U.S. 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 September 30, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act of 1934
For the transition period from to
Commission file number 1-9224
HELMSTAR GROUP, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 13-2689850
- ----------------------------------------- ------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2 World Trade Center, Suite 2112, New York, N.Y. 10048
---------------------------------------------------------------------------
(Address of Principal Executive Offices)
212-775-0400
(Issuer's Telephone Number, Including Area Code)
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 [ ]
The number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
The number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at October 31, 1998
- ----------------------------- -------------------------------
Common stock - par value $.10 5,453,373 shares
<PAGE>
PART I
FINANCIAL INFORMATION
Item l. Financial Statements.
The following consolidated financial statements of Helmstar Group, Inc.
and subsidiaries (collectively referred to as the "Company," unless the context
requires otherwise) are prepared in accordance with the rules and regulations of
the Securities and Exchange Commission for Form 10-QSB and reflect all
adjustments (consisting of normal recurring accruals) and disclosures which, in
the opinion of management, are necessary for a fair statement of results for the
interim periods presented. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Form 10-KSB for the fiscal year ended December 31, 1997, which was
filed with the Securities and Exchange Commission.
The results of operations for the three months and nine months ended
September 30, 1998 are not necessarily indicative of the results to be expected
for the entire fiscal year.
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents .................. $ 690,369 $ 802,352
Short term investments ..................... 59,708,081 71,174,934
Marketable securities ...................... 7,629,502 7,234,862
Joint ventures ............................. 185,864
Land ....................................... 10,097,315
Construction in progress ................... 327,218 11,000
Deferred financing costs, less
accumulated amortization of
$83,146 in 1998 and $11,000
in 1997 ........................... 1,684,446 1,663,209
Furniture, equipment and
leasehold improvements - at cost,
less accumulated depreciation and
amortization of $284,311 in
1998 and $242,565 in 1997 ......... 225,588 106,128
Other assets ............................... 636,708 640,403
------------ ------------
TOTAL .................... $ 80,999,227 $ 81,818,752
============ ============
LIABILITIES
Bonds payable .............................. $ 72,750,000 $ 72,750,000
Accrued expenses and other
liabilities ....................... 979,559 1,509,201
Income taxes payable ....................... 72,090 59,737
------------ ------------
Total liabilities ........ 73,801,649 74,318,938
------------ ------------
Due to preferred member .................... 750,000 750,000
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(continued)
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
STOCKHOLDERS' EQUITY
<S> <C> <C>
Common stock - authorized
10,000,000 shares, par value
$.10; issued 6,749,600 shares ..... 674,960 674,960
Paid-in surplus ............................ 14,984,510 14,984,510
(Accumulated deficit) ...................... (6,187,364) (5,981,058)
------------ ------------
Total .................... 9,472,106 9,678,412
Less treasury stock, at cost -
1,296,227 shares in 1998 and
1,233,227 shares in 1997 .......... (3,024,528) (2,928,598)
------------ ------------
Total stockholders' equity 6,447,578 6,749,814
------------ ------------
TOTAL .................... $ 80,999,227 $ 81,818,752
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
Sept 30, Sept 30,
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Profit from joint ventures ........ $ $ 5,377,474 $ 9,527 $ 5,741,325
Financial consulting fees ......... 60,000 150,000
Interest income ................... 942,442 65,341 3,071,594 170,351
Investment (loss) income .......... 717,291 (489,044) 1,630,794 (435,644)
Other income ...................... 1,500 1,500
----------- ----------- ----------- -----------
Total Revenues ........... 1,661,233 5,013,771 4,713,415 5,626,032
----------- ----------- ----------- -----------
Expenses:
Compensation and related costs ... 352,687 314,345 926,565 943,091
Occupancy cost ................... 46,357 39,920 133,726 123,371
General and administrative ....... 115,307 66,299 297,405 302,372
Professional fees and
litigation expenses ...... 93,191 42,785 221,218 131,982
Interest .......................... 1,086,435 12,641 3,427,141 82,260
----------- ----------- ----------- -----------
Total Expenses ........... 1,693,977 475,990 5,006,055 1,583,076
----------- ----------- ----------- -----------
Profit (loss) before taxes ................. (32,744) 4,537,781 (292,640) 4,042,956
Income tax (benefit) ....................... (110,271) 422,000 (86,334) 425,016
----------- ----------- ----------- -----------
Net profit (loss) from
continuing operations ............. 77,527 4,115,781 (206,306) 3,617,940
Loss from discontinued operations .......... (383,513) (986,370)
----------- ----------- ----------- -----------
NET INCOME (LOSS) .......................... $ 77,527 $ 3,732,268 $ (206,306) $ 2,631,570
=========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (continued)
Three Months Ended Nine Months Ended
Sept 30, Sept 30,
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Per common share - basic and diluted:
Income (loss) from
continuing operations ................... $ .01 $ .74 $ (.04) $ .65
(Loss) from discontinued operations ........ (.07) (.18)
----------- ----------- ----------- -----------
Net income (loss) .......................... $ .01 $ .67 $ (.04) $ .47
=========== =========== =========== ===========
Weighted average number of
common shares outstanding - basic . 5,473,373 5,510,123 5,501,371 5,516,233
Effect of dilutive employee
stock options ..................... 71,000 25,000 25,000
Weighted average number of ----------- ----------- ----------- -----------
common shares - diluted
income (loss) per share ........... 5,544,373 5,535,123 5,501,371 5,541,233
=========== =========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
The three and nine month periods for 1997 have been restated to reflect the
results of a Company's subsidiary as a discontinued operation.
