-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nd9sWzseLrX5lrxbarWQFm6ADiHsw3oTHHx1M5C5HLXw310/yVFYbCXLnDg5lzC3 jHhkgV6H0fGfnlLAaiSBsg== 0000950147-98-000514.txt : 19980701 0000950147-98-000514.hdr.sgml : 19980701 ACCESSION NUMBER: 0000950147-98-000514 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980630 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES AIRCRAFT CORP CENTRAL INDEX KEY: 0000350129 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 953518487 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09974 FILM NUMBER: 98657792 BUSINESS ADDRESS: STREET 1: 3121 E. GREENWAY RD STE201 CITY: PHOENIX STATE: AZ ZIP: 85032 BUSINESS PHONE: 6027871351 MAIL ADDRESS: STREET 1: 3121 E. GREENWAY RD #201 CITY: PHOENIX STATE: AZ ZIP: 85032 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------- QUARTERLY REPORT UNDER SECTION 13 OF 15(d) of the Securities Exchange Act of 1934 -------------------------------- For quarter ended March 31, 1998 Commission file number 0-9974 UNITED STATES AIRCRAFT CORPORATION ---------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-3518487 - ------------------------------- ----------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER I.D. NUMBER) INCORPORATION OR ORGANIZATION) 3121 E. Greenway Rd. Phoenix, Arizona 85032 - ---------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (602) 765-0500 - ------------------------------------------------- (REGISTRANT'S TELEPHONE NO., INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed 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 of each of the issuer's classes of common stock, as of March 31, 1998. NUMBER OF SHARES CLASS ---------------------- ----------- 7,927,504 Class A 4,962,801 Class B UNITED STATES AIRCRAFT CORPORATION COMMISSION FILE NUMBER 0-9974 FORM 10-Q INDEX Page No. -------- PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Consolidated Balance Sheets March 31, 1998 (Unaudited) and September 30, 1997 3 Consolidated Statements of Operations (Unaudited) for the Three and Six Months ended March 31, 1998 and 1997 4 Consolidated Statements of Cash Flows (Unaudited) for the Three and Six Months Ended March 31, 1998 and 1997 5 Notes to Consolidated Financial Statements 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS of Financial Condition and Results of Operations 7 Item 3. DEFAULTS UPON SENIOR SECURITIES 10 Item 5. OTHER INFORMATION 10 PART II - OTHER INFORMATION 11 SIGNATURES 11 United States Aircraft Corporation and Subsidiaries Consolidated Balance Sheets March 31, 1998 and September 30, 1997
March 31, 1998 September 30, 1997 Assets (Unaudited) ------ -------------- ------------------ Current Assets Cash $ 7,021 $ 20,427 Accounts receivable 79,961 69,311 Notes Receivable 7,000 8,000 Prepaid expenses 25,715 21,800 ----------- ----------- Total current assets 119,697 119,538 Advance to officer 4,026 27,769 Note receivable, net of current portion 46,544 52,044 Land held for development 602,233 577,327 Property & equipment, net of accumulated depreciation 53,012 57,154 Agency acquisition, net of amortization 93,745 104,774 Goodwill, net 106,270 87,308 Course materials 14,736 15,718 Other 5,914 24,527 ----------- ----------- 1,046,177 1,066,159 ----------- ----------- Liabilities & Stockholder's Equity ---------------------------------- Current Liabilities Note Payable, bank 25,000 Current portion of long-term debt 28,000 37,775 Convertible debentures & related accrued interest 86,490 82,938 Accounts payable 57,242 86,159 Accrued expenses 70,699 68,263 Unearned tuition 64,037 45,290 ----------- ----------- Total current liabilities 331,468 320,425 Long term debt, net of current portion 14,223 19,979 Trust deed notes payable with land for development as collateral 601,000 601,000 Stockholders' Equity Capital stock Class A: $.50 par value, 10,000,000 shares authorized, 7,927,504 issued 3,963,752 3,826,252 Class B: $.001 par value, 5,000,000 shares authorized, 4,962,801 issued 4,963 4,963 Paid in capital (861,827) (751,827) Retained earnings (deficit) (3,007,402) (2,954,633) ----------- ----------- 99,486 124,755 ----------- ----------- $ 1,046,177 $ 1,066,159 ----------- -----------
The accompanying notes are an integral part of these statements. United States Aircraft Corporation and Subsidiaries Consolidated Statements of Operations For the Three and Six Months Ended March 31,1998 and 1997 (Unaudited)
