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 March 31, 1999.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange
Act for the transition 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 September 30, 1999
1,000 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
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Sterling Financial Services of Florida I, Inc.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of March 31, 1999 and December 31, 1998..........3
Statements of Operations for the three-months ended March 31,
1999 and 1998......................................................4
Statement of Stockholders' Deficit for the three-months ended March
31, 1999...........................................................5
Statements of Cash Flows for the three-months ended March 31,
1999 and 1998......................................................6
Notes to Financial Statements .....................................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (including Year 2000 Issue and Cautionary
Statement).........................................................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ................................................12
Item 2. Changes in Securities ............................................12
Item 3. Defaults Upon Senior Securities ..................................12
Item 4. Submission of Matters to a Vote of Securities Holders ............12
Item 5. Other Information.................................................13
Item 6. Exhibits and Reports on Form 8-K..................................13
Signatures 13
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STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
BALANCE SHEETS
- -------------------------------------------------------------------
March 31, December
ASSETS 1999 31, 1998
- ------ (Unaudited)
--------- ----------
Cash and cash equivalents $ 519,402 $1,282,906
--------- ----------
Receivables:
Finance - net 2,240,084 1,485,697
Mobile home floor plan 420,486 182,007
Affiliate 166,544 257,278
Interest and fees 43,218 8,920
---------- ---------
Total receivables 2,870,332 1,933,902
--------- ----------
Inventories 835,625 433,597
--------- ----------
Investment in and advances to
Parkwood Estates Mobile Home Park, L.C. 636,095 602,178
--------- ----------
Property and equipment - net 280,900 254,541
--------- ----------
Other assets:
Deferred debt issuance costs - net 564,833 514,999
Repossessed mobile homes 62,569 85,417
--------- ----------
Total other assets 627,402 600,416
--------- ----------
TOTAL $ 5,769,756 $ 5,107,540
========= ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Secured notes payable $ 6,842,000 $ 5,974,000
Accrued and other liabilities 46,084 56,334
--------- ----------
Total liabilities 6,888,084 6,030,334
--------- ----------
STOCKHOLDERS' DEFICIT
Common stock, no par value, 10,000
shares authorized, 1,000 shares issued 1,000 1,000
and outstanding
Deficit (1,119,328)
(923,794)
--------- ----------
Total stockholders' deicit (1,118,328) (922,794)
icit
--------- ----------
TOTAL $ 5,769,756 $ 5,107,540
========= ==========
- -------------------------------------------------------------------
See accompanying notes.
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STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
- --------------------------------------------------------------------------
Three-Months Three-Months
Ended Ended
March 31, March 31,
1999 1998
------------ -----------
REVENUES:
Mobile home sales $ 354,700
Interest and fee 153,709 24,341
Rental 30,230 19,180
Other 333 2,364
-------------- ------------
Total revenues 538,972 45,885
-------------- ------------
OPERATING EXPENSES:
Cost of mobile homes sold 277,420
Management fees - Related Party 158,396 48,701
Interest 205,969 58,849
Occupancy and equipment 29,748 45,268
Professional fees 10,000 4,250
Equity in loss of Parkwood
Estates Mobile Home Park, L.C. 11,686
Other 41,287 35,418
-------------- ------------
Total operating expenses 734,506 192,486
-------------- ------------
NET LOSS $ 195,534 146,601
============== ============
LOSS PER COMMON SHARE $ 195.53 146.60
============== ============
- --------------------------------------------------------------------------
See accompanying notes.
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STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited)
- ------------------------------------------------------------------------------
Common Stock
Shares Amount Deficit Total
-------- ----------- ---------- --------
Balances, December 31, 1998 1,000 1,000 $ (923,794) $ (922,794)
Net loss for three-months
ended (195,534) (195,534)
March 31, 1999
-------- ----------- ----------- -----------
Balances, March 31, 1999 1,000 $ 1,000 (1,119,328) $(1,118,328)
======== =========== =========== ===========
- ------------------------------------------------------------------------------
See accompanying notes.
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STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
- -----------------------------------------------------------------------------
Three-Months Three-Months
Ended Ended
March 31, March 31,
1999 1998
----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (195,534) $ (146,601)
Adjustments to reconcile net loss to net cash
used in
operating activities:
Depreciation 6,619 6,446
Amortization of deferred debt issuance 37,166 12,561
costs
Equity in loss of Parkwood Estates 11,686
Mobile Home Park, L.C.
