United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission File Number 2-87738
T. H. Lehman & Co., Incorporated and Subsidiaries
(Exact name of small business issuer as specified in its charter)
Delaware 22-2442356
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4900 Woodway, Suite 650
Houston, Texas
77056
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (713) 621-8404
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES [ X ] NO [ ]
Number of shares of T.H. Lehman & Co., Incorporated Common Stock, $0.01 par
value, issued and outstanding as of November 15, 1995: 3,230,342
PART I. FINANCIAL INFORMATION
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND MARCH 31, 1995
ASSETS
September 30 March 31
1995 1995
(Unaudited)
CURRENT ASSETS
Cash $10,423 $46,438
Trading securities (Note 3) 7,794 7,794
Accounts receivable 49,912 48,401
Non-interest bearing advances to
related parties (Note 11) 0 36
Prepaid expenses and other current assets 30,598 41,072
Current portion of non-current
receivables (Note 4) 216,193 228,314
TOTAL CURRENT ASSETS 314,920 372,055
PROPERTY AND EQUIPMENT AT COST
less accumulated depreciation of $214,686 at
September 30 and $189,280 at March 31
(Note 5) 111,718 137,185
OTHER ASSETS
Securities available for sale (Note 3) 565,156 515,156
Investments in non-public companies,
at cost 64,500 64,500
Non-current receivables (Note 4) 2,004,958 1,806,750
Deposits 13,443 9,735
Certificate of Deposit - Restricted 80,000 0
Patents, trademarks and tradenames-at cost
less accumulated amortization of $5,847
at September 30 and $4,750 at March 31 5,116 6,213
Covenants not to compete, less
accumulated amortization of $341,683 at
September 30 and $324,493 at March 31 80,224 97,414
Excess of cost over net assets of acquired
companies, less accumulated amortization
of $15,625 at September 30 and $13,125 at
March 31 34,375 36,875
TOTAL OTHER ASSETS 2,847,772 2,536,643
TOTAL ASSETS $3,274,410 $3,045,883
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30 March 31
1995 1995
(Unaudited)
CURRENT LIABILITIES
Loans payable - financial
institutions (Note 6) $266,129 $225,513
Accounts payable 337,401 285,477
Accrued liabilities 119,307 95,374
Current portion of long-term debt (Note 7) 706,031 304,077
Estimated environmental liability
(Notes 2 and 12) 240,037 245,442
TOTAL CURRENT LIABILITIES 1,668,905 1,155,883
LONG-TERM DEBT, LESS CURRENT PORTION
(Note 7) 382,751 448,463
TOTAL LIABILITIES 2,051,656 1,604,346
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY (Note 8)
Common stock-par value $.01; authorized
5,000,000 shares, issued 3,230,342 shares
at September 30, and 3,230,342 at
March 31 32,303 32,303
Additional paid-in capital 7,293,394 7,293,394
Accumulated deficit (6,054,506) (5,835,722)
Treasury stock at cost - 25,000 shares (48,438) (48,438)
TOTAL STOCKHOLDERS' EQUITY 1,222,754 1,441,537
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,274,410 $3,045,883
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1995
Three months Six months
ended ended
September 30 September 30
1995 1995
(Unaudited) (Unaudited)
REVENUES
Management and billing fees,
net of allowances $300,346 $532,822
Interest and dividends 20,333 40,005
Net gain (loss) on investments 0 0
TOTAL REVENUES 320,679 572,827
OPERATING EXPENSES
Selling, general and administrative 388,866 749,861
Interest expense 22,682 41,750
TOTAL OPERATING EXPENSES 411,548 791,611
LOSS BEFORE INCOME TAXES (90,869) (218,784)
PROVISION FOR INCOME TAXES (Note 9) 0 0
NET LOSS $(90,869) $(218,784)
PER SHARE DATA:
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 3,230,342 3,230,342
NET LOSS PER COMMON SHARE $(0.03) $(0.07)
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1994
Three months Six months
ended ended
September 30 September 30
1994 1994
(Unaudited) (Unaudited)
REVENUES
Management and billing fees,
net of allowances $278,374 $539,638
Interest and dividends 20,289 39,768
Net gain (loss) on investments 31,874 31,874
TOTAL REVENUES 330,538 611,281
OPERATING EXPENSES
Selling, general and administrative 388,139 791,582
Interest expense 13,571 25,751
TOTAL OPERATING EXPENSES 401,710 817,333
LOSS BEFORE INCOME TAXES (71,172) (206,052)
PROVISION FOR INCOME TAXES (Note 9) 0 0
NET LOSS $(71,172) $(206,052)
PER SHARE DATA:
