AMERICAN HOLDINGS INC /DE/, 10KSB/A, 1995-04-06

AMERICAN HOLDINGS INC /DE/
10KSB/A, 1995-04-06
NON-OPERATING ESTABLISHMENTS

Previous: POLICY MANAGEMENT SYSTEMS CORP, DEF 14A, 1995-04-06

Next: STATE BOND MUNICIPAL FUNDS INC, PRES14A, 1995-04-06

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB/A
AMENDMENT NO. 1
MARK ONE:

[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended December 31, 1994

[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from _________________ to _________________.

Commission file number 0-10566

AMERICAN HOLDINGS, INC.
(Name of small business issuer in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)

95-3419191
(I.R.S. Employer Identification Number)

376 MAIN STREET, P.O. BOX 74, BEDMINSTER, NEW JERSEY 07921
(Address of principal executive offices with Zip Code)

Issuer's telephone number, including area code (908) 234-9220

SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

NONE

SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

Common Stock, par value $.01 per share

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ]

Issuer's revenues for the fiscal year ended December 31, 1994 were
approximately $1,802,000.

At February 28, 1995, there were 7,726,149 shares of common stock
outstanding. The aggregate market value of the common stock held by
non-affiliates of the registrant, based on the closing price of such
stock on such date as reported by NASDAQ, was approximately $7,200,000.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

The purpose of this amendment is to correct minor errors which occurred
within the Form 10-KSB during the Edgar formatting process. This document is
being filed in its entirety.

<PAGE>

PART I

ITEM 1. - DESCRIPTION OF BUSINESS

DISPOSITION OF A SUBSIDIARY

On September 21, 1993, the Board of Directors of the Company approved the
distribution of the common stock of NorthCorp Realty Advisors, Inc.
("NorthCorp"), a real estate asset manager and a wholly-owned subsidiary of the
Company, to all holders of the Company's outstanding common stock (the
"Distribution"). Under the plan of distribution, the Company declared a dividend
of one share of NorthCorp common stock outstanding for every two shares of the
Company's common stock outstanding on the record date of the Distribution, July
8, 1994. At the date of the Distribution (July 11, 1994), 8,250,000 shares of
NorthCorp common stock were outstanding. Approximately 4,000,000 shares, or 48%
of NorthCorp's common stock were distributed to the stockholders of the Company.

On August 4, 1994, the Company sold substantially all of its remaining
interest in NorthCorp to Mr. R. E. Roark and NorthCorp for approximately $1.5
million. Mr. Roark was the sole shareholder of Crown Revenue Services, Inc.
("Crown"), a Resolution Trust Corporation ("RTC") contractor. As part of the
transaction, Crown was reorganized as a subsidiary of NorthCorp. NorthCorp also
assumed the lease of the Company's Washington D.C. office and the employment
contract of one of the Company's executive officers.

ACQUISITION OF MADIS BOTANICALS, INC.

American Holdings, Inc. (the "Company" or "AmHold") manufactures botanical
extracts through its eighty percent (80%) owned subsidiary, Madis Botanicals,
Inc. ("Madis"). On January 3, 1995, the Company's wholly-owned subsidiary merged
(the "Merger") with Dr. Madis Laboratories, Inc. (subsequently renamed Madis
Botanicals, Inc.), a New Jersey corporation located in South Hackensack, New
Jersey. The surviving corporation is owned 80% by the Company and 20% by the
former shareholders of Madis. The Merger was effected in connection with a Plan
of Reorganization (the "Plan") filed by the predecessor corporation in Chapter
11 proceedings under the Federal Bankruptcy Law. Under the terms of the Merger,
the Company financed the Plan which provided for the payment of $3.4 million to
the Madis creditors, of which approximately $2.3 million was advanced by the
Company and approximately $900,000 was paid by Madis from funds on hand. The
balance of the predecessor corporation's indebtedness was assumed by the
surviving corporation and will be paid as due from working capital or by the
Company in the event of any deficiency.

Madis had sales of approximately $6.0 million and income before
reorganization expenses and income taxes of $731,000 in 1994. In 1993, Madis had
sales of $5.2 million and income before reorganization expenses and income taxes
of $594,000. The botanical extract industry is very competitive, but is not
dominated to any significant degree by any large producers. Madis has been
operating continuously in this industry since 1959 and has developed expertise
in the manufacture of hundreds of botanical extracts. Madis products, sold
throughout the world, include flavor extracts, enzymes, water soluble gums, and
oleoresins.

EMPLOYEES

At February 28, 1995, the Company had 55 employees, 47 of whom were
employed by Madis.

<PAGE>

ITEM 2. - DESCRIPTION OF PROPERTY

On February 1, 1994, the Company entered into a five-year lease agreement
with an affiliate for 1,700 square feet of office space at a monthly rate of
approximately $3,600. Prior to that date, the Company leased the same space from
the affiliate on a month-to-month basis.

Madis leases a 125,000 square-foot facility in South Hackensack, New
Jersey, from an affiliated corporation ("Madis Affiliate") owned by the minority
shareholders of Madis for $20,000 per month, net, plus one per cent of the gross
revenues of Madis up to an additional $200,000 per annum. The lease has a term
of five years and expires in December 1999 with renewal options for fifteen
additional years. The Company believes this rental rate represents the fair
market value of the lease. This facility includes a 20,000 square-foot office
area; a 10,000 square-foot laboratory; manufacturing space of 70,000 square
feet; and warehousing space of 25,000 square feet.

In connection with the Merger, the Madis Affiliate borrowed $200,000 from
the Company (the "First Loan") in 1995 and the Madis Affiliate and its
shareholders borrowed $205,000 in 1994 from the Company (the "Second Loan").
Both Loans bear interest at the rate of 2% above the Citibank prime rate (but in
no event more than 13%) and are collateralized by the Madis facility. The First
Loan is repayable at $10,000 per month plus interest commencing February 1, 1995
until it is satisfied and thereafter the Second Loan will be repaid at the rate
of $10,000 per month plus interest until it is satisfied.

Madis also leases a warehouse facility in Teterboro, New Jersey for
$100,000 per year from an unrelated party. The lease has a two-year term with a
renewal option for one three-year period at rates up to $130,000 per year.

ITEM 3. - LEGAL PROCEEDINGS

ENVIRONMENTAL MATTERS

In connection with the Plan, Madis was required to undertake up to $280,000
to perform specified remedial environmental activities at the South Hackensack
facility, including the removal of certain underground storage tanks. This
liability has been accrued on the balance sheet of Madis at December 31, 1994.
The Company believes this accrued liability will be sufficient to perform all
required remediation activity.

OTHER

The Company is involved from time to time in various lawsuits that arise in
the ordinary course of business and the outcome of which, if adverse, would not
have a material affect on the financial condition and results of operations of
the Company.

<PAGE>

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Stockholders on October 26, 1994.
All nominees to the Company's Board of Directors were elected.

The following is a vote tabulation for all nominees:
<TABLE>
<CAPTION>
FOR WITHHELD
--------- --------
<S> <C> <C>

Paul O. Koether 6,790,014 52,291
Richard M. Bossert 6,790,468 51,837
Mark W. Jaindl 6,790,123 52,182
William Mahomes, Jr. 6,790,170 52,135
Alfredo Mena 6,790,225 52,080

</TABLE>

<PAGE>

PART II

ITEM 5. - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

At February 28, 1995, the Company had approximately 3,200 stockholders of
record. The Company's common stock currently trades on the NASDAQ/National
Market System under the symbol "HOLD."

The following table sets forth the high and low closing prices for the
common stock for the periods indicated, as reported by NASDAQ on the National
Market System.
<TABLE>
<CAPTION>
Calendar Quarter Ended:
HIGH LOW
<S> <C> <C>
1994:

March 31 ........................ $1 17/32 $1 3/8
June 30 ......................... 1 1/2 1 11/32
September 30 .................... 1 5/16 1 5/16
December 31 ..................... 1 5/8 1 9/32

1993:

March 31 ........................ $3 1/8 $2 1/4
June 30 ......................... 3 1 5/8
September 30 .................... 2 1/8 1 5/8
December 31 ..................... 2 1 3/8

</TABLE>

The Company distributed one share of NorthCorp common stock for every two
shares of the Company's common stock outstanding on the record date of the
distribution, July 8, 1994. At the date of distribution (July 11, 1994),
8,250,000 shares of NorthCorp common stock were outstanding. Approximately 4
million shares, or 48%, of NorthCorp's common stock were distributed to the
stockholders of the Company. This distribution was not taxable to the
stockholders of the Company, assuming the individual stockholder's cost basis in
the shares of the Company exceeded the fair market value of the shares of
NorthCorp at the date of distribution.

