<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number 1-8292
HELM RESOURCES, INC
(Exact name of registrant as specified in charter)
Delaware 59-0786066
(State or other jurisdiction (IRS EMPLOYER
incorporation or organization) Identification No.)
537 Steamboat Road
Greenwich, Connecticut 06830
(Address of principal executive offices)
203-629-1400
(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
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
As of May 10, 1996 there were 2,458,953 shares of the Company's
common stock, par value $.01 per share, outstanding.
PAGE 1 OF 12
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PART I - FINANCIAL INFORMATION
Helm Resources, Inc. and Subsidiaries
Consolidated Balance Sheet
(In Thousands)
(Unaudited)
[S] [C]
March 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 77
Accounts receivable, net 2,431
Inventories 235
Current portion of promissory notes
receivable from officers 180
Due from affiliates 95
Prepaid expenses 173
Other current assets 18
------------
TOTAL CURRENT ASSETS 3,209
INVESTMENTS IN AND DUE FORM AFFILIATES 2,090
PROMISSORY NOTES RECEIVABLE FORM OFFICERS 554
PROPERTY, PLANT AND EQUIPMENT, net 2,339
DEFERRED CHARGES AND OTHER ASSETS 419
------------
$ 8,611
============
PAGE 2 OF 12
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HELM RESOURCES, INC.
Consolidated Balance Sheet
(In Thousands)
(unaudited)
[S] [C]
March 31, 1996
LIABILITIES AND SHAREHOLDER'S (DEFIFIENCY)
CURRENT LIABILITIES:
Notes payable to affiliates $ 1,585
Revolving loan 1,000
Accounts payable 1,928
Accrued interest 230
Accrued expenses 802
Current portion of long-term debt 307
Due for contact settlement 226
Due to affiliates 367
---------------
TOTAL CURRENT LIABILITES 6,445
LONG-TERM DEBT, NET OF CURRENT PORTION 1,430
SUBORDINATED DEBENTURES 3,252
OTHER LIABILITIES 689
---------------
TOTAL LIABILITIES 11,816
SHAREHOLDERS' DEFICIENCY (NOTE 5) (3,205)
---------------
$ 8,611
===============
PAGE 3 OF 12
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Helm Resources, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
(unaudited)
Three Months Ended
March 31,
[S] [C] [C]
1996 1995
REVENUES $ 4,985 $ 3,502
---------- ---------
COSTS, EXPENSES AND OTHER:
Operating expenses 3,780 2,738
Selling, general and administrative
expenses 1,002 1,033
Gain on sale of securities (41) -
Equity in net (earnings)losses of
affiliates 58 100
Provision for settlement of
litigation 275 -
Interest and debt expense 199 221
Interest income (19) (20)
--------- ---------
TOTAL COSTS, EXPENSES AND OTHER 5,254 4,072
--------- ---------
NET INCOME (LOSS) $ (269) $ (570)
========= =========
NET INCOME (LOSS) PER SHARE $ (.12) $ (.27)
========= =========
Average common shares outstanding 2,444 2,160
========= =========
PAGE 4 OF 12
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Helm Resources, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(unaudited)
Three Months Ended
March 31,
[S] [C] [C]
1996 1995
Net cash provided by (used in)
operating activities $ (308) $ 103
--------- ---------
Cash flows from investing activities:
Decrease (increase) in investments
in and due from affiliates 522 51
Proceeds from sales of securities 45 -
Additions to property, plant and
equipment (58) (50)
--------- ---------
509 1
--------- ---------
Cash flows from financing activities:
Increase (decrease) in notes payable
and long-term debt (525) (40)
Payment on contract settlement (33) (33)
--------- ---------
(558) (73)
--------- ---------
NET INCREASE (DECREASE) IN CASH (357) 31
CASH BEGINNING OF PERIOD 434 41
--------- ---------
CASH END OF PERIOD $ 77 $ 72
========= =========
Cash paid during the period for:
Interest $ 70 $ 62
Taxes - -
PAGE 5 OF 12
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HELM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Note 1. Management believes the accompanying unaudited
condensed consolidated financial statements of Helm
Resources, Inc. and subsidiaries ( the "Company")
include all adjustments (consisting only of normal
recurring accruals) required to present fairly the
financial statements for the periods presented. The
results of operations for any interm period are not
necessarily indicative of the annual results of
operations.
