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 September 30, 2000
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.
Preferred 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
--- ---
4,717,720
(Number of shares of common stock outstanding as of October 06, 2000)
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INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated condensed balance sheets at
September 30, 2000 and March 31, 2000 3
Consolidated condensed statements of
operations and comprehensive
income six months ended
September 30, 2000 and 1999 4
Consolidated condensed statements of
operations and comprehensive
income three months ended
September 30, 2000 and 1999 4-5
Consolidated condensed statements of
cash flows for the six months ended
September 30, 2000 and 1999 5-6
Notes to consolidated condensed
financial statements 6
Item 2. Management's Discussion and Analysis 7
PART II. OTHER INFORMATION
Signatures 8
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<TABLE>
<CAPTION>
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2000 AND MARCH 31, 2000
ASSETS
September 30 March 31
2000 2000
(Unaudited) (Derived
from audited
financial
statements)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 29,353 $ 9,081
Accounts receivable 4,699 0
Current portion of non-current receivables 258,363 275,023
----------- -----------
TOTAL CURRENT ASSETS 292,415 284,104
PROPERTY AND EQUIPMENT 1,828 9,950
OTHER ASSETS
Securities available for sale 482,419 1,265,770
Investments in non-public companies 833,659 833,659
Non-current receivables 1,068,626 1,080,933
Deposits 10,414 6,514
----------- -----------
TOTAL OTHER ASSETS 3,395,118 3,186,876
----------- -----------
TOTAL ASSETS $ 2,689,361 $3,480,930
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 330,819 $ 308,631
Accrued liabilities 71,053 136,408
Current portion of long-term debt 1,434,554 1,987,265
----------- -----------
TOTAL CURRENT LIABILITIES 1,836,426 2,432,304
LONG-TERM DEBT, less current portion 291,826 310,826
----------- -----------
TOTAL LIABILITIES 2,128,252 2,743,130
STOCKHOLDERS' EQUITY
Common stock-par value $.01; authorized
20,000,000 shares, issued 4,742,720 shares
at September 30, 2000 and March 31, 2000 47,427 47,427
Preferred stock-par value $.01; authorized
10,000,000 shares, issued 0 shares
at September 30, 2000 and March 31, 2000 0 0
Additional paid-in capital 7,764,504 7,764,014
Accumulated other comprehensive income 21,401 68,396
Accumulated deficit (7,223,785) (7,093,599)
Treasury stock at cost - 25,000 shares (48,438) (48,438)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 561,109 737,800
----------- -----------
$2,689,361 $3,480,930
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
Page 3
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
SIX MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
September 30 September 30
2000 1999
(Unaudited) (Unaudited)
----------- -----------
REVENUES
Management fees, net of allowances $ 282,479 $ 329,722
Income from finance receivables 0 15,440
Interest and dividends 4,363 0
Realized gain from sales of securities
Available for sale 64,370 0
Miscellaneous income 15 545
----------- ------------
TOTAL REVENUES 351,227 345,707
OPERATING EXPENSES
Selling, general and administrative 389,468 338,667
Interest expense 91,946 14,721
----------- -----------
TOTAL OPERATING EXPENSES 481,414 353,388
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (130,187) (7,681)
PROVISION FOR INCOME TAXES 0 0
----------- -----------
NET INCOME (LOSS) (130,187) (7,681)
OTHER COMPREHENSIVE INCOME:
Unrealized gain (loss) on securities 17,375 (15,590)
Less: reclassification adjustment
for gains included in net income (64,370) 0
----------- -----------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) (46,995) (15,590)
----------- -----------
COMPREHENSIVE INCOME (LOSS) $ (177,182) $ (23,271)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,717,720 4,717,720
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE $ (0.03) $ (0.00)
=========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
September 30 September 30
2000 1999
(Unaudited) (Unaudited)
----------- -----------
REVENUES
Management fees, net of allowances $ 104,570 $ 164,701
Interest and dividends 2,263 0
Realized gain from sales of securities
Available for sale 64,370 0
----------- -----------
TOTAL REVENUES 171,203 164,701
OPERATING EXPENSES
Selling, general and administrative 154,034 144,327
Interest expense 43,564 7,422
----------- -----------
TOTAL OPERATING EXPENSES 197,598 151,749
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (26,395) 12,952
PROVISION FOR INCOME TAXES 0 0
----------- -----------
NET INCOME (LOSS) (26,395) 12,952
Page 4
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
September 30 September 30
2000 1999
(Unaudited) (Unaudited)
----------- -----------
OTHER COMPREHENSIVE INCOME:
Unrealized gain (loss) on securities (3,682) (17,860)
Less: reclassification adjustment
for gains included in net income (64,370) 0
----------- -----------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) (68,052) (17,860)
----------- -----------
COMPREHENSIVE INCOME (LOSS) $ (94,448) $ (4,908)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,717,720 4,717,720
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE $ (0.01) $ (0.00)
=========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
September 30 September 30
2000 1999
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (130,187) $ (7,681)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 8,121 8,877
Realized gain from sales of securities
available for sale 64,370 0
Deposits (paid) received (3,900) 0
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (4,699) 0
Prepaid expenses and other current assets 0 503
Value of marketable securities 719,472 0
Increase (decrease) in:
Accounts payable 22,189 37,785
Accrued liabilities (58,449) 14,087
----------- -----------
NET CASH PROVIDED BY (REQUIRED BY)
OPERATING ACTIVITIES 616,917 53,571
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans made evidenced by notes receivable (626,776) (329,722)
Collection of notes receivable 655,743 241,968
Acquisition of securities available for sale 0 0
(Purchase) disposal of property and equipment 0 (3,029)
----------- -----------
NET CASH PROVIDED BY (REQUIRED BY)
INVESTING ACTIVITIES 28,967 (90,783)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of long-term debt 237,387 18,000
Repayment of long-term debt (862,999) (4,513)
----------- -----------
NET CASH PROVIDED BY (REQUIRED BY)
FINANCING ACTIVITIES (625,612) 13,487
----------- -----------
INCREASE (DECREASE)IN CASH 20,272 (23,725)
CASH - BEGINNING 9,081 20,677
----------- -----------
CASH - END $ 29,353 $ (3,048)
=========== ===========
Page 5
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
CASH PAID DURING THE PERIODS FOR:
Interest $ 37,910 $ 804
=========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. COMMENTS
The accompanying unaudited consolidated condensed financial statements, which
are for interim periods, do not include all disclosure provided in the annual
consolidated financial statements. These unaudited consolidated condensed
financial statements should be read in conjuction with the consolidated
financial statements and footnotes thereto contained in the Annual Report on
Form 10-KSB for the year ended March 31, 2000 of T.H. Lehman & Co.,
Incorporated and Subsidiaries (the "Company"), as filed with the Securities and
Exchange Commission. The March 31, 2000 consolidated condensed balance sheet
was derived from audited consolidated financial statements, but does not include
all disclosures required by generally accepted accounting principles.
