SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1998
Senior Retirement Communities, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Louisiana 72-1394159
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
507 Trenton Street, West Monroe, Louisiana 71291
-----------------------------------------------------------
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including are code (318) 323-2115
Number of share outstanding of each of the registrant's class of common shares
and preferred shares, as of June 30, 1998
Common Shares 624,410 par value $ .10 per share:
Preferred shares 425,000 par value $1.00 per share:
- -------------------------------------------------------------------------------
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 twelve (12) months (or for such shorter period
that the registrant was required to file such report) and (2) has subject to
such filing requirements for the past ninety (90) days.
Yes X No
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<PAGE>
Senior Retirement Communities, Inc.
Form 10-QSB
TABLE OF CONTENTS
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Part 1: Financial Information Page
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Item 1. Financial Statements (Unaudited)
Balance Sheets as of June 30, 1998 (unadited) and
December 31, 1997 (Audited)................................. 2
Statements of Income for the six months ended
June 30, 1998 and for period from September 10,
1997 (Inception) to June 30, 1998........................... 3
Statement of Retained Earnings for the six months
ended June 30, 1998 and for period from September
10, 1997 (Inception) to June 30, 1998....................... 4
Statements of Cash Flows for the six months ended
June 30, 1998 and for period from September 10,
1997 (Inception) to June 30, 1998............................ 5-6
Notes to Financial Statements................................ 7-14
Item 2. Management's Discussion .................................. 15-18
Part II: Other Information
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Item 1. Legal Proceedings........................................ 19
Item 2. Changes in Securities.................................... 19
Item 3. Defaults Upon Senior Securities.......................... 19
Item 4. Submission of Matters to a Vote of Security Holders...... 19
Item 5. Other Information........................................ 19
Item 6. Other Matters............................................ 20
Item 7. Exhibits and reports on Form 8-K......................... 20
<PAGE>
SENIOR RETIREMENT COMMUNITIES, INC.
( A Development Stage Company )
FINANCIAL STATEMENT
June 30, 1998
<PAGE>
Senior Retirement Communities, Inc.
Financial Statement
June 30, 1998
Table of Contents
-----------------
Page
FINANCIAL STATEMENTS:
Report 1
Balance Sheet 2
Statement of Income 3
Statement of Retained Earnings 4
Statement of Cash Flows 5
Notes to Financial Statements 7
<PAGE>
To the Board of Directors and Shareholders
Senior Retirement Communities, Inc.
West Monroe, Louisiana
The accompanying balance sheet of Senior Retirement Communities, Inc.
( A Development Stage Company ) as of June 30, 1998 and December 31, 1997 and
the related statement of income, retained earnings and cash flows for the six
months then ended, and for the period from September 10, 1997 ( Date of
Inception ) to June 30, 1998 were prepared internally from the books and
records of Senior Retirement Communities, Inc. These financial statements
were not audited or reviewed.
Joanne Caldwell-Bayles
President, Senior Retirement Communities, Inc.
August 6, 1998
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
ASSETS Six months ended
June 30, 1998 Dec. 31,1997
<S> <C> <C>
Current assets:
Cash $ 11,133 $ 352
Prepaid insurance 4,125 4,125
------------ ------------
Total current assets 15,258 4,477
------------ ------------
Property, plant and equipment
Building construction in progress 2,228,397 716,307
Land 1,626,500 635,000
------------ ------------
Total property, plant and equipment 3,854,897 1,351,307
------------ ------------
Other assets:
Deposits 4,000 2,000
Deferred charges 441,782 120,000
------------ ------------
Total other assets 445,782 122,000
------------ ------------
$ 4,315,937 $ 1,477,784
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank overdraft $ 0 $ 21,405
Notes payable 2,418,737 450,000
------------ ------------
Total current liabilities 2,418,737 471,405
------------ ------------
Other liabilities:
Due to stockholders and affiliates 229,322 58,200
------------ ------------
Stockholders' Equity
Common stock, $ .10 par value,
1,500,000 shares authorized, 624,410
shares issued and outstanding 62,441 47,441
Preferred stock, $ 1 par value,
425,000 shares authorized, 425,000
shares issued and outstanding 425,000 0
Additional paid in capital 1,186,379 901,379
Retained earnings ( deficit )
accumulated During the development
stage (5,942) (641)
------------ ------------
Total stockholder's equity 1,667,878 948,179
------------ ------------
$ 4,315,937 $ 1,477,784
------------ ------------
</TABLE>
See accompanying notes.