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 3,205,342 3,205,342
NET LOSS PER COMMON SHARE $(0.02) $(0.06)
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Six months Six months
ended ended
September 30 September 30
1995 1994
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(218,784) $(195,044)
Adjustments to reconcile net income to net
cash provided (required) by operating
activities:
Depreciation and amortization 46,193 118,091
Provision for bad debts 0 0
(Gain) loss on marketable securities and
other assets 0 (31,874)
Deposits (paid) received (3,708) 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (1,511) (9,848)
(Increase) decrease in prepaid expenses
and other current assets 10,474 23,599
(Increase) decrease in prepaid income taxes 0 0
Increase (decrease) in accounts payable 51,924 24,102
Increase (decrease) in accrued liabilities 50,563 18,877
NET CASH PROVIDED (REQUIRED) BY
OPERATING ACTIVITIES (64,850) (52,097)
CASH FLOWS FROM INVESTING ACTIVITIES
Loans made evidenced by notes receivable (498,992) (554,549)
Collection of notes receivable 312,905 494,905
Collections from (advances to) related parties 36 0
Acquisition of securities (130,000) 0
Proceeds from sale of investments and other
assets 0 32,374
Disposal (acquisition) of property and equipment 61 (158)
Payment of estimated environmental liability (5,404) 0
NET CASH PROVIDED (REQUIRED) BY
INVESTING ACTIVITIES (321,394) (27,428)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of loans payable - financial
institution 40,616 22,000
Proceeds of long-term debt 357,250 182,000
Repayment of long-term debt (47,638) (122,381)
NET CASH PROVIDED (REQUIRED) BY
FINANCING ACTIVITIES 350,229 81,619
INCREASE (DECREASE) IN CASH (36,015) 2,094
CASH - BEGINNING 46,438 67,576
CASH - END $10,423 $69,670
CASH PAID DURING THE PERIODS FOR:
Interest $1,576 $8,809
Income Taxes $0 $0
See accompanying Notes to Consolidated Financial Statements
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
The financial information contained within is unaudited, but reflects all
adjustments (consisting solely of normal recurring adjustments), which, in the
opinion of the Company, are necessary to fairly present the financial position
of the Company as of September 30, 1995 and the results of operations and cash
flows for the three month periods ended September 30, 1995 and 1994. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations governing interim
reporting. The results of operations for the three month period ending
September 30, 1995 are not necessarily indicative of the results to be expected
for the full year.
This report should be read in conjunction with the financial statements
included in the Company's annual report on Form 10-KSB for the year ended March
31, 1995.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies of the Company set forth in
Note 1, Notes to Consolidated Financial Statements in the Company's Form 10
-KSB, (File No.2-87738) for the fiscal year ended March 31, 1995, is
incorporated herein by reference.
2. ACQUISITIONS AND DISPOSITIONS
The discussion of acquisitions and dispositions of the Company set forth in
Note 2, Notes to Consolidated Financial Statements in the Company's Form 10
-KSB, (File No.2-87738) for the fiscal year ended March 31, 1995, is
incorporated herein by reference.
3. SECURITIES AVAILABLE FOR SALE
The discussion of securities available for sale by the Company set forth in
Note 3, Notes to Consolidated Financial Statements in the Company's Form 10
-KSB, (File No.2-87738) for the fiscal year ended March 31, 1995, is
incorporated herein by reference.
4. NON-CURRENT RECEIVABLES
At September 30, 1995 and March 31, 1995, notes receivable consisted of the
following:
September 30, March 31,
1995 1995
(Unaudited)
Purchased receivables of a medical provider
adjusted to estimated net realizable value
(See Note 2). All of the remainder of the
unpaid is expected to be collected during
the current fiscal year. $ 28,242 $52,396
Assigned medical billings net of allowances of
which $170,000 of the unpaid is expected to be
collected during the current fiscal year. 1,208,519 1,196,342
Working capital advances at 12% per annum interest
to a provider of medical services who has contracted
with the Company to provide management services.