Three Months Ended Six Months Ended March 31 March 31 -------- -------- 1998 1997 1998 1997 ---- ---- ---- ---- Revenue Real estate education $ 122,757 $ 109,146 $ 218,109 $ 193,518 Travel Agency 281,339 696,617 Other 1,025 1,010 1,025 ------------ ------------ ------------ ------------ Total revenue $ 404,096 $ 110,171 $ 915,736 $ 194,543 ------------ ------------ ------------ ------------ Expenses Costs of sales travel agency 255,121 626,510 Personnel expenses 84,780 63,519 187,246 124,584 Facility cost 21,401 13,647 33,650 18,700 Other operating cost 35,024 25,025 51,896 40,134 General and administration 23,646 18,026 43,543 27,922 ------------ ------------ ------------ ------------ 419,972 120,217 942,845 211,340 ------------ ------------ ------------ ------------ Income (loss) before interest expense, depreciation and amortization (15,876) (10,046) (27,109) (16,797) Interest expense 2,888 3,378 6,391 6,925 Depreciation and amortization 9,635 4,173 19,269 8,345 ------------ ------------ ------------ ------------ Income (loss) from continuing operations (28,399) $ (17,597) (52,769) $ (32,067) Income (loss) from discontinued operations (2,996) (2,806) ------------ ------------ ------------ ------------ Net income (loss) $ (28,399) $ (20,593) $ (52,769) $ (34,873) ------------ ------------ ------------ ------------ Net income (loss) per share $ (.002) $ (.002) $ (.004) $ (.003) ------------ ------------ ------------ ------------ Weighted number of shares outstanding 12,840,305 11,542,528 12,727,805 11,393,917 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these statements. United States Aircraft Corporation and Subsidiaries Consolidated Statements of Cash Flows For the Three Months and Six Months Ended March 31, 1998 and 1997 (Unaudited)
Three Months Ended Six Months Ended March 31 March 31 -------- -------- 1998 1997 1998 1997 --------- --------- --------- --------- Cash Flows From Operating Activities Net income (loss) $ (28,399) $ (20,593) $ (52,769) $ (34,873) Adjustments to reconcile net to cash used by operating activities Depreciation 2,662 2,481 5,324 4,962 Amortization 6,973 2,089 13,945 4,178 Net increase (decrease) in current liabilities and (increase) decrease in accounts receivable prepaid expense and other assets 20,141 30,922 34,418 40,140 --------- --------- --------- --------- Net cash provided by (used by) operating activities 1,377 14,899 918 14,407 --------- --------- --------- --------- Cash flows from investing activities Reduction in advance to officer 11,526 23,743 Increase in goodwill-Western College, Inc acquisition (20,000) (20,000) (20,000) (20,000) Addition to land held for development (14,666) (528,529) (24,906) (528,529) Disposition (acquisition) of equipment (765) (1,190) (1,182) (4,894) --------- --------- --------- --------- Net cash provided by (used by) investing activities (23,905) (549,719) (22,345) (553,423) --------- --------- --------- --------- Cash flows from financing activities Trust deed notes payable for land acquisition 501,000 501,000 Issuance of Class A Common shares for: Land acquisition 25,000 25,000 Contingent shares-Western College, Inc. Acq 20,000 20,000 20,000 20,000 Decrease in long-term debt (9,646) (3,009) (11,979) (5,390) --------- --------- --------- --------- Net cash provided by (used by) financing activities 10,354 542,991 8,021 540,610 --------- --------- --------- --------- Net increase (decrease) in cash (12,174) 8,171 (13,406) 1,594 Cash Beginning of Period 19,195 3,560 20,427 10,137 --------- --------- --------- --------- Cash, End of Period $ 7,021 $ 11,731 $ 7,021 $ 11,731 --------- --------- --------- ---------
The accompanying notes are an integral part of these statements. UNITED STATES AIRCRAFT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 (UNAUDITED) AND SEPTEMBER 30, 1997 NOTE 1 - Basis of Presentation --------------------- The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. For further information, refer to the audited financial statements and footnotes thereto included in the Company's Form 10-K for the year ended September 30, 1997. NOTE 2 - Summary of Significant Accounting Policies ------------------------------------------ Basis of Consolidation ---------------------- The consolidated financial statements include the accounts of United States Aircraft Corporation and its subsidiaries (hereinafter referred to as "the Company"). All intercompany transactions have been eliminated in consolidation. For further information concerning significant accounting policies, refer to the audited financial statements and footnotes thereto in the Company's Form 10-K for the year ended September 30, 1997. Item 2. Management's Discussion and Analysis of Financial Condition and ----------------------------------------------------------------- Results of Operations --------------------- Results of Operations --------------------- Comparison six months ended March 31, 1998 to 1997 The loss before interest, depreciation and