SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or
15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended: December 31, 1998
Commission File No. 0-23965
Centennial Banc Share Corp..
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1374481
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(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
6970 South Holly Circle, #105, Englewood, CO 80112
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(Address of principal executive offices) (zip code)
(303) 840-2000
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(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the Act: None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.0000001 per share par value
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:
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ ]
State issuer's revenues for its most recent fiscal year $-0-; The aggregate
market value of the voting stock of the Registrant held by non-affiliates as of
December 31, 1998 was not able to be determined since the Registrant's stock has
not ever traded. The number of shares outstanding of the Registrant's common
stock, as of the latest practicable date, March 1, 1999, was 1,165,965.
DOCUMENTS INCORPORATED BY REFERENCE
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Documents incorporated by reference are found in Item 13.
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PART I
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Item 1. Description of Business.
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(a) General Development of Business
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Centennial Banc Share Corp. (the "Company" or the "Registrant"), is a
Colorado corporation. The principal business address is 6970 South Holly Circle,
#105, Englewood, Colorado 80112. Its telephone number is (303) 840-2000.
The Company was originally incorporated under the laws of the State of
Colorado on November 8, 1996. The Company spent several months of preparation
and research before beginning formal operations on March 10, 1997. Since
beginning operations in March, 1997, the Company has been marginally
unprofitable. At the present time, the Company should be considered to be in the
development stage because it is only minimally capitalized. The Company has not
engaged in any substantial business activity over a sustained period of time,
and thus cannot be said to have a successful operating history.
The present management has been involved with the Company since its
inception., with the exception of Michael J. Delaney, who joined the Company in
August, 1997. As of March 10, 1998 the Company had a total of 1,165,965 common
shares issued and outstanding. The Company has not been subject to any
bankruptcy, receivership or similar proceeding.
(b) Narrative Description of the Business
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General
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From the Company's inception to the present, the Company has acted as a
mortgage brokering operation. From 1996 until 1997, the Company had minimal
activities and carried no substantial inventories or accounts receivable. In
March, 1997, the Company expanded its operations and completed a private
placement in February, 1998 for a total of $110,750, which permitted it to
expand to its present level of operations. At the present time, the Company has
no plans to raise any additional funds within the next twelve months. Any
working capital will be expected to be generated from internal operations.
However, the Company reserves the right to examine possible additional sources
of funds, including, but not limited to, equity or debt offerings, borrowings,
or joint ventures.
No independent market surveys have ever been conducted to determine demand
for the Company's products and services.
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Organization
------------
The Company presently comprises one corporation with no subsidiaries or
parent entities. The Company is a Colorado corporation organized for the purpose
of developing and maintaining the business associated with mortgage banking.
However, at the present time, the Company acts solely as a mortgage broker. The
Company name has been approved by the State of Colorado division of banking. The
Company is an approved broker which has a correspondent relationship with
several large wholesale banks including, Countrywide Mortgage, Fleet Mortgage,
Monument Mortgage of California, National Consumer Services, and Bank United,
among others. The Company maintains an office in the Southeast Denver
metropolitan area and a correspondent office in Colorado Springs. See "Plan of
Operations" below.
The Company collects loan fees for acting as the broker under oral
agreements with non-affiliate loan originators. The Company principally utilizes
such non-affiliate loan originators for its operations and currently has only
two employees, each of whom coordinate the relationships with these
non-affiliate loan originators. Contract labor is a substantial part of the
Company's planned operations. The Company's fixed expenses run approximately
$8,000 per month. Such costs are not expected to materially increase in the
foreseeable future as the Company's business increases. The Company believes
that it is meeting its fixed expenses as of the date hereof. Within six months
from the date hereof, the Company believes that it will begin to generate a
modest profit and will thereafter be profitable. The extent of the Company's
profitability cannot be ascertained at this point.
The Company brokers lending to all markets in the mortgage business.
However the main thrust of the Company's business is concentrated in the niche
market lending to borrowers whose credit is less than perfect. This market is
known in the industry as the "B" & "C" grade market. Borrowers are graded by
lenders for the purpose of determining eligibility for credit. A "B" borrower is
typically one who has had no more than two 30 day late credit payments in the
past year. A "C" borrower is typically one who has had between three and six two
30 day late credit payments in the past year. Borrowers are generally graded "A"
through "D."
The Company has discovered what it perceives as a great need for this type
of financing and is aggressively pursuing these customers. It appears to the
Company that the future of the "B" & "C" grade clientele is not necessarily
affected by changing interest rates but thereby affords a substantial
opportunity for the Company.
