<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Form 10-QSB of American Holdings, Inc. for the quarter ended March 31, 1995 and
is qualified in its entirety by reference to such financial statements ($000
omitted, except per share data).
</LEGEND>
<CIK> 0000356446
<NAME> American Holdings, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 9,099
<SECURITIES> 2,732
<RECEIVABLES> 949
<ALLOWANCES> 102
<INVENTORY> 1,426
<CURRENT-ASSETS> 14,412
<PP&E> 332
<DEPRECIATION> 27
<TOTAL-ASSETS> 18,879
<CURRENT-LIABILITIES> 2,405
<BONDS> 0
<COMMON> 77
0
0
<OTHER-SE> 16,397
<TOTAL-LIABILITY-AND-EQUITY> 18,879
<SALES> 1,609
<TOTAL-REVENUES> 1,820
<CGS> 1,024
<TOTAL-COSTS> 1,024
<OTHER-EXPENSES> 703
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 93
<INCOME-TAX> 23
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No.: 0-10566
AMERICAN HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 95-3419191
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
376 MAIN STREET, BEDMINSTER, NEW JERSEY 07921
(Address of principal executive offices)
(908) 234-9220
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 _____
State the number of shares outstanding of each of the issuer's classes of
common stock: As of April 30, 1995, the issuer had 7,705,235 shares of its
common stock, par value $.01 per share, outstanding. Transitional Small Business
Disclosure Format (check one): Yes ______ No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
($000 Omitted)
<TABLE>
<CAPTION>
March 31,
1995
---------
<S> <C>
ASSETS
Cash and cash equivalents ............................... $ 9,099
U.S. Treasury securities ................................ 1,938
Trading securities ...................................... 794
Accounts receivable, net of
allowance for uncollectible
accounts and returns and
allowances of $102 .................................... 847
Inventories ............................................. 1,426
Other current assets .................................... 308
-------
Total current assets .................................. 14,412
-------
Securities available-for-sale ........................... 1,351
Furniture and equipment, net ............................ 305
Notes receivable from affiliates ........................ 423
Goodwill ................................................ 2,330
Other assets ............................................ 58
-------
Total assets ......................................... $18,879
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable ........................................ $ 358
Accrued expenses ........................................ 2,047
-------
Total current liabilities ............................ 2,405
-------
Stockholders' equity:
Common stock, par value $.01;
30,000,000 shares authorized;
7,705,235 shares issued
and outstanding ........................................ 77
Additional paid-in capital .............................. 43,770
Accumulated deficit ..................................... ( 26,750)
Unrealized losses on securities
available-for-sale ..................................... ( 623)
-------
Total stockholders' equity ........................... 16,474
-------
Total liabilities and
stockholders' equity ............................... $18,879
=======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
($000 Omitted, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
MARCH 31,
1995 1994
------- -------
<S> <C> <C>
Revenues:
Sales ........................................... $ 1,609 $ -
Equity in earnings of disposed-of
subsidiary ..................................... - 294
Net gains on marketable securities .............. 6 17
Interest, dividend and other income ............. 205 177
------- -------
Total revenues ............................... 1,820 488
------- -------
Expenses:
Cost of goods sold .............................. 1,024 -
Personnel ....................................... 401 168
Professional fees ............................... 86 151
Other ........................................... 216 107
------- -------
Total expenses ............................... 1,727 426
------- -------
Income before income taxes ........................ 93 62
Provision for income taxes ........................ 23 42
------- -------
Net income ........................................ $ 70 $ 20
======= =======
Net income per share .............................. $ .01 $ -
======= =======
Weighted average shares outstanding
(in 000's) ..................................... 7,725 8,683
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($000 Omitted)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................ $ 70 $ 20
Adjustments:
Net trading securities and
U.S. Treasury securities
transactions .................................. ( 1,621) 157
Change in inventories .......................... 33 -
Depreciation and amortization .................. 61 282
Change in other receivables .................... ( 85) ( 925)
Change in accounts payable and
other accruals ................................ ( 680) 138
Change in accrued income taxes ................. 24 ( 5)
Other, net ..................................... ( 28) ( 148)
------- --------
Net cash used in operating activities ............. ( 2,226) ( 481)
------- --------
Cash flows from investing activities:
Purchase of a business less cash
acquired ...................................... ( 2,019) -
Purchase of furniture and equipment, net ....... ( 44) ( 11)
Proceeds from sale of securities
available-for-sale ............................ - 4
Purchase of securities available-for-sale ...... ( 16) ( 1,070)
Repayment of loans from former
employees and affiliates ...................... 10 360
------- --------
Net cash used in investing
activities ................................. ... ( 2,069) ( 717)
------- --------
Cash flows from financing activities:
Repurchase of common stock ..................... ( 31) ( 948)
Other, net ..................................... ( 2) -
------- --------
Net cash used in financing
activities ....................................... ( 33) ( 948)
------- --------
Net decrease in cash and cash
equivalents ......................................... ( 4,328) ( 2,146)
Cash and cash equivalents at beginning
of period ........................................... 13,427 17,909
------- --------
Cash and cash equivalents at end of
period .............................................. $ 9,099 $ 15,763
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial statements of American
Holdings, Inc. (the "Company") as of March 31, 1995 and for the three months
ended March 31, 1995 and 1994 reflect all material adjustments consisting of
only normal recurring adjustments which, in the opinion of management, are
necessary for a fair presentation of results for the interim periods. Certain
information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures are adequate to make the information presented not
misleading. These consolidated financial statements should be read in
conjunction with the year-end consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994 as filed with the Securities and Exchange Commission.
