|
|
|
|
|
|
|
|
|
|
Previous: EMB CORP, 10KSB/A, 1998-01-27 |
Next: EMB CORP, 10QSB/A, 1998-01-27 |
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[ X ] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
-------------- ----------------
COMMISSION FILE NUMBER: 1-11883
EMB CORPORATION
---------------
(NAME OF SMALL BUSINESS ISSUER AS
SPECIFIED IN ITS CHARTER)
HAWAII 95-3811580
--------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3200 BRISTOL STREET, EIGHTH FLOOR, COSTA MESA, CALIFORNIA 92626
----------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(714) 437-0738
---------------------------
(ISSUER'S TELEPHONE NUMBER)
575 ANTON BOULEVARD, SUITE 200, COSTA MESA, CALIFORNIA 92626
--------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
CHECK WHETHER THE REGISTRANT FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE
FILED BY SECTION 12, 13 OR 15(d) OF THE EXCHANGE ACT AFTER THE DISTRIBUTION OF
SECURITIES UNDER A PLAN CONFIRMED BY COURT. YES NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON EQUITY, AS OF THE LAST PRACTICABLE DATE: 6,161,692
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES NO X
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EMB CORPORATION AND SUBSIDIARY -- CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS As of As of
March 31, 1997 September 30,
(Unaudited) 1996
CURRENT ASSETS (As restated) (As restated)
-------------- -------------
<S> <C> <C>
Cash $ 129,645 $ 395
Accounts receivable (no allowance deemed necessary) 17,958 14,582
Inventory, net 31,880 35,324
Note receivable 100,000 14,000
Mortgage loans held for sale 3,105,625 -
Prepaid expenses 38,250 -
----------- -----------
TOTAL CURRENT ASSETS 3,423,358 64,301
PROPERTY AND EQUIPMENT, net 175,182 149,363
RELATED PARTY RECEIVABLE 1,258 129,687
NOTE RECEIVABLE 3,200,000 -
LAND HELD FOR SALE 43,000 843,000
OTHER ASSETS 107,629 4,128
----------- -----------
$ 6,950,427 $ 1,190,479
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 213,393 $ 195,374
Bank overdrafts - 27,177
Accrued expenses 41,637 48,886
Warehouse line of credit 3,105,625 -
Notes payable - current portion 246,293 293,793
Capital lease obligations - current portion 14,161 28,553
Related party payable 63,750 -
----------- -----------
TOTAL CURRENT LIABILITIES 3,684,859 593,783
NOTES PAYABLE, net of current portion 22,770 65,000
CAPITAL LEASE OBLIGATIONS, net of current portion 28,000 30,096
DEFERRED GAIN 3,200,000 -
----------- -----------
TOTAL LIABILITIES 6,935,629 688,879
----------- -----------
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares authorized, no shares
issued or outstanding - -
Common stock, no par value, 30,000,000 shares
authorized; 6,166,692 and 5,311,817 shares issued
and outstanding, respectively 5,333,579 3,910,391
Common stock to be issued - 585,000
Common stock subscribed (187,875) (200,000)
Retained deficit (5,130,906) (3,793,791)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 14,798 501,600
----------- -----------
$ 6,950,427 $ 1,190,479
=========== ===========
</TABLE>
2
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the six months For the three months
ended March 31, ended March 31,
--------------------------- ---------------------------
1997 1997
(As restated) 1996 (As restated) 1996
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
REVENUES
Loan origination fees and other fees,
net of commitment fees $ 902,451 $ 121,907 $ 553,085 $ 18,129
----------- ---------- ---------- ----------
TOTAL REVENUES 902,451 121,907 553,085 18,129
----------- ---------- ---------- ----------
OPERATING EXPENSES
General and administrative 2,208,012 805,230 961,151 376,790
Depreciation 11,853 12,263 5,000 10,763
----------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 2,219,865 817,493 966,151 387,553
----------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (1,317,414) (695,586) (413,066) (369,424)
OTHER INCOME (EXPENSE)
Interest expense (18,101) (24,055) (6,095) (20,135)
----------- ---------- ---------- ----------
TOTAL OTHER INCOME (EXPENSE) (18,101) (24,055) (6,095) (20,135)
----------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (1,335,515) (719,641) (419,161) (389,559)
Income taxes 1,600 800 - 800
----------- ---------- ---------- ----------
NET INCOME (LOSS) $(1,337,115) $ (720,441) $ (419,161) $ (390,359)
=========== ========== ========== ==========
NET INCOME (LOSS) PER COMMON SHARE $(.23) $(.23) $(.07) $(.09)
=========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,709,361 3,128,199 6,024,053 4,158,650
=========== ========== ========== ==========
