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 QUARTER BY PERIOD ENDED JANUARY 31, 1996
COMMISSION FILE NUMBER 33-17286
LIFSCHULTZ INDUSTRIES, INC.
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(Exact name of small business as specified in its charter)
DELAWARE 87-0448118
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
641 WEST 59TH STREET, NEW YORK, NY 10019
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (212) 397-7788
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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 Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the issuer 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 stock, as of January 31, 1996, the most recent date for which figures
are available.
Class Outstanding at January 31, 1996
- -------------------- -------------------------------
COMMON STOCK 36,541,229
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I N D E X
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<CAPTION> Page Number
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheet - January 31,
1996 and July 31, 1995 1
Consolidated Statement of Operations
for Three Months ended January 31,
1996 and January 31, 1995; Six Months
ended January 31, 1996 and January 31, 1995 3
Consolidated Statements of Cash Flows -
Six Months Ended January 31, 1996 and
January 31, 1995 4
Notes To Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Results of Operation 6
Financial Condition and Liquidity 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
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LIFSCHULTZ INDUSTRIES, INC.
Consolidated Balance Sheet
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<CAPTION>
(UNAUDITED)
31-Jan-96 31-Jul-95
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $2,002,000 $1,139,000
Trade accounts receivable 1,370,000 1,669,000
Inventories 1,290,000 1,085,000
Other current assets 94,000 124,000
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Total current assets 4,756,000 4,017,000
Property held for sale or lease, net 2,898,000 3,319,000
Property & equipment, net 718,000 496,000
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Total Assets $8,372,000 $7,832,000
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LIFSCHULTZ INDUSTRIES, INC.
Consolidated Balance Sheet (Continued)
<TABLE>
<CAPTION>
(UNAUDITED)
31-Jan-96 31-Jul-95
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Note payable to a bank $ 400,000 $ 150,000
Trade accounts payable 718,000 312,000
Accrued liabilities 826,000 994,000
Notes payable to shareholder s 50,000 50,000
Accounts payable and accrued
liabilities past due 487,000 2,088,000
Current portion of long-term debt 22,000 32,000
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Total current liabilities 2,503,000 3,626,000
Long-term debt, less current portion 17,000 26,000
Shareholders' equity:
Convertible preferred stock, par value $.01;
authorized 4,900,000 shares
Series A; issued and outstanding
5,200 shares - -
Series B; issued and outstanding
1,004,215 shares 10,000 10,000
Series E; issued and outstanding
513,148 shares 6,000 6,000
Common stock, par value $.001;
authorized 80,000,000 shares;
issued and outstanding,
36,541,229 shares 36,000 36,000
Additional paid-in capital 10,978,000 10,938,000
Common stock subscriptions receivable
from related parties (15,000) (15,000)
Treasury Stock (at cost) (157,000) (157,000)
Retained (deficit) (5,006,000) (6,638,000)
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Total shareholders' equity 5,852,000 4,180,000
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Total liabilities and shareholders' equity $8,372,000 $7,832,000
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LIFSCHULTZ INDUSTRIES, INC.
Consolidated Statement of Operations
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
Three months ended Six months ended
31-Jan-96 31-Jan-95 31-Jan-96 31-Jan-95
REVENUES: ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 2,976,000 $ 2,394,000 $ 5,331,000 $ 4,524,000
COSTS AND EXPENSES:
Cost of
products sold 1,504,000 1,326,000 2,685,000 2,412,000
Selling, general
and admin. 1,032,000 758,000 1,867,000 1,454,000
Research and
development 62,000 74,000 124,000 118,000
Interest Expense 9,000 63,000 15,000 109,000
----------- ----------- ----------- -----------
Total costs
and expenses 2,607,000 2,221,000 4,691,000 4,093,000
Income before
income taxes
and extraordinary
item 369,000 173,000 640,000 431,000
Income Taxes 37,000 - 72,000 53,000
----------- ----------- ----------- -----------
Income before
extraordinary item 332,000 173,000 568,000 378,000
EXTRAORDINARY ITEM
Forgiveness of Debt,
net of tax effect - - 1,062,000 -
NET INCOME 332,000 173,000 1,630,000 378,000
=========== =========== =========== ===========
NET INCOME PER COMMON
AND COMMON EQUIVALENT
SHARE:*
Income before
extraordinary
item $0.005 $0.002 $0.009 $0.005
Extraordinary item - - 0.018 -
----------- ----------- ----------- -----------
$0.005 $0.002 $0.027 $0.005
=========== =========== =========== ===========
Common Shares
Outstanding* $60,036,089 $59,639,934 $60,036,089 $59,639,934
*See Note 2
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LIFSCHULTZ INDUSTRIES, INC.
Consolidated Statement of Cashflows
<TABLE>
<CAPTION>
(UNAUDITED)
Six months ended
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<S> <C> <C>
OPERATING ACTIVITIES 31-Jan-96 31-Jan-95
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Net income
Adjustments to reconcile net income to net cash $ 1,630,000 $ 360,000
provided by (used in) operating activities:
Depreciation and amortization
Gain on debt Forgiveness
(extraordinary item) 208,000 255,000
Changes in assets and liabilities: (1,062,000) -
Trade Accounts receivable
Inventories 299,000 (586,000)
Other assets (204,000) (172,000)
Accounts payable 30,000 (24,000)
Accrued liabilities (134,000) (25,000)
Net cash provided (used) by
operating activities (168,000) 35,000
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599,000 (157,000)
INVESTING ACTIVITIES
Purchase of Property and Equipment (A)
Net cash provided (used) by investing activities (7,000) (50,000)
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(7,000) (50,000)
FINANCING ACTIVITIES
Proceeds from notes payable and
long-term obligations
Proceeds from notes payable to shareholders 250,000 200,000
Principal payments of notes payable
and long-term obligations
Proceeds from sale of equity securities (19,000) (750,000)
Net cash provided (used) by financing activities 40,000 799,000
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271,000 249,000
Net increase (decrease) in cash
Cash and cash equivalents at beginning of period 863,000 42,000
Cash and cash equivalents at end of period 1,139,000 931,000
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$ 2,002,000 $ 973,000
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(A) Net of Disposals
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Notes to Financial Statements
Note 1- Accounting Policies
In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes,"
which is effective for fiscal years beginning after December 15, 1992.
