Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
FORM 10-KSB
ANY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal year ended December 31, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ___ to ___
Commission file number 333-45419
Senior Retirement Communities, Inc.
Louisiana 72-1394159
(State or other jurisdiction of incorporation) I.R..S. I D
or organization)
507 Trenton Street, West Monroe, Louisiana 71291
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(318) 323-2115
Securities registered pursuant to Section 12 (b) of the Act:
First Mortgage Bonds $9,000,000
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__________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of the Form 10-KSB ____
Revenues for fiscal year 1999 - $ 714,729
Number of share outstanding of each of the registrant's class of common shares
and preferred shares, as of December 31, 1999
Common Shares 16,588,200 par value $.10 per share:
Preferred shares 425,000 par value $1.00 per share:
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Included by reference Prospectus dated June 23, 1998, I, II, III (2)
Included by reference 10-QSB dated June 30, 1999 I, II (3) Included by reference
10-QSB dated September 30, 1999 I, II
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SENIOR RETIREMENT COMMUNITIES, INC.
Form 10-KSB
INDEX
Part I Page
Item 1. Business
Item 2. Properties and method of Financing
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Part II.
Item 5. Market for Registrant's Bonds
Item 6. Management's Discussion and Analysis of Results of Operations
Item 7. Financial Statements and Supplementary Data
Item 8. Changes in and Disagreements with Accountants
Part III.
Item 9. Directors and Executive Officers of the Registrant
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Part IV.
Item 13. Exhibits, Financial Statement Schedules Reports on Form 8-K
Part I
Item 1. Business
OVERVIEW
General
Senior Retirement Communities, Inc. (the "Company" or SRC) was organized as a
Corporation under the laws of the State of Louisiana on September 10, 1997. The
Corporate charter has been amended one time on November 6, 1997. The Company is
in the business of developing and owning housing for seniors. SRC primary
interests are in the Development of Assisted Living Facilities ("ALFs"). ALF's
contain one or more facilities for seniors who are independent, require some
assistance or suffer from Dementia. Dementia units are primarily for the support
of individuals suffering from Alzheimer's and related disorders.
Independent Living
Independent Living facilities are anticipated to make up a small amount of the
Company's business. It is anticipated as the Independent Living group of seniors
age, they will convert to Assisted Living within the community thereby reducing
their impact upon the communities. The Company has maintained excess land in
each of the communities in order to meet the demands of seniors, no matter which
direction senior care evolves.
Assisted Living
Assisted Living will make up the largest impact upon the Company's success.
Assisted Living continues to evolve with State and Federal interest in this form
of Senior Care. It is anticipated that political pressure will continue to grow,
because of the impact that Assisted Living is having on other forms of senior
care. In Louisiana the Nursing Home industry, which has strong political support
in the Louisiana Legislature, has introduced a bill, which would have a negative
impact upon the industry. SRC along with other Assisted Living Communities are
aware of the proposed legislation. It the Company's intent to resist these
efforts.
Dementia
Independent Dementia facilities are fairly new in Louisiana. The Company has
built the first independent Dementia facility in Bossier City and Shreveport,
Louisiana. It used as a model the Terrace located in West Monroe, Louisiana
which was built by an affiliate of the Company. It is anticipated that Dementia
facilities will have a growing impact on the company success. The same political
pressures discussed above will also impact dementia.
Employees
The Company has sixty full time and nine part time employees in three locations
in north Louisiana. It is anticipated as occupancy increases the number of
employees will increase.
Source of Business
The Company's business is designed to provide secure, comfortable, and healthy
living environment for seniors with disposal income of approximately $25,000 and
up, between the age of 72 and up and in the case of Independent Living and
Dementia younger.
Method of Operation
The Company's ALF's are managed by The Forsythe Group, Inc. (Forsythe) which is
owned by Joanne M. Caldwell-Bayles, President of the Company. The ALF management
staff consists of five individuals includes MS. Bayles. Two members of the staff
have Master's degrees in Gerontology. They have over 20 years of experience in
Hospitals, Nursing Homes, and Assisted Living industry. They have direct
management responsibility for each Administrator of each ALF.
