-----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, PHjsp08/EfUEOJeRG1ftStYw/A3K03o6N+Zps6op7lyEaFCjV74eyTq2MvWTpLxw C0d5P2vW6kdy4nrmC3em1Q== 0000950147-99-000130.txt : 19990217 0000950147-99-000130.hdr.sgml : 19990217 ACCESSION NUMBER: 0000950147-99-000130 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES AIRCRAFT CORP CENTRAL INDEX KEY: 0000350129 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] 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: 99542566 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 STREET 2: STE B-6 CITY: PHOENIX STATE: AZ ZIP: 85032 10-Q 1 QUARTERLY REPORT FOR THE QTR ENDED 12/31/98 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 December 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 December 31, 1998. NUMBER OF SHARES CLASS ---------------- ----- 9,927,504 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 December 31, 1998 (Unaudited) and September 30, 1998 3 Consolidated Statements of Operations (Unaudited) for the Three Months ended December 31, 1998 and 1997 4 Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended December 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 11 PART II - OTHER INFORMATION 14 SIGNATURES 15 2 United States Aircraft Corporation and Subsidiaries Consolidated Balance Sheets December 31, 1998 and September 30, 1998 December 31, September 30, 1998 1998 ------------ ----------- Assets (Unaudited) Current Assets Cash $ 1,160 $ 8,070 Accounts receivable 79,569 75,902 Notes receivable 1,500 1,500 Prepaid expenses 30,978 7,844 ----------- ----------- Total current assets 113,207 93,316 Note receivable, net of current portion 25,000 25,000 Investment, Neo Vision, Inc. 152,338 103,338 Property & equipment, net of accumulated depreciation 47,443 47,613 Agency acquisitions, net of amortization 79,040 84,555 Goodwill, net 101,840 103,339 Course materials 13,263 13,754 Other 13,243 13,874 ----------- ----------- 545,374 484,789 ----------- ----------- Liabilities & Stockholder's Equity Current Liabilities Current portion of long-term debt 26,000 26,000 Notes payable, bank 30,000 30,000 Convertible debentures & related accrued interest 91,817 90,041 Accounts payable 86,566 90,734 Accrued expenses 258,382 214,062 Unearned tuition 67,153 62,900 ----------- ----------- 559,918 513,737 Long term debt, net of current portion 2,415 5,360 Total liabilities 562,333 519,097 Stockholders' Equity Capital stock Class A: $.50 par value, 10,000,000 shares authorized, 9,927,504 issued 4,963,752 4,963,752 Class B: $.001 par value, 5,000,000 shares authorized, 4,962,801 issued 4,963 4,963 Paid in capital (1,838,862) (1,838,862) Retained earnings (deficit) (3,146,812) (3,164,161) ----------- ----------- (16,959) (34,308) ----------- ----------- $ 545,374 $ 484,789 ----------- ----------- The accompanying notes are an integral part of these financial statements. 3 United States Aircraft Corporation and Subsidiaries Consolidated Statements of Operations For the Three Months Ended December 31, 1998 and 1997 (Unaudited) 1998 1997 ----------- ----------- Revenue Real estate education $ 108,980 $ 95,352 Travel agency 271,330 415,278 Other 90,000 1,010 ----------- ----------- Total revenue 470,310 511,640 ----------- ----------- Expenses Cost of sales-travel agency 240,113 71,389 Personnel expenses 83,580 102,466 Facility cost 16,578 12,249 Other operating cost 35,124 16,872 General and administration 63,960 19,897 ----------- ----------- 439,355 522,873 ----------- ----------- Income (loss) before interest expense, depreciation and amortization 30,955 (11,233) Interest expense 3,445 3,503 Depreciation and amortization 10,161 9,634 ----------- ----------- Net income (loss) $ 17,349 $ (24,370) =========== =========== Net income (loss) per share $ .001 $ (.002) ----------- ----------- Weighted number of shares outstanding 14,890,305 11,245,305 ----------- ----------- The accompanying notes are an integral part of these statements. 4 United States Aircraft Corporation and Subsidiaries Consolidated Statements of Cash Flows For the Three Months Ended December 31, 1998 and 1997 (Unaudited) 1998 1997 -------- -------- Cash Flows From Operating Activities Net income (loss) 17,349 (24,370) Adjustments to reconcile net to cash used by operating activities Depreciation 2,662 2,662 Amortization 7,499 6,972 Net increase (decrease) in current liabilities and (increase) decrease in accounts receivable prepaid expense and other assets (28,983) 14,277 -------- -------- Net cash provided by (used by) operating activities (1,473) (459) Cash flows from investing activities Reduction in advance to officer 12,217 Addition to land (10,240) Disposition (acquisition) of equipment (2,492) (417) -------- -------- Net cash provided by (used by) investing activities (2,492) 1,560 -------- -------- Cash flows from financing activities Decrease in long-term debt (2,945) (2,333) -------- -------- Net cash provided by (used by) financing activities (2,945) (2,333) -------- -------- Net increase (decrease) in cash (6,910) (1,232) Cash, Beginning of Period 8,070 20,427 -------- -------- Cash, End of Period $ 1,160 $ 19,195 -------- -------- The accompanying notes are an integral part of these statements. 