The Company had not declared or paid any other dividends on its common
stock and does not foresee doing so in the immediate future.

ITEM 6. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

DISPOSITION OF A SUBSIDIARY

On September 21, 1993, the Board of Directors of the Company approved a
plan to distribute the common stock of NorthCorp Realty Advisors, Inc.
("NorthCorp"), a real estate asset manager and a wholly-owned subsidiary of the
Company, to all holders of the Company's outstanding common stock (the
"Distribution"). Under the plan of distribution, the Company declared a dividend
of one share of NorthCorp common stock for every two shares of the Company's
common stock outstanding on the record date of the Distribution, July 8, 1994.

At the date of distribution (July 11, 1994), 8,250,000 shares of NorthCorp
common stock were outstanding. Approximately 4,000,000 shares, or 48%, of
NorthCorp's common stock were distributed to the stockholders of the Company.

<PAGE>

On August 4, 1994, the Company sold substantially all of its remaining
interest in NorthCorp ("the Sale") to Mr. R. E. Roark and NorthCorp for
approximately $1.5 million. Mr. Roark was the sole shareholder of Crown Revenue
Services, Inc. ("Crown"), a Resolution Trust Corporation ("RTC") contractor. As
part of the transaction, Crown was reorganized as a subsidiary of NorthCorp.
NorthCorp also assumed the lease of the Company's Washington, D.C. office and
the employment contract of one of the Company's executive officers. The net gain
on sale was $378,000.

NorthCorp's results of operations have been included in the consolidated
financial statements through the date of sale in 1994 and in 1993 as equity in
the earnings (loss) of disposed-of subsidiary. Since its acquisition in June
1992 and until the date of sale, NorthCorp made dividends and payments under a
tax-sharing agreement to the Company aggregating approximately $4.9 million.

ACQUISITION OF MADIS BOTANICALS, INC.

On January 3, 1995, the Company's wholly-owned subsidiary merged (the
"Merger") with Dr. Madis Laboratories, Inc., a New Jersey corporation located in
South Hackensack, New Jersey. The surviving corporation in the Merger operates
under the name of Madis Botanicals, Inc. ("Madis") and is owned 80% by the
Company and 20% by the former shareholders of Madis. In addition, the Company
issued to the former Madis shareholders options to acquire 250,000 shares of the
Company's Common Stock at its approximate book value of $2.10 per share. Madis,
a manufacturer of botanical and medicinal extracts, had sales of approximately
$6.0 million and income before reorganization items and income taxes of $731,000
in 1994 compared to sales of $5.2 million and income before reorganization items
and income taxes of $594,000 in 1993.

The Merger was effected in connection with a Plan of Reorganization (the
"Plan") filed by Madis in Chapter 11 proceedings under the Federal Bankruptcy
Law. The Plan was confirmed on November 29, 1994 by the United States Bankruptcy
Court in Newark, New Jersey. Under the terms of the Merger, the Company financed
the Plan which provided for the payment to the creditors of $3.4 million, of
which approximately $2.3 million was advanced by the Company and approximately
$900,000 was paid by Madis from funds on hand. The balance of the predecessor
corporation's indebtedness was assumed by the surviving corporation and will be
paid as due from working capital or by the Company in the event of any
deficiency. The Company believes that the Madis creditors will receive 100% of
their approved claims.

Two principal shareholders of Madis, who were also executive officers,
received employment agreements under which one will serve as chairman emeritus
of the surviving corporation for a period of three years at an annual salary of
$100,000 and the other will serve as president for a period of four years at an
annual salary of $150,000. The premises occupied by the surviving corporation
will be leased from the former Madis shareholders at an annual rent of $240,000
net, plus 1% of gross revenues up to an additional $200,000 per annum. The
Company believes the rental represents the fair market value.

PROFORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION

Proforma consolidated condensed financial information is included in Note 4
of Notes to Consolidated Financial Statements. The results of operations have
been adjusted to reflect the disposition of NorthCorp and the Washington, D.C.
office of the Company (the "Disposition") had the Disposition taken place on
January 1, 1994. The results of operations also include the operations of Madis
as if the acquisition of Madis had taken place on the same date.

<PAGE>

The proforma financial information is not intended to reflect results of
operations which would have actually resulted had these transactions been
effected on the dates indicated. Moreover, this proforma financial data is not
intended to be indicative of results of operations which may be attained in the
future. This information should be read in conjunction with the audited
historical consolidated financial statements contained in this Form 10-KSB.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1994, the Company had cash and cash equivalents of $13.4
million. Cash equivalents consisted of treasury bills with a maturity of less
than three months and yields of approximately 5 percent. On January 3, 1995,
cash and cash equivalents of $2.3 million were used for the acquisition of
Madis. The Company also had marketable securities with a current market value of
approximately $2.0 million at December 31, 1994. The Company has no funded debt.
The management of the Company believes that the Company's financial resources
and anticipated cash flows will be sufficient for future operations and possible
acquisitions of other operating businesses.

In connection with the acquisition of NorthCorp by the Company, two
officers of NorthCorp were paid an aggregate of $1,125,000 by NorthCorp, which
was used to acquire an aggregate of 750,000 shares of Company stock ("Officer
Shares"). In addition, the Company advanced $180,000 to each of the officers to
pay federal income taxes resulting from this cash payment. The advances bore
interest at the minimum rate allowed under the Internal Revenue Code and were
secured by their shares of the Company's common stock.

The advances and accrued interest were repaid by the officers from the
proceeds of a partial sale of the Officer Shares to the Company in February 1994
in connection with their resignation as officers and directors of NorthCorp. The
remaining shares were subsequently repurchased from the Officers in 1994.

RESULTS OF OPERATIONS

The Company's consolidated operations resulted in net income of $26,000 in
1994, compared to a net loss of $1.2 million, or $.11 per share in 1993. The
consolidated results of operations for 1994 reflect the net gain on the sale of
the Company's remaining interest in NorthCorp of $378,000.

Equity in the earnings (loss) of disposed-of subsidiary was $464,000
compared to a loss of $1.0 million in 1993. A restructuring charge of $2.8
million was recorded by the Company in 1993. This charge was a result of the
lack of extensions and renewals of RTC contracts, the decline in available
public sector contracts, and the competitive nature of the real estate asset
management industry. Aside from this charge, the reduction in NorthCorp's
earnings was due primarily to the continued disposition of assets under RTC
contracts in late 1993 and 1994.

Interest, dividend and other income was $947,000 in 1994, an increase of
$249,000, or 35.7% from the $698,000 recorded in 1993. Interest income was
$632,000 in 1994, an increase of $133,000, or 26.7% from the $499,000 recorded
in 1993. This increase was due to higher prevailing interest rates in 1994
compared to 1993. Dividend income was $68,000 in 1994 compared to $125,000 in
1993, a decrease of $57,000. The decrease in dividends was due to a change in
portfolio composition. All other income increased from $74,000 in 1993 to
$247,000 in 1994. This increase in all other income was due principally to
revenue from the Washington, D.C. office of the Company, which was disposed of
on August 4, 1994.

In 1994, the Company recorded net gains on marketable securities of
$13,000, compared to net gains of $1.9 million in 1993. The Company adopted
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", on January 1, 1994. As a result, net
gains on marketable securities in 1994 are composed of realized gains of $50,000
and net unrealized losses of $37,000. Gains on marketable securities in 1993

<PAGE>

were composed entirely of realized gains. A charge to stockholders' equity of
$742,000 was recorded in 1994 to reflect the decrease in market value of
securities available for sale. This charge was related primarily to the
Company's investment in a real estate investment trust ("REIT"). The Company had
undertaken two proxy contests to protect its investment in the REIT and to
obtain control of the REIT's Board of Directors. The decrease in net gains on
marketable securities was due to the changes in portfolio composition and
general market conditions.

