Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 31, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-18097
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BERNARD HALDANE ASSOCIATES, INC.
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(Exact name of small business issuer as specified in its charter)
Florida 59-2720407
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2600 North Military Trail, Suite 270, Boca Raton, Florida 33431
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(address of principal executive offices)
(407) 997-4050
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(Issuer's telephone number)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: August 31, 1996
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Class Outstanding at August 31, 1996
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Common Stock, $.00001 Par Value 1,148,865 shares
Page 1 of 9
<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
as of August 31, 1996 (Unaudited)
and May 31, 1996 3 - 4
Consolidated Statements of Income
for the Three Months Ended
August 31, 1996 and 1995 (Unaudited) 5
Consolidated Statements of Cash Flows
for the Three Months Ended
August 31, 1996 and 1995 (Unaudited) 6
Notes to Consolidated Financial Statements
as of August 31, 1996 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 9
PART II. OTHER INFORMATION AND SIGNATURES
Signatures 10
<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
AUGUST 31, MAY 31,
1996 1996*
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(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $1,671,830 $1,559,116
Short-term investments 53,716 53,146
Accounts receivable - net of allowance for
doubtful accounts of $200,000 and $170,000,
respectively 291,348 329,146
Notes receivable 42,762 48,478
Due from related parties 95,635 28,039
Prepaid expenses and miscellaneous receivables 15,181 9,734
Deferred taxes 95,000 83,000
Net assets of discontinued operations 34,394 36,635
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Total current assets 2,299,866 2,147,294
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OTHER ASSETS:
Licenses - net of accumulated amortization of
$1,509,761 and $1,460,376, respectively 1,012,767 1,062,152
Equipment, fixtures and leasehold improvements -
net of accumulated depreciation of $20,086
and $19,549, respectively 19,494 20,031
Security deposits and other 60,460 60,460
Notes receivable 150,211 134,893
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Total other assets 1,242,932 1,277,536
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TOTAL ASSETS $3,542,798 $3,424,830
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*The balance sheet at May 31, 1996 is derived from the audited financial
statements of that date.
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
AUGUST 31, MAY 31,
1996 1996*
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(Unaudited)
CURRENT LIABILITIES:
Cash overdraft $ -- $ 18,044
Current maturities of long-term debt 239,778 245,956
Accounts payable 42,250 56,968
Accrued expenses and other current liabilities 61,604 12,778
Income taxes payable 86,905 61,905
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Total current liabilities 430,537 395,651
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OTHER LIABILITIES:
Long-term debt 530,519 541,080
Deferred rent payable 14,719 14,719
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545,238 555,799
Total liabilities 975,775 951,450
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STOCKHOLDERS' EQUITY:
Common stock ($.00001 par value; 950,000,000
shares authorized, 1,148,865 shares issued
and outstanding) 12 12
Additional paid-in capital 2,761,727 2,761,727
Retained earnings 311,722 162,964
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3,073,461 2,924,703
Less: Treasury stock (199,500 and 179,500 shares
at cost) 506,438 451,323
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Total stockholders' equity 2,567,023 2,473,380
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,542,798 $3,424,830
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*The balance sheet at May 31, 1996 is derived from the audited financial
statements of that date.
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS
ENDED AUGUST 31,
1996 1995
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(Restated)
REVENUES:
Royalty income $ 582,175 $ 560,620
Interest, dividends and other income 24,088 23,317
Sub-license income 43,718 --
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Total revenues 649,981 583,937
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EXPENSES:
Payroll and related costs 84,810 84,773
Other general and administrative 235,528 209,866
Amortization 49,385 49,385
Interest 15,259 17,012
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Total expenses 384,982 361,036
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INCOME BEFORE PROVISION FOR INCOME TAXES 264,999 222,901
PROVISION FOR INCOME TAXES 106,000 85,000
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INCOME FROM CONTINUING OPERATIONS 158,999 137,901
DISCONTINUED OPERATIONS:
Loss from operations of travel agency
to be disposed of 10,241 10,131
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NET INCOME $ 148,758 $ 127,770
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NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Continuing operations $ .16 $ .11
Discontinued operations (.01) (.01)
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$ .15 $ .10
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WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES 1,022,222 1,245,092
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DIVIDENDS None None
==== ====
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED AUGUST 31,
1996 1995
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(Restated)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 148,758 $ 127,770
Loss from discontinued operations 10,241 10,131
Adjustments to reconcile net income to net cash
provided by operating activities:
Expenses (income) not requiring the use of cash:
Provision for losses on accounts receivable 30,000 --
Depreciation 537 --
Amortization of licenses 49,385 49,385
Interest expense - imputed 11,261 13,012
Interest income - imputed (550) (1,775)
Deferred income taxes (12,000) 72,000
Changes in assets and liabilities:
Accounts receivable 7,798 (49,131)
Prepaid expenses (5,447) (20,884)
Cash overdraft (18,044) --
Accounts payable and other current liabilities 34,108 5,857
Income taxes payable 25,000 (61,384)
Net assets of discontinued operations 185,697 81,227
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NET CASH PROVIDED BY OPERATING ACTIVITIES 466,744 226,208
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (570) (51,643)
Redemption of short-term investments -- 151,008
(Increase) decrease in due from related parties (67,596) 67,000
Acquisition of fixed assets -- (17,880)
Addition to notes receivable (17,718) --
Payments of notes receivable 8,666 16,138
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (77,218) 164,623
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (28,000) (42,000)
Repurchase of common stock (55,115) --
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NET CASH USED IN FINANCING ACTIVITIES (83,115) (42,000)
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NET CHANGE IN CASH AND CASH EQUIVALENTS 306,411 348,831
CASH AND CASH EQUIVALENTS - beginning 1,615,073 835,008
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CASH AND CASH EQUIVALENTS - ending
(includes cash of discontinued operations of
$249,654 and $159,499, respectively) $ 1,921,484 $ 1,183,839
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 15,260 $ 17,012
Income taxes 101,000 87,200
</TABLE>
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996
(UNAUDITED)
The accompanying interim consolidated financial statements are unaudited and
include the accounts of Bernard Haldane Associates, Inc. ("Haldane") and its
subsidiaries.