amortization expense increased by $10,312. The increased loss consists of the following: Increase in Real Estate Education 1998 operating income over 1997 $ 22,851. Operating loss from travel agency operation during the six months ended March 31, 1998 with no comparable amount for 1997 $ (17,527). Increase in general corporate overhead $ (15,621). Decrease in other revenue $ (15). The operating income from the adult education division improved by $22,851. The improvement was due to an $24,591 increase in revenues offset by a $1,740 increase in operating costs. The revenue increase is the result of additional enrollments including those at the new East campus, and due to a $3,232 increase in advertising revenue related to the publication of the Renewal News. The operating cost increase consists of an $6,593 decrease in personnel expense, $10,646 increase in facility costs and $2,313 decrease in other operating costs. The travel services operation was started on July 1, 1997 with the purchase of an existing travel agency and the operating results are included during the six months ended March 31, 1998 with no comparable amounts for the six months ended March 31, 1997 as follows: Amount ------ Sales $696,617 Cost of sales $626,510 -------- Gross profit 70,107 Operating Costs Personnel expense $69,255 Facility cost 4,304 Other operating costs 14,075 ------- Total operating costs 87,634 -------- Income (loss) before interest depreciation and amortization $(17,527) -------- General corporate overhead increased by $15,621 primarily due to management compensation increases of $12,000 and professional fee increases of $3,500. Other revenue consisting primarily of interest on travel agency deposits declined by $15. Depreciation and amortization increased by $10,924 primarily due to equipment and business acquisitions. Interest decreased by $534. On September 30, 1997 the company sold its wholly-owned subsidiary Hansen and Associates, Inc. dba Property Masters after determining to discontinue its real estate brokerage and property management line of business. The financial statements have been restated to reflect the operations of the subsidiary as a discontinued operation reflecting a 1997 operating loss of $2,806 with no comparable amount for 1998. Comparison three months ended March 31, 1998 to 1997 The loss before interest, depreciation and amortization expense increased by $5,830. The increased loss consists of the following: Increase in Real Estate Education 1998 operating income over 1997 $ 11,668. Operating loss from travel agency operation during the three months ended March 31, 1998 with no comparable amount for 1997 $ (10,853). Increase in general corporate overhead $ (5,620). Decrease in other revenue $ (1,025). The operating income from the adult education division improved by $11,668. The improvement was due to an $13,611 increase in revenues offset by a $1,943 increase in operating costs. The revenue increase is the result of additional enrollments including those at the new East campus. The operating cost increase consists of an $401 increase in personnel expense, $5,227 increase in facility costs and $3,685 decrease in other operating costs. The travel services operation was started on July 1, 1997 with the purchase of an existing travel agency and the operating results are included during the three months ended March 31, 1998 with no comparable amounts for the three months ended March 31, 1997 as follows: Amount ------ Sales $281,339 Cost of sales $255,121 -------- Gross profit 26,218 Operating Costs Personnel expense $20,859 Facility cost 2,528 Other operating costs 13,684 ------- Total operating costs 37,071 -------- Income (loss) before interest depreciation and amortization $(10,853) -------- Effective January 1, 1998, management reduced its full time travel staff to bring personnel expenses in line with the revenue production with a further a reduction of its full time staff on May 1, 1998. General corporate overhead increased by $5,620 primarily due to management compensation increases of $2,000 and professional fee increases of $3,500. Other revenue consisting primarily of interest on travel agency deposits declined by $1,025. Depreciation and amortization increased by $5,462 primarily due to equipment and business acquisitions. Interest decreased by $490. On September 30, 1997 the company sold its wholly-owned subsidiary Hansen and Associates, Inc. dba Property Masters after determining to discontinue its real estate brokerage and property management line of business. The financial statements have been restated to reflect the operations of the subsidiary as a discontinued operation reflecting a 1997 operating