Note 2. Primary earnings per share is computed by dividing
earnings, after deducting the preferred stock dividend
requirements of $31,600 in the 1996 period and $31,600
in 1995, by the average common shares outstanding
during each period.
Note 3. Inventories consist of packaging supplies.
Note 4. Summarized Financial Data (in thousands):
Intersystems, Inc. Three Months Ended
- ------------------
(25% owned in 1996 and 41% in 1995) March 31
[S] [C] [C]
1996 1995
REVENUES $ 5,055 $ 3,253
---------- ----------
Operating expenses 3,573 2,231
Selling, general and administrative
expenses 1,541 1,102
Settlement of note receivable-sale
of trading business 45 -
Interest expense (net) 199 170
---------- ----------
TOTAL COST AND EXPENSES 5,358 3,503
---------- ----------
NET INCOME (LOSS) $ (303) $ 250
========== ==========
PAGE 6 OF 12
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Note 5. In March 1995, the Financial Accounting Standards Board
issued statement of Financial Accounting Standards No.
121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of (SFAS N0.
121). SFAS No. 121 requires, among other things, that
impairment losses on assets to be held, and gains or
losses from assets that are expected to be disposed of,
be included as a component of income from continuing
operations. The Company adopted SFAS No. 121 in 1996
and its implemention did not have a material effect on
the consolidated financial statements.
In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Stndards
No. 12, "Accounting for Stock-Based Compensation" (SFAS
No.123). SFAS No. 123 encourages entities to adopt the
fair value method in place of the provisions of
Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB No. 25), for all
arrangements under which employees receive shares of
stock or other equity instruments of the employer or
the employer incurs liabilities to employees in amounts
based on the price of its stock. The Company did not
adopt the fair market method encouraged by SFAS No. 123
and will continue to account for such transactions in
accordance with APB No. 25. However, the Company will
be required to provide additional disclosures for the
1996 annual financial statements providing pro forma
effects as if the Company had elected to adopt SFAS No.
123.
PAGE 7 OF 12
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Note 6. Stockholders' Equity (in Thousands)
----------------------------------
Common Stock Additional
Preferred Stock $.01 par value Paid
Shares Amount Shares Amount in capital
[S] [C] [C] [C] [C] [C]
Balance
Jan. 1, 1996 40 $ - 2,399 $ 24 $ 19,889
Common stock
issued,
primarily for
accrued
interest - - 60 1 45
------ ------- ----- ------ --------
Balance
March 31, 1996 40 $ - 2,459 $ 25 $ 19,934
====== ======= ===== ====== ========
Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock Total
--------------- --------- -------- -----
[S] [C] [C] [C] [C]
Balance
Jan. 1, 1996 $ 763 $(23,501) $ (29) $(2,854)
Common stock
issued, primarily
for accrued interest - - - 46
Unrealized gain
on available for
sale securities (128) - - (128)
Net (loss) - (269) - (269)
-------- -------- ----- -------
Balance
March 31, 1996 $ 635 $(23,770) $ (29) $(3,205)
======== ======== ===== =======
PAGE 8 OF 12
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Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
- -------------------------------------------------
Revenue increased by $1,483,000 (42%) to $4,985,000 in the
1996 period compared to $3,502,000 in the 1995 period primarily
due to and increase in packaging and storage volume at Interpak
Terminals.
Operating expenses increased $1,042,000 (38%) to $3,780,000
in the 1996 period from $2,738,000 in the 1995 period due to
increased labor cost, packaging supply cost and rent to
accomodate the increase in volume.
Gain on sale of securities represents the gain from the sale
of 15,900 shares of Intersystem common stock and 2,000 shares of
Unapix common stock.
