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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A-1
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
COMMISSION FILE NUMBER 1-8292
HELM CAPITAL GROUP, INC.
(FORMERLY HELM RESOURCES, INC.)
(Exact name of registrant as specified in character)
Delaware 59-0786066
-------- ----------
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification number)
537 Steamboat Road
Greenwich, CT 06830
(Address of principal executive offices)
203-629-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to 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 / /
As of November 12, 1997 there were 2,791,389 shares of the Company's common
stock, par value $.01 per share, outstanding.
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EXPLANATORY NOTE
Helm Capital Group, Inc. is amending its Form 10-QSB for the period ended
September 30, 1997 to present Interpak Terminals as a discontinued operation. In
its previous filing, the Company, upon the advice of its independent auditors,
included the sale of Interpak Terminals as a normal operating item.
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PART I - FINANCIAL INFORMATION
HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,716
Prepaid expenses 12
---------
TOTAL CURRENT ASSETS 1,728
INVESTMENTS IN AFFILIATES 740
OTHER ASSETS 53
CASH HELD IN ESCROW, LESS RESERVE 125
---------
$ 2,646
=========
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable to affiliates $ 110
Accrued interest 323
Accrued expenses 544
---------
TOTAL CURRENT LIABILITIES 977
SUBORDINATED DEBENTURES 2,969
ACCRUED EXPENSES PAYABLE IN COMMON STOCK 563
OTHER LIABILITIES 362
TOTAL LIABILITIES 4,871
SHAREHOLDERS DEFICIENCY (NOTE 4) (2,225)
---------
$ 2,646
=========
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
September 30,
---------------------
1997 1996
--------- ---------
REVENUES $ - $ 22
========= =========
COSTS, EXPENSES AND OTHER
Selling, general and administrative expenses 296 97
Gain on sale of securities (37) (192)
Equity in net (earnings) of affiliates (43) (30)
Increase in underlying equity of Intersystems, Inc. (501) (18)
Interest and debt expense 94 117
--------- ---------
TOTAL COSTS, EXPENSES AND OTHER (191) (26)
--------- ---------
INCOME FROM CONTINUING OPERATIONS 191 48
DISCONTINUED OPERATIONS
Income (loss) from operations of Interpak (88) (564)
Gain on disposal of Interpak, net of income
taxes of $65 2,324 -
--------- ---------
2,236 (564)
========= =========
NET INCOME (LOSS) $ 2,427 $ (516)
========= =========
Primary Earnings Per Share:
Continuing Operations $ .06 $ -
Discontinued Operations .86 .(23)
--------- ---------
$ .92 $ .(23)
========= =========
Fully Diluted Earnings Per Share:
Continuing Operations $ .05 $ -
Discontinued Operations .55 -
--------- ---------
$ .60 $ -
========= =========
Average Common Shares Outstanding:
Primary 2,592 2,459
========= =========
Fully Diluted 4,211 -
========= =========
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Nine Months Ended
September 30,
---------------------
1997 1996
--------- ---------
REVENUES $ 30 $ 92
========= =========
COSTS, EXPENSES AND OTHER
Selling, general and administrative expenses 502 366
Gain on sale of securities (515) (418)
Equity in net (earnings) of affiliates (49) (22)
Increase in underlying equity of Intersystems, Inc. (501) (60)
Interest and debt expense 274 330
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TOTAL COSTS, EXPENSES AND OTHER (289) (196)
--------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS 319 (104)
DISCONTINUED OPERATIONS
Equity portion of investment gain (loss) on
discontinued operations - (168)
Income (loss) from operations of Interpak 95 (473)
Gain on disposal of Interpak, net of income
taxes of $65 2,324 -
--------- ---------
2,419 (641)
========= =========
NET INCOME (LOSS) $ 2,738 $ (745)
========= =========
Primary Earnings Per Share:
Continuing Operations $ .09 $ (.28)
Discontinued Operations .95 (.07)
--------- ---------
$ 1.04 $ (.35)
========= =========
Fully Diluted Earnings Per Share:
Continuing Operations $ .08 $ -
Discontinued operations .58 -
--------- ---------
$ .66 $ -
========= =========
Average Common Shares Outstanding:
Primary 2,541 2,453
========= =========
Fully diluted 4,160 -
========= =========
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
September 30,
---------------------
1997 1996
--------- ---------
Net cash provided by (used in) operating activities $ (424) $ 343
========= =========
Cash flows from investing activities:
Proceeds from sale of Interpak Terminals 1,950 -
Decrease in investments in and due from
affiliates - 227
Proceeds from sales of securities 411 85
Additions to property, plant and equipment - (480)
--------- ---------
2,361 (168)
--------- ---------
Cash flows from financing activities:
Increase in due to affiliate - 406
(Decrease) in notes payable and long-term debt (282) (951)
--------- ---------
(282) (545)
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NET INCREASE (DECREASE) IN CASH 1,655 (370)
CASH BEGINNING OF PERIOD 61 434
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CASH END OF PERIOD $ 1,716 $ 64
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Cash paid during the period for:
Interest $ 128 $ 305
Taxes - 2
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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. Primary earnings per share is computed by dividing earnings, after
deducting the preferred stock dividend requirements of $31,600 and
$94,800 in the three month and nine month periods, by the average
common shares outstanding during each period. Fully diluted earnings
per share for 1997 assumes conversion of series A and B 8% cumulative
convertible preferred stock after adding back the preferred dividend
requirements.
