UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 33-97130-A
THE THAXTON GROUP, INC.
(Name of small business issuer in its charter)
SOUTH CAROLINA 57-0669498
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1524 PAGELAND HIGHWAY, LANCASTER SOUTH CAROLINA 29270
(Address of principal executive offices)
Issuers telephone number: 803-285-4337
Indicate by check mark whether the issuer (1) has filed all reports required to
by 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 issuer was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
Yes X No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
OUTSTANDING AT
CLASS APRIL 30, 1998
COMMON STOCK 3,782,077
1
<PAGE>
THE THAXTON GROUP, INC.
FORM 10-QSB
MARCH 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at March 31, 1998 and 3
December 31, 1997
Consolidated Statements of Income for the three months
ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 9
and Results of Operations
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
THE THAXTON GROUP, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Assets (Unaudited)
- ------
Cash $ 1,037,606 1,162,793
Finance receivables, net 45,935,029 48,662,228
Premises and equipment, net 1,939,093 2,003,787
Accounts receivable 1,206,739 1,616,570
Repossessed automobiles 656,703 744,030
Goodwill and other intangible assets 3,813,856 3,894,956
Other assets 3,410,339 2,881,308
----------- --------------
Total assets 57,999,365 60,965,672
=========== ============
Liabilities and Stockholders' Equity
Liabilities
Accrued interest payable 379,673 420,863
Notes payable 48,094,600 51,071,066
Notes payable to affiliates 1,029,271 1,015,358
Accounts payable 1,478,696 1,357,739
Employee savings plan 984,049 1,045,533
Other liabilities 458,211 85,796
----------- ----------------
Total liabilities 52,424,500 54,996,355
----------- ------------
Stockholders' Equity
Preferred Stock $ .01 par value,
Series A: 400,000 shares authorized,
178,014 shares issued and outstanding 1,780 1,780
Series B: 27,076 shares authorized, issued and
outstanding 271 271
Series C: 50,000 shares authorized, issued and
outstanding in 500 500
Common stock, $ .01 par value; authorized 50,000,000 shares, issued and
outstanding 3,783,000 shares at March 31,1998, 3,795,600
shares at December 31, 1997 37,830 37,956
Additional paid-in-capital 4,306,620 4,521,354
Deferred stock award (540,000) (630,000)
Retained earnings 1,767,864 2,037,456
-------- ------------
Total stockholders' equity 5,574,865 5,969,317
----------- ------------
Total liabilities and stockholders' equity $ 57,999,365 60,965,672
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
THE THAXTON GROUP, INC.
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
1998 1997
---- ----
<S> <C> <C>
Interest and fee income $3,681,892 3,519,211
Interest expense 1,077,415 1,148,796
----------- ------------
Net interest income 2,604,477 2,370,415
Provision for credit losses 1,033,454 729,767
----------- ------------
Net interest income after provision for credit losses 1,571,023 1,640,648
Other income:
Insurance premiums and commissions, net 1,384,552 1,207,657
Other income 224,483 448,862
----------- ------------
Total other income 1,609,035 1,656,519
----------- ------------
Operating expenses:
Compensation and employee benefits 1,789,355 1,425,474
Telephone, postage, and supplies 387,289 317,275
Net occupancy 356,996 355,534
Reinsurance claims expense 68,109 123,655
Insurance 65,844 56,961
Collection expense 37,242 43,311
Travel 32,885 32,407
Professional fees 31,620 37,470
Other 729,746 422,111
----------- ------------
Total operating expenses 3,499,086 2,814,198
----------- ------------
Income (loss) before income tax expense (319,028) 482,969
Income tax expense (benefit) (103,684) 168,693
------------ ------------
Net income (loss) $ (215,344) 314,276
============ ============
Dividends on preferred stock $ 54,248 -
=========== ============
Net income (loss) applicable to common shareholders $ (269,592) 314,276
============ ============
Net income (loss) per common share -- basic $ (0.07) 0.08
============ ============
Net income (loss) per common share -- diluted $ (0.05) 0.08
============ ============
Weighted average shares outstanding -- basic 3,792,709 3,929,281
=========== ============
Weighted average shares outstanding -- diluted 4,047,799 3,929,281
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE THAXTON GROUP, INC.
Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities $1,370,184 881,729
Cash flows from investing activities 1,646,290 (2,883,165)
Cash flows from financing activities (3,141,661) 1,535,849
Net increase (decrease) in cash (125,187) (465,587)
Cash at beginning of period 1,162,793 421,465
Cash at end of Period 1,037,606 (44,122)
</TABLE>
5
<PAGE>
THE THAXTON GROUP, INC.
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Thaxton Group, Inc. (the "Company") is incorporated under the laws of the
state of South Carolina and operates branches in South Carolina, North Carolina,
Georgia, Virginia and Tennessee. The Company is a diversified consumer finance
company that is engaged primarily in purchasing and servicing retail installment
contracts purchased from independent used car dealers and making and servicing
personal loans to borrowers with limited credit histories, low incomes or past
credit problems. The Company also offers insurance premium financing to such
borrowers. A substantial amount of the Company's premium finance business has
been derived from customers of the independent insurance agencies operated by
the Company's subsidiary, Thaxton Insurance Group, Inc. ("Thaxton Insurance").
The Company provides reinsurance through a wholly owned subsidiary, TICO
Reinsurance, Ltd. ("TRL"). Through a wholly owned subsidiary, CFT Financial
Corporation, the Company is also engaged in mortgage banking, originating
mortgage loans to individuals. The Company sells substantially all mortgage
loans it originates to independent third parties. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
Information with respect to March 31, 1998 and 1997, and the periods then ended,
have not been audited by the Company's independent auditors, but in the opinion
of management, reflect all adjustments (which include only normal recurring
adjustments) necessary for the fair presentation of the operations of Company.
