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, 1997
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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.)
192 Lexington Avenue, 15th Floor, New York, New York 10016
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(address of principal executive offices)
(212) 679-3360
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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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: August 31, 1997
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Class Outstanding at August 31, 1997
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Common Stock, $.00001 Par Value 1,148,865 shares
Page 1 of 10
<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
as of August 31, 1997 (Unaudited)
and May 31, 1997 3 - 4
Consolidated Statements of Income
for the Three Months Ended
August 31, 1997 and 1996 (Unaudited) 5
Consolidated Statements of Cash Flows
for the Three Months Ended
August 31, 1997 and 1996 (Unaudited) 6
Notes to Consolidated Financial Statements
as of August 31, 1997 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 9
PART II. OTHER INFORMATION AND SIGNATURES
Signatures 10
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
1997 1997*
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<S> <C> <C>
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $1,672,846 $1,698,099
Short-term investments 56,026 55,426
Accounts receivable - net of allowance for
doubtful accounts of $330,000 and $290,000, respectively 421,637 419,470
Notes receivable 195,409 149,080
Due from related parties 52,544 11,001
Prepaid expenses and miscellaneous receivables 66,597 60,158
Deferred taxes 162,000 145,000
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Total current assets 2,627,059 2,538,234
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OTHER ASSETS:
Licenses - net of accumulated amortization of
$1,707,302 and $1,657,917, respectively 815,226 864,611
Equipment, fixtures and leasehold improvements -
net of accumulated depreciation of $32,789
and $28,871, respectively 51,626 50,831
Security deposits and other 79,103 79,103
Notes receivable 434,167 451,309
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Total other assets 1,380,122 1,445,854
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TOTAL ASSETS $4,007,181 $3,984,088
========== ==========
*The consolidated balance sheet at May 31, 1997 is derived from the audited financial
statements of that date.
</TABLE>
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
1997 1997*
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(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 248,016 $ 235,240
Accounts payable 117,355 207,316
Accrued expenses and other current liabilities 23,513 8,147
Income taxes payable 87,433 141,510
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Total current liabilities 476,317 592,213
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OTHER LIABILITIES:
Long-term debt 481,803 498,839
Deferred rent payable 13,679 13,679
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495,482 512,518
Total liabilities 971,799 1,104,731
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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 780,081 624,056
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3,541,820 3,385,795
Less: Treasury stock (199,500 shares at cost) 506,438 506,438
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Total stockholders' equity 3,035,382 2,879,357
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,007,181 $3,984,088
========== ==========
*The consolidated balance sheet at May 31, 1997 is derived from the audited financial
statements of that date.
</TABLE>
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS
ENDED AUGUST 31,
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1997 1996
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REVENUES:
Royalty income $ 703,535 $ 582,175
Interest, dividends and other income 53,372 24,088
Sub-license income 41,721 43,718
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Total revenues 798,628 649,981
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EXPENSES:
Payroll and related costs 145,389 84,810
Other general and administrative 323,390 235,528
Amortization 49,385 49,385
Interest 14,439 15,259
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Total expenses 532,603 384,982
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INCOME BEFORE PROVISION FOR INCOME TAXES 266,025 264,999
PROVISION FOR INCOME TAXES 110,000 106,000
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INCOME FROM CONTINUING OPERATIONS 156,025 158,999
DISCONTINUED OPERATIONS:
Loss from operations of travel agency
to be disposed of -- 10,241
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NET INCOME $ 156,025 $ 148,758
=========== ===========
NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Continuing operations $ .15 $ .16
Discontinued operations -- (.01)
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$ .15 $ .15
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES 1,054,365 1,022,222
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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,
--------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 156,025 $ 148,758
Loss from discontinued operations -- 10,241
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 40,000 30,000
Depreciation 3,918 537
Amortization of licenses 49,385 49,385
Interest expense - imputed 10,440 11,261
Interest income - imputed (5,038) (550)
Deferred income taxes (17,000) (12,000)
Changes in assets and liabilities:
Accounts receivable (42,167) 7,798
Prepaid expenses (6,439) (5,447)
Cash overdraft -- (18,044)
Accounts payable and other current liabilities (74,595) 34,108
Income taxes payable (54,077) 25,000
Net assets of discontinued operations -- 185,697
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NET CASH PROVIDED BY OPERATING ACTIVITIES 60,452 466,744
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (600) (570)
Decrease in due from related parties (41,543) (67,596)
Acquisition of fixed assets (4,713) --
Addition to notes receivable (65,472) (17,718)
Payments of notes receivable 41,323 8,666
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NET CASH USED IN INVESTING ACTIVITIES (71,005) (77,218)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (14,700) (28,000)
Repurchase of common stock -- (55,115)
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NET CASH USED IN FINANCING ACTIVITIES (14,700) (83,115)
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NET CHANGE IN CASH AND CASH EQUIVALENTS (25,253) 306,411
CASH AND CASH EQUIVALENTS - beginning 1,698,099 1,615,073
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CASH AND CASH EQUIVALENTS - ending
(includes cash of discontinued operations of
$-0- and $249,654, respectively) $ 1,672,846 $ 1,921,484
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 14,439 $ 15,260
Income taxes 176,500 101,000
</TABLE>
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<PAGE>
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1997
(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, 1997 and
the results of operations and cash flows for the three months ended August
31, 1997. The results of operations for the three month period ended August
31, 1997 are not necessarily indicative of the results of operations for the
year ended May 31, 1998.