While the "B" & "C" grade market is priced to reflect a difference in risk
associated with such lending, the Company believes that its risk has been
minimized by the manner in which it brokers its loans. The Company develops the
loan applications pursuant to pre-approved underwriting criteria of lenders. If
the borrower meets the applicable criteria, then the loan is guaranteed to be
purchased by the lender.
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(c) Plan of Operations
----------------------
The Company is now eligible to handle the transactions associated with FHA
qualified financing. The Company has an FHA status through its sponsor,
Countrywide Mortgage. The Company currently has a VA excepted status through
several of its affiliated wholesale banking relations.
The Company will first attempt to establish an effective client lending
base for which it will provide services. The Company plans to utilize the
expertise of its principal officers, Messrs. Gregarek and Burden and Ms.
Kimminau, to develop lending opportunities. Each individual will utilize his
previous contacts in business to develop potential opportunities. Otherwise, the
Company plans to sell its services through Company employees and authorized
representatives. All operational decisions will be made solely by the management
of the Company. The management of the Company has had extensive experience in
the mortgage business. See "Directors, Executive Officers, Promoters and Control
Persons".
The Company has had operational activity and has generated revenues and a
modest profit from time to time and has most recently been marginally
unprofitable, as reflected in its most current financial statements. It should
be noted, however, that the Company does not have an extensive history of
operations. To the extent that management is unsuccessful in keeping expenses in
line with income, failure to effect the events and goals listed herein would
result in a general failure of the business. This would cause management to
consider liquidation or merger.
The Company was formed to develop the new and emerging markets in the
mortgage brokering business, particularly in the area of "B" & "C" grade
lending. The Company is presently planning to develop and implement full system
applications for the electronic exchange of data in new and existing markets
within the mortgage banking industry. One of the base technologies for these
systems is the Internet system, which can provide information such as changing
interest and bond market rates and other economic indicators.
The Company plans to take advantage of the emerging market in the U.S. and
around the world created by the Internet. The Company plans to equip its offices
with a network of personal computers, which will allow staff to access e-mail,
the Internet, and a collection of applications designed to optimize the
productivity of the Company's staff. The Company also plans to utilize high
speed modem communications and the most current loan processing software which
interfaces directly with the Fannie Mae System and several credit reporting
software companies. The Company believes that this technology will expedite loan
processing and closings.
In addition, the Company has developed a web site, known as
www.mortgage2000.com, which will allow realtors to send loan applications
directly to the Company for approval. In the future, the Company plans to
develop enhancements to the web site to permit realtors to use the site to fill
out loan applications for prospective borrowers, to check the status of a
previously submitted application, and to generally otherwise interact with the
Company during the loan process.
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The Company believes that the advance of the on-line industry alone will
have potential for a new and untapped market in the industry of on-line banking
services provided at home. It is the intent of the Company to fully explore and
develop all avenues in the information processing field connected to the banking
industry and its numerous applications as this new system matures in the United
States and through out the world..
The Company's proposed system must be established to operate at maximum
efficiency to control administrative and associated costs. Therefore, the
Company plans to develop a system which will allow for individual
identification, appointment scheduling, credit history records, payment records,
itemized expenses as well as associated fees and payment processing. With all
data stored on the individuals customized electronic record disk formulated by
the Company at the time of processing., the system would also allow the periodic
review of the client's current condition of the loan and offer alternative
solutions to loans that are structured for the short term.
It is the belief of the Company that sophisticated electronics data
exchange systems will be a significant part of the future of mortgage banking
and many various other forms of banking that exist now and the ones to be
created by needs of the future.
The Company also has plans to utilize a Visa card program for its customers
and realtors utilizing the Company's system. The program is planned to provide
the Company's clients and selected brokers with a Visa card at the time of the
closing and funding their loans. The Company would also use this program as a
means of paying individual realtors for generating loan applications using the
Company's Internet web page. The realtors would complete a two page informal
application for their clients and then e-mail that information directly to the
Company's main office for acceptance and preparation of the loan. When the loan
is funded, the Company would transfer a fee to the visa account of the
individual realtor. The fee to the individual realtor has not been specifically
arranged, so the fee may vary in the amount among individual realtors. A future
enhancement to the system would permit brokers to view the status of their VISA
accounts.
