<PAGE>
U.S. 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 December 31, 1997
Commission file number
2-87738
T.H. LEHMAN & CO., INCORPORATED
(Name of small business issuer in its charter)
Delaware 22-2442356
(State or other jurisdiction (I.R.S./Employer
of incorporation or organization) Identification Number)
4900 Woodway, Suite 650, Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (713) 621-8404
Securities registered under Section 12(b) of the Exchange Act:
Common Stock, $.01 Par.
(Title of Class)
Securities registered under Section 12(g) of the Exchange Act: None
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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes _X_ No ___
3,230,342
(Number of shares of common stock outstanding as of February 13, 1998)
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
DECEMBER 31, 1997
(UNAUDITED)
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Balance sheets at December 31, 1997
and March 31, 1997 3-4
Statements of operations for
the three months and nine months
ended December 31, 1997 5
Statements of operations for
the three months and nine months
ended December 31, 1996 6
Statements of cash flows
for the three months ended
December 31, 1997 and 1996 7-8
Notes to consolidated
financial statements 9-15
Item 2. Management's Discussion and Analysis 16-17
PART II. OTHER INFORMATION
Item 5. Other Information 18
Signatures 19
2
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND MARCH 31, 1997
ASSETS
December 31 March 31
1997 1997
(Unaudited)
CURRENT ASSETS __________ __________
Cash $ 147,554 $ 33,422
Trading securities (Note 3) 0 15,000
Accounts receivable 15,045 15,532
Prepaid expenses and other current assets 3,478 6,540
Current portion of non-current receivables
(Note 4) 440,000 440,000
__________ __________
TOTAL CURRENT ASSETS 606,077 510,494
PROPERTY AND EQUIPMENT AT COST,
less accumulated depreciation of $155,635
at December 31, 1997 and $131,120 at
March 31, 1997 (Note 5) 60,746 67,843
OTHER ASSETS
Securities available for sale (Note 3) 513,272 963,767
Investments in non-public companies, at cost 30,500 30,500
Non-current receivables (Note 4) 1,376,499 1,479,000
Deposits 1,514 4,900
Certificate of Deposit - Restricted 80,000 80,000
Excess of cost over net assets of acquired companies,
less accumulated amortization of $26,875 at
December 31, 1997 and $23,125 at March 31, 1997 23,125 26,875
__________ __________
TOTAL OTHER ASSETS 2,024,910 2,585,042
__________ __________
TOTAL ASSETS $2,691,733 $3,163,379
========== ==========
See accompanying Notes to Consolidated Financial Statements
3
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND MARCH 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31 March 31
1997 1997
(Unaudited)
CURRENT LIABILITIES __________ __________
Loans payable - financial institution (Note 6) $ 320,403 $ 285,946
Accounts payable 449,942 462,463
Accrued liabilities 70,023 72,565
Current portion of long-term debt (Note 7) 330,884 316,776
Estimated environmental liability (Notes 2 and 12) 145,540 189,315
__________ __________
TOTAL CURRENT LIABILITIES 1,316,792 1,327,065
LONG-TERM LIABILITIES
Investments in non-consolidated subsidiary 0 0
LONG-TERM DEBT, less current portion (Note 7) 383,431 821,316
__________ __________
TOTAL LONG-TERM LIABILITIEES 383,431 821,316
TOTAL LIABILITIES 1,700,223 2,148,381
___________ ___________
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 December 31, 1997 and March 31, 1997 32,303 32,303
Additional paid-in capital 7,310,300 7,310,300
Unrealized gain on investments 367,127 561,422
Accumulated deficit (6,669,782) (6,840,589)
Treasury stock at cost - 25,000 shares (48,438) (48,438)
__________ __________
TOTAL STOCKHOLDERS' EQUITY 991,510 1,014,998
__________ __________
$2,691,733 $3,163,379
========== ==========
See accompanying Notes to Consolidated Financial Statements
4
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1997
Three Months Nine Months
Ended Ended
December 31 December 31
1997 1997
(Unaudited) (Unaudited)
__________ __________
REVENUES
Management and billing fees, net of allowances $ 124,835 $ 368,497
Income from finance receivables 7,636 53,657
Interest and dividends 19,111 56,833
Net gain on trading securities 0 6,953
Net realized and unrealized gain (loss) on
investments 89,275 414,623
Profit participation fee 0 20,000