Management fees - Related Party 157,889
Increase in inventories (402,028)
Increase in interest and fee receivables (34,298)
Increase (decrease) in accrued and (10,250) 6,578
other liabilities
----------- -------------
NET CASH USED IN OPERATING ACTIVITIES (428,750) (121,016)
----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (32,978) (31,066)
Advances to Parkwood Estates Mobile Home (45,603)
Park, L..C.
Proceeds from sales of repossessed mobile 82,008
homes
Finance and floor plan receivables (1,254,859) (219,818)
originated and purchased
Repayments of finance and floor plan 202,833 51,128
receivables
----------- -------------
NET CASH USED BY INVESTING ACTIVITIES (1,048,599) (199,756)
----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of secured notes 868,000 589,000
payable
(Increase) decrease in affiliate (67,155) 250
receivables
Cash paid for deferred debt issuance costs (87,000) (51,300)
----------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 713,845 537,950
----------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (763,504) 217,178
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,282,906 816,433
- ----------------------------------------------------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 519,402 $ 1,033,611
=========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Interest paid $ 168,803 $ 46,288
=========== =============
- -----------------------------------------------------------------------------
See accompanying notes.
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STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
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 is
primarily in the business of originating and purchasing retail mobile home
installment sales contracts created in connection with the financing of
manufactured homes. The Company also owns and rents mobile homes located in the
Halliday Village Mobile Home Park ("Halliday") and has a 25% ownership interest
in a mobile home park located in Hillsborough County, Florida (see Note E). The
Company's operations are located in Tampa, Florida and substantially all of its
customers are Florida residents.
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 ended March 31, 1999 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1999. The
accompanying financial statements and the notes should be read in conjunction
with the Company's audited financial statements as of and for the year ended
December 31, 1998 contained in its Form 10-KSB.
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. Estimates from management that are critical to
the accompanying financial statements include the appropriate level or allowance
for credit losses which can be significantly impacted by future industry, market
and economic trends and conditions. Actual results could differ significantly
from management's estimates.
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 such shares outstanding for the three-months ended March 31, 1999 and
1998 was 1,000.
Reclassifications
Certain amounts in the March 31, 1998 financial statements have been
reclassified to conform with the March 31, 1999 presentation.
NOTE C - SECURED NOTES PAYABLE
Secured notes payable (the "Notes") bear interest at 10.5%, with interest
payable monthly, and mature on June 30, 2002. The Notes are secured by a first
lien on any assets acquired with the proceeds and may be prepaid in whole or
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in part at any time without premium or penalty. The Company had registered $9.9
million of Notes, and as of March 31, 1999 was continuing to offer the remaining
$3,058,000 of Notes for sale. The offering terminated on June 30, 1999, at which
time the Company had sold $9,818,000 of such notes (representing 99% of the
offering). The notes were being offered on a "best-efforts" basis by
broker-dealers, who are members of the National Association of Securities
Dealers, Inc.
NOTE D - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
During the three-months ended March 31, 1999, approximately $59,000 of finance
receivables were reclassified to repossessed mobile homes when certain customers
of the Company defaulted on their receivables.
NOTE E - RELATED PARTY TRANSACTIONS
Sterling Financial Services, Inc. ("SFS"), a related party by virtue of Anthony
Sutter's ownership of SFS (Mr. Sutter is the Company's President and majority
stockholder), manages the Company and provides all services in connection with
the origination, purchase and servicing of receivables. As consideration for
these services, the Company pays SFS for all of its expenses plus 20% of such
expenses. Management fees expensed under this arrangement during the
three-months ended March 31, 1999 and 1998 approximated $158,000 and $49,000,
respectively. With respect to the former, the Company had effectively prepaid
these amounts at December 31, 1999 by advancing SFS approximately $227,000 as of
such date. Accordingly, during the quarter ended March 31, 1999, the Company
reduced their receivable from SFS for the aforementioned management fees, and
reflected this transaction as non-cash in the accompanying statement of cash
flows. As of March 31, 1999, the Company had remaining advances to SFS of
approximately $69,000; such amount is expected to be expensed as management fees
in the second quarter of 1999.
During the quarter ended March 31, 1999, the Company advanced approximately
$67,000 to Anthony Sutter and/or his affiliates. With the exception of the
advance to SFS (see preceding paragraph) which is non-interest bearing,
affiliate receivables bear interest at 12.9.%, are unsecured and contain no
specified repayment terms as to principal and/or accrued interest.
The Company rents certain lot space for mobile home rental units it owns, and
prior to April 1998 certain office space for its administrative operations, from
Halliday, a related party by virtue of Anthony Sutter's ownership. In May 1998,
SFS began to pay the rent on the administrative space and accordingly, the
related rent expense is included in SFS expenses on which the Company pays
management fees as discussed above. Total rent paid under these arrangements for
the three-months ended March 31, 1999 and 1998 approximated $22,000 and $26,000,
respectively.
