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: June 30, 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 August 10, 2000, there were 3,779,000 shares of the Company's common
stock, par value $.01 per share, outstanding.
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PART I - FINANCIAL INFORMATION
HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9
Participation in receivables of affiliate 1,833
Prepaid expenses 13
Due from related party 50
Other 23
------
TOTAL CURRENT ASSETS 1,928
INVESTMENTS IN AFFILIATES 1,211
------
$3,139
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HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
CURRENT LIABILITIES:
Accrued expenses $ 459
Notes due to related parties 120
Subordinated debentures due currently 25
Loan payable to bank 328
--------
TOTAL CURRENT LIABILITIES 932
SUBORDINATED DEBENTURES 1,450
SUBORDINATED DEBENTURES AND
ACCRUED INTEREST DUE TO OFFICERS 1,329
ACCRUED EXPENSES PAYABLE IN
COMMON STOCK 575
OTHER LIABILITIES 41
--------
TOTAL LIABILITIES 4,327
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: shares authorized
15,000; issued 3,779 shares 38
Additional paid-in capital 20,723
Deficit (21,920)
--------
(1,159)
Less: 6 shares of treasury stock, at cost (29)
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TOTAL SHAREHOLDERS' CAPITAL (DEFICIT) (1,188)
--------
$ 3,139
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HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
June 30,
2000 1999
---- ----
REVENUES $ 48 $ 57
------- -------
COSTS, EXPENSES, AND OTHER:
Selling, general and administrative expenses 65 43
Equity in net (earnings) losses of affiliates 26 18
Interest and debt expense 61 77
------- -------
TOTAL COSTS, EXPENSES AND OTHER 152 138
------- -------
NET LOSS $ (104) $ (81)
======= =======
Earnings Per Share - Basic and Diluted $ (.04) $ (.03)
======= =======
Average common shares outstanding 3,779 3,779
======= =======
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HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Six Months Ended
June 30,
2000 1999
---- ----
REVENUES $ 138 $ 115
------- -------
COSTS, EXPENSES, AND OTHER:
Selling, general and administrative expenses 119 98
Equity in net (earnings) losses of affiliates 40 128
Interest and debt expense 128 150
------- -------
TOTAL COSTS, EXPENSES AND OTHER 287 376
------- -------
NET LOSS $ (149) $ (261)
======= =======
Earnings Per Share - Basic and Diluted $ (.06) $ (.08)
======= =======
Average common shares outstanding 3,779 3,779
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HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
June 30,
2000 1999
---- ----
Net cash (used by) operating activities $ (52) $ (11)
----- -----
Cash flows from investing activities-loan repaid 355 --
----- -----
Cash flow from financing activities:
Payments on notes to related parties (250) --
Payment on loan payable to bank (72) --
----- -----
(322) --
----- -----
NET INCREASE (DECREASE) IN CASH (19) (11)
CASH BEGINNING OF PERIOD 28 15
----- -----
CASH END OF PERIOD $ 9 $ 4
===== =====
Supplemental disclosure of cash flow information:
Cash paid for taxes -- --
Cash paid for interest $ 87 $ 91
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HELM CAPITAL GROUP, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Income (loss) from continuing operations $(104) $ (81) $(149) $(261)
Dividends on preferred stock (30) (30) (60) (60)
----- ----- ----- -----
Numerator for basic and diluted income
(loss) from continuing operations $(134) $(111) $(209) $(321)
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For the Three and Six months ended June 30, 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):
Three Months Six Months
2000 1999 2000 1999
Stock options 467 437 467 437
Stock warrants 299 299 299 299
Shares issuable on conversion of
preferred shares 1,585 1,585 1,585 1,585
Shares issuable on conversion of
subordinated debentures 753 753 753 753
Shares issuable on conversion of
promissory notes 300 300 300 300
----- ----- ----- -----
3,404 3,374 3,404 3,374
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Note 3. Summarized Financial Data (in thousands):
Intersystems, Inc. Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
REVENUES $ 4,388 $ 3,610 $ 8,311 $ 6,993
------- ------- ------- -------
Operating expenses 3,200 2,455 5,906 4,729
Selling, general and administrative expenses 1,020 881 1,977 1,739
Interest expense (net) 341 401 694 750
------- ------- ------- -------
TOTAL COST AND EXPENSES 4,561 3,737 8,577 7,218
------- ------- ------- -------
Income (loss) from continuing
Operations (173) (127) (266) (225)
Discontinued operation-Inter systems
Nebraska -- 358 -- 235
Cumulative effect of change in
Accounting principle -- -- -- (133)
------- ------- ------- -------
Net Income (loss) $ (173) $ 231 $ (266) $ (123)
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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
June 30, 2000 29 $-- 3,779 $ 38 $20,723
----- ------ ----- ------- -------
Retained
Earnings
(Deficit) Treasury Stock Total
Balance
January 1, 2000 $(21,771) $ (29) $(1,039)
Net loss (149) - (149)
-------- ----- -------
Balance
June 30, 2000 $(21,920) $(29) $(1,188)
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
The net loss of $104,000 for three months ended June 30, 2000 compared
to a loss of $81,000 for the three months ended June 31, 1999. The increased
loss was the result of lower revenues, which decreased by $10,000, and an
increase in equity in loss of affiliates of $8,000.
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
The net loss for the six months ended June 30, 2000, decreased by
$112,000 from the loss for the six months ended June 30, 1999. The primary
factor was a decrease in the equity in loss of affiliates which decreased by
$88,000 in the 2000 period.
Impact of Inflation
Inflation has not had a significant impact on the Company's operations.
Liquidity and Capital Resources
Operating activities for the six months ended June 30, 2000 used cash
of $52,000. Collections on loans was $355,000 and $322,000 was used to repay
notes. Cash decreased by $19,000 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.
The Company's independent certified public accountants have not
reviewed the Company's 10QSB for the period ended June 30, 2000.
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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 indebtness. 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.
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HELM CAPITAL GROUP, INC.
Date: August 11, 2000 /s/ Daniel T. Murphy
Daniel T. Murphy
Executive Vice President
Chief Accounting and
Financial Officer
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