5 UNITED STATES AIRCRAFT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (UNAUDITED) AND SEPTEMBER 30, 1998 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, 1998. 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") except Neo Vision, Inc whose exchanges agreement was entered into on June 30, 1998. Neo Vision has not been consolidated until its acquisition has been fully assured. The balance sheet as of December 31, 1998 for Neo Vision, Inc and the related statements of operations and cash flows for the three months ended December 31, 1998 are presented in Note 3 and pro forma financial information is presented in Note 4. 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, 1998. NOTE 3 - ACQUISITION - NEO VISION INC. At June 30, 1998 acquired all of the outstanding shares of Neo Vision, Inc. whose principal business purpose is to provide advertising, programming and information to remote audiences using computer, video and transmission technology throughout the United States. The merger was closed with the exchange of 2,000,000 shares of the Company's Class A common stock for all of the outstanding shares of Neo Vision, Inc. The exchange agreement requires that an amendment and restatement of the Company's Certificate of Incorporation be approved by the stockholders authorizing (i) the reclassification of the Company's Class A Common Stock and Class B Common Stock in a single new class of Common Stock ("New Common Stock,") pursuant to the following ratios: shares of Class A Common Stock will be reclassified into shares of New Common Stock on the basis of 10 shares of Class A Common Stock into one share of New Common Stock and 13 shares of Class B Common Stock into one share of New Common Stock; (ii) the issuance of up to 100,000,000 shares of New Common Stock: (iii) the issuance of up to 75,000,000 shares of preferred stock: (iv) the change of the name of the Company from United States Aircraft Corporation to Neo Vision Corporation, Inc. and (v) make certain technical amendments to the Company's Certificate of Incorporation. The exchange agreement provides that if the amendment and restatement of the Certificate of Incorporation is not approved by a majority of each of the Class A and Class B stockholders then the Neo Vision stockholders can each elect to rescind their exchange of shares with the Company. 6 UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) NOTE 3 - ACQUISITION - NEO VISION INC. (CONTINUED) The financial statements of Neo Vision, Inc. will not be consolidated with the Company, until approval of the amendment and restatement of the Certificate of incorporation is fully assured and the investment is being accounted pursuant to the cost method. At September 30, 1998, the investment in Neo Vision, Inc. representing the initial 2,000,000 Class A Common Stock shares issued for all of the outstanding shares of Neo Vision, Inc. has been recorded for financial reporting purposes at $22,965, which represents the portion of the total investment in Neo Vision Inc. represented by the initial issuance of the Company's Class A shares. The investment, Neo Vision, Inc, includes the following: Acquisition of Neo Vision, Inc. common shares $ 22,965 Management Fee Receivable from Neo Vision Inc. 129,373 --------- $ 152,338 --------- The management fees are expected to be received from the future operating profits of Neo Vision, Inc. and the proceeds of its planned capital infusion. Upon approval of the amendment and restatement of the Certificate of Incorporation an additional 3,977,560 shares of the New Common Stock will be issued to the former stockholders of Neo Vision, Inc., approximately 973,000 shares of the New Common Stock will be in exchange for the outstanding Neo Vision, Inc convertible debentures and 753,000 shares of the New Common Stock issued in payments of fees to a Neo Vision, Inc. financial advisor. When the acquisition of Neo Vision, Inc is fully assured it will be accounted for under the purchase method of accounting with a reverse merger and Neo Vision, Inc being the acquirer for financial reporting purposes. 