SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For Quarter Ended September 30, 1997 Commission File No. 1-8249
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LINCORP HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
245 Park Avenue
New York, New York 10167
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(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number,
Including Area Code: (212) 867-3800
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has 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 registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
-- --
Indicate the number of shares outstanding on each of the Issuer's classes of
common stock, as of the latest practicable date.
1,730,559 Shares of Common Stock Outstanding at November 3, 1997
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by the registrant from the books of Lincorp Holdings, Inc. without audit (except
for the Balance Sheet as of December 31, 1996), pursuant to the rules and
regulations of the Securities and Exchange Commission. This information, which
is subject to year-end adjustments, reflects all adjustments which are, in the
opinion of management, necessary to present fairly the results for the interim
periods. Although the registrant believes that the disclosures are adequate to
make the information presented not misleading, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto included in the registrant's latest Annual Report on Form
10-K.
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LINCORP HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
Cash ...................................................... $ 2 $ 210
Investment in real estate assets, net ..................... 900 23,608
Other assets .............................................. -- 160
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$ 902 $ 23,978
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Debt on real estate, including accrued interest ...... $ -- $ 16,812
Other borrowed funds, including accrued interest ..... 167,149 171,045
Other liabilities .................................... 3,925 3,776
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171,074 191,633
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Commitments and contingent liabilities
Stockholders' deficit:
Preferred stock, Series A;
200 shares authorized;
no shares issued and outstanding ................... -- --
Preferred stock, $.01 par value;
10,000 shares authorized;
no shares issued and outstanding ................... -- --
Common stock, $.01 par value;
1,990,000 shares authorized;
1,730,559 shares issued and outstanding ............ 17 17
Capital contributed in excess of par value ............ 153,638 153,638
Accumulated deficit ................................... (327,827) (321,310)
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(170,172) (167,655)
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$ 902 $ 23,978
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
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LINCORP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Unaudited
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
Income:
Rental income ................................................ $ -- $ 383 $ 357 $ 882
Equity in operating results of real estate joint ventures .... -- 50 60 137
Interest income .............................................. -- -- -- 23
Gain on sale of subsidiary ................................... -- -- 146 --
Gain on sale of real estate assets ........................... 6,631 1,033 6,631 1,033
Other income ................................................. -- 79 8 183
--------- --------- --------- ---------
6,631 1,545 7,202 2,258
--------- --------- --------- ---------
Expenses:
Interest Expense ............................................. 3,025 3,595 9,582 10,427
General and administrative expense ........................... 38 43 123 130
--------- --------- --------- ---------
Total expenses ........................................ 3,063 3,638 9,705 10,557
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Income (loss) before income taxes ............................... $ 3,568 $ (2,093) $ (2,503) $ (8,299)
Provision for income taxes ...................................... 8 4 14 17
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Net income (income)(loss)........................................ $ 3,560 $ (2,097) $ (2,517) $ (8,316)
========= ========= ========= =========
Income (loss) per share of Common Stock outstanding ............. $ 2.06 $ (1.21) $ (1.45) $ (4.80)
========= ========= ========= =========
Weighted average shares of Common Stock outstanding ............. 1,731 1,731 1,731 1,731
========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
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LINCORP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
OPERATING ACTIVITIES
Net income (loss) ....................................... $ 3,560 $ (2,097) $ (2,517) $ (8,316)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Gain on sale of subsidiary ..................... -- -- (146) --
Gain on sale of real estate assets ............. (6,631) (1,033) (6,631) (1,033)
Equity in operating results of real estate
joint ventures ............................. -- (50) (60) (137)
Decrease (increase) in other assets ............ 6 (87) 72 (86)
Increase in accrued interest payable ........... 3,026 3,147 9,008 9,997
Increase (decrease) in other liabilities ....... 19 (7) 149 (419)
-------- -------- -------- --------
Net cash provided by (used in) operating activities ..... (20) (127) (125) 6
-------- -------- -------- --------
INVESTING ACTIVITIES
Proceeds from sale of subsidiary ........................ -- -- 50 --
Proceeds from sale of real estate assets ................ -- 6,649 -- 6,649
Investment in real estate assets ........................ -- (93) (133) (422)
-------- -------- -------- --------
Net cash provided by (used in) investing activities ..... -- 6,556 (83) 6,227
-------- -------- -------- --------
FINANCING ACTIVITIES
Repayment of borrowed funds ............................. -- (6,649) -- (6,649)
-------- -------- -------- --------
Net decrease in cash .................................... (20) (220) (208) (416)
Cash, beginning of period ............................... 22 464 210 660
-------- -------- -------- --------
Cash, end of period ..................................... $ 2 $ 244 $ 2 $ 244
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
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LINCORP HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest ....................................... $ -- $ 448 $ 574 $ 448
Income taxes ................................... $ 8 $ 4 $ 14 $ 17
Non cash investing and financing activities:
Assets sold .................................... $ 9,875 $ -- $ 22,989 $ --
Liabilities sold ............................... $ -- $ -- $ 13,210 $ --
Debt repurchased ............................... $ 16,506 $ -- $ 16,506 $ --
The accompanying notes are an integral part of these consolidated financial
statements.
