<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 30, 1998
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 0-22541
-------
MERCRISTO DEVELOPMENTS, INC.
----------------------------
(Exact name of Registrant as Specified in Its Charter)
DELAWARE 98-0166912
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
240 ARGYLE AVENUE, OTTAWA, ONTARIO, CANADA K2P 1B9
- ------------------------------------------ -------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 613-230-9803, 800-565-6671
--------------------------
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal year, if Changed Since Last Report
Indicate by check whether the registrant: (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 such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding for each of the issuer's
classes of common stock, as of the latest practicable date.
COMMON STOCK, $.001 PAR VALUE: 17,840,519 ISSUED AND OUTSTANDING
AS OF JUNE 11, 1998
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Mercristo Developments, Inc.
(A Delaware Corporation)
Ottawa, Ontario - Canada
TABLE OF CONTENTS
-----------------
Consolidated Balance Sheets at April 30, 1998 (Unaudited)
and January 31, 1998
Consolidated Statements of Operations for the Three Months Ended
April 30, 1998 and 1997 (Unaudited)
Consolidated Statements of Cash Flows for the Three Months
Ended April 30, 1998 and 1997 (Unaudited)
Notes to the Consolidated Financial Statements (Unaudited)
<PAGE> 3
Mercristo Developments, Inc.
(A Delaware Corporation)
Ottawa, Ontario - Canada
Consolidated Balance Sheets at
------------------------------
April 30, 1998 (Unaudited) and January 31, 1998
-----------------------------------------------
(All Expressed in Terms of Canadian Dollars)
--------------------------------------------
<TABLE>
<CAPTION>
ASSETS
------
April 30 January 31
1998 1998
---------- ----------
<S> <C> <C>
Current Assets
- --------------
Cash and Cash Equivalents $ -- $ 14,612
Accounts Receivable 4,972,869 4,805,590
Inventories 40,000 60,500
---------- ----------
Total Current Assets $5,012,869 $4,880,702
Due from Partnership 2,744,050 2,717,107
Due from Related Companies 93,059 210,743
Property and Equipment - Net of
Accumulated Depreciation 1,940,689 1,954,041
---------- ----------
Total Assets $9,790,667 $9,762,593
------------ ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
- -------------------
Accounts Payable and Accrued Expenses $4,071,943 $4,018,267
Income Taxes Payable 152,821 73,427
Current Portion of Long Term Debt 77,847 77,847
---------- ----------
Total Current Liabilities $4,302,611 $4,169,541
Deferred Revenue 955,900 1,646,472
Long Term Debt 755,319 770,409
Deferred Income Taxes 1,162,600 1,015,600
---------- ----------
Total Liabilities $7,176,430 $7,602,022
----------------- ---------- ----------
Stockholders' Equity
- --------------------
Common Stock: $.001 Par; 100,000,000 Shares Authorized,
17,840,519 Shares Issued and Outstanding 17,840 17,840
Additional Paid Capital 1,324,627 1,324,627
Retained Earnings 1,271,770 818,104
---------- ----------
Total Stockholders' Equity $2,614,237 $2,160,571
-------------------------- ---------- ----------
Total Liabilities and Stockholders' Equity $9,790,667 $9,762,593
------------------------------------------ ========== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement and
should be read in conjunction therewith.
<PAGE> 4
Mercristo Developments, Inc.
(A Delaware Corporation)
Ottawa, Ontario - Canada
Consolidated Statements of Operations
-------------------------------------
for the Three Months Ended April 30, 1998 and 1997
--------------------------------------------------
(All Expressed in Terms of Canadian Dollars)
--------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended April 30
1998 1997
------------ ------------
<S> <C> <C>
Revenues
- --------
Farm
Limited Partnership $ 493,568 $ 520,982
Other 20,500 11,719
Horses
Limited Partnership --- 128,250
Other 505,950 156,750
Interest 56,748 37,803
Other 5,419 875
------------ ------------
Total Revenues $ 1,082,185 $ 856,379
------------ ------------
Costs and Expenses
- ------------------
Farm $ 175,973 $ 282,968
Horses 31,250 560,000
Marketing and Sales 1,594 47,561
General and Administrative 146,533 254,497
Depreciation and Amortization 17,909 16,720
Interest Expense 28,866 16,715
------------ ------------
Total Costs and Expenses $ 402,125 $ 1,178,461
------------ ------------
Income (Loss) Before
Provision for Taxes $ 680,060 $ (322,082)
Provision for Taxes 226,394 (128,833)
------------ ------------
Net Income (Loss) $ 453,666 $ (193,249)
============ ============
Net Income (Loss) per
Common Share $ .02 $ (.01)
============ ============
Weighted Average Number
of Common Shares Outstanding 17,840,519 16,560,519
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement and
should be read in conjunction therewith.