During the three-months ended September 30, 1998, the Company purchased a
twenty-five percent interest in Parkwood Estates Mobile Home Park, L.C.
("Parkwood") for approximately $561,600; such entity was formed in August 1998
for the purpose of purchasing, selling and leasing Parkwood Estates Mobile Home
Park. The remaining 75% interest is owned by Anthony Sutter. In addition to such
investment, the Company has agreed to loan Parkwood up to $350,000 to fund its
cash flow needs. Advances under this arrangement accrue interest at a fixed rate
of 12.9%, are unsecured and have no specified repayment terms as to principal
and/or interest. At March 31, 1999, the Company had advanced approximately
$100,000 to Parkwood.
- ------------------------------------------------------------------------------
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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 December 31, 1998 and the financial statements as of and for
the three-months ended March 31, 1999 and 1998 included with this Form 10-QSB.
The Company is primarily in the business of originating and purchasing retail
mobile home installment sales contracts created in connection with the financing
of manufactured homes. The Company also owns and rents mobile homes located in
the Halliday Village Mobile Home Park ("Halliday"), and has a 25% ownership
interest in Parkwood Estates Mobile Home Park, L.C. ("Parkwood") which was
formed in 1998 for the purpose of purchasing, and leasing Parkwood Mobile Home
Park in Hillsborough County, Florida (the "Park"). Halliday and Parkwood are
related to the Company by virtue of Anthony Sutters's majority ownership in the
Company, Halliday and Parkwood. The Company's operations are located in Tampa,
Florida and substantially all of its customers are Florida residents.
Readers are referred to the Cautionary Statement at page 12, which addresses
forward-looking statements made by the Company.
RESULTS OF OPERATIONS
During the three months ended March 31, 1999 and 1998, the Company generated
revenues of approximately $539,000 and $46,000, respectively. This represented
an increase of approximately 1000% or $493,000 and resulted substantially
because the Company experienced significant growth in revenue generating assets
in 1998 and during the first quarter of 1999. This increase was made possible by
proceeds received from the sale of the Notes since December 31, 1997 when the
Company was considered to be in the development stage. Because of the relatively
small amount of revenues generated during the three-months ended March 31, 1998,
this analysis does not include any additional discussion on such revenues.
Revenues generated during the three-months ended March 31, 1999 resulted
substantially from sales of mobile homes, and interest and fee revenues of
approximately $355,000 and $154,000, respectively. The Company generated margins
of approximately 22% on sales of mobile homes; substantially all of which
occurred at the Park, and management believes that sales of such homes, and
related costs of sales, will continue to represent a significant portion of the
Company's revenues and expenses for the foreseeable future. Interest and fee
revenues consisted substantially of interest earned on finance receivables of
approximately $106,000, interest earned on cash equivalents of approximately
$12,000 and interest earned on mobile home floor plan receivables of
approximately $21,000 (interest income on cash equivalents occurs because of the
lag time between the receipt of proceeds from sale of the Notes and the date the
funds were invested in finance and/or other interest bearing receivables).
Interest earned on finance receivables increased significantly because of the
related increase in finance receivables in 1998 and during the first quarter of
1999. In addition to interest and fee revenues, the Company generated
approximately $30,000 of rental revenues from the rental of its mobile homes.
Operating expenses during the three months ended March 31, 1999 and 1998
approximated $735,000 and $192,000, respectively. This represented an increase
of approximately 280% or $543,000 and resulted substantially because of the
aforementioned growth in 1998 and the first quarter of 1999. The Company's
revenues grew at a faster pace than its expenses because certain expenses are
fixed and therefore did not increase significantly. In addition to the cost of
mobile homes sold discussed above, significant operating expenses arose from
management fees charged by SFS and interest paid on the Notes. Management fees
approximated $158,000 for the three months ended March 31, 1999 as compared to
approximately $49,000 for the corresponding period of the preceding fiscal year.
This increase of approximately 220% or $109,000 resulted because SFS required
additional personnel and expenses to originate and service the Company's finance
and mobile home floor plan receivables, as well as to manage the Company's
operations.
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Interest expense increased from approximately $59,000 for the quarter ended
March 31, 1998 to approximately $206,000 for the quarter ended March 31, 1999.
This represented an increase of approximately $147,000 or 250%. Interest expense
arose from interest on the Notes of approximately $169,000 and $46,000 and
amortization of deferred debt issuance costs of approximately $37,000 and
$13,000, for the respective quarters ended March 31, 1999 and 1998 (the
amortization costs represent non-cash expenses and arise from commissions and
other costs incurred to sell the Notes). The significant increase in interest
expense resulted from the corresponding increases in the Notes and related
deferred debt issuance costs.
