<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, 1997
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, 1997 there were 2,521,543 shares of the Company's common stock,
par value $.01 per share, outstanding.
PAGE 1 OF 11
<PAGE> 2
PART I - FINANCIAL INFORMATION
HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1997
--------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17
Accounts receivable, net 1,815
Inventories 245
Current portion of promissory notes
receivable from officers 150
Due from affiliates 24
Prepaid expenses 164
------
TOTAL CURRENT ASSETS 2,415
INVESTMENTS IN AND DUE FROM AFFILIATES 1,097
PROMISSORY NOTES RECEIVABLE FROM OFFICERS 300
PROPERTY, PLANT AND EQUIPMENT, NET 2,513
DEFERRED CHARGES AND OTHER ASSETS 401
------
$6,726
======
</TABLE>
PAGE 2 OF 11
<PAGE> 3
HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1997
--------------
<S> <C>
LIABILITIES AND SHAREHOLDER'S (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable to affiliates $ 851
Accounts payable 1,882
Accrued interest 278
Accrued expenses 1,152
Current portion of long-term debt 1,751
Due for contact settlement 259
Due to affiliates 270
--------
TOTAL CURRENT LIABILITIES 6,443
LONG-TERM DEBT, NET OF CURRENT PORTION 738
NOTES PAYABLE TO AFFILIATES 275
SUBORDINATED DEBENTURES 3,072
ACCRUED EXPENSES PAYABLE IN COMMON STOCK 546
OTHER LIABILITIES 158
--------
TOTAL LIABILITIES 11,232
SHAREHOLDERS' DEFICIENCY (NOTE 5) (4,506)
--------
$ 6,726
========
</TABLE>
PAGE 3 OF 11
<PAGE> 4
HELM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------
1997 1996
------- -------
<S> <C> <C>
REVENUES $ 4,644 $ 4,985
------- -------
COSTS, EXPENSES AND OTHER:
Operating expenses 3,562 3,780
Selling, general and administrative
expenses 984 1,002
Gain on sale of securities (307) (41)
Equity in net losses of
affiliates 11 (2)
Provision for settlement of
litigation -- 275
Interest and debt expense 220 221
Interest income (11) (19)
------- -------
TOTAL COSTS, EXPENSES AND OTHER 4,459 5,216
INCOME (LOSS)FROM CONTINUING OPERATIONS 185 (231)
DISCONTINUED OPERATIONS OF AFFILIATE -- (38)
------- -------
NET INCOME (LOSS) $ 185 $ (269)
======= =======
Earnings Per Share:
Continuing operations $ .06 $ (.10)
Discontinued operations -- (.02)
------- -------
Net Earnings (Loss) $ .06 $ (.12)
======= =======
Average common shares outstanding 2,511 2,444
======= =======
</TABLE>
PAGE 4 OF 11
<PAGE> 5
HELM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------
1997 1996
----- -----
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (46) $(308)
----- -----
Cash flows from investing activities:
Decrease (increase) in investments
in and due from affiliates -- 522
Proceeds from sales of securities 374 45
Additions to property, plant and
equipment (68) (58)
----- -----
306 509
----- -----
Cash flows from financing activities:
Increase (decrease) in notes payable
and long-term debt (344) (525)
Payment on contract settlement - (33)
----- -----
(344) (558)
===== =====
NET INCREASE (DECREASE) IN CASH (84) (357)
CASH BEGINNING OF PERIOD 101 434
----- -----
CASH END OF PERIOD $ 17 $ 77
===== =====
Cash paid during the period for:
Interest $ 52 $ 70
Taxes -- --
</TABLE>
PAGE 5 OF 11
<PAGE> 6
HELM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
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 interim 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 1997 and 1996 periods, by the
average common shares outstanding during each period.
Note 3. Inventories consist of packaging supplies.
