Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended April 30, 1999 Commission file No. 0-0767
LINCOLN INTERNATIONAL CORPORATION
(Exact Name of Registrant as specified in its charter)
Kentucky 61-0575092
(State of other Jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. Box 43129
120 Village Square
Louisville, Kentucky 40243
(Address or principal executive offices) (Zip Code)
(Registrants Telephone Number, Including Area Co(502) 245-8814
Indicate by check whether the registrant (1) has filed a reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or of such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the numbers of shares outstanding of each of the issuer' classes of
common stock, as of the close of the period covered by this report: 7972 of the
(no-par) voting common stock.
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
4/30/99 7/31/98
ASSETS
Current assets:
Cash (Includes Funds Held by Intermediary) 3470457 90994
Other receivables 2557 10911
Prepaid expenses 37827 3141
Total current assets 3510841 105046
Net property, plant and equipment 14365 1042265
Total assets 3525206 1147311
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 15037 12311
Accrued expenses 77 21559
Current maturities of long-term debt 0 5849
Deferred Rent 0 18810
Deposits 0 25000
Total current liabilities 15114 83529
Long-term debt, less current maturities 0 380205
Deferred Income Taxes - Non Current 940249 0
Stockholders' equity
Common Stock
Voting 7972 shares O/S 1879898 1281998
Retained earnings 689945 -598421
Total stockholders' equity 2569843 683577
Total liabilities and stockholders' equity 3525206 1147311
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDING APRIL 30
4/30/99 4/30/98
Revenues:
Net service and operating revenues 22844 59816
22844 59816
Cost and expenses:
Cost of service and operating revenues 120877 5679
Operating, general and administrative expense 52623 47829
173500 53508
Income - Loss from operations -150656 6308
Other income - expense:
Interest expense 3752 -8684
Gain on sale of assets 2460255 0
Miscellaneous -2766 2115
2461241 -6569
Income - Loss before income taxes 2310585 -261
Provision for income taxes -940249 0
Net income - loss 1370336 -261
Net income - loss per common share 171.89 -0.07
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDING APRIL 30
4/30/99 4/30/98
Revenues:
Net service and operating revenues 150571 206456
150571 206456
Cost and expenses:
Cost of service and operating revenues 176928 47033
Operating, general and administrative expense 187886 182063
364814 229096
Income - Loss from operations -214243 -22640
Other income - expense:
Interest expense -15254 -27106
Gain on sale of assets 2460255 0
Miscellaneous -2143 2032
2442858 -25074
Income - Loss before income taxes 2228615 -47714
Provision for income taxes -940249 0
Net income - loss 1288366 -47714
Net income - loss per common share 161.61 -11.97
LINCOLN INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEAR TO DATE TO APRIL 30
1999 1998
Cash flows from operating activities:
Net income (loss) 1288366 -47714
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 104002 31151
(Gain) Loss on sale of assets -2460255 0
Other receivables 8354 41759
Prepaid expenses -34686 0
Accounts payable 2726 -21643
Accrued expenses -65292 -21639
Income Taxes 940249 0
Total adjustments -1504902 29628
Net cash provided by (used in)
operating activities -216536 -18086
Cash flows from investing activities:
Proceeds from sale of fixed assets 3400000 0
(Purchases of) Sales of property and
equipment -15847 0
Net cash provided by (used in) investing
activities 3384153 0
Cash flows from financing activities:
Net borrowings (repayments) under
short term notes payable 0 0
Proceeds from the issuance of common stock 597900 0
Principal payments on long-term debt -386054 58994
Net cash provided by (used in) financing
activities 211846 58994
Net increase (-decrease) in cash 3379463 40908
Cash, beginning of year 90994 156141
Cash, end of period 3470457 83186
Supplemental disclosure of cash flow information:
Cash paid during the year for interest 15254 27106
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
APRIL 30, 1999
Agri-Business
Bourbon Stockyard
Net revenue from the stockyard operation decreased by approximately
$36,972, or 61.8% during the quarter ended April 30, 1999 as compared to the
quarter ended April 30, 1998. This reduction resulted from the disposition of
the real estate (see further discussion below).
Operating costs for the quarter ended April 30, 1999 increased by
approximately $120,878, or 2028.5% as compared to the quarter ended April 30,
1998. Increased cost relative to depreciation expense ($81,777, adjusted for
the final depreciation cost of the disposed property) and professional fees
($18,600) were cited as the most material operating cost for the quarter ended
April 30, 1999.
Bourbon Stock Yard did not have any capital commitments at April
30, 1999.
Consolidated Operations
As of April 5 1998, the reverse split was completed resulting in
Lincoln International having 3,986 shares issued and outstanding with a
total of 3,000,000 shares authorized and a total number of 412 shareholders.
