-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OudIBoL9UAPzNlMyFfXmZhgQfsXLfvxqW1eTWcejLhDLCc4tiIqNaphDfNXHLISw /MgvtCNG5Ex8FVPLXAWNqw== 0001042910-98-001261.txt : 19990101 0001042910-98-001261.hdr.sgml : 19990101 ACCESSION NUMBER: 0001042910-98-001261 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981231 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALDANE BERNARD ASSOCIATES INC CENTRAL INDEX KEY: 0000801557 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 592720407 STATE OF INCORPORATION: FL FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-18097 FILM NUMBER: 98779720 BUSINESS ADDRESS: STREET 1: 192 LEXINGTON AVENUE STREET 2: 15TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126793360 MAIL ADDRESS: STREET 1: 2600 N MILIARY TRAIL STREET 2: SUITE 270 CITY: BOCA RATON STATE: FL ZIP: 33431 FORMER COMPANY: FORMER CONFORMED NAME: QUANTUM VENTURES GROUP INC DATE OF NAME CHANGE: 19920703 10QSB/A 1 Securities and Exchange Commission Washington D.C. 20549 Form 10-QSB/A [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from___________________to_______________________ Commission file number 000-18097 --------------------------------------- BERNARD HALDANE ASSOCIATES, INC. -------------------------------- (Exact name of small business issuer as specified in its charter) Florida 59-2720407 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 192 Lexington Avenue, 15th Floor, New York, New York 10016 ---------------------------------------------------------- (address of principal executive offices) (212) 679-3360 -------------- (Issuer's telephone number) Not Applicable -------------- (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, 1998 --------------- Class Outstanding at August 31, 1998 ----- ------------------------------ Common Stock, $.00001 Par Value 1,148,865 shares BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES INDEX
PAGE ---- PART I. FINANCIAL INFORMATION Consolidated Balance Sheets as of August 31, 1998 (Unaudited) and May 31, 1998 3 - 4 Consolidated Statements of Income for the Three Months Ended August 31, 1998 and 1997 (Unaudited) 5 Consolidated Statements of Cash Flows for the Three Months Ended August 31, 1998 and 1997 (Unaudited) 6 Notes to Consolidated Financial Statements (Unaudited) as of August 31, 1998 7 - 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION AND SIGNATURES Signatures Exhibit
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
AUGUST 31, MAY 31, 1998 1998* --------------- --------------- (Restated) (Restated) (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 1,495,206 $ 1,693,220 Short-term investments 110,202 108,908 Accounts receivable - net of allowance for doubtful accounts of $223,000 and $180,000 respectively (includes receivables from related parties of $183,274 and $100,635, respectively) 475,805 315,436 Notes receivable - net of allowance for credit losses of $19,200 and $15,000, respectively, current portion 93,761 89,855 Due from related parties 29,498 8,887 Prepaid expenses and miscellaneous receivables 158,112 185,957 Prepaid income taxes 57,351 - Deferred income taxes 143,000 126,000 --------------- --------------- Total current assets 2,562,935 2,528,263 --------------- --------------- OTHER ASSETS: Licenses - net of accumulated amortization of $1,904,197 and $1,870,372, respectively 753,801 787,626 Equipment, fixtures and leasehold improvements - net of accumulated depreciation of $49,673 and $46,165, respectively 48,812 48,374 Security deposits and other 100,825 115,820 Notes receivable - net of allowances for credit losses of $115,300 and $119,500, respectively (includes receivables from related parties of $39,402 and $44,060, respectively) 422,270 448,115 --------------- --------------- Total other assets 1,325,708 1,399,935 --------------- --------------- TOTAL ASSETS $ 3,888,643 $ 3,928,198 =============== ===============
*The consolidated balance sheet at May 31, 1998 is derived from the audited financial statements of that date. -3- BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
AUGUST 31, MAY 31, 1998 1998* --------------- --------------- (Restated) (Restated) (Unaudited) CURRENT LIABILITIES: Current maturities of long-term debt $ 44,438 $ 42,437 Accounts payable 132,848 127,314 Accrued expenses and other current liabilities 41,022 32,135 Income taxes payable - 62,313 --------------- --------------- Total current liabilities 218,308 264,199 --------------- --------------- OTHER LIABILITIES: Long-term debt 587,116 599,135 Deferred rent payable 23,437 23,437 --------------- --------------- 610,553 622,572 Total liabilities 828,861 886,771 --------------- --------------- STOCKHOLDERS' EQUITY: Common stock ($.00001 par value; 950,000,000 shares authorized, 1,148,865 shares issued) 12 12 Additional paid-in capital 2,738,015 2,738,015 Retained earnings 828,193 809,838 --------------- --------------- 3,566,220 3,547,865 Less: Treasury stock (199,500 shares at cost) 506,438 506,438 --------------- --------------- Total stockholders' equity 3,059,782 3,041,427 --------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,888,643 $ 3,928,198 =============== ===============
