SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
QUARTERLY REPORT UNDER SECTION 13 OF 15(d)
of the Securities Exchange Act of 1934
-----------------------------
For quarter ended June 30, 1997 Commission file number 0-9974
------------- ------
UNITED STATES AIRCRAFT CORPORATION
----------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3518487
- ------------------------------- -----------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER I.D. NUMBER)
INCORPORATION OR ORGANIZATION)
3121 E. Greenway Rd. Phoenix, Arizona 85032
- ---------------------------------------- -----------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(602) 765-0500
- -------------------------------------------------
(REGISTRANT'S TELEPHONE NO., 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1997.
NUMBER OF SHARES CLASS
------------------------ -------------
6,732,504 Class A
4,962,801 Class B
<PAGE>
UNITED STATES AIRCRAFT CORPORATION
COMMISSION FILE NUMBER 0-9974
FORM 10-Q
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
June 30, 1997 (Unaudited)
and September 30, 1996 3
Consolidated Statements of
Operations (Unaudited) for
the Three and Nine Months ended
June 30, 1997 and 1996 4
Consolidated Statements of
Cash Flows (Unaudited) for
the Three and Nine Months Ended
June 30, 1997 and 1996 5
Notes to Consolidated
Financial Statements 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of
Operations 7
PART II - OTHER INFORMATION
SIGNATURES 8
2
<PAGE>
United States Aircraft Corporation and Subsidiaries
Consolidated Balance Sheets
June 30, 1997 and September 30, 1996
June 30,1997 September 30, 1996
Assets (Unaudited)
------ ----------- -----------------
Current Assets
Cash $ 5,597 $ 10,137
Accounts receivable 46,880 54,834
Prepaid expenses 8,140 7,191
----------- -----------
Total current assets 60,617 72,162
Advance to officer 3,394 30,584
Landheld for development 531,903
Property & equipment, net of
accumulated depreciation 57,277 58,504
Plans and specifications 1 1
Goodwill, net 93,897 78,278
Course materials 16,210 17,683
Other 50,292 21,457
----------- -----------
813,591 278,669
----------- -----------
Liabilities & Stockholder's Equity
Current Liabilities
Current portion of long-term debt 41,000 41,137
Convertible debentures & related
accrued interest 79,386 74,059
Accounts payable 32,777 22,320
Accrued expenses 58,788 36,211
Unearned tuition 42,699 35,298
----------- -----------
254,650 209,025
Long term debt, net of current portion 23,592 31,967
Trust deed notes payable with land
held for development as collateral 501,000
Stockholders' Equity
Capital stock
Class A: $.50 par value,
10,000,000 shares authorized,
6,732,504 issued 3,366,252 3,141,252
Class B: $.001 par value,
5,000,000 shares authorized,
4,962,801 issued 4,963 4,963
Paid in capital (383,827) (203,827)
Retained earnings (deficit) (2,953,039) (2,904,711)
----------- -----------
34,349 37,677
----------- -----------
$ 813,591 $ 278,669
----------- -----------
The accompanying notes are an integral part of these statements.
3
<PAGE>
United States Aircraft Corporation and Subsidiaries
Consolidated Statements of Operations
For the Three Months Ended and Nine June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 151,916 $ 150,316 $ 401,812 $ 348,109
------------ ------------ ------------ ------------
Expenses
Expenses
Personnel expenses 92,918 84,178 255,461 213,116
Facility cost 15,409 9,611 37,967 23,082
Other operating cost 28,286 23,355 83,787 65,278
General and administration 20,525 15,137 48,447 20,447
------------ ------------ ------------ ------------
157,138 132,281 425,662 321,923
------------ ------------ ------------ ------------
Income (loss) before interest
expense, depreciation and
amortization (5,222) 18,035 (23,850) 26,186
Interest Expense 3,662 3,368 10,767 10,200
Depreciation and amortization 4,571 3,665 13,711 9,862
------------ ------------ ------------ ------------
Net income (loss) $ (13,455) $ 11,002 $ (48,328) $ 6,124
------------ ------------ ------------ ------------
Net income (loss) per share $ (.001) $ .001 $ (.004) $ .001
------------ ------------ ------------ ------------
Weighted number of shares
Outstanding 11,695,305 11,245,305 11,494,379 10,663,360
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
United States Aircraft Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the Three Months and Nine Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
------- -------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (13,455) $ 11,002 $ (48,328) $ 6,124
Adjustments to reconcile net to cash
used by operating activities
Depreciation 2,481 2,482 7,443 6,311
Amortization 2,090 1,154 6,268 3,552
Class A Shares in payment of services 37,500 37,500
Net increase (decrease) in current liabilities
and (increase) decrease in accounts receivable
prepaid expense and other assets 10,431 (28,002) 50,571 (29,704)
--------- --------- --------- ---------
Net cash provided by (used by)
operating activities 1,547 24,136 15,954 (23,783)
--------- --------- --------- ---------
Cash flows from investing activities
Cash provided from acquisition of Western
College, Inc. 4,145
Increase in goodwill-Western College, Inc.