General and administrative expenses were $1.8 million in 1994, compared to
$2.6 million in 1993, a decrease of approximately $800,000, or 31.1%. The
decrease was mainly due to the disposition of the Washington, D.C. office of the
Company, reduced salary expense for executive officers in 1994 and accrued
severance expenses for a former executive officer of the Company. The overall
decline in expenses was offset somewhat by a slight increase in professional
fees expense principally due to work performed in association with the
distribution of NorthCorp's shares to the Company's stockholders; the sale of
NorthCorp; the proxy contests undertaken in connection with one of the Company's
investments; and the acquisition of Madis.

<PAGE>

ITEM 7. - FINANCIAL STATEMENTS

The financial statements filed with this item are listed below:

Independent Auditors' Report

Consolidated Financial Statements:

Consolidated Balance Sheet as of December 31, 1994

Consolidated Statements of Operations for the Years ended December
31, 1994 and 1993

Consolidated Statements of Stockholders' Equity for the Years
ended December 31, 1994 and 1993

Consolidated Statements of Cash Flows for the Years ended December
31, 1994 and 1993

Notes to Consolidated Financial Statements

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
of American Holdings, Inc.:

We have audited the accompanying consolidated balance sheet of American
Holdings, Inc. and subsidiaries as of December 31, 1994, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the two years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of American Holdings, Inc. and
subsidiaries as of December 31, 1994 and the results of their operations and
their cash flows for the two years then ended in conformity with generally
accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for marketable securities effective
January 1, 1994 to conform to Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities," and
changed its method of accounting for income taxes effective January 1, 1993 to
conform to Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes."

/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
March 20, 1995.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994
(IN $000's)

<S> <C>
ASSETS

Cash and cash equivalents ................................... $13,427
Marketable securities ....................................... 2,018
Notes receivable from Madis and affiliates................... 483
Investment in Madis ......................................... 243
Furniture and equipment, net of
accumulated depreciation .................................. 33
Other assets ................................................ 732
-------
Total assets ........................................... $16,936
=======

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable ............................................ $ 47
Accrued expenses ............................................ 574
-------
Total liabilities 621
-------

Stockholders' equity:
Common stock, par value $.01;
30,000,000 shares authorized;
7,726,161 shares issued and outstanding ................... 77
Additional paid-in capital .................................. 43,800
Accumulated deficit ........................................ ( 26,820)
Unrealized losses on securities
available for sale ....................................... ( 742)
-------
Total stockholders' equity ............................. 16,315
-------

Total liabilities and stockholders' equity ............. $16,936
=======

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN $000'S, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31,
-----------------------
1994 1993
------ ------
<S> <C> <C>
Revenues:
Equity in earnings (loss) of
disposed-of subsidiary ............................ $ 464 ($ 1,033)
Net gain on sale of majority interest
in disposed-of subsidiary ......................... 378 -
Net gains on marketable
securities ........................................ 13 1,892
Interest, dividend and other income ................ 947 698
------- -------
1,802 1,557
------- -------

General and administrative expenses:
Personnel .......................................... 855 977
Professional fees .................................. 634 619
Other .............................................. 282 974
------- -------
1,771 2,570
------- -------

Income (loss) before income taxes .................... 31 ( 1,013)
Provision for income taxes ........................... 5 164
------- -------

Net income (loss) .................................... $ 26 ($ 1,177)
======= =======

Net income (loss) per share .......................... $ - ($ .11)
======= =======

Weighted average shares
outstanding (in 000's) ............................. 8,095 10,772
======= =======

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN 000'S)

<TABLE>
<CAPTION>
Total
Total Additional Deferred Stock-
Shares Common Paid-In Accumulated Treasury Stock Compensation holders'
Outstanding Stock Capital Deficit Shares Cost Charge Equity
----------- ------ ---------- ----------- -------- ----- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 ... 11,862 $ 119 $50,924 ($25,627) - $ - ($ 797) $24,619

Net loss ..................... - - - ( 1,177) - - - ( 1,177)

Accretion to common
stock subject to put
agreement ................... - - - ( 42) - - - ( 42)

Amortization of deferred
compensation charge ......... - - - - - - 563 563

Write-off of remaining de-
ferred compensation charge
as part of restructuring .... - - - - - - 234 234

Exercise of stock option ..... 100 1 174 - - - - 175

Repurchase of treasury
stock ....................... - - - - 1,897 ( 3,330) - ( 3,330)

Repurchase and cancella-
tion of common stock .......( 1,113) ( 12) ( 1,629) - - - - ( 1,641)
------ ----- ------- ------- ----- ------ ------ -------

Balance, December 31, 1993 ... 10,849 $ 108 $49,469 ($26,846) 1,897 ($3,330) $ - $19,401
====== ===== ======= ======= ===== ====== ====== =======
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(continued)
(IN 000'S)

Unrealized Total
Total Additional losses on Stock-
Shares Common Paid-In Accumulated Treasury Stock Sec. Avail. Holders'
Outstanding Stock Capital Deficit Shares Cost For Sale Equity
----------- ------ ---------- ----------- -------- ----- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 ... 10,849 $108 $49,469 ($26,846) 1,897 ($3,330) $ - $19,401

Unrealized gains on
securities available for
sale at January 1, 1994...... - - - - - - 68 68

Change in unrealized
losses in securities
available for sale .......... - - - - - - ( 810) ( 810)

Net income ................... - - - 26 - - - 26

Distribution of NorthCorp
shares ..................... - - ( 897) - - - - ( 897)

Purchase of treasury stock ... - - - - 759 ( 1,217) - ( 1,217)

Common stock subject to
put agreement ............... - - - - - 400 - 400

Cancellation of treasury
stock ...................( 2,656) ( 26) ( 4,121) - (2,656) 4,147 - -

Repurchase and cancella-
tion of common stock .......( 467) ( 5) ( 651) - - - - ( 656)
------ ---- ------- ------- ----- ------ ---- -------

Balance, December 31, 1994 ... 7,726 $ 77 $43,800 ($26,820) - $ - ($742) $16,315
====== ==== ======= ======= ===== ====== ==== =======

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN $000's)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) .................................. $ 26 ($ 1,177)
Adjustments:
Gain on sale of disposed-of subsidiary ........... ( 378) -
Net gains on marketable securities ............... ( 13) ( 1,892)
Other, net ....................................... ( 1,310) 6,450
-------- -------
Net cash provided by (used in)
operating activities ........................... ( 1,675) 3,381
-------- -------

Cash flows from investing activities:
Sale of fixed assets, net ......................... ( 6) ( 177)
Proceeds from sale of subsidiary .................. 1,500 -
Proceeds from sale of marketable
securities ....................................... 1,346 10,432
Purchase of marketable securities ..................( 3,510) ( 8,785)
Increase in notes receivable .......................( 463) -
Investment in Madis Botanicals, Inc. ...............( 156) -
Repayment of loans from former employees ........... 360 -
Other, net .........................................( 5) -
-------- -------
Net cash provided by (used in) investing
activities ...................................... ( 934) 1,470
-------- -------
Cash flows from financing activities:
Sale of common stock ............................. - 175
Repurchase of common stock ........................ ( 1,873) ( 4,971)
-------- -------
Net cash used in financing activities ........... ( 1,873) ( 4,796)
-------- -------
Net increase (decrease) in cash and cash
equivalents ......................................... ( 4,482) 55
Cash and cash equivalents at beginning
of period .......................................... 17,909 17,854
-------- -------
Cash and cash equivalents at end of period ........... $ 13,427 $17,909
======== =======

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>
AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of American
Holdings, Inc. (the "Company" or "AmHold") and its wholly-owned subsidiaries
after elimination of all material intercompany accounts and transactions.

The results of operations of NorthCorp Realty Advisors, Inc. ("NorthCorp")
are included in the Consolidated Statements of Operations as equity in the
earnings (loss) of disposed-of subsidiary through the date of disposition in
1994 and in 1993.