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Statement of Income
For the Six Months ended June 30, 1998 and the Period from September 10, 1997
(Date of Inception ), to June 30, 1998
<TABLE>
<CAPTION>
September 10, 1997
Six Months Ended (Inception ) to
June 30, 1998 June 30, 1998
<S> <C> <C>
Revenues $ 0 $ 0
------------ -----------
Operating expenses
Advertising 6 6
Bank charges 35 186
Casual labor 174 554
Donations 150 150
Dues and subscriptions 250 250
Education 1,266 1,266
Insurance 107 107
Legal and accounting 210 210
Permits 75 75
Printing 272 382
Taxes 2,581 2,581
Travel and entertainment 175 175
------------ -----------
Total operating expenses 5,301 5,942
------------ -----------
Net income (loss) $ (5,301) $ (5,942)
</TABLE>
See accompanying notes.
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Statement of Retained Earnings ( Deficit )
For the Six Months ended June 30, 1998 and the Period from September 10, 1997
( Date of Inception), to June 30, 1998
<TABLE>
<CAPTION>
September 10, 1997
Six Months Ended (Inception ) to
June 30, 1998 June 30, 1998
<S> <C> <C>
Beginning retained earnings $ (641) $ 0
Net income (loss) (5,301) (5,942)
------------- -------------
Ending retained earnings (deficit) $ (5,942) $ (5,942)
------------- -------------
</TABLE>
See accompanying notes.
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Statement of Cash Flows
For the Six Months ended June 30, 1998 and the Period from September 10, 1997
(Date of Inception ), to June 30, 1998
<TABLE>
<CAPTION>
Six September 10,
Months Ended 1997
June 30, (Inception) to
1998 June 30, 1998
<S> <C> <C>
Cash flows from operating activities:
Cash paid to suppliers and employees $ (5,301) $ (10,067)
------------ ------------
Net cash provided (used) by operations (5,301) (10,067)
------------ ------------
Cash flows from investing activities
Acquisitions land (991,500) (1,626,500)
Payments towards construction (1,512,090) (2,228,397)
Payments of deposits (2,000) (4,000)
Payment of deferred charges (321,782) (441,782)
------------ ------------
Net cash provided by (applied to)
Investing activities (2,827,372) (4,300,679)
------------ ------------
Cash flows from financing activities
Issuance of common stock 300,000 1,248,820
Issuance of preferred stock 425,000 425,000
Interim construction loans 1,968,737 2,418,737
Loans from stockholders and affiliates 171,122 229,322
------------ ------------
Net cash provided by (applied to)
financing activities 2,864,859 4,321,879
------------ ------------
Net increase (decrease) in cash 32,186 11,133
Cash at the beginning of the period -21,053 0
------------ ------------
Cash at the end of the period $ 11,133 $ 11,133
------------ ------------
</TABLE>
See accompanying notes.
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Statement of Cash Flows
For the Six Months ended June 30, 1998 and the Period from September 10, 1997
(Date of Inception), to June 30, 1998
<TABLE>
<CAPTION>
Six September 10,
Months Ended 1997
June 30, (Inception) to
1998 June 30, 1998
Reconciliation of net income to net cash provided by operations:
<S> <C> <C>
Net income $ (5,301) $ (5,942)
Adjustments to reconcile net income to cash
Provided by operations
Payment of insurance deposits 0 (4,125)
----------- -----------
Net cash provided (used) by operations $ (5,301) $ (10,067)
----------- -----------
</TABLE>
See accompanying notes.
-7-
<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Nature of Business
The Company is a Louisiana corporation established to develop assisted living
center and dementia facilities for the housing and care of senior citizens in
Ruston, Bossier City, Shreveport, Minden and West Monroe, Louisiana.
Basis of Accounting
The Company uses the accrual basis of accounting and will utilize a calendar
year for all reporting purposes.