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 is based on the modified treasury stock method.
NOTE 4
On May 31, 1996, the Company adopted a plan to terminate its travel agency
operations which ceased in February 1997. 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. Net revenues of
the travel agency segment for the three months ended August 31, 1996 amounted
to $2,838, and are not included in consolidated revenues.
NOTE 5
Haldane has hired a financial advisory company and attorneys to evaluate the
possibility of going private in the future. Haldane's president and the
former president's spouse have offered to purchase the shares of common stock
owned by the public investors at $3 per share, which is the valuation made by
the financial advisory company in its fairness opinion. The estimated number
of shares to be purchased is less than 300,000 shares or $900,000.
-7-
<PAGE>
BERNARD HALDANE ASSOCIATES, INC.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
THREE MONTHS ENDED AUGUST 31, 1997 VS. THREE MONTHS ENDED AUGUST 31, 1996
Royalty payments from licensee offices for the three month period ended
August 31, 1997 totaled $703,535 as compared to $582,175 during the same period
in the prior fiscal year. This represents an increase of nearly 21% in royalty
revenue. The Company has recognized a total of $41,721 in revenues from the sale
of territorial licenses as compared to $43,718 during the three month period
ended August 31, 1996.
Additional revenues for the quarter ended August 31, 1997 include $53,372
in interest income as compared to $24,088 during the three month period ended
August 31, 1996. This significant increase in interest income is directly
attributable to the Company's increasing cash position.
Total revenues for the three months ended August 31, 1997 as compared to
August 31, 1996 were $798,628 as compared to $649,981. This 22% increase in
revenues is due primarily to an increase in the number of Haldane offices
nationwide. Despite these gains, management does not anticipate revenues to
continue to increase at this rate as Haldane offices have been opened in most
major metropolitan areas throughout the country and overseas expansion has been
considerably slower than anticipated.
While total revenues increased by 22%, income before taxes increased only
marginally, increasing from $264,999 to $266,025. Payroll and general and
administrative costs increased from $320,338 to $468,779, an increase of 46%.
Net income after taxes for the three months ended August 31, 1997 totaled
$156,025 as compared to $148,758 for the three months ended August 31, 1996.
Income per share of common stock remained constant at $.15.
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<PAGE>
As the Haldane operations continue to grow, additional staff has been
hired. Moreover, the Company has experienced larger than anticipated start-up
costs as it attempts to launch First Career, a career consulting and management
course targeted at graduating college seniors and recent college graduates. As a
result of these costs and expenses, net income after tax increased by less than
5% from the same period ended August 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
AUGUST 31, 1997 AS COMPARED TO MAY 31, 1997
Total current assets as of August 31, 1997 were $2,627,059 as compared to
$2,538,234; an increase of 3.5%. While the Company's cash holdings declined from
$1,698,099 to $1,672,846, notes receivable increased from $149,080 to 195,409
and accounts receivable increased from $419,470 to $421,637,
There has been only a marginal increase in the Company's total assets;
increasing from $3,984,088 to $4,007,181.
Total current liabilities declined 24%, declining from $592,213 to
$476,317 while total liabilities declined from $1,104,731 to $971,799, an
overall decline of 13.7%. This significant decline in the liabilities can be
attributable to the decline in income taxes payable from $141,510 to $87,433 and
the reduction in accounts payable from $207,316 to $117,355.
Management believes that the Company has sufficient revenues to finance
ongoing business activities including a proposed purchase at a cost of $3.00 per
share of the Company's shares of stock owned by non management and nonaffilated
shareholders.
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<PAGE>
SIGNATURES
----------
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 Wienger
--------------------------------
Jerold Weinger, President
DATED: October 15, 1997
<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, 1997, 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-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> AUG-31-1998
<CASH> 1,672,846
<SECURITIES> 56,026
<RECEIVABLES> 751,637
<ALLOWANCES> 330,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,627,059
<PP&E> 89,505
<DEPRECIATION> 32,879
<TOTAL-ASSETS> 4,007,181
<CURRENT-LIABILITIES> 476,317
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 3,035,370
<TOTAL-LIABILITY-AND-EQUITY> 4,007,181
<SALES> 0
<TOTAL-REVENUES> 798,628
<CGS> 0
<TOTAL-COSTS> 532,603
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,439
<INCOME-PRETAX> 266,025
<INCOME-TAX> 110,000
<INCOME-CONTINUING> 156,025
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 156,025
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
