1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (b)
of the Securities Exchange Act of 1934
For Quarter Ended: March 31, 2000
Commission File Number: 1-8292
HELM CAPITAL GROUP, INC.
(Exact name of registrant as specified in character)
Delaware 59-0786066
State or other jurisdiction of IRS Employer
Incorporation or organization Identification No.
537 Steamboat Road
Greenwich, Connecticut 06830
(Address of principal executive offices)
203-629-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrants (1) has filed all reports
required to be filed by section 13 of 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 / /
As of May 12, 2000, there were 3,779,000 shares of the Company's common stock,
par value $.01 per share, outstanding.
Page 1 of 11
2
PART I - FINANCIAL INFORMATION
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(IN THOUSANDS)
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 21
Participation in receivables of affiliate 1,896
Prepaid expenses 15
Due from related party 50
Other 23
-----
TOTAL CURRENT ASSETS 2,005
INVESTMENTS IN AFFILIATES 1,237
DEFERRED CHARGES AND OTHER ASSETS 26
-----
3,268
=====
Page 2 of 11
3
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(IN THOUSANDS)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
CURRENT LIABILITIES:
Accrued expenses $ 389
Advances due to affiliates 59
Notes due to related parties 120
Subordinated debentures due currently 25
Loan payable to bank 367
--------
TOTAL CURRENT LIABILITIES 960
SUBORDINATED DEBENTURES 1,450
SUBORDINATED DEBENTURES AND
ACCRUED INTEREST DUE TO OFFICERS 1,329
ACCRUED EXPENSES PAYABLE IN
COMMON STOCK 575
OTHER LIABILITIES 38
--------
TOTAL LIABILITIES 4,352
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' CAPITAL (DEFICIT):
Preferred stock, $.01 par value:
shares authorized 5,000; issued and --
outstanding 29 shares
Common stock, $.01 par value: 38
shares authorized 15,000; issued 3,779 20,723
shares (21,816)
--------
Additional paid-in capital (1,055)
Deficit (29)
--------
Less: 6 shares of treasury stock, at cost (1,084)
--------
TOTAL SHAREHOLDERS' CAPITAL (DEFICIT) $ 3,268
========
Page 3 of 11
4
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
2000 1999
------- -------
REVENUES $ 90 $ 58
------- -------
COSTS, EXPENSES, AND OTHER:
Selling, general and administrative
expenses 54 55
Equity in net (earnings) losses of
affiliates 14 110
Interest and debt expense 67 73
------- -------
TOTAL COSTS, EXPENSES AND OTHER 135 238
------- -------
NET LOSS (45) (180)
======= =======
Earnings Per Share - Basic and Diluted $ (.02) $ (.05)
======= =======
Average common shares outstanding 3,779 3,779
======= =======
Page 4 of 11
5
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
2000 1999
----- ---
Net cash provided by (used by) operating activities $ (16) $ 4
----- ---
Cash flows from investing activities-loan repaid 292 --
----- ---
Cash flows from financing activities:
Payments on notes to related parties (250) --
Payment on loan payable to bank (33) --
----- ---
(283) --
----- ---
NET INCREASE (DECREASE) IN CASH (7) 4
CASH BEGINNING OF PERIOD 28 15
----- ---
CASH END OF PERIOD $ 21 $19
===== ===
Supplemental disclosure of cash flow information:
Cash paid for taxes -- --
Cash paid for interest $ 10 $12
Page 5 of 11
6
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
Note 1. Management believes the accompanying unaudited condensed
consolidated financial statements of Helm Capital Group, Inc. and
subsidiaries (the Company) include all adjustments (consisting of only
normal recurring accruals) required to present fairly the financial
statements for the periods presented. The results of operations for any
interim period are not necessarily indicative of the annual results of
operations.
Note 2 - Earnings (Loss) Per Share
The basic earnings (loss) per common share is computed by dividing the
net income (loss) available to common shareholders by the weighted
average number of common shares outstanding.
Diluted earnings (loss) per common share is computed by dividing the
net income (loss) available to common shareholders, adjusted on an as
if converted basis, by the weighted average number of common shares
outstanding plus potential dilutive securities.