Note 3. Summarized Financial Data (in thousands):
Intersystems, Inc.
- ------------------ Three Months Ended
(19% owned in 1997 and 24% in 1996) September 30,
---------------------
1997 1996
--------- ---------
REVENUES $ 8,095 $ 5,855
========= =========
Operating expenses 5,676 4,229
Selling, general and administrative expenses 1,746 1,394
Interest expense (net) 352 166
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TOTAL COST AND EXPENSES 7,774 5,789
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NET INCOME $ 321 $ 66
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Nine Months Ended
September 30,
---------------------
1997 1996
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REVENUES $ 21,060 $ 14,826
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Operating expenses 14,177 10,453
Selling, general and administrative expenses 5,027 3,980
Settlement of note receivable - sale of
trading business - 48
Interest expense (net) 1,211 469
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TOTAL COST AND EXPENSES 20,415 14,950
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INCOME (LOSS) FROM CONTINUING OPERATIONS 645 (124)
DISCONTINUED OPERATIONS - (730)
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NET INCOME (LOSS) $ 645 $ (854)
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Stockholders Equity (in thousands)
Common Stock Additional
Preferred Stock $.01 par value Paid-in
Shares Amount Shares Amount capital
------ ------ ------ ------ ----------
Balance January 1, 1997 37 $ - 2,501 $ 25 $ 19,852
Preferred stock received
from officers in
connection with retire-
ment of debt (6) - (322)
Common stock issued - - 232 2 148
---- ------ ----- ----- --------
Balance September 30, 1997 31 $ - 2,733 $ 27 $ 19,678
==== ====== ===== ===== ========
Unrealized gain Retained
on available for Earnings Treasury
sale securities (Deficit) Stock Total
---------------- ----------- --------- ---------
Balance January 1, 1997 $ 315 $ (24,639) $ (29) $ (4,476)
Preferred stock received
from officers in con-
nection with retirement
of debt - - - (322)
Common stock issued - - - 150
Change in unrealized gain
on available for sale
securities (315) - - (315)
Net income - 2,738 - 2,738
----- ---------- --------- ---------
Balance September 30, 1997 $ - $ (21,901) $ (29) $ (2,225)
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 5. On July 31, 1997, the Company's subsidiary, Interpak Holdings, Inc.,
sold its Interpak Terminals units, located in Houston, Texas and
Edison, New Jersey to Katoen Natie N.V., a privately-held Belgium
corporation, for a cash purchase price of $2.2 million of which
$250,000 is held in escrow until July 31, 2000.
Summarized Financial Data (in thousands)
Interpak, Inc.
Three
Month Ended Months Ended
July 31, September 30,
1997 1996
---------- ---------
REVENUES $ 1,363 $ 4,097
TOTAL COST AND EXPENSES 1,451 4,661
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NET INCOME (LOSS) $ (88) $ (564)
========== =========
Seven Months Nine Months
Ended Ended
July 31, September 30,
1997 1996
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REVENUES $ 10,608 $ 13,904
TOTAL COST AND EXPENSES 10,513 14,377
---------- ---------
NET INCOME (LOSS) $ 95 $ (473)
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6. During the three months ended September 30, 1996 an officer of the
Company purchased 25,000 shares of common stock of Unapix
Entertainment, Inc. and 40,000 shares of common stock of Professional
Financial Services, Inc. from the Company, at market value. The
purchase price was paid by surrender of $200,000 principal amount of
senior subordinated notes due to him. The Company realized a gain from
the transaction of $177,000 which is included in gain on sale of
securities. In addition, the Company sold 10,000 shares of Intersystems
common stock for a gain of $15,000.