The results of operations for the three months ended March 31, 1995 and
1994 are not necessarily indicative of the results to be expected for the entire
fiscal year or any other period.
Certain reclassifications have been made in the 1994 consolidated financial
statements to conform to presentations in the 1995 consolidated financial
statements. Such reclassifications have no effect on stockholders' equity or on
results of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of American
Holdings, Inc. (the "Company") 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 of disposed-of subsidiary through the date of disposition in 1994.
<PAGE>
The acquisition of an 80 percent interest in Madis Botanicals, Inc.
("Madis") occurred on January 3, 1995 and was accounted for using the purchase
method. In accordance with Accounting Principles Board Opinion No. 16, the
purchase price will be allocated to the acquired assets and liabilities. The
Company has preliminarily allocated the purchase price, which is subject to
final determination after additional information is obtained.
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. 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.
INVENTORIES
Merchandise inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first-out (FIFO) method.
FURNITURE AND EQUIPMENT
The Company records all furniture and equipment at cost. Depreciation is
computed using the straight-line and double-declining balance methods over the
related estimated useful life of the asset. Gains or losses on dispositions of
furniture and equipment are included in operating results.
<PAGE>
GOODWILL
Goodwill resulting from the acquisition of Madis is being amortized over 15
years using the straight-line method.
3. PROFORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
The proforma consolidated condensed financial information reflects 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 financial
information also includes the operations of Madis as if the acquisition had
taken place on the same date.
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.
<TABLE>
American Holdings, Inc. and Subsidiaries
Proforma Consolidated Condensed
Financial Information
For the Three Months Ended
March 31, 1994
(in $000's)
<S> <C>
Revenues ....................................... $ 4,464
Income before income taxes ..................... $ 190
Net income ..................................... $ 166
Net income per share ........................... $ .02
</TABLE>
<PAGE>
4. MARKETABLE SECURITIES
At March 31, 1995, 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 $ 9 $ - $ 200
Equity securities ...... 643 8 57 594
------ ----- ----- ------
Total .............. 834 17 57 794
------ ----- ----- ------
Available-for-sale:
Equity securities ...... 1,974 25 648 1,351
------ ----- ----- ------
Total marketable
securities ..... $2,808 $ 42 $ 705 $2,145
====== ===== ===== ======
</TABLE>
The realized gains and unrealized losses on trading securities included in
the results of operations for the quarter ended March 31, 1995, were $9,000 and
$3,000, respectively. The unrealized gains on trading securities included in the
results of operations for the first quarter of 1994 were $19,000. The unrealized
losses on securities available-for-sale included as a separate component of
consolidated stockholders' equity were approximately $623,000 at March 31, 1995.
5. INVENTORIES
Inventories are comprised of the following (in $000's):
<TABLE>
<S> <C>
Raw materials $ 159
Work in process 199
Finished goods 1,068
-------
Total inventory $ 1,426
=======
</TABLE>
<PAGE>
ITEM 2. 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.
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 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.
NorthCorp's results of operations have been included in the consolidated
financial statements through the date of sale in 1994 as equity in the earnings
of disposed-of subsidiary.
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.
<PAGE>
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. 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.
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
are 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 3
of Notes to Consolidated Financial Statements. The proforma information reflects
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.
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.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had cash and cash equivalents of $9.1
million. Cash equivalents of $8.8 million consisted of U.S. Treasury bills with
a maturity of less than three months and yields ranging between 5.53% and 5.99%.