Prior to the formation of the Company, Forsythe closely kept close relation with
the Department of Social Services of the State of Louisiana, which is the
authority responsible for regulating ALF's in Louisiana. In 1996 Social Service
began developing new Minimum Standards for ALF's. When a decision was made for
the Company and develop ALF's the Forsythe staff recommended that the Company
adopt the proposed new minimum standards for all of its project. As a result the
design staff of Forsythe designed all of the ALF's which the Company owns meet
the new stricter requirements. The Company also adopted the new standards for of
its personnel. The new Adult Residential Care Minimum Standards were adopted and
became effective on March 31, 1999. As a result the Company is in compliance
with the new stricter requirement including buildings, staffing, and education
requirements a well.
The Forsythe ALF management staff has central purchasing, payroll, accounts
payable, menu planning and programming. All menus are planned with the
assistance with a registered dietitian.
Administrators are required to meet the standards set forth in the new
regulations. Employees are required to submit to drug testing before employment
as well as during employment. All employees are required to submit to a
background check by the State Police before employment.
Competition
ALF's are under ever growing competition for the senior market. Competition is
coming from additional ALF's being built in each market and Nursing home
upgrading and expansion. In Addition government regulation will continue to
increase. The one area in which competition remains at a reasonable pace is in
the area of independent Dementia units. While many ALF's are including Dementia
units it has not grown in the Company's markets as much as traditional ALF's.
In the fourth quarter of 1998 an Assisted Living facility without a formal
Dementia facility was announced in Ruston, Louisiana. While smaller than the
Arbor of Ruston it is and will be a factor in the market. It will take some
business, which would have move into the Arbor. As a result the rent up period
will be longer than anticipated. As part of the Company planning some of the
Assisted Living units and all of the Independent Living units were converted to
Dementia. Special dinning and activity designed for Dementia areas will also be
added. The Company believes that by moving quickly the new facilities will
regain any lost business and income because of the new Assisted Living facility.
In the fourth Quarter of 1998 an Assisted Living Facility was started in Bossier
City, the new facility opened in the spring of 1999. The Company believes the
market in Bossier City will be able to support both facilities. Additional new
facilities would increase competition and may have negative impact on the
Company's ALF.
Property Environmental
1The Company's ALF's are all in compliance with all environmental laws. Prior to
building each site was inspected and an environmental engineer studied pass
history. Each site was not subject to any environmental problems.
Item 2. Properties and Methods of Financing
As of December 31, 1999 the Company had three ("ALFs") open for business. The
Ruston, Louisiana ALF's Assisted Living Units (assisted and Independent living
units) opened for business in October 1998. The Company has converted four
independent living units and adding additional facilities which are operating as
a 6-unit Dementia (Terrace) facility, along with activity and dinning
facilities. The Ruston ALF contains 42 Assisted/Independent and 6 Terrace units
as result of increase demand for Alzheimer's facilities in the area and an
increase in competition in Assisted Living facilities. As of December 31, 1999
The Assisted/Independent units were 52% occupied and the Terrace was 50%
occupied.
The Bossier City facility has The Arbor of Bossier consisting of 36 assisted
living facility and The Terrace of Bossier 24-unit Dementia facility. As of
December 31, 1999 the assisted living units facility was 28% occupied. By March
15, 2000 occupancy had risen to 42%. ON December 31, 1999 the Terrace had
occupancy of 13%, which has not increased. Competition in the Shreveport-Bossier
market is fierce because of over building. The Arbor is competing well, while
the Terrace is slow in reaching its target occupancy. We anticipate our strong
marketing efforts will be successful in reaching stabilized occupancy with the
two year target ending March 2001..
The final facility is The Terrace of Shreveport located in Shreveport, Louisiana
consisting of a 24 unit Dementia facility. The Shreveport facility opened for
business on January 22, 1999. The occupancy of the Terrace on December 31, 1999
was 30% that has not changed as of March 15, 2000. The Terrace is slow in
reaching its target occupancy. We anticipate our strong marketing efforts will
be successful in reaching stabilized occupancy with the two-year target ending
March 2001, which is three months behind anticipated schedule.
The construction of the facilities were financed through the sale of Co-First
Mortgage bonds as set forth in the prospectus dated June 23, 1998 with
construction loans provided by Church Loans and Investment Trust. All of the
Construction loans have been paid in full.
We also own approximately 26 acres of land located in Ruston (20 acres),
Shreveport (2 acres), and Minden (4 acres), Louisiana for future construction.
We have continued 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 March 1999 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. The property is the
location of the Bossier City, Louisiana facility. The Preferred stock is paying
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 Preferred stock shall be redeemed in full at
the end of the fifth year for the total sum including accrued dividends. It is
recallable at anytime at the option of the company.
The holders of the Preferred stock shall also have the right to purchase 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 issued for
preferred stock.