Income Taxes
The company is treated as a corporation for federal income tax purposes.
Property, Buildings, Equipment, and Depreciation
Buildings and equipment are stated at cost and are to be depreciated by the
straight- line method over their estimated economic lives. Buildings shall
include capitalized construction period interest which will be treated as a
component cost of the building and depreciated over the same economic
life as the building. Some of the land was acquired in a series of tax free
exchange in return for shares of the Company's common stock (Note 5).
Consequently, the Company's tax basis in those properties for income tax
purposes is the stockholder's basis.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Advertising
The Company follows the policy of charging the costs of advertising to expense
as incurred.
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 1- Summary of Significant Accounting Policies- (continued)
Deferred Charges
Deferred charges represents the costs associated with obtaining long- term
financing for the care facilities of the Company. These costs are to be
amortized over the life of the bonds using the effective interest rate method.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB and Article 10 of
Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In management's opinion, all adjustments (consisting of
normal recurring adjustments ) considered necessary for a fair presentation of
the unaudited interim financial statements have been included. Operating
results for interim periods reflected are not necessarily indicative of the
results that may be expected for a full fiscal year. These financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-KSB.
Certain reclassifications have been made to previously reported amounts to
conform with the current presentation.
Note 2 - Related Party Transactions
The company acquired 6 acres of land at the Ruston location with an estimated
fair market value of $ 450,000 in a transaction with one of its stockholders in
exchange for 77,500 shares of common stock and by assuming a debt of
$200,000, which is reflected as a due to stockholders and affiliates. This
transaction would have resulted in a gain to the transferring shareholder of
approximately $ 95,000 had it not been a tax free exchange. This land is
included on the balance sheet at a value of $ 355,000 which is the transferring
shareholder's basis in this property.
-9-
<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 2- Related Party Transactions - (continued)
The company acquired 20 acres of land at the Ruston location with an estimated
fair market value of $ 250,000 in a transaction with one of its stockholders in
exchange for 40,000 shares of common stock. This transaction would have
resulted in a gain to the transferring shareholder of approximately $ 170,000
had it not been a tax free exchange. This land is included on the balance
sheet at a value of $ 80,000 which is the transferring shareholder's basis in
this property.
The company acquired land at the West Monroe location with an estimated fair
market value of $ 200,000 in a transaction with one of its stockholders in
exchange for 100,000 shares of common stock. This transaction would have
resulted no gain to the transferring shareholder had it not been a tax free
exchange.
The Company has entered into a construction contract in the amount of
$ 2,750,000 with one of the shareholders to construct the Ruston facility.
The contract calls for the cash payments of $ 2,500,000 during the building
of the facility as approved by the contract engineer and the issuance of an
additional 125,000 shares of common stock at the completion of the project,
such stock issuance to represent the builders profit in the project. As of
June 30, 1998 $ 1,191,873 has been paid on this contract.
The Company has entered into a construction contract in the amount of
$1,225,000 with one of the shareholders to construct the Shreveport
facility. The contract calls for the cash payments during the building of the
facility as approved by the contract engineer. As of June 30, 1998 $ 78,595
has been paid on this contract.
The Company has entered into a construction contract in the amount of
$2,200,000 with one of the shareholders to construct the Bossier City facility.
The contract calls for the cash payments during the building of the facility as
approved by the contract engineer. As of June 30, 1998 $ 104,635 has been
paid on this contract.
Due to stockholder and affiliates consist of amounts advanced by stockholders
and other related entities.
-10-
<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 3 - Deferred Charges
Deferred charges are summarized as follows:
Loan fees $441,782
The loan fees are to be amortized as interest expense over the life of the
related loan by use of the interest method.
Note 4 - Notes Payable
Notes payable at June 30, 1998 consists of the following:
1. Church Loans $ 1,452,577
2. Church loans 379,680
3. Church loans 384,480
4. First Republic Bank 202,000
----------
Total $ 2,418,737
----------
1. Note payable to Church Loans, dated December 1, 1997. This note is to
provide the funding for the construction of the Ruston location in an amount
not to exceed $ 2,700,000. The loan is to be repaid from the permanent
financing of the project through the proposed issuance of bonds. This note
calls for the payment of interest at a rate of prime ( as published in the Wall
Street Journal plus two per cent but in no case shall the rate be less than ten
and one- half per cent per annum. The lender shall maintain a first mortgage
position on the Ruston location until such time as the bonds are sold. At that
time Church Loans will maintain a co- first mortgage position for any
amounts which are not liquidated by the bond proceeds.