Note 4. Summarized Financial Data (in thousands):
<TABLE>
<CAPTION>
Intersystems, Inc. Three Months Ended
(22% owned in 1997 and 25% in 1996) March 31
1997 1996
------ -------
<S> <C> <C>
REVENUES $5,484 $ 3,904
------ -------
Operating expenses 3,551 2,592
Selling, general and administrative
expenses 1,579 1,257
Settlement of note receivable-sale
of trading business -- 45
Interest expense (net) 334 161
------ -------
TOTAL COST AND EXPENSES 5,464 4,055
------ -------
INCOME (LOSS) FROM CONTINUING OPERATION $ 20 $ (151)
DICONTINUED OPERATIONS -- (152)
------ -------
NET INCOME (LOSS) $ 20 $ (303)
====== =======
</TABLE>
PAGE 6 OF 11
<PAGE> 7
Note 5. Stockholders' Equity (in Thousands)
<TABLE>
<CAPTION>
Common Stock Additional
Preferred Stock $.01 par value Paid
Shares Amount Shares Amount in capital
------ ------ ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Balance
Jan. 1, 1997 37 $ -- 2,501 $25 $19, 852
Common stock
issued,
primarily for
accrued
interest -- -- 20 -- 26
-- -------- ----- --- -------
Balance
March 31, 1997 37 $ -- 2,521 $25 $19,878
== ======== ===== === =======
</TABLE>
<TABLE>
<CAPTION>
Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock Total
--------------- --------- ----- -----
<S> <C> <C> <C> <C>
Balance
Jan. 1, 1997 $ 315 $(24,639) $(29) $(4,476)
Common stock
issued, primarily
for accrued interest -- -- -- 26
Change in unrealized
gain on available
for sale securities (241) -- -- (241)
Net income -- 185 -- 185
----- -------- ---- -------
Balance
March 31, 1997 $ 74 $(24,454) $(29) $(4,506)
===== ======== ==== =======
</TABLE>
PAGE 7 OF 11
<PAGE> 8
Note 6.
The Company's subsidiary, Interpak Holdings, Inc., has entered into a
letter of intent for the sale of its Interpak Terminals units, located in
Houston, Texas and Edison, New Jersey to Katoen Natie N.V., a privately-held
Belgium corporation, for an undisclosed cash purchase price. The sale is subject
to approval of the parties' respective boards of directors and the negotiation
and execution of a definitive purchase agreement.
Interpak is a provider of custom packaging and distribution services to
manufacturers of thermoplastic resins. For the quarters ended March 31, 1997 and
1996, Interpak had revenues of $4,620,000 and $4,985,000, respectively. On a
consolidated basis, Interpak's revenues constitute substantially all of the
revenues reported by Helm, and Interpak's assets constitute a significant
percentage of Helm's assets.
PAGE 8 OF 11
<PAGE> 9
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
Revenue decreased by $341,000 (7%) to $4,644,000 in the 1997 period
compared to $4,985,000 in the 1996 period primarily due to a decrease in
packaging volume at Interpak.
Operating expenses decreased $218,000 (6%) to $3,562,000 in the 1997
period from $3,780,000 in the 1996 period due to the reduction in packaging
volume.
Gain on sale of securities of $307,000 in 1997 represents the gain from
the sale of 71,200 shares of Unapix common stock. The 1996 gain of $41,000 is
from the sale of 15,900 shares of Intersystems common stock and 2,000 shares of
Unapix common stock.
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.
Discontinued operations of affiliate in 1996 is the Company's
share of the discontinued operations of a subsidiary of Intersystems, Inc. as
indicated in note 4 to the financial statements.
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, 1997 used
cash of $46,000; $374,000 was provided by proceeds from sale of
securities;$344,000 was used for repayments of notes payable and $68,000 was
used for purchase of fixed assets, which resulted in a decrease in cash of
$84,000.
PAGE 9 OF 11
<PAGE> 10
At March 31, 1997, the Company had a working capital deficit of
$4,028,000, which included $2,873,000 for Interpak. The Interpak working capital
deficit included $1,000,000 under a revolving loan agreement that expired in
February 1997 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, 1997, 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 the lender has informed
Interpak that the line of credit will not be renewed. Management is currently
discussing an increased line of credit with a new lender; however, there can be
no assurance that these negotiations will be successful. Interpak is also in
violation of certain financial covenants relating to an equipment term loan in
the amount of $690,000, which has been classified as a current liability. The
working capital deficit also includes approximately $1,121,000 of payables to
affiliates as to which the company is confident of its ability to reach payment
accommodations.
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 or the possible sale
of Interpak, and possible sales of investment securities. The Company is
currently in negotiations with a European corporation for the sale of Interpak.
No assurance can be given that such negotiations will result in a sale of the
subsidiary. 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 or affiliates.
PAGE 10 OF 11
<PAGE> 11
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, 1997 /s/ Daniel T. Murphy
--------------------
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
PAGE 11 OF 11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 1,815
<ALLOWANCES> 0
<INVENTORY> 245
<CURRENT-ASSETS> 2,415
<PP&E> 11,195
<DEPRECIATION> 8,682
<TOTAL-ASSETS> 6,726
<CURRENT-LIABILITIES> 6,443
<BONDS> 3,072
0
0
<COMMON> 25
<OTHER-SE> (4,531)
<TOTAL-LIABILITY-AND-EQUITY> 6,726
<SALES> 4,644
<TOTAL-REVENUES> 4,644
<CGS> 0
<TOTAL-COSTS> 3,562
<OTHER-EXPENSES> 984
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 220
<INCOME-PRETAX> 185
<INCOME-TAX> 0
<INCOME-CONTINUING> 185
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