Item 3. Legal Proceedings
The Company is not involved in any material legal proceedings at this time
Item 4. Submission of Matters to a Vote of Security Holders
No matter were submitted to a vote of security holders during the fourth quarter
of fiscal 1999.
Part II.
Item 5. Market for Registrant's Bonds
The Bonds were offered by MMR Investment Bankers, Inc. (the "Underwriter") on a
best efforts basis as agent for the Company. The Bonds are offered subject to
prior sale. The Offering of the Bonds (the "Offering") will continue until the
sale of all Bonds or for a period of one year from the date of the Prospectus
(June 23, 1998). As of December 31, 1999 $8,992,000 of the issue of $9,000,000
had been sold. The Underwriter does not intend to make a market in the Bonds.
There is no quoted market for the Bonds and there is no assurance a market will
develop.
Item 6. Management's Discussion and Analysis of Results of Operations
The Company's first ALF opened for business on October 16, 1999 in Ruston,
Louisiana. The Shreveport and Bossier City facilities opened in the first
quarter of 1999 at which point all of the facilities were open and operating.
The operating loss for the year ending December 31, 1999 was $ 1,359,541.
This commentary should be read the following documents for a full understanding
of Senior Retirement Communities, Inc. financial condition and the status of the
Company which reflect start up operations; the entire Prospectus dated June 23,
1998; 10QSB for the period ending June 30, 1999; and September 30, 1999 and the
unaudited financial statement presented therein along with all of the footnotes
thereto.
Major changes in Financial Conditions
The major change in financial condition between December 31, 1998 and December
31, 1999 were as follows: Current assets consisted primarily of cash in the
amount of $ 623,646. Cash is restricted as follows: $3,797 to fund bond reserve
accounts and $618,760 is restricted to pay Operating Fund Payments. Reader is
encouraged to read page 13 of the Prospectus. Property, Plant, and Equipment
increased from $8,617,164 as of December 31,1998 to $9,602,869 as of December
31, 1999. The increase is the result of completion of the construction in
progress at Ruston, Bossier City and Shreveport, Louisiana. Total current
liabilities decreased $ 1,005,910 as of December 31, 1998 to $ 602,269 as of
December 31, 1999 consisting primarily of retirement of the construction loans.
Long-term debt increased from $ 6,913,837 as of December 31, 1997 to $ 8,100,550
as of December 31, 1999, which consisted of bond payables. Liabilities due
stockholders and affiliates increased from $ 424,217 as of December 31, 1997 to
$ 872,075 as of December 31, 1999. Total Stockholders Equity decreased from $
1,613,840 as of December 31, 1997 to $ 651,621 as of December 31, 1999. The
decrease is the primarily the result of the net operating loss of $ 1,359541.
Liquidity and Financial Position
The Company receives significant operating funds from its affiliate The Forsythe
Group, Inc. through short-term loans. The ability of The Forsythe Group to
continue to make available loans is necessary for the continuing success of the
company. If future conditions would create problems in Forsythe's ability to
advance funds to the Company, the Company's future success would be in doubt.
Forward- Looking Statements:
Statements that are not historical facts, including statements about (I)
operating profits or losses as those discussed in results of operations; (II)
Impact of political decisions and new laws from the State and Federal
Government. The Company wishes to caution the reader that factors below, along
with the factors set forth in the Company's June 30, 1999 form 10QSB, September
30, 1999 form 10 QSB, and the prospectus along with the Company's other
documents filed with the SEC, have affected and could affect the Company's
actual results causing results to differ materially from those in any
forward-looking statement. These factors include: the acceptance of the Assisted
Living Concept by each of the communities in which they are located, increased
competition in each of the communities, economic outlook whether the economy
improves or slips into recession, technological changes in dealing with seniors,
change in government regulation, the success of strategic decisions to improve
financial performance, the ability of the Company to contain cost, and the
continued increase in the market acceptance of ALF's.
Item 7. Financial Statements and Supplementary Data
The financial statements for the Company and independent auditors' report
incorporated herein by reference and is filed herewith as Exhibit "A"
Item 8. Changes in and Disagreements with Accountants
None
Part III.
Item 9. Directors and Executive Officers of the Registrant
OFFICERS, DIRECTORS AND MANAGEMENT OF THE COMPANY.
The members of the Board of Directors of the Company are elected annually and
hold office until their successors are elected and qualify. The Company's
officers are chosen to serve at the pleasure of the Stockholders. The management
of the Company has a combined total of over 75 years of experience in finance,
construction, property development, and property management.