2. Note payable Church Loans, dated April 28, 1998. This note is to provide
the funding for the construction of the Bossier City location in an amount
not to exceed $2,200,000. The loan is to be repaid from the permanent financing
of the project through the proposed issuance of bonds. This note calls for the
payment of interest at a rate of prime ( as published in the Wall Street
Journal plus two per cent but in no case shall the rate be less than ten and
one- half per cent per annum. The lender shall maintain a first mortgage
position on the Bossier City location until such time as the bonds are sold.
At that time Church Loans will maintain a co- first mortgage position for any
amounts which are not liquidated by the bond proceeds.
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<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 4 - Notes Payable - (continued)
3. Note payable Church Loans, dated April 28, 1998. This note is to provide
the funding for the construction of the Shreveport location in an amount not
to exceed $ 1,845,000. The loan is to be repaid from the permanent financing
of the project through the proposed issuance of bonds. This note calls for
the payment of interest at a rate of prime ( as published in the Wall Street
Journal plus two per cent but in no case shall the rate be less than ten and
one- half percent per annum. The lender shall maintain a first mortgage
position on the Shreveport location until such time as the bonds are sold.
At that time Church Loans will maintain a co- first mortgage position for any
amounts which are Not liquidated by the bond proceeds.
4. Note payable First Republic Bank, dated April 30, 1998 represents a loan
in the amount of $ 202,000 secured by a first mortgage on a 9.72 acre tract
of land at the proposed Minden location. This loan requires monthly interest
payments based on interest at the rate of ten per cent per annum with the
principal due November 1, 1998.
Through June 30, 1998 the Company has incurred $ 46, 705 of interest expense,
all of which has been treated as construction period interest and included as
part of the Building construction on progress on the balance sheet.
Note 5 - Issuances of Common Stock
The Company was formed September 10, 1997. The Company has issued
Common stock totaling 624,410 shares of $ .10 par value in exchange for
Property and cash as follows:
<TABLE>
<CAPTION>
Total Issue
Description Shares Amount
<S> <C> <C>
1. Certificate number 1 issued in 20,417 $ 40,834
exchange for cash
2. Certificate number 2 issued in exchange 85,896 $ 171,792
for services rendered in connection with
developing the plans for construction for
the Ruston location and a deposit on the
plans for the Bossier City, Shreveport,
Minden, and West Monroe locations
-12-
<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 5 - Issuance of Common Stock - (continued)
3. Certificate number 3 issued in exchange 20,417 40,834
for cash
4. Certificate number 4 issued in exchange 77,500 155,000
for the equity in 6 acres of land at the
Ruston location.
5. Certificate number 5 issued in exchange 40,000 80,000
for 20 acres of land at the Ruston location.
6. Certificate number 6 issued in exchange 57,264 114,528
for services rendered in connection with
developing the plans for construction
for the Ruston location and a deposit on
the plans for the Bossier City, Shreveport,
Minden, and West Monroe locations
7. Certificate number 7 issued in exchange 20,416 40,832
for cash
8. Certificate number 8 issued in exchange 100,000 200,000
for land at the West Monroe location.
9. Certificate number 9 issued in exchange 52,500 105,000
for cash.
10. Certificate number 10 issued in exchange 150,000 300,000
for services rendered in connection with
developing the plans for construction for
the Ruston, Bossier City, and Shreveport
---------------------
Totals 624,410 $1,248,820
======= =========
</TABLE>
The Company has also reserved 102,440 shares of Common Stock to be issued
at the completion of the services described above relative to certificates
2 and 6.
-13-
<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 6 - Issuances of Prefered Stock
In April of 1998 the Company issued 425,000 shares of preferred stock in
connection with a purchase of land for the Bossier City, Louisiana location.