The following illustrates income (loss) utilized in the computation of earnings
(loss) per share (in thousands):
Three Months Ended
March 31,
2000 1999
---- -----
Net (loss) $(45) $(180)
Dividends on preferred stock (30) (30)
---- -----
Numerator for basic and diluted (loss)
from continuing operations $(75) $(210)
==== =====
Page 6 of 11
7
For the three months ended March 31, 2000 and 1999, certain securities
were not included in the calculation of diluted earnings because of their
antidilutive effect. Those securities are as follows (shares in thousands):
2000 1999
----- -----
Stock options 467 437
Stock warrants 299 299
Shares issuable on conversion of
preferred shares 1,585 1,585
Shares issuable on conversion of
subordinated debentures 753 753
Shares issuable on conversion of
promissory notes 300 300
----- -----
3,404 3,374
===== =====
Note 3. Summarized Financial Data (in thousands):
Intersystems, Inc. Three Months Ended
(15 % owned in 2000 and 1999) March 31,
2000 1999
------- -------
REVENUES $ 3,922 $ 3,383
------- -------
Operating expenses 2,705 2,274
Selling, general and administrative expenses 958 798
Interest expense (net) 352 418
------- -------
TOTAL COST AND EXPENSES 4,015 3490
------- -------
Income (loss) from continuing operations (93) (107)
Discontinued operation-Inter systems Nebraska -- (114)
Cumulative effect of change in
accounting principle -- (134)
------- -------
Net Income $ (93) $ (355)
======= =======
Page 7 of 11
8
Note 4. Stockholders (Deficit) (in thousands)
Common Stock Additional
Preferred Stock $.01 par value Paid
Shares Amount Shares Amount in Capital
------ ------ ------ ------ ----------
Balance
Jan. 1, 2000 29 $-- 3,779 $38 $20,723
Net Loss -- -- -- -- --
-- --- ----- --- -------
Balance
March 31, 2000 29 $-- 3,779 $38 $20,723
-- --- ----- --- -------
Retained
Earnings Treasury
(Deficit) Stock Total
--------- -------- -----
Balance
January 1, 2000 $(21,771) $(29) $(1,039)
Net loss (45) -- (45)
-------- ---- -------
Balance
March 31, 2000 $(21,816) $(29) $(1,084)
-------- ---- -------
Page 8 of 11
9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
The net loss of $45,000 for three months ended March 31, 2000
compared to a loss of $180,000 for the three months ended March 31, 1999. The
improvement was the result of $25,000 in seismic participation revenues
included in the 2000 period and a decrease of $96,000 in equity in losses of
affiliates. The 1999 period include $57,000 for equity losses in an affiliate
for which there is no remaining investment in 2000.
Impact of Inflation
Inflation has not had a significant impact on the Company's operations.
Liquidity and Capital Resources
Operating activities for the three months ended March 31, 2000 used
cash of $16,000. Collections on loans was $292,000 and $283,000 was used to
repay notes. Cash decreased by $7,000 for the period.
Future liquidity sources for the Company will consist of revenues
generated from its financial service activities, reduction in selling, general
and administrative expenses, reimbursement of general and administrative
expenses from affiliates, and sales of investment securities. On a longer term
basis, the Company may be required to seek additional liquidity through debt or
equity offerings.
Page 9 of 11
10
YEAR 2000 COMPLIANCE
During 1999, the Company completed its Year 2000 ("Y2K") compliance
project to prepare its computer systems, applications and software products for
the year 2000 at an insignificant cost. Subsequent to December 31, 1999, the
Company has not experienced any Y2K disruptions, either internally or from
suppliers or other outside sources that had an adverse impact on the Company's
operations or financial condition. The Company has no reason to believe that Y2K
failures will materially affect it in the future. However, since it may take
several additional months before it is known whether the Company or its
suppliers, vendors or customers may have undergone Y2K problems, no assurances
can be given that the Company will not experience losses or disruption due to
Y2K computer-related problems. The Company will continue to monitor the
operation of its software products, computers and microprocessor-based devises
for any Y2K problems.
FORWARD LOOKING STATEMENTS
This quarterly report for the period ended March 31, 2000 as well
as other public documents of the Company contains forward-looking statements
which involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievement of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such statements
include, without limitation, the Company's expectations and estimates as to
future financial performance, cash flows from operations, capital expenditures
and the availability of funds from refinancing of indebtedness. Readers are
urged to consider statements which use the terms "believes', "intends",
"expects", "plans", "estimates", "anticipated" or "anticipates" to be uncertain
and forward-looking. In addition to other factors that may be discussed in the
company's filings with the Securities and Exchange Commission, including this
report, the following factors, among others, could cause the Company's actual
results to differ materially from those expressed in any forward-looking
statement made by the Company: (I) general economic and business conditions,
acts of God and natural disasters, as well as the demand for the Company's
services, or the ability of the Company to provide such services; (ii) the
insolvency or failure to pay its debts by a significant creditor of the Company
or its subsidiaries or affiliates, or the inadequacy or uncollectibility of any
collateral pledged to secure such creditor's debts to the Company or its
subsidiaries or affiliates; (iii) increased competition; (iv) changes in
customer preferences and the inability of the Company's subsidiaries of
affiliates to develop and introduce new services to accommodate these changes;
and (v) the maturing of debt at the Company, subsidiary or affiliate level and
the inability of the Company, the subsidiary or affiliate to raise capital to
repay or refinance such debt on favorable terms, or the insufficiency of
collateral pledged to secure any such debt.
Page 10 of 11
11
HELM CAPITAL GROUP, INC.
Date: May 12, 2000 /s/ Daniel T. Murphy
-----------------------------------------
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
Page 11 of 11