__________ __________
TOTAL REVENUES 240,857 920,563
OPERATING EXPENSES
Selling, general and administrative 226,343 683,260
Interest expense 20,563 66,495
__________ __________
TOTAL OPERATING EXPENSES 246,906 749,755
__________ __________
LOSS BEFORE INCOME TAXES (6,049) 170,808
PROVISION FOR INCOME TAXES (Note 9) 0 0
___________ __________
NET INCOME (LOSS) ($ 6,049) $ 170,808
=========== ==========
PER SHARE DATA:
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 3,230,342 3,230,342
========== ==========
NET INCOME (LOSS) PER COMMON SHARE ($0.00) $0.05
=========== =========
See accompanying Notes to Consolidated Financial Statements
5
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1996
Three Months Nine Months
Ended Ended
December 31 December 31
1996 1996
(Unaudited) (Unaudited)
__________ __________
REVENUES
Management and billing fees, net of allowances $ 149,073 $ 583,072
Income from finance receivables 1,600 9,285
Interest and dividends 22,518 62,173
Net realized and unrealized gain
(loss) on investments 53,666 185,511
Loss from 50% owned unconsolidated subsidiary (5,231) (5,231)
___________ __________
TOTAL REVENUES 221,626 834,810
__________ __________
OPERATING EXPENSES
Selling, general and administrative 209,277 814,897
Interest expense 24,837 77,420
___________ __________
TOTAL OPERATING EXPENSES 234,114 892,317
___________ __________
LOSS BEFORE INCOME TAXES (12,488) (57,507)
PROVISION FOR INCOME TZXES (Note 9) 0 0
___________ ____________
NET INCOME(LOSS) $ (12,488) $ (57,507)
============ ============
PER SHARE DATA:
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 3,230,342 3,230,342
========== ==========
NET INCOME (LOSS) PER COMMON SHARE $(0.00) $(0.02)
========== ==========
See accompanying Notes to Consolidated Financial Statements
6
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
Nine Months Nine Months
Ended Ended
December 31 December 31
1997 1996
(Unaudited) (Unaudited)
__________ __________
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 170,808 ($ 57,507)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 28,561 19,674
Realized Gain from sale of securities
available for sale (414,623) (185,511)
Loss on unconsolidated subsidiary 0 5,231
Net effect of deconsolidation of subsidiary 0 11,930
Deposits (paid) received 0 1,315
Changes in operating assets and liabilities:
(Increase) decrease in trading securities 15,000 0
(Increase) decrease in accounts receivable 487 (9,964)
(Increase) decrease in prepaid expenses and
other current assets 3,062 (1,449)
Increase (decrease) in accounts payable 60,479 86,671
Increase (decrease) in accrued liabilities 43,123 59,434
Payment of estimated environmental liability (43,775) (61,363)
__________ _________
NET CASH REQUIRED BY OPERATING ACTIVITIES (136,788) (131,539)
__________ _________
CASH FLOWS FROM INVESTING ACTIVITIES
Loans made evidenced by notes receivable (441,205) (545,983)
Collection of notes receivable 543,705 337,669
Deposits and certificates of deposits 3,386 0
Proceeds from sale of investments and other assets 134,365 295,214
Acquisition of property and equipment (17,804) (28,094)
__________ _________
NET CASH REQUIRED BY INVESTING ACTIVITIES 222,447 58,806
__________ _________
See accompanying Notes to Consolidated Financial Statements
7
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
NINE MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
Nine Months Nine Months
Ended Ended
December 31 December 31
1997 1996
(Unaudited) (Unaudited)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of loans payable - financial
institution $ 34,457 $ 33,104
Proceeds of long-term debt 0 268,067
Repayment of long-term debt (5,984) (209,712)
__________ _________
NET CASH PROVIDED BY FINANCING ACTIVITIES 28,473 91,459
__________ _________
INCREASE (DECREASE)IN CASH 114,132 18,726
CASH - BEGINNING 33,422 47,879
_________ _________
CASH - END $ 147,554 $ 66,605
========= =========
CASH PAID DURING THE PERIODS FOR:
Interest $ 1,481 $ 10,331
========= =========
Income Taxes $ 0 $ 0
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
On June 5, 1997, the Company settled certain notes and accounts payable
in the aggregate amount of $536,457 by transferring to the creditors a portion
of the Company's investment in KTI, Inc. The Company realized a gain of
$325,348 from this transfer.