None of these advances is expected to be collected
during the current fiscal year. 566,439 502,560
Convertible 6% unsecured promissory note issued
by Helionetics, Inc. in conjunction with its purchase
of the Company's former manufacturing subsidiary
due and payable December 31, 1996. Interest is
payable quarterly. 417,951 405,918
$2,221,151 $2,157,216
Less Allowance for Uncollectible (122,152) (122,152)
$2,098,999 $2,035,064
Less Current Portion (216,193) (228,314)
$1,882,806 $1,806,750
5. PROPERTY AND EQUIPMENT
September 30, March 31,
1995 1995
(Unaudited)
Machinery and Equipment 5-10 Years $ 4,574 $ 4,484
Leasehold Improvements 5-10 Years 500 500
Furniture and Fixtures 5-10 Years 321,330 321,481
TOTAL $326,404 $326,465
Less Accumulated Depreciation (214,686) (189,280)
NET $111,718 $137,185
6. LOANS PAYABLE - OTHER FINANCIAL INSTITUTION
Pursuant to an agreement dated October 4, 1991 and modified March, 1993 and
March, 1994, the Company had received loans from a Netherlands corporation,
consisting of various advances from an available line of credit of
$400,000. As of September 30, 1995 and March 31, 1995, the outstanding
balance against this line of credit totaled $247,649 and $225,513,
respectively. The loans bear interest at the prime rate of a certain bank
in Texas plus 2% per annum. The weighted average interest rate for the
quarter ended September 30, 1995 was 10.75%, which was computed based on
month-end balance. During the six months ended September 30, 1995 and the
year ended March 31, 1995, the maximum outstanding balances totaled
$247,649 and $286,349, respectively. The approximate average outstanding
monthly balance during the quarter ended September 30, 1995 and the year
ended March 31, 1995 amounted to $240,000 and $264,000, respectively.
7. LONG-TERM DEBT
Long-term debt consists of the following:
September 30, March 31,
1995 1995
Related Party:
Advances from an available line of credit of
$450,000. The loan bears interest at the
prime rate of a certain bank in Texas.
Interest on this loan is to be calculated
and payable quarterly as of the first day of
each quarter (or at maturity). The principal
is due and payable on or before December 31,
1997. The loan is secured by the market value
of publicly-held stock in the Company's
investment portfolio. As further consideration,
100,000 warrants expiring in December, 1997 to
purchase 100,000 shares of the Company's common
stock at an exercise price of $1.25 per share
were issued to this creditor. (See Note 8) 143,843 139,503
Non-related Parties:
Debt incurred related to acquisition of California
medical management practice. (See Note 2) 161,927 159,087
Advances from an available line of credit of
$250,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before April 18, 1997. 98,166 0
Advances from an available line of credit of
$400,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before August 3, 1996. 316,468 291,869
Note payable of $22,500 principal plus accrued
interest at 6%, all due on February 28, 1997. 23,291 22,615
Advances from an available line of credit of
$100,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before August 3, 1996. 77,862 74,277
Two notes payable, $22,500 principal each plus
accrued interest at 6%, all due on January 27,
1997, unsecured. 1,418 45,776
Note payable of $22,500 principal plus accrued
interest at 10%, all due on July 21, 1997. 22,938 0
Note payable of $22,500 principal plus accrued
interest at 10%, all due on September 8, 1997. 22,635 0
Advances from an available line of credit of
$100,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before August 16, 1997. 72,798 0
Note payable of $130,000 principal plus accrued
interest at 8%, all due on September 7, 1997. 130,660 0
Equipment purchase contract with a monthly
payment of $330 and an effective interest rate
of 11% payable through January, 1999. 12,472 13,722
Equipment purchase contract with a monthly
payment of $315 and an effective interest rate
of 20% payable through October, 1996. 4,304 5,691
$1,088,782 $752,540
Less Current Portion (628,170) (304,077)
$400,612 $448,463
The amounts of long-term debt maturing in each of the years ending March 31
are as follows: 1996 - $277,697; 1997 - $397,398; 1998 - $345,205; 1999 -
$5,073.
8. STOCKHOLDERS' EQUITY
The discussion regarding stockholders' equity of the Company set forth in
Note 8, Notes to Consolidated Financial Statements in the Company's Form 10
-KSB, (File No.2-87738) for the fiscal year ended March 31, 1995, is
incorporated herein by reference.
9. INCOME TAXES
The discussion regarding income taxes of the Company set forth in Note 9,
Notes to Consolidated Financial Statements in the Company's Form 10-KSB,
(File No.2-87738) for the fiscal year ended March 31, 1995, is incorporated
herein by reference.