The Facilities management staff consists of five individuals including the
President. Two members of the staff have Master's degrees in Gerontology. They
have over 20 years of experience in Hospitals, Nursing Homes, and Assisted
Living facilities. They have direct management responsibility for each
Administrator of each ALF.
The Company owns three facilities in Ruston, Bossier City, and Shreveport,
Louisiana, which are managed by The Forsythe Group, Inc. Other facilities
managed by Forsythe which are affiliates of the Company are Assisted Living
Centers, Independent Living Centers, and Dementia Centers in West Monroe,
Bastrop, Farmerville and Minden Louisiana. The Company affiliates has under
construction a facility in Natchitoches, Louisiana.
Forsythe and the individual owners of the each facility maintain close relation
with the Department of Social Services of the State of Louisiana, which is the
authority responsible for regulating Assisted Living in Louisiana. New minimum
standards were adopted and became effective on March 31, 1999. As a result the
Company is in the process of discussing the new standards with Social Services
in order to comply with the new stricter requirement including buildings,
staffing, and education requirements. As in most cases when government adopts
new operating standards for industry conflicts will occur. The Assisted Living
industry is working to resolve any problems that occur.
The Company management staff has central purchasing, payroll, and accounts
payable, menu planning and programming. All menus are planned with the
assistance with a registered dietitian.
Administrators are required to meet the standards set forth in the new
regulations. Employees are required to submit to drug testing before employment
as well as during employment. All employees are required to submit to a
background check by the State Police.
The names of the directors and executive officers of the Company, there
respective ages and their positions and office with the Company are as follows:
Name Age Positions and Offices Held
Joanne M. Caldwell-Bayles 40 Chairperson of the Board,
Chief ExecutiveOfficer, President
and Director
Suzette L. Brewster 51 Vice-President, Director
Facility-Design
Sherry Kenney 42 Vice President, Director.
Director of Operations
Raymond L. Nelson 63 Vice-President - Director
Jean Gaffney-Nelson 61 Assistant Secretary - Director
Charles H. Pritchard 44 Chief Financial Officer - Director
Joanne M. Caldwell-Bayles, 40 years old. In 1996 Joanne M. Caldwell-Bayles
formed The Forsythe Group an unincorporated holding company specialize in the
purchase and collection of FDIC notes from failed financial institutions.
Forsythe purchased over $10,000,000 in face value of notes at a discount.
Forsythe was successful in collecting an amount to produce profits from their
efforts. Some of the notes were secured as a result Holdings obtained property,
which was sold or financed at a profit. In 1996 Joanne M. Caldwell-Bayles
incorporated The Forsythe Group. Inc. She has been the President and Chief
Executive Officer of the Company since it inception. Mrs. Caldwell-Bayles has
senior executive experience in the development and operation of assisted living
and memory disorder facilities beginning in 1996. Mrs. Bayles also has senior
executive experience in hotel management, personnel, finance and commercial and
residential development.
In addition to her duties with the company she is serving a member of the Board
of Director of the Louisiana Assisted Living Association
Suzette L. Brewster, 54 years old has been with the Company and its
predecessors since September 1994. Ms. Brewster was trained in interior
design and landscaping. She has been involved in the design of all of the
facilities which the Company manages. Her main challenge is interior
design as well as landscaping of each of the facilities. She is also in
charge of purchasing all furniture, fixtures and equipment for each facility.
Ms. Brewster attended Louisiana Tech University, Ruston, Louisiana.
Sherry Kenny, 42 years old. She served as the Administrator of The Oaks Nursing
Home in Monroe, Louisiana from 1988 - 1994 responsible for the strategic
planning, marketing and maintenance of all plans/records relating to the
facility. In 1995 she became the Manager of the Azalea Estates Assisted Living
Facility, Monroe, Louisiana. Ms. Kenny also conducted a night class at Northeast
Louisiana University, Monroe, Louisiana teaching "Perspectives on Aging" to
occupational therapy, gerontology, and social work students. In 1997, she joined
SENIOR RETIREMENT COMMUNITIES, INC., as director of operations. She is
responsible for strategic planning, marketing, maintenance of all plans, records
for the company as it relates to the facilities being managed by the Company.