In addition to its office in the Denver Metropolitan area and correspondent
office in Colorado Springs, the Company plans to pursue the opening of other
offices in locations such as Fort Collins, Colorado. Other offices for expansion
would involve the Western United States as well as into markets throughout North
America. No specific plans have been devised at this point for such additional
offices. It is anticipated that these branch offices would function as separate
and independent agencies, with all communications and processing of the loans
conducted by the main office in Denver. However, at present, the Colorado
Springs office operates under an oral agreement as a correspondent facility. The
lessors of the office, who are minority shareholders Sheryl K. Fitzgerald, Carey
A. Bailey, and Melissa Davidson, provide the Company with free space but have
the right to broker mortgages on behalf of the Company. In exchange, the Company
received twenty-five percent of the net income, after defined expenses, of this
operation through April 30, 1998. Thereafter, the Company will receive ten
percent of the net income, after defined expenses, of this operation. Defined
expenses are the costs of advertising, loan processing, and office supplies,
which are estimated at approximately $4,000 since the commencement of the
arrangement. However, this arrangement is in the process of being reevaluated,
since the entire operation has generated less than $2,000 in gross fees since
inception.
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(d) Markets
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The Company's initial marketing plan will be focused completely on
developing a share of the residential mortgage business. As of the date of this
Registration Statement, the Company has made initial efforts toward this
marketing plan. The Company plans, at this point, to utilize the expertise of
its principal officers, Messrs. Gregarek and Burden and Ms. Kimminau, to develop
lending opportunities. Each individual will utilize his previous contacts in
business to develop potential opportunities. Otherwise, the Company plans to
sell its services through Company employees and authorized representatives.
(e) Raw Materials
-----------------
The use of raw materials is not now material factor in the Company's
operations at the present time.
(f) Customers and Competition
-----------------------------
The mortgage banking business is highly competitive, with hundreds of
brokers and wholesalers competing for the same consumer dollar. The Company's
operational activities centers primarily in the mortgage loan origination
business, in which there is a great deal of competition. It is anticipated that
competition will come from a number of sources, many of whom will have greater
resources and experience than the Company. All lenders in the Rocky Mountain
United States region are potential competitors. There can be no guarantee that
the Company will be able to compete successfully over the short or long term.
(g) Employees
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Currently, the Company has one full-time employee and one part-time
employee. The full-time employee, Mr. Burden, coordinates the activities with
third party loan originators and oversees the daily operations of the Company.
The part-time employee acts as the office manager and bookkeeper. The Company's
directors and officers are currently managing the affairs of the Company. The
Company plans to hire employees in the future but has formulated no definite
plans at this point.
(h) Backlog
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At December 31, 1998, the Company had no backlogs.
(i) Proprietary Information
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The Company owns the tradename "Mortgage 2000" and owns proprietary
computer software which it uses in its operations. Otherwise, the Company has no
proprietary information.
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(j) Government Regulation
-------------------------
The Company is expected to be subject to material governmental regulation
and approvals customarily incident to the operation of a mortgage company. The
Company will be regulated by applicable Federal and state regulation It is the
policy of the Company to fully comply with all governmental regulation and
regulatory authorities.
(k) Research and Development
----------------------------
The Company has never spent any amount in research and development
activities.
(l) Environmental Compliance
----------------------------
The Company is not expected to be subject to any material environmental
compliance.
Item 2. Description of Properties.
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The Company's executive offices are located at 6970 South Holly Circle,
#105, Englewood, Colorado 80112. The Company rents this office on a one year
lease at a cost of $1,828 per month from an unaffiliated third party. Company
also owns office equipment to furnish the Denver office. The Company owns the
tradename "Mortgage 2000" and licenses proprietary computer software which it
uses in its operations. Otherwise, the Company owns no properties.
Item 3. Legal Proceedings.
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In January, 1999, a shareholder filed a lawsuit demanding recision of her
investment in the Company (Sheryl K. Fitzgerald, et al. v. Centennial Banc Share
Corp., et al. State District Court, County of Arapahoe, State of Colorado). The
Company filed a motion with the Court to move the matter to arbitration under
the investors' subscription agreement. This matter was settled in April, 1999.
Otherwise, no legal proceedings of a material nature to which the Company is a
party were pending during the reporting period, and the Company knows of no
legal proceedings of a material nature pending or threatened or judgments
entered against any director or officer of the Company in his capacity as such.
Item 4. Submission of Matters to a Vote of Security Holders.
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The Company did not submit any matter to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.
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PART II
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Item 5. Market for Common Equity and Related Stockholder Matters.
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(a) Principal Market or Markets
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The Company's securities have never been listed for trading on any market
and are not quoted at the present time. At the present time, the Company does
not know where secondary trading will eventually be conducted. The place of
trading, to a large extent, will depend upon the eventual size of the Company..
To the extent, however, that trading will be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board,"
a shareholder may find it more difficult to dispose of or obtain accurate
quotations as to price of the Company's securities. In addition, The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure
and documentation related to the market for penny stock and for trades in any
stock defined as a penny stock.