<PAGE> 5
Mercristo Developments, Inc.
(A Delaware Corporation)
Ottawa, Ontario - Canada
Consolidated Statements of Cash Flows for the
---------------------------------------------
Three Months Ended April 30, 1998 and 1997
------------------------------------------
(All Expressed in Terms of Canadian Dollars)
--------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended April 30
1998 1997
------------ ------------
<S> <C> <C>
Operating Activities
- --------------------
Net Income (Loss) for the Period $ 453,666 $ (193,249)
Non-Cash Adjustments:
Depreciation/Amortization 17,909 16,720
Deferred Revenue (690,572) (347,841)
Deferred Income Taxes 147,000 (128,833)
Changes:
Accounts Receivable (167,279) 2,764,487
Inventory 20,500 395,000
Prepaid Expenses --- (360,866)
Accounts Payable 53,676 (1,903,487)
Income Taxes Payable 79,394 ---
------------ ------------
Net Cash Flows from Operating Activities $ (85,706) $ 241,931
------------ ------------
Investing Activities
- --------------------
Acquisition of Fixed Assets $ (4,557) $ (613,605)
Due from Partnerships (26,943) (48,918)
Due to/from Related Companies 117,684 42,275
------------ ------------
Net Cash Flows from Investing Activities $ 86,184 $ (620,248)
------------ ------------
Financing Activities
- --------------------
Increase in Long-Term Debt $ --- $ 426,613
Decrease in Long-Term Debt (15,090) ---
------------ ------------
Net Cash Flows from Financing Activities $ (15,090) $ 426,613
------------ ------------
Decrease in Cash and Cash Equivalents $ (14,612) $ 48,296
Cash and Cash Equivalents - Beginning of Period 14,612 53,162
------------ ------------
Cash and Cash Equivalents - End of Period $ --- $ 101,458
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement and
should be read in conjunction therewith.
<PAGE> 6
Mercristo Developments, Inc.
(A Delaware Corporation)
Ottawa, Ontario - Canada
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(All Expressed in Terms of Canadian Dollars)
(Unaudited)
Note A - Basis of Presentation
------------------------------
The condensed consolidated financial statements of Mercristo
Developments, Inc. (the "Company") included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Certain information and
footnote disclosures normally included in financial statements prepared in
conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These condensed financial statements should be
read in conjunction with the annual audited financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the
Fiscal Year Ended January 31, 1998.
The accompanying unaudited interim financial statements reflect all
adjustments of a normal and recurring nature which are, in the opinion of
management, necessary to present fairly the financial position, results of
operations and cash flows of the Company for the interim periods
presented. The results of operations for these periods are not necessarily
comparable to, or indicative of, results of any other interim period or
for the fiscal year as a whole. Factors that affect the comparability of
financial data from year to year and for comparable interim periods
include timing of the foaling season, demand for investment limited
partnerships, unusual horse mortality and illness rates and non-recurring
marketing expenses. Certain financial information that is not required for
interim financial reporting purposes has been omitted.
Note B - Receivables
Accounts receivable consisted of the following at April 30, 1998 and
January 31, 1998:
<TABLE>
<CAPTION>
April 30, January 31,
1998 1998
------------ ------------
<S> <C> <C>
Due from Investors $ 93,635 $ 208,153
Partnerships 3,808,142 3,499,402
Horses 3,815,142 3,815,142
------------ ------------
Total Accounts Receivable $ 7,716,919 $ 7,522,697
Less: Amounts Due Within One Year 4,972,869 4,805,590
- ---- ------------ ------------
Amounts Due After One Year $ 2,744,050 $ 2,717,107
============ ============
</TABLE>
<PAGE> 7
Note B - Receivables - continued
--------------------------------
The amounts due from the investment partnerships and individual
investors represent secondary financing supplied by Edwards Arabians Inc.
to allow them to prepay board and care for horses in exchange for an
installment obligation. Deferred revenues are amortized monthly as the
services are rendered over a period of one to three years. The loans are
collateralized by the horses purchased and have interest rates ranging
from 8.5% to 10.5%. The loans require interest only payments during their
term, with principal repayments due as the horses are sold. Partnership
loans will be collected by the time the assets of the partnerships are
rolled over into corporations. The anticipated wind-up dates vary among
partnerships but are generally one to three years.