Ms. Kenny also maintains and keep track of all state guidelines in accordance
with the Department of Social Services. In May 1999, she was elected to the
Board of Directors and appointed Vice-President of the Company. Ms. Kenny has a
Bachelor of Business Administration, Major in Accounting and Master of Arts. She
also has a Masters degree in Gerontology from Northeast Louisiana University,
Monroe, Louisiana.
Raymond L. Nelson Director-Vice-President, 63 years old. Mr. Nelson attended
the University of Houston. He is the President and CEO of Town & Country
Insurance Agency, Inc. He manages forty employees in three locations in
the Houston-Galveston, Texas
metropolitan area. Mr. Nelson is the past President of the Houston Council of
the Navy League of the United States and is currently a
national director. He is a past director of the Independent Insurance Agency of
Houston, Texas.
Jean Gaffney Nelson, 61 years old, Mrs.. Nelson has 27 years in management
experience in diagnostic and iterventional cardiology in a large hospital
environment. Mrs. Nelson was employed as the Manager of Cardiology Services
and Nuclear Medicine at the Methodist
Hospital in Houston, Texas. She studied biology and took courses in computer
science, accounting and management at the University of
Houston in Houston, Texas. Mrs.. Nelson is registered in adult
echocardiography by the American Registry of Diagnostic Medical
Sonographers and is a member of the American College of Cardiovascular
Administrators.
Charles Pritchard, 44 year old graduated from Northeast Louisiana
University May 1977 with a degree in accounting. In 1980 completed the
requirements as a CPA. He worked for two local firms from 1977 to 1986. In 1986,
he established an independent accounting practice. He has clients in the fields
of health care, manufacturing, construction, retail, auto, leasing, and service
industry. For the past three years he has served as the accountant for Forsythe
and all Affiliates, including relations with the SEC and State regulatory
agencies. In May 1999 he joined the Company as Chief Financial Officer and
Director.
The members of the Board of Directors of The Company are elected annually and
hold office until their successor are elected and qualified. The Company's
officers are chosen to serve at the pleasure of the Board of Directors. The
management of The Company has a combined total of over 75 years of experience in
finance, construction, property development, and property management.
Item 10. Executive Compensation
Joanne M. Caldwell-Bayles $60,000 per year
The company pays no other Executive, officer or director
Director and officers are employed and paid by The Forsythe Group, Inc. ,
the management company for the Company's properties.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Percent of
Name & Address of Beneficial Owner Title of Class Class Owned
Joanne M. Caldwell Bayles Common Stock 16.7%
507 Trenton Street
West Monroe, LA 71291
Raymond and Jean Nelson Common Stock 9.0%
1075 Katy Freeway, Suite 150
Houston, TX 77024
The Forsythe Group, Inc. (1) Common Stock 55.4%
507 Trenton Street
West Monroe, LA 71291
The Arbor Group, L.L.C. (2) Common Stock 18.8
507 Trenton Street
West Monroe, LA 71291
Minorty stockholders Common Stock .1%
Note 1:Joanne M. Caldwell-Bayles owns 100% of the capital stock of the Forsythe
Group, Inc.
Note 2:Joanne M. Caldwell-Bayles owns 50%, Raymond and Jean Nelson own 40% and
The Forsythe Group, Inc. owns 10% of the capital stock of The Arbor
Group, L.L.C.
The executive officers and directors of the Company as a group
are the beneficial owners of 100% of the common stock of the
Company.
Item 12. Certain Relationships and Related Transactions
See Prospectus dated June 23, 1998, included herein by reference.
Part IV.
Item 13. Exhibits, Financial Statement schedules and Reports on Form 8-K
(a) Exhibits, Financial Statement Schedules
Exhibit - "A", Financial Statement and Schedules
Exhibit -- "B", Cover letter to be sent to the Common Stockholders, Preferred
Stockholders and Bondholder, along with the 10-KSB for the year ending December
31, 1999.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of 1999
Pursuant to the requirements of Section 13 or 15 (d) 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, in the City of West
Monroe, State of Louisiana, on March 24, 2000.
Senior Retirement Communities, Inc.
/s/Joanne M. Caldwell-Bayles
--------------------------
By: Joanne M. Caldwell-Bayles
President, Finance and
Treasurer, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on March 24, 2000.