See accompanying Notes to Consolidated Financial Statements
8
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
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, 1997, is
incorporated herein by reference.
2. ACQUISITIONS AND DISPOSITIONS
The summary of acquisitions and dispositions 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, 1997, is incorporated
herein by reference.
In a transaction that was effective October 1, 1996, the Company transferred
50% of the outstanding stock and substantially all of the control of
Healthcare Professional Billing Corp.("HPB") to certain key employees of HPB.
Until that time, HPB was a wholly-owned subsidiary the Company. As a result
of the transfer, the subsidiary's financial position, results of operations
and cash flows are not consolidated with that of the Company subsequent to the
transfer date.
Effective October 1, 1996, the investment in HPB including advances to HPB
will be accounted for under the equity method. The summarized financial
information of HPB at December 31, 1997 is as follows:
December 31,1997
_____________
Financial Position:
Current assets $ 34,098
Property and equipment 37,538
Other assets 3,792
________
Total assets $ 75,428
========
Current liabilities(including
due to the Company of $255,067) $346,711
Long-term obligations (a) 75,408
Stockholders' deficiency (346,691)
________
Total liabilities and stockholders'
deficiency $ 75,428
========
9
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
Nine Months
ended
December 31, 1997
______________
Results of Operations:
Revenues $159,009
Operating Expenses 255,723
_______
Net loss $(66,714)
========
(a) Certain creditors of HPB are also creditors of the Company.
3. SECURITIES AVAILABLE FOR SALE
December 31 March 31
1997 1997
__________ __________
KTI, Inc. $ 476,430 $ 941,934
Other equity investments in public entities 36,842 21,833
__________ __________
$ 513,272 $ 963,767
========== ==========
On June 5, 1997, the Company settled certain notes and accounts payable in the
aggregate amount of $536,457 by transferring to the creditors a portion of the
Company's investment in KTI, Inc. The Company realized a gain of $325,348
from this transfer.
Unrealized gains and losses for marketable equity securities at December 31,
1997 and March 31, 1997 are as follows:
December 31, 1997 March 31, 1997
______________________ ______________________
Current Non-Current Current Non-Current
Aggregate Cost $ 0 $146,145 $ 2,923 $402,345
Aggregate Market Value $ 0 $513,272 $ 15,000 $963,767
Gross Unrealized Gains $ 0 $367,127 $ 12,077 $561,422
Gross Unrealized Losses $ 0 $ 0 $ 0 $ 0
10
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
4. NON-CURRENT RECEIVABLES
Non-current receivables at December 31, 1997 and March 31, 1997 consisted
of the following:
December 31 March 31
1997 1997
__________ __________
Assigned medical billings net of allowances of
which $440,000 of the unpaid is expected to be
collected during the current fiscal year. $1,550,711 $1,718,260
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. 834,641 769,593
__________ __________
2,385,352 2,487,853
Less Allowance for Uncollectible (568,853) (568,853)
__________ __________
1,816,499 1,919,000
Less Current Portion (440,000) (440,000)
__________ __________
$1,376,499 $1,479,000
========== ==========
5. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 and March 31, 1997 consisted of
the following:
Life 1997 1996
__________ __________ __________
Machinery and Equipment 5-10 Years $ 47,970 $ 30,426
Leasehold Improvements 5-10 Years 500 500
Furniture and Fixtures 5-10 Years 167,911 168,037
__________ __________
216,381 198,963
Less Accumulated Depreciation (155,635) (131,120)
__________ __________
$ 60,746 $ 67,843
========== ==========
11
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
6. LOANS PAYABLE - FINANCIAL INSTITUTION
Pursuant to an agreement dated October 4, 1991 and modified March, 1993 and
March, 1994, the Company has received loans from a Netherlands corporation,
consisting of various advances from an available line of credit of $400,000.