</TABLE>
3
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Stock Common Total
------------ --------------- Subscription Stock to be Retained Shareholders'
Shares Amounts Shares Amount Receivable Issued Deficit Equity (Deficit)
--------- ---------- -------- -------- ------------ -------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1995 1,644,350 $ 345,250 - $ - $ - $ - (565,593) (220,343)
Proceeds from sale of shares 412,707 1,017,914 - - - - - 1,017,914
Shares issued for services 836,389 1,279,460 - - - - - 1,279,460
Shares issued to founders for
services 893,712 35,749 - - - - - 35,749
Shares issued for Monterey land 200,000 800,000 - - - - - 800,000
Shares issued for note receivable 50,000 200,000 - - (200,000) - - -
Shares issued for debt 116,009 232,018 - - - - - 232,018
Shares issued for net assets of
Sterling Alliance Group, Ltd. 1,158,650 - - - - - - -
Shares to be issued for services - - - - - 585,000 - 585,000
Net loss - - - - - - (3,228,198) (3,228,198)
--------- ---------- -------- -------- ---------- --------- ----------- -----------
BALANCE, SEPTEMBER 30, 1996
(As restated) 5,311,817 $3,910,391 - $ - $(200,000) $ 585,000 $(3,793,791) $ 501,600
Proceeds from sale of shares 50,000 137,500 - - - - - 137,500
Proceeds from exercise of
warrants 27,500 55,000 - - - - - 55,000
Shares issued for services 350,000 537,500 - - - - - 537,500
Warrants exercised
for note receivable 36,125 72,250 - - (112,875) - - (40,625)
Payments on note receivable - - - - 125,000 - - 125,000
Net loss - - - - - - (917,954) (917,954)
--------- ---------- -------- -------- ---------- --------- ----------- -----------
BALANCE, DECEMBER 31, 1996
(As restated) 5,775,442 $4,712,641 - $ - $(187,875) $ 585,000 $(4,711,745) $ 398,021
Warrants exercised 31,250 35,938 - - - - - 35,938
Shares issued for services 360,000 585,000 - - - (585,000) - -
Net loss - - - - - - (419,161) (419,161)
--------- ---------- -------- -------- ---------- --------- ----------- -----------
BALANCE, MARCH 31, 1997
(As restated) (Unaudited) 6,166,692 $5,333,579 - $ - $(187,875) $ - $(5,130,906) $ 14,798
========= ========== ======== ======== ========== ========= =========== ===========
</TABLE>
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months
ended Six months
March 31, ended
1997 March 31,
(As restated) 1996
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,337,115) $(720,441)
Adjustments to reconcile net loss to net cash
used in operating activities:
Common stock issued for services 537,500 116,307
Note payable issued for commitment fees 25,500 -
Depreciation 11,853 12,263
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (3,376) (21,613)
Mortgage loans receivable (3,105,625) -
Inventory 3,444 (57,798)
Note receivable (86,000) -
Prepaid expenses and other assets (103,501) -
Increase (decrease) in:
Accounts payable 18,019 50,103
Accrued expenses (34,425) 109,925
----------- ---------
NET CASH USED IN OPERATING ACTIVITIES (4,073,726) (511,254)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (37,673) (37,199)
Proceeds from sale of land held for sale 800,000 -
Loans made on related party receivable 128,429 (264,221)
----------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 890,756 (301,420)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from warehouse line of credit 3,105,625 -
Proceeds from issuance of notes payable 54,000 698,958
Payments under capital lease obligations (16,488) (11,000)
Proceeds from exercise of warrants 35,938 -
Payments on borrowings (184,355) -
Payments on common stock subscribed 125,000 -
Proceeds from sale of common stock 192,500 100,000
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,312,220 787,958
----------- ---------
NET INCREASE (DECREASE) IN CASH 129,250 (24,716)
CASH, BEGINNING OF PERIOD 395 26,071
----------- ---------
CASH, END OF PERIOD $ 129,645 $ 1,355
=========== =========
</TABLE>
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying financial statements
contain all adjustments (which include only normal recurring
adjustments) necessary to present fairly the balance sheet of EMB
Corporation and Subsidiary as of March 31, 1997 and the result of
their operations and their cash flows for the nine months ended March
31, 1997 and 1996, respectively. The financial statements are
consolidated to include the accounts of EMB Corporation and its
subsidiary company (together "the Company").
Certain 1996 amounts have been reclassified to conform to current
period presentation. These reclassifications have no effect on
previously reported net income.
