stock Options - Board Appraisal Method of Valuation (d)
CompuSonics Video Corporation* Digital Video Product Development (c) 300,000 - -
Williams Controls, Inc.* Manufacturer of automotive 11/08/97 (c) 150,000 - 214,650
electronics, components and 01/18/99 (c) 25,000 - -
consumer products 05/03/00 (c)(e) 25,000 - -
--------- ---------
1,506,727 3,961,799
</TABLE>
(Continued)
7
<PAGE>
Enercorp, Inc.
Schedule of Investments (Continued)
June 30, 1996
<TABLE>
<CAPTION>
Restriction Number Cost
Expiration as to of and/or Fair
Company Description of Business Date Resale Shares Owned Equity Value
------- ----------------------- ---------- ----------- ------------ ------ -----
<S> <C> <C> <C> <C> <C>
UNAFFILIATED COMPANIES
Common Stocks - Public Market Method of Valuation (d)
Immune Response, Inc. Holding Company 10,000,000 5,000 -
Vitro Diagnostics Diagnostic Test Kits 300 1,500 42
--------- ---------
Proconnextions, Inc. Sports Memorabilia Marketing (a) 191,610 19,161 4,790
--------- ---------
Sub-total - UNAFFILIATED
COMPANIES 25,661 4,832
--------- ---------
Total - ALL COMPANIES 1,532,388 3,966,631
========= =========
</TABLE>
(a) Non-public company whose securities are privately owned.
(b) May be sold under the provisions of Rule 144 of the Securities
Act of 1933 after a holding period which expires in the month
indicated.
(c) No public market for this security exists.
(d) A discount factor as determined by the Company's Board of
Directors has been applied to those stocks valued by the public
market method which have restrictions as to resale.
(e) 25% vesting at 8/94, 8/95, 8/96 and 8/97.
(f) Pledged as collateral against a line of credit with NBD Bank.
* This entity is considered an affiliated company since the Company
owns more than 5% but less than 25% of the Investee company's
outstanding common stock. Because of this, the Company would be
affected by a sales limitation of one percent of the investee's
outstanding common stock during any three-month period, or the
average of the last four weeks' trading volume, whichever is
greater.
8
<PAGE>
Enercorp, Inc.
Statements of Operations
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1996 1995
<S> <C> <C>
REVENUES
Interest income $ 824 $ 2,899
Interest income from related entities 152 -0-
Consulting fees from related companies 672 -0-
Royalties and settlement income -0- 2,640
Dividend income from affiliated company 500 -0-
---------- ----------
2,148 5,539
---------- ----------
EXPENSES
Salaries - officer 18,000 18,000
Bonus expense - officer -0- 2,893
Directors' fees -0- 1,000
Staff salaries 9,600 9,400
Legal, accounting and other professional fees 4,314 20,217
Interest expense - related entity -0- 12,221
Interest expense - other 35,277 24,334
Bad debt expense 613 2,172
Other general and administrative expenses 14,334 10,767
---------- ----------
82,138 101,004
---------- ----------
Net (loss) from operations before taxes (79,990) (95,465)
Income taxes 27,000 32,000
---------- ----------
Net (loss) from operations after taxes (52,990) (63,465)
---------- ----------
Net unrealized gain on investments before taxes 1,160,460 237,914
Income taxes (395,000) (80,900)
---------- ----------
Net unrealized gain on investment after taxes 765,460 157,014
---------- ----------
Increase in net assets $ 712,470 $ 93,549
========== ==========
Increase in net assets per share $ 1.21 $ 0.16
========== ==========
</TABLE>
9
<PAGE>
Enercorp, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Increase in net assets $ 712,470 $ 93,549
---------- ----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 519 431
Bad debt provision on notes receivable
and interest net of write offs 612 2,172
Unrealized (gain) on investments $(1,160,460) $ (237,914)
(Increase) in accounts receivable - related party (3,523) -0-
(Increase) in interest receivable (968) (2,895)
Decrease in other assets 3,374 7,719
Increase (decrease) in accounts payable and
accrued expenses 13,132 (7,682)
Increase in deferred taxes 368,000 48,900
Increase in bonus payable to officer -0- 2,893
---------- ----------
Total adjustments (779,314) (186,376)
---------- ----------
Net cash (used) by operating activities (66,844) (92,827)
---------- ----------
Cash flows from investing activities:
Purchase of investments -0- (20,000)
Payments received from notes receivable 2,558
Issuance of notes receivable (200,000) -0-
Purchase of furniture and fixtures (3,514) -0-
---------- ----------
Net cash (used) by investing activities (203,514) (17,442)
---------- ----------
Cash flows from financing activities:
Proceeds from notes payable 282,300 110,500
---------- ----------
Net cash provided by investing activities 282.300 110,500
---------- ----------
Increase in cash 11,942 231
Cash, beginning of period 495 1,191
---------- ----------
Cash, end of period $ 12,437 $ 1,422
========== ==========
Supplemental disclosures of cash flow information:
Interest paid $ 23,484 $ 35,887
========== ==========
</TABLE>
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Material Changes in Financial Condition:
Net assets increased by $712,470 during the first quarter ended
September 30, 1996. This compares to an increase in net assets of
$93,549 during the first quarter ended September 30, 1995. The
increase during the quarter was due mainly to an increase in the fair
market value of the Registrant's investment in its largest investee,
Williams Controls, Inc. ("Williams"), which represented 89% of the
Registrant's investments (at fair value) at September 30, 1996.
