<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: September 30, 2000
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 November 13, 2000, there were 3,779,000 shares of the Company's common
stock, par value $.01 per share, outstanding.
Page 1 of 13
<PAGE> 2
PART I - FINANCIAL INFORMATION
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 14
Participation in receivables of affiliate 1,016
Prepaid expenses 18
Due from related party 50
Other 23
TOTAL CURRENT ASSETS 1,121
INVESTMENTS IN AFFILIATES 1,169
------
$2,290
======
</TABLE>
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<PAGE> 3
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS'
(DEFICIENCY)
<S> <C>
CURRENT LIABILITIES:
Accrued expenses $ 465
Notes due to related parties 120
Subordinated debentures due currently 25
Loan payable to bank 202
--------
TOTAL CURRENT LIABILITIES 812
SUBORDINATED DEBENTURES 800
SUBORDINATED DEBENTURES AND
ACCRUED INTEREST DUE TO OFFICERS 1,375
ACCRUED EXPENSES PAYABLE IN
COMMON STOCK 575
OTHER LIABILITIES 45
--------
TOTAL LIABILITIES 3,607
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' CAPITAL (DEFICIT):
Preferred stock, $.01 par value: shares
authorized 5,000; issued and outstanding 29 shares --
Common stock, $.01 par value: shares
authorized 15,000; issued 3,779 shares 38
Additional paid-in capital 20,723
Deficit (22,049)
--------
(1,288)
Less: 6 shares of treasury stock, at cost (29)
--------
TOTAL SHAREHOLDERS' CAPITAL (DEFICIT) (1,317)
--------
$ 2,290
========
</TABLE>
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<PAGE> 4
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
---- ----
<S> <C> <C>
REVENUES $ 41 $ 71
------- -------
COSTS, EXPENSES, AND OTHER:
Selling, general and administrative expenses 65 48
Gain on sale of securities -- (196)
Equity in net (earnings) losses of affiliates 43 32
Interest and debt expense 62 67
------- -------
TOTAL COSTS, EXPENSES AND OTHER 170 (49)
------- -------
NET INCOME (LOSS)
$ (129) $ 120
======= =======
Earnings Per Share - Basic and Diluted $ (.04) $ .02
======= =======
Average common shares outstanding
3,779 3,779
======= =======
</TABLE>
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<PAGE> 5
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
---- ----
<S> <C> <C>
REVENUES $ 179 $ 186
------- -------
COSTS, EXPENSES, AND OTHER:
Selling, general and administrative expenses 184 146
Gain on sale of securities -- (196)
Equity in net (earnings) losses of affiliates 83 140
Interest and debt expense 190 217
------- -------
TOTAL COSTS, EXPENSES AND OTHER 457 307
------- -------
INCOME (LOSS) FROM
CONTINUING OPERATIONS (278) (121)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPAL -- (20)
------- -------
NET (LOSS) INCOME $ (278) $ (141)
======= =======
Earnings Per Share - Basic and Diluted
Continuing operations $ (.10) $ (.06)
Cumulative effect of change in
accounting principal -- --
------- -------
$ (.10) $ (.06)
======= =======
Average common shares outstanding 3,779 3,779
======= =======
</TABLE>
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<PAGE> 6
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
---- ----
<S> <C> <C>
Net cash (used by) operating activities $ (21) $(112)
------- -----
Cash flows from investing activities
Collections on loans 1,105 --
Proceeds from sale of securities -- 196
------- -----
1,105 196
------- -----
Cash flow from financing activities:
Payments on notes to related parties (250) --
Payment on loan payable to bank (198) (20)
Repayment of Subordinated debentures (650) --
Loan (to) from affiliate -- (63)
------- -----
(1,098) (83)
NET INCREASE (DECREASE) IN CASH (14) 1
CASH BEGINNING OF PERIOD 28 15
------- -----
CASH END OF PERIOD $ 14 $ 16
======= =====
Supplemental disclosure of cash flow information:
Cash paid for taxes -- --
Cash paid for interest 93 91
</TABLE>
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<PAGE> 7
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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
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.
The following illustrates income (loss) utilized in the computation of earnings
(loss) per share (in thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $(129) $ 120 $(278) $(121)
Dividends on preferred stock (30) (30) (90) (90)
----- ----- ----- -----
Numerator for basic and diluted income
(loss) from continuing operations $(159) $ 90 $(368) $(211)
===== ===== ===== =====
</TABLE>
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<PAGE> 8
For the three and nine months ended September 30, 2000 and 1999, certain
securities were not included in the calculation of diluted earnings because of
their antidilutive effect. Those securities are as follows (shares in
thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Stock options 467 437 467 437
Stock warrants 299 299 299 299
Shares issuable on conversion of
preferred shares 1,585 1,585 1,585 1,585
Shares issuable on conversion of
subordinated debentures 493 753 493 753
Shares issuable on conversion of
promissory notes 300 300 300 300
----- ----- ----- -----
3,144 3,374 3,144 3,374
===== ===== ===== =====
</TABLE>
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<PAGE> 9
Note 3. Summarized Financial Data (in thousands):
<TABLE>
<CAPTION>
Intersystems, Inc. Three Months Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 4,044 $ 3,607 $ 12,377 $ 10,600
------- ------- -------- --------
Operating expenses 2,937 2,441 8,842 7,170
Selling, general and administrative expenses 1,038 996 3,039 2,755
Interest expense (net) 344 453 1,050 1,308
------- ------- -------- --------
TOTAL COST AND EXPENSES 4,319 3,890 12,931 11,233
------- ------- -------- --------
Income (loss) from continuing
operations (275) (283) (554) (633)
Discontinued operation-Inter systems
Nebraska -- 384 -- 745
Cumulative effect of change in
accounting principle -- -- -- (134)
------- ------- -------- --------
Net income (loss) $ (275) $ 101 $ (554) $ (22)
======= ======= ======== ========
</TABLE>
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<PAGE> 10
Note 4. Stockholders (Deficit) (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, 2000 29 $-- 3,779 $38 $20,723
Net loss -- -- -- -- --
-- ---- ----- --- -------
Balance
September 30, 2000 29 $-- 3,779 $38 $20,723
-- ---- ----- --- -------
</TABLE>
<TABLE>
<CAPTION>
Retained
Earnings
(Deficit) Treasury Stock Total
--------- -------------- -----
<S> <C> <C> <C>
Balance
January 1, 2000 $(21,771) $(29) $(1,039)
Net loss (278) -- (278)
-------- ---- -------
Balance
September 30, 2000 $(22,049) $(29) $(1,317)
-------- ---- -------
</TABLE>
Note 5.
