<PAGE> 1
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 March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-25803
AMERICA'S SENIOR FINANCIAL SERVICES, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0181535
- ------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15544 N.W. 77th Court
Miami Lakes, FL 33014
----------------------------------------
(Address of principal executive offices)
(305) 828-2599
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark 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 [ ]
Number of shares outstanding of each of the issuer's classes of common equity:
As of April 30, 2000, the Company had a total of 8,958,942 shares of
Common Stock, par value $.001 per share (the "Common Stock"), outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE> 2
AMERICA'S SENIOR FINANCIAL SERVICES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I
Item 1. Financial Statements.....................................................................................3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................................................4
PART II
Item 2. Changes in Securities....................................................................................6
Item 6. Exhibits and Reports on Form 8-K.........................................................................6
SIGNATURES.......................................................................................................7
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The unaudited, condensed, consolidated financial statements included
herein, commencing at page F-1, have been prepared in accordance with the
requirements of Regulation S-B and supplementary financial information included
herein, if any, has been prepared in accordance with Item 310(b) of Regulation
S-B and, therefore, omit or condense certain footnotes and other information
normally included in financial statements prepared in accordance with generally
accepted accounting principles. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of the financial information for the interim periods reported have been made.
Certain reclassifications have been made to the 1999 financial information to
conform to the presentation used in 2000. Results of operations for the three
months ended March 31, 2000 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2000. These financial
statements should be read in conjunction with the Company's Form 10-KSB as
originally filed with the Securities and Exchange Commission on April 14, 2000.
Note 2. Loss Per Share
The Company follows the provisions of SFAS No. 128, "Earnings Per
Share," which requires presentation of basic earnings per share including only
outstanding common stock, and diluted earnings per share including the effect of
dilutive common stock equivalents. The Company's basic and diluted losses per
share for all periods presented are the same since the Company's convertible
debentures, stock options, and warrants are anti-dilutive.
Note 3. Income Taxes
The Company follows the provisions of SFAS No. 109, "Accounting for
Income Taxes." In accordance with this statement, the Company records a
valuation allowance so that the deferred tax asset balance reflects the
estimated amount of deferred tax assets that may be realized. Therefore, the
deferred tax assets generated by the net losses in the periods presented have
been offset in their entirety by a deferred tax asset valuation allowance.
Note 4. Convertible Debentures
In May 1999, the Company entered into a Securities Purchase Agreement,
pursuant to which the Company issued $2,500,000 of 3% convertible debentures,
which are due May 6, 2002, and common stock purchase warrants for 34,383 shares
at $8.70 per share, which expire May 31, 2004. The Securities Purchase
Agreement, among other terms, allows the Company to require the buyer to
purchase additional convertible debentures up to $7,500,000, if certain criteria
are met with regard to the trading prices and activity of the Company's common
3
<PAGE> 4
stock. Currently, these criteria are not met and the Company may not require the
buyer to purchase additional debentures. The holder of the debentures may take
the interest in either cash or Company common stock. The debentures are
convertible into common stock at the option of the holder, and are converted at
a price of the lower of (a) $8.70 per share, or (b) 85% of the average closing
bid price for the common stock for 5 of the 20 trading days ending immediately
before the conversion. At the time the Company entered into this agreement the
debentures would be convertible at $6.16 per share of the Company's common
stock.
During 1999, the debenture holder converted $750,000 worth of debentures into
152,260 common shares. During the first three months ended March 31, 2000, the
debenture holder converted another $613,995 in principal and $62,032 in interest
and penalty into 398,497 common shares.
Note 5, Loans held for Sale/ Warehouse Line of Credit
As part of Jupiter Mortgage Corporation acquisition, completed in
August 1999, the Company obtained certain loan funding credit facilities. As a
result, the balance sheet of the Company includes a "Warehouse line of credit"
and "loans held for sale." The warehouse line of credit is used to fund loans as
they are produced, and this line of credit is secured by the mortgages.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTORY STATEMENT
The Private Securities Litigation Reform Act provides a "safe harbor"
for forward-looking statements. Certain statements included in this form 10-QSB
are forward looking and are based on the Company's current expectations and are
subject to a number of risks and uncertainties that could cause actual results
to differ significantly from results expressed or implied in any forward-looking
statements made by, or on behalf of, the Company. The Company assumes no
obligation to update any forward-looking statements contained herein or that may
be made from time to time by, or on behalf of, the Company.
