UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
( X ) Quarterly report pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934.
For the quarterly period ended June 30, 1997.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange
Act for thetransition period from ____________ to ____________ .
Commission File Number: 333-06328
Sterling Financial Services of Florida I, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Florida 65-0716464
(State of Incorporation) (I.R.S. Employer I.D. No)
239 Halliday Park Drive, Tampa, Florida 33612
(Address of Principal Executive Offices)
(813) 932-2228
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES ( ) NO (X)
Indicate the number of shares outstanding of each of the issuer's classes of
stock as of April 21, 1999.
1,000 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
<PAGE>
Sterling Financial Services of Florida I, Inc.
(A Development Stage Company)
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of June 30, 1997 and January 10, 1997............3
Statements of Operations for the Three Months Ended June 30,
1997 and the Period January 3, 1997 (Inception) to June 30,
1997...............................................................4
Statement of Stockholders' Deficit as of June 30, 1997.............5
.................................................
Statements of Cash Flows for the Three Months Ended June 30,
1997 and the Period January 3, 1997 (Inception) to June 30,
1997...............................................................6
Notes to Financial Statements .....................................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .............................................8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .................................................10
Item 2. Changes in Securities .............................................10
Item 3. Defaults Upon Senior Securities ...................................10
Item 4. Submission of Matters to a Vote of Securities Holders..............10
Item 5. Other Information..................................................10
Item 6. Exhibits and Reports on Form 8-K...................................10
Signatures
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<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
(A Development Stage Company)
BALANCE SHEETS
- -----------------------------------------------------------------
June 30, January
1997 10,
ASSETS Unaudited 1997
---------- --------
Cash and cash equivalents $ 98,353 $ 1,000
Property and equipment - net 9,635 0
Deferred debt issuance costs 53,316 0
----------- ----------
TOTAL $ 161,304 $ 1,000
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Secured notes payable $ 139,000 $ 0
Due to stockholder 1,750 0
Accrued expenses 30,000 0
----------- ----------
Total liabilities 170,750 0
----------- ----------
STOCKHOLDERS' DEFICIT
Common stock, no par value, 10,000
shares authorized,
1,000 shares issued and outstanding 1,000 1,000
Deficit accumulated during
the development stage (10,446) 0
----------- ----------
Total stockholders' deficit (9,446) 1,000
----------- ----------
TOTAL $ 161,304 $ 1,000
=========== ==========
- -----------------------------------------------------------------
See accompanying notes.
-3-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
- --------------------------------------------------------------------
Period
January
Three 3, 1997
Months (Inception)
Ended to June
June 30, 30 , 1997
1997
------------ ----------
OPERATING EXPENSES:
Management fees - related party $ 4,550 $ 4,550
Office rent - related party 4,400 4,400
Other 250 700
------------- ------------
Total operating expenses 9,200 9,650
------------- ------------
LOSS FROM OPERATIONS (9,200) (9,650)
INTEREST EXPENSE (796) (796)
------------- ------------
NET LOSS $ (9,996) $ (10,446)
============= ============
LOSS PER COMMON SHARE $ (10.00) $ (10.45)
============= ============
- --------------------------------------------------------------------
See accompanying notes.
-4-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited)
- ------------------------------------------------------------------------------
Deficit
Accumulated
During
the
Common Stock Development
Shares Amount Stage Total
-------- ----------- ---------- --------
Balances, January 3, 1997 0 $ 0 $ 0 $ 0
(Inception)
Issue of common stock 1,000 1,000 1,000
Net loss for period
January 3, 1997
(Inception) through
June 30,1997 (10,446) (10,446)
-------- ----------- ----------- -----------
Balances, June 30, 1997 1,000 $ 1,000 $ (10,446) $ (9,446)
======== =========== =========== ===========
- ------------------------------------------------------------------------------
See accompanying notes.