Users of financial information produced for interim periods are encouraged to
refer to the footnotes contained in the Company's Annual Report on Form 10-KSB
when reviewing interim financial statements. The results of operations for the
quarter ended March 31, 1998 are not necessarily indicative of results to be
expected for the entire fiscal year.
Effective January 1, 1998, the Company adopted the provisions of SFAS Number
130, "Reporting Comprehensive Income." This Statement establishes standards for
reporting comprehensive income and its components in a full set of general
purpose financial statements. The objective of the Statement is to report a
measure of all changes in equity of an enterprise that result from transactions
and other economic events during the period other than transactions with owners.
Comprehensive income is divided into net income and other comprehensive income.
Adoption of this Statement will not change total shareholders' equity as
previously reported. The Company's adoption of this Statement had no effect on
the presentation of income in the Company's financial statements for the
quarters ending March 31, 1998 and 1997.
6
<PAGE>
(2) Finance Receivables
Finance receivables consist of the following at March 31, 1998 and December
31,1997:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Automobile Sales Contracts $ 43,732,737 48,098,657
Direct Loans 15,134,876 15,449,004
Premium Finance Contracts 4,203,857 4,010,608
-------------- --------------
Total finance receivables 63,071,470 67,558,269
Unearned interest (11,621,312) (12,902,552)
Unearned insurance premiums, net (1,236) (155,514)
Bulk purchase discount (111,561) (359,945)
Dealer hold back (640,532) (668,630)
Allowance for credit losses (4,761,800) (4,809,400)
-------------- --------------
Finance receivables, net $ 45,935,029 48,662,228
============== ==============
</TABLE>
Consumer loans include bulk purchases of receivables, auto dealer
receivables under holdback arrangements, and small consumer loan
receivables. With bulk purchase arrangements, the Company typically
purchases a group of receivables from an auto dealer or other retailer at
a discount to par based on management's review and assessment of the
portfolio to be purchased. This discount amount is then maintained in an
unearned income account to which losses on these loans are charged. To
the extent that losses from a bulk purchase exceed the purchase discount,
the allowance for credit losses will be charged. To the extent losses
experienced are less than the purchase discount, the remaining discount
is accreted into income. The amount of bulk purchased receivables, net of
unearned interest and insurance, and the related purchase discount
outstanding were approximately $5,417,000 and $112,000, respectively, at
March 31, 1998 and approximately $8,328,000 and $360,000, respectively,
at December 31, 1997.
With holdback arrangements, an automobile dealer or other retailer will
assign receivables to the Company on a loan-by-loan basis, typically at
par. The Company will withhold a certain percentage of the proceeds,
generally 5% to 10%, as a dealer reserve to be used to cover any losses
which occur on these loans. The agreements are structured such that all
or a portion of these holdback amounts can be reclaimed by the dealer
based on the performance of the receivables. To the extent that losses
from these holdback receivables exceed the total remaining holdback
amount for a particular dealer, the allowance for credit losses will be
charged. The amount of holdback receivables, net of unearned interest and
insurance, and the related holdback amount outstanding were approximately
$30,438,000 and $641,000, respectively, at March 31, 1998 and
approximately $31,593,000 and $669,000, respectively, at December 31,
1997.
At March 31, 1998, there were no significant concentrations of
receivables in any type of property or to one borrower.
These receivables are pledged as collateral for a line of credit
agreement (see note 3).
7
<PAGE>
Changes in the allowance for credit losses for the three months ended
March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Beginning balance $ 4,809,400 2,195,000
Provision for credit losses 1,033,454 729,766
Charge-offs (1,124,547) (688,489)
Recoveries 43,493 48,780
-------------- ---------------
Net charge-offs (1,081,054) (639,709)
--------------- ---------------
Ending balance $ 4,761,800 2,285,057
============== ===============
</TABLE>
The Company's loan portfolio primarily consists of short term loans, the
majority of which are originated or renewed during the current year.
Accordingly, the Company estimates that fair value of the finance
receivables is not materially different from carrying value.
(3) Notes Payable
At March 31, 1998, the Company maintained a line of credit agreement with a
commercial finance company for $100 million, maturing on August 31, 1999 (the
"Credit Facility"). At March 31, 1998, the Company's net finance receivables
would have allowed it to borrow an additional $6.3 million against existing
collateral. The outstanding balance under the Credit Facility was $41,988,000 at
March 31, 1998. There are six tranches under this agreement, Tranche A, B, C, D,
E and F. The total line of credit, amount of credit line available at March 31,
1998, and interest rate for each Tranche is summarized below:
Tranche A: $100,000,000; $58,178,000; 9.5% (Lender's prime rate + 1%)
Tranche B: $ 10,000,000; $10,000,000; 13.5% (Lender's prime rate + 5%)
Tranche C: $ 5,000,000; $ 4,834,000; 9.5% (Lender's prime rate + 1%)
Tranche D: $ 10,000,000; $10,000,000; 10.5% (Lender's prime rate + 2%)
Tranche E: $ 7,000,000; $7,000,000; 13.5% (Lender's prime rate + 5%)
Tranche F: $ 25,000,000; $25,000,000; 9.5% (Lender's prime rate + 1%)
The borrowing availability under certain Tranches is also limited by amounts
borrowed under other Tranches, outstanding receivables, insurance premiums
written, and in some cases, additional restrictions. As a result of these
additional restrictions, the Company had approximately $58 million total
potential borrowing capacity, and actual borrowing capacity of approximately
$6.3 million as of March 31, 1998.
The terms of the Credit Facility provide that the finance receivables are
pledged as collateral for the amount outstanding. The agreement requires the
Company to maintain certain financial ratios at established levels and comply
with other non-financial requirements which may be amended from time to time.