The acquisition of Madis Botanicals, Inc. ("Madis") described in Note 3 of
Notes to Consolidated Financial Statements occurred on January 3, 1995 and was
accounted for using the purchase method.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist primarily of cash on hand, cash in banks
and treasury bills purchased with an original maturity of three months or less.

MARKETABLE SECURITIES

The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115")
as of January 1, 1994. SFAS 115 provides that all investments are to be
classified into three categories: debt securities that the Company has the
positive intent and ability to hold to maturity are classified as held-to-
maturity securities and reported at amortized cost; debt and equity securities
that are bought and held principally for the purpose of selling them in the near
term are classified as trading securities and reported at fair value, with
unrealized gains and losses included in the results of operations; and debt and
equity securities not classified as either held-to-maturity securities or
trading securities are classified as available-for-sale securities reported at
fair value with unrealized gains and losses excluded from the results of
operations and reported as a separate component of stockholders' equity.

The Company accounts for securities transactions on a trade-date basis.
Marketable securities are recorded at the lower of aggregate cost or market in
1993. For computing realized gains or losses on sale of marketable securities,
cost is determined on a first-in, first-out basis. The effect of all unsettled
transactions is accrued in the consolidated financial statements.

FURNITURE AND EQUIPMENT

The Company records all furniture and equipment at cost. Depreciation is
computed using the straight-line method over the related estimated useful life
of the asset. Gains or losses on dispositions of furniture and equipment are
included in operating results.

DEFERRED COMPENSATION CHARGE

In connection with the acquisition of NorthCorp by the Company, NorthCorp
entered into two-year employment agreements with two Key Employees requiring
NorthCorp to make aggregate payments of $1,125,000 upon execution of the
agreements.

Under the terms of the agreements, the Key Employees were required to
purchase $1,125,000 of the Company's common stock. Accordingly, the compensation
paid to the Key Employees was being amortized using the straight-line method
over the two-year term of the related employment agreements. The remaining
deferred compensation charge was written off at December 31, 1993 in connection
with a restructuring charge which is included in equity in earnings (loss) of
disposed-of subsidiary.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

INCOME TAXES

The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") effective January 1, 1993. SFAS
No. 109 requires an asset and liability approach for the accounting for income
taxes. There was no cumulative effect of adopting SFAS No. 109 at that date due
to the recording of a valuation allowance that entirely offset the net deferred
tax asset, which consists principally of the tax effects of the Company's net
operating loss carryforwards.

NorthCorp's results of operations are included in the consolidated federal
income tax return of the Company in 1993 and in 1994, for the period from
January 1, 1994 through the date of Distribution (see Note 2 of Notes to
Consolidated Financial Statements). At December 31, 1994, the Company had net
operating loss carryforwards for tax purposes that expire in various years
through 2003 and are available to offset consolidated taxable income.

NET INCOME (LOSS) PER SHARE

For purposes of calculating net income (loss) per share for 1993, net
income (loss) has been reduced by the amount of the charge to accumulated
deficit for the contingency associated with the 200,000 shares of common stock
subject to the Put Agreement.

Net income (loss) per share is calculated by dividing net income (loss) by
the weighted average number of outstanding common stock and common equivalent
stock, which consists of the dilutive effect of the assumed exercise of certain
outstanding stock options when applicable.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1993 financial statements
to conform to the 1994 classifications. The consolidated statement of cash flows
for the year ended December 31, 1993 has been reclassified to the indirect
method to conform to the current presentation.

2. DISPOSITION OF A SUBSIDIARY

On September 21, 1993, the Board of Directors of the Company approved the
distribution of the common stock of NorthCorp, a real estate asset manager and a
wholly-owned subsidiary of the Company, to all holders of the Company's
outstanding common stock (the "Distribution"). Under the plan of distribution,
the Company declared a dividend of one share of NorthCorp common stock for every
two shares of the Company's common stock outstanding on the record date of the
Distribution, July 8, 1994.

At the date of Distribution (July 11, 1994), 8,250,000 shares of NorthCorp
common stock were outstanding. Approximately 4,000,000 shares, or 48%, of
NorthCorp's common stock were distributed to the stockholders of the Company.

On August 4, 1994, the Company sold substantially all of its remaining
interest in NorthCorp to Mr. R. E. Roark and NorthCorp for approximately $1.5
million. Mr. Roark was the sole shareholder of Crown Revenue Services, Inc.
("Crown"), a Resolution Trust Corporation contractor. As part of the
transaction, Crown was reorganized as a subsidiary of NorthCorp. NorthCorp also
assumed the lease of the Company's Washington, D.C. office and the employment
contract of one of the Company's executive officers.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

3. ACQUISITION OF MADIS

The Merger was effected in connection with a Plan of Reorganization (the
"Plan") filed by the predecessor corporation in Chapter 11 proceedings under the
Federal Bankruptcy law. The Plan was confirmed on November 29, 1994 by the
United States Bankruptcy Court in Newark, New Jersey. Under the terms of the
Merger, the Company financed the Plan which provided for Madis creditors to be
paid approximately $3.4 million, of which approximately $2.3 million was
advanced by the Company and approximately $900,000 was paid by Madis from funds
on hand. The balance of the predecessor corporation's indebtedness was assumed
by the surviving corporation and will be paid as due from working capital or by
the Company in the event of any deficiency. The Company believes that the Madis
creditors will receive 100% of their approved claims.

Two principal shareholders of Madis, who were also executive officers,
received employment agreements under which one will serve as chairman emeritus
of the surviving corporation for a period of three years at an annual salary of
$100,000 and the other will serve as president for a period of four years at an
annual salary of $150,000. The premises occupied by the surviving corporation
will be leased from an affiliated corporation owned by the minority shareholders
of Madis at an annual rent of $240,000 net, plus 1% of gross revenues up to an
additional $200,000 per annum. The Company believes the rental represents the
fair value of this lease.

4. PROFORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION

The proforma results of operations have been adjusted to reflect the
disposition of NorthCorp and the Washington, D.C. office of the Company (the
"Disposition") had the Disposition taken place on January 1, 1994. The results
of operations also include the operations of Madis as if the acquisition had
taken place on the same date.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

<TABLE>

American Holdings, Inc.
and Subsidiaries
Proforma Consolidated Condensed
Statement of Operations
For the Year Ended
DECEMBER 31, 1994

(in $000's, except per share data)

<S> <C>

Revenues ...................... $ 5,995

Cost of goods sold ............ 4,008
-------
Gross profit .................. 1,987
-------
Selling, general and
administrative expenses ..... 3,081
-------
Loss from operations .......... ( 1,094)

Other income .................. 441
-------
Loss before income taxes ...... ( 653)

Income taxes .................. -
-------
Net loss ...................... ($ 653)
=======

Loss per common share ......... ($ .08)
=======
Weighted average shares
outstanding (in 000's) ...... 8,095
=======

</TABLE>

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

5. MARKETABLE SECURITIES

At December 31, 1994, marketable securities consisted of the following
(in $000's):
<TABLE>
<CAPTION>
Gross Gross
Amortized Holding Holding Fair
COST GAINS LOSSES VALUE

<S> <C> <C> <C> <C>
Trading securities:
Corporate debt
securities $ 191 $ 4 $ - $ 195
Equity securities 639 7 48 598
------- ------ ------ -------
Total 830 11 48 793
------- ------ ------ -------

Available-for-sale:
Equity securities 1,967 17 759 1,225
------- ------ ------ -------

Total marketable
securities $ 2,797 $ 28 $ 807 $ 2,018
======= ====== ====== =======
</TABLE>

The corporate debt securities mature in the year 2009.

The unrealized losses and gains on trading securities included in the
results of operations for the year ended December 31, 1994 was $48,000 and
$11,000, respectively. The unrealized loss on securities available for sale
included as a separate component of consolidated stockholders' equity was
approximately $742,000 at December 31, 1994.

6. INCOME TAXES

At December 31, 1994, the Company had net operating loss carryforwards of
approximately $21.2 million for Federal income tax reporting purposes, which
expire in the years 2000 to 2003. Additionally, the Company has investment and
research and development tax credit carryforwards aggregating approximately
$200,000 and $870,000, respectively, which expire from 1996 through 2000. The
ultimate realization of the tax benefits from the net operating loss and tax
credit carryforwards is dependent upon future taxable earnings of the Company.