-5-
<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
- ------------------------------------------------------------------------------
Three Period
Months January 3,
Ended 1997
June 30, (Inception)
1997 to June 30
, 1997
----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,996) $ (10,446)
Adjustments to reconcile net loss to net
cash used by operating activities-
Increase in accrued expenses 30,000 30,000
------------ ---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 20,004 19,554
------------ ---------------
CASH FLOWS FROM INVESTING ACTIVITIES-
Purchase of property and equipment (9,635) (9,635)
------------ ---------------
NET CASH USED BY INVESTING ACTIVITIES (9,635) (9,635)
------------ ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 0 1,000
Issuance of secured notes payable 139,000 139,000
Net increase (decrease) in stockholder
advance (5,000) 1,750
Cash paid for deferred debt issuance costs (46,326) (53,316)
------------ ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 87,674 88,434
------------ ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 98,042 98,353
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 311 0
------------ ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 98,353 $ 98,353
============ ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Interest paid $ 796 $ 796
============ ===============
- -----------------------------------------------------------------------------
See accompanying notes.
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<PAGE>
STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Sterling Financial Services of Florida I, Inc, (the "Company") was incorporated
under the laws of the state of Florida on January 3, 1997. The Company which is
considered to be in the development stage as defined in Financial Accounting
Standard No 7, intends to offer financial services to the sub-prime mobile home
industry, including originating and refinancing for its own account installment
contracts created in connection with the sale of used and new mobile homes.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principals for interim
financial information and the instructions to Form 10-QSB and Rule 10-1 of
Regulation S-X of the Securities and Exchange Commission (the "SEC").
Accordingly, these financial statements do not include all of the footnotes
required by generally accepted accounting principals. In the opinion of
management, all adjustments (consisting of normal and recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three months and the period January 3, 1997 (Inception) to June
30, 1997 are not necessarily indicative of the results that may be expected for
the period January 3, 1997 (Inception) to December 31, 1997. The accompanying
financial statements and the notes should be read in conjunction with the
Company's audited financial statements as of January 10, 1997 contained in its
Amendment No. 3 Registration Statement on Form S-1.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principals requires that management make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. The reported amounts of the revenues and expenses during the
reporting period may be affected by the estimates and assumptions that
management is required to make. Actual results could differ from those
estimates.
Basis of Accounting
The Company's financial statements are prepared using the accrual basis of
accounting.
Year End
The Company's year-end for financial and tax-reporting purposes is December 31.
Financial Instruments
The Company believes the book value of their cash and cash equivalents and
accrued expenses approximates their fair values due to their short-term nature.
The book value of the Company's secured notes payable approximates their fair
value as the current interest rates approximate rates at which similar types of
borrowing arrangements could be currently obtained by the Company.
-7-
<PAGE>
Property and Equipment
Property and equipment are stated at cost. Major additions are capitalized,
while minor additions and maintenance and repairs, which do not extend the
useful life of an asset, are expensed as incurred. Depreciation will be computed
using an accelerated method over the assets' estimated useful lives of 5 to 27.5
years.
Income Taxes
The Company has elected to be taxed under Subchapter S of the Internal Revenue
Code, and accordingly is not subject to income taxes as the results of
operations flow through to the shareholders for inclusion in their personal tax
returns.
Deferred Debt Issuance Costs
Direct costs incurred to register and issue the secured notes will be deferred
and amortized to interest expense over the lives of the related loans using the
actuarial method.
Loss Per Common Share
Loss per common share is based on the weighted average number of common and
common equivalent shares outstanding during the period. The weighted average
number of common shares outstanding for the three months ended June 30, 1997 and
for the period January 3, 1997 (Inception) to June 30, 1997 was 1,000.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
NOTE C - SECURED NOTES PAYABLE
Secured notes payable bear interest at 10.5%, with interest payable monthly, and
mature on June 30, 2002. The notes will be secured by a first lien on any assets
acquired with the proceeds. The notes are prepayable in whole or in part at any
time without premium or penalty. The Company has registered $9.9 million of such
notes and is continuing to offer the remaining $9,761,000 of secured notes for
sale. The notes are being offered on a "best-efforts" basis by broker-dealers,
who are members of the National Association of Securities Dealers, Inc.