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
------------------------------
1998 1997
------------ ------------
Restated
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ..................................................... $ (206,306) $ 2,631,570
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ................................ 55,825 20,827
Unrealized (gain) from joint ventures
and other investments ....................................... (9,527) (463,062)
(Gain) on settlement, sale or disposal of
joint ventures and investments .............................. (5,278,263)
Loss on sale or abandonment of fixed assets .................. 3,746 2,653
Provision for loan reserve ................................... 50,000
Changes in operating assets and liabilities:
(Increase) in receivable due to sale of business segment ..... (264,607)
Decrease in other assets ..................................... 3,695 277,561
(Purchase) of marketable securities .......................... (394,640) (1,007,796)
(Decrease) increase in accrued expenses ...................... (517,289) 166,253
Decrease in assets & liabilities of disposed subsidiary ...... 2,132,608
------------ ------------
Net cash (used in) operating activities ........................................ (1,064,496) (1,732,256)
------------ ------------
Cash flows from investing activities:
Sale of investment securities - net ................................... 11,466,853
Distributions from joint ventures and other investments ............... 195,391 2,315,359
Purchase of other investments ......................................... (35,000)
Purchase of land ...................................................... (10,097,315)
Increase in construction in progress .................................. (316,218)
Increase in deferred financing costs .................................. (21,237)
Purchase of fixed assets .............................................. (181,381) (38,548)
Proceeds from the sale of fixed assets ................................ 2,350
Loan to debtor in possession .......................................... (50,000)
------------ ------------
Net cash provided by investing activities ...................................... 1,048,443 2,191,811
------------ ------------
Cash flows from financing activities:
Purchase of treasury stock ............................................ (95,930) (15,774)
------------ ------------
Net cash (used in) financing activities ........................................ (95,930) (15,774)
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ........................... (111,983) 443,781
Cash and cash equivalents at beginning of period ............................... 802,352 165,858
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $ 690,369 $ 609,639
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (continued)
Nine Months Ended
September 30,
------------------------------
1998 1997
------------ ------------
Restated
<S> <C> <C>
Supplemental schedule of noncash investing and
financing activities:
During the period ended September 30, 1997, the
Company recorded a receivable from the sale of the
joint ventures assets ................................................ $ 4,533,240
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ..................................................... $ 3,165,302 $ 82,260
Taxes ........................................................ 69,718 688
</TABLE>
See Notes to Condensed Consolidated Financial Statements (Unaudited).
<PAGE>
HELMSTAR GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
l. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by the Company are set forth in the
notes to the Company's financial statements included in its Form 10-KSB, for the
fiscal year ended December 3l, 1997, which was filed with the Securities and
Exchange Commission (the "SEC"). With respect to interest incurred during the
construction period, the Company capitalized such cost ($244,071) for the nine
month period ended September 30, 1998.
2. INCOME (LOSS) PER SHARE
Income (loss) per share is based on the weighted average number of
common shares outstanding and common stock equivalents based on the treasury
stock method when dilutive.
3. LITIGATION
The Company is a defendant in various lawsuits. The ultimate outcome of
the lawsuits cannot presently be determined, and no provision for any liability
that may result has been made in the financial statements, since the amounts, if
any, cannot be determined. There were no significant changes in the status of
litigation during the three months ended September 30, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Statements of Operations for the current and prior periods
have been restated to treat the sale of Citizens Mortgage Service Company during
the third quarter of 1997 as discontinued operations.