In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements. The
results of operations for the six months ended September 30, 2000 are
not necessarily indicative of the results to be expected for the full fiscal
year.
In the course of determining the Company's ability to increase the number of
authorized shares from 5,000,000 to 20,000,000 it was determined the Company
already had this available to it as stated in item 4 of the Company's
Certificate of Incorporation. Disclosure on the Company's Balance Sheet under
Stockholder's Equity beginning the quarter ending September 30, 1992 through its
most recent filing for period ending June 30, 2000, should have reflected
20,000,000 shares of Common Stock and 10,000,000 shares of undesignated
Preferred Stock as the correct number of authorized shares. Since the number of
issued and outstanding shares has been reported correctly, the Company believes
there has been no negative impact as a result of the inadvertent error in
disclosure.
2. RELATED PARTY TRANSACTION
During August 2000, the Company sold 100,000 shares of Optisystems Solutions,
Ltd. a publicly traded company, for $1,000,000. The company acquired these
shares by issuing an 8% interest bearing unsecured note. Under the terms of the
note the Company repaid all of the principal of the note, accrued interest and
75% of the gain (determined after adjustment for interest) from the sale.
Mr. Dibo Attar resigned from the Board of Directors and as the Company's acting
President on September 10, 2000. The Company filed a Form 8-K on September 19,
2000 disclosing this item. Michael J. Lyons was appointed to the Board of
Directors by the remaining Board members to serve until the next Annual Meeting
to fill this vacancy.
At the upcoming (December 5, 2000) 2000 Annual Meeting of Stockholders, the
Board of Directors will be seeking adoption of their proposal to issue 2,227,398
Common Shares of $.01 Par Value in consideration of the forgiveness of certain
indebtedness by the Company to a related party.
Page 6
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
SEPTEMBER 30, 2000
Statements of Operations:
Six Months Ended September 30, 2000 Compared to Six Months Ended September 30,
1999
Revenues totaled $351,227 during the six months ended September 30, 2000, 1.6%
higher than the $345,707 in revenues from the same period in the previous year.
Management fees decreased to $282,479 from $329,722 due to less patient
activity. Income from finance receivables decreased from $15,440 during the six
months ended September 30, 1999 to $0 for the current six months due to the
liquidation of these type of receivables as of last year. Gains from securities
available for sale were $64,370 compared to $0 for the same time period in the
previous year.
Interest expense increased from $14,721, for the six months ended September 30,
1999, to $91,946 for the six months ended September 30, 2000. This is due to
note payables issued in exchange for the acquisition of shares in three publicly
traded companies and two private companies.
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Revenues totaled $171,202 during the three months ended September 30, 2000, 4%
higher than the $164,701 in revenues from the same period in the previous year.
Management fees decreased to $104,570 from $164,701 due to less patient
activity. Gains from securities available for sale were $64,370 compared to $0
for the same time period in the previous year.
Interest expense increased from $7,422, for the three months ended September 30,
1999, to $43,564 for the three months ended September 30, 2000. This is due to
note payables issued in exchange for the acquisition of shares in three publicly
traded companies and two private companies.
Liquidity, Capital Resources and Income Taxes:
At September 30, 2000 cash amounted to $29,353, an increase of $20,272 from the
cash balance of $9,081 at March 31, 2000. This cash will be used to fund
operations.
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.
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, 2000, the Company had an operating tax loss carry forward of
approximately $5,365,000.
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.
Year 2000 Issue
The Company purchased a medical practice management system (including software,
hardware needed to utilize the system, licensing, training and support) for
approximately $30,000 in 1996. This system is specifically designed for the
management of medical practices, which accounts for most of the Company's
revenue. The version of the system the Company owned was not Year 2000
compliant. However the vendor of this system updated the version with one that
is fully Year 2000 compliant without charge.
The Company's financial statements are produced by the management company of
T.H. Lehman & Co., Inc. which uses a licensed financial and general ledger
software program which is currently Year 2000 compliant.
The Company utilizes personal computers that utilizes Microsoft Windows 95 or
higher. The Company believes that the Windows operating system is Year 2000
compliant.
Page 7
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T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
/s/ Elliot Gerstenhaber DATE: September 10, 2000
-----------------------
Secretary/Treasurer and
Principal Financial Officer
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