RESULTS OF OPERATIONS
Revenues for the three-month period ending March 31, 2000 increased to
$1,498,793 from $959,932 for the three-month period ending March 31, 1999. This
growth in revenues was primarily attributable to the contributions of the
Jupiter Mortgage Corporation ("Jupiter") subsidiary, whose results were not part
of AMSE's 1999 results. See the Pro-forma financial statements including
Jupiter, presented on page F-5 herein for the three months ended March 31, 1999.
Total Expenses for the three-month period ended March 31, 2000 compared to the
three-month period ended March 31, 1999 increased to $1,863,079 from $1,123,889.
This increase in expenses was partially attributable to the inclusion of the
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Jupiter subsidiary, which was not a part of AMSE during the first quarter of
1999, and Capital Funding which was a part of AMSE for only two of the three
months ended March 31, 1999.
Total Other Expenses for the three-month period ended March 31, 2000 compared to
the three-month period ended March 31, 1999 decreased to $12,708 from $13,647,
this decrease is due primarily to an increase in interest income.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently managing the payment of our current
liabilities and obligations on a monthly basis as cash becomes available. Based
on the current success in raising capital from investors, the costs of
operations may increase as these funds are invested to enhance operations. We
believe that our current negative cash flow from operations is approximately
$50,000 per month.
The Company issued $2,500,000 of convertible debentures in May 1999.
Each debenture is convertible into common stock. The number of shares of common
stock that may be issued upon conversion of the debentures depends upon the
market price of our common stock at the time of the conversion. Based upon the
recent price of common stock of approximately $0.20, if the debentures were
converted into common stock, the Company would issue 6,682,382 shares of common
stock. Subject to certain criteria regarding trading price and activity of the
Company's common stock, the Company may issue up to $7,500,000 of additional
convertible debentures, these criteria are not currently met. During 1999, the
Company also issued warrants to purchase 34,483 shares of our common stock to
the purchaser of the debentures and will issue more warrants in the event of the
sale of additional debentures. The material risk associated with this type of
debenture is that the Company's recent historically low stock price could have a
significant dilutive effect upon future conversions of the principle amount of
the debenture.
"Y2K" ISSUE
The Company believes it is in full compliance with the "Y2K" issue. The Company
operates internal Local Area Networks for all of its computer operations and all
the software and substantially all the hardware in use appears to have
successfully passed through the new year without disruption. The Company has had
no interruption from its vendors that have interfered with the Company's
operations. Management of the Company believes that the "Y2K" issue has not had
a material effect on the Company's business, results of operations or financial
condition.
5
<PAGE> 6
PART II
ITEM 2. CHANGES IN SECURITIES
During the first quarter of 2000, the Company issued 1,268,680 shares
of our common stock. 19,900 shares were issued to employees as
restricted stock grants to vest over a period of three years. 398,497
shares were issued in connection with the conversion of principal,
interest and a penalty on the convertible debenture outstanding.
208,333 shares were issued in connection with a private placement of
our common stock for $112,500, and 541,950 shares were issued to
advisors and consultants. The Company also issued 100,000 shares as a
good faith deposit in connection with two possible acquisitions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
1. Financial Statements begin on page F-1.
2. Exhibits:
27 Financial Data Schedule.
(b) Reports on Form 8-K.
1. A form 8-K was filed as of February 3, 2000 to announce the
pending acquisitions of Senior Income Reverse Mortgage
Corporation and Pinnacle Financial Corporation.
6
<PAGE> 7
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.
AMERICA'S SENIOR FINANCIAL SERVICES, INC.
