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<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 DECEMBER 31, 1996
[ ] 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
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
575 ANTON BOULEVARD, SUITE 200, COSTA MESA, CALIFORNIA 92626
-------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(714) 437-0715
--------------------------
(ISSUER'S TELEPHONE NUMBER)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(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 X 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: 6,190,267
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES ___ NO X
---
<PAGE>
Part I - Financial Information
ITEM 1. EMB CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31, September 30,
1996 1996
CURRENT ASSETS (As restated) (As restated)
-------------- -------------
<S> <C> <C>
Cash $ 836,035 $ 395
Accounts receivable (no allowance deemed necessary) 30,407 14,582
Inventory, net 31,880 35,324
Note receivable - 14,000
Mortgage loans held for sale 1,825,650 -
----------- -----------
TOTAL CURRENT ASSETS 2,723,972 64,301
PROPERTY AND EQUIPMENT, net 150,193 149,363
RELATED PARTY RECEIVABLE 140,446 129,687
NOTE RECEIVABLE 3,200,000 -
LAND HELD FOR SALE 43,000 843,000
OTHER ASSETS 9,129 4,128
----------- -----------
$ 6,266,740 $ 1,190,479
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 274,307 $ 195,374
Bank overdrafts - 27,177
Accrued expenses 88,288 48,886
Warehouse line of credit 1,825,650 -
Notes payable - current portion 343,526 293,793
Capital lease obligations - current portion 28,828 28,553
----------- -----------
TOTAL CURRENT LIABILITIES 2,560,599 593,783
NOTES PAYABLE, net of current portion 84,997 65,000
CAPITAL LEASE OBLIGATIONS, (net of current portion) 23,123 30,096
DEFERRED GAIN 3,200,000 -
----------- -----------
TOTAL LIABILITIES 5,868,719 688,879
----------- -----------
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; 5,775,442 and 5,311,817 shares issued
and outstanding, respectively 4,712,641 3,910,391
Common stock to be issued 585,000 585,000
Common stock subscribed (187,875) (200,000)
Retained deficit (4,711,745) (3,793,791)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 398,021 501,600
----------- -----------
$ 6,266,740 $ 1,190,479
=========== ===========
</TABLE>
2
<PAGE>
<PAGE>
EMB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
December 31,
-------------------------
1996 1995
(As restated) (Unaudited)
------------- -----------
<S> <C> <C>
REVENUES
Loan origination and other fees, net of commitment fees $ 349,367 $ 103,779
---------- ----------
TOTAL REVENUES 349,367 103,779
OPERATING EXPENSES
General and administrative 1,246,095 417,641
Depreciation 6,853 1,500
---------- ----------
TOTAL OPERATING EXPENSES 1,252,948 419,141
---------- ----------
LOSS FROM OPERATIONS (903,581) (315,362)
OTHER INCOME (EXPENSE)
Interest expense (12,773) (3,920)
---------- ----------
TOTAL OTHER INCOME (EXPENSE) (12,773) (3,920)
---------- ----------
LOSS BEFORE INCOME TAXES (916,354) (319,282)
Income taxes 1,600 800
---------- ----------
NET INCOME (LOSS) $ (917,954) $ (320,082)
========== ==========
NET INCOME (LOSS) PER COMMON SHARE $ (.17) $ (.15)
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,406,549 2,108,949
========== ==========
</TABLE>
3
<PAGE>
EMB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Stock Common Total
Common Stock Preferred Stock 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
========= ========== ====== ======= ========== ========== =========== ===========
</TABLE>
4
<PAGE>
EMB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
December 31,
--------------------------
1996 1995
(As restated) (Unaudited)
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (917,954) $(320,082)
Adjustments to reconcile net income to net cash
used in operating activities:
Common stock issued for services 537,500 116,307
Depreciation 6,853 1,500
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (15,825) (1,081)
Mortgage loans held for sale (1,825,650) -
Inventory 3,444 -
Note receivable 14,000 -
Prepaid expenses and other assets (5,001) -
Increase in:
Accounts payable 51,756 7,078
Accrued expenses 39,402 66,961
----------- ---------
NET CASH USED IN OPERATING ACTIVITIES (2,111,475) (129,317)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (7,683) (3,103)
Proceeds from sale of land held for sale 800,000 -
Loans made on related party receivable (10,759) (11,931)
----------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 781,558 (15,034)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from warehouse line of credit 1,825,650 -
Proceeds from issuance of notes payable 54,000 18,490
Payments under capital lease obligations (6,698) -
Payments on borrowings (24,895) -
Payments on common stock subscribed 125,000 -
Proceeds from sale of common stock 192,500 100,000
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,165,557 118,490
----------- ---------
NET INCREASE (DECREASE) IN CASH 835,640 (25,861)
CASH, BEGINNING OF PERIOD 395 26,071
----------- ---------
CASH, END OF PERIOD $ 836,035 $ 210
=========== =========
</TABLE>
5
<PAGE>
EMB CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited 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 December 31, 1996 and the results of
their operations and their cash flows for the three months ended
December 31, 1996 and 1995, respectively. The financial statements are
consolidated to include the accounts of EMB Corporation and its
subsidiary company (together "the Company").
Certain 1995 amounts have 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 4:1 of the
reverse stock split effected fiscal 1996.
NOTE 3. MATERIAL EVENT:
On December 30, 1996 the Company sold the Monterey 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 balance 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 to an additional $50,000,000 commitment.
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:
6
<PAGE>
EMB CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<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 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."
The change to retained deficit as of December 31, 1996, and the related
statement of operations for the three months then ended are summarized
below:
<TABLE>
<CAPTION>
Retained
Deficit Net Loss
------------ ------------
<S> <C> <C>
As previously reported, December 31, 1996 $(3,486,745) $(277,954)
Omission of stock for services transaction (see above) (585,000) -
Change in accounting method - land sale (640,000) (640,000)
----------- ---------
As restated, December 31, 1996 $(4,711,745) $(917,954)
=========== =========
</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> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 836,035
<SECURITIES> 0
<RECEIVABLES> 30,407
<ALLOWANCES> 0
<INVENTORY> 31,880
<CURRENT-ASSETS> 2,723,972
<PP&E> 150,193
<DEPRECIATION> 6,853
<TOTAL-ASSETS> 6,266,740
<CURRENT-LIABILITIES> 2,560,599
<BONDS> 0
0
0
<COMMON> 4,712,641
<OTHER-SE> (4,314,620)
<TOTAL-LIABILITY-AND-EQUITY> 6,266,740
<SALES> 349,367
<TOTAL-REVENUES> 349,367
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,252,948
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (12,773)
<INCOME-PRETAX> (916,354)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (917,954)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (917,954)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
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