Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-18097
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BERNARD HALDANE ASSOCIATES, INC.
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(Exact name of small business issuer as specified in its charter)
Florida 59-2720407
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
192 Lexington Avenue, 15th Floor, New York, New York 10016
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(address of principal executive offices)
(212) 679-3360
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(Issuer's telephone number)
2600 North Military Trail, Suite 270, Boca Raton, Florida 33431
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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 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: November 30, 1996
Class Outstanding at November 30, 1996
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Common Stock, $.00001 Par Value 1,148,865 shares
Page 1 of 11
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
as of November 30, 1996 (Unaudited)
and May 31, 1996 3 - 4
Consolidated Statements of Income
(Unaudited) for the Three and Six Months Ended
November 30, 1996 and 1995 5
Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended
November 30, 1996 and 1995 6 - 7
Notes to Consolidated Financial Statements
as of November 30, 1996 8 - 9
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II. OTHER INFORMATION AND SIGNATURES
Signatures 11
-2-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
NOVEMBER 30, MAY 31,
1996 1996*
----------- ----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $1,561,811 $1,559,116
Short-term investments 54,286 53,146
Accounts receivable - net of allowance for doubtful
accounts of $230,000 and $170,000, respectively 346,349 329,146
Notes receivable 312,048 48,478
Due from related parties 60,791 28,039
Prepaid expenses and miscellaneous receivables 15,380 9,734
Deferred taxes 107,000 83,000
Net assets of discontinued operations -- 36,635
---------- ----------
Total current assets 2,457,665 2,147,294
---------- ----------
OTHER ASSETS:
Licenses - net of accumulated amortization of
$1,559,147 and $1,460,376, respectively 963,381 1,062,152
Equipment, fixtures and leasehold improvements - net of
accumulated depreciation of $21,123 and $19,549, respectively 24,258 20,031
Security deposits and other 60,460 60,460
Notes receivable 275,129 134,893
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Total other assets 1,323,228 1,277,536
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TOTAL ASSETS $3,780,893 $3,424,830
========== ==========
*The balance sheet at May 31, 1996 is derived from the audited financial statements of that date.
-3-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
NOVEMBER 30, MAY 31,
1996 1996*
----------- ----------
(Unaudited)
CURRENT LIABILITIES:
Cash overdraft $ -- $ 18,044
Current maturities of long-term debt 240,598 245,956
Accounts payable 63,140 56,968
Accrued expenses and other current liabilities 96,406 12,778
Income taxes payable 100,405 61,905
Net liabilities of discontinued operations 1,328 --
---------- ----------
Total current liabilities 501,877 395,651
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OTHER LIABILITIES:
Long-term debt 519,959 541,080
Deferred rent payable 14,719 14,719
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534,678 555,799
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Total liabilities 1,036,555 951,450
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STOCKHOLDERS' EQUITY:
Common stock ($.00001 par value; 950,000,000
shares authorized, 1,148,865 shares issued
and outstanding) 12 12
Additional paid-in capital 2,761,727 2,761,727
Retained earnings 489,037 162,964
---------- ----------
3,250,776 2,924,703
Less: Treasury stock (199,500 and 179,500 shares at cost) 506,438 451,323
---------- ----------
Total stockholders' equity 2,744,338 2,473,380
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,780,893 $3,424,830
========== ==========
*The balance sheet at May 31, 1996 is derived from the audited financial statements of
that date.