Signature Title
/s/ Joanne M. Caldwell-Bayles
- -----------------------------
Joanne M. Caldwell-Bayles Chairperson of the Board,
Chief Executive Officer, President,
Finance and Treasurer - Director
/s/ Raymond L. Nelson
- -----------------------------
Raymond L. Nelson Vice-President, Director
Jean Gaffney Nelson
- -----------------------------
Jean Gaffney Nelson Assistant Secretary, Director
/s/ Sherry Kenney
- --------------------------
Sherry Kenney Vice President, Secretary
Director of Operations
Director
/s/ Charles H. Pritchard
- --------------------------
Charles H. Pritchard Chief Financial Officer - Director
/s/ Suzette L. Brewster
__________________________ Vice President, Facility - Design
Suzette L. Brewster Director
SENIOR RETIREMENT COMMUNITIES, INC.
FINANCIAL STATEMENT
DECEMBER 31, 1999
Senior Retirement Communities, Inc.
Financial Statement
December 31, 1999
Table of Contents
Page
FINANCIAL STATEMENTS:
Report 1
Balance Sheet 2
Statement of Income 4
Statement of Retained Earnings 6
Statement of Cash Flows 7
Notes to Financial Statements 9
WILLIAM R. HULSEY
CERTIFIED PUBLIC ACCOUNTANT
2117 FORSYTHE AVENUE
MONROE, LOUISIANA
MEMBER MAILING ADDRESS
AMERICAN INSTITUTE OF P.O. BOX 2253
CERTIFIED PUBLIC ACCOUNTANTS MONROE, LOUISIANA 71207
(318) 362-9900
FAX (318) 362-9993
Senior Retirement Communities, Inc.
507 Trenton Street
West Monroe, Louisiana
I have audited the accompanying balance sheets of Senior Retirement Communities,
Inc. as of December 31, 1999 and 1998 and the related statements of income,
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Senior Retirement Communities, Inc.
at December 31, 1999 and 1998 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
March 24, 2000
/s/ Wm R. Hulsey
William R. Hulsey
Certified Public Accountant
Senior Retirement Communities, Inc.
-2-
Balance Sheet
December 31, 1999
December 31
1999 1998
------------------------------------------
ASSETS
Current assets:
Cash $ 1,589 $ 12,087
Escrow cash 618,260 1,324,496
Sinking fund cash 3,797 0
Prepaid Insurance 0 4,125
----------- -------------
Total current assets 623,646 1,340,708
----------- -------------
Property, plant and equipment
Buildings 8,088,299 7,039,233
Furniture and fixtures 212,964 75,102
Land 1,508,820 1,508,820
----------- -----------
9,810,083 8,623,155
Less: Accumulated depreciation 207,214 5,991
----------- -----------
Net property and equipment 9,602,869 8,617,164
----------- -----------
$10,226,515 $9,957,872
=========== ==========
See accompanying notes.
Senior Retirement Communities, Inc. -3-
Balance Sheets
December 31, 1999
December 31
1999 1998
---------- ----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $ 47,269 $ 3,375
Notes Payable 0 1,002,535
Current Maturities of Bonds 555,000 0
------------ ----------------
602,269 1,005,910
------------ ----------------
Long-term debt:
Bonds payable 8,100,550 6,913,833
------------ ----------------
Other liabilities:
Due to stockholders
and affiliates 872,075 424,217
------------- ---------------
Stockholders' Equity
Common stock, No par value,
90,000,000 shares authorized,
16,588,200 shares issued
and outstanding 1,658,820 1,248,820
Preferred stock, $ 1 par value,
20,000,000 shares authorized,
425,000 shares issued
and outstanding 425,000 425,000
Retained earnings (deficit) (1,432,199) (59,908)
------------ ------------
Total stockholders' equity 651,621 1,613,912
----------- ------------
$ 10,226,515 $ 9,957,872
============= ==============
See accompanying notes.