Also, the Credit Facility limits the amount of cash dividends the Company may
pay up to 25% of the current year's net income. As of March 31, 1998, the
Company met all such ratios and requirements under the Credit Facility or
obtained waivers for any instances of non-compliance.
(4) Deferred Stock Award
One of the Company's executive officers has notified the Company that he does
not intend to accept 10,000 shares of common stock previously granted under the
Company's deferred stock compensation plan which were scheduled to vest on
December 30, 1998. Accordingly, no compensation expense related to the vesting
of those shares has been recognized for the three months ended March 31, 1998.
The common stock, paid-in-capital, and deferred stock award accounts have been
adjusted to reflect cancellation of those shares.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company is a diversified consumer financial services company that,
operating in Georgia, North Carolina, South Carolina, Tennessee and Virginia
under the name "TICO Credit Company," is engaged in purchasing and servicing
retail installment contracts ("Automobile Sales Contracts") originated by
independent used automobile dealers ("Dealers") and making and servicing
personal loans ("Direct Loans") to persons with limited credit histories, low
incomes or past credit problems ("Non-prime Borrowers"). Under the name "TICO
Premium Finance Company" in North Carolina and South Carolina and "Eagle Premium
Finance" in Virginia, the Company finances insurance premiums ("Premium Finance
Contracts"), primarily for personal lines of insurance purchased by Non-prime
Borrowers through independent agents ("Premium Finance"). The Company also sells
through Thaxton Insurance Group, Inc., ("Thaxton Insurance"), on an agency
basis, various lines of automobile, property and casualty, life and accident and
health insurance, and also sells various insurance products (primarily credit
life and credit accident and health) in conjunction with the purchase of
Automobile Sales Contracts or the making of Direct Loans. The Company recently
formed CFT Financial Corp., a mortgage banking firm, and began originating
mortgage loans primarily for non-prime borrowers in South Carolina and North
Carolina.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Finance Receivables at March 31, 1998 were $63,071,470 versus $64,984,733
at March 31, 1997, a 3% decrease. The decline is due primarily to a decline in
volume associated with the Company's tightened underwriting policies instituted
in the third quarter of 1997 designed to reduce credit losses.
Unearned income at March 31, 1998 was $11,622,548 versus $12,898,136 at
March 31, 1997, a 10% decrease which was directly related to the lower
receivable level. The provision for credit losses established for the three
months ended March 31, 1998 was $1,033,454 versus $729,766 for 1997, and the
allowance for credit losses increased from $2,285,057 at March 31, 1997 to
$4,761,800 at March 31, 1998. The increase in the provision is due to the
Company's strengthening of its allowance for credit losses in response to higher
than expected loan losses. The allowance for credit losses as a percentage of
Net Finance Receivables increased from 4.39% at March 31, 1997 to 9.26% at March
31, 1998.
Interest and fee income for the three months ended March 31, 1998 was
$3,681,892, versus $3,519,211 for the three months ended March 31, 1997, a 5%
increase. This increase is the result of a higher percentage mix of higher
yielding direct loan receivables in the portfolio in 1998, as well as greater
fee income generated by the Company's mortgage banking business. Interest
expense was lower, decreasing to $1,077,415 for the three months ended March 31,
1998 versus $1,148,796 for the three months ended March 31, 1997, a 6% decrease,
due to a lower level of borrowings. As a result of the higher interest and fee
income and lower interest expense, net interest income for the three months
ended March 31, 1998 increased to $2,604,477 from $2,370,415 for the comparable
period of 1997, a 10% increase.
10
<PAGE>
Insurance commissions net of insurance cost increased to $1,384,552 for
the three months ended March 31, 1998 from $1,207,657 for 1997, due to a higher
penetration rate for the product. Other income decreased from $448,862 at March
31, 1997 to $224,483 at March 31, 1998 due to a timing difference in the
recognition of insurance profit sharing payments from the Company's carriers.
Operating expenses increased from $2,814,198 for the three months ended
March 31, 1997 to $3,499,086 for 1998, a 24% increase. The increase in expenses
was due to additional expenses incurred as a result of a larger branch network
and increased home office expenses associated primarily with the Company's
mortgage banking business.
As a result of the above, the Company incurred a $215,344 loss for the
three months ended March 31, 1998, versus net income of $314,276 for 1997.
Stockholders' equity decreased from $ 5,969,317 at December 31, 1997 to
$5,574,865 at March 31, 1998, a 6.6% decrease, as a result of a reduction in
retained earnings from after tax losses during the period combined with
preferred stock dividends paid and legal expenses associated with preferred
stock offerings.
CREDIT LOSS EXPERIENCE
Provisions for credit losses are charged to income in amounts sufficient
to maintain the allowance for credit losses at a level considered adequate to
cover the expected future losses of principal and interest in the existing
finance receivable portfolio. Credit loss experience, contractual delinquency of
finance receivables, the value of underlying collateral, and management's
judgment are factors used in assessing the overall adequacy of the allowance and
resulting provision for credit losses. The Company's reserve methodology is
designed to provide an allowance for credit losses that, at any point in time,
is adequate to absorb the charge-offs expected to be generated by the finance
receivable portfolio, based on events or losses that have occurred or are known
to be inherent in the portfolio. The model used by the Company utilizes
historical charge-off data to predict the charge-offs likely to be generated in
the future by the existing finance receivable portfolio. The model stratifies
losses by originating office and by type, and develops historical loss factors
which are applied to the current portfolio. In addition, changes in dealer and
bulk purchase reserves are analyzed for each individual dealer and bulk
purchase, and additional reserves are established for any dealer or bulk
purchase if coverage has declined below adequate levels. The Company's
charge-off policy is based on an account by account review of delinquent
receivables. Losses on finance receivables secured by automobiles are recognized
at the time the collateral is repossessed. Other finance receivables are charged
off when they become contractually past due 180 days, unless extenuating
circumstances exist leading management to believe such finance receivables will
be collectible. Finance receivables may be charged off prior to the normal
charge-off period if management deems them to be uncollectible.