*The consolidated balance sheet at May 31, 1998 is derived from the audited financial statements of that date. -4- BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 1997 -------------- -------------- REVENUES: Royalty income (includes royalty income from related parties of $66,890 and $73,997, respectively) $ 649,421 $ 703,535 Consulting income 178,405 2,100 Interest, dividends and other income 20,153 29,922 Sub-license income - 41,721 -------------- -------------- Total revenues 847,979 777,278 -------------- -------------- EXPENSES: Payroll and related costs 276,335 145,389 Other general and administrative 375,251 231,944 Amortization 33,825 49,385 Bad debt expense 43,000 40,000 Advertising 76,446 30,096 Interest 12,767 14,439 -------------- -------------- Total expenses 817,624 511,253 -------------- -------------- INCOME BEFORE PROVISION FOR INCOME TAXES 30,355 266,025 PROVISION FOR INCOME TAXES 12,000 110,000 -------------- -------------- NET INCOME $ 18,355 $ 156,025 ============== ============== EARNINGS PER SHARE: Basic $ .02 $ .16 ============== ============== Diluted $ .02 $ .15 ============== ==============
-5- BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 1997 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 18,355 $ 156,025 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Expenses (income) not requiring the use of cash: Provision for losses on accounts receivable 43,000 40,000 Depreciation 3,508 3,918 Amortization of licenses 33,825 49,385 Interest expense - imputed 12,767 10,440 Interest income - imputed (1,736) (5,038) Deferred income taxes (17,000) (17,000) Changes in assets and liabilities: Accounts receivable (203,369) (42,167) Prepaid expenses and miscellaneous receivables 27,845 (6,439) Prepaid income taxes (57,351) - Accounts payable and other current liabilities 14,421 (74,595) Income taxes payable (62,313) (54,077) -------------- -------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (188,048) 60,452 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short-term investments (1,294) (600) Decrease in due from related parties (20,611) (41,543) Acquisition of fixed assets (3,946) (4,713) Addition to notes receivable - (65,472) Payments of notes receivable 23,675 41,323 Security deposits 14,995 - -------------- -------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 12,819 (71,005) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt (22,785) (14,700) -------------- -------------- NET CASH USED IN FINANCING ACTIVITIES (22,785) (14,700) -------------- -------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (198,014) (25,253) CASH AND CASH EQUIVALENTS - beginning 1,693,220 1,698,099 -------------- -------------- CASH AND CASH EQUIVALENTS - ending $ 1,495,206 $ 1,672,846 ============== ============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 12,767 $ 14,439 Income taxes 113,806 176,500
-6- BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1998 (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, 1998 and the results of operations and cash flows for the three months ended August 31, 1998. The results of operations for the three month period ended August 31, 1998 are not necessarily indicative of the results of operations for the year ended May 31, 1999. NOTE 2 Certain reclassifications have been made to the consolidated financial statements for the three months ended August 31, 1997 in order to conform with the current year's presentation. NOTE 3 The Company utilizes Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," to record income taxes. The components of the deferred tax asset are the allowances for doubtful accounts and credit losses. NOTE 4 In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share" which is effective for periods ending after December 15, 1997. The Companies adopted this new standard in the year ended May 31, 1998. Prior period earnings per share were restated to conform to this new pronouncement. -7- BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1998 (UNAUDITED) NOTE 4 (CONTINUED) Earnings per share for the three months ended Ausust 31, were calculated using the treasury stock method as follows:
1998 1997 ------------ ------------ Numerator Income from continuing operations $ 18,355 $ 156,025 Less: Preferred dividends - - ------------ ------------ Income available to common stockholders used in basic EPS 18,355 156,025 Impact of potential common shares - - ------------ ------------ Income available to common stockholders after assumed conversion of dilutive securities $ 18,355 $ 156,025 ============ ============ Denominator Weighted average number of common shares outstanding used in basic EPS 949,365 949,365 Impact of potential common shares: Stock options 61,954 88,280 ------------ ------------ Weighted number of common shares and dilutive potential common shares used in dilutive EPS 1,011,319 1,037,645 ============ ============ Basic EPS $ .02 $ .16 ============ ============ Diluted EPS $ .02 $ .15 ============ ============
NOTE 5 In February 1998, the Companies filed an application to withdraw its common shares from the public market. Such application is under review by the Securities and Exchange Commission. Certain of the Companies' stockholders offered to purchase the shares of common stock owned by the public investors at $3 per share, which represents the valuation made by a financial advisory company in its fairness opinion. The number of shares to be purchased is 217,695 shares or $653,085. NOTE 6 Additional paid-in capital and retained earnings at May 31, 1997 have been adjusted to record the cumulative equity of minority interests in losses for the period 1989 through February 1995, not previously recorded. On February 2, 1995 such interests were purchased through the issuance of 75,000 shares of common stock. The error had no effect on net income for years subsequent to May 31, 1995. -8- BERNARD HALDANE ASSOCIATES, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION THREE MONTHS ENDED AUGUST 31, 1998 VS. THREE MONTHS ENDED AUGUST 31, 1997 Royalty payments from licensee offices for the three month period ended August 31, 1998 totaled $649,421 as compared to $703,535 