-4-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(Restated) (Restated)
REVENUES:
Royalty income $ 1,197,333 $ 1,107,433 $ 615,158 $ 546,813
Interest, dividends and other income 50,492 73,550 26,404 50,233
Sub-license income 89,712 -- 45,994 --
----------- ----------- ----------- -----------
Total revenues 1,337,537 1,180,983 687,556 597,046
----------- ----------- ----------- -----------
EXPENSES:
Payroll and related costs 188,010 170,555 103,200 85,782
Other general and administrative 507,127 442,586 271,599 232,720
Amortization 98,771 98,771 49,386 49,386
Interest 30,519 34,024 15,260 17,012
----------- ----------- ----------- -----------
Total expenses 824,427 745,936 439,445 384,900
----------- ----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 513,110 435,047 248,111 212,146
PROVISION FOR INCOME TAXES 205,000 156,000 99,000 71,000
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 308,110 279,047 149,111 141,146
DISCONTINUED OPERATIONS:
Income (loss) from operations of travel agency to
be disposed of (net of income taxes of $12,000,
$-0-, $12,000 and $-0-, respectively) 17,963 (45,491) 28,204 (35,360)
----------- ----------- ----------- -----------
NET INCOME $ 326,073 $ 233,556 $ 177,315 $ 105,786
=========== =========== =========== ===========
NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Continuing operations $ .30 $ .23 $ .15 $ .12
Discontinued operations .02 (.04) .03 (.03)
----------- ----------- ----------- -----------
$ .32 $ .19 $ .18 $ .09
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES 1,014,035 1,245,092 1,005,134 1,245,092
=========== =========== =========== ===========
DIVIDENDS NONE NONE NONE NONE
==== ==== ==== ====
-5-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
NOVEMBER 30,
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1996 1995
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(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 326,073 $ 233,556
(Income) loss from discontinued operations (17,963) 45,491
Adjustments to reconcile net income to net cash
provided by operating activities:
Expenses (income) not requiring the use of cash:
Provision for losses on accounts and notes receivable 80,000 --
Depreciation 1,574 1,300
Amortization of licenses 98,771 98,771
Interest expense - imputed 22,521 26,024
Interest income - imputed (1,350) (3,550)
Deferred income taxes (24,000) 119,000
Changes in assets and liabilities:
Accounts receivable (77,203) (33,205)
Prepaid expenses (5,646) (16,357)
Cash overdraft (18,044) --
Accounts payable and other current liabilities 89,800 13,085
Income taxes payable 38,500 (61,384)
Net liabilities of discontinued operations - net (2,231) (95)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 510,802 422,636
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (1,140) (351,511)
Redemption of short-term investments -- 450,104
Increase in due from related parties (32,752) (25,075)
Acquisition of fixed assets (5,801) (25,461)
Additions to notes receivable (533,507) (20,000)
Payments of notes receivable 111,051 28,062
Net assets (liabilities) of discontinued operations - net 2,200 (500)
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (459,949) 55,619
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of debt (49,000) (98,000)
Repurchase of common stock (55,115) --
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NET CASH USED IN FINANCING ACTIVITIES (104,115) (98,000)
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NET CHANGE IN CASH AND CASH EQUIVALENTS (53,262) 380,255
CASH AND CASH EQUIVALENTS - beginning 1,615,073 835,008
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CASH AND CASH EQUIVALENTS - ending (includes cash
of discontinued operations of $-0- and $77,677, respectively) $ 1,561,811 $ 1,215,263
=========== ===========
-6-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
SIX MONTHS ENDED
NOVEMBER 30,
--------------------------
1996 1995
----------- -----------
(Restated)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 30,519 $ 35,357
Income taxes 210,500 108,200
-7-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOVEMBER 30, 1996
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 November 30, 1996
and the results of operations and cash flows for the six months ended
November 30, 1996. The results of operations for the six month period ended
November 30, 1996 are not necessarily indicative of the results of operations
for the year ending May 31, 1997.
NOTE 2
The Company utilizes Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," to record income taxes.
The major temporary difference which gives rise to deferred taxes is the
allowance for doubtful accounts.