The Company's federal income tax returns for the years ended March 31, 1987
and 1988 and for the nine months ended December 31, 1988 were examined by the
Internal Revenue Service ("IRS"). The IRS challenged the deductibility of
certain payments aggregating approximately $8.1 million made during those
periods in connection with certain litigation settlements and legal fees
primarily related to the settlement of a class action lawsuit. The Company
disagrees with the IRS.

The Company is precluded from challenging the IRS findings until such time
as the Company utilizes the disputed loss carryforwards. Even though the Company
intends to vigorously defend its position, there can be no assurance that the
Company's position will be sustained.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

The Company adopted SFAS No. 109 as of January 1, 1993. SFAS No. 109
required a change from the deferred method to the asset and liability method of
accounting for income taxes. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of "temporary differences"
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities. At the adoption date, the net deferred tax
asset of the Company was composed principally of the tax effects of net
operating loss carryforwards. Due to the uncertainty of realizing this asset, a
valuation allowance of an equal amount was established. There was no cumulative
effect for the change in the method of accounting for income taxes and the
adoption of SFAS No. 109 had no significant impact on the Company's financial
position or results of operations.

The components of income tax expense were as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Federal:
Current $ - $ 55
Deferred - -
------ ------
Total federal $ - $ 55
====== ======

State:
Current $ 5 $ 109
Deferred - -
------ ------
Total state $ 5 $ 109
====== ======

Total provision for
income tax $ 5 $ 164
====== ======
</TABLE>

Deferred income taxes reflect the tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
and tax credit carryforwards. The tax effects of significant items comprising
the Company's net deferred tax asset as of December 31, 1994 are as follows:
<TABLE>
<CAPTION>
($000)
------
<S> <C>
Deferred tax assets:
Net operating loss carryforwards ........... $ 7,247
Alternative minimum tax ("AMT")
and other credit carryforwards ........... 107
Other, net ................................. 1,206
-------
$ 8,560
=======
Valuation allowance .......................... ($ 8,560)
=======
Net deferred tax asset ....................... $ -
=======

</TABLE>

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

A reconciliation of income tax expense to the expected income tax expense
[income (loss) before income taxes times the statutory tax rate of 34%] is as
follows:
<TABLE>
<CAPTION>
($000)
1994 1993
------ ------
<S> <C> <C>

Income (loss) before income
taxes $ 31 ($1,013)
Statutory federal income
tax rate 34% 34%
---- ------
Expected income tax (benefit) 11 ( 345)

Dividends received
deduction ( 16) ( 30)
Alternative minimum tax - 55
State tax 3 73
Net gain on sale of majority
interest in disposed-of
subsidiary ( 129) -
Valuation allowance 114 411
Other, net 22 -
---- ------
Provision for income tax $ 5 $ 164
==== ======
</TABLE>

The Tax Reform Act of 1986 provides for a parallel tax system which
requires the calculation of AMT and the payment of the higher of the regular
income tax or AMT. The Company also has an AMT credit carryforward of
approximately $107,000 which will be allowed as a credit carryover against
regular tax in the future in the event the regular tax exceeds the AMT tax.

7. COMMON STOCK

STOCK REPURCHASES

In February and December 1993, the Company purchased 750,000 and 765,704
shares, respectively, of its common stock for an aggregate purchase price of
$1,000,000 (approximately $1.33 per share) and $925,000 (approximately $1.21 per
share), respectively. The sellers were stockholders of Sun Equities Corporation,
the Company's principal stockholder. On September 22, 1993, the Company
purchased 1,000,000 shares of its common stock from a stockholder at an
aggregate purchase price of $2,175,000. The shares had been issued to the
stockholder in June 1992 in connection with the acquisition of NorthCorp.

As part of the acquisition and merger of NorthCorp by the Company, two
officers of NorthCorp were paid an aggregate of $1,125,000, which was used to
acquire 750,000 shares of the Company's stock ("Officer Shares"). The two
officers of NorthCorp could each require the Company to repurchase 100,000 of
the Officer Shares at $2 per share. The Company repurchased these shares in
February 1994 in connection with the officers' resignations as officers and
directors of NorthCorp. The Company repurchased an additional 175,000 of the
Officer Shares from each of the two officers at $1.50 per share in the first
quarter of 1994. The Company repurchased the remaining 200,000 Officer Shares at
$1.50 per share during the second quarter of 1994.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

In February 1994, the Company announced a plan to purchase up to two
million shares of the Company's common stock, subject to market conditions and
other considerations. As of December 31, 1994, 475,963 shares had been acquired
under this plan for an aggregate cost of $648,000.

Including the repurchased shares referenced in the above paragraphs, the
Company repurchased a total of 3,009,704 shares at an aggregate cost of
approximately $5.0 million in 1993 and 1,225,963 shares at an aggregate cost of
approximately $1.9 million in 1994.

STOCK OPTIONS

In August 1991, the Board of Directors of the Company adopted a
Non-Qualified Stock Option Plan (the "Plan"). Under the Plan, non-qualified
options to purchase up to an aggregate of 500,000 shares of common stock of the
Company may be granted by the Board of Directors to officers, directors and
employees of the Company. Options will expire five years from date of grant and
will be exercisable as to one-half of the shares on the date of grant of the
option and as to the other half, on the first anniversary of the date of grant
of the option.

The following table summarizes option transactions under the Plan for the
year ended December 31, 1994:
<TABLE>
<CAPTION>
Price
Shares Range
-------- -------
<S> <C> <C>
Options outstanding at
December 31, 1992 345,000 $1.3125 - $1.75
Options granted in 1993 -
Options cancelled -
Options exercised (100,000) $1.75
-------
Options outstanding at
December 31, 1993 245,000 $1.3125 - $1.75
Options granted 10,000 $1.3125
Options cancelled -
Options exercised -
-------
Options outstanding at
December 31, 1994 255,000 $1.3125 - $1.75
=======
</TABLE>

At December 31, 1994, there were 400,000 shares of common stock reserved
for issuance under the option plan described above.

In connection with the Madis acquisition, the Company issued to the former
Madis shareholders options to acquire 250,000 shares of the Company's common
stock at its approximate book value of $2.10 per share. Two senior executives of
Madis were also given a total of 35,000 options on the same terms.

8. COMPENSATION ARRANGEMENTS

In April 1990, the Company entered into an employment and deferred
compensation agreement (the "Agreement") with the Company's Chairman for an
initial three-year term commencing on April 1, 1990 (the "Effective Date") at an
annual salary of $185,000, which may be increased but not decreased at the
discretion of the Board of Directors. In December 1992, the Board of Directors

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

voted unanimously to increase the Chairman's salary to $215,000 per annum
effective December 1, 1992. The term is to be automatically extended one day for
each day elapsed after the Effective Date. The Chairman may terminate his
employment under the Agreement under certain conditions specified in the
Agreement, and the Company may terminate the Chairman's employment under the
Agreement for cause. In the event of the Chairman's death during the term of the
Agreement, his beneficiary shall be paid a death benefit equal to $215,000 per
year for three years payable in equal monthly installments. Should the Chairman
become "disabled" (as such term is defined in the Agreement) during the term of
the Agreement, he shall be paid an annual disability payment equal to 80 percent
of his base salary plus cash bonuses in effect at the time of the disability.
Such disability payments shall continue until the Chairman attains the age of
70. The Company accrued approximately $35,000 in each of 1993 and 1994 for the
contingent payments provided under the terms of the Agreement.

In connection with the Madis acquisition, two employees were given
employment agreements commencing January 3, 1995. The Chairman Emeritus of Madis
entered into an employment contract with Madis for a three-year period at an
annual salary of $100,000. The President of Madis entered into an employment
agreement with Madis for a term of four years at an annual salary of $150,000.
Both of the employment arrangements may be terminated for cause, as defined in
the contract.

9. COMMITMENTS AND RELATED PARTY TRANSACTIONS

The Chairman of the Company is the Chairman of a brokerage firm which
provided investment services to the Company during the years ended December 31,
1994 and 1993. Brokerage commissions totalled approximately $51,000 in 1994 and
$136,000 in 1993.

