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 EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
or
[ ] 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: 333-22239
AEROCENTURY IV, INC.
(Exact name of small business issuer as specified in its charter)
CALIFORNIA
(State or other jurisdiction
of incorporation or organization)
94-3260392
(I.R.S. Employer Identification No.)
1440 CHAPIN AVENUE, SUITE 310
BURLINGAME, CALIFORNIA
(Address of principal executive office)
94010
(Zip Code)
Issuer's telephone number, including area code: (415) 696-3900
Indicate by check mark whether the issuer: (1) has filed all reports
required to be 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 registrant was required to file such reports), and (2) has
been subject to the filing requirements
for the past 90 days. Yes X No
On August 14, 1997, 140,800 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AEROCENTURY IV, INC.
(A Development Stage California Corporation)
Balance Sheet
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<BTB>
<S> <C>
Cash $ 467,440
Debt issue costs 50,900
----------
$ 518,340
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payable to affiliates $ 2,545
Interest payable 1,555
---------
Total current liabilities 4,100
Medium-term secured
promissory notes 509,000
----------
Total liabilities 513,100
---------
Common stock, no par value,
1,000,000 shares authorized,
10,000 issued and outstanding 10,000
Accumulated deficit (4,760)
-----------
Total shareholders' equity 5,240
-----------
$ 518,340
==========
<FN>
See accompanying notes.
</TABLE>
AEROCENTURY IV, INC.
(A Development Stage California Corporation)
Statement of Operations
For the Period From Inception (February 7, 1997)
to June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
<BTB>
<S> <C>
Revenues:
$ -
---------
Expenses:
Management fees 2,545
Interest expense 1,555
General and administrative 660
---------
4,760
---------
Net loss $ (4,760)
======
Weighted average common shares 10,000
======
Loss per common share $ (0.48)
======
<FN>
See accompanying notes.
</TABLE>
AEROCENTURY IV, INC.
(A Development Stage California Corporation)
Statement of Cash Flows
For the Period From Inception (February 7, 1997)
to June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
<BTB>
<S> <C>
Net cash used in operating activities $ (660)
Financing activities:
Proceeds from issuance of medium-term
secured promissory notes 509,000
Debt issue costs (50,900)
Proceeds from issuance of common stock 10,000
---------
Net cash provided by
financing activities 468,100
---------
Net increase in cash 467,440
Cash, beginning of period -
---------
Cash, end of period $ 467,440
============
<FN>
See accompanying notes.
</TABLE>
AEROCENTURY IV, INC.
(A Development Stage California Corporation)
Notes to Financial Statements
June 30, 1997
(Unaudited)
1. Basis of Presentation
AeroCentury IV, Inc. (the "Company") was incorporated in the
state of California on February 7, 1997 ("Inception"). All of the
Company's outstanding stock is owned by JetFleet Management Corp.
("JMC"), a California corporation formed in January 1994. JMC is
an integrated aircraft management, marketing and financing
business, and also manages, on behalf of their general partners
and shareholders, the aircraft assets of JetFleet Aircraft, L.P.
and JetFleet Aircraft II, L.P and JetFleet III. The accompanying
balance sheet at June 30, 1997 and statement of operations and
cash flows for the period from Inception through June 30, 1997
reflect all adjustments (consisting of only normal recurring
accruals) which are, in the opinion of the Company, necessary for
a fair presentation of the financial results. The results of
operations of such period is not necessarily indicative of results
of operations for a full year.
2. Organization and Capitalization
The Company was formed solely for the purpose of acquiring
Income Producing Assets. The Company anticipates that these
will be Equipment, consisting mainly of aircraft, aircraft
engines, aircraft parts subject to operating or full payout leases
with third parties.
From May 21, 1997 through June 30, 1997, the Company raised
$509,000 in $1,000 10% Secured Promissory Notes ("the Notes")
maturing on April 30, 2005 (the "Offering"), pursuant to
a prospectus dated May 21, 1997 (the "Prospectus"). The Notes
bear an annual interest rate of 10.00% from issuance through April
30, 2005. The Company may prepay all or a portion of the
outstanding principal of the Notes at any time beginning May 1,
2000. All of the Company's outstanding common stock is owned by
JMC.
JMC has incurred certain costs in connection with the
organization of the Company and the Offering. The Company will
pay an Organization and Offering Expense Reimbursement (the
"Reimbursement") to JMC in an amount up to 2.0% of Aggregate
Offering Proceeds. To the extent that JMC incurs expenses in
excess of the 2.0% cash limit, such excess expenses will be repaid
to JMC in the form of Common Stock issued by the Company at a
of $1.00 per share. In no event will the Reimbursement exceed
$200,000. The amount of Excess Stock that the Company
can issue is limited according to the amount of Aggregate Gross
Offering Proceeds raised by the Company. The Company capitalizes
the Reimbursement paid by the Company and amortizes such costs
the life of the Notes (approximately 8 years).
3. Medium-term secured promissory notes
As mentioned above, the Company has raised funds through the
Offering which is ongoing. Each $1,000 Note subscribed in the
offering matures on April 30, 2005. During the period from
Inception through June 30, 1997, the Company accepted
subscriptions for $509,000 of Gross Offering Proceeds and,
pursuant to the Prospectus, issued Notes totaling such amount.
