U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[|X|] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ended ______________to_______________
Commission file number 333-35063
Baron Capital Trust
(Exact name of small business issuer
as specified in its charter)
Delaware 31-1574856
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
7826 Cooper Road, Cincinnati, Ohio 45242
(Address of principal executive offices)
(513) 984-5001
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [|X|] No [ ]
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BARON CAPITAL TRUST
BALANCE SHEET
As of June 30, 1998
June 30, 1998
-------------
ASSETS
Current Assets
Checking/Savings
Amer Stock Trans & Trust Escrow 225,540.00
Key Bank 160,857.55
------------
Total Checking/Savings 386,397.55
------------
Total Current Assets 386,397.55
Other Assets
Investments
Baron Capital Properties, L.P. 1,532,240.00
------------
Total Investments 1,532,240.00
------------
Total Other Assets 1,532,240.00
------------
TOTAL ASSETS 1,918,637.55
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Other Payables 147,563.64
------------
Total Other Current Liabilities 147,563.64
------------
Total Current Liabilities 147,563.64
------------
Equity
Common Shares 2,031,233.89
Partnership Capital 100.00
Net Income -260,259.98
------------
Total Equity 1,771,073.91
------------
TOTAL LIABILITIES & EQUITY 1,918,637.55
============
2
<PAGE>
BARON CAPITAL TRUST
PROFIT AND LOSS
January through June 1998
Jan - Jun 1998
--------------
Income
Bank account interest 406.66
----------
Total Income 406.66
Expense
Advisory Expenses 40,624.67
Bank Service Charges 160.58
Commissions 162,498.71
Federal Withholding on Interest 0.01
Investment Expenses 57,382.67
----------
Total Expenses 260,666.64
----------
Net Income -260,259.98
----------
3
<PAGE>
BARON CAPITAL TRUST
STATEMENT OF CASH FLOWS
Period Ending June 30, 1998
1998
-------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (260,259.98)
Changes in assets (increase) decrease in:
Other assets 0.00
Changes in liabilities, increase (decrease) in:
Accounts payable and accrued expenses 147,563.64
-------------
Net cash provided by operating activities (112,696.34)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Baron Capital Properties, L.P. (1,532,240.00)
CASH FLOWS FROM FINANCING ACTIVITIES:
Offering Proceeds 2,031,333.89
Net increase (decrease) in cash and cash equivalents 386,397.55
Cash and cash equivalents, beginning of period 0.00
-------------
Cash and cash equivalents, end of period 386,397.55
4
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Baron Capital Trust, the Registrant commenced operations on May 17, 1998.
On June 30, 1998, it acquired beneficial ownership of a 67-unit multi-family
residential apartment property located in Kissimmee, Florida. Since that time,
it has acquired additional interests in multi-family residential apartment
properties. The Registrant intends to continue to acquire similar property
interests using proceeds from its registered public offering of 2,500,000 Common
Shares at $10.00 per share.
The Registrant has the ability to satisfy its cash requirements for the
foreseeable future. However, it will be necessary to raise additional capital
during the next 12 months to make acquisitions and to meet management's revenue
and cash flow goals. Baron Capital Properties, L.P. (of which the Registrant is
the sole general partner and a limited partner) intends to conduct an exchange
offering under which it will offer to issue units ("Units") of limited
partnership interest to be registered, with an initial value of $25,000,000, in
exchange for limited partnership interests in real estate limited partnerships
which directly or indirectly own interests in multi-family residential apartment
properties. The Registrant intends to investigate making an additional public or
private offering of Common Shares and/or Units within the next 12 months.
The Registrant expects no material change in the number of employees over
the next 12 months.
5
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
The Registrant's Form SB-2 Registration Statement (the "Registration
Statement") (Commission file number 333-35063) was declared effective
by the Commission on May 15, 1998. On May 18, 1998, the Registrant
commenced its public offering (the "Offering") of Common Shares, the
class of securities registered, and the Offering is currently ongoing.
The name of the managing underwriter of the Offering is Sigma
Financial Corporation. The amount of Common Shares registered is
2,500,000 shares. The offering price per Common Share is $10.00, and
the aggregate price of the offering amount registered is $ 25,000,000.
As of the date of this report, 203,123.4 Common Shares have been sold
in the Offering, for an aggregate offering price of $ 2,031,233.89.