10. COMMITMENTS AND CONTINGENCIES
The discussion regarding commitments and contingencies of the Company set
forth in Note 10, Notes to Consolidated Financial Statements in the
Company's Form 10-KSB, (File No.2-87738) for the fiscal year ended March
31, 1995, is incorporated herein by reference.
11. RELATED PARTY TRANSACTIONS
The discussion regarding related party transactions of the Company set
forth in Note 11, Notes to Consolidated Financial Statements in the
Company's Form 10-KSB, (File No.2-87738) for the fiscal year ended March
31, 1995, is incorporated herein by reference.
12. ALLOWANCE FOR ENVIRONMENTAL LIABILITIES
The discussion regarding related party transactions of the Company set
forth in Note 12, Notes to Consolidated Financial Statements in the
Company's Form 10-KSB, (File No.2-87738) for the fiscal year ended March
31, 1995, is incorporated herein by reference.
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1995
(UNAUDITED)
Statements of Operations:
Quarter Ended September 30, 1995 Compared to
Quarter Ended September 30, 1994
Total revenues for the quarter ended September 30, 1995 were $320,679
versus $330,538 for the same period in the previous year. This reduction in
revenues is attributable to the fact that no investments were sold during the
current quarter, whereas there was a gain on investments of $31,874 during the
same quarter of the previous year. Billing and management fee income increased
8% from $278,374 in last year's second quarter to $300,346 in the current
quarter. Interest and dividend income remained essentially flat at $20,333.
Consolidated net loss after taxes for the quarter ended September 30, 1995
totaled $90,869, as compared with a net loss after taxes of $71,172 from the
second quarter of the previous year. General and administrative expenses
changed less than one percent, but interest expense increased to $22,682, 67%
higher than the $13,571 recorded in the quarter ended September 30, 1994. Medfin
Management Corp. contributed a loss of $35,074 from gross revenues of $259,432
and expenses of $294,506. Amortization and depreciation expense comprised
$6,084 of Medfin's expenses, and intercompany interest and billing fees to
another subsidiary comprised $43,243 of those expenses. Healthcare Professional
Billing contributed $35,983 of the net loss on billing income of $70,499 and
expenses of $106,482. $15,301 of Healthcare's billing fee income was derived
from fees charged to other subsidiaries, $16,810 of its expenses were composed
of depreciation and amortization expense and intercompany interest comprised
$8,122 of its expenses.
Liquidity, Capital Resources and Income Taxes:
At September 30, 1995 working capital amounted to $10,423, compared to
March 31, 1995, when working capital was $46,438.
Medfin Management Corp. will continue to require working capital infusions
over the next few months, as the outstanding receivable collections mature
to cover current cash operating requirements; in the interim the Company
believes that it has adequate resources to meet such working capital needs.
The Company's primary source of liquidity has been the cash it has obtained
from the liquidation of its investment portfolio and collection of medical
accounts receivable, as well as loans from financial institutions.
The Company anticipates that internally generated cash and its lines of
credit will be sufficient to finance overall operations.
The Company is continually seeking to acquire businesses and may be in
various stages of negotiations at any point in time which may or may not
result in consummation of a transaction. To provide funding for such
acquisitions it may take a number of actions including (i) selling of its
existing investments (ii) use of available working capital (iii) seeking
short or long term loans (iv) issuing stock. In addition, the Company may
seek additional equity funds if needed. These sources of capital may be
both conventional and non-traditional. The Company has no existing funding
commitments and is presently under no contractual obligation to make any
investment or acquisition.
At March 31, 1995, the Company had an operating tax loss carryforward of
approximately $4,400,000. The Company expects its effective tax rate for
financial statement purposes for fiscal year 1996 to be negligible based
upon the aforementioned net operating loss carry forwards and other
factors.
Impact of Inflation and Other Business Conditions
Generally, increases in the Company's operating costs approximate the rate
of inflation. In the opinion of management, inflation has not had a
material effect on the operation of the Company. The Company has
historically been able to react effectively to increases in labor or other
operating costs through a combination of greater productivity and selective
price increases where allowable.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this amendment to this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
T.H. LEHMAN & CO., INCORPORATED
AND SUBSIDIARIES
Date: November 17, 1995 SHANNON C. GRIES
Secretary/Treasurer and
Principal Financial Officer