Senior Retirement Communities, Inc. -4-
Statements of Income
For the years ended December 31
1999 1998
---- ----
Revenues $ 714,729 $ 16,081
--------- ---------
Expenses
Accounting 50,822 10,950
Activities 3,776 0
Advertising 44,517 12,355
Automobile 4,024 1,993
Bank Charges 617 192
Cable Expense 46 0
Carpet Cleaning 856 0
Casual labor 1,376 174
Construction 3,000 0
Consulting 26,600 0
Decorations 2,268 0
Depreciation 201,223 5,991
Dues & subscripts. 1,733 1,523
Employee Education 3,192 3,063
Employee Screening 7,531 0
Employee training 1,265 0
Equipment rental 6,936 0
Food Costs 71,238 3,932
Gloves 815 0
Housekeeping 5,027 4,407
Insurance 38,398 8,937
Interest 830,095 29,675
Kitchen supplies 1,142 0
Laundry 1,064 0
Lawn Care 11,485 0
Licenses & permits 2,889 245
Light Bulbs 112 0
Linens 90 0
Management Fees 55,781 0
Miscellaneous (2,797) 8,275
Office 475 3,260
Office Supplies 5,847 0
Paper Goods 1,901 0
Payroll Expenses 504,574 45,330
Pest Control 3,017 0
Pet Supplies 694 0
Postage & Delivery 3,386 756
Printing 14,166 4,451
Professional fees 6,808 0
Promotion 8,378 0
Rental Bonus 4,300 0
Repairs 10,868 0
Resident Gifts 494 0
Taxes 1,537 2,858
Telephone 14,486 1,180
Training & Education 1,977 0
Travel & Entertain 8,962 1,520
Uniforms 2,160 0
Utilities 89,118 1,840
Van Expense 12,674 0
Waste Removal 2,975 0
Wellness 352 0
--------------- -------------
Total Expenses 2,074,270 152,907
--------------- -------------
Net Income (Loss)
Operations (1,359,541) (136,826)
Gain on Sale of Real Estate 0 86,059
-------------- ------------
Net Income (Loss) $ (1,359,541) $ ( 50,767)
============= ============
Earnings (Loss) Per Share $ (.08) $ (.01)
See accompanying notes
Senior Retirement Communities, Inc.
- -6-
Statement of Retained Earnings ( Deficit )
For the Years Ended December 31
Beginning retained earnings $( 59,908) $( 641)
Net income (loss) ( 1,359,541) ( 50,767)
Preferred dividends paid ( 12,750) ( 8,500)
--------------- ------------
Ending retained earnings
(deficit) $( 1,432,199) $( 59,908)
============ ============
See accompanying notes.
Senior Retirement Communities, Inc.
- -7-
Statement of Cash Flows
For the years ended December 31
1999 1998
-------- --------
Cash flows from operating activities:
Revenues received $ 714,729 $ 16,081
Cash paid to suppliers & employees (1,825,028) (117,435)
----------- -----------
Net cash provided (used) by operations (1,110,299) (101,354)
---------- -----------
Cash flows from investing activities
Purchase of equipment ( 137,862) 0
Payments towards construction ( 1,049,066) (5,939,333)
Purchase of land 0 ( 991,500)
Payments of deposits 0 2,000
Payment of deferred charges 0 ( 573,968)
Sale of Land 0 203,739
----------- ----------
Net cash provided by (applied to)
Investing activities ( 1,186,928) (7,299,062)
----------- ----------
Cash flows from financing activities
Interim construction loans ( 1,002,535) 552,535
Issuance of bonds 2,171,053 7,123,000
Payment of bonds ( 429,336) 0
Payment of Preferred dividends ( 12,750) ( 8,500)
Loans from stockholders
and affiliates 447,858 366,017
Issuance of stock 410,000 725,000
----------- ----------
Net cash provided by (applied to)
financing activities 1,584,290 8,758,052
----------- ----------
Net increase (decrease) in cash ( 712,937) 1,357,636
Cash at the beginning of the period 1,336,583 ( 21,053)
---------- ----------
Cash at the end of the period $ 623,646 $ 1,336,583
---------- ----------
See accompanying notes
Senior Retirement Communities, Inc.
- -8-
Statement of Cash Flows
For the Years Ended December 31
1999 1998
-------- --------
Reconciliation of net income to net
cash provided by operations:
Net income (loss) from operations $ (1,359,541) $ ( 136,826)
Adjustments to reconcile net income
to cash provided by operations
Depreciation 201,223 5,991
Decrease (increase) in prepaid expenses 4,125 0
Increase in accrued expenses 43,894 $ 29,481
----------- ------------
Net cash provided (used) by Operations $( 1,110,299) $ ( 101,354)
------------ ------------
See accompanying notes.
-9-
Senior Retirement Communities, Inc.
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 Centers and dementia facilities for the housing and care of
senior citizens in Ruston, Bossier City and Shreveport, 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 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.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affects 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.
Senior Retirement Communities, Inc. -10-
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
TheCompany entered into a construction contract in the amount of $
2,750,000 with one of the shareholders to construct the Ruston
facility. The contract called 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 builder's profit in the project. On May 16, 1999, the
125,000 shares of Common Stock were issued pursuant to this contract
and the Facility was accepted as completed.