7 UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) NOTE 3 - ACQUISITION - NEO VISION INC. (CONTINUED) The following unaudited Pro forma Consolidated Balance Sheets of United Stated Aircraft Corporation as of December 31, 1998 sets forth the consolidation of United States Aircraft Corporation with Neo Vision, Inc. under the purchase method of accounting with a reverse merger and Neo Vision, Inc. being the acquirer for financial reporting purposes. The pro forma adjustments report the exchange of the Class A and Class B shares for the New Common stock, the issuance of 4,577,560 additional New Common shares pursuant to the Exchange Agreement and approximately 1,126,000 of New Common shares for the conversion of the Neo Vision, Inc convertible debentures. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS - December 31, 1998
United States Aircraft Corp. Pro Forma Neo Vision And Subsidiaries Neo Vision, Inc. Combined Adjustments Corporation ----------------- --------------- ----------- ----------- ----------- Assets Current Assets Cash $ 1,160 $ 5,646 $ 6,806 $ 6,806 Accounts Receivable 79,569 57,481 137,050 137,050 Notes Receivable 1,500 1,500 1,500 Prepaid expenses 30,978 11,489 42,467 42,467 ----------- ---------- ----------- ---------- Total current asets 113,207 74,616 187,823 187,823 Investment, Neo Vision, Inc. 152,338 152,338 (152,338)(3)(4)(5) Note receivable, net of current portion 25,000 25,000 25,000 Property & equipment, net 47,443 564,371 611,814 611,814 Agency acquisition, net of amortization 79,040 79,040 79,040 Goodwill, net 101,840 101,840 101,840 Course materials 13,263 13,263 13,263 Other 13,243 28,566 41,809 41,809 ----------- ---------- ----------- ---------- Total assets 545,374 667,553 1,212,927 1,060,589 ----------- ---------- ----------- ---------- LIABILITIES & STOCKHOLDER'S EQUITY Current Liabilities Note Payable, bank $ 30,000 40,393 70,393 70,393 Current portion of long-term debt 26,000 26,000 26,000 Convertible debentures & related accrues interest 91,817 798,297 890,114 (798,297)(6) 91,817 Accounts payable 86,566 291,384 377,960 377,960 Accrued expenses 258,382 30,936 289,318 (25,950)(6) 263,368 Unearned revenue 67,153 12,360 79,513 79,513 ----------- ---------- ----------- ---------- Total current liabilities 559,918 1,173,380 1,733,298 909,051 Due to United States Aircraft Corp. 129,373 129,373 (129,373)(5) Long term debt, net 2,415 2,415 2,415 Minority Interest in Neo Vision LLC 136,096 136,096 136,096 Stockholders' Equity - Capital stock Class A: $.50 par value, 9,927,504 issued 4,963,752 4,963,752 (4,963,752)(1) Class B: $.001 par value, 4,962,801 issued 4,963 4,963 (4,963)(2) Common Stock, Neo Vision, Inc 6,250 6,250 (6,250)(4) New Common Shares $.001 par value, 7,078,303 issued 7,078(1)(2)(3)(6) 7,078 Paid in Capital (1,838,862) (1,838,862) 2,622,357(1)(2)(3)(6) 783,495 Retained earnings (deficit) (3,146,812) (777,546) (3,924,358) 3,146,812(4) (777,546) ----------- ---------- ----------- ---------- (16,959) (771,296) (788,255) 13,027 ----------- ---------- ----------- ---------- Total liabilities and stockholders' equity $ 545,374 $ 667,553 $ 1,212,927 $1,060,589 ----------- ---------- ----------- ----------
See explanation of pro forma adjustments on following page. 8 UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES Notes to Consolidated Financial Statements NOTE 3 - ACQUISITION - NEO VISION, INC. (CONTINUED) Pro Forma Adjustments: 1. To record the exchange of Class A shares outstanding for the New Common shares on the basis of 10 Class A shares for 1 New Common Share. 2. To record the exchange of Class B shares outstanding for the New Common shares on the basis of 13 Class B shares for 1 New Common shares. 3. To record the 4,577,560 additional New Common shares to be issued to the former Neo Vision, Inc. shareholders pursuant to the June 30, 1998 exchange agreement. 4. To record elimination of intercompany investment on Neo Vision, Inc using the purchase method of accounting with a reverse merger and Neo Vision, Inc being the acquirer for financial reporting purposes. 5. To eliminate intercompany receivables and payables. 6. To record the conversion of the Neo Vision, Inc convertible debentures, accrued interest to December 31, 1998 and the payment of financial consulting fees all through the issuance of approximately 1,126,000 shares of New Common stock. 9 UNITED STATES AIRCRAFT CORPORATION, AND SUBSIDIARIES Notes to Consolidated Financial Statements NOTE 3 - ACQUISITION - NEO VISION SYSTEMS, INC. (CONTINUED). The following unaudited consolidated statements of operations of Unites States Aircraft Corporation for the quarter ended December 31, 1998 sets forth the consolidation of United States Aircraft Corporation with the Neo Vision, Inc. under the purchase method of accounting as if the acquisition was completed on October 1, 1998. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE QUARTER ENDED DECEMBER 31, 1998