loss of $2,996 with no comparable amount for 1998. Financial Condition, Liquidity and Capital Resources - ---------------------------------------------------- The working capital deficit increased $10,884 from September 30, 1997 to $211,771. Current assets increased by $159 from September 30, 1997 to $119,697. The increase consists of a $13,406 decrease in cash, a $10,650 increase in accounts receivable, an $1,000 decrease in notes receivable related to the sale of Hansen & Associates Inc. dba Property Masters and a $3,915 increase in prepaid expenses. Current liabilities increased $11,043 from September 30, 1997 to $331,468. The increase consists of a $25,000 increase in the notes payable bank related to the new $30,000 line of credit obtained in March, 1998, a $9,775 decrease in the current portion of long-term debt, a $3,562 increase related to the accrued interest on the debentures, a $28,917 decrease in accounts payable and a $2,436 increase in accrued expenses. Unearned tuition increased by $18,747. Advances to officer made pursuant to the officer's compensation program decreased by $23,743. The long term note receivable of $46,544 relates to the sale of Hansen and Associates Inc. and decreased by $5,500 due to collections. Property and equipment decreased by $4,142 as a result of equipment acquisitions of $1,182 offset by depreciation of $5,324. Goodwill increased by $18,962 due to the issuance of the contingent shares related to the 1996 acquisition of Western College, Inc. valued at $20,000 offset by amortization of $1,038. Course materials decreased by $982 due to amortization. Other assets decreased by $18,613. In February 1997, the Company acquired 35.66 acres of undeveloped land in Glenn County, California which is recorded for financial reporting purposes at $602,233. The land has been pledged as collateral for three trust deed notes payable totaling $601,000. The Company is planning the formation of a Real Estate Investment Trust (REIT) or other alternative to whom the undeveloped land would be sold or contributed. Interest payments on the second and third trust deed notes payable are delinquent and the holder of the second trust deed Note payable filed a notice of default on March 30, 1998. If the REIT or other alternative is not formed with the resulting sale or contribution of the land, the Company will be required to take other steps to sell the land which could be at a sales price that would be less than the trust deed notes payable. The July and August 1997 purchase price of the travel agencies exceeded the indentifiable tangible assets of the agencies by $110,288 and relates primarily to the value of the income production of the approximately 175 Home Based Travel Agents who place their travel sales through FirsTravel . The original cost has been reduced by amortization of $16,543 with $11,029 of amortization being recorded in the six months ended March 31, 1998. Long-term debt decreased by $5,756 due to payments. The convertible debentures of $56,450 plus the related accrued interest are classified as current liabilities as they were due on December 31, 1996. Currently, the debentures remain unpaid and the Company believes that they will eventually be retired through conversion to the Company's Class A common stock, although no assurance that such a conversion will be elected by the debenture holders. The Company's management has continued its program to expand the services operations through further expansion of its existing operations plus the acquisition of other service organizations. Working capital continues to limit the expansion of the Company although the Company in February 1997 acquired 35.66 acres of undeveloped land for 250,000 Class A shares of its common stock plus approximately $500,000 of trust deed notes payable. The Company intends to plan the development of the parcel and has used the land as collateral for a $100,000 loan to provide an interim resolution to the working capital deficiency. Further, in March 1998 the Company obtained a one year bank revolving line of credit in the amount of $30,000. Additionally, the Company is aggressively investigating acquisitions of adult education, travel services or other operations that are compatible with the existing operations and that can be acquired for the Company's common stock or with debt that is retired from the cash flow from the acquired operation. Further, the Company plans to complete a private placement aggregating approximately $150,000 to provide working capital, fund the acquisitions and retire a portion of the long-term debt. No assurance can be given the acquisitions will be completed or the private placement will