acquisition (20,000)
Acquisition of land held for development (3,374) (531,903)
Disposition (acquisition) of equipment (1,322) (6,216) (1,155)
--------- --------- --------- ---------
Net cash provided by (used by)
investing activities (4,696) (558,119) 2,990
--------- --------- --------- ---------
Cash flows from financing activities
Trust deed notes payable for land acquisition 501,000
Issuance of Class A Common shares for:
Land acquisition 25,000
Contingent shares-Western College, Inc. Acq 20,000
(Decrease) in long-term debt (2,985) (17,227) (8,375) (19,599)
--------- --------- --------- ---------
Net cash provided by (used by)
financing activities (2,985) (17,227) 537,625 (19,599)
--------- --------- --------- ---------
Net increase (decrease) in cash (6,134) 6,909 (4,540) 7,174
Cash, Beginning of Period 11,731 5,924 10,137 5,659
--------- --------- --------- ---------
Cash, End of Period $ 5,597 $ 12,833 $ 5,597 $ 12,833
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
UNITED STATES AIRCRAFT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997 (UNAUDITED) AND SEPTEMBER 30, 1996
NOTE 1 - Basis of Presentation
---------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included.
For further information, refer to the audited financial statements and footnotes
thereto included in the Company's Form 10-K for the year ended September 30,
1996.
NOTE 2 - Summary of Significant Accounting Policies
------------------------------------------
Basis of Consolidation
----------------------
The consolidated financial statements include the accounts of United States
Aircraft Corporation and its subsidiaries (hereinafter referred to as "the
Company"). All intercompany transactions have been eliminated in consolidation.
For further information concerning significant accounting policies, refer to the
audited financial statements and footnotes thereto in the Company's Form 10-K
for the year ended September 30, 1996.
NOTE 3 - Land Acquisition
----------------
On November 8, 1996, the Company entered into an agreement to acquire 35.66
acres of raw land in Glenn County, California, for $700,000, which for financial
reporting purposes has been recorded at $526,000. The acquisition, completed in
February 1997, was funded through the issuance of 250,000 shares of the
Company's Class A common stock, the issuance of a $171,000 first deed of trust,
bearing interest at 14.5% per annum, payable in monthly installments of interest
only at $2,066, with the remaining principal balance due February, 1999, and a
seller carryback of $330,000 payable in monthly installments of interest only,
bearing interest at 10% per annum, with the entire principal balance due
February 2001. The Company intends to develop the land as a recreational vehicle
park.
Note 4 - Subsequent Events:
------------------
In July 1997 the Company acquired certain assets of Travel Easy, Inc. a
Phoenix, Arizona full service travel agency in exchange for the assumption of
approximately $70,000 of liabilities and the issuance of Class A common shares.
In August 1997, the Company acquired the assets of FirsTravel another Phoenix,
Arizona full service travel agency for the assumption of approximately $17,000
in liabilities. On November 1, 1997 the two agencies were combined and the
Company's travel agency is being operated as division under the name of
FirsTravel. The acquisition will be accounted for as purchases and included in
operations from the date of purchase.
The company determined to discontinue its real estate brokerage and
property management operation and in September 1997, sold its subsidiary Hansen
& Associates, Inc. dba Property Masters. The sale resulted in a gain of
approximately $50,000.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations Results of Operations
-------------------------------------------
The company operates a real estate training school through its wholly
owned subsidiaries Western College, Inc. and Ford Schools, Inc. and a real
estate brokerage and property management firm through its wholly owned
subsidiary Hansen & Associates, Inc. d.b.a. Property Masters.