during the same period in the prior fiscal year. This represents a decrease of nearly 8% in royalty revenue despite an increase in the number of licensee offices. During this same period the Company recognized $178,405 in consulting income from the operation of several company owned Haldane offices which were acquired when the licensor terminated the license of a prior licensee. During the same period in the prior calendar quarter the Company recognized $2,100 in consulting revenues. (Company owned offices report revenues as consulting income and do not pay royalties.) The Company did not recognize any revenues from the sale of territorial licenses as compared to $41,721 during the three month period ended August 31, 1997. Additional revenues for the quarter ended August 31, 1998 include $20,153 in interest and dividend income as compared to $29,922 during the three month period ended August 31, 1997. This decrease in interest income is directly attributable to the Company's declining cash position. Total revenues for the three months ended August 31, 1998 as compared to August 31, 1997 were $847,979 as compared to $777,278. This 9% increase in revenues is directly attributable to the fact that the Company was required to operate several Haldane offices and does not reflect an increase in profitability. In fact, net income has declined significantly due to an increase in expenses from $511,253 to $817,624, an increase of approximately 60%. Income before taxes decreased from $266,025 to $ 30,355; a decline of more than 76%. Payroll and general and administrative costs increased from $145,389 to $276,335, an -9- increase of 90%; while general and administrative expenses increased from $231,944 to $375,251, an increase of 62%. These increased costs were primarily attributable to the costs incurred by the company in assuming certain preexisting obligations of the terminated licensed offices and additional fees and costs incurred in operating these terminated licensee offices as company owned Haldane offices. Net income after taxes for the three months ended August 31, 1998 totaled $18,355 as compared to $156,025 for the three months ended August 31, 1997. Income per share of common stock declined from $.16 to $.02. With the anticipated sale of all company owned offices to be completed in the Company's second quarter, management anticipates a significant reduction in operating expenses and anticipates improved operating results. LIQUIDITY AND CAPITAL RESOURCES AUGUST 31, 1998 AS COMPARED TO MAY 31, 1998 Total current assets as of August 31, 1998 were $2,562,935 as compared to $2,528,263, an increase of 1%. Cash and cash equivalents declined from $1,693,220 to $1,495,205, while short term investments increased from $108,908 to $110,202 and accounts receivable increased nearly 50%, from $315,436 to $475,805. The Company reported the value of its license, equipment, and other non-current assets of $1,325,708 as compared to $1,399,935 and total assets of $3,888,643 as compared to $3,928,198 a decline of approximately 1%. Total current liabilities declined from $264,199 to $218,308 and total liabilities declined from $886,771 to $828,861, a decrease of approximately 7%. The Company believes that its current cash position and working capital are sufficient to meet its operational requirements for the coming year. Royalty revenues from licensee offices and the sale of territorial rights to the Bernard Haldnae offices are expected to be sufficient to meet the Company's ongoing operational expenses and a proposed -10- purchase at a cost of $3.00 per share of the Company's common stock owned by non-management and non-affiliated shareholders. Management does not anticipate the need for any significant capital expenditures in the coming year which would require third party financing. Nor does the Company believe that there is any material risk of any sublicensee seeking rescission pursuant to any technical violations of state franchise statutes. YEAR 2000 COMPLIANCE The Company's systems are Year 2000 ("Y2K") compliant. The cost of such compliance by the Company was less than $10,000. The Y2K compliance issue is the result of com.puter programs being written using two digits rather than four to define the applicable year. Computer programs that have time sensitive software may recognize a date using "00" as the year 1900 rather than 2000. This could result in a systems failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Company does not know if it s licensees are Y2K compliant but believe that there will be no material adverse impact upon the Company if an individual licensee's office is not Y2K compliant. -11- BERNARD HALDANE ASSOCIATES, INC. SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 or 15(d) OF THE SECURITIES ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THIS REGISTRANT IN THE CAPACITIES INDICATED. BERNARD HALDANE ASSOCIATES, INC. (Registrant) /s/ Jerold Weinger December 31, 1998 ___________________________ DATED:__________________ JEROLD WEINGER, president/ treasurer/director /S/ Jeffrey G. Klein December 31, 1998 ___________________________ DATED:___________________ Jeffrey G. Klein, secretary/ director -12- EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S UNAUDITED BALANCE SHEET AS OF AUGUST 31, 1998 AND UNAUDITED STATEMENT OF OPERATIONS FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 3-MOS MAY-31-1999 JUN-01-1998 AUG-31-1998 1,495,206 110,202 811,766 242,200 0 2,562,935 98,485 49,673 3,888,643 218,308 0 0 0 12 3,059,770 3,888,643 847,979 847,979 0 0 804,857 0 12,767 30,355 12,000 18,355 0 0 0 18,355 .02 .02
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