The stock certificates were issued as follows:
<TABLE>
<CAPTION>
Description Shares Amount
<S> <C> <C>
1. Certificate number 1 issued in 100,000 $ 100,000
exchange for land
2. Certificate number 2 issued in 100,000 $ 100,000
exchange for land
3. Certificate number 3 issued in 100,000 $ 100,000
exchange for land
4. Certificate number 4 issued in 100,000 $ 100,000
exchange for land
5. Certificate number 5 issued in 25,000 $ 25,000
exchange for land
======= =========
Totals 425,000 $ 425,000
</TABLE>
The preferred stock issued accrues dividends at the rate of four per cent per
year for each of the first two years, then six per cent per year for the next
two years then at eight per cent per year for the final two years. The
preferred stock is callable at the Company's option and shall be redeemed at
the end of the sixth year if still outstanding. The preferred shareholders
have an option to purchase common stock at a twenty per cent discount at any
time within eight years of the preferred stock issue date if the Company
issues additional common stock through a public offering.
Note 7 - Development Stage Operations
The Company has begun construction of the Ruston, Shreveport, and Bossier City
facilities. Ruston has an estimated completion date of late 1998, while
Shreveport and Bossier City are scheduled to open in early 1999. The
expenditures related to this project are reflected as building construction in
progress on the balance sheet.
-14-
<PAGE>
Senior Retirement Communities, Inc.
( A Development Stage Company )
Notes to Financial Statements
Note 8 - Income Taxes
As discussed in notes 2 and 4, the Company was incorporated and capitalized
during the period from September 10, 1997 to June 30, 1998.
Note 9 - Subsequent Events
Effective June 23, 1998, the Company was approved to issue $9,000,000 of bonds
which are to become the permanent financing for the projects under construction
reflected in this financial statement. As of June 30, 1998, these bonds are
in the process of being printed and readied for sale. The proceeds of these
bond sales will be used to liquidate the construction loans noted in note 4.
-15-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
As of June 30, 1998, the Company had under construction three assisted
living facilities ("ALFs") containing 134 units. There are 48 memory disorder
units primarily for the support of individuals suffering from Alzheimer's and
related disorders. The balance of the 86 units is designed for more
traditional assisted living units. The units under construction are located
in Ruston, Louisiana (48 assisted living units and 12 independent living
units), Bossier City, Louisiana (36 assisted living units and 24 Alzheimer's
and related disorder units) and Shreveport, Louisiana (24 Alzheimer's and
related disorder units). Ruston ALF is scheduled to open in early fall 1998.
Bossier City and Shreveport ALF's are scheduled to open in January 1999.
Once constructed, these facilities will be managed pursuant to a
Management Contract. On September 10, 1997 the company entered into a
Management Agreement (the "Management Agreement") with the Forsythe Group,
Inc (the "Manager"), a company owned and controlled by Joanne M.
Caldwell-Bayles the President and principle shareholder of the company. The
Management Agreement extends to each of the facilities being financed as a
result of the sale of the bonds. Pursuant to the term of the Management
Agreement, the Forsythe Group, Inc. as agent of the company will perform all
services incidental to the operation of the facility, including hiring of
employees, collection of payments, the paying of expenses, receiving
governmental permits and compliance thereof, marketing, preparing budgets, and
in general, all activities that are associated with the management of the
facilities. The Manager will account to the Company as its agent for the
services rendered.
The employees of each facility will be employees of the Company. The
Manager will have no authority to make any disbursement in excess of
$15,000.00, unless specifically authorized by the Company, nor may the
Manager incur any liability, which will require more than one year of payment.
The Company will pay the Manager $1,500 per month or seven percent (7%)
of the gross collections of the facility, whichever is greater. Prior to the
opening date of the facility, the Manager shall be entitled to receive
$1,500.00 per month. The Management Agreement continues until January 1,
2010, and may be terminated by the mutual consent of the parties for cause if
the Manager shall fail to perform any of its duties pursuant to the Management
Agreement, or in the event of Manager's bankruptcy.
Other than matters regarding operations of the facility, the Manager has
no authority over the conduct of the affairs of the Company or its Management
or operations.
