|
|
|
|
|
|
|
|
|
|
|
|
|
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (b)
of the Securities Exchange Act of 1934
For Quarter Ended: March 31, 1998
Commission File Number: 1-8292
HELM CAPITAL GROUP, INC.
(Exact name of registrant as specified in character)
Delaware 59-0786066
-------- ----------
State or other jurisdiction of 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 registrants (1) has filed all
reports required to be filed by section 13 of 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 8, 1998, there were 3,729,000 shares of the Company's common
stock, par value $.01 per share, outstanding.
PAGE 1 OF 12
<PAGE> 2
PART I - FINANCIAL INFORMATION
HELM CAPITAL GROUP, AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 67
Loan receivable from affiliates 1,208
Prepaid expenses 25
Due from affiliates 60
Due from officer 125
Other 18
------
TOTAL CURRENT ASSETS 1,503
INVESTMENTS IN AFFILIATES 1,107
OTHER ASSETS 31
CASH HELD IN ESCROW, LESS RESERVE 125
------
$2,766
======
</TABLE>
PAGE 2 OF 12
<PAGE> 3
HELM CAPITAL GROUP, AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
(DEFICIENCY)
<S> <C>
CURRENT LIABILITIES:
Accrued interest $ 60
Accrued expenses 577
-------
TOTAL CURRENT LIABILITIES 637
SUBORDINATED DEBENTURES 2,800
ACCRUED EXPENSES PAYABLE IN
COMMON STOCK 575
OTHER LIABILITIES 35
-------
TOTAL LIABILITIES 4,047
SHAREHOLDERS DEFICIENCY (NOTE 4) (1,281)
-------
$ 2,766
=======
</TABLE>
PAGE 3 OF 12
<PAGE> 4
HELM CAPITAL GROUP, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------- -------
<S> <C> <C>
REVENUES $ 80 $ 24
COSTS, EXPENSES, AND OTHER:
Selling, general and administrative expenses 44 110
Gain on sale of securities -- (307)
Equity in net (earnings) losses of affiliates (9) 36
Interest and debt expense 55 91
Other (34) --
------- -------
TOTAL COSTS, EXPENSES AND OTHER 56 (70)
------- -------
INCOME FROM CONTINUING OPERATIONS 24 94
DISCONTINUED OPERATIONS 40 91
------- -------
NET INCOME $ 64 $ 185
======= =======
Earnings Per Share - Basic and Diluted
Continuing operations $ -- $ .02
Discontinued operations .01 .04
------- -------
$ .01 $ .06
======= =======
Average common shares outstanding 3,720 2,511
===== =====
</TABLE>
PAGE 4 OF 12
<PAGE> 5
HELM CAPITAL GROUP, AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
----- -----
<S> <C> <C>
Net cash used by operating activities $ (82) $(233)
----- -----
Cash flows from investing activities:
Loans originated (898) --
Loan repaid 650 --
Investment in affiliate (100) --
Loan to officer (125) --
Proceeds from sales of securities -- 374
----- -----
(473) 374
----- -----
Cash flows from financing activities:
(Decrease) in notes payable and
long-term debt -- (171)
----- -----
NET (DECREASE) IN CASH (555) (30)
CASH BEGINNING OF PERIOD 622 61
----- -----
CASH END OF PERIOD $ 67 $ 31
===== =====
Supplemental disclosure of cash flow information:
Cash paid for taxes 65 --
Noncash transactions:
Repayment of officer's note receivable by
exchange of preferred stock 175 --
</TABLE>
PAGE 5 OF 12
<PAGE> 6
HELM CAPITAL GROUP, AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
Note 1. Management believes the accompanying unaudited condensed consolidated
financial statements of Helm Capital Group, Inc., and subsidiaries
(the Company) include all adjustments (consisting of only 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 - Earnings (Loss) Per Share
Effective for the year ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share" ("SFAS 128"). In accordance with SFAS 128, the
Company is required to provide basic and dilutive earnings (loss) per
common share information.
The basic earnings (loss) per common share is computed by dividing the
net income (loss) available to common shareholders by the weighted
average number of common shares outstanding.
Diluted earnings (loss) per common share is computed by dividing the
net income (loss) available to common shareholders, adjusted on an as
if converted basis, by the weighted average number of common shares
outstanding plus potential dilutive securities.
For the three months ended March 31, 1998 and 1997, potential dilutive
securities had an anti-dilutive effect and accordingly were not
included in the calculation of diluted earnings (loss) per common
share.
PAGE 6 OF 12
<PAGE> 7
The following illustrates the components' income (loss) from
continuing operations utilized in the computation of earnings (loss) per share
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Income from continuing operations $ 24 $ 94
Dividends on preferred stock (30) (30)
---- ----
Numerator for basic and diluted income (loss)
from continuing operations $ (6) $ 64
==== ====
</TABLE>
For the three months ended March 31, 1998 and 1997, certain securities
were not included in the calculation of diluted earnings because of their
anti-dilutive effect, those securities are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
Shares Shares
------ ------
<S> <C> <C>
Stock options 243 183
Stock warrants 136 136
Shares issuable on conversion of
preferred shares 1,591 1,722
Shares issuable on conversion of
subordinated debentures 798 235
----- -----
2,768 2,276
===== =====
</TABLE>
The adoption of SFAS 128 had no effect on net loss per common share
for the three months ended March 31, 1997, accordingly, no restatement was
necessary.
