FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-17286
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LIFSCHULTZ INDUSTRIES, INC.
- ----------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE No. 87-0448118
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
641 West 59th Street, New York, NY 10019
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(Address of principal executive offices)
(Issuer's telephone number) (212) 397-7788
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- ----------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report.)
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 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
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State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common Stock 55,569,495
- ----------------- -------------------------------
Class Outstanding at January 31, 1997
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheet--
January 31, 1997 and July 31, 1996 4-5
Consolidated Statement of Earnings
for Three Months ended January 31, 1997
and January 31, 1996; Six Months ended
January 31, 1997 and January 31, 1996 6
Consolidated Statement of Cash Flows--
Six Months ended January 31, 1997 and
January 31, 1996 7
Notes To Consolidated Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Results of Operation 8-9
Financial Condition and Liquidity 9
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
SIGNATURES 10
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
31-Oct-96 31-Jul-96
---------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 896,000 $1,424,000
Marketable Securities 770,000 601,000
Trade accounts receivable 1,643,000 1,774,000
Related Party Receivable 34,000
Inventories 1,663,000 1,488,000
Other current assets 45,000 60,000
Total current assets ---------- ----------
5,017,000 5,381,000
Property held for sale or lease, net 2,637,000 2,973,000
Property & equipment, net 722,000 489,000
---------- ----------
Total Assets $8,376,000 $8,843,000
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS (continued)
(unaudited)
31-Jan-97 31-Jul-96
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Note payable to a bank $ 303,000 $ 182,000
Trade accounts payable 471,000 311,000
Accrued liabilities 698,000 1,623,000
Notes payable 50,000
Notes payable to shareholders 110,000 120,000
Accounts payable and accrued
liabilities past due 113,000 321,000
Current portion of long-term debt 0
----------- -----------
Total current liabilities 1,695,000 2,607,000
Long-term debt, less current portion 0 0
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
0 shares 0 8,000
Series E; issued and outstanding
21,231 shares 0 1,000
Common stock, par value $.001;
authorized 80,000,000 shares;
issued and outstanding,
55,569,495 shares 56,000 44,000
Additional paid-in capital 10,979,000 10,978,000
Common stock subscriptions receivable
from related parties (15,000) (15,000)
Treasury Stock (at cost) (157,000) (157,000)
Retained (deficit) (4,182,000) (4,623,000)
----------- -----------
Total shareholders' equity 6,681,000 6,236,000
----------- -----------
Total liabilities and shareholders'
equity $8,376,000 $8,843,000
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Three months ended Six months ended
------------------------ ------------------------
<S> <C> <C> <C> <C>
31-Jan-97 31-Jan-96 31-Jan-97 31-Jan-96
REVENUES: ----------- ----------- ----------- -----------
Sales $ 2,930,000 $ 2,976,000 $ 5,629,000 $ 5,331,000
COSTS AND EXPENSES:
Cost of products sold 1,515,000 1,504,000 2,874,000 2,685,000
Selling, general and admin. 1,059,000 1,032,000 2,006,000 1,867,000
Research and development 109,000 62,000 192,000 124,000
Interest Expense 11,000 9,000 23,000 15,000
----------- ----------- ----------- -----------
Total costs and expenses 2,694,000 2,607,000 5,095,000 4,691,000
Earnings before income taxes
and extraordinary item 236,000 369,000 534,000 640,000
Income Taxes 68,000 37,000 93,000 72,000
----------- ----------- ----------- -----------
Earnings before
extraordinary item 168,000 332,000 441,000 568,000
EXTRAORDINARY ITEM
Forgiveness of Debt,
net of tax effect - - - 1,062,000
----------- ----------- ----------- -----------
Net Earnings 168,000 332,000 441,000 1,630,000
=========== =========== =========== ===========
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Income before
extraordinary item 0.003 0.005 0.008 0.009
Extraordinary item 0.000 0.000 0.000 0.018
----------- ---------- ----------- -----------
Net earnings 0.003 0.005 0.008 0.027
=========== =========== =========== ===========
Common Shares Outstanding 59,077,815 60,036,089 59,077,815 60,036,089
</TABLE>
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LIFSCHULTZ INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarter ended
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31-Jan-97 31-Jan-96
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OPERATING ACTIVITIES
Net
income $ 441,000 $ 1,298,000
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization (A) 429,000 99,000
Gain on debt Forgiveness
(extraordinary item) 0 (1,062,000)
Changes in assets and liabilities:
Trade Accounts receivable 131,000 276,000
Inventory (175,000) (136,000)
Other assets 49,000 (3,000)
Accounts payable 159,000 313,000
Accrued liabilities (981,000) (270,000)
Net cash provided (used) by operating ------------ ------------
activities 53,000 515,000
INVESTING ACTIVITIES
Purchase of Property and Equipment (A) (326,000) (52,000)
Net cash provided (used) by
investing activities (326,000) (52,000)
------------ ------------
FINANCING ACTIVITIES
Proceeds from notes payable and long-term
obligations - 0
Proceeds from Bank Line of Credit 118,000 -
Principal payments of notes payable
and long-term obligations (208,000) (11,000)
Proceeds from sale of equity securities 4,000 0
Net cash provided (used) by financing
activities (86,000) (11,000)
------------ ------------
Net increase (decrease) in cash (359,000) 452,000
Cash and cash equivalents at beginning
of period 2,025,000 1,139,000
Cash and cash equivalents at end of
period $ 1,666,000 $ 1,591,000
============ ============
(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, 1997
and 1996 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.