Comparison nine months ended June 30, 1997 to 1996
The (loss) before interest, depreciation and amortization expenses increased by
$50,036 primarily because of operating cost increases related to the expansion
of the real estate training operations. Operating expenses increased by $103,739
including a $42,345 increase in personnel expenses, a $14,885 increase in
facility costs, a $18,509 increase in other operating cost, and a $28,000
increase in general and administrative expense. Revenue increased by $53,703
consisting of increases in real estate training tuition of $79,166 and offset by
a decrease in real estate brokerage and other revenue of $25,463.
Interest increased by $567 and depreciation and amortization increased by
$3,849.
Comparison three months ended June 30,1997 to 1996
The (loss) before interest, depreciation and amortization expenses increased by
$23,257 primarily because of operating costs increases related to the expansion
of the real estate training operations. Operating expenses increased by $24,857
including a $8,740 increase in personnel expenses, a $5,798 increase in facility
costs, a $4,931 increase in other operating costs, and a $5,388 increase in
general and administrative expense. Revenue increased by $1600 consisting of
increases in real estate training tuition of $ 23,426 and offset by a decrease
in real estate brokerage and other revenue of $21,826.
Interest increased by $294 and depreciation and amortization increased by $906.
Financial Condition and Liquidity and Capital Resources
-------------------------------------------------------
The working capital deficit increased by $57,170 from September 30, 1996 to
$194,033. Property and equipment decreased by $1,227 due to acquisitions of
equipment of $6,216 offset by depreciation of $7,443. Goodwill increased by
$20,000 due to the issuance of 200,000 Class A shares of common stock pursuant
to the acquisition of Western College, Inc. offset by amortization of $4,381.
Current liabilities increased by $45,625 from September 30, 1996 to $254,650.
Included in current liabilities are $56,450 of convertible debentures and
$22,936 of related accrued interest that were due on December 31, 1996. The
debentures and interest have not been paid and the Company believes that they
will eventually be retired through conversion to the Company's Class A common
stock, although no assurance can be given that such a conversion will be elected
by the debenture holders. Long-term debt decreased by $8,375 due to payments.
The Company's management has continued its program to expand the services
operations through further expansion of its existing operations plus the
acquisition of other service organizations. Working capital continues to limit
the expansion of the Company although the Company in February 1997 acquired
35.66 acres of undeveloped land for 250,000 Class A shares of its common stock
plus approximately $500,000 of trust deed notes payable. The Company intends to
plan the development of the parcel and to use the land as collateral for a
$100,000 loan to provide an interim resolution to the working capital
deficiency. Additionally, the Company is aggressively investigating acquisitions
of services operations that are compatible with the existing operations and that
can be acquired for the Company's common stock or with debt that is retired from
the cash flow from the acquired operation. Further, the Company plans to
complete a private placement aggregating approximately $150,000 to provide
working capital, fund the acquisitions and retire a portion of the long-term
debt. No assurance can be given that the acquisitions will be completed or the
private placement will be successful.
7
<PAGE>
PART II. Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
UNITED STATES AIRCRAFT CORPORATION
----------------------------------
Date: 1-13-98 /s/ Harry V. Eastlick
---------- ---------------------------------------------------
Harry V. Eastlick, President and Chief
Executive Officer
Date: 1-13-98 /s/ Harry V. Eastlick
---------- ---------------------------------------------------
Harry V. Eastlick, Acting Chief Financial Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 5,597
<SECURITIES> 0
<RECEIVABLES> 46,880
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 60,617
<PP&E> 121,750
<DEPRECIATION> 64,473
<TOTAL-ASSETS> 813,591
<CURRENT-LIABILITIES> 254,650
<BONDS> 524,592
0
0
<COMMON> 3,366,252
<OTHER-SE> (3,331,903)
<TOTAL-LIABILITY-AND-EQUITY> 813,591
<SALES> 401,812
<TOTAL-REVENUES> 401,812
<CGS> 425,662
<TOTAL-COSTS> 425,662
<OTHER-EXPENSES> 13,711
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,767
<INCOME-PRETAX> (48,328)
<INCOME-TAX> 0
<INCOME-CONTINUING> (48,328)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,328)
<EPS-PRIMARY> (.004)
<EPS-DILUTED> (.004)
</TABLE>