The Company performs ongoing credit evaluation of its customers'
financial condition and evaluates the collectibility of all receivables
maintained. Amounts considered uncollectible are written off when such
determination is made and an allowance for accounts doubtful of collection
is maintained based upon the expected collectibility. The Company measures
its estimates of impaired loans in accordance with the provisions of
Statement of Financial Accounting Standards No. 118 Accounting by
Creditors for Impairment of a Loan - Income, Recognition and Disclosures.
Interest income on impaired loans is recognized only when payment is
received. The Company had no impaired loans.
Note C - Revenue Recognition
----------------------------
The Company recognizes revenues from the sale of horses to investment
partnerships, other breeders, and individuals at the time of delivery. The
vast majority of the sales of horses are made for cash under normal credit
terms. Revenues from board and care, breeding, and management of horses
are recognized as the services are rendered. Board and care and management
fees are generally paid in advance. Many of the investment partnerships
and individual investors pay for these services through the use of
installment obligations with the Company, which have interest rates
ranging from 8.5% to 10.5%. The installment obligations require interest
only payments during their term, with principal repayments due as the
horses are sold to third parties.
Note D - Net Income Per Common Share
------------------------------------
Net income per common share is computed using the weighted average
number of shares of common stock outstanding during each period.
Note E - Contingencies
----------------------
The Canadian income tax authorities are presently reviewing the farming
tax status and associated investment losses for some of the individuals in
limited investment partnerships which previously purchased horses from the
company. Denial of some of these losses by the tax authorities might make
investing in the limited partnership less attractive and could adversely
impact the demand for the company's horses. Should an adverse condition
result from this, management would work vigorously to restructure the
limited partnerships in accordance with any revisions to the tax code
and/or would seek other sources for the sale of its horses.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Effective January 31, 1997, pursuant to the terms and conditions of an
Agreement and Plan of Reorganization by and among the Company, Egyptian
Arabians Inc. and Egyptian Arabians' sole stockholder, Egyptian Arabians
Inc. became a wholly-owned subsidiary of the Company. Simultaneous with
that transaction, 622291 Ontario Ltd. ("622291") became a wholly-owned
subsidiary of Egyptian Arabians and, 622291 was reorganized pursuant to
which operations of 622291 other than the Blue Moon Farms breeding and
care operations of 622291's wholly-owned subsidiary, Edwards Arabian Inc.,
were spun off from 622291. The transaction pursuant to which Egyptian
Arabians Inc. (including directly and indirectly its wholly-owned
subsidiaries, 622291 and Edwards Arabians) became a wholly-owned
subsidiary of the Company has been accounted for as a recapitalization,
resulting in the historical operations of 622291 being treated as the
historical operations of the Company. Accordingly, the following
discussion and analysis of financial condition and results of operations
is a discussion of the historical financial performance of 622291's
operations relating to the Blue Moon Farms operations and the operations
of 622291's wholly-owned subsidiary, Edwards Arabians Inc.
Since the inception of the Company's Canadian operations in 1991, the
Company has generated revenue primarily by selling Straight Egyptian
Arabian horses to investment limited partnerships and individual investors
and by operating the breeding and care facilities at its Blue Moon Farms
facilities. Revenues generated by these two activities have remained
fairly constant as a percentage of the Company's overall revenues, with
sales representing approximately 78% and management fees for the breeding
and care of the horses representing approximately 20%. The Company has
increased sales primarily as a result of increased levels of investing
activities promoted by Edwards Securities Inc. which, in turn, results in
a greater number of horses being boarded at the Company's Blue Moon Farms
facilities. Sales to limited partnerships have traditionally accounted for
approximately 50% of the Company's sales while the balance consists of
sales to other farms and individual owners. Revenues from the Company's
Blue Moon Farms operations, as those operations relate to the care and
maintenance of the horses boarded there, are generated almost entirely
(98%) from services rendered to the various limited partnerships that
purchase Straight Egyptian Arabians from the Company. The Company
continues to believe that the markets outside of Canada represent
significant opportunities for the Company. Management intends to allocate
greater resources to expanding sales channels and establishing marketing
alliances in non-Canadian and international markets.