be successful. In May 1998, The Company signed a letter of intent to acquire all of the outstanding shares of Neo Vision, Inc. For additional information, reference is made to Item 5 Other Information of this report. Item 3. Defaults Upon Senior Securities ------------------------------- The Company currently is in default on the payment of various convertible debentures in the outstanding principal amount of $56,450. The Company also is in default on various trust deed notes payable with respect to 35.66 acres of undeveloped land it owns in Glenn County, California (the "California Land") in the amount of $601,000, and the holder of the $276,600 first and second trust deed notes payable has filed a notice of default with respect to the non-.payments on the related notes. The Company is pursuing various alternatives for realizing the value of the California land, including the possibility of forming a Real Estate Investment Trust (REIT) to whom the undeveloped land would be sold or contributed. If the Company is unable to pay the balance due on the first and second trust deed note payable, then the Company may lose the California Land in a foreclosure sale and would be liable for any deficiency in the payment on the notes securing the land, which could be substantial. The Company currently does not have the ability to pay any of its defaulted debts and no assurance can be given that the Company will have sufficient capital to pay such debts. Item 5. Other Information ----------------- On May 28, 1998, the Company signed a letter of intent to acquire Neo Vision, Inc. in tax-free exchange of 2,000,000 of the Company's Class A common shares for all of the outstanding shares of Neo Vision, Inc. The letter of intent provides for a closing on June 30, 1998 but is subject to several contingencies and the due diligence review of both parties. Neo Vision, Inc. (Neo), an Arizona corporation, has been in the development stage since its inception in June, 1997. Neo has developed the technology to provide out-of-home, high impact advertising, programming and information to remote audiences using state of the art, computer, video and signal transmission technology. Neo concluded the development phase of its operation in mid June 1998 with the start of operations of the three video screens that have been installed in Las Vegas, Nevada. The letter of intent further provides for the issuance of common shares of United States Aircraft Corporation contingent upon Neo meeting certain future conditions that prove the viability of the technology and the goodwill of the Neo Vision, Inc. product. If all of the contingent shares are issued the Neo shareholders would own approximately 80% of the outstanding shares of United States Aircraft Corporation. The letter of intent also provides for an increase in the Board of Directors at closing to nine individuals with one of the current outside directors resigning and the election of five new members to the board of directors two of whom will be outside directors nominated by Neo. Additionally the letter of intent calls for the filing of a proxy statement shortly after closing for a shareholders' meeting where the following will be presented for shareholder approval: * Authorization of new common shares and an exchange of the currently authorized Class A and B shares for the new common share. * Authorization of preferred stock with the Board of Directors being authorized to establish preferences for separate classes of the preferred stock. * Approval of a name change to Neo Vision. Systems, Inc. and a restatement of and revision to the articles of incorporation. * Adoption of a stock option plan along with approval of the initial grants. At this time no assurance can be given that the acquisition of Neo Vision, Inc. will be completed PART II. Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- A. 27 - Financial Data Schedule None SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED STATES AIRCRAFT CORPORATION ---------------------------------- Date: 6-29-98 /s/ Harry V. Eastlick ------- ---------------------------------------------------- Harry V. Eastlick, President and Chief Executive Officer Date: 6-29-98 /s/ Harry V. Eastlick ------- ---------------------------------------------------- Harry V. Eastlick, Acting Chief Financial Officer EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1 U.S. Dollar 6-MOS SEP-30-1998 OCT-01-1997 MAR-31-1998 1 7,021 0 86,961 0 0 119,697 124,298 71,286 1,046,177 331,468 615,223 0 0 3,968,715 3,869,229 1,046,177 915,736 915,736 942,845 942,845 19,269 0 6,391 (52,769) 0 (52,769) 0 0 0 (52,769) (.004) (.004)
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