As of December 31, 1997 and March 31, 1997, the outstanding balance against
this line of credit totaled $320,403 and $285,946, 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 nine months ended December 31,
1997 and the year ended March 31, 1997 was 10.5% and 10.25% respectively,
which was computed based on month-end balance. The approximate average
outstanding monthly balance during the nine months ended December 31,
1997 and the year ended March 31, 1997 amounted to $320,470 and $201,806,
respectively. This line of credit expired on January 31, 1998, and
subsequently has been extended to January 31, 2001.
7. LONG-TERM DEBT
Long-term debt including accrued interest at December 31, 1997 and March 31,
1997 consisted of the following:
December 31 March 31
1997 1997
__________ __________
Related Party:
Advances from an unsecured 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) $ 323,707 $ 309,346
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, 1999. 0 159,284
12
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
Non-related Parties (all unsecured):
Advances from an available line of credit of
$20,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before July 1,1999. 0 9,673
Advances from three available lines of credit
which total $200,000. The loans bear interest
at an annual rate of 10%. All principal and
interest is due and payable on or before
October 26, 1998. 0 57,151
Two notes payable totaling $10,000 principal
plus accrued interest at 10%, all due on December
28, 1998. 11,410 11,258
Note payable of $10,000 principal plus accrued
interest at 10%, all due on February 27, 1999. 0 679
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, 2000. 157,591 166,023
Advances from an available line of credit of
$200,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before November 16, 1998. 0 82,578
Note payable of $10,000 principal plus accrued
interest at 10%, all due on November 1, 1998. 11,164 10,411
Equipment purchase contract with a monthly payment
of $886 and an effective interest rate of 11% payable
through November, 2000. 26,300 31,784
Advances from an available line of credit of
$300,000. The loan bears interest at an annual
rate of 10%. All principal and interest is due
and payable on or before November 1, 1998. 184,143 171,716
Note payable of $60,000 principal plus accrued
interest at 10%, all due on March 12, 2000. 0 60,312
13
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
Advances from an available line of credit of
$100,000. the loan bears interest at annual
of 10%. All principal and interest is due
and payable on or before February 5, 2000. 0 67,877
__________ __________
714,315 1,138,092
Less Current Portion (330,884) (316,776)
__________ __________
$ 383,431 $ 821,316
========== ==========
The amounts of long-term debt maturing in each of the years ending March 31
are as follows: 1998 - $325,653; 1999 - $215,028; 2000 - $9,294;
2001 - $164,340.
On June 5, 1997, the Company settled certain notes and accounts payable in
the aggregate amount of $536,457 by transferring to the creditors a portion
of the Company's investment in KTI, Inc. The Company realized a gain of
$325,348 from this transfer.
8. STOCKHOLDERS' EQUITY
The discussion regarding stockholders' equity 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, 1997, is incorporated
herein by reference.
9. INCOME TAXES
The discussion regarding income taxes 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, 1997, is incorporated herein
by reference.
10. COMMITMENTS AND CONTINGENCIES
The discussion of commitments and contingencies 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, 1997, is
incorporated herein by reference.