During the quarter ended June 30, 1998, the Company formed a
new wholly-owned subsidiary to provide Information Technology placement and
consulting services. An internet website will be used to provide occupation
opportunities for skilled technology specialists. In addition, the subsidiary
will provide information technology management consulting, special project
management and corporate task/outsourcing services.
Certain statements in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Form 10-QSB
constitute "forward-looking statements" within the meaning of the Reform Act.
See Other Information, Item 5.
A. Three Months Ended September 30, 1998 Compared
with Three Months Ended September 30, 1997
Total revenues decreased to $1,661,233 for the three months
ended September 30, 1998 from $5,013,771 for the three months ended September
30, 1997.
Profit from joint ventures for the three months ended
September 30, 1998 was nil compared with $5,377,474 for the three months ended
September 30, 1997. This was due to the sale during the third quarter of 1997 of
the outlet shopping malls by two partnerships in which the Company had a
majority financial interest.
Financial consulting fees were nil for the three months ended
September 30, 1998 compared to $60,000 for the three months ended September 30,
1997. Although providing financial structuring advice on a fee basis remains an
integral component of the Company's merchant banking business, significant
variations in revenues are likely because of the transactional nature of this
business. The Company currently is engaged in tendering advice with respect to
the structuring of transactions which are expected to generate fees later in
1998.
Interest income increased to $942,442 for the three months
ended September 30, 1998 from $65,341 for the three months ended September 30,
1997, primarily due to interest earned on the unused proceeds from the
$72,750,000 bond offering, pending application of the entire proceeds for
acquiring land and constructing multiplex movie theaters pursuant to its
agreement with Carmike Cinemas, Inc., and on the securities held in the cash
management and investing activities of the Company.
Investment income increased to a $717,291 for the three months
ended September 30, 1998 from a negative $489,044 for the three months ended
September 30, 1997. This category principally consists of net income or loss
from cash management and investing in futures, puts, calls, equities, municipal
securities, and other securities activities. Large swings can occur due to
volatility in the financial markets.
<PAGE>
Total expenses increased to $1,693,977 for the three months
ended September 30, 1998 from $475,990 for the three months ended September 30,
1997 primarily due to interest paid on the $72,750,000 bond offering made by the
Company.
Compensation and related costs increased to $352,687 for the
three months ended September 30, 1998 from $314,345 for the three months ended
September 30, 1997. This increase is due to the salaries incurred in a new
subsidiary formed to provide technology placement and consulting services.
Occupancy costs increased to $46,357 for the three months
ended September 30, 1998 from $39,920 for the three months ended September 30,
1997.
General and administrative expenses increased to $115,307 for
the three months ended September 30, 1998 from $66,299 for the three months
ended September 30, 1997. This increase is primarily due to expenses incurred in
the new subsidiary formed to provide technology placement and consulting
services.
Professional fees increased to $93,191 for the three months
ended September 30, 1998 from $42,785 for the three months ended September 30,
1997. The increase is due in large part to increased legal expenses.
Interest expense increased to $1,086,435 for the three months
ended September 30, 1998 from $12,641 for the three months ended September 30,
1997, due to interest paid on the $72,750,000 bond offering made by the Company.
On a pre-tax basis, from continuing operations the Company had
a loss of $32,744 for the three months ended September 30, 1998 compared with a
profit of $4,537,781 for the three months ended September 30, 1997. Provision
for income taxes for the three months ended September 30, 1998 were a benefit of
$110,271 compared to a provision for tax of $422,000 for the three months ended
September 30, 1997. The current benefit consists solely of an adjustment to
state and local taxes relating to the 1997 sale of the outlet shopping malls.
For Federal income tax purposes, as of December 31, 1997, the Company had net
operating loss carryforwards of approximately $7,300,000 available to reduce
future taxable income. These carryforwards expire in the years 2005 through
2011. The Company has a net capital loss carryforward of approximately
$3,400,000 which will expire in 2002.
The Company's net income for the three months ended September
30, 1998 was $77,527 compared with net income of $3,732,268 for the three months
ended September 30, 1997. For the three months ended September 30, 1998, net
income from continuing operations was $.01 per share. For the three months ended
September 30, 1997, net income from continuing operations was $.74 per share
decreased by a net loss from discontinued operations of $.07 per share,
resulting in income of $.67 per share. The Company adopted Statements of
Financial Accounting Standards No. 128 in 1997 and has retroactively applied the
effects thereof to the quarter ended September 30, 1997. Statement No. 128
replaces the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. The number of shares used
in the computations were 5,544,373 for the three months ended September 30, 1998
and 5,535,123 for the three months ended September 30, 1997.