Note 3- Cash and Cash Equivalents, Marketable Securities
Marketable securities consist exclusively of U.S. Treasury Bills and are
considered a cash equivalent.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
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Results of Operations:
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Total revenues for the six months ended January 31, 1997 increased 5.6%
to $5,629,000 versus $5,331,000 for the same period last fiscal year. Total
revenues for the three months ended January 31, 1997 decreased 1.5% to
$2,930,000 versus $2,976,000 for the same period last fiscal year.
Hart Scientific revenues for the current six month period were
$5,396,000 versus $5,075,000 for the same period last year, an 6.3%
increase. Hart Scientific revenues for the current three month period were
$2,802,000 versus $2,808,000 for the same period last year. A decrease in
sales of higher priced instruments accounts for the lower revenue in the
quarter and the lower rates of revenue growth versus previous periods.
Hart Scientific's gross margins were 47% for the current six months,
this is equal to the same period last year.
General and Administrative costs for the current six month period were
$1,322,000 versus $1,379,000 for the same period last year. In the current
three month period, ended January 31, 1997, General and Administrative
expenses for Hart Scientific were $715,000 versus $516,000 for the same
period last year.
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Marketing and sales expenses for the current three month period were
$358,000 versus $249,000 for the same period last year. Marketing and sales
expenses for the current six month period were $664,000 versus $508,000 for
the same period last year.
Net income for the current three months is $168,000 versus net income of
$332,000 for the same period last year, a 49% decrease. Net income before
extraordinary income for the current six months is $441,000 versus net income
before extraordinary income of $568,000 for the same period last year, a
22% decrease. Net income for the current six months of $441,000 does not
include any extraordinary gain while the net income for the same period last
year of $1,630,000 includes an extraordinary gain of $1,062,000. Hart
Scientific had net income of $57,000 for the current quarter versus $430,000
for the same period last year, an 87% decrease. Hart had net income for the
current six months of $370,000 versus net income of $782,000 for the same
period last year, a 53% decrease. Product mix and in particular a decrease
in sales of higher priced instruments contributed to the lower net income.
Financial Condition and Liquidity
- ---------------------------------
The Registrant's current ratio at January 31, 1997 is 2.96 versus 2.06
at July 31, 1996.
Total current assets decreased by $364,000 during the current six
month period while current liabilities decreased by $912,000 during the same
period. Cash and cash equivalents decreased by $359,000 in the current six
month period to $1,666,000. This reflects the higher costs of the period and
lower revenue and net income. The balance sheet of LIFF remains strong and
debt at the Lifschultz Fast Freight subsidiary continues to be reduced.
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.
The Registrant's annual meeting was held on December 10, 1996. 34,727,998
votes were cast at the annual meeting, this represents 62% of the total
possible votes. Proposal One, election of a Board of Directors of the
Registrant, received 34,655,370 votes in favor of the proposed board,
99.8% of the total. 72,628 votes negaative votes were cast on Proposal
One, .2% of the total votes cast. Proposal Two, approval of Grant Thornton
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as the Registrant's independent certified public accountants for the
1997 fiscal year, received 34,627,470 votes in favor (99.71% of total cast),
49,028 votes against (.14% of total cast) and 51,500 votes that abstained
(.14% of total cast). Both proposals were passed. Elected to the Board were
Sidney B. Lifschultz, David K. Lifschultz, and Dennis R. Hunter.
ITEM 5. OTHER INFORMATION. Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) List of Exhibits
27.0 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
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 12 March 1997 By:/s/ Dennis R.. Hunter
President, Director
and Chief Financial Officer
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Exhibit Index
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Exhibit No. Description
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27 Financial Data Schedule.
==============================
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JAN-31-1997
<CASH> $896,000
<SECURITIES> $770,000
<RECEIVABLES> $1,643,000
<ALLOWANCES> 0
<INVENTORY> $2,637,000
<CURRENT-ASSETS> $5,017,000
<PP&E> $722,000
<DEPRECIATION> 0
<TOTAL-ASSETS> $8,376,000
<CURRENT-LIABILITIES> $1,695,000
<BONDS> 0
0
0
<COMMON> $56,000
<OTHER-SE> $6,625,000
<TOTAL-LIABILITY-AND-EQUITY> $8,376,000
<SALES> $2,930,000
<TOTAL-REVENUES> $2,930,000
<CGS> $1,515,000
<TOTAL-COSTS> $2,694,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $11,000
<INCOME-PRETAX> $236,000
<INCOME-TAX> $68,000
<INCOME-CONTINUING> $168,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $168,000
<EPS-PRIMARY> $.003
<EPS-DILUTED> $.003
</TABLE>