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NOTE 1 - LIQUIDITY AND GOING CONCERN
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At September 30, 1997, the Company had approximately $167.1 million of
principal and accrued interest (the"Indebtedness") outstanding under its various
debt obligations. The Company's parent company, Unicorp Energy Corporation
("UEC") holds $152.3 million of the Indebtedness. The Company is in payment
default under each of the debt obligations comprising the Indebtedness. The
Indebtedness is secured by a senior security interest in all of the Company's
assets.
The Company's sources of operating funds during the nine months ended
September 30, 1997, and to date have been primarily from it's previously
existing cash balances. The assets being utilized to fund the Company's
operations are part of collateral package securing the above described credit
facilities. Unless the Company's lenders are prepared to continue to defer in
realizing on the pledged collateral and allow the Company to utilize the
proceeds from such collateral to fund its ongoing operations, the Company will
be unable to continue as a going concern.
NOTE 2 - SALE OF REAL ESTATE ASSET
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As of September 30, 1997, the Company sold its interest in the Colorado
State Bank Building (the "CSBB") to one of the other owners of CSBB (the
"Purchaser") in exchange for $16.2 million of the Company's outstanding debt
($12.6 million in principal and $3.9 million in accrued interest) which the
Purchaser acquired from UBC.
As of the date of sale, the Company's recorded net book value for the
CSBB was $9.9 million and therefore the gain on the sale was approximately $6.6
million.
NOTE 3 - SALE OF SUBSIDIARY
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On April 30, 1997, the Company sold its wholly-owned subsidiary, DB
Holdings, Inc. ("DBH") for $50,000. At the time of sale, DBH's liabilites
exceeded its assets by approximately $96,000 resulting in a gain on the sale of
approximately $146,000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND GOING CONCERN
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At September30, 1997, the Company had approximately $167.1 million of
principal and accrued interest (the"Indebtedness") outstanding under its various
debt obligations. The Company's parent company, Unicorp Energy Corporation
("UEC") holds $152.3 million of the Indebtedness. The Company is in payment
default under each of the debt obligations comprising the Indebtedness. The
Indebtedness is secured by a senior security interest in all of the Company's
assets.
The Company's sources of operating funds during the nine months ended
September 30, 1997, and to date have been primarily from it's previously
existing cash balances. The assets being utilized to fund the Company's
operations are part of collateral package securing the above described credit
facilities. Unless the Company's lenders are prepared to continue to defer in
realizing on the pledged collateral and allow the Company to utilize the
proceeds from such collateral to fund its ongoing operations, the Company will
be unable to continue as a going concern.
RESULTS OF OPERATIONS
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Nine Months Ended September 30, 1997 Compared to the Nine Month Ended September
30, 1996
The Company's net loss for the nine months ended September 30, 1997 and
September 30, 1996, was $2.5 million and $8.3 million, respectively. Excluding
the gains on sale of real estate of $6.6 million in 1997 and $1.0 million in
1996, the comparative net losses for 1997 and 1996 were $9.1 million and $9.3
million, respectively.
FINANCIAL POSITION
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Material Changes Since December 31, 1996
As of September 30, 1997, the Company sold its interest in the Colorado
State Bank Building (the "CSBB") in exchange for $16.5 million of the Company's
outstanding debt ($12.6 million principal and $3.9 million in accrued interest).
The CSBB had a recorded net book value of $9.9 million at the date of sale.
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On April 30, 1997, the Company sold its wholly-owned subsidiary, DB
Holdings, Inc., thus reducing its consolidated assets and liabilities by $13.1
million and $13.2 million, respectively.
There were no other significant changes in the Company's financial
position since December 31, 1996.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments with respect to litigation.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) At September 30, 1997, the Company had approximately $167.1 million
of principal and accrued interest (the"Indebtedness") outstanding
under its various debt obligations. The Company's parent company,
Unicorp Energy Corporation holds $152.3 million of the Indebtedness.
The Company is in payment default under each of the debt obligations
comprising the Indebtedness. The Indebtedness is secured by a senior
security interest in all of the Company's assets.
(b) Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable.
(b) None filed.
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SIGNATURE
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.
LINCORP HOLDINGS, INC.
Dated: November 13, 1997 /s/ Jack R. Sauer
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President
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