In the third quarter of 1999, the Company sold its common stock ownership
interest in Teletrak Environmental Systems, Inc., (1,353,013 common shares) in a
private sale to a third party for a cash consideration of $200,000. The Teletrak
shares were carried on the Company's balance sheet at no value and the Company
recorded a gain of $196,000 on the sale, net of expenses.
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<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED September 30, 2000 AND 1999
The net loss of $129,000 for three months ended September 30,2000
compared to income of $81,000 for the three months ended September 31, 1999. The
increased loss was the result of a gain on sale of securities of $196,000
included in the 1999 period and lower revenues, which decreased by $31,000, in
the 2000 period.
NINE MONTH PERIODS ENDED September 30, 2000 AND 1999
The net loss for the nine months ended September 30, 2000, increased
by $137,000 from the loss for the nine months ended September 30, 1999. The
primary factors were the inclusion of a $196,000 gain on sale of securities in
the 1999 period, offset by a reduction of $57,000 in equity loss of affiliates
and a reduction of $27,000 in interest expense due to lower borrowings in the
2000 period.
Impact of Inflation
Inflation has not had a significant impact on the Company's
operations.
Liquidity and Capital Resources
Operating activities for the nine months ended September 30, 2000 used
cash of $21,000. Collections on loans was $1,105,000 and $1,098,000 was used to
repay notes. Cash decreased by $14,000 for the period.
Future liquidity sources for the Company will consist of revenues
generated from its financial service activities, reduction in selling, general
and administrative expenses, reimbursement of general and administrative
expenses from affiliates, and sales of investment securities. On a longer term
basis, the Company may be required to seek additional liquidity through debt or
equity offerings.
The Company's independent certified public accountants have not
reviewed the Company's 10QSB for the period ended September 30, 2000.
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<PAGE> 12
YEAR 2000 COMPLIANCE
During 1999, the Company completed its Year 2000 ("Y2K") compliance
project to prepare its computer systems, applications and software products for
the year 2000 at an insignificant cost. Subsequent to December 31, 1999, the
Company has not experienced any Y2K disruptions, either internally or from
suppliers or other outside sources that had an adverse impact on the Company's
operations or financial condition. The Company has no reason to believe that Y2K
failures will materially affect it in the future. However, since it may take
several additional months before it is known whether the Company or its
suppliers, vendors or customers may have undergone Y2K problems, no assurances
can be given that the Company will not experience losses or disruption due to
Y2K computer-related problems. The Company will continue to monitor the
operation of its software products, computers and microprocessor-based devises
for any Y2K problems.
FORWARD LOOKING STATEMENTS
This quarterly report for the period ended September 30, 2000
as well as other public documents of the Company contains forward-looking
statements which involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievement of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward- looking statements. Such
statements include, without limitation, the Company's expectations and estimates
as to future financial performance, cash flows from operations, capital
expenditures and the availability of funds from refinancing of indebtedness
Readers are urged to consider statements which use the terms "believes',
"intends", "expects", "plans", "estimates", "anticipated" or "anticipates" to be
uncertain and forward-looking. In addition to other factors that may be
discussed in the company's filings with the Securities and Exchange Commission,
including this report, the following factors, among others, could cause the
Company's actual results to differ materially from those expressed in any
forward-looking statement made by the Company: (I) general economic and business
conditions, acts of God and natural disasters, as well as the demand for the
Company's services, or the ability of the Company to provide such services; (ii)
the insolvency or failure to pay its debts by a significant creditor of the
Company or its subsidiaries or affiliates, or the inadequacy or uncollectibility
of any collateral pledged to secure such creditor's debts to the Company or its
subsidiaries or affiliates; (iii) increased competition; (iv) changes in
customer preferences and the inability of the Company's subsidiaries of
affiliates to develop and introduce new services to accommodate these changes;
and (v) the maturing of debt at the Company, subsidiary or affiliate level and
the inability of the Company, the subsidiary or affiliate to raise capital to
repay or refinance such debt on favorable terms, or the insufficiency of
collateral pledged to secure any such debt.
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<PAGE> 13
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 thereunto duly authorized.
HELM CAPITAL GROUP, INC.
Date: November 13, 2000 /s/ Herbert M. Pearlman
-----------------------------------
Herbert M. Pearlman
President and
Chief Executive Officer
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