<PAGE>
Nine Months Ended September 30, 1998 Compared
with Nine Months Ended September 30, 1997
Total revenues decreased to $4,713,415 for the nine months
ended September 30, 1998 from $5,626,032 for the nine months ended September 30,
1997.
Profit from joint ventures decreased to $9,527 for the nine
months ended September 30, 1998 from $5,741,325 for the nine months ended
September 30, 1997. This was due to the sale during the third quarter of 1997 of
the outlet shopping malls by two partnerships in which the Company has a
majority financial interest. The income for the nine month period ended
September 30, 1998 represents percentage rents collected during the period, but
attributable to a prior period per the terms of the sales contract and a
provision for local taxes.
Financial consulting fees were nil for the nine months ended
September 30, 1998 versus $150,000 for the nine months ended September 30, 1997.
Although providing financial structuring advice on a fee basis remains an
integral component of the Company's merchant banking business, significant
variations in revenues are likely because of the transactional nature of this
business. The Company currently is engaged in rendering advice with respect to
the structuring of transactions which are expected to generate fees later in
1998.
Interest income increased to $3,071,594 for the nine months
ended September 30, 1998 from $170,351 for the nine months ended September 30,
1997. This increase was primarily due to interest earned on the unused proceeds
from the $72,750,000 bond offering, pending application of the entire proceeds
for acquiring land and constructing multiplex movie theaters pursuant to its
agreement with Carmike Cinemas, Inc., and on the securities held in the cash
management and investing activities of the Company.
Investment income increased to $1,630,794 for the nine months
ended September 30, 1998 from a loss of $435,644 for the nine months ended
September 30, 1997. This category principally consists of net profit or loss
from cash management and investing in futures, puts, calls, equities, municipal
securities and other securities activities. Large swings can occur due to
volatility in the financial markets.
Total expenses increased to $5,006,055 for the nine months
ended September 30, 1998 from $1,583,076 for the nine months ended September 30,
1997, primarily due to interest paid on the $72,750,000 bond offering made by
the Company.
Compensation and related costs decreased to $926,565 for the
nine months ended September 30, 1998 from $943,091 for the nine months ended
September 30, 1997. The decrease resulted from a reduction in discretionary
bonuses, offset by salaries incurred in a new subsidiary formed to provide
technology placement and consulting services.
Occupancy costs increased to $133,726 for the nine months
ended September 30, 1998 from $123,371 for the nine months ended September 30,
1997.
<PAGE>
General and administrative expenses decreased to $297,405 for
the nine months ended September 30, 1998 from $302,372 for the nine months ended
September 30, 1997. During the nine months ended September 30, 1998, the Company
incurred additional expenses in connection with its new subsidiary formed to
provide technology and placement services. During the same period in 1997, a
reserve for bad debt was recorded.
Professional fees increased to $221,218 for the nine months
ended September 30, 1998 from $131,982 for the nine months ended September 30,
1997. The increase is due in large part to increased legal expenses incurred for
the period ended September 30, 1998.
Interest expense increased to $3,427,141 for the nine months
ended September 30, 1998 from $82,260 for the nine months ended September 30,
1997, due to interest paid on the $72,750,000 bond offering made by the Company.
On a pre-tax basis, from continuing operations, the Company
had a loss of $292,640 for the nine months ended September 30, 1998 compared
with a profit of $4,042,956 for the nine months ended September 30, 1997. A
benefit for income taxes for the nine months ended September 30, 1998 was
$86,334 compared with a provision of $425,016 for the nine months ended
September 30, 1997. These provisions consist solely of state and local taxes.
For Federal income tax purposes, as of December 31, 1997, the Company has net
operating loss carryforwards aggregating approximately $7,300,000 available to
reduce future taxable income. These carryforwards expire in the years 2005
through 2011. The Company has a net capital loss carryforward of approximately
$3,400,000.
The Company's net loss for the nine months ended September 30,
1998 was $206,306 compared with a net profit of $2,631,570 for the nine months
ended September 30, 1997. On a per share basis, the net loss from continuing
operations was $.04 for the nine months ended September 30, 1998, compared with
a net profit from continuing operations of $.65 decreased by a net loss from
discontinued operations of $.18 resulting in a profit of $.47 per share for the
nine months ended September 30, 1997. Average common shares outstanding used for
the primary computation of net loss per common share were 5,501,371 in 1998 and
5,541,233 in 1997. Common share equivalents relating to the Company's Incentive
Compensation Plan were not included in the computation because the effect of
their inclusion would be antidilutive for the nine months ended September 30,
1998.