The following table sets forth the Company's allowance for credit losses at
March 31, 1998, and 1997 and the credit loss experience over the periods
presented.
<TABLE>
<CAPTION>
At or for the Three Months Ended March 31,
1998 1997
<S> <C> <C>
Net finance receivables(1) $51,448,922 $52,086,596
Allowance for credit losses 4,761,800 2,285,057
Allowance for credit losses as a percentage of net 9.26% 4.39%
finance receivables (1)
Dealer reserves and discounts on bulk purchases $752,093 $1,675,048
Dealer reserves and discounts on bulk purchases as 2.14% 4.23%
percentage of Automobile Sales Contracts at period
end(2)
11
At or for the Three Months Ended March 31,
<PAGE> 1998 1997
Allowance for credit losses and dealer reserves and 10.72% 7.60%
discount on bulk purchases as a percentage of net
finance receivables (1)
Provision for credit losses $1,033,454 $729,767
Charge-offs (net of recoveries) 1,081,054 639,709
Charge-offs (net of recoveries) as a percentage of 8.40% 5.16%
average net finance receivables (1)
</TABLE>
- ---------------------
(1) Averages are computed using month-end balances of Net Finance
Receivables during the period presented.
(2) Percentages are computed using Automobile Sales Contracts,
net of unearned finance charges only.
The following table presents an allocation of the Company's reserves and
allowances for credit losses, by type of receivable. The allowance for credit
losses has been allocated on an approximate basis between Direct Loans and
Premium Finance Contracts because losses on Automobile Sales Contracts are
charged against dealer reserves if the originating dealer's Specific Reserve
Account is adequate to cover the loss. The entire allowance is, however,
available to absorb losses occurring on any type of finance receivable. The
allocation is not indicative of future losses.
<TABLE>
<CAPTION>
At March 31,
1998 1997
<S> <C> <C>
Dealer reserves and discounts on bulk purchases on Automobile Sales Contracts $752,093 $1,675,048
Allowance for credit losses: 4,534,816 2,069,255
Direct Loans
Premium Finance Contracts 226,984 215,802
--------- ---------
Subtotal 4,761,800 2,285,057
--------- ---------
Total $5,513,893 $3,960,105
========= ==========
</TABLE>
The following table sets forth certain information concerning Automobile
Sales Contracts and Direct Loans at the end of the periods indicated:
<TABLE>
<CAPTION>
At March 31,
1998 1997
<S> <C> <C>
Automobile Sales Contracts and Direct Loans contractually $472,410 $394,144
past due 90 days or more(1)
Automobile Sales Contracts and Direct Loans (1) 46,671,809 47,380,472
Automobile Sales Contracts and Direct Loans contractually 1.01% .83%
past due 90 days or more as a percentage of Automobile
Sales Contracts and Direct Loans
</TABLE>
- -------------------------
12
<PAGE>
(1) Finance receivable balances are presented net of unearned finance
charges, dealer reserves on Automobile Sales Contracts and discounts on bulk
purchases.
The following table sets forth certain information concerning Premium
Finance Contracts at the end of the periods indicated:
<TABLE>
<CAPTION>
At March 31,
1998 1997
<S> <C> <C>
Premium finance contracts contractually $80,744 $66,208
past due 60 days or more(1)
Premium finance contracts outstanding(1) 4,025,020 3,031,076
Premium finance contracts contractually 2.01% 2.18%
past due 60 days or more as a percentage
of premium finance contracts
</TABLE>
- -------------------------------------------
(1) Finance receivable balances are presented net of unearned finance charges
and discounts on bulk purchases
LIQUIDITY AND CAPITAL RESOURCES
The Company generally finances its operations and new offices through cash
flow from operations and borrowings under the Credit Facility. See Note (3) to
Financial Statements. The Credit Facility is extended by a commercial finance
company and consists of six tranches. The primary tranche provides for advances
of up to $100 million and the secondary tranches provide for advances from $5
million to $25 million during their respective terms, all of which expire on
August 31, 1999, subject to the limitation that advances under each tranche of
the Credit Facility may not exceed an amount equal to specified percentages of
Net Finance Receivables. As of March 31, 1998, $42 million was outstanding under
the Revolving Credit Facility and there was $58 million of potential borrowing
capacity and actual borrowing capacity of $6.3 million. The interest rate for
borrowings is the prime rate published by Citibank, N.A. (or other money center
bank designated by Finova) plus one percent per annum for the primary tranche
and ranges from plus one to five percent per annum for the secondary tranches.
The Credit Facility agreement, amended on September 3, 1997, provides for a
lower fixed percentage over prime for certain secondary tranches than did the
previous agreement. The Credit Facility imposes several financial and other
covenants, including leverage tests, dividend restrictions, and minimum net
worth requirements. The Company does not believe these covenants will materially
limit its business activities.
The Company funds its liquidity and capital requirements from cash from
operations and available borrowings under the Revolving Credit Facility. In July
1997, the Company began selling subordinated term notes only to residents of
South Carolina, with interest rates ranging from 5.5% to 8.25% per annum (the
"SC Term Notes"). Through March 31, 1998, the Company had sold approximately
$2.8 million in aggregate principal amount of SC Term Notes. Net proceeds from
the sale of the SC Term Notes have been applied to reduce the Company's
indebtedness under the Revolving Credit Facility. The offering of SC Term Notes
was terminated in late March when the Company registered under the Securities
Act of 1993, as amended, an offering of up to $50 million of subordinated term
notes and subordinated daily notes, with interest rates ranging from 6.25% to
8.25% per annum, which is expected to continue over a period of up to two years
(the "Subordinated Note Program"). No material amount of subordinated notes
under the Subordinated Note Program were sold in the quarter ended March 31,
1998.