The Registrant has a line of credit with NBD Bank ("NBD"). The
collateral is all of the shares of Williams common stock currently
owned by the Registrant (1,710,000 shares at September 30, 1996 and
1,610,000 shares subsequent to the quarter) and all future shares of
Williams common stock acquired by the Registrant. The interest rate
is NBD's prime rate plus 1%. The Registrant may borrow up to the
lessor of $2,000,000 or 50% of the fair market value of the
collateral. This line expires in August 1997. The amount outstanding
at September 30, 1996 and June 30, 1996 was $1,737,021 and
$1,454,721, respectively. As of September 30, 1996, the Registrant
has no material commitments for capital expenditures.
On September 27, 1996 the Registrant loaned Ajay Sports, Inc.
("Ajay") $200,000 for working capital. This loan is a 90 day note
with an interest rate of NBD's prime rate plus 1%.
On October 1, 1996 the Registrant sold 100,000 shares of Williams
common stock for $2.50/share. The proceeds from this sale was used to
decrease the line of credit.
The Registrant's liquidity is affected primarily by the business
success, securities prices and marketability of its invested
companies and by the amount and timing of new or incremental
investments it makes.
Material Changes in Results of Operations:
The Registrant's revenues were $2,148 and $5,539 for the three months
ended September 30, 1996 and 1995, respectively. The decrease in
revenues for the quarter is due mainly to a decrease in interest
income and a decrease in settlement income. The Registrant's
operating expenses for the quarter ended September 30, 1996 decreased
by $18,886 (19%) over the same period of the prior year. The decrease
in expenses is due mainly to a decrease in legal fees and bad debt
expenses.
11
<PAGE>
The Registrant recorded an unrealized gain on investments of
$1,160,460 for the quarter ended September 30, 1996 compared to
$237,914 for the quarter ended September 30, 1995. This is mainly due
to the changes in fair market value of the Registrant's investment in
Williams.
Williams Controls, Inc. - Investee Company
The Registrant's largest investee company, Williams Controls, is a
publicly held company (Nasdaq:WMCO) in which the Registrant owns
common stock and options. Management recognizes that there is risk
associated with its lack of diversification due to its large
investment concentration in Williams. Williams Controls, Inc.,
through its subsidiary companies, manufactures and markets sensors,
controls, communication systems and accessories for the
transportation, telecommunication and agricultural industries.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Prior period amounts associated with shares and per share
calculations have been restated to reflect the Registrant's 1-for-75
reverse stock split which became effective at the close of business
on December 13, 1995.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
12
<PAGE>
Enercorp, Inc.
Form 10-Q
For the First Quarter Ended September 30, 1996
Signature Page
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Enercorp, Inc.
(Registrant)
BY s\Robert R. Hebard
---------------------------------------
Robert R. Hebard
President and Chief Financial Officer
Date: November 12, 1996
10Q996.ENC
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 12,437
<SECURITIES> 5,127,091
<RECEIVABLES> 373,748
<ALLOWANCES> 33,803
<INVENTORY> 0
<CURRENT-ASSETS> 5,493,133
<PP&E> 10,884
<DEPRECIATION> 4,359
<TOTAL-ASSETS> 5,499,658
<CURRENT-LIABILITIES> 2,484,298
<BONDS> 0
0
0
<COMMON> 1,468,251
<OTHER-SE> 1,547,109
<TOTAL-LIABILITY-AND-EQUITY> 5,499,658
<SALES> 0
<TOTAL-REVENUES> 2,148
<CGS> 0
<TOTAL-COSTS> 46,861
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,277
<INCOME-PRETAX> 1,080,470
<INCOME-TAX> 368,000
<INCOME-CONTINUING> 712,470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 712,470
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
</TABLE>
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