The Company also owns approximately 34 acres of land, which are located
in Ruston (20 acres), Shreveport (2 acres), Minden (9 acres), West Monroe
(3acres),
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<PAGE>
Louisiana. These lands are being maintained for future development as senior
health care related housing. Negotiations are underway to lease a part of the
Minden land for the development of an assisted living facility by an affiliated
Company. Studies are underway to determine the feasibility of an assisted
living facility on the 2 acres in Shreveport. The 2 acres in Shreveport is
part of the security for the series 1998-III bonds. If any additional
facility is to be built on this site, it would require an amendment to series
1998-III, if the land was to be released from the co- first mortgage or the
1998-III series would have to be amended to increase the indebtedness if
financing would be required to build the additional facility. The Ruston,
Minden, and West Monroe, Louisiana property are not security for any of the
1998 series of bonds.
The Company continues to finance the expansion and development by a
combination of private placement of Common Stock, and Preferred Stock as
well as the public offering of First Mortgage Bonds. In April 1998 the
Company purchased approximately 6 acres of land for $ 525,000, paying $100,000
in cash and the issuing 425,000 shares of $1.00 par value Preferred Stock.
This property is the location on which it is building the Bossier City,
Louisiana facility. The Preferred Stock is accruing dividends at a rate of
4% for the first two years, 6% for the second two years, and 8% for the
final two years. The dividends are based solely on the initial outstanding
principal balance. The Preferred Stock shall be redeemed in full at the end
of the fifth year for the total sum including accrued dividends. It is
callable at any time at the option of the company. The holders of the
Preferred Stock also have the right to purchase $525,000 of the common stock
at a 20% discount if and when the Company issues additional Common Stock in
the form of a public offering, if done so within 8 years of date of issue of
the Preferred Stock.
The only operations of the Company at this time are the construction of the
ALF's described above. It is anticipated that the Ruston, Louisiana ALF will
be in operation in early fall 1998. Shreveport and Bossier City, Louisiana
ALF's should be completed and opened in early winter 1999.
FINANCIAL CONDITION, CHANGES IN FINANCIAL CONDITON AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company receives funds for construction and operations from three
sources. Those sources are: sale of Bonds as set forth in the prospectus
dated, construction loans from Church Loans and Investments Trust (Co-First
Mortgage) and credit lines supplied by The Forsythe Group, Inc.
The source and use of the proceeds from the sale of bonds is divided into
three series. Series 1998-I in the amount of $3,685,000.00 (Co- First
Mortgage Bonds) is
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<PAGE>
dedicated for cost related to the Ruston, Louisiana facility. Series 1998-II
in the amount of $3,470,000.00 (Co- First Mortgage Bonds) is dedicated for
cost related to the Bossier City facility. Series 1998-III in the amount of
$1,845,000.00 (Co- First Mortgage Bonds) is dedicated for cost related to the
Shreveport facility. The actual use of proceeds is set forth on page 13 of
the prospectus dated June 23, 1998.
The construction of the facilities are being financed through the sale of
Co- First Mortgage Bonds as set forth in the prospectus dated June 23, 1998
and construction loans provided by Church Loans and Investments Trust. Church
Loans and Investments Trust is committed to loan all the funds necessary for
the construction of the ALF's. As the bonds are sold they will be used to
pay the amounts owed to the construction lender and if the construction lender
is paid in full before construction is completed, the remainder of the funds
received through the sale of the bonds will be used for the financing of the
remainder of the construction. The first proceeds from the sale on bonds
will be applied to underwriting concessions, offering cost, and initial
operating fund payments; thereafter bond sale proceeds will be used to pay
Church Loans and Investments Trust for its portion of the Co- First Mortgage,
if any is due.
During the construction period the company primarily relies on
Construction funding from Church Loans and Investments Trust and Credit lines
from The Forsythe Group, Inc. Failure of either source of funding would have
adverse results on the Company. In that case construction would have to rely
on the sale of the Bonds which would cause delays in construction. Failure of
the Bonds to be sold would require the Company to depend on the Construction
Loan to be converted to a permanent loan. The Company and Church Loans and
Investments Trust have agreed that in the event of the failure of the Bonds to
sell, then in that event the Construction Loan would be covered to a permanent
loan.