B. Liquidity and Capital Resources
Management of the Company believes that funds generated from
operations, supplemented by its available cash and cash equivalents, will
provide it with sufficient resources to meet all present and reasonably
foreseeable future capital needs.
The Company invests excess funds in liquid, short-term
financial instruments in order to maximize its current cash return with minimum
interest rate risk, while preserving the ability to move quickly in funding
attractive merchant banking ventures. Such investments include U.S. Government
and municipal obligations, futures contracts and money market funds.
On November 20, 1997, the Company issued $72,750,000 of
adjustable rate tender securities due November 1, 2015 (the "Bonds"). The Bonds
were issued to finance 97% of the cost of developing and/or acquiring
<PAGE>
state-of-the-art multiplex movie theaters in various states throughout the
continental United States. The 3% balance, $2,250,000, is being provided as a
capital contribution from Preferred Members (shareholders) of the Company's
Lessor subsidiary, Movieplex Realty Leasing, L.L.C. $772,500 of this capital was
contributed during the fourth quarter of 1997.
The Bonds pay interest from the date of delivery on the first
Monday of each month for the preceding four or five week period commencing
January 5, 1998 and principal annually on the first Monday of November
commencing in the year 2000. Various commercial banks which provided letters of
credit securing payment on the Bonds are due letter of credit ("LOC") fees which
are payable on the same dates as the Bond interest and also commence in 1998. In
addition, a preferred return on capital contributed is due to the Preferred
Members, payable on the same due dates as is the interest on the Bonds but
commencing in January of the year 2000.
All debt service on the Bonds, while bank letters of credit
are effectively in force, is paid directly from draws on those LOCs. The banks
are then reimbursed by the Lessor. Fees and the Preferred return are due from
the Lessor directly. During the period from November 1997 through November 1999,
all reimbursements to the banks and bank fees will be paid from Bond proceeds.
Thereafter, all reimbursements to the banks for debt service on the Bonds as
well as fees and the preferred return to Preferred Members will be paid from the
Rents which commence on December 1, 1999. In addition, the Rents will cover all
other costs of owning and operating the real estate other than Federal, state or
local income taxes due on a net income basis. Prior to the utilization of these
proceeds to pay for the costs in connection with the construction of the
multiplex movie theaters, they will be invested in liquid short-term
instruments.
While the Company believes that currently available funds will
provide it with sufficient resources to meet all present and reasonably
foreseeable future capital needs, the Company may seek various forms of credit
in order to finance its merchant banking or other activities in the future. The
Company does not have any material commitments for capital expenditures as of
September 30, 1998, except for the development of the multiplex movie theaters
with funds provided by the issuance of the Bonds.
The Company is a defendant in various lawsuits. An unfavorable
result in certain of those lawsuits could have a significant adverse effect upon
the Company's liquidity and capital resources.
Year 2000 Issue
The Company has carefully evaluated the Year 2000 issue. None
of the critical operations of the Company, either for internal purposes or as
they affect third parties, required programmed or firmware computer calculations
concerning the time differences between dates or similar related functions.
Consequently, the Year 2000 issue will have no practical effect on the Company
and no material costs relative thereto are anticipated.
<PAGE>
PART II
OTHER INFORMATION
Item 5. Other Information.
Certain statements under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and elsewhere in
this Form 10-QSB constitute "forward looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward looking
statements are based on current expectations and information available to
management at this time. They may involve known risks, uncertainties, and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements. Factors
which could cause actual results to differ from the forward looking statements
include, among others, the following: general economic and business conditions;
changes in business strategy or development plans; quality of management;
availability, terms and deployment of capital; business abilities and judgment
of personnel; availability of qualified personnel; labor and employee benefit
costs; changes in or the failure to comply with government regulations; and
construction costs.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: A statement regarding the computation of per
share earnings is omitted because the computation is described in Note 2 of the
Notes to Condensed Consolidated Financial Statements (Unaudited) of this Form
10-QSB.
Exhibit 27 - Financial Data Schedule -- See below.
(b) Reports on Form 8-K:
-- The Company did not file any reports on Form
8-K during the three months ended September
30, 1998.
<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.
HELMSTAR GROUP, INC.
/s/ George W. Benoit
----------------
Date: November 13, 1998 George W. Benoit
Chairman of the Board of
Directors, President,
Chief Executive Officer
/s/ Roger J. Burns
------------------
Date: November 13, 1998 Roger J. Burns
First Vice President,
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HELMSTAR
GROUP, INC. AND SUBSIDIARIES' CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE INTERIM
PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 690,369
<SECURITIES> 67,337,583
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
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0
0
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</TABLE>