The Company believes that cash from operations and borrowings under the
Revolving Credit Facility will be sufficient to fund its liquidity and capital
requirements through 1998. The Company continues to evaluate opportunities to
enhance its operating performance through expansion of certain of its lending
activities, and may also pursue attractive acquisitions opportunities. The
Company expects to obtain the capital required to pursue such opportunities from
cash from operations, the sale of additional equity or debt securities or from
credit facilities or other borrowings.
13
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Information in response to this item is incorporated by
reference from the attached Index to Exhibits.
(B) REPORTS ON FORM 8-K
There were no reports on Form 8-K during the quarter ended March
31, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE THAXTON GROUP, INC.
-----------------------
(Registrant)
Date: May 11, 1998 /s/JAMES D. THAXTON
-------------------
James D. Thaxton
President and Chief Executive Officer
Date: May 11, 1998 /s/ALLAN F. ROSS
----------------
Allan F. Ross
Vice President, Treasurer, Secretary, and
Chief Financial Officer
14
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of The Thaxton Group, Inc.(1) --
3.2 Bylaws of the Thaxton Group, Inc.(1) --
4.1 Form of Indenture between the Company and Bank of New York defining rights
of Holders of the Company's Subordinated Notes Due 6, 12, 36, and 60 Months
and Subordinated Daily Notes (2) --
4.2 Form of Subordinated Term Note for 6, 12, 36, and 60 Month Notes
4.3 Form of Subordinated Daily Note
10.1 Amended and Restated Loan and Security Agreement dated March 27, 1995 between --
Finova Capital Corporation and the Company(1)
10.2 Loan Agreement dated May 16, 1994 between the American Bankers Insurance --
Company of Florida and the Company(1)
10.3 Promissory note dated April 1, 1995 payable in the amount of $250,000 to --
Thaxton Insurance Group(1)
10.4 Promissory note dated April 1, 1995 payable in the amount of $165,000 to C. L. --
Thaxton, Sr. (1)
10.5 Promissory note dated April 1, 1995 payable in the amount of $250,000 to --
Katherine D. Thaxton(1)
10.6 Promissory note dated April 1, 1995 payable in the amount of $35,000 to --
Katherine D. Thaxton (1)
10.7 Promissory note dated May 1, 1995 payable in the amount of $350,000 to Thaxton --
Insurance Group(1)
10.8 Promissory note dated August 21, 1995 payable in the amount of $100,000 to --
Katherine D. Thaxton(1)
10.9 Security Agreement dated January 19, 1995 between the Company and Oakland Auto --
Sales, including Guaranty by Thaxton Insurance Group, Inc.(1)
10.10 Form of Restricted Stock Award between the Company and Robert L Wilson --
10.11 The Thaxton Group, Inc. 1995 Stock Incentive Plan(1) --
10.12 The Thaxton Group, Inc. Employee Stock Purchase Plan(1) --
10.13 Form of Note Conversion Agreement(1) --
10.14 Amended and Restated Schedule to Loan and Security Agreement dated February 23, --
1996 between Finova Capital Corporation and the Company(2)
10.15 Incentive Stock Option Agreement between Kenneth H. James and the Company (2) --
10.16 Incentive Stock Option Agreement between James A. Cantley and the Company(2) --
10.17 Loan Agreement dated March 18, 1996 between the American Bankers Insurance --
Company of Florida and the Company(2)
10.18 First Amended and Restated to Loan and Security Agreement dated
September 3, 1997 between Finova Capital Corporation and the Company(3)
10.19 Aircraft Sales Agreement dated July 16, 1996(3) --
10.20 Share Exchange Agreement by and among The Thaxton Group, Inc., Thaxton --
Insurance Group, Inc., James D. Thaxton, William H. Thaxton and Calvin L.
Thaxton, Jr.(4)
10.21 Promissory note payable by the Company to Kramer-Wilson Insurance Services (5) --
11 Statement re: computation of per share earnings 8
27 Financial Data Schedule 21
</TABLE>
- -----------
15
<PAGE>
(1) Incorporated by reference from Registration Statement on Form SB-2,
Commission File No. 33-97130-A
(2) Incorporated by reference from Exhibit 4.1 to Company's Registration
Statement on Form SB-2, Commission File No. 333-42623
(3) Incorporated by reference from 1995 Annual Report on Form 10-KSB
(4) Incorporated by reference from Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1996
(5) Incorporated by reference from Report on Form 8-K dated October 31, 1996
(6) Incorporated by reference from the Company's Registration Statement on
Form S-4, Commission File No. 333-28719
16
<PAGE>
The Thaxton Group, Inc.
1524 Pageland Highway
Lancaster, South Carolina 29720
SUBORDINATED TERM NOTE - SERIES T-36
--------------------------------------
Date of Issue Note Number
FOR VALUE RECEIVED, The Thaxton Group, Inc., (the "Issuer") hereby promises to
pay the principal amount of _______________________________________________
on the Stated Maturity Date set forth below, as the same may be extended as
provided herein, to _______________________________________________________
Social Security Stated Maturity Date
or Employer I.D. ("Maturity")
(the "Holder"), or registered assigns, in the manner provided for on the reverse
side hereof. This Subordinated Term Note (the "Term Note") shall bear interest
on the unpaid principal amount from the date of issue until paid at the rate of
______________________________________________________________________________
per annum, such interest to be payable as provided herein.