United States Neo Vision Aircraft Corp. Pro Forma Corporation And Subsidiaries Neo Vision, Inc. Adjustments Consolidated ---------------- ---------------- ----------- ------------ Revenue Real estate education $ 108,980 $ 108,980 Travel Agency 271,330 271,330 Video Wall advertising 143,572 143,572 Other 90,000 (90,000)(1) --------- --------- --------- Total revenue 470,310 143,572 523,882 --------- --------- --------- Expenses Cost of sales 240,113 100,461 340,574 Personnel expenses 83,580 16,360 99,940 Facility cost 16,578 4,232 20,810 Other operating cost 35,124 57,080 92,204 General and administration 63,960 90,000 (90,000)(1) 63,960 Depreciation and amortization 10,161 10,818 20,979 --------- --------- --------- Total expenses 449,515 278,951 638,466 --------- --------- --------- Income (loss) before interest expense and minority interest 20,795 (135,379) (114,584) Interest expense 3,446 28,198 31,644 --------- --------- --------- Net income (loss) $ 17,349 $(163,577) $(146,228) ========= ========= ========= Pro forma net income (loss) per New common shares (2) (.02) ---------
- ---------- (1) To eliminate intercompany management fees. (2) Based on pro forma shares of 7,078,303 to be outstanding after the exchange of Class A and B shares for the New Common shares to be authorized and the New Common shares to be issued in the acquisition of Neo Vision, Inc., the conversion of the Neo Vision, Inc. convertible debentures and the payment of financial consulting fees. 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Comparison Three months ended December 1998 to 1997 The total revenue of $470,310 for the year three month ended December 31, 1998 is made up of $108,980 or 23% from the real estate education segment and $271,330 or 58% from the travel agency segment with the remaining 90,000 or 19% consisting o the management fee charged to Neo Vision, Inc. Total revenue decreased by 41,330 in 1998 compared to a $427,268 increase in 1997. The 1998 revenue decrease consists of an increase in real estate education revenue of $13,628, a decrease in travel agency sales of $143,948 and management fees and other revenues of 88,990. The loss before interest, depreciation and amortization expense decreased by $42,188 and consists of the following: Decrease in Real Estate Education 1998 income before interest, depreciation and amortization over 1997 $(10,615) Decrease in Travel Agency 1998 loss before interest, depreciation and amortization loss over 1997 $ 7,876 Increase in consulting and other income $ 88,990 Increase in general corporate overhead $ 44,063 The decrease in real estate education 1998 results over 1997 consists of the following: Increase 1998 1997 (Decrease) -------- -------- -------- Revenue $108,980 $ 95,352 $ 13,628 -------- -------- -------- Costs and expenses Personnel expense 66,645 54,071 12,574 Facility cost 14,924 10,472 4,452 Other operating cost 24,089 16,872 7,217 -------- -------- -------- Total 105,658 81,415 24,243 -------- -------- -------- Income before interest, depreciation and amortization $ 3,322 $ 13,737 $(10,615) ======== ======== ======== The adult education division results declined by $10,615. The decline was due to a $24,243 increase in operating costs offset by a $13,628 increase in revenues. The revenue increase is the result of additional enrollments including those at the new East campus. The operating cost increase consists of an $12,574 increase in personnel expense, including additional marketing personnel, $4,452 increase in facility costs and $7,217 increase in other operating costs. 11 The decrease in the travel agency 1998 loss before interest, depreciation and amortization consists of the following: Increase 1998 1997 (Decrease) --------- --------- --------- Sales $ 271,330 $ 415,278 $(143,948) Costs of sales 240,113 371,389 (131,276) --------- --------- --------- Gross profit 31,217 43,889 (12,672) --------- --------- --------- Operating costs Personnel expense 16,936 48,376 (31,460) Facility cost 1,154 1,776 (122) Other operating costs 11,425 391 11,034 --------- --------- --------- Total 30,015 50,563 (20,548) --------- --------- --------- Income (loss) before interest, depreciation and amortization 1,202 (6,674) (7,876) --------- --------- --------- Sales for the travel agency operation decreased by $143,948 for the quarter ended December 31, 1998 over the agencies sales for the three months ended December 31, 1997 with a gross profit decrease of $12,672. The sales decrease was the result of the travel agency restructuring completed in January 1998. The