NOTE D - RELATED PARTY TRANSACTIONS
The Company's majority stockholder advanced $6,750 to the Company of which
$5,000 was repaid during the period January 3, 1997 (Inception) to June 30,
1997; the remaining $1,750 is reflected as a due to stockholder in the
accompanying balance sheet. The advances were and are unsecured, non-interest
bearing and due on demand.
Sterling Financial Services, Inc. ("SFS"), a related party due to common
ownership manages the Company and leases space to the Company for its
operations. Management fees and office rent paid to SFS during the period
January 3, 1997 (Inception) to June 30, 1997 totaled $8,950.
-8-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW
The following discussion and analysis should be read in conjunction with the
balance sheet as of January 10, 1997 and the financial statements as of and for
the three months ended June 30, 1997 and the period January 3, 1997 (Inception)
to June 30, 1997 included with this Form 10-QSB.
The Company, which is currently in the development stage, intends to offer
financial services to the sub-prime mobile home industry by originating and
refinancing sub-prime mobile home installment contracts. The Company has not
originated or refinanced any installment notes as of June 30, 1997.
RESULTS OF OPERATIONS
The Company did not generate revenue during the three months ended June 30,
1997. Operating expenses during the same period totaled $9,200 and consisted
primarily of management fees and rent of $8,950. The management fees and rent
were paid to Sterling Financial Services, Inc. ("SFS"), which is related to the
Company by virtue of common ownership. Interest expense of $796 was incurred on
outstanding secured notes of $139,000 during the three-month period. The net
losses for the three months ended June 30, 1997 and for the period January 3,
1997 (Inception) to June 30, 1997 were $9,996 and $10,446, respectively.
The losses are the result of the initial startup costs incurred to implement the
Company's business plan.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities in the three months ended June 30, 1997 provided $20,004 in
cash flow due to an increase in accrued expenses of $30,000. Offsetting the
increase in cash due to accrued expenses was a loss of $9,996 for the three
months ended June 30, 1997. There was no significant activity prior to the three
months ended June 30, 1997.
Financing activities generated additional cash flow of $139,000 from the
proceeds of secured notes payable. Financing activities utilized $51,326 of cash
flow due to the payment of $46,326 in deferred debt issuance costs, and the
repayment of $5,000 that had been advanced by the majority stockholder during
the three months ended June 30, 1997. The balance of the stockholder advance is
$1,750 which amount is unsecured non-interest bearing, and due on demand.
The Company is offering subscriptions for a maximum of 9,900 secured notes in
the principal amount of $1,000 each. As such, $9,761,000 of notes remain
available for sale as of June 30, 1997. If all of these notes are sold, the
Company will net approximately $8,784,000. The notes bear simple interest at
10.5% and mature on June 30, 2002. Interest is payable monthly. The notes will
be secured by a first lien on the assets acquired with the proceeds of the
offering. The notes are prepayable in whole or in part at any time without
premium or penalty.
The Company believes that it will be able to satisfy its cash requirements for
the foreseeable future if it does not expand its business by originating
additional finance receivable contracts. However, in order for the Company to
expand its dealer base and portfolio of finance receivable contracts, the
Company must secure additional capital resources through additional debt or
equity offerings and/or institutional financing, such as a line of credit. No
assurance can be given that additional capital resources will be available
through such sources, or available on reasonable terms. If the Company is unable
to originate finance receivable contracts in an amount and at a pace that
approximates the amount and the pace that capital is raised through the issue of
secured notes, the interest earned on the capital raised will not be sufficient
to cover the cost of the interest on the secured notes.
- --------------------------------------------------------------------------------
-9-
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
05/03/99 /s/ Anthony A. Sutter
- ---------------------------- --------------------------------
Date Anthony A. Sutter, President
-10-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 98,353
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 98,353
<PP&E> 9,635
<DEPRECIATION> 0
<TOTAL-ASSETS> 161,304
<CURRENT-LIABILITIES> 31,750
<BONDS> 139,000
0
0
<COMMON> 1,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 161,304
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,650
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 796
<INCOME-PRETAX> (10,446)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,446)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,446)
<EPS-PRIMARY> (10.45)
<EPS-DILUTED> (10.45)
</TABLE>