From the effective date of the Registration Statement through June 30,
1998, the following expenses have been incurred for the Registrant's
account in connection with the issuance and distribution of the
registered Common Shares:
Underwriting discounts and commissions: $ 162,498.71 (plus
five-year warrants
to acquire 17,265.5
Common Shares at an
exercise price of
$ 13.00 per share)
Finder's Fees: $ 0
Expenses Paid to or for Underwriter: $ 0
Other Expenses (reimbursement for advisory and
investment expenses): $ 98,007.34
------------
Total Expenses: $ 260,506.05
Of such expense payments, $ 98,007.34 were made directly to Baron
Advisors, Inc., the Managing Shareholder of the Registrant. The
remaining payments of $162,498.71 were made directly or indirectly to
others. The net offering proceeds to the Registrant after deducting
the foregoing total expenses were $ 1,770,727.84.
From the effective date of the Registration Statement through June 30,
1998, the net offering proceeds to the Registrant were used for the
following purposes:
6
<PAGE>
Improvements to buildings and facilities: $ 0
Purchase and installation of equipment: $ 0
Repayment of indebtedness: $ 0
Working capital: $ 386,397.55
Temporary investments: $ 0
Investment in Baron Capital Properties, L.P. $ 1,532,240.00
Other purposes for which 5% or more of net $ 0
offering proceeds or $100,000 (whichever is
less) have been used:
Of such net proceeds, $ 1,532,240.00 was directly contributed to Baron
Capital Properties, L.P. ("Baron Properties") (of which the Registrant
is the sole general partner and a limited partner) in exchange for
limited partnership interests in Baron Properties. Baron Properties
will conduct all of the real estate operations of the Registrant and
hold all of its real property assets.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
As reported on a Form 8-K Current Report dated July 15, 1998, on June
30, 1998, Baron Properties acquired beneficial ownership of a 67-unit
residential apartment property located in Kissimmee, Florida referred
to as the Heatherwood Apartments - Phase I.
On July 31, 1998, Baron Properties acquired beneficial ownership of a
second property, an 80-unit residential apartment property located in
Lakewood, Florida referred to as Crystal Court Apartments - Phase II
(the "Crystal Court Property").
7
<PAGE>
The Crystal Court Property, completed in 1986, consists of 20 studio/
one bathroom units, 54 one bedroom/ one bathroom units, and six two
bedroom/one bathroom units. The property is situated on approximately
6.8 acres and has approximately 42,048 square feet of rentable area.
The average unit size of the studio, one bedroom and two bedroom units
is approximately 288, 576 and 864 square feet, respectively. The
average monthly rental rate as of July 1, 1998 for each type of unit
is approximately $319, $369 and $455, respectively, or $1.11, $.64 and
$.53 per square foot, respectively. The units were approximately 92%
occupied as of July 1, 1998. The average monthly occupancy rates for
1993, 1994, 1995, 1996 and 1997 were approximately 95%, 91%, 91%, 90%
and 95%, respectively.
Baron Properties acquired the entire limited partnership interest in
the Crystal Court Partnership from Rylex Capital, L.L.C., a Florida
limited liability company an unaffiliated third party for a purchase
price of $756,293. The Crystal Court Property is subject to first
mortgage financing with a current principal balance of approximately
$1,488,000. The mortgage is held by GMAC Commercial Mortgage Corp. The
maturity date of the first mortgage loan is October 2004. Assuming no
prepayments of principal, the balance that will be due at maturity is
approximately $1,366,490. The monthly debt service payments are
$10,404, or an annual amount of $124,808. The loan bears a fixed
interest rate of 7.5% and amortizes on a 30-year basis. The loan is
prepayable with a prepayment fee equal to 1% of the then outstanding
principal balance.
The purchase price was paid out of the net proceeds of the
Registrant's sale of Common Shares in its ongoing public offering. The
purchase price was determined by the parties to the transaction in
arms-length negotiations and was based on a June 1998 appraisal of the
property by Consortium Appraisal, Inc., an independent appraisal firm
located in Winter Park, Florida.
The financial statements required under item 7 of Form 8-K in
connection with such acquisition have not been filed with this report.
Such financial statements will be filed on a Form 8-K within 60 days
after the date of execution of this report.
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits attached.
(b) On July 15, 1998, the Registrant filed a Form 8-K to report Baron
Properties' acquisition of beneficial ownership of the
Heatherwood Property. The financial statements required under
item 7 of Form 8-K in connection with such acquisition were not
filed with the initial report on Form 8-K. Such financial
statements will be filed by amendment to the initial report on
Form 8-K within 60 days after the date of execution of the Form
8-K.
8
<PAGE>
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
August 14, 1998
BARON CAPITAL TRUST
By: /s/ Gregory K. McGrath
---------------------------------
Gregory K. McGrath
Chief Executive Officer
By: /s/ David E. Williams
---------------------------------
David E. Williams
Chief Financial Officer
9