gross profit percentage improved from 10.5% to 11.5% primarily due to an increase in the portion of sales attributable to cruise and tours sales where the gross profit percentage generally ranges from 10% to 13%. Operating costs for the quarter were $30,015 compared to $50,563 for the three months ended December 31, 1997, which reflects the restructuring of travel agency operations to reduce the fixed operating costs to approximate $30,000 per quarter. Other revenue consists of the $90,000 of management fees from Neo Vision, Inc., the unconsolidated subsidiary acquired on June 30, 1998, which exceeded other miscellaneous income for 1997 by $88,990. The management fee of $90,000 represents the $30,000 per month charge to Neo Vision, Inc. for executive management, general and administrative expense provided by the Company. General corporate overhead increased by 44,063 primarily due to management compensation increases resulting primarily from the June 30, 1998 acquisition of Neo Vision, Inc. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The working capital deficit increased $26,290 from September 30, 1998 to $446,711. Current assets increased by $19,891 from September 30, 1998 to $113,207. The increase consists of a $6,910 decrease in cash, a $3,667 increase in accounts receivable, and a $23,134 increase in prepaid expenses. Current liabilities increased $46,181 from September 30, 1998 to $559,918. The increase consists of a $1,776 increase related to the accrued interest on the Company's convertible debentures, a $4,168 decrease in accounts payable and a $44,320 increase in accrued expenses which consists primarily of increase in the estimated compensation due executive officers. Unearned tuition increased by $4,253. The long term note receivable of $25,000 relates to the sale of Hansen and Associates Inc. Property and equipment decreased by $170 as a result of equipment acquisitions of $2,492 offset by depreciation of $2,662. Goodwill decreased by $1,499 due to amortization. Course materials decreased by $491 due to amortization. Other assets decreased by $631. The Company has formed RVP-LLC, an Arizona limited liability company for the purpose of owning recreational vehicle parks that will be leased to and operated by the Company. The operating agreement provides that the Company will manage RVP-LLC and that profits and losses will be allocated 90% to a trust whose trustee is the individual from whom the RV Park consulting fee has been earned, with the remainder allocated to the Company. 12 The Company has earned a consulting fee of $412,999 relating to its research project on the recreational vehicle park industry net of its contribution to RVP-LLC. The Company for over two years has investigated the recreational vehicle park industry and instituted a program to establish a chain of RV Parks. In connection therewith, the Company has earned a consulting fee for its research and development of the RV Parks program from which it will contribute $1,700,000 to RVP-LLC. The net consulting fee at September 30, 1998 consists of the following: Fee, net of contribution to RVP-LLC $300,000 Equity in RVP-LLC. 112,999 -------- $412,999 ======== No additional consulting fees were earned during the quarter ended December 31, 1998. The consulting fee revenue was earned upon completion of the research and the agreement with the unrelated individual who is the trustee of the family trust that holds 90% of RVP-LLC. However, for financial reporting purposes the consulting fee revenue will not be recognized until it is received, since there is insufficient evidence to assure its realization. Management believes the consulting fee, which is expected to be revenue with an infrequent occurrence, will be collected in the year ending September 30, 1999. The costs related to earning the consulting fee consisted primarily of executive compensation and travel all of which has been expensed over the period of the project. On June 30, 1998 the Company approved the transfer to RVP-LLC of the 35.66 acres of land in Glenn County, California subject to trust deeds payable in the amount of $601,000. The 35.66 acres of land transferred to RVP-LLC resulted in $12,516 being included as the original investment in RVP-LLC. The $12,516 represents the excess of the land cost at June 30, 1998 over the balance of the trust deeds payable and it has been included in the Company's general and administrative expenses for the year ended September 30, 1998. The land was acquired for the purpose of developing the initial recreational vehicle park of the planned chain of RV parks. The holder of the second trust deed filed a notice of default due to non payment of interest. The LLC determined not to reinstate the defaulted trust deed and in August 1998, RVP-LLC lost the California land in a foreclosure sale. There are no collection activities being pursued by the trust deed noteholders and management does not believe there will be any collection efforts. At September 30, 1998, the members equity of RVP-LLC is $1,707,500 and consists of primarily of the $1,700,000 capital contribution to be received from the consulting fee which for financial reporting purposes reduces the member's equity of RVP-LLC until the capital contribution of $1,700,000 is received. The Company's interest in the RVP-LLC, if the capital contributions were recognized, would be approximately $135,988. 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 $31,248 with $5,514 of amortization being recorded in the three months ended December 31, 1998. Long-term debt decreased by $2,945 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 or the New Common Stock to be authorized; although no assurance that such a conversion will be elected by the debenture holders. If the debentures holders do not elect to convert into the Company's New Common Stock, they could demand payment and seek enforcement through legal action; however, the Company has had no contact with the debentures holders. 13 The report by the Company's independent certified public accountant on the Company's financial statements for the fiscal year ended September 30, 1998 states that the Company's significant operating losses raise substantial doubt about the Company's ability to continue as a going concern. The net loss for the year ended September 30, 1998 primarily results from the increase in general and administrative expenses related to increases in the management team and their compensation, which have been made to facilitate the planned expansion including the acquisition and expansion of Neo Vision, Inc. Management projects that all of its operating units including Neo Vision, Inc. will operate at a sufficient profit to cover all of its general and administrative expenses during the year ended September 30, 1999. To accomplish its planned expansion and resulting profitability, management has adopted a program to expand its existing services operations plus the acquisition of other service organization; however, the expansion program requires the resolution of its working capital deficiency and the infusion of additional capital for which the following program has been adopted. The internal sources of liquidity include the acquisition of Neo Vision, and its projected profitability, the collection of the net consulting fee, and the anticipated conversion of the convertible debentures all of which are expected to resolve the current working capital deficiency. However, the Company intends to rapidly expand its newly acquired Neo Vision operation by the expected installation of 21 and 36 video walls in the years ended September 30, 1999 and 2000, respectively at a projected cost of $250,000 for each wall. The planned expansion will require capital from external sources of approximately $3,000,000 to $5,000,000 by early 1999. Neo Vision has engaged financial advisors to assist in the funding of its capital needs for the planned expansion, including private placements. Management believes that the funding will be a combination of long-term lease, convertible debt financing or the preferred stock to be authorized and that it will be funded in time to complete the expected installation of video walls in the year ended September 30, 1999. However, the Company does not intend to make material commitments for further capital expenditures until financing becomes available. 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. No assurance can be given that the acquisitions or installation of the video walls will be completed or the private placement to obtain the required capital infusion will be successful. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. 27 - Financial Data Schedule 14 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: February 16, 1999 /s/ Albert C. Lundstrom ------------------ ------------------------------------------- Albert C. Lundstrom, President and Chief Executive Officer Date: February 16, 1999 /s/ Harry V. Eastlick ------------------ ------------------------------------------- Harry V. Eastlick, Chief Financial Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 3-MOS SEP-30-1999 OCT-01-1998 DEC-31-1998 1 1,160 0 81,069 0 0 113,207 129,128 81,685 545,374 559,918 2,415 0 0 4,968,715 (4,985,674) 545,374 470,310 470,310 240,113 439,355 10,161 0 3,445 (17,349) 0 (17,349) 0 0 0 (17,349) (.001) (.001)
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