On March 5, 1999, the Company closed on the sale of the Bourbon Stock
Yard real estate located at 1048 East Main to the Home of the Innocents, Inc.
for a total purchase price of $3,400,000. The first mortgage on the property,
which Stock Yards Bank & Trust Co. of Louisville, KY held, was paid off in the
amount of $385,605. The expenses of the sale were $22,009. All proceeds of
the sale were deposited with an Intermediary as required under United States
Code Section 1031 in order to effect a deferral of capital gains taxes on
the sale proceeds. Pursuant to U. S. C. 1031, the Company had identified
eligible real property from which net cash of $2,992,386 would have to be
reinvested to avoid any gain. On May 3, 1999, the Company purchased for
$282,500, a 35,000 square foot office condominium located at 11860 Capital Way
as part of the U. S. C. 1031 transaction. On May 24, 1999, the Company
entered into a contract to purchase real estate located at 2200/2211/2300
Greenway, Louisville, Kentucky for a purchase price of $2,900,000, less
$50,000 if the closing could be consummated within 30 days of the acceptance
of the Company's offer. That contract is subject to the regular appraisal,
inspection and enviromental contingencies. If that sale should not be
consummated, management will continue negotiations to purchase additional
property in order to obviate any recognizable gain on the Bourbon Stock
Yards sales proceeds. Management has begun negotiations with PNC Bank and
others to borrow money against the property to use in the acquisition of
operating companies.
The gain on the sale of the Bourbon Stock Yards property is reflected
on the income statement of the Company totaling $2,460,255. An income tax
provision has been recorded on the Company's financial report as an expense of
$940,249. This income tax provision is reflected as a non-current deferred
income tax liability on the Company's balance sheet.
On January 4, 1999 an interstate sale of Lincoln securities as a Unit
Offering to Kentucky residents was completed and pursuant to authorization of
and by the Board of Directors, all Units remaining after the close of the
offer be made available to other existing shareholders as determined by the
Board of Directors. The shares remaining after the close were made available
and purchased as follows:
1. 600 Units shall be available for purchase by Pyramid Securities
LTD, P. O. Box 2185, Georgetown, Grand Cayman, British West Indies;
2. 600 Units shall be available for purchase by Salina Investment
LTD, P. O. Box 2185, Georgetown, Grand Cayman, British West Indies;
3. 600 Units shall be available for purchase by the Ryan Jeffrey
Frockt Trust; Sheldon G. Gilman, Trustee, 462 So. 4th Ave., Suite
500, Louisville, KY 40202;
4. 150 shares available to Richard A. Dolin, Director of Lincoln
International Corporation, 5502 Tecumseh Circle, Louisville, KY 40207;
5. 100 shares to Earl W. Winebrenner, III and/or Holly Winebrenner,
1741 Kensington Pl. Lane, Louisville, KY 40205-2748;
6. 150 shares to Russell Roth, Director, 7769 Spanish Lake Dr., Las
Vegas, NV 89113;
7. and 427 shares to Thurman L. Sisney, Director and Chairman of the
Board, 8002 Montero Court, Prospect, KY 40059.
Total capital raised from the the Unit Offering was $597,900.
Litigation Report. Mr. Sisney reported that Lincoln International
Corporation, former director David Barhorst, former director Richard A. Dolin
(now deceased) and Thurman L. Sisney had been sued by two minor shareholders,
Mr. Merle Brewer and Ms. Sarah Foree, on March 23, 1999. The matter had been
turned over to Mr. Don Cox, Attorney at Law, who had successfully handled the
Michigan Livestock Exchange matter. Mr. Sisney further reported that the
lawsuit appeared to be primarily based upon allegations that a 1993 appraisal
of the Bourbon Stock Yards property had not been made available to
shareholders pursuant to the tender offer by LTG, Inc. in 1997 or the
reverse split in 1998. Both complainants claim that failure to include the
1993 appraisal caused them damage because of the sale of fractional shares of
1/4th share each based upon past reverse split holdings. SEC records show
that the appraisal was reported in the 1995 tender offer disclosure filed
with the SEC and was therefore in the public domain. Further, the appraisal
was based upon Bourbon Stock Yards as an on-going business and included the
administration building which rendered it meaningless and would have in fact
been misleading to have reported. It was further noted that the attorney at
this point in time did not feel the lawsuit had much merit and that they
would be preparing a motion to dismiss and advising Mr. Sisney of any
liability exposure, remedies, etc.
Total operating cost for the quarter ending April 30, 1999 were up
approximately $120,000 or 224.3% as compared to the quarter ended April 30,
1998.
There were no capital commitments at April 30, 1999.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
APRIL 30, 1999
NO DIVIDENDS WERE PAID BY THE COMPANY DURING THE INTERIM PERIOD.
Lincoln International Corporation was not required to file a Form 8K during
the current quarter.
The unaudited consolidated financial statements include the accounts
of the Company and all of its subsidiaries after eliminating all material
inter-company accounts and transactions. They reflect all adjustments which
are necessary in the opinion of management to fairly state the financial
position of the Company at April 30, 1999 and the result of its operations
and cash flow for the period then ended.
- -SIGNATURES-
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
under-signed thereunto duly authorized.
LINCOLN INTERNATIONAL CORPORATION
Lee Sisney, President
Richard J. Frockt, Treasurer
Dated this 11th day of June, 1999
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