Dated: May 12, 2000 By: /s/ NELSON A. LOCKE
--------------------------------------
Nelson A. Locke, President
Chief Executive Officer
By: /s/ JACE SIMMONS
--------------------------------------
Jace Simmons
Chief Financial Officer
Principal Accounting Officer
7
<PAGE> 8
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
31-Mar-00 31-Dec-99
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 76,446 $ 402,373
Brokerage fees receivable 247,243 214,604
Employee advances 180,033 175,714
Mortgage loans held for sale 5,012,800 2,389,162
Due from shareholder -- 20,734
Prepaid expenses 156,302 56,851
Other current assets 25,000 72,302
------------ ------------
TOTAL CURRENT ASSETS 5,697,824 3,331,740
------------ ------------
PROPERTY AND EQUIPMENT, net 418,717 442,897
------------ ------------
OTHER ASSETS
Goodwill, net 5,032,369 5,096,841
Due from related parties 112,000 112,000
Notes receivable 250,000 250,000
Other assets 683,471 561,536
------------ ------------
TOTAL OTHER ASSETS 6,077,840 6,020,377
------------ ------------
TOTAL $ 12,194,381 $ 9,795,014
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 19,136 $ 24,934
Lines of credit 583,837 366,298
Warehouse lines of credit 4,957,268 2,639,192
Accounts payable 453,998 394,752
Accrued liabilities 245,231 418,634
Other current liabilities 29,000 29,291
------------ ------------
TOTAL CURRENT LIABILITIES 6,288,470 3,873,101
CAPITAL LEASE OBLIGATIONS, less current portion 62,315 56,834
------------ ------------
LONG-TERM DEBT, convertible debentures 1,136,005 1,750,000
------------ ------------
LONG-TERM DEBT, less current portion -- --
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares
authorized, zero shares issued and outstanding -- --
Common stock, $0.001 par value; 25,000,000 shares
authorized, shares issued and outstanding, 9,083,942
at March 31, 2000 and 7,690,262 at December 31, 1999 8,959 7,690
Additional paid-in capital 13,466,224 12,498,553
Retained earnings (deficit) (8,596,277) (8,219,283)
Unearned compensation - restricted stock (171,315) (171,881)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,707,591 4,115,079
------------ ------------
TOTAL $ 12,194,381 $ 9,795,014
============ ============
</TABLE>
See notes to financial statements.
F-1
<PAGE> 9
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUES $ 1,498,793 $ 959,932
----------- -----------
EXPENSES:
Payroll and related expenses 1,259,006 663,493
Administrative, processing, and occupancy 539,601 410,679
Goodwill amortization 64,472 49,717
----------- -----------
TOTAL EXPENSES 1,863,079 1,123,889
----------- -----------
LOSS FROM OPERATIONS (364,286) (163,957)
----------- -----------
OTHER
Interest income (3,632) --
Interest expense 16,340 13,647
----------- -----------
TOTAL OTHER, NET 12,708 13,647
----------- -----------
LOSS BEFORE INCOME TAXES (376,994) (177,604)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (376,994) $ (177,604)
=========== ===========
LOSS PER SHARE:
Basic $ (0.046) $ (0.028)
=========== ===========
Diluted $ (0.046) $ (0.028)
=========== ===========
Weighted average common shares outstanding 8,284,328 6,317,434
=========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 10
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (376,994) $ (177,604)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 86,272 67,047
Common stock issued for services 155,955 --
Common stock issued for deposits 25,000
Recognition of restricted stock earned 8,198
Changes in certain assets and liabilities:
Brokerage fee receivable (32,639) (40,250)
Employee advances (4,319) (27,849)
Prepaid expenses (99,451) (31,657)
Other current assets and liabilities, net 47,302 --
Accounts payable 115,475 6,848
Accrued liabilities (173,694) --
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (257,093) (195,267)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of property and equipment 2,380 5,101
Acquisition expenditures, net of cash acquired (121,935) (452,571)
Increase in mortgage loans (2,623,638) --
Changes in other assets -- (7,592)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (2,743,193) (455,062)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 112,292 448,900
Other capital contributions 6,035 --
Net Borrowings under lines of credit 2,535,615 --
Borrowing on capital lease obligations -- 76,230
Due from shareholder 20,734 28,618
Change in long-term debt (317)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,674,359 553,748
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS (325,927) (96,581)
CASH AND CASH EQUIVALENTS, beginning of period 402,373 195,728
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 76,446 $ 99,147
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 11
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
(continued) ENDED MARCH 31,
-----------------------
2000 1999
------- -------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid in cash during the period $ 4,752 $14,886
======= =======
Income taxes paid in cash during the period $ -- $ --
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During January and February 2000, the holder of the convertible debenture bond converted $676,001 of the principal,
penalty and accrued interest into 398,497 shares of common stock (see Note 4).