During 1997, as a result of Revenue Canada's proposed assessments with
the investors in the investment limited partnerships, the sales of horses
was limited primarily to other breeders and individual investors. As a
result, as a percentage of the Company's overall revenues for the 1997
Operating Year, sales of horses declined to approximately 43% and
management fees for the breeding and care of the horses increased to
approximately 52%. The volume of sales of horses in the 1998 Operating
Year will continue to be negatively impacted pending the outcome of the
Revenue Canada assessments with the individual investors. The Company
expects farm revenues to continue to increase during the 1998 Operating
Year since the foaling activity and the limited sales of horses will
result in a greater number of horses under the Company's care.
Revenues from the Company's Blue Moon Farms operations, as those
operations relate to the care and maintenance of the horses boarded there,
are generated almost entirely (97%) from services rendered to the various
limited partnerships that purchased Straight Egyptian Arabian
<PAGE> 9
horses from the Company.
The Company recognizes the need to continue to apply technology in a
manner that will increase its operating margins. In furtherance of those
goals, the Company expects to allocate a greater percentage of its overall
revenues to research and development and sales and marketing activities
over the next several years.
In recognition of the fact that sales of horses to investment limited
partnerships have diminished as a result of Revenue Canada pronouncements,
the Company has decided to diversify its base of operations by expanding
into unrelated and totally distinct consumer sector businesses. The
Company's management has identified several possible acquisition
candidates and is evaluating the merits of pursuing those candidates.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the
percentages which the selected items in the Company's Consolidated
Statements of Operations bear to total revenues:
<TABLE>
<CAPTION>
Three Months
Ended April 30
1998 1997
-------- --------
<S> <C> <C>
REVENUES
Farms (1) 47.5% 62.2%
Horses (2) 46.8% 33.3%
Interest and Other 5.7% 4.5%
-------- --------
Total Revenues 100.0% 100.0%
-------- --------
COSTS AND EXPENSES
Farm (1) 16.3% 33.0%
Horses (2) 2.9% 65.4%
Marketing and Sales .1% 5.6%
General and Administrative 13.5% 29.7%
Depreciation and Amortization 1.7% 2.0%
Interest Expense 2.7% 2.0%
-------- --------
Total Costs and Expenses 37.2% 137.7%
-------- --------
Income (Loss) Before Taxes 62.8% (37.7)%
Provision for Income Taxes 20.9% (15.0)%
-------- --------
Net Income (Loss) 41.9% (22.7)%
======== ========
</TABLE>
(1) - Farm revenues and costs and expenses relate to the Company's breeding
operations and care of the horses.
(2) - Horse revenues and costs and expenses relate to the Company's sale of
horses.
- continued -
<PAGE> 10
RESULTS OF OPERATIONS - continued
The following table sets forth for the periods indicated the number of
horses in the Company's inventory and the changes in that inventory.
Horses enter life as weanling fillies or colts, and fillies are allowed to
grow up to mare status at age three. At this time, mares will begin to
breed. Management of the Company expects that a mare will have an economic
reproductive life of at least 15 years, although actual experience has
shown that some mares have been bred and have foaled out beyond the 15
year reproductive life span. Horses have been sold to investors within a
broad range of age groupings, from weanling fillies up to mature mares.
The Company does not sell colts to investors. As the inventory of horses
maintained by the Company constantly changes, the ages of the horses in
that inventory varies depending on the ages of the horses sold and
purchased by the Company. The Company does not own any stallions and
instead utilizes and accesses semen from a major international
organization which currently controls the largest collection of senior,
world class Straight Egyptian Arabian stallions available. In addition,
the Company has previously purchased semen from other senior stallions
which are owned by other independent North American breeders of Straight
Egyptian Arabian horses. The number of horses in the Company's inventory
is significantly less than the number of horses under the Company's care
and supervision.