Accordingly, the Company has implemented Statement 109 in the accompanying
financial statements, without effect on reported income.
Note 2- Earnings per Share
Earnings per common and common equivalent shares for January 31, 1996 and
1995 is based on the weighted average number of common shares actually
outstanding during the period plus the shares that would be outstanding
assuming conversion of convertible preferred stock and exercise of stock
options and warrants, all of which are common stock equivalents.
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CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Total revenues for the six months ended January 31, 1996 increased 17%
to $5,331,000 versus $4,524,000 for the same period last fiscal year. Total
revenues for the three months ended January 31, 1996 increased 24% to
$2,976,000 versus $2,394,000 for the same period last fiscal year.
Hart Scientific revenues for the current six month period were $5,075,000
versus $4,288,000 for the same period last year, an 18% increase. Hart
Scientific revenues for the current three month period were $2,808,000 versus
$2,274,000 for the same period last year, a 23% increase.
Hart Scientific's gross margins were 47% for the current six months versus
44% for the same period last year.
General and Administrative costs for the current six month period were
$1,379,000 versus $1,057,000 for the same period last year. In the current
three month period, ended January 31, 1996, General and Administrative expenses
for Hart Scientific were $516,000 versus $366,000 for the same period last
year.
Marketing and sales expenses for the current three month period were
$249,000 versus $247,000 for the same period last year. Marketing and sales
expenses for the current six month period were $508,000 versus $394,000 for
the same period last year.
Net income for the current three months is $332,000 versus net income of
$152,000 for the same period last year, a 118% increase. Net income before
extraordinary income for the current six months is $568,000 versus net income
before extraordinary income of $378,000 for the same period last year, a 50%
increase. Net income for the current six months including extraordinary
income is $1,630,000 versus $378,000 for the same period last fiscal year, a
331% increase (last fiscal year did not have any extraordinary income items).
Hart Scientific had net income of $430,000 for the current quarter versus
236,000 for the same period last year, an 82% increase. Hart had net income
for the current six months of $782,000 versus net income of $595,000 for the
same period last year, a 31% increase.
Financial Condition and Liquidity
The Registrant's current ratio at January 31, 1996 is 1.90 versus 1.11 at
July 31, 1995.
Total current assets increased by $739,000 during the current six month
period while current liabilities decreased by $1,123,000 during the same
period and long term debt decreased by $9,000. Cash and cash equivalents
increased by $863,000 in the current six month period to $2,002,000. The
net result is a much improved balance sheet. Substantial progress has also
been made in reducing the debt problems at Lifschultz Fast Freight as evidenced
by the $1,062,000 extraordinary gain in the current six month period from
forgiveness of debt. The Registrant is continuing its efforts to resolve any
remaining debt problems at Lifschultz Fast Freight.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. Not Applicable
ITEM 2. CHANGES IN SECURITIES. Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On November 8, 1995 pursuant to a written consent of a majority of the
voting shares the entire Board of Directors of the Registrant was elected and
Grant Thornton was appointed as the Registrant's independent certified public
accountants for the 1996 fiscal year. Elected to the Board were Sidney B.
Lifschultz, David K. Lifschultz, and Dennis R. Hunter. Total votes cast for
the Board and Grant Thornton were 30,899,648.
ITEM 5. OTHER INFORMATION. Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Not applicable.
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SIGNATURES
Pursuant to the requirements 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.
LIFSCHULTZ INDUSTRIES, INC.
Date 7 March 1996 By: /s/ Dennis R. Hunter
President, Director
and Chief Financial Officer
Date 7 March 1996 By: /s/ Tim Pont
Controller
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> AUG-01-1995
<CASH> 2,002,000
<SECURITIES> 0
<RECEIVABLES> 1,370,000
<ALLOWANCES> 0<F1>
<INVENTORY> 1,290,000
<CURRENT-ASSETS> 8,372,000
<PP&E> 3,616,000
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 8,372,000
<CURRENT-LIABILITIES> 2,503,000
<BONDS> 0
0<F3>
16,000
<COMMON> 36,000
<OTHER-SE> 5,800,000
<TOTAL-LIABILITY-AND-EQUITY> 8,372,000
<SALES> 0
<TOTAL-REVENUES> 2,976,000
<CGS> 0<F4>
<TOTAL-COSTS> 1,504,000
<OTHER-EXPENSES> 1,103,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 369,000
<INCOME-TAX> 37,000
<INCOME-CONTINUING> 332,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 332,000
<EPS-PRIMARY> .005
<EPS-DILUTED> .005
<FN>
<F1>Amount is not separately provided in interim financial statements.
<F2>Amount is included in figure for property, plant and equipment.
<F3>Amount is not separetely in interim financial statements.
<F4>Amount is not seperately in interim financial statements.
</FN>
</TABLE>