AEROCENTURY IV, INC.
(A Development Stage California Corporation)
Notes to Financial Statements
June 30, 1997
(Unaudited)
4. Related Party Transactions
The Company's Income Producing Asset portfolio is managed and
administered under the terms of a management agreement with JMC.
Under this agreement, on the last day of each calendar quarter,
receives a quarterly management fee equal to 0.5% of the Company's
Aggregate Gross Proceeds received through the last day of such
quarter. During the period from Inception through June 30, 1997,
the Company accrued a total of $2,545 in management fees due JMC.
Capital Management Associates ("CMA"), an affiliate of JMC,
provides certain administrative services to the Company. The
Company does not reimburse CMA for those services. JMC may
pay a portion of its management fee to CMA in connection with
services rendered for the Company.
JMC may receive a brokerage fee for locating assets for the
Company, provided that such fee is not more than the customary and
usual brokerage fee that would be paid to an unaffiliated party
for such a transaction and provided that the total of the
Aggregate Purchase Price plus the brokerage fee does not exceed
the fair market value of the asset based on appraisal. No
brokerage fees were due JMC during the period from Inception
through June 30, 1997.
As discussed in Note 2, the Company reimburses JMC for certain
costs incurred in connection with the organization of the Company
the Offering. During the period from Inception through June 30,
1997, the Company paid $10,180 to JMC.
Crispin Koehler Securities, a member of the National
Association of Securities Dealers, Inc. and a related party of
JMC, serves as underwriter of the Offering and, as such, receives
retail commissions and underwriter, due diligence and marketing
fees, portions of which are paid to third parties. The Company
paid Crispin Koehler Securities a total of $40,720 in commissions
and underwriter, due diligence and marketing fees during the
period from Inception through June 30, 1997.
5. Subsequent Events
During July 1997, JetFleet III purchased a 50% undivided
interest in a Shorts 360 aircraft, serial number SH3676 ("S/N
SH3676"). The remaining undivided interest in SH3676 is owned by
JetFleet III, an affiliate of the Company. S/N SH3676 is subject
to a 48-month lease with a regional carrier in the United Kingdom.
On August 6, 1997 JMC purchased an additional 130,800 shares
of common stock in the Company at a price of $1.00 per share in
order to make its investment in common stock equal to it's initial
investment plus 4% of the proceeds raised by the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
At the end of the second quarter of 1997, the Company had cash
balances of $467,440. This amount was held for the interest
payments to the Noteholders, for the purchase of aircraft in July
1997 and for normal recurring expenses.
Since Inception, the Company's source of capital has come in
the form of an initial contribution from JMC and proceeds from the
Offering. The Company's liquidity will vary in the future,
increasing to the extent cash flows from operations exceed
expenses, and decreasing as interest payments are made to the
Noteholders and to the extent expenses exceed cash flows from
Leases.
AeroCentury IV currently has available adequate reserves to
meet its immediate cash requirements.
Cash flow from operations of ($660) for the period from
Inception through June 30, 1997 included recording payables of
$2,545 and $1,555 for management fees and interest expense,
respectively. At June 30, 1997, the Company had not purchased any
aircraft and, therefore, had not had any significant operations.
Results of Operations
The Company recorded a net loss of ($4,760) or ($0.48) per
common share for the period from Inception through June 30, 1997.
Because the Company had not yet had significant operations at
June 30, 1997, it had no revenue to offset the management fees due
JMC or its miscellaneous expenses.
Pursuant to the Prospectus, management fees equal to 0.5% of
the Gross Offering Proceeds accepted by the Company through June
30, 1997 were accrued as payable to JMC.
The Company uses substantially all its operating cash flow to
make interest payments to its Noteholders. Any excess funds,
after interest payment, will be aggregated and invested in
additional Income Producing Assets. Since the Company plans to
acquire Income Producing Assets which are subject to triple net
leases (the lessee pays operating and maintenance expenses,
insurance and taxes), the Company does not anticipate that it will
incur significant operating expenses in connection with ownership
of its Income Producing Assets as long as they remain on lease.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized
on August 14, 1997.
AEROCENTURY IV, INC.
<TABLE>
<BTB>
<S> <C>
By: /s/ Neal D. Crispin
------------------------
Neal D. Crispin
Title: President
</TABLE>
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed below by the following persons in the
capacities indicated on August 14, 1997.
Signature Title
<TABLE>
<CAPTION>
<BTB>
<S> <C>
/s/ Neal D. Crispin President and Chairman of the
- ------------------------ Board of Directors of the Registrant
Neal D. Crispin Chief Financial Officer
</TABLE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ------------ ------------ ---------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 467,440
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 467,440
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 518,340
<CURRENT-LIABILITIES> 4,100
<BONDS> 509,000
<COMMON> 10,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,240
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,205
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,555
<INCOME-PRETAX> (4,760)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,760)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,760)
<EPS-PRIMARY> (0.48)
<EPS-DILUTED> (0.48)
</TABLE>