Equity in loss of affiliates was $42,000 less in the 1996
period that 1995 due to a decrease in the equity in Intersystems
loss, $24,000, because of a reduction in the ownership percentage
of Intersystems as a result of a private placement in the first
quarter of 1996 and equity in net income of Professional
Financial Service in 1996 of $18,000, a new investment.
The provision for settlement of litigation of $275,000 in
1996 is for the settlement of all claims related to a lawsuit
against the Company and Interpak. See Part II-Item 1 for
additional information related to this matter.
Interest expense decreased $22,000 (10%) to $199,000 in 1996
compared to $221,000 in 1995 due to less parent company debt
outstanding in 1996.
Impact of Inflation
- -------------------
Inflation has not had a significant impact on the Company's
operations.
Liquidity and Capital Resources
- -------------------------------
Operating activities for the three months ended March 31,
1996 used cash of $308,000; and $522,000 was provided by payments
from affiliates, and $558,000 was used for repayments of notes
payable and long-term debt; other net decreases were $13,000,
which resulted in a decrease in cash of $357,000.
PAGE 9 OF 12
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At March 31, 1996, the Company had a working capital deficit
of $3,236,000, which included $1,467,000 for Interpak. The
Interpak working capital deficit included $1,000,000 under a
revolving loan agreement that expired in February 1996 and which
is presently being extended on a month to month basis. The line,
which has an annual interest rate of prime plus 1.25%, was fully
borrowed at March 31, 1996, is secured by substantially all of
the assets of Interpak, as well as Interpak's common stock and
400,000 shares of common stock of an affiliated company, and is
guaranteed by the Company. Interpak is in violation of the
covenants under this loan agreement and has requested waivers
from the lender, an increase in the line of credit, and an
extension of the agreement to February 1997. There is no
assurance that Interpak will be able to refinance, or refinance
on the same terms. It is expected that Interpak's operations,
with an increase in the line of credit, should be sufficient to
meet its other obligations as they become due. The balance of
the working capital deficit included approximately $1,190,000 of
payables to affiliates as to which the Company is confident of
its ability to fund as needed from the sale of investment
securities.
Future liquidity sources for the parent company will consist
of reimbursement of general and administrative expenses from
subsidiaries and affiliates, available funds from the earnings of
Interpak and possible sales of investment securities. On a
longer term basis, the Company may be required to seek additional
liquidity through debt and equity offerings of the company and/or
its subsidiaries.
PAGE 10 OF 12
<PAGE> 11
Part II
Item 1. Legal Proceedings.
- ----------------------------
As reported in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995, the Company and Interpak
Terminals, Inc., a Texas corporation and subsidiary of the
Company ("Interpak Texas") were defendants in a lawsuit commenced
by Shirley Garner, the wife and duly appointed guardian of James
A. Garner, in the Probate and County Court of Brazoria County,
Texas (docket n. 19,408). The lawsuit arose from injuries
sustained to Mr. James A. Garner, an independent contractor,
while installing equipment at a Texas facility of Interpak Texas,
and his subsequent death. On October 30, 1995, the plaintiff
filed an amended complaint seeking wrongful death damages for
herself and her two sons aggregating $17,500,000, medical
expenses of $3,000,000 and punitive damages to the maximum extent
allowable by law. The matter was scheduled for trial beginning
on April 29, 1996. The amended complaint alleged that Mr. Garner
was an employee of Interpak Texas, or that in the alternative, he
was an independent contractor.
On April 22, 1996, an agreement was reached between the
plaintiff and her sons, and the Company and Interpak, to settle
all claims within the aggregate limits of the Company's and
Interpak's insurance policies. The Company has recorded a non-
recurring charge of $275,000 in the first quarter of 1996 for
expenses related to this settlement.
PAGE 11 OF 12
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned there unto duly authorized.
Helm Resources, Inc.
May 13, 1996 /s/ Daniel T. Murphy
________________________
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
PAGE 12 OF 12
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<CIK> 0000351685
<NAME> HELM RESOURCES, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 77
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<PP&E> 10,680
<DEPRECIATION> 8,341
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<BONDS> 3,252
0
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