The accounting policies followed by the Company are set forth in Note
1 to the Company's financial statements as stated in its report on
Form 10-K for the fiscal year ended September 30, 1996.
NOTE 2. INCOME (LOSS) PER COMMON SHARE:
Income (loss) per common share is based on the weighted average number
of common shares outstanding during the period. No material dilution
of earnings per share would result for the periods if it were assumed
that all outstanding warrants were exercised.
The income (loss) per common share computations, and the weighted
average common shares outstanding, for the three month period ended
December 31, 1995, were adjusted to reflect the effects of the 4:1
reverse stock split effected fiscal 1996.
NOTE 3. MATERIAL EVENT:
On December 30, 1996 the Company sold its Monterey, California land
(which had been held for sale) to an unrelated third-party for
$4,000,000. The Company received $800,000 cash and a note receivable
for $3,200,000. The note receivable is secured by the property, bears
interest at 12% per annum, and calls for nine annual installments of
principal and interest of $422,867 commencing December 30, 1997, with
the balanced due on December 30, 2006. This transaction was accounted
for consistent with Statement of Financial Accounting Standards No.
66, and applied the deposit method for recognition of gain on the
sale.
NOTE 4. SIGNIFICANT AGREEMENT:
The Company entered into an agreement with a national lender whereby
the lender has extended a $3,000,000 warehouse line of credit to the
Company solely for the purpose of funding residential mortgage loans.
Additionally, the lender has executed a master commitment to purchase
$50,000,000 of jumbo and conforming residential mortgages from the
Company, with an option for an additional $50,000,000 commitment.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. RESTATEMENT:
An error, resulting in the understatement of net loss, common stock to
be issued, operating expenses and retained deficit in the Company's
previously issued financial statements for the year ended September
30, 1996, has resulted in the restatement of those financial
statements. The changes to retained deficit as of September 30, 1996
and the related statement of operations for the year then ended are
summarized as follows:
<TABLE>
<CAPTION>
Retained
Deficit Net Loss
------------ ------------
<S> <C> <C>
As previously reported, September 30, 1996 $(3,208,791) $(2,643,198)
Omission of stock for services transaction (585,000) (585,000)
----------- -----------
As restated, September 30, 1996 $(3,793,791) $(3,228,198)
=========== ===========
</TABLE>
The current period financial statements have been restated to reflect
management's change in accounting for the land sale referred to in
Note 3 from the installment sale method to the deposit method. Both
methods are consistent with Statement of Financial Accounting
Standards No. 66, "Accounting for Sales of Real Estate."
In addition, the current period financial statements have been
restated to reflect management's reversal of a sales transaction
booked in the original filing and commitment fees not accrued for in
the original filing. The agreement that generated the sales
transaction was rescinded in a subsequent period.
The change to retained deficit as of March 31, 1997, and the related
statement of operations for the six months then ended are summarized
below:
<TABLE>
<CAPTION>
Retained
Deficit Net Loss
------------ ------------
<S> <C> <C>
As previously reported, March 31, 1997 $(3,480,406) $ (271,615)
Omission of stock for services transaction (see above) (585,000) -
Change in accounting method - land sale (640,000) (640,000)
Reversal of sales transaction (400,000) (400,000)
Omission of commitment fees (25,500) (25,500)
----------- -----------
As restated, March 31, 1997 $(5,130,906) $(1,337,115)
=========== ===========
</TABLE>
7
<PAGE>
Item 6. Exhibits
27 Financial Data Schedule
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act, the
Registrant caused this amendment to its Form 10-QSB report to be signed on its
behalf by the undersigned, thereunto duly authorized.
EMB CORPORATION
Date: January 26, 1998 By: /s/ James E. Shipley
---------------------------------------
James E. Shipley, President
Date: January 26, 1998 By: /s/ B. Joe Wimer
---------------------------------------
B. Joe Wimer, Secretary, Treasurer
and Principal Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 129,645
<SECURITIES> 0
<RECEIVABLES> 17,958
<ALLOWANCES> 0
<INVENTORY> 31,880
<CURRENT-ASSETS> 3,423,358
<PP&E> 221,522
<DEPRECIATION> 41,340
<TOTAL-ASSETS> 6,950,427
<CURRENT-LIABILITIES> 3,684,859
<BONDS> 0
0
0
<COMMON> 5,333,579
<OTHER-SE> (5,318,781)
<TOTAL-LIABILITY-AND-EQUITY> 6,950,427
<SALES> 553,085
<TOTAL-REVENUES> 553,085
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 966,151
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,095
<INCOME-PRETAX> (419,161)
<INCOME-TAX> 0
<INCOME-CONTINUING> (419,161)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (419,161)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
|
|