NOTE 3
Net earnings per share were calculated using the modified treasury stock
method as follows:
Six Months Ended Three Months Ended
November 30, November 30,
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1996 1995 1996 1995
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(Restated) (Restated)
Net income $ 326,073 $ 233,556 $ 177,315 $ 105,786
Incremental income -- 4,252 -- 2,126
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Total income $ 326,073 $ 237,808 $ 177,315 $ 107,912
========== ========== ========== ==========
Weighted average shares outstanding 952,222 1,148,865 949,365 1,148,865
Incremental shares 61,813 96,227 55,769 96,227
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Total shares 1,014,035 1,245,092 1,005,134 1,245,092
========== ========== ========== ==========
Net earnings per share $ .32 $ .19 $ .18 $ .09
========== ========== ========== ==========
-8-
BERNARD HALDANE ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOVEMBER 30, 1996
NOTE 4
On May 31, 1996, the Company adopted a plan to terminate its travel agency
operations. The operations were disposed of in December 1996. The operating
results of the travel agency segment for the six and three months ended
November 30, 1996 are shown separately in the accompanying consolidated
income statement. The 1995 consolidated statements of income and cash flows
have been restated to segregate the operating results of the travel agency
segment. Revenues of the travel agency segment, net of direct expenses,
amounted to $67,027 and $64,189 for the six and three months ended November
30, 1996, respectively, and $(10,491) and $(20,354) for the six and three
months ended November 30, 1995, respectively, and are not included in
consolidated revenues.
-9-
BERNARD HALDANE ASSOCIATES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1996
vs.
SIX MONTHS ENDED NOVEMBER 30, 1995
Royalty revenues from licensee offices for the six and three month periods
ended November 30, 1996 as compared to November 30, 1995 increased from $546,813
and $1,107,433 to $615,158 and $1,197,333. An increase of 8% and 12%
respectively. Sales of territorial licenses totalled $89,712 and $45,994 for the
six and three month period in 1996. There were no sales of territorial licensee
offices during the comparable periods in the prior year. Additional revenues for
the quarter ended November 30, 1996 include interest income of $50,292 and
$26,404.
Total expenses for the six and three month periods ended November 30, 1996
were $824,427 and $439,445 as compared to $745,936 and $384,900 for the six and
three month period ended November 30, 1995. The increase in expenses is
attributable to additional costs and personnel required to oversee the Haldane
operations and the costs incurred in launching First Career, a career consulting
program developed by First Career Corp., to be marketed to college graduates.
The increase in expenses did not adversely affect the Company's net income as
net income increased from $233,556 to $326,073 and from $105,786 to $177,315 for
the six and three month periods ended November 30, 1996 and November 30, 1995.
Net income per share of common stock increased from $.19 to $.32 and from $.09
to $.18; an increase of 68% and 100% respectively.
LIQUIDITY AND CAPITAL RESOURCES
NOVEMBER 30, 1996 AS COMPARED TO MAY 31, 1996
Total current assets as of November 30, 1996 were $2,457,665 as compared
to $2,147,294 as of May 31, 1996. Total assets increased from $3,424,830 to
$3,780,893. This increase of more than 14% is due primarily to an increase in
notes receivable from $48,478 to $312,048. This increase is due primarily to two
transactions whereby the company agreed to finance the acquisition costs of two
licensee/franchisee offices to an existing licensee.
Total assets increased from $3,424,830 to $3,780,893, an increase of more
than 10%. Approximately $140,000 of this increase is attributable to an increase
in notes receivable from $134,893 to $275,129. This increase is attributable to
the long term portion of the notes receivable from the licensee for the
acquisition of two existing Haldane offices in Arlington and Richmond, Virginia.
10
The increase in total current liabilities from $951,450 to $1,036,555 is
due primarily to an increase in the company's liability for federal and state
income tax.
The Company has redeemed from shareholders an additional 20,000 sabres of
its common stock and as of November 30, 1996 a total of 199,500 shares of common
stock are being held as treasury shares.
Management believes that the Company has sufficient revenues to finance
ongoing business activities. The Company anticipates the opening of additional
sub-licensee or franchise offices.
Through its wholly owned subsidiary, First Career Corp., the Company
intends to focus on developing a licensee/franchisee system of career consulting
for college graduates. Initially, it is anticipated that current Bernard Haldane
licensees will participate in the program. However, no assurances can be given
that the Company will be successful in developing this program.
11
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
Bernard Haldane Associates, Inc.
BY:/s/ Jerold Weinger
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Jerold Weinger
President/ Secretary
DATED: January 15, 1997
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BY:/s/ Jeffrey G. Klein
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Jeffrey G. Klein
Secretary
DATED: January 15, 1997
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12