The Company also had U.S. Treasury securities of $1.9 million with maturities in
August 1995 with a weighted average yield of 6.43%, and trading securities with
a current market value of approximately $.8 million at March 31, 1995. The
<PAGE>
Company had net working capital of $12.0 million and had 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 in 1992, 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.
Including the aforementioned shares, the Company repurchased 733,508 shares
of its common stock at an aggregate cost of $1,183,000 in the first quarter of
1994 and 20,926 shares at an aggregate cost of $30,500 in the first quarter of
1995. All shares purchased in 1994 and 1995 have been returned to the status
of authorized but unissued shares.
Net cash of approximately $2.2 million was used in operations in the first
quarter of 1995. Net purchases of marketable securities and U.S. Treasury
securities with maturities greater than three months of $1.6 million and
decreases in current liabilities of $.7 million, principally at Madis, accounted
for this use of cash.
In the first quarter of 1994, net cash of approximately $481,000 was used
in operations. The principal reason for this use of cash was a receivable from
broker at March 31, 1994 due to the sale of marketable securities of
approximately $1 million. This receivable was converted into cash equivalents
shortly after quarter end.
RESULTS OF OPERATIONS
The Company's operations resulted in net income of $70,000 in the first
quarter of 1995, compared to $20,000 in the comparable period of 1994. The
consolidated results of operations in 1994 reflect the equity in earnings of
NorthCorp.
<PAGE>
Madis had sales of $1.6 million and $1.7 million in the first quarter of
1995 and 1994, respectively. The cost of goods sold was $1.0 million in 1995,
compared to $1.1 million in 1994. As a consequence, gross margin was $.6 million
in the first quarter of 1995 and 1994. Since the acquisition of Madis was
accounted for as a purchase, the results of operations of Madis have been
included in the consolidated financial statements since January 3, 1995, the
date of the acquisition. Financial information of Madis from the first quarter
of 1994 has been included only for comparison purposes.
Interest, dividend and other income was $205,000 in the first quarter of
1995, an increase of $28,000, or 15.8%, from the $177,000 recorded in the
comparable period in 1994. Interest income was $163,000 in 1995, an increase of
$43,000, or 35.8%, from the $120,000 recorded in 1994. This increase was due to
higher prevailing interest rates in 1995 compared to 1994. Dividend income was
$42,000 in 1995 compared to $1,000 in 1994. The increase in dividends was due to
a change in portfolio composition. All other income decreased from $56,000 in
1994 to zero in 1995. In 1994 all other income was revenue from the Washington
D.C. office of the Company, which was disposed of on August 4, 1994.
In the first quarter of 1995, the Company recorded net gains on marketable
securities of $6,000, compared to net gains of $17,000 in 1994. Net gains on
marketable securities in 1995 are composed of realized gains of $9,000 and
unrealized losses of $3,000, compared to realized losses of $2,000 and
unrealized gains of $19,000 in the first quarter of 1994. A charge to
stockholders' equity of $742,000 was recorded in 1994 to reflect the decrease in
market value of securities available for sale. The unrealized losses on
securities held for sale was decreased by $119,000 in 1995 to reflect an
increase in the market value of these securities. This net 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. The decrease in net gains on marketable securities was
due to the changes in portfolio composition and general market conditions.
Personnel expenses were $401,000 in the first quarter of 1995, compared to
$168,000 in the comparable quarter of 1994. This increase was due almost
entirely to the acquisition of Madis. Professional fees were $86,000 in the
first quarter of 1995, a decrease of $65,000 from the first quarter of 1994.
Professional fees were incurred in the latter quarter in a proxy contest in
connection with the Company's investment in the REIT. The professional fees in
1995 were incurred primarily in the operations of Madis. Other expenses also
increased by $109,000 due principally to the acquisition of Madis. Included in
this number is the amortization of goodwill of $39,000.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS - None
(b) REPORTS ON FORM 8-K
A current report on Form 8-K was filed by the Company on January 18,
1995, in connection with the acquisition of Madis. Amendment No. 1 to
this Form 8-K (Form 8-K/A) was filed on March 17, 1995. Amendment No.
1 contained the audited financial statements of Dr. Madis Laboratories,
Inc., the predecessor to Madis, as of and for the two years ended
December 31, 1994, as well as the required proforma consolidated
condensed financial information required under Item 7 of Form 8-K.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN HOLDINGS, INC.
Dated: May 12, 1995 By: /S/ MARK L. KOSCINSKI
------------------------------
Mark L. Koscinski
Vice President and
Chief Accounting Officer