During the first Quarter 2000, the Company recognized $20,466 of expense related to the vesting of restriced stock
issued to employees.
During the first Quarter 2000, the Company issued 541,950 shares valued at $135,488 for services.
The Company issued 100,000 shares valued at $25,000, as a deposit on an acquisition candidate.
</TABLE>
See notes to financial statements
F-4
<PAGE> 12
AMERICA'S SENIOR FINANCIAL SERVICES, INC. AND SUBSIDIARIES
PROFORMA STATEMENTS OF OPERATIONS INCLUDING JUPITER
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
1/01/99 to 1/01/99 to
HISTORIC 1/31/99 3/31/99 PROFORMA
AMSE CFSF(1) JUPITER ADJUSTMENTS CONSOLIDATED
---- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues: $ 959,932 $ 58,469 $ 717,970 $ 1,736,371
----------- ----------- ----------- --------- -----------
Expenses: --
Payroll and related expenses 663,493 58,089 381,025 1,102,607
Administrative, processing,
and occupancy 410,679 37,191 330,369 778,239
Goodwill amortization 49,717 -- -- 45,087 (a) 94,804
----------- ----------- ----------- --------- -----------
TOTAL EXPENSES 1,123,889 95,280 711,394 45,087 1,975,650
----------- ----------- ----------- --------- -----------
PROFIT (LOSS) FROM OPERATIONS (163,957) (36,811) 6,576 (45,087) (239,279)
----------- ----------- ----------- --------- -----------
Interest Expense (Net) 13,647 2,063 15,710
PROFIT (LOSS) BEFORE INCOME TAXES (177,604) (36,811) 4,513 (45,087) (254,989)
PROVISION FOR INCOME TAXES -- -- -- -- --
----------- ----------- ----------- --------- -----------
NET PROFIT (LOSS) $ (177,604) $ (36,811) $ 4,513 $ (45,087) $ (254,989)
=========== =========== =========== ========= ===========
</TABLE>
- -------------------
(a) To annualize goodwill as if this acquisition took place on January 1, 1999.
(1) Capital Funding of South Florida, Inc. (CFSF).
See notes to financial statements
F-5
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 76,446 98,608
<SECURITIES> 0 0
<RECEIVABLES> 247,243 90,103
<ALLOWANCES> 0 0
<INVENTORY> 5,012,800 0
<CURRENT-ASSETS> 5,697,824 763,142
<PP&E> 551,864 401,994
<DEPRECIATION> 133,147 99,930
<TOTAL-ASSETS> 12,194,381 6,391,888
<CURRENT-LIABILITIES> 6,288,470 373,377
<BONDS> 1,136,805 0
0 0
0 0
<COMMON> 8,959 6,631
<OTHER-SE> 12,185,422 5,938,432
<TOTAL-LIABILITY-AND-EQUITY> 12,194,381 5,945,063
<SALES> 0 0
<TOTAL-REVENUES> 1,498,793 959,932
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,863,079 1,123,889
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 16,340 13,647
<INCOME-PRETAX> (376,994) (177,604)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (376,994) (177,604)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (376,994) (177,604)
<EPS-BASIC> (.046) (.028)
<EPS-DILUTED> (.046) (.028)
</TABLE>