PAGE 7 OF 12
<PAGE> 8
Note 3. Summarized Financial Data (in thousands):
<TABLE>
<CAPTION>
Intersystems, Inc. Three Months Ended
(16% owned in 1998 and 19% in 1997) March 31,
1998 1997
---- ----
REVENUES
<S> <C> <C>
Operating expenses $8,187 $5,484
------ ------
Selling, general and administrative expenses
Interest expense (net) 5,787 3,551
1,770 1,579
TOTAL COST AND EXPENSES 400 334
------ ------
NET INCOME 7,957 5,464
------ ------
$ 230 $ 20
====== ======
</TABLE>
Note 4. 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, 1998 33 $ -- 3,703 $ 37 $ 20,848
Preferred stock
received from
officers in
connection with
retirement of debt (3) -- -- -- (175)
Common stock
issued -- -- 27 -- --
--- ---- ----- -------- --------
Balance
March 31, 1998 30 $ -- 3,730 $ 37 $ 20,673
=== ==== ===== ======== ========
</TABLE>
PAGE 8 OF 12
<PAGE> 9
<TABLE>
<CAPTION>
Retained
Earnings
(Deficit) Treasury Stock Total
--------- -------------- -----
<S> <C> <C> <C>
Balance
January 1, 1998 $(22,026) $ (29) $ (1,170)
Preferred stock received
from officers in
connection with
retirement of debt -- -- (175)
Net income 64 -- 64
-------- -------- --------
Balance
March 31, 1998 $(21,962) $ (29) $ (1,281)
=== ==== ======== ======== ========
</TABLE>
Note 5.
On July 31, 1997, the Company's subsidiary, Interpak Holdings, Inc., sold
its Interpak Terminals units, located in Houston, Texas and Edison, New Jersey
to Katoen Natie N.V., a privately-held Belgium corporation, for a cash purchase
price of $2.2 million of which $250,000 is held in escrow until July 31, 2000.
The results of Interpak have been classified as discontinued operations in
the accompanying financial statements as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
(In Thousands)
<S> <C>
REVENUES $4,620
-------
Operating expenses 3,562
Selling, general and administrative expenses 874
Equity in affiliates (25)
Interest expense 118
-------
TOTAL COST AND EXPENSES 4,529
-------
NET INCOME $ 91
=======
</TABLE>
PAGE 9 OF 12
<PAGE> 10
In the first quarter of 1998 the Company received additional proceeds of
$40,000 upon settlement of an Interpak liability.
Note 6.
During the three months ended March 31, 1997, the Company sold 71,200
shares of Unapix common stock at a gain of $307,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
Income from continuing operations was $24,000 in the three months ended
March 31, 1998 compared to $94,000 in the three months ended March 31, 1997. The
1997 period benefited from a gain of $307,000 on the sale of securities but was
partly offset by higher general and administrative expense and interest expense.
Revenues of $80,000 in the 1998 period consisted of interest income from
lending activities compared to $24,000 in 1997 which consisted of participating
interests in seismic data sales. Future revenues are expected to be derived
primarily from the Company's focus on financial services.
General and administrative expenses decreased by $66,000 (60%) in 1998
primarily due to reductions in salary expense.
Equity in earnings of affiliates increased to $9,000 in 1998 compared with
a loss of $36,000 in 1997 due to the change in the Company's share of
Intersystems' increased income in 1998 (note 3).
Interest and debt expense decreased by $36,000 (67%) in 1998 due to
reductions in outstanding debt.
Other income in 1998 consists primarily of royalty income from an
affiliate.
Income from discontinued operations relates to Interpak Terminals as
described in note 5.
PAGE 10 OF 12
<PAGE> 11
Impact of Inflation
Inflation has not had a significant impact on the Company's operations.
Liquidity and Capital Resources
Operating activities used cash of $82,000. Another $473,000 was used for
investing activities, primarily for loans, which together reduced the beginning
cash balance of $622,000 by $555,000 resulting in cash at March 31, 1998 of
$67,000.
Future liquidity sources will consist of interest income from lending
activities, reimbursement of general and administrative expenses from
subsidiaries and affiliates, 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 or
affiliates.
PAGE 11 OF 12
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
HELM CAPITAL GROUP, INC.
Date: May 8, 1998 /s/ Daniel T. Murphy
--------------------
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
PAGE 12 OF 12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 67
<SECURITIES> 0
<RECEIVABLES> 1,208
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,503
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,766
<CURRENT-LIABILITIES> 637
<BONDS> 2,800
0
0
<COMMON> 37
<OTHER-SE> (1,318)
<TOTAL-LIABILITY-AND-EQUITY> 2,766
<SALES> 80
<TOTAL-REVENUES> 80
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 44
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55
<INCOME-PRETAX> 24
<INCOME-TAX> 0
<INCOME-CONTINUING> 24
<DISCONTINUED> 40
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
|
|