Occupancy and equipment expenses declined from approximately $45,000 during the
quarter ended March 31, 1998 to approximately $30,000 during the quarter ended
March 31, 1999. This decline resulted partially because the Company was paying
rent expense of approximately $2,200 a month to Halliday until April 1998, at
which time such expenses were paid to SFS in accordance with the Servicing
Agreement between the entities. Accordingly, rent expenses subsequent to April
1998 are effectively included in management fees paid to SFS. In addition, March
31, 1998 occupancy expense included repairs and maintenance of approximately
$12,000 arising from costs incurred on mobile home rentals; no such expenses
were incurred during the quarter ended March 31, 1999. With respect to the
Company's rental homes, the Company rents lot space from Halliday. In connection
therewith, the Company paid lot rent of approximately $22,000 and $19,000 to
Halliday during the quarters ended March 31, 1999 and 1998, respectively.
The March 31, 1999 results of operations also included recognition of the
Company's loss of approximately $12,000 in Parkwood. This amount represents 25%
(the Company's ownership percentage) of the total loss generated by Parkwood
during such quarter.
There were no other individual expenses of significance for either of the
quarters ending March 31, 1999 or 1998.
.
The net losses for the respective quarters ended March 31, 1999 and 1998
approximated $196,000 and $147,000, respectively; such losses occurred because
the Company's interest bearing assets did not generate sufficient income to
cover expenses arising substantially from management fees and interest expense
on the Notes.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities used cash of approximately $429,000 and $121,000 during the
respective quarters ended March 31, 1999 and 1998, respectively. The increase
was attributable to the purchase of mobile home inventories having a cost of
approximately $402,000, which mobile homes are being sold at the Park. In
addition, cash of approximately $27,000 and $121,000 (net losses adjusted for
revenues and expenses which did not affect cash) was used to fund the respective
net losses for the quarters ended March 31, 1999 and 1998.
Investing activities used cash of approximately $1,049,000 and $200,000 during
the respective quarters ended March 31, 1999 and 1998. This increase of
approximately $849,000 or 425% resulted primarily from increased lending
activity made possible by proceeds received from the sale of the Notes. Net cash
(originations less repayments) invested in finance and floor plan receivables
approximated $1,052,000 during the quarter ended March 31, 1999 as compared to
$169,000 for the quarter ended March 31, 1998 (an increase of approximately
$883,000 or 525%). The Company is attempting to limit its exposure to risk
resulting from interest rate spread by investing funds in interest bearing
receivables as proceeds are received from the Notes since the cost of such Notes
is significantly higher than the yield on cash and cash equivalents.
In addition, during the quarter ended March 31, 1999, the Company advanced
approximately $46,000 to Parkwood. This advance resulted from an arrangement
between the Company and Parkwood, whereby the Company has agreed to loan
Parkwood up to $350,000 to fund its cash flow needs. Advances under this
arrangement accrue interest at a fixed rate of 12.9%, are unsecured and have no
specified repayment terms for the principal and/or accrued interest.
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The above investment outlays for the quarter ended March 31, 1999 of
approximately $929,000 were partially offset by proceeds received from sales of
repossessed mobile homes of approximately $82,000.
Cash used by operating and financing activities was funded by financing
activities which generated net cash inflows of approximately $714,000 and
$538,000 for the respective quarters ended March 31, 1999 and 1998. Cash inflows
from financing activities resulted from net proceeds received from the sale of
Notes (principal amount less cash paid for deferred debt issuance costs) of
approximately $781,000 and $538,000 for the respective quarters ended March 31,
1999 and 1998. Through June 30, 1999 (the termination date of the offering), the
Company was offering subscriptions for a maximum of 9,900 Notes in the principal
amount of $1,000 each. The Notes bear simple interest at 10.5% (interest is
payable monthly) and are payable in full on June 30, 2002. As of March 31, 1999,
the Company had sold $6,842,000 of Notes; subsequently through June 30, 1999,
additional Notes of $2,976,000 were sold. Accordingly, the Company sold
$9,818,000 of Notes or approximately 99% of the Notes offered to the public.
Because debt issuance costs approximated 10% of the Notes sold, net proceeds to
the Company approximated $8,800,0000 in total. The Notes are secured by a first
lien on the assets acquired with proceeds generated from their sale, and may be
prepaid in whole or in part at any time.