Keck Mahin Cate & Koether ("KMC&K") performed substantial legal work for
the Company and its affiliates. Aggregate fees and expenses billed to the
Company and its subsidiaries were approximately $198,000 in 1993. Natalie I.
Koether, Esq., a former partner of KMC&K, is the wife of the Chairman and
President of the Company. Rosenman & Colin ("R&C") also performed legal work for
the Company and its subsidiaries in 1993. Mrs. Koether has been of Counsel to
R&C since November 1993. Aggregate fees and expenses billed to the Company and
its subsidiaries in 1994 were approximately $615,000 and $119,000 in 1993. The
1994 professional fees represented work performed in association with the
distribution of NorthCorp's shares to the Company's stockholders; the sale of
NorthCorp; the proxy contests undertaken in connection with one of the Company's
investments; and the acquisition of Madis.

The Chairman of the Company is also the President of Sun Equities
Corporation ("Sun"). The Company reimburses Sun, the Company's principal
stockholder, for the Company's proportionate share of the cost of certain group
medical insurance and office supplies. Such reimbursements for the years ended
December 31, 1994 and 1993 amounted to approximately $72,000 and $91,000,
respectively. The Company rents office space on a month-to-month basis from an
affiliate. Such rent expense was approximately $46,000 in 1994 and $55,000 in
1993.

<PAGE>

AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 1994 and 1993

In June 1993, the Company purchased the residence of one of its officers
for $387,000 as part of his relocation package for employment at NorthCorp. The
Company reserved $77,000 against declines in the real estate market and property
values. The residence was sold to another officer of the Company at
approximately the net book value (which approximated market value) in December
1993. Neither officer is a director of the Company or NorthCorp.

Madis leases a 125,000 square-foot facility in South Hackensack, New
Jersey, from an affiliated corporation ("Madis Affiliate") owned by the minority
shareholders of Madis for $20,000, net, per month plus one per cent of the gross
revenues of Madis up to an additional $200,000 per year over a term of five
years expiring in December 1999 with renewal options for fifteen additional
years. The Company believes this rental rate represents the fair market value.
This facility includes a 20,000 square-foot office area; a 10,000 square-foot
laboratory, manufacturing space of 70,000 square feet; and warehousing space of
25,000 square feet.

In connection with the Merger, the Madis Affiliate borrowed $200,000 from
the Company (the "First Loan") in 1994 and the Madis Affiliate and its
shareholders borrowed $205,000 in 1995 from the Company (the "Second Loan").
Both Loans bear interest at the rate of 2% above the Citibank prime rate (but in
no event more than 13%) and are collateralized by the Madis facility. The First
Loan is repayable at $10,000 per month plus interest commencing February 1, 1995
until it is satisfied and thereafter the Second Loan will be repaid at the rate
of $10,000 per month plus interest until it is satisfied.

Madis also leases a warehouse facility in Teterboro, New Jersey for
$100,000 per year from an unrelated party. The two-year lease has a renewal
option for one three-year period at rates up to $130,000 per year.

<PAGE>

Item 8. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

<PAGE>

PART III

ITEM 9. - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The five members of the current Board of Directors were elected at the 1994
Annual Meeting of Stockholders and will serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified. The
Company's officers are elected by and serve at the leave of the Board.

None of the executive officers of the Company is related to any other.
There is no arrangement or understanding between any executive officer and any
other person pursuant to which such officer was elected.

The directors and executive officers of the Company at February 28, 1995
are as follows:
<TABLE>
<CAPTION>

Position and Office
Presently Held with Director
NAME OF PERSON AGE THE COMPANY SINCE
-------------- --- ------------------- --------
<S> <C> <C> <C>
Paul O. Koether 58 Chairman, President 1988
and Director of the
Company; Chairman
of Madis

Richard M. Bossert 66 Director 1990

Mark W. Jaindl 35 Senior Vice President 1994
and Director of the
Company and Madis

Alfredo Mena 42 Director 1992

William Mahomes 48 Director 1993

</TABLE>

PAUL O. KOETHER is principally engaged in the following businesses: (i) the
Company, as Chairman since April 1988, President since April 1989, a director
since March 1988, and for more than five years as the Chairman and President of
Sun Equities Corporation ("Sun"), a private, closely-held corporation which is
the Company's principal stockholder; (ii) as Chairman of Madis Botanicals, Inc.,
("Madis") since January 1995 and as a director since December 1994; (iii) as
Chairman and director since July 1987 and President since October 1990 of Kent
Financial Services, Inc. ("Kent") which engages in various financial services,
including the operation of a retail brokerage business through its wholly-owned
subsidiary, T. R. Winston & Company, Inc. ("Winston") and the general partner
since 1990 of Shamrock Associates, an investment partnership which is the
principal stockholder of Kent; (iv) various positions with affiliates of Kent,
including Chairman since 1990 and a registered representative since 1989 of
Winston; and (iv) since July 1992, as a director of American Metals, Inc., which
is currently seeking to acquire an operating business. Prior to August 1994, Mr.
Koether also served as an officer and director of NorthCorp.

<PAGE>

RICHARD M. BOSSERT is a construction engineer. For more than the past five
years, Mr. Bossert has been the President and Chief Operating Officer of Sawyert
Corporation which is engaged in industrial and commercial site construction and
development.

MARK W. JAINDL has served as Senior Vice President of the Company since
June 1992 and as a director since October 1994. He is currently Senior Vice
President and a director of Madis since December 1994 and has served as a
director of American Metals Service, Inc. since July 1992. From October 1991 to
June 1992, he was self-employed as an investment consultant. From May 1982 to
October 1991, he served as Chief Financial Officer of Jaindl Farms which is
engaged in diversified businesses, including the operation of a 10,000-acre
turkey farm, a mobile home park, Ford and John Deere dealerships, a private
water company, and a grain operation. Mr. Jaindl also served as the Chief
Financial Officer of Jaindl Land Company, a developer of residential, commercial
and industrial properties in eastern Pennsylvania. Mr. Jaindl was a director of
NorthCorp from June 1992 until September 1994 and was Interim President of
NorthCorp from February 1994 until August 1994.

ALFREDO MENA has served as a director of the Company since July 1992. He
has been the President of CIA. Salvadorena de Inversiones, S.A. de C.V. since
1986 and had served as its Director and General Manager from 1974 to 1986. CIA.
Salvadorena de Inversiones, S.A. de C.V. is engaged in coffee growing,
processing and exporting. Mr. Mena is a citizen of El Salvador.

WILLIAM MAHOMES, JR. is an attorney. Since 1994 he has been a partner of
Locke Purnell Rain Harrell. From 1990 to 1994 he was a partner in the Dallas
office of Baker & McKenzie. Prior to that, from 1987 to 1990, he served as Vice
President and General Counsel of Pro-Line Corporation, which is engaged in the
manufacture and distribution of hair care products. Mr. Mahomes currently serves
on the Board of Directors of a variety of organizations, including the Bethlehem
Foundation, The Salvation Army, MESBIC Financial Corporation, St. Philip's
Academy, Dallas Black Chamber of Commerce, Dallas/Fort Worth International
Airport and the Dallas Opera.

ITEM 10. - EXECUTIVE COMPENSATION

The table below sets forth for the years ended December 31, 1994, 1993 and
1992, the compensation of any person who, as of December 31, 1994, was the Chief
Executive Officer of the Company or who was among the four most highly
compensated executive officers of the Company other than the Chief Executive
Officer with annual compensation in excess of $100,000 ("Executive Officers").

<PAGE>

Long-Term
Name and ANNUAL COMPENSATION(1)(2) COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) OTHER
------------------ ---- ------ ----- ------------ -----
<S> <C> <C> <C> <C> <C>

Paul O. Koether 1994 $215,000 $35,000 - $ -
Chairman, President 1993 215,000 50,000 200,000 2,250(3)
and Chief Executive 1992 187,500 30,000 - 2,050(3)
Officer of the Company
and Chairman of Madis

Mark W. Jaindl 1994 $120,692 $25,000 - $ -
Senior Vice President 1993 120,000 10,000 55,000 -
and Director of the
Company and Madis
----------------------------------------------------------
</TABLE>

(1) The Company has no bonus plan.