During the nine months ended September 30, 1996, the Company sold
65,000 shares of Intersystems common stock at a gain of 4106,000 and
had an additional gain of $79,000 from the sales of 17,152 common
shares of Professional Financial Services, Inc., 4,783 common shares of
Unapix Entertainment, Inc., 14,350 common shares of Intersystems and
86,098 warrants, which expire in 2006, to purchase a like number of
shares of Helm common stock at $1.25 per share, all at a market value
to another officer of the Company in exchange for $91,250 principal
amount of 8% debentures and accrued interest thereon of $16,203.
During the three months ended September 39, 1997, the Company sold
8,200 shares of Unapix common stock at a gain of $37,000.
During the nine months ended September 30, 1997, the Company sold
79,400 shares of Unapix common stock at a gain of $415,000 and 70,060
shares of Intersystems common stock issued at market to Intersystems in
partial payment of advances at a gain of $100,000.
Note 7. On October 30, 1997 the Company commenced an exchange offer to exchange
its outstanding 12% debentures, $1,650,000 principal amount
outstanding, for 9-1/2% senior convertible notes due December 31, 2001
of Mezzanine Financial Corp. (Mezzanine), a newly formed wholly-owned
subsidiary of Helm. Mezzanine was created to engage in the business of
providing capital in high yield debt situations of mid-market companies
and to provide asset-based lending directly to or in participation with
other commercial lenders. One-half of the new notes will be convertible
into shares of Helm common stock, at $1.25 per share, and one-half into
shares of Intersystems, Inc. common stock owned by Helm, at $2.75 per
share.
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
Net income for the three months ended September 30, 1997 was $2,427,000
compared to a loss of $516,000 for the similar period in 1996. The net change of
$2,943,000 is primarily attributable to two factors - a gain on the sale of the
Interpak Terminals operations of $2,324,000 and $501,000 representing the
Company's share of the increase in the underlying equity of Intersystems, Inc.
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
Income from continuing operations for the nine months ended September 30,
1997 was $319,000 compared to a loss of $104,000 for the nine month period of
1996 or a net change of $423,000 which is primarily attributable to the
Company's share of the increase in the underlying equity of Intersystems, Inc.
Discontinued operations had income of $2,419,000 in the 1997 period and a loss
of $641,000 in the 1996 period, the primary difference being a gain of
$2,324,000 on the sale of Interpak Terminals. Interpak had operating income of
$95,000 in 1997 through July 31, the date of sale and an operating loss of
$473,000 for the nine months ended September 30, 1996.
Impact of Inflation
Inflation has not had a significant impact on the Company's operations.
Liquidity and Capital Resources
Operating activities used cash of $424,000. The sale of Interpak provided
$1,950,000,$411,000 was received from sales of securities and $282,000 was used
to repay debt all of which provided a net increase in cash of $1,655,000.
Future liquidity sources for the parent company will consist of
reimbursement of general and administrative expenses from subsidiaries and
affiliates, and possible sales of investment securities. On a longer term basis,
the Company maybe required to seek additional liquidity through debt and equity
offerings of the Company and/or its subsidiaries or affiliates.
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HELM CAPITAL GROUP, INC. AND SUBSIDIARIES
PART II
Item 5. OTHER INFORMATION
On July 31, 1997, the Company's subsidiary, Interpak Holdings, Inc., a
Delaware corporation, completed the sale of all of the capital stock of its
subsidiaries, Interpak Terminals, Inc., a Delaware corporation doing business in
New Jersey, and Interpak Terminals, Inc., a Texas corporation doing business in
Houston, to Katoen Natie U.S.A., Inc., a domestic subsidiary of a privately-held
Belgium corporation, for a $2.2 million cash purchase price.
Interpak is a provider of custom packaging and distribution services to
manufacturers of thermoplastic resins. For the years ended December 31, 1996 and
1995, Interpak had revenues of $18,065,361 and $15,066,502, respectively. On a
consolidated basis, Interpak's revenues constitute substantially all of the
revenues reported by Helm, and Interpak's assets constitute a significant
percentage of Helm's assets.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HELM CAPITAL GROUP, INC.
April 13, 1998 /s/ Daniel T. Murphy
--------------------------------------
Daniel T. Murphy
Executive Vice President
Chief Accounting and Financial Officer
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