The only other cash used by financing activities resulted from advances of
approximately $67,000 to Anthony Sutter and/or his affiliates. These advances
are unsecured, bear interest at 12.9% per annum and contain no specified
repayment terms as to principal or interest.
The net impact of the above operating, investing and financing activities was
that cash and cash equivalents increased by approximately $217,000 during the
quarter ended March 31, 1998 and decreased by approximately $764,000 during the
quarter ended March 31, 1999.
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 and/or making other investments.
However, in order for the Company to continue to expand its dealer base and
portfolio of finance receivable contracts, and to ultimately pay the Notes in
full, the Company will have to generate significant cash from operations and/or
secure additional capital resources (i.e. other debt or equity). No assurance
can be given that the Company will generate profitable results of operations or
that additional capital resources will be available, or available on reasonable
terms. Also, 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 the Notes, the interest earned on the
capital raised will not be sufficient to cover the cost of the interest on the
Notes.
YEAR 2000 ISSUE
Many software applications and operational programs written in the past were not
designed to recognize calendar dates beginning in the Year 2000. The failure of
such applications or systems to properly recognize the dates beginning in the
Year 2000 could result in miscalculations or system failures which could result
in an adverse effect on the Company's operations.
The Company does not currently utilize any critical date sensitive systems.
Although many of the Company's transactions rely on date sensitive calculations,
such calculations are currently being performed either manually or using off the
shelf spreadsheet programs. However, the Company is currently involved in
installing a new PC based server and accounting application, which is
represented to be Year 2000 compliant.
The Company has not incurred any costs to date related to Year 2000 compliance
nor does it believe that its cost of conversion will be significant because of
the installation of new systems that are represented to be fully Year 2000
compliant. The Company believes the costs to transition its remaining systems to
Year 2000 compliance will not have a material effect on its financial position
or results of operations.
The Company has not deferred any information technology projects to address the
Year 2000 issue. In addition to internal Year 2000 activities, the Company will
communicate with others with which their systems interface or on which they rely
to determine the extent to which those companies are addressing their Year 2000
compliance. There
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can be no assurance that there will not be an adverse effect on the Company, if
third parties, such as utility companies or mobile home suppliers, do not
convert their systems in a timely manner and in a way that is compatible with
the Company's systems. However, management believes that ongoing communication
with, and assessment of, these third parties will minimize these risks. Although
the Company anticipates minimal business disruption will occur as a result of
Year 2000 issues, possible consequences include, but are not limited to, loss of
electric power, inability to process transactions or engage in similar business
activities.
To date, the Company has not established a contingency plan for possible Year
2000 issues. Where needed, the Company will establish contingency plans based on
assessment of outside risks and actual testing experience with suppliers. It is
not anticipated that a contingency plan will need to be developed as manual
processes mitigate outside risks. The cost of the conversion and the completion
dates are based on management's best estimates and may be updated, as additional
information becomes available.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically
in writing or orally by the Company's officers or its agents contain statements
which constitute forward-looking statements within the meaning of Section 27A of
the Securities Act, as amended and Section 21E of the Securities Exchange Act of
1934. The words expect, anticipate, believe, goal, plan, intend, estimate and
similar expressions and variations thereof if used are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-QSB and in other places, particularly, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
the Company's liquidity and capital resources; (ii) its financing opportunities
and plans and (iii) its future performance and operating results. Investors and
prospective investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors. The factors that
might cause such differences include, among others: (i) any material inability
of the Company to successfully identify, consummate and integrate the
acquisition of finance receivables at reasonable and anticipated costs, (ii) any
material inability of the Company to successfully develop its products; (iii)
any adverse effect or limitations caused by governmental regulations; (iv) any
adverse effect on the Company's continued positive cash flow and ability to
obtain acceptable financing in connection with its growth plans; (v) any
increased competition in business; (vi) any inability of the Company to
successfully conduct its business in new markets; and (vii) other risks
including those identified in the Company's filings with the SEC. The Company
undertakes no obligation to publicly update or revise the forward looking
statements made in this Form 10-QSB, to reflect events or circumstances after
the date of this Form 10-QSB or to reflect the occurrence of unanticipated
events.
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
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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.
- ---------------------------- --------------------------------
Date Anthony A. Sutter, President and
Chief Accounting Officer
- ------------------------------------------------------------------------------
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 519,402
<SECURITIES> 0
<RECEIVABLES> 2,870,332
<ALLOWANCES> 0
<INVENTORY> 835,625
<CURRENT-ASSETS> 4,225,359
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0
0
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<INCOME-CONTINUING> (195,534)
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<NET-INCOME> (195,534)
<EPS-BASIC> (195.53)
<EPS-DILUTED> (195.53)
</TABLE>