(2) Certain Executive Officers received incidental personal benefits during
the fiscal years covered by the table. The value of these incidental benefits
did not exceed the lesser of either $50,000 or 10% of the total annual salary
and bonus reported for any of the Executive Officers. Such amounts are excluded
from the table.

(3) Represents the amount of matching contributions made by the Company
pursuant to a 401(k) plan.

OPTIONS GRANTED

Under the Company's 1991 Non-Qualified Stock Option Plan (the "Plan"),
non-qualified options to purchase up to an aggregate of 500,000 shares of the
Company's Common Stock may be granted by the Board of Directors to officers,
directors and employees of the Company, its subsidiaries or parent. The exercise
price for the shares may not be less than the fair market value of the Common
Stock on the date of grant. Options will expire five years from the date of
grant and will be exercisable as to one-half of the shares on the date of grant
and as to the other half, after the first anniversary of the date of grant, or
at such other time, or in such other installments as may be determined by the
Board of Directors or a committee thereof at the time of grant. The options are
non-transferable (other than by will or by operation of the laws of descent) and
are exercisable generally only while the holder is employed by the Company or by
a subsidiary or parent of the Company or, in the event of the holder's death or
permanent disability while employed by the Company, within one year after such
death or disability.

The Company granted 10,000 options pursuant to the Plan to one of its
executive officers in 1994 at an exercise price of $1.3125 per share, which was
the market value of the Company's common stock on the date of grant.

<PAGE>

The Board of Directors repriced Mr. Jaindl's stock options in August, 1994
to $1.3125, which was the market value of the Company's stock on the day of
repricing, in connection with his performance as the former acting president of
NorthCorp.

The table below contains information concerning the fiscal year-end value
of unexercised options held by the Executive Officers. During 1993, Mr. Koether
acquired 100,000 shares through the exercise of stock options at a price of
$1.75 per share.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTIONS VALUES
------------------------------------------------------
Value of Unexercised
Number of Unexercised In-the-Money
Options at 12/31/94 Options at 12/31/94
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C> <C> <C>

Paul O. Koether 100,000 - $ - $ -
Mark W. Jaindl 55,000 - 5,625 -

</TABLE>

401(K) PLAN

The Company has established a Retirement Savings Plan pursuant to Section
401(k) of the Internal Revenue Code (the "401(k) Plan"). The 401(k) Plan permits
employees of the sponsor to defer a portion of their compensation on a pre-tax
basis. Employees who meet the 401(k) Plan's eligibility requirements may defer
up to 15% of their compensation (base pay plus any bonuses and overtime) for the
year. No participant, however, may have deferred more than $9,240 in 1994, which
amount is indexed each year for inflation. The Company in previous years had
elected to match an employee's contribution to the 401(k) Plan on the basis of
50% of the compensation an employee defers, however, as of June 1, 1993, the
Company's matching election was discontinued. Federally mandated discrimination
testing limits the amounts which highly paid employees may defer based on the
amounts contributed by all other employees. Participant elective deferral
accounts are fully vested and participant matching contribution accounts in the
401(k) Plan are vested in accordance with a graduated vesting schedule over a
period of six years of service. All participant accounts in the 401(k) Plan are
invested at the direction of the participants among several different types of
funds offered by a large mutual fund management company selected by the Company.
Distributions of account balances are normally made upon death, disability or
termination of employment after normal retirement date (age 60) or early
retirement date (age 55). However, distribution may be made at any time after an
employee terminates employment. Participants may make withdrawals from their
deferred accounts in the event of financial hardship but may not borrow from
their accounts. Amounts payable to an employee are dependent on the employee's
account balance, which is credited and debited with appropriate earnings, gains,
expenses and losses of the underlying investment. Benefits are determined by
contributions and investment performance over the entire period an employee
participates in the 401(k) Plan. Payment is made in a single cash sum no later
than sixty days following the close of the year in which the event giving rise
to the distribution occurs.

<PAGE>

The Company does not have any other bonus, profit sharing, or compensation
plans in effect.

EMPLOYMENT AGREEMENT

In April 1990 the Company entered into an employment agreement (the
"Agreement") with Mr. Koether, the Company's Chairman, for an initial three-year
term commencing on April 1, 1990 (the "Effective Date") at an annual salary of
$185,000 ("Base Salary"), which may be increased but not decreased at the
discretion of the Board of Directors. The term is to be automatically extended
one day for each day elapsed after the Effective Date. In December 1992, the
Board of Directors voted to increase the Chairman's Base Salary to $215,000
effective December 1, 1992.

The Chairman may terminate his employment under the Agreement at any time
for "good reason" (defined below) within 36 months after the date of a Change in
Control (defined below) of the Company. Upon his termination, he shall be paid
the greater of (i) the Base Salary and any bonuses payable under the Agreement
through the expiration date of the Agreement or (ii) an amount equal to three
times the average annual Base Salary and bonuses paid to him during the
preceding five years.

Change in Control is deemed to have occurred if (i) any individual or
entity, other than individuals beneficially owning, directly or indirectly,
common stock of the Company representing 30% or more of the Company's stock
outstanding as of April 1, 1990, is or becomes the beneficial owner, directly or
indirectly, of 30% or more of the Company's outstanding stock or (ii)
individuals constituting the Board of Directors on April 1, 1990 ("Incumbent
Board"), including any person subsequently elected to the Board whose election
or nomination for election was approved by a vote of at least a majority of the
Directors comprising the Incumbent Board, cease to constitute at least a
majority of the Board. "Good reason" means a determination made solely by Mr.
Koether, in good faith, that as a result of a Change in Control he may be
adversely affected (i) in carrying out his duties and powers in the fashion he
previously enjoyed or (ii) in his future prospects with the Company.

Mr. Koether may also terminate his employment if the Company fails to
perform its obligations under the Agreement (including any material change in
Mr. Koether's duties, responsibilities and powers or the removal of his office
to a location more than five miles from its current location) which failure is
not cured within specified time periods.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of Common Stock of
the Company as of February 28, 1995, by each person who was known by the Company
to beneficially own more than 5% of the Common Stock, by each director, all
current directors, and officers as a group:

<PAGE>

NUMBER OF SHARES APPROXIMATE
NAME AND ADDRESS OF COMMON STOCK PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ------------------- ------------------ -----------

<S> <C> <C>
Paul O. Koether 2,926,196(2)(3) 37.70%
56 Pennbrook Road
Far Hills, N.J. 07931

Sun Equities Corporation 2,234,296 28.75%
376 Main Street
Bedminster, N.J. 07921

Richard M. Bossert 16,000 *
P.O. Box 209
Bedminster, N.J. 07921

Mark W. Jaindl 136,220(4) 1.76%
376 Main Street
Bedminster, N.J. 07921

William Mahomes, Jr. - *
2200 Ross Avenue, Suite 2700
Dallas, Texas 75201

Alfredo Mena 2,000 *
P. O. Box 520656
Miami, Florida 33152

All directors and 3,144,616(2)(5) 40.52%
officers as a group
(6 persons)
- ------------------------------

*Represents less than one percent.
</TABLE>

(1) The beneficial owner has both sole voting and sole investment powers
with respect to these shares except as set forth in this footnote or in other
footnotes below. Included in such number of shares beneficially owned are shares
subject to options currently exercisable or becoming exercisable within sixty
days: Paul O. Koether (100,000 shares); Richard M. Bossert (15,000 shares); Mark
W. Jaindl (55,000 shares) and all directors and officers as a group (250,000
shares).

(2) Includes (a) 19,400 shares held by a trust for the benefit of Mr.
Koether's daughter for which he serves as the sole trustee, and (b) 211,900
shares beneficially owned by his wife, including 100,000 shares owned by Emerald
Partners of which she is the sole general partner, 2,000 shares owned by Sussex

<PAGE>

Group, Inc. of which she is the President, a director and controlling
stockholder, 25,000 shares which she has the right to acquire upon exercise of
stock options and 2,000 shares held in custodial accounts. Mr. Koether may also
be deemed to be the beneficial owner of the 2,234,296 shares owned by Sun, of
which Mr. Koether is a principal stockholder and Chairman, and 182,000 shares
held in discretionary accounts of certain of his brokerage customers. Mr.
Koether disclaims beneficial ownership of all of the foregoing shares.