Senior Retirement Communities, Inc. -11-
Notes to Financial Statements
Note 2- Related Party Transactions - (continued)
The Company entered into a construction contract in the amount of
$1,225,000 with one of the shareholders to construct the Shreveport
facility. The contract called for the cash payments during the building
of the facility as approved by the contract engineer. The facility was
completed and opened in January 1999.
TheCompany 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 called for the cash payments during the
building of the facility as approved by the contract engineer. The
facility was completed in March of 1999.
Due to stockholders and affiliates consist of amounts advanced by
stockholders and other related entities. This amount accrues interest
at the current market rate.
During 1999, the Company incurred $ 919,400 of interest
expense, of which $ 89,305 has been treated as construction period
interest and included as part of the Building construction in
progress on the balance sheet. The remainder of $ 830,095 has been
charged to operations.
Note 3 - Preferred Stock
ThePreferred Stock issued accrues dividends at the rate of four
percent per year for each of the first two years, then six percent
per year for the next two years then at eight percent 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 percent discount at any time
within eight years of the Preferred stock issue dates, if the
Company issues additional common stock through a public offering.
Note 4 - Development Stage Operations
The Company has completed construction of the Ruston, Shreveport, and
Bossier City facilities. Ruston was completed effective December 1, 1998,
Shreveport was completed January 22, 1999 and Bossier City was completed March
10, 1999.
Senior Retirement Communities, Inc -12-
Notes to Financial Statements
Note 5 - Bonds Payable
On June 23, 1998, the Company's issue of $ 9,000,000 of bonds became
effective. These bonds are to become the permanent financing for the
projects reflected in this financial statement. As of December 31,
1999, the bond sales are complete. As of December 31, 1999, the status
of these bonds is as follows:
Amount Amount
Location Authorized Issued
Ruston $ 3,685,000 $ 3,677,000
Bossier City 3,470,000 3,470,000
Shreveport 1,845,000 1,845,000
----------- -----------
Totals $ 9,000,000 $ 8,992,000
----------- -----------
These bonds have varying interest rates from 7.5 percent per annum to 11 percent
per annum. The maturity of these bonds is from one to twenty years.
Bonds payable on the balance sheet reflects the accrued interest due
and is reflected net after the deferred charges incurred is issuing and
selling the bonds.
Note 6 - Other Matters
The Company issued 160,000 shares of its common stock under Regulation
D, Rule 506 (a) in order to provide funds to be used for the day-to-day
operations of the Company, to payback certain loans to the Company from
affiliates of the Company, to pay accounting, audit and legal costs,
provide working capital or other purposes of the Company.
Senior Retirement Communities, Inc.
507 Trenton Street
West Monroe, Louisiana 71291
318 323-2115 0fax 318 323-6281
March 24, 2000
To our Stockholders and Bondholders
Our top priority in fiscal 1999 was to complete construction on three assisted
living centers in Ruston, Bossier City and Shreveport, Louisiana. I am please to
report that all three facilities were completed by March 10, 1999. The challenge
of operating these facilities in a successful manner is now our future. The
Company and I accept this challenge.
Management is providing you the entire 10-KSB (including exhibits), as filed
with Securities and Exchange Commission for your review. After careful review of
the 10-KSB, you may call or write if you have any questions.
Thank you for your trust and faith in us.
Sincerely,
/s/Joanne M. Caldwell-Bayles
Joanne M. Caldwell-Bayles
President
SUMMATION OF 10KSB
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF SENIOR RETIREMENT COMMUNITIES, INC. AUDITED FINANICIAL
STATEMENT DATED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
ASSETS
DECEMBER 31, DECEMBER 31,
1999 1998
TOTAL CURRENT ASSETS $ 623,646 $ 1,340,708
AND , PROPERTY, PLANT,
EQUIPMENT 9,602,869 8,617,164
TOTAL ASSETS $ 10,226,515 $ 9,957,872
LIABILITY & STOCKHOLDERS EQUITY
CURRENT LIABILITIES $ 602,269 $ 1,005,910
OTHER LIABILITIES 8,972,625 7,338,050
STOCKHOLDERS EQUITY 651,621 1,613,912
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $ 10,226,515 $ 9,957,872
INFORMATION SET FORTH IN THIS SCHEDULE DOES NOT CONTAIN ALL OF THE
INFORMATION NECESSARY AND SHOULD BE READ IN CONJUNCTION WITH THE COMPLETE
AUDITED FINANCIAL STATEMENT DATED DECEMBER 31, 1999 INCLUDING FOOTNOTES.