ISSUANCE UNDER INDENTURE. This Term Note is one of a series of a duly
authorized issue of securities of the Issuer (each a "security" and, together,
the "Securities") issued and to be issued under an Indenture, dated as of
February 17, 1998 (herein call the "Indenture") between the Issuer and The Bank
of New York, as Trustee (herein called the "Trustee" which term includes any
successor Trustee under the Indenture) to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations, duties and immunities thereunder of the Issuer,
the Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
Reference is made to the further provisions of this Term Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
Unless the Certificate of Authentication hereon has been executed by the
Trustee, either directly or through an Authenticating Agent, by the manual or
facsimile signature of an authorized signer, this Term Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
INTEREST PAYMENT OPTIONS
Interest at the above rate will be paid:
________
[________] Monthly
[________] Quarterly
[________] At Maturity (Compounded Quarterly)
THIS SECURITY IS NOT A DEPOSIT, SAVINGS ACCOUNT OR AN OBLIGATIONS OF AN
INSURED DEPOSITORY INSTITUTION AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENTAL AGENCY.
ATTEST: THE THAXTON GROUP, INC
By:___________________________ By:_______________________________
Allan F. Ross, Secretary James D. Thaxton
Chairman of the Board,
President and Chief Executive
Officer
Authentication Certificate:
This Term Note is one of the series of Securities referred to in the within-
mentioned Indenture.
The Bank of New York, as Trustee
__________________________________
Authorized Agent
<PAGE>
PAYMENT AND INTEREST ACCRUAL. Payment of the principal of and interest on
this Term Note shall be made in lawful money of the United States at the
principal office of The Thaxton Group, Inc. 1524 Pageland Highway, Lancaster,
South Carolina 29720, or at such other place as the Issuer may designate to the
Holder in writing ("Place of Payment"); provided, however, that any such payment
may be made, at the option of the Issuer, by check mailed to the registered
address of the Holder. Upon payment or tender of payment hereof at Maturity or
earlier redemption (in whole), this Term Note shall be surrendered to the Issuer
for cancellation at the Place of Payment. Unless otherwise agreed in writing by
the Issuer, interest hereon shall cease to accrue, and the Issuer shall have no
further liability with respect thereto, upon payment (or tender of payment in
the aforesaid manner) of the outstanding principal amount hereof plus all
accrued but unpaid interest at Maturity or earlier redemption.
INTEREST RATE AND INTEREST RATE ADJUSTMENT. The interest rate payable on
the principal amount of this Term Note shall be determined by the Issuer and
shall not be less than the rate established for the most recent auction average
of United States Treasury Bills with maturities of 52 weeks but in no event
will the interest rate be less than 2% nor more than 12% per annum. The Issuer
may adjust the interest rate payable on this series of Securities. Any such
adjustment shall be determined in accordance with the preceding sentence on the
last Business Date of each month and shall be effective on the first day of the
succeeding month for Securities of this series issued or extended on or after
the first date of such month. Any adjustment of the interest rate shall remain
in effect unless and until a further adjustment is made by the Issuer.
POSSIBLE AUTOMATIC EXTENSIONS. No later than 15 days prior to Maturity,
the Company will give the Holder of this Term Note notice for first-class mail
of the Maturity and provide the Holder with a copy of the Company's most recent
quarterly report on From 10-Q filed with the United States Securities and
Exchange Commission (the "Commission"), or, if the Holder has not previously
been provided with such, a copy of the Company's most recent annual report on
Form 10-K filed with the Commission. This Term Note (with any interest payable
at Maturity being added to the principal amount hereof) will be automatically
extended for successive terms, equal in duration to the original term hereof,
at the rate of interest then in effect for Term Notes of this series unless,
prior to Maturity, the Issuer receives written notification of the Holder's
intent to redeem the Term Note or receive the interest payment due at Maturity.
All of the terms and conditions applicable to the Term Note when issued will
also apply during each period of extension. Upon any extension hereof, unless
this Term Note is surrendered and cancelled and a new Term Note is issued in its
stead, the principal amount of this Term Note shall be deemed amended to
include any accrued but unpaid interest that is added to the principal amount
and the date of Maturity shall be deemed amended to be the date of Maturity of
the period of extension.
OPTIONAL REDEMPTION BY ISSUER. This Term Note is subject to redemption upon
not less than 30 days notice by first class mail, at any time, as a whole or in
part, at the election of the Issuer, without premium, together with accrued
interest to the date fixed for redemption in such notice, but any interest
installment, which is due and payable on or prior to such date, will be payable
to the Holder at the close of business on the relevant interest payment date.
Each partial redemption payment shall be made as provided in the Indenture on
the Outstanding Securities of this series of the Securities called for
redemption.
REDEMPTION PRIOR TO MATURITY BY HOLDER. The Holder shall have the right at
its option to redeem this Term Note in whole or in part on any Business Date
prior to Maturity. Upon such redemption, the Holder shall forfeit an amount
equal to the difference between the amount of interest actually accrued on this
Term Note since the date of issuance (or, in the case of a renewal or extension
of this Term Note from the date of the most recent renewal or extension) and the
amount of interest that would have accrued on this Term Note had the rate of
interest been 3% less than the rate of interest actually accrued. When necessary
to comply with the requirements of this paragraph, any interest already paid to
or for the account of the Holder shall be deducted from the amount redeemed.
Holders shall also have the right to make partial redemption prior to Maturity;
provided, however, that, in the case of a partial redemption, a minimum
outstanding principal amount of $1,000 is maintained. The above-mentioned
forfeitures shall be evaluated only upon the amount so redeemed. This Term Note
may be redeemed before Maturity without forfeiture of any interest upon the
death of the Holder of this Term Note or when the Holder of this Term Note is
determined to be legally incompetent by a court or other administrative body
of competent jurisdiction. The Issuer retains the absolute right to require the
Holder at any time (including the time at which the Holder may otherwise request
a partial or full redemption of this Term Note) to give the Issuer no less than
30 days prior written notice by first class mail of a redemption demanded by the
Holder, which notice shall specify the principal amount of the Term Note to be
redeemed and the redemption date which shall be a Business Day. Upon any
redemption of this Term Note pursuant to this paragraph, accrued interest on the
redeemed amount to which the holder is entitled shall be payable on the
redemption date.