(b) Approximate Number of Holders of Common Stock
-------------------------------------------------
As of the March 1, 1999, a total of 1,165,965 of shares of the Company's
Common Stock were outstanding and the number of holders of record of the
Company's common stock at that date was approximately thirteen. Five of the
Company's shareholders acquired their respective shares in the Company in 1998
at a cash price of $2.50 per share. These shares were issued under Rule 504 of
the Securities Act of 1933, as amended. The remaining shareholders acquired
their shares in 1996 for cash and services at par value. All of these shares
were issued in accordance with the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, in that these were
private offerings to individuals who were sophisticated investors and received
all pertinent information relative to this investment.
(c) Dividends
-------------
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the common stock
were paid by the Company during the periods reported herein nor does the Company
anticipate paying dividends in the foreseeable future.
(d) The Securities Enforcement and Penny Stock Reform Act of 1990
-----------------------------------------------------------------
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless the Company can
acquire substantial assets and trade at over $5.00 per share on the bid, it is
more likely than not that the Company's securities, for some period of time,
would be defined under that Act as a "penny stock." As a result, those who trade
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in the Company's securities may be required to provide additional information
related to their fitness to trade the Company's shares. Also, there is the
requirement of a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. Further, a broker-dealer
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. These requirements present a
substantial burden on any person or brokerage firm who plans to trade the
Company's securities and would thereby make it unlikely that any liquid trading
market would ever result in the Company's securities while the provisions of
this Act might be applicable to those securities.
(e) Blue Sky Compliance
-----------------------
The trading of penny stock companies may be restricted by the securities
laws ("Blue Sky" laws) of the several states. Management is aware that a number
of states currently prohibit the unrestricted trading of penny stock companies
absent the availability of exemptions, which are in the discretion of the
states' securities administrators. The effect of these states' laws would be to
limit the trading market, if any, for the shares of the Company and to make
resale of shares acquired by investors more difficult.
Item 6. Management's Discussion and Analysis or Plan of Operation.
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Results of Operations
The Company has had operational activity and has generated revenues to
date. However, the Company does not have an extensive history of operations and
is marginally unprofitable. The Company's primary activity for the coming fiscal
year will be to internally expand its business by processing increasing amounts
of mortgage banking business. The Company plans to work with its established
contacts and to attempt to develop new contacts to increase its business.
As in the past, the Company plans to concentrate its activities in Colorado
and particularly in the Denver and Colorado Springs Metropolitan areas. As the
Company expands, it will focus next on markets within the Rocky Mountain states.
The Company collects loan fees for acting as the broker under oral
agreements with non-affiliate loan originators. The Company principally utilizes
such non-affiliate loan originators for its operations and currently employs
only two persons, each of whom coordinate the relationships with these
non-affiliate loan originators.
Contract labor is a substantial part of the Company's planned operations.
The principal variable in the Company's operation is also contract labor, which
represents fees paid to third party loan originators for developing loans. Such
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contract labor is subject to fluctuation, based upon the loan activity within a
given period. However, this cost is not fixed and is directly related to the
successful placement of loans and the resultant generation of revenue for the
Company.
The Company's fixed expenses run approximately $8,000 per month. Such costs
are not expected to materially increase in the foreseeable future as the
Company's business increases. The Company believes that it is meeting its fixed
expenses as of the date hereof. Within six months from the date hereof, the
Company believes that it will begin to generate a modest profit and will
thereafter be profitable. The extent of the Company's profitability cannot be
ascertained at this point.
The Company also plans, as a secondary matter, to search for and to
identify potential acquisition candidates in businesses related to or compatible
with the Company's core business of mortgage banking. Because the Company has
limited capital, any such acquisition would most likely result in a change of
control of the Company. As of the date hereof, the Company has not engaged in
any preliminary efforts intended to identify such possible potential acquisition
candidates and has neither conducted negotiations nor entered into a letter of
intent concerning any such candidates.
The principal criteria for evaluating such acquisitions which the Company
may engage in will be the amount of investment required by the Company, the
degree of risk to the Company, the potential return on investment to the
Company, the Company's expertise in each situation and the expertise and
reliability of the acquiree in any such situation.
Liquidity and Capital Resources
As of the end of the reporting period, the Company had no material cash or
cash equivalents. There was no significant change in working capital during this
fiscal year. In February, 1998, the Company completed a private placement and
raised $110,750, which it plans to utilize in its operations.
As of the date of this Registration Statement, there are no plans,
proposals, arrangements, or understandings with respect to the sale or issuance
of additional securities by the Company. During the latter part of 1999, the
Company plans to examine the feasibility of a public offering to expand its
operations. No definitive plans currently exist for a public offering at this
time.