<TABLE>
<CAPTION>
Three Months
Ended April 30
1998 1997
-------- --------
<S> <C> <C>
Number of Horses
Beginning Inventory 4 12
Horses Acquired 2 3
Horses Sold or Exchanged (4) (7)
--- ---
Ending Inventory 2 8
=== ===
</TABLE>
The range of sales and purchase prices and the average sale and
purchase price of horses for all periods were as follows:
<TABLE>
<CAPTION>
Range Average
------------------ --------------
<S> <C> <C> <C> <C>
Mares $ 70,000 -$ 95,000 $ 92,000
Fillies $ 50,000 -$ 60,000 $ 55,000
Colts:
Purchase $ 10,000
Sale $ 500 or less
</TABLE>
- continued -
<PAGE> 11
RESULTS OF OPERATIONS - continued
The limited partnerships to which the Company frequently sells fillies
and mares generally have a one to three year life until, for tax reasons,
they are rolled over into corporations. Prior to the occurrence of these
roll-overs, the Company will evaluate the holdings of a given partnership,
focusing on the number of horses and the mix of colts to fillies, in order
to support and maintain the investment value of those partnerships. The
Company will often take fillies or mares from its existing inventory and
exchange them for colts owned by the various investment partnerships.
Fillies and mares are much more valuable than colts, and the price
differential between the fillies and mares surrendered by the Company and
the colts received in exchange is expensed as part of the cost of horses
sold. In determining the value of the fillies and mares surrendered by the
Company and colts received in exchange from the limited partnerships, the
Company recognizes the current market value of the horses based on the
Company's costs of purchasing fillies, mares and colts. Total replacement
costs reflected in cost of sales were $0, and $315,000 for the three
months ended April 30, 1998 and 1997, respectively.
In addition, the average management fees charged by the Company for all
periods presented were approximately $5,000 per investment limited
partnership per year, or approximately $417 per month.
THREE MONTHS ENDED APRIL 30, 1998 COMPARED WITH THREE MONTHS ENDED
APRIL 30, 1997
REVENUES. Total revenues for the three months ended April 30, 1998
increased by $225,806 (20.8)% to $1,082,185 from $856,379 for the three
months ended April 30, 1997. Revenues from breeding and care of horses
decreased by $27,414, and the sale of horses accounted for an increase in
revenues of $220,950, and interest and other revenues accounted for the
remaining $32,270 increase in revenues. The sales of horses in the three
months ended April 30, 1998 included $500,000 on the sale of the rights to
purchase all of the colts delivered at the Blue Moons Farms facilities
during the 1997-98 breeding season which was deferred from the year ended
January 31, 1998. Other revenues generated by the sale of horses were very
limited pending the outcome of the Revenue Canada proposed assessments
with the investors. Farm revenues for board and care continued to increase
as the number of horses under the Company's care has grown. Breeding fees
in the first quarter 1998 as compared to the first quarter of 1997
accounted for the overall decrease in farm revenues.
COSTS AND EXPENSES. Total costs and expenses for the three months ended
April 30, 1998 decreased by $ 776,336 (65.9%) to $402,125 from $1,178,461
for the three months ended April 30, 1997. As the Company's horse
purchases and sales activity was very limited during the three months
ended April 30, 1998 as compared to the three months ended April 30, 1997,
the Company was able to control the incurring of expenses associated with
those activities.
Farm expenses as a percentage of farm revenues decreased to 34.2% for
the three months ended April 30, 1998 from 53.1% for the three months
ended April 30, 1997. The decrease was primarily due to reduced salaries
and staffing, cancellation of insurance on the horses and fewer horse
registrations, all of which are a result of the continued Revenue Canada
assessment against the investors in the limited partnerships.
The cost of horses sold as a percentage of horse sales decreased to
6.2% for the three months ended April 30, 1998 from 196.5% for the three
months ended April 30, 1997. The decrease was primarily due to high margin
on the sale of the rights to purchase all of the colts delivered during
the three months ended April 30, 1998 and the unusually high mortality
rate and replacement costs of horses during the three months ended April
30, 1997.
MARKETING AND SALES. The company incurred only $1,594 of marketing and
sales expenses for the three months ended April 30, 1998 which was
attributable to the lack of horse sales. Marketing and sales expenses for
the three months ended April 30, 1997 were $47,561.
GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
three months ended April 30,
<PAGE> 12
1998 decreased by $107,964 to $146,533 from $254,497 for the three months
ended April 30, 1997. The primary reason for the decrease was professional
and consulting fees incurred in connection with the recapitalization and
Registration of the Company during the three months ended April 30, 1997.
INCOME TAXES. The provision for taxes for the three months ended April 30,
1998 and 1997 is based upon an effective Canadian tax rate of 40.0%.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1998, the Company's primary source of liquidity included cash
and cash equivalents of $0 and open trade credit with vendors of
$4,071,943. The Company has not borrowed any moneys from financial
institutions for working capital needs with the exception of its
commercial mortgages on the construction and improvements to its
facilities. The Company's working capital decreased by $903 during the
three months ended April 30, 1998 from $711,161 at January 31, 1998 to
$710,258 at April 30, 1998.
Net cash flows from operating activities during the three months ended
April 30, 1998 were a negative $85,706 as compared to a positive $241,931
for the three months ended April 30, 1997. The decrease of $327,637
resulted primarily from the reduction in deferred revenues and an increase
in accounts receivable during the three months ended April 30, 1998.
Net cash flows from investing activities (primarily from the collection of
amounts due from related companies) during the three months ended April
30, 1998 were $86,184 as compared to net cash flows used in investing
activities (primarily used in the acquisition of property and equipment)
of $620,248 for the three months ended April 30, 1997.
Net cash flows used in financing activities during the three months ended
April 30, 1998 were $15,090 as compared with net cash flows from financing
activities of $426,613 for the three months ended April 30, 1997. The
decrease reflects the borrowings on new commercial property during the
three months ended April 30, 1997.
The balance sheet at April 30, 1998 shows an increase in current assets
for the three months from $4,880,702 to $5,012,869 and an increase in
current liabilities from $4,169,541 to $4,302,611 and a decrease in
deferred revenues from $1,646,472 to $955,900, all compared with those
figures at January 31, 1998. The increase in current assets and
liabilities was primarily attributable to an increase in accounts
receivable and accounts payable during the first three months ended April
30, 1998.
COMPANY'S FINANCING REQUIREMENTS
The Company has no current need for any externally generated financing to
fund its continued operations or to fund continued internal growth. As the
Financial Statements show, the Company's business has been self-financing,
and does not depend on any institutional debt or commercial lines of
credit (except for commercial mortgages on the Company's properties).
The Company has available through Resi Corp., a related party, a line of
credit that could be used to fund operating cash shortfalls and future
acquisitions of new businesses.
<PAGE> 13
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Index to Exhibits
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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.
MERCRISTO DEVELOPMENTS, INC.
Date: June 15, 1998 /s/ David G. Edwards
--------------- ---------------------------------------
David G. Edwards, President
and Chief Financial Officer
<PAGE> 14
INDEX TO EXHIBITS
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
Not applicable.
(3) (a) ARTICLES OF INCORPORATION
Restated Certificate of Incorporation is incorporated herein by
reference to Exhibit 3.1 to the Registrant's Registration Statement
on Form 10 (Registration No. 0-22541) as filed on May 8, 1997.
(b) BY-LAWS
Amended and Restated By-laws are incorporated herein by reference to
Exhibit 3.2 to the Registrant's Registration Statement on Form 10
(Registration No. 0-22541) as filed on May 8, 1997.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
(a) The documents listed under Item (3) of this Index are incorporated
herein by reference.
(10) MATERIAL CONTRACTS
Not applicable.
(11) STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Computation can be clearly determined from the Financial Statements and
Notes thereto included herein.
(15) LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
Not applicable.
(18) LETTER RE CHANGE IN ACCOUNTING PRINCIPLES
Not applicable.
(19) REPORT FURNISHED TO SECURITY HOLDERS
Not applicable.
(22) PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE OF SECURITY HOLDERS
Not applicable.
(23) CONSENTS OF EXPERTS AND COUNSEL
Not applicable.
(24) POWER OF ATTORNEY
Not applicable.
<PAGE> 15
*(27) FINANCIAL DATA SCHEDULE
The Financial Data Schedule is included herein as Exhibit 27.
(99) ADDITIONAL EXHIBITS
Not applicable.
- -------------------------
*Exhibit filed with this Report
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> CANADIAN
<S> <C>
<PERIOD-TYPE> 3-MOS
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0
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