In the event of redemption of this Term Note in part only, a new Term Note
or Term Notes for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
ASSIGNMENT. As provided in the Indenture and subject to certain limitations
set forth therein, this Term Note shall not be transferable to any person except
by endorsement and delivery by the Holder, or his duly authorized representative
at any Place of Payment referred to above and, upon surrender to the Issuer with
proper endorsement, a new instrument of like tenor shall be issued in the name
of the transferee. No service charge shall be made for any such registration
of transfer or exchange, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Unless and until transferred in the manner aforesaid, the Issuer, the Trustee
and any agent or either of them, may treat the Holder whose name or names appear
on the face of this instrument as the absolute owner hereof for all purposes and
neither the Issuer, the Trustee nor any Paying Agent shall be affected by notice
to the contrary. If this Term Note is payable to two or more persons, they
shall be deemed to be joint tenants with right of survivorship and any and all
payments hereon shall be made to either, or the survivor of them.
SUBORDINATION. THE INDEBTEDNESS EVIDENCED BY THIS TERM NOTE IS, TO THE
EXTENT AND IN THE MANNER PROVIDED IN THE INDENTURE, SUBORDINATE AND THE SUBJECT
IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL SENIOR INDEBTEDNESS (AS
DEFINED IN THE INDENTURE) OF THE ISSUER, THIS TERM NOTE, BY HIS ACCEPTANCE
HEREOF, AGREES TO AND SHALL BE BOUND BY ALL THE PROVISIONS OF THIS INDENTURE
RELATING TO SUCH SUBORDINATION.
EVENT OF DEFAULT. If any Event of Default, as defined in the Indenture,
shall occur and be continuing, the principal of all the Securities may be
declared due and payable in the manner and with the effect provided in the
Indenture.
WHEN PAYMENT DATE IS NOT A BUSINESS DAY. In any case where any interest
payment date, redemption date or the Stated Maturity Date (as set forth above)
of this Term Note shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Term Note) payment of principal
and interest need not be made at such Place of Payment on such date, but may be
made on the next succeeding Business Day at such Place of Payment with the same
force and effect as if made on the interest payment date or redemption date,
or at the Stated Maturity Date (as set forth above), provided that no interest
shall accrue for the period from and after such interest payment date,
redemption date or Stated Date, as the case may be.
ISSUABLE IN REGISTERED FORM ONLY. This Term Note is one of a series of
Securities issuable only in registered form without coupons.
DEFINED TERMS. All capitalized terms in this Term Note which are defined
in the Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Indenture.
<PAGE>
The Thaxton Group, Inc.
1524 Pageland Highway
Lancaster, South Carolina 29720
SUBORDINATED DAILY NOTE - SERIES D
-----------------------------------
Date of Issue Note Number
FOR VALUE RECEIVED, The Thaxton Group, Inc., (the "Issuer") hereby promises to
pay the principal amount of _______________________________________________,
together with accrued interest, upon any redemption date as provided herein, to:
______________________________________________________
Social Security
or Employer I.D.
(the "Holder"), or registered assigns, in the manner provided for on the reverse
side hereof.
This Subordinated Daily Note (the "Daily Note") shall bear interest
on the unpaid principal amount at the initial rate of _________________________.
This rate may fluctuate as described on the reverse side hereof.
ISSUANCE UNDER INDENTURE. This Daily Note is one of a series of a duly
authorized issue of securities of the Issuer (each a "Security" and, together,
the "Securities") issued and to be issued under an Indenture, dated as of
February 17, 1998 (herein call the "Indenture") between the Issuer and The Bank
of New York, as Trustee (herein called the "Trustee" which term includes any
successor Trustee under the Indenture) to which Indenture and all Indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations, duties and immunities thereunder of the Issuer,
the Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
Reference is made to the further provisions of this Daily Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
Unless the Certificate of Authentication hereon has been executed by the
Trustee, either directly or through an Authenticating Agent, by the manual or
facsimile signature of an authorized signer, this Daily Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
THIS SECURITY IS NOT A DEPOSIT, SAVINGS ACCOUNT OR AN OBLIGATIONS OF AN
INSURED DEPOSITORY INSTITUTION AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC) OR ANY OTHER GOVERNMENTAL AGENCY.
ATTEST: THE THAXTON GROUP, INC
By:___________________________ By:_______________________________
Allan F. Ross, Secretary James D. Thaxton
Chairman of the Board,
President and Chief Executive
Officer
Authentication Certificate:
This Term Note is one of the series of Securities referred to in the within-
mentioned Indenture.
The Bank of New York, as Trustee
__________________________________
Authorized Agent
<PAGE>
PAYMENT AND INTEREST ACCRUAL. Payment of the principal of and interest on
this Daily Note upon a full or partial redemption by the holder of the Issuer,
and interest thereon shall be made on a Business Day in lawful money of the
United States at the principal office of The Thaxton Group, Inc. 1524 Pageland
Highway, Lancaster, South Carolina 29720, or at such other place as the Issuer
may designate to the Holder in writing ("Place of Payment"); provided, however,
that any such payment may be made, at the option of the Issuer, by check mailed
to the registered address of the Holder. Upon payment or tender of payment of
the full principal amount and accrued interest thereon, this Daily Note shall be
surrendered to the Issuer for cancellation at the Place of Payment. Unless
otherwise agreed in writing by the Issuer, interest hereon shall cease to
accrue, and the Issuer shall have no further liability with respect thereto,
upon payment (or tender of payment in the aforesaid manner) of the full
principal amount hereof and accrued interest thereon.