NOTE 1
In the opinion of management, the accompanying interim consolidated financial
statements contain all material and significant adjusting and eliminating
entries consisting only of normal recurring adjustments and eliminations
necessary to present fairly the financial condition as of August 31, 1996 and
the results of operations and cash flows for the three months ended August
31, 1996. The results of operations for the three month period ended August
31, 1996 are not necessarily indicative of the results of operations for the
year ended May 31, 1997.
NOTE 2
The Company utilizes Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," to record income taxes.
The component of the deferred tax asset is the allowance for doubtful
accounts.
NOTE 3
For the three months ended August 31, the calculation of net earnings per
share, using the modified treasury stock method, is as follows:
1996 1995
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Net income $ 148,758 $ 127,770
Incremental income -- 2,126
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Total income $ 148,758 $ 129,986
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Weighted average shares outstanding 954,365 1,148,865
Incremental shares 67,857 96,227
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Total shares 1,022,222 1,245,092
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Net earnings per share $ .15 $ .10
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NOTE 4
On May 31, 1996, the Company adopted a plan to terminate its travel agency
operations. The anticipated disposal date is November 1996. The operating
results of the travel agency segment for the three months ended August 31,
1996 are shown separately in the accompanying consolidated income statement.
The 1995 consolidated statements of income and cash flows have been restated
to segregate the operating results of the travel agency segment. Net revenues
of the travel agency segment for the three months ended August 31, 1996 and
1995 amounted to $2,838 and $9,863, respectively, and are not included in
consolidated revenues.
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 1996 AND 1995
Royalty revenue from licensee offices increased only 3.8%, increasing from
$560,620 to $582,175 for the three months ended August 31, 1996 as compared to
the comparable three month period in the prior year. Although the number of
Haldane offices increased over the prior comparable period and the Company
recognized $43,718 in sub-license income, gross royalty revenue per office
declined . This decline is due in part to the fact that Haldane offices continue
to open in smaller metropolitan offices where the average gross royalty payable
to the Company is less than the average gross royalty received from larger
metropolitan areas. However, management remains optimistic that gross royalty
revenue will continue to increase as the number of Haldane offices continues to
increase.
Interest income during this period remained relatively constant,
increasing from $23,317 to $24,088.
Total expenses for the three month period increased from $361,036 to
$384,982 due almost exclusively to an increase in general and administrative
expenses from $209,866 TO $235,528. These costs reflect increasing costs in
administering and managing the growing network of Haldane offices.
Net income before taxes increased by more than 18% as compared to the
prior period, increasing from $222,901 to $264,999 resulting in net income after
taxes of $148,758 as compared to $127,770 in the prior period.
Although no assurances can be given, management remains optimistic that
the Company will continue to operate profitably in the coming quarter.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
August 31, 1996 as compared to August 31, 1995
Total cash, cash equivalents and short term investments as of August 31,
1996 were $1,725,546 as compared to $1,612,262 on May 31, 1996, an increase of
more than $110,000. Total current assets increased from $2,147,294 to $2,299,866
and the Company's total assets increased from $3,424,830 to $3,542,830.
Current liabilities increased from $395,651 to $430,537 as of August 31,
1996. Total liabilities increased from $951,450 as of May 31, 1996 to $975,775
as of August 31, 1996. The increase in liabilities is attributable to revenues
collected by Quantum Tours for upcoming tours which has been reported on the
balance sheet as unearned income.
Management believes that the Company has sufficient revenues and reserves
to finance ongoing business activities.
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<PAGE>
SIGNATURES
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Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BERNARD HALDANE ASSOCIATES, INC.
By:/s/ Jerold Weinger
--------------------------------
JEROLD WEINGER
PRESIDENT/TREASURER
DATED: 10/15/96
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BERNARD HALDANE ASSOCIATES, INC. FOR THE THREE MONTHS
ENDED AUGUST 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 1,671,830
<SECURITIES> 53,716
<RECEIVABLES> 491,348
<ALLOWANCES> 200,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,299,866
<PP&E> 39,580
<DEPRECIATION> 19,494
<TOTAL-ASSETS> 3,542,798
<CURRENT-LIABILITIES> 430,537
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 2,567,011
<TOTAL-LIABILITY-AND-EQUITY> 3,542,798
<SALES> 0
<TOTAL-REVENUES> 649,981
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 369,723
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,259
<INCOME-PRETAX> 264,999
<INCOME-TAX> 106,000
<INCOME-CONTINUING> 158,999
<DISCONTINUED> 10,241
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 148,758
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