Management feels that the Company has inadequate working capital to pursue
most of its business opportunities other than to internally expand the
operations of its existing offices or to effect an acquisition with third
parties. The Company's capital requirements for the foreseeable future will be
supplied through internally generated profits, if any, and borrowings. The
opening of additional offices will require a substantial infusion of capital,
which the Company feels can only be accomplished by additional equity financing
through either a public or private offering, or both.
The Company does not intend to pay dividends in the foreseeable future.
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Item 7. Financial Statements.
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The complete financial statements are included at Item 13 herein.
Item 8. Disagreements With Accountants on Accounting and Financial Disclosure.
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The Company did not have any disagreements on accounting and financial
disclosures with its present accounting firm during the reporting period.
PART III
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Item 9. Directors, Executive Officers, Promoters, and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
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The Directors and Executive Officers of the Company, their ages and
positions held in the Company as of December 31, 1998 are as follows:
NAME AGE POSITION HELD
- ---- --- -------------
David J. Gregarek 44 President, Director
Pat Kimminau 54 Executive Vice President, Director
of Compliance, Director
J. Dean Burden 47 Vice President, Director of
Operations, Director
Michael J. Delaney 40 Secretary, Treasurer, Chief
Financial Officer
Richard Schreck 46 Director
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
David J. Gregarek
Mr. Gregarek has served as President and a Director of the Company since
November, 1996. For the past ten years, he has been a private investor. Mr.
Gregarek is the President and founder of Clear Ridge Realty, Inc. of Englewood,
Colorado, which he organized in 1976. Mr. Gregarek has served as an officer and
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director of a number of public companies, including as President of JNS
Marketing, Inc. since August, 1997, as President of Parkway Capital, Inc. from
1988 to 1994, and as President of Maui Capital, Inc. from 1988 to 1995. He is
also a principal shareholder of Huntington Capital Corporation, a company which
was formed to acquire other businesses or entities. Mr. Gregarek shall devote
such time as is necessary to carry out his responsibilities as an Officer and
Director of the Company.
Pat Kimminau
Ms. Kimminau has been a Director, Executive Vice President, and Director of
Company for the Company since its inception in November, 1996. She has been
involved in the mortgage industry for the past twenty-eight years. She has
extensive experience and knowledge of the various regulatory requirements and
documentation required under FNMA, FHLMC, GNMA, RESPA, Truth In Lending, ECOA,
HMDA, Fair Lending, FHA, and VA programs for both the origination and servicing
of mortgages. From 1991 to the present she has been an independent consultant to
a number of mortgage companies. She has assisted these mortgage companies with
the development of quality control procedures, audits of origination loan
servicing, due diligence on lending, and compliance control. Ms. Kimminau has
had experience as a supervisor and manager and was responsible for training and
establishing policies and procedures for mortgage company operations. She has
been invited by FNMA to join the Quality Control Liaison Committee for its
Southwest Region. She shall devote a minimum of twenty hours per week to the
business of the Company.
J. Dean Burden
Mr. Burden has served as a Director, Vice President, and Director of Operations
of the Company since its inception in November 1996. Mr. Burden has been
involved in the mortgage business since 1994. Mr. Burden has worked with
Mortgage Loan specialists, a California based company from September, 1994 to
November, 1996, when he joined the Company. For the past five years, Mr. Burden
has also worked as a private consultant. He was principally a merger and
acquisition specialist. From 1993 to 1994, his principal activity involved the
design of an on-line computer system which was eventually sold to Ralston
Purina. His background also includes a wide range of functions connected with
the structure and formulation of companies that intend to become public. He
attended Western State College and the University of the Americas. He is on the
Board of Directors of the Southeast Denver-Douglas County Economic Development
Council and a member of the Colorado Mortgage Lenders' Association. He declared
bankruptcy under Chapter 7 of the Bankruptcy Code in 1994. Mr. Burden shall
devote a minimum of forty hours per week to the business of the Company.
Michael J. Delaney
Mr. Delaney has served as Secretary of the Company since August, 1997 and as
Treasurer and Chief Financial Officer since March, 1998. In January, 1998, he
became President, Secretary, and sole Director of Boulder Capital Opportunities,
II, Inc., a public company. Since 1980, Mr. Delaney has also been the owner and
president of MD Sales, a sales representative and consulting firm for various
companies in product development, sales, and marketing. Mr. Delaney has served
as a Director of Maui Capital Corporation from 1988 to 1995 and of Parkway
Capital Corporation from 1988 to 1994. He will devote