(3) Includes 40,000 shares owned by Winston. Mr. Koether is an officer and
director of Winston and of Kent, Winston's parent company, and may be deemed the
beneficial owners of such shares. Mr. Koether disclaims such beneficial
ownership.

(4) Includes 11,720 shares held in Mr. Jaindl's IRA account and 4,000
shares held by a trust for the benefit of his son, for which Mr. Jaindl serves
as a trustee.

(5) Pursuant to a Stock Purchase Agreement dated January 23, 1990, certain
stockholders, including two former directors and a former officer of the Company
and their affiliates, have agreed to vote the shares of Common Stock which they
may continue to hold in favor of management proposals.

ITEM 12. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company reimbursed Sun approximately $72,000 and $91,000 in 1994 and
1993, respectively, for the Company's proportionate share of certain general and
administrative expenses.

Keck Mahin Cate & Koether ("KMCK") performed substantial legal work for the
Company and its affiliates. Aggregate fees and expenses billed to the Company
and its subsidiaries were approximately $189,000 in 1993. Natalie I. Koether,
Esq., a former partner of KMCK, is the wife of the Chairman and President of the
Company. Rosenman & Colin ("R&C") performed substantial legal work for the
Company for which they billed the Company an aggregate of approximately $615,000
in 1994 and $119,000 in 1993. The 1994 professional fees represented work
performed in association with the distribution of NorthCorp's shares to the
Company's shareholders; the sale of NorthCorp in August 1994 to Crown Revenue;
the proxy contests undertaken in connection with one of the Company's
investments; and the acquisition of Madis in the fourth quarter of 1994. Mrs.
Koether has been of Counsel to R&C since November 1993. See "Security Ownership
of Officers, Directors and Certain Stockholders."

In connection with the acquisition of NorthCorp in June 1992, the Company
issued 80,000 shares of its common stock to Winston as a finder's fee. The
transaction was introduced to the Company by an officer of Winston who was
otherwise unaffiliated with the Company. Winston's parent company, Kent, may be
deemed to be an affiliate of the Company. The Company paid brokerage commissions
of approximately $51,000 in 1994 and $136,000 in 1993 to Winston in connection
with the Company's purchases and sales of marketable securities.

<PAGE>

PART IV

ITEM 13.EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed as part of this report:
<TABLE>
<CAPTION>

Exhibit
NUMBER EXHIBIT METHOD OF FILING
- ------- ------- ----------------
<S> <C> <C>
3.1 Restated Certificate of Incorporated by reference to
Incorporation of the Company Computer Memories Incorporated
Form 10-K for the year ended
March 31, 1987.

(b) Certificate of Amendment Incorporated by reference to
of Restated Certificate of Exhibit A to Computer Memories
Incorporation of the Company Incorporated Proxy Statement
dated February 16, 1990.

(c) Certificate of Amendment Incorporated by reference to
of Restated Certificate of American Holdings, Inc.
Incorporation of the Company Form 10-KSB for the year ended
December 31, 1992.

3.2 By-laws, as amended Incorporated by reference to
American Holdings, Inc.
Form 10-KSB for the year ended
December 31, 1992.

10.1 Stock Purchase Agreement, dated Incorporated by reference to
as of January 23, 1990, by and Computer Memories Incorporated
between The Leslie Group, Inc., Form 10-K for the year ended
Messrs. Leslie, Heim and Butler, December 31, 1990.
the children of Mr. Butler and
Computer Memories Incorporated.

10.2 Employment Agreement, dated as Incorporated by reference to
of April 6, 1990, by and between Computer Memories Incorporated
Computer Memories Incorporated Form 10-Q for the quarter ended
and Paul O. Koether June 30, 1990.

<PAGE>

10.3 Agreement and Plan of Merger dated Incorporated by reference to
June 1, 1992 between CMIN Merger Computer Memories Incorporated
Co. and NorthCorp Realty Form 8-K dated June 17, 1992.
Advisors, Inc.

10.4 1991 Computer Memories Incorporated Incorporated by reference to
Non-Qualified Stock Option Plan Exhibit A to Computer Memories
Incorporated Proxy Statement
dated July 7, 1992.

10.5 Agreement and Plan of Merger Incorporated by reference to
dated as of December, 1994. American Holdings, Inc. Form
8-K dated January 18, 1995.

10.6 Employment Agreement with Incorporated by reference to
Dr. V. Madis, Chairman Emeritus American Holdings, Inc. Form
of Dr. Madis Laboratories, Inc. 8-K dated January 18, 1995.

10.7 Stock Purchase Agreement, dated Incorporated by reference to
as of September 22, 1993, by and American Holdings, Inc. Form
between the Company and Nancy 10-KSB for the year ended
Nasher December 31, 1993.

10.8 Severance Agreements among the Incorporated by reference to
Company, NorthCorp and Messrs. American Holdings, Inc. Form
Dorsey and Young, dated February 10-KSB for the year ended
17, 1994 December 31, 1993.

10.9 Employment Agreement with Incorporated by reference to
V. Madis, President of American Holdings, Inc.
Dr. Madis Laboratories, Inc. Form 8-K dated January 18, 1995.

10.10 Lease Agreement for premises of Incorporated by reference to
Dr. Madis Laboratories, Inc. American Holdings, Inc.
375 Huyler Street, South Form 8-K dated January 18, 1995.
Hackensack, New Jersey

10.11 Plan of Reorganization of Incorporated by reference to
Dr. Madis Laboratories, Inc. American Holdings, Inc.
Form 8-K/A (Amendment No. 1)
dated March 17, 1995.

10.12 Disclosure Statement Related to Incorporated by reference to
Plan of Reorganization of American Holdings, Inc.
Dr. Madis Laboratories, Inc. Form 8-K/A (Amendment No. 1)
dated March 17, 1995.

<PAGE>

21. Subsidiaries of the Registrant Filed herewith.

27. Financial Data Schedule Filed herewith.

(b) Reports on Form 8-K

None.

</TABLE>

<PAGE>
SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

AMERICAN HOLDINGS, INC.

March 30, 1995 By: /S/ PAUL O. KOETHER
Paul O. Koether
Chairman of the Board
and President

By: /S/ MARK L. KOSCINSKI
Mark L. Koscinski
Vice President
(Principal Financial and
Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

SIGNATURE CAPACITY DATE
- --------- -------- ----

/S/ PAUL O. KOETHER Chairman of the Board March 30, 1995
- ------------------------- President, and Director
Paul O. Koether (Principal Executive
Officer)

Director
- -------------------------
Richard M. Bossert

/S/ WILLIAM MAHOMES, JR. Director March 30, 1995
- -------------------------

/S/ ALFREDO MENA Director March 30, 1995
- -------------------------
Alfredo Mena

/S/ MARK W. JAINDL Senior Vice President March 30, 1995
- ------------------------- and Director
Mark W. Jaindl

EXHIBIT 21

AMERICAN HOLDINGS, INC.

LIST OF SUBSIDIARIES

NAME OF SUBSIDIARY STATE OF INCORPORATION
- ------------------ ----------------------

Eco-Pure, Inc. Delaware

Strategic Information Systems, Inc. Delaware

Madis Botanicals, Inc. Delaware

<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the Form
10-KSB of American Holdings, Inc. for the fiscal year ended December 31, 1994
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 13,427
<SECURITIES> 2,018
<RECEIVABLES> 483
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,936
<PP&E> 60
<DEPRECIATION> 27
<TOTAL-ASSETS> 16,936
<CURRENT-LIABILITIES> 621
<BONDS> 0
<COMMON> 77
0
0
<OTHER-SE> 16,238
<TOTAL-LIABILITY-AND-EQUITY> 16,936
<SALES> 0
<TOTAL-REVENUES> 1,802
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,771
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31
<INCOME-TAX> 5
<INCOME-CONTINUING> 26
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>