INTEREST RATE AND INTEREST RATE ADJUSTMENT. The interest rate will be
determined by the Issuer and may fluctuate on a monthly basis. The interest rate
shall no be less than 3% below nor more than 5% above the rate established for
the most recent auction average of United States Treasury Bills with maturities
of 13 weeks but in no event will the rate of interest payable be less than 2%
nor more than 12% per annum. Any adjustment to the interest rate will be
determined in accordance with the provisions of the preceeding sentence on the
last Business Day of each month, shall be effective on the first day of the
following month and shall remain in effect until next adjusted by the Issuer.
The Issuer shall notify the Holder promptly by first class mail of any
adjustment in the interest rate.
OPTIONAL REDEMPTION BY ISSUER. This Daily Note is subject to redemption
upon not less than 30 days notice by first class mail, at any time, as a whole
or in part, at the election of the Issuer, without premium, together with
accrued interest to the date fixed for redemption in such notice. Each partial
redemption payment shall be made as provided in the Indenture on the Outstanding
Securities of this series of the Securities called for redemption.
REDEMPTION BY HOLDER. The Holder shall have the right at its option to
redeem this Daily Note, in whole or in part, on any Business Day. Holders shall
also have the right to make partial redemptions; provided, however, that upon a
partial redemption, a minimum outstanding principal amount of $50 must be
maintained. The Issuer retains the absolute right to require the Holder at any
time (including the time at which the Holder may otherwise request a full or
partial redemption of this Daily Note), to give the Issuer no less than 30 days
prior written notice by first class mail of a redemption demanded by the Holder
which notice shall specify the principal amount of the Daily Note to be
redeemed and the redemption date which shall be a Business Day.
RECORDATIONS OF ADDITIONS OR PARTIAL REDEMPTIONS. Upon presentation of this
Daily Note at a Place of Payment, the Issuer, or the Issuer's agent, will, for
the Holder's convenience, record on the register that is a part hereof any
adjustments to the original principal amount of this Daily Note, such as
additional purchases or partial redemptions.
ASSIGNMENT. As provided in the Indenture and subject to certain limitations
set forth therein, this Daily Note shall not be transferable to any person
except by endorsement and delivery by the Holder, or his duly authorized
representative at any Place of Payment referred to above and, upon surrender to
the Issuer with proper endorsement, a new instrument of like tenor shall be
issued in the name of the transferee. No service charge shall be made for any
such registration of transfer or exchange, but the Issuer may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Unless and until transferred in the manner aforesaid, the
Issuer, the Trustee and any agent or either of them, may treat the Holder whose
name or names appear on the face of this instrument as the absolute owner hereof
for all purposes and neither the Issuer, the Trustee nor any Paying Agent shall
be affected by notice to the contrary. If this Security is payable to two or
more persons, they shall be deemed to be joint tenants with right of
survivorship and any and all payments hereon shall be made to either, or the
survivor of them.
SUBORDINATION. THE INDEBTEDNESS EVIDENCED BY THIS DAILY NOTE IS, TO THE
EXTENT AND IN THE MANNER PROVIDED IN THE INDENTURE, SUBORDINATE AND SUBJECT
IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL SENIOR INDEBTEDNESS (AS DEFINED
IN THE INDENTURE) OF THE ISSUER, WHETHER OUTSTANDING AT THE DATE OF THE
INDENTURE OR THEREAFTER INCURRED. EACH HOLDER OF THIS DAILY NOTE, BY HIS
ACCEPTANCE HEREOF, AGREES TO AND SHALL BE BOUND BY ALL THE PROVISIONS OF THE
INDENTURE RELATING TO SUCH SUBORDINATION.
EVENT OF DEFAULT. If an Event of Default, as defined in the Indenture,
shall occur and be continuing, the principal of all the Securities may be
declared due and payable in the manner and with the effect provided in the
Indenture.
WHEN PAYMENT DATE IS NOT A BUSINESS DAY. In any case where any redemption
date shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Daily Note) payment of principal
and interest need not be made at such Place of Payment on such date, but may be
made on the next succeeding Business Day at such Place of Payment with the same
force and effect as if made on the redemption date, provided that no interest
shall accrue for the period from and after such redemption date.
ISSUABLE IN REGISTERED FORM ONLY. This Daily Note is one of a series of
Securities issuable only in registered form without coupons.
DEFINED TERMS. All capitalized terms in this Daily Note which are defined
in the Indenture and not otherwise defined herein shall have the meanings
assigned to them in the Indenture.
Initial Purchase/Register Balance
This Daily Note Register is provided for the convenience of the Holder.
Entries may be made only by an authorized agent of the Issuer to reflect
additional purchases of redemptions. The Issuer will not be liable for any
transaction unless an entry is made hereon by an authorized agent of the Issuer.
The Holder will receive statements on a monthly basis which will include all
transactions for the period.
- -------------------------------------------------------------------------------
Received/Paid
Transaction Date By Redemptions Purchases
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,037,606
<SECURITIES> 0
<RECEIVABLES> 50,696,829
<ALLOWANCES> 4,761,800
<INVENTORY> 0
<CURRENT-ASSETS> 46,972,635
<PP&E> 4,266,403
<DEPRECIATION> 2,327,310
<TOTAL-ASSETS> 58,037,815
<CURRENT-LIABILITIES> 2,316,580
<BONDS> 0
0
0
<COMMON> 37,830
<OTHER-SE> 5,564,877
<TOTAL-LIABILITY-AND-EQUITY> 58,037,815
<SALES> 0
<TOTAL-REVENUES> 5,290,927
<CGS> 0
<TOTAL-COSTS> 4,576,501
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,033,454
<INTEREST-EXPENSE> 1,077,415
<INCOME-PRETAX> (319,028)
<INCOME-TAX> (103,684)
<INCOME-CONTINUING> (215,344)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (215,344)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.05)
</TABLE>