The Company is involved in a dispute in respect to the ownership of a note
payable that originally expired on December 31, 1997. The note has been
extended to June 30, 1998 by what the Company considers to be the rightful
owner of that note, however another party has filed a lawsuit demanding
immediate payment on the note. The Company cannot be ensure that the note
in the amount of $323,707 will not be called prior to June 30, 1998, but
believes that the other sources of funding are sufficient to minimize the
impact of such contingency.
14
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
11. RELATED PARTY TRANSACTIONS
The discussion of related party transactions 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, 1997, is incorporated
herein by reference.
12. ALLOWANCE FOR ENVIRONMENTAL LIABILITY
The discussion of environmental liabilities 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, 1997, is incorporated
herein by reference.
15
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
DECEMBER 31, 1997
ITEM 2
Statements of Operations:
Three Months Ended December 31, 1997 Compared to
Three Months Ended December 31, 1996
Revenues totaled $240,857 during the three months ended December 31, 1997,
8% higher than the $221,626 in revenues from the same quarter in the previous
year. The increase in revenue is attributable to the realized gains on
investments during the current quarter, an amount that totaled $89,275
compared to $53,666 during the same time period last year. In addition,
management fees were down by $24,238 as compared to the prior year's third
quarter totals of $149,073. This was mainly attributable to the decline in
referrals, due to the absence of a marketer for the part of the quarter.
Income from finance receivables jumped to $7,636 in the current quarter from
$1,600 during the same time period in the previous year. However, this is down
from this year's first quarter income from finance receivables, which totaled
$34,368. Interest and dividend income decreased to $19,111 from $22,518 during
the third fiscal quarter of the previous year.
General and administrative expenses increased by $16,275 to $225,552 in the
current year's third fiscal quarter. This is primarily attributable to an
increase in the legal fees that totaled $10,063 during the current quarter
compared to $199 during the same time period last year. The additional
increase in general and administrative expenses was a result of programs
implanted to increase public awareness of our services. Collection costs
increased by 35% to $12,008 as compared to the same quarter last year in an
effort to boost collections of the Company's and its clients' receivables,
which resulted in increased collections of 60% as compared to last year's
results.
MedFin Management Corp. contributed $142,968 in revenues during the current
quarter and $192,375 in non-intercompany expenses during that same time frame.
During the quarter ended December 31, 1996, MedFin's revenues were $165,518
and its non-intercompany expenses totaled $185,758. HLT Holding Corp.
contributed the previously mentioned finance receivable income of $7,636 during
the third three months of this fiscal year and $1,600 during the third fiscal
quarter of last year. Non-intercompany expenses for HLT rose from $3,453
during the quarter ended December 31, 1996 to $3,746 during the current
quarter.
16
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
DECEMBER 31, 1997
Liquidity, Capital Resources and Income Taxes:
At December 31, 1997 cash amounted to $147,554, a significant increase from
the cash balance of $33,422 at March 31, 1997.
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, however, the Company is
involved in a dispute with respect to a note payable in the amount of $323,707
that originally expired on December 31, 1997. The note has been extended to
June 30, 1998, by what the Company considers to be the rightful owner of that
note, but another party has disputed that person's authority to extend the
note. The Company cannot ensure that the note will not be called prior to
June 30, 1998, but believes that other sources of funding are sufficient to
minimize the impact of such a contingency.
On June 5, 1997, the Company settled certain notes and accounts payable in the
aggregate amount of $536,457 by transferring to the creditors a portion of the
Company's investment in KTI, Inc.
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, 1997, the Company had an operating tax loss carryforward of
approximately $4,800,000.
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.
17
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
DECEMBER 31, 1997
PART II. OTHER INFORMATION
ITEM 5
OTHER INFORMATION
On December 5, 1997, Edmond Nagel resigned as President of the Company.
As of the date of filing this report, the Company is still searching
for his replacement.
18
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
DECEMBER 31, 1997
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.
/s/ SHANNON C. GRIES DATE: February 17, 1998
Secretary/Treasurer and
Principal Financial Officer
19
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