After completion of construction, the Company believes it will operate at
a deficit. Therefore liquidity will be a problem. The Company is and will be
dependent upon The Forsythe Group, Inc. for operating short fall funds. At
this time The Forsythe Group, Inc. has the resources to provide the anticipated
funds, as needed. The Company is dependent upon the continued stable economic
environment in order to be successful.
-18-
<PAGE>
Major Changes in Financial Condition
The Major changes in financial condition between Dec 31, 1997 and June
30, 1998 is as follows:
1. Building, plant, and equipment increased by $1,512,090 due to the
construction in progress in Ruston, Bossier City and Shreveport, Louisiana.
Land for development owned by the Company increased by $1,968,737. Notes
payable increased by $1,968,737. The funds produced from the Notes payable
was used to pay for buildings under construction, equipment use in the
construction of building under construction, and land for present and
possible future construction of ALF's.
2, Other Liabilities increased by $171,122 as a result of loans from The
Forsythe Group, Inc. These funds were used in the construction process and in
the promotion and marketing, in anticipation of the opening of the Ruston,
Louisiana ALF in early fall 1998.
3. Preferred stock in creased by $425,000. In April 1998 the company
purchased approximately 6 acres of land for $ 525,000, paying $100,000 in
cash and the issuing 425,000 shares of $1.00 par value Preferred Stock.
4. Total equity increased by $719,699 as a result of the issuance of the
preferred stock discussed in paragraph 3, above and the issuance of Common
stock as set forth in note 2 of the financial report on page 8 of this report.
The future success of the Company is dependent upon many factors,
including a stable economy, the continued support of The Forsythe Group, Inc.,
stable Management, and availability of the staff for each ALF. Management is
in the process of developing a management team which it feels will be able
to provide the services to the communities in which they are being built.
-19-
<PAGE>
Senior Retirement Communities, Inc.
Attachments to Form 10-QSB
Part II - Other Information
Item 1. Legal proceedings
None
Item 2. Change in Securities
Common Stock
On May 18, 1998, the Company issued certificate number 100 for
150,000 shares to the Forsythe Group in exchange for services
rendered On the plans and specifications for the Bossier City
and Shreveport Locations.
Preferred Stock
On April 24, 1998, the Company issued certificates number 1
through 5 Totaling 425,000 shares to Patterson Insurance in
addition to $ 100,000 Cash in payment of the land for the land
for the Bossier City location.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Real Estate Acquisitions
On April 30, 1998, the Company acquired land for a proposed
facility in Minden, Louisiana for cash in the amount of
$ 200,000.
-20-
<PAGE>
On April 27, 1998, the Company acquired land for a proposed
facility in Shreveport, Louisiana for cash in the amount of
$ 266,500.
On April 24, 1998, the Company acquired land for a proposed
facility in Bossier City, Louisiana for cash in the amount of
$ 100,000 and the Issuance of 425,000 shares of preferred stock
for a total consideration Of $525,000.
Item 6: Other Matters
In its prospectus to potential buyers of the bonds to be issued,
the Company stated that all positions requiring skilled personnel
would be filled with people holding Nursing degrees. The Company
has found that people holding gerontology degrees or those who
have been trained in gerontology are also qualified to hold many
of the positions and in many cases are more qualified than are
the nursing graduates. Due to this discovery, some of the
positions presented in the Prospectus projected to be staffed
with nursing graduates will instead be staffed Gerontology
graduates or those who have been trained in gerontology in order
to provide better quality services to those being served.
Item 7. Exhibits and reports on Form 8-K
None
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.
Senior Retirement Communities, Inc. (Registrant)
By: /S/Joanne M. Caldwell-Bayles
President , Finance and Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
===========================================================================
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF SENIOR RETIREMENT COMMUNITIES, INC. STATEMENT DATED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
===========================================================================
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 11,133
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,258
<PP&E> 3,854,897
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,315,937
<CURRENT-LIABILITIES> 2,648,059
<BONDS> 0
425,000
0
<COMMON> 62,441
<OTHER-SE> 1,186,379
<TOTAL-LIABILITY-AND-EQUITY> 4,315,937
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,301
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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<NET-INCOME> (5,301)
<EPS-PRIMARY> (.01)
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