been approximately 5%. Under the terms of the Settlement, at closing, the balance of the lease will be assumed by IAP.
The Company commenced purchasing Installment Contracts Receivable in May 1994 and ceased making such purchases in December 1995. The Company commenced its Inventory Assistance Program in March 1995.
During the fiscal year ended March 31, 1996, viatical revenues decreased by $18,611,200 to $1,326,706, reflecting the maturity of 12 Policies, from $19,937,906, reflecting the maturity of 195 Policies, during the fiscal year ended March 31, 1995. Net viatical revenues for the fiscal year ended March 31, 1996 were $541,858 or 41% of viatical revenues, reflecting costs of $784,848 associated with the Policies that matured during such year. The cost of a Policy includes the initial purchase price, insurance premiums, and other direct expenditures, if any, by the Company in connection with the purchase and maintenance of a Policy. Such costs in excess of the purchase price accounted for approximately 2% of the face value of Policies that matured during the year ended March 31, 1996 and March 31, 1995. Net viatical revenues for the year ended March 31, 1995 were $6,677,650, or 33.5% of viatical revenues, reflecting costs of $13,260,256. The decrease in policy maturities and net viatical revenues resulted from the Company's decision not to purchase new Policies after September 1994, and the sale in May and July 1995 of a total of 225 policies for approximately $17.5 million to Viaticus, Inc.
General and administrative expenses increased by $3,269,367 to $9,914,990 during the year ended March 31, 1996, from $6,645,623 during the year ended March 31, 1995. This increase resulted primarily from increases of approximately $1,873,000 in costs resulting from the expanded activity of the Company's Installment Contracts Receivable business during the first three quarters of the year, $444,000 in legal and professional fees, $226,162 in severance pay resulting from the Company's downsizing during the third quarter of 1996, and $219,799 and $173,973 in costs incurred in 1993 and 1994 relating to the Company's offering of securities and its 1995 organization of an Australian joint venture, respectively. As a result of the Company's downsizing during the third quarter of 1996, salary expense was approximately $246,000 during the three months ended March 31, 1996 as compared with approximately $860,000 during the three months ended September 30, 1995.
During the year ended March 31, 1996, the Company's operating loss (excluding provision for credit losses) was $1,564,763, as compared with operating income of $2,750,932 during the year ended March 31, 1995. The decrease in operating income was primarily attributable to the developments described above.
For the year ended March 31, 1996, the Company had a net loss of $744,547 or $.16 per share. For the year ended March 31, 1995, the Company had a net loss of $2,999,823 or $0.65 per share. The change in net loss was attributable primarily to the developments described above, coupled with an increase of $5.3 million in gain on early extinguishment of debt and an increase of $4.9 million in benefits from income taxes.
During the fiscal year ended March 31, 1996 the Company funded a total volume of 2,771 IAP purchases totalling approximately $13.2 million. At March 31, 1996 the Company's IAP receivable portfolio consisted of 994 loans totalling approximately $5.1 million.
The Company commenced its purchases of Installment Contracts Receivable in May 1994 and ceased purchases of Installment Contracts Receivable on December 22, 1995.
During the fiscal year ended March 31, 1996, the Company purchased a total of approximately 2,600 Installment Contracts Receivable at a cost of approximately $12.6 million. The Company's portfolio of Installment Contracts Receivable at March 31, 1996, excluding Installment Contracts Receivable with respect to which there has been a repossession of the underlying collateral, a charge-off or the creation of a reserve, consisted of approximately 3,400 active loans purchased at a cost of approximately $12.0 million.
("Viaticus"), a subsidiary of the CNA Insurance Companies. Under the Agreements, ALRG and LB NM received consideration for each of the assigned policies when Viaticus received an acknowledgement from the insurer of the assignment of the policy. During the fiscal year ended March 31, 1996, approximately $17.5 million has been received as payment for policies with completed assignments to Viaticus and there are no outstanding amounts receivable under the agreements at March 31, 1996.
The Company believes it has sufficient funds to finance its currently contemplated operations for at least the next 12 months but will require additional funds, if not generated from operations, to finance future growth, the entering into new businesses and the payment of interest on and repayment of the Debentures. Auction fundings until the closing of the Settlement are expected to be funded through proceeds from maturities of outstanding Policies and Installment Contracts Receivable, cash reserves and Securities Available for Sale, and proceeds, if any, from the exercise of the Company's outstanding Class A and Class B Warrants. Since the receipt of such funds is not completely predictable, the Company may need to acquire additional financing to fund its anticipated operations beyond such period. Furthermore, in the event that a closing of the Settlement has not taken place by the interest payment date in September 1996, the Company may be left with insufficient liquidity to continue funding its IAP operations. The ability of management to return the Company to profitable operations and a capacity to meet its obligations on demand is uncertain. There can be no assurance that management will be able to accomplish its objectives or that it will enable the Company to become profitable on an ongoing basis and to continue as a going concern.
In connection with the acquisition of LBI in April 1991, the Company agreed to pay consideration of (i) $500,000 cash; (ii) 158,730 shares of Common Stock valued at $500,000; and (iii) additional consideration equal to 50% of the Estimated Net Earnings (as that term is defined in the acquisition agreement) of LB NM in the fiscal years ending March 31, 1992, 1993 and 1994. This acquisition was accounted for under the purchase method of accounting, resulting in goodwill of $1,000,000, which was initially being amortized over a period of 10 years. At March 31, 1993, the Company accrued $549,258 under the acquisition agreement as additional consideration which was paid in July 1993. The Company and the principals of LBI are disputing the remaining amounts of consideration due based on differences in interpretation of certain computational items set forth in the acquisition agreement. The Company has accrued an amount based on its interpretation of the agreement and intends to negotiate a settlement of the dispute. However, the Company is currently unable to predict with certainty the final resolution of this matter.
In connection with the acquisition of ALRC in April 1993, the Company paid a purchase price of $250,000 for the assets, $500,000 for certain employment and non-competition arrangements with the two principals of ALRC and incurred transaction costs of $250,000. The Company did not assume any liabilities or obligations of ALRC, except for certain nominal office lease obligations. The employment agreements with the two principals of ALRC provided for employment terms of five years from the date of the acquisition. One
of the two principals of ALRC was subsequently appointed President, Chief Executive Officer and Chairman of the Company.
At March 31, 1996, the Company had cash, cash equivalents and securities available for sale of approximately $3.2 million. A portion of the Company's available funds may be applied to fund acquisitions of companies or assets of companies in complementary or related fields. Although the Company from time to time engages in discussions and negotiations of potential acquisitions, it currently has no agreements or understandings with respect to any particular acquisition.
At March 31, 1993, the Company adopted Financial Accounting Standard Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities" and, accordingly, began recording its investments in securities available for sale at fair value. See Notes 1 and 3 of Notes to Consolidated Financial Statements for additional information about the Company's investment in securities available for sale.
The Company's primary sources of capital have been sales of equity and debt securities, including the Company's initial equity offering in July 1990, which resulted in net proceeds of approximately $7.6 million, and a September 1991 sale of $55 million 9.5% Convertible Subordinated Debentures maturing on September 19, 1997, which resulted in net proceeds of $51.4 million. During the fiscal year ended March 31, 1996, the Company prepaid, without penalty $28.9 million principal amount of Debentures leaving $22.1 million outstanding. The Debentures are convertible into Common Stock at the rate of one share of Common Stock per $12.25 principal amount. Annual interest payments of approximately $2.1 million are required under the Debentures outstanding as of March 31, 1996. Annual interest payments were made in accordance with the terms of the Indenture in September 1992, 1993, 1994 and 1995. As of March 31, 1996, the Company had accrued $1,111,369 as interest payable.
In December 1992, the Company announced a plan to utilize up to $10,000,000 to repurchase its Common Stock and Class A Warrants. During the year ended March 31, 1993, the Company repurchased 705,700 shares of its Common Stock at a total cost of $2,746,140, or an average price of $3.89 per share, and 142,000 of its Class A Warrants at a total cost of approximately $227,000, or an average price of $1.60 per warrant. During the year ended March 31, 1994, the Company repurchased an additional 165,500 shares of its Common Stock at a total cost of approximately $718,000, or an average price of $4.34 per share. No shares of Common Stock or Class A Warrants have been purchased since April 1994. All shares repurchased were retired during the year ended March 31, 1994.
The responses to this item are submitted in a separate section of this Annual Report on Form 10-K. See Index to Consolidated Financial Statements on page.