-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IQw3dv9yEcERHd79hZImahDh3Z8ipEh2jeA99FGQ3VndYWRi3b5fj/zofNqCXrwx 5438CGYVGpQhUT7AhNLFNA== 0000356446-95-000019.txt : 19950517 0000356446-95-000019.hdr.sgml : 19950516 ACCESSION NUMBER: 0000356446-95-000019 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN HOLDINGS INC /DE/ CENTRAL INDEX KEY: 0000356446 STANDARD INDUSTRIAL CLASSIFICATION: [9995] IRS NUMBER: 953419191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10566 FILM NUMBER: 95537683 BUSINESS ADDRESS: STREET 1: P O BOX 74 STREET 2: 376 MAIN STREET CITY: BEDMINSTER STATE: NJ ZIP: 07921 BUSINESS PHONE: 9082349220 MAIL ADDRESS: STREET 1: P O BOX 74 STREET 2: 376 MAIN STREET CITY: BEDMINSTER STATE: NJ ZIP: 07921 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER MEMORIES INC /DE/ DATE OF NAME CHANGE: 19940411 EX-27 1 FDS --
5 This Schedule contains summary financial information extracted from the Form 10-QSB of American Holdings, Inc. for the quarter ended March 31, 1995 and is qualified in its entirety by reference to such financial statements ($000 omitted, except per share data). 0000356446 American Holdings, Inc. 1,000 3-mos DEC-31-1995 JAN-01-1995 MAR-31-1995 9,099 2,732 949 102 1,426 14,412 332 27 18,879 2,405 0 77 0 0 16,397 18,879 1,609 1,820 1,024 1,024 703 0 0 93 23 0 0 0 0 70 .01 .01
10QSB 2 FOR QUARTER ENDED MARCH 31, 1995 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: MARCH 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 0-10566 AMERICAN HOLDINGS, INC. (Exact name of small business issuer as specified in its charter) DELAWARE 95-3419191 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 376 MAIN STREET, BEDMINSTER, NEW JERSEY 07921 (Address of principal executive offices) (908) 234-9220 (Issuer's telephone number) N/A (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 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 April 30, 1995, the issuer had 7,705,235 shares of its common stock, par value $.01 per share, outstanding. Transitional Small Business Disclosure Format (check one): Yes ______ No X PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) ($000 Omitted)
March 31, 1995 --------- ASSETS Cash and cash equivalents ............................... $ 9,099 U.S. Treasury securities ................................ 1,938 Trading securities ...................................... 794 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $102 .................................... 847 Inventories ............................................. 1,426 Other current assets .................................... 308 ------- Total current assets .................................. 14,412 ------- Securities available-for-sale ........................... 1,351 Furniture and equipment, net ............................ 305 Notes receivable from affiliates ........................ 423 Goodwill ................................................ 2,330 Other assets ............................................ 58 ------- Total assets ......................................... $18,879 ======= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable ........................................ $ 358 Accrued expenses ........................................ 2,047 ------- Total current liabilities ............................ 2,405 ------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 7,705,235 shares issued and outstanding ........................................ 77 Additional paid-in capital .............................. 43,770 Accumulated deficit ..................................... ( 26,750) Unrealized losses on securities available-for-sale ..................................... ( 623) ------- Total stockholders' equity ........................... 16,474 ------- Total liabilities and stockholders' equity ............................... $18,879 =======
See accompanying notes to consolidated financial statements. AMERICAN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data)
Three Months Ended MARCH 31, 1995 1994 ------- ------- Revenues: Sales ........................................... $ 1,609 $ - Equity in earnings of disposed-of subsidiary ..................................... - 294 Net gains on marketable securities .............. 6 17 Interest, dividend and other income ............. 205 177 ------- ------- Total revenues ............................... 1,820 488 ------- ------- Expenses: Cost of goods sold .............................. 1,024 - Personnel ....................................... 401 168 Professional fees ............................... 86 151 Other ........................................... 216 107 ------- ------- Total expenses ............................... 1,727 426 ------- ------- Income before income taxes ........................ 93 62 Provision for income taxes ........................ 23 42 ------- ------- Net income ........................................ $ 70 $ 20 ======= ======= Net income per share .............................. $ .01 $ - ======= ======= Weighted average shares outstanding (in 000's) ..................................... 7,725 8,683 ======= =======
See accompanying notes to consolidated financial statements. AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted)
THREE MONTHS ENDED MARCH 31, 1995 1994 -------- -------- Cash flows from operating activities: Net income ........................................ $ 70 $ 20 Adjustments: Net trading securities and U.S. Treasury securities transactions .................................. ( 1,621) 157 Change in inventories .......................... 33 - Depreciation and amortization .................. 61 282 Change in other receivables .................... ( 85) ( 925) Change in accounts payable and other accruals ................................ ( 680) 138 Change in accrued income taxes ................. 24 ( 5) Other, net ..................................... ( 28) ( 148) ------- -------- Net cash used in operating activities ............. ( 2,226) ( 481) ------- -------- Cash flows from investing activities: Purchase of a business less cash acquired ...................................... ( 2,019) - Purchase of furniture and equipment, net ....... ( 44) ( 11) Proceeds from sale of securities available-for-sale ............................ - 4 Purchase of securities available-for-sale ...... ( 16) ( 1,070) Repayment of loans from former employees and affiliates ...................... 10 360 ------- -------- Net cash used in investing activities ................................. ... ( 2,069) ( 717) ------- -------- Cash flows from financing activities: Repurchase of common stock ..................... ( 31) ( 948) Other, net ..................................... ( 2) - ------- -------- Net cash used in financing activities ....................................... ( 33) ( 948) ------- -------- Net decrease in cash and cash equivalents ......................................... ( 4,328) ( 2,146) Cash and cash equivalents at beginning of period ........................................... 13,427 17,909 ------- -------- Cash and cash equivalents at end of period .............................................. $ 9,099 $ 15,763 ======= ========
See accompanying notes to consolidated financial statements. AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1995 AND 1994 (UNAUDITED) 1. GENERAL The accompanying unaudited consolidated financial statements of American Holdings, Inc. (the "Company") as of March 31, 1995 and for the three months ended March 31, 1995 and 1994 reflect all material adjustments consisting of only normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1994 as filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period. Certain reclassifications have been made in the 1994 consolidated financial statements to conform to presentations in the 1995 consolidated financial statements. Such reclassifications have no effect on stockholders' equity or on results of operations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The consolidated financial statements include the accounts of American Holdings, Inc. (the "Company") and its wholly-owned subsidiaries after elimination of all material intercompany accounts and transactions. The results of operations of NorthCorp Realty Advisors, Inc. ("NorthCorp") are included in the Consolidated Statements of Operations as equity in the earnings of disposed-of subsidiary through the date of disposition in 1994. The acquisition of an 80 percent interest in Madis Botanicals, Inc. ("Madis") occurred on January 3, 1995 and was accounted for using the purchase method. In accordance with Accounting Principles Board Opinion No. 16, the purchase price will be allocated to the acquired assets and liabilities. The Company has preliminarily allocated the purchase price, which is subject to final determination after additional information is obtained. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist primarily of cash on hand, cash in banks and treasury bills purchased with an original maturity of three months or less. MARKETABLE SECURITIES The Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115") as of January 1, 1994. SFAS 115 provides that all investments are to be classified into three categories: debt securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost; debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in the results of operations; and debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities reported at fair value with unrealized gains and losses excluded from the results of operations and reported as a separate component of stockholders' equity. The Company accounts for securities transactions on a trade-date basis. For computing realized gains or losses on sale of marketable securities, cost is determined on a first-in, first-out basis. The effect of all unsettled transactions is accrued in the consolidated financial statements. INVENTORIES Merchandise inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. FURNITURE AND EQUIPMENT The Company records all furniture and equipment at cost. Depreciation is computed using the straight-line and double-declining balance methods over the related estimated useful life of the asset. Gains or losses on dispositions of furniture and equipment are included in operating results. GOODWILL Goodwill resulting from the acquisition of Madis is being amortized over 15 years using the straight-line method. 3. PROFORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION The proforma consolidated condensed financial information reflects the disposition of NorthCorp and the Washington, D.C. office of the Company (the "Disposition") had the Disposition taken place on January 1, 1994. The financial information also includes the operations of Madis as if the acquisition had taken place on the same date. The proforma financial information is not intended to reflect results of operations which would have actually resulted had these transactions been effected on the dates indicated. Moreover, this proforma financial data is not intended to be indicative of results of operations which may be attained in the future. American Holdings, Inc. and Subsidiaries Proforma Consolidated Condensed Financial Information For the Three Months Ended March 31, 1994 (in $000's) Revenues ....................................... $ 4,464 Income before income taxes ..................... $ 190 Net income ..................................... $ 166 Net income per share ........................... $ .02
4. MARKETABLE SECURITIES At March 31, 1995, marketable securities consisted of the following (in $000's):
Gross Gross Amortized Holding Holding Fair Cost Gains Losses Value --------- ------- ------- ----- Trading securities: Corporate debt securities ........... $ 191 $ 9 $ - $ 200 Equity securities ...... 643 8 57 594 ------ ----- ----- ------ Total .............. 834 17 57 794 ------ ----- ----- ------ Available-for-sale: Equity securities ...... 1,974 25 648 1,351 ------ ----- ----- ------ Total marketable securities ..... $2,808 $ 42 $ 705 $2,145 ====== ===== ===== ======
The realized gains and unrealized losses on trading securities included in the results of operations for the quarter ended March 31, 1995, were $9,000 and $3,000, respectively. The unrealized gains on trading securities included in the results of operations for the first quarter of 1994 were $19,000. The unrealized losses on securities available-for-sale included as a separate component of consolidated stockholders' equity were approximately $623,000 at March 31, 1995. 5. INVENTORIES Inventories are comprised of the following (in $000's): Raw materials $ 159 Work in process 199 Finished goods 1,068 ------- Total inventory $ 1,426 =======
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations --------------------------------------------- DISPOSITION OF A SUBSIDIARY On September 21, 1993, the Board of Directors of the Company approved a plan to distribute the common stock of NorthCorp Realty Advisors, Inc. ("NorthCorp"), a real estate asset manager and a wholly-owned subsidiary of the Company, to all holders of the Company's outstanding common stock (the "Distribution"). Under the plan of distribution, the Company declared a dividend of one share of NorthCorp common stock for every two shares of the Company's common stock outstanding on the record date of the Distribution, July 8, 1994. At the date of Distribution (July 11, 1994), 8,250,000 shares of NorthCorp common stock were outstanding. Approximately 4,000,000 shares, or 48%, of NorthCorp's common stock were distributed to the stockholders of the Company. On August 4, 1994, the Company sold substantially all of its remaining interest in NorthCorp (the "Sale") to Mr. R. E. Roark and NorthCorp for approximately $1.5 million. Mr. Roark was the sole shareholder of Crown Revenue Services, Inc. ("Crown"), a Resolution Trust Corporation contractor. As part of the transaction, Crown was reorganized as a subsidiary of NorthCorp. NorthCorp also assumed the lease of the Company's Washington D.C. office and the employment contract of one of the Company's executive officers. NorthCorp's results of operations have been included in the consolidated financial statements through the date of sale in 1994 as equity in the earnings of disposed-of subsidiary. ACQUISITION OF MADIS BOTANICALS, INC. On January 3, 1995, the Company's wholly-owned subsidiary merged (the "Merger") with Dr. Madis Laboratories, Inc., a New Jersey corporation located in South Hackensack, New Jersey. The surviving corporation in the Merger operates under the name of Madis Botanicals, Inc. ("Madis") and is owned 80% by the Company and 20% by the former shareholders of Madis. In addition, the Company issued to the former Madis shareholders options to acquire 250,000 shares of the Company's common stock at its approximate book value of $2.10 per share. Madis, a manufacturer of botanical and medicinal extracts, had sales of approximately $6.0 million and income before reorganization items and income taxes of $731,000 in 1994 compared to sales of $5.2 million and income before reorganization items and income taxes of $594,000 in 1993. The Merger was effected in connection with a Plan of Reorganization (the "Plan") filed by Madis in Chapter 11 proceedings under the Federal Bankruptcy Law. Under the terms of the Merger, the Company financed the Plan which provided for the payment to the creditors of $3.4 million, of which approximately $2.3 million was advanced by the Company and approximately $900,000 was paid by Madis from funds on hand. The balance of the predecessor corporation's indebtedness was assumed by the surviving corporation and will be paid as due from working capital or by the Company in the event of any deficiency. Two principal shareholders of Madis, who were also executive officers, received employment agreements under which one will serve as chairman emeritus of the surviving corporation for a period of three years at an annual salary of $100,000 and the other will serve as president for a period of four years at an annual salary of $150,000. The premises occupied by the surviving corporation are leased from the former Madis shareholders at an annual rent of $240,000, net, plus 1% of gross revenues up to an additional $200,000 per annum. The Company believes the rental represents the fair market value. PROFORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION Proforma consolidated condensed financial information is included in Note 3 of Notes to Consolidated Financial Statements. The proforma information reflects the disposition of NorthCorp and the Washington D.C. office of the Company (the "Disposition") had the Disposition taken place on January 1, 1994. The results of operations also include the operations of Madis as if the acquisition of Madis had taken place on the same date. The proforma financial information is not intended to reflect results of operations which would have actually resulted had these transactions been effected on the dates indicated. Moreover, this proforma financial data is not intended to be indicative of results of operations which may be attained in the future. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1995, the Company had cash and cash equivalents of $9.1 million. Cash equivalents of $8.8 million consisted of U.S. Treasury bills with a maturity of less than three months and yields ranging between 5.53% and 5.99%. The Company also had U.S. Treasury securities of $1.9 million with maturities in August 1995 with a weighted average yield of 6.43%, and trading securities with a current market value of approximately $.8 million at March 31, 1995. The Company had net working capital of $12.0 million and had no funded debt. The management of the Company believes that the Company's financial resources and anticipated cash flows will be sufficient for future operations and possible acquisitions of other operating businesses. In connection with the acquisition of NorthCorp by the Company in 1992, two officers of NorthCorp were paid an aggregate of $1,125,000 by NorthCorp, which was used to acquire an aggregate of 750,000 shares of Company stock ("Officer Shares"). In addition, the Company advanced $180,000 to each of the officers to pay federal income taxes resulting from this cash payment. The advances bore interest at the minimum rate allowed under the Internal Revenue Code and were secured by their shares of the Company's common stock. The advances and accrued interest were repaid by the officers from the proceeds of a partial sale of the Officer Shares to the Company in February, 1994, in connection with their resignation as officers and directors of NorthCorp. The remaining shares were subsequently repurchased from the officers in 1994. Including the aforementioned shares, the Company repurchased 733,508 shares of its common stock at an aggregate cost of $1,183,000 in the first quarter of 1994 and 20,926 shares at an aggregate cost of $30,500 in the first quarter of 1995. All shares purchased in 1994 and 1995 have been returned to the status of authorized but unissued shares. Net cash of approximately $2.2 million was used in operations in the first quarter of 1995. Net purchases of marketable securities and U.S. Treasury securities with maturities greater than three months of $1.6 million and decreases in current liabilities of $.7 million, principally at Madis, accounted for this use of cash. In the first quarter of 1994, net cash of approximately $481,000 was used in operations. The principal reason for this use of cash was a receivable from broker at March 31, 1994 due to the sale of marketable securities of approximately $1 million. This receivable was converted into cash equivalents shortly after quarter end. RESULTS OF OPERATIONS The Company's operations resulted in net income of $70,000 in the first quarter of 1995, compared to $20,000 in the comparable period of 1994. The consolidated results of operations in 1994 reflect the equity in earnings of NorthCorp. Madis had sales of $1.6 million and $1.7 million in the first quarter of 1995 and 1994, respectively. The cost of goods sold was $1.0 million in 1995, compared to $1.1 million in 1994. As a consequence, gross margin was $.6 million in the first quarter of 1995 and 1994. Since the acquisition of Madis was accounted for as a purchase, the results of operations of Madis have been included in the consolidated financial statements since January 3, 1995, the date of the acquisition. Financial information of Madis from the first quarter of 1994 has been included only for comparison purposes. Interest, dividend and other income was $205,000 in the first quarter of 1995, an increase of $28,000, or 15.8%, from the $177,000 recorded in the comparable period in 1994. Interest income was $163,000 in 1995, an increase of $43,000, or 35.8%, from the $120,000 recorded in 1994. This increase was due to higher prevailing interest rates in 1995 compared to 1994. Dividend income was $42,000 in 1995 compared to $1,000 in 1994. The increase in dividends was due to a change in portfolio composition. All other income decreased from $56,000 in 1994 to zero in 1995. In 1994 all other income was revenue from the Washington D.C. office of the Company, which was disposed of on August 4, 1994. In the first quarter of 1995, the Company recorded net gains on marketable securities of $6,000, compared to net gains of $17,000 in 1994. Net gains on marketable securities in 1995 are composed of realized gains of $9,000 and unrealized losses of $3,000, compared to realized losses of $2,000 and unrealized gains of $19,000 in the first quarter of 1994. A charge to stockholders' equity of $742,000 was recorded in 1994 to reflect the decrease in market value of securities available for sale. The unrealized losses on securities held for sale was decreased by $119,000 in 1995 to reflect an increase in the market value of these securities. This net charge was related primarily to the Company's investment in a real estate investment trust ("REIT"). The Company had undertaken two proxy contests to protect its investment in the REIT. The decrease in net gains on marketable securities was due to the changes in portfolio composition and general market conditions. Personnel expenses were $401,000 in the first quarter of 1995, compared to $168,000 in the comparable quarter of 1994. This increase was due almost entirely to the acquisition of Madis. Professional fees were $86,000 in the first quarter of 1995, a decrease of $65,000 from the first quarter of 1994. Professional fees were incurred in the latter quarter in a proxy contest in connection with the Company's investment in the REIT. The professional fees in 1995 were incurred primarily in the operations of Madis. Other expenses also increased by $109,000 due principally to the acquisition of Madis. Included in this number is the amortization of goodwill of $39,000. PART II - OTHER INFORMATION ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS - None (b) REPORTS ON FORM 8-K A current report on Form 8-K was filed by the Company on January 18, 1995, in connection with the acquisition of Madis. Amendment No. 1 to this Form 8-K (Form 8-K/A) was filed on March 17, 1995. Amendment No. 1 contained the audited financial statements of Dr. Madis Laboratories, Inc., the predecessor to Madis, as of and for the two years ended December 31, 1994, as well as the required proforma consolidated condensed financial information required under Item 7 of Form 8-K. 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. AMERICAN HOLDINGS, INC. Dated: May 12, 1995 By: /S/ MARK L. KOSCINSKI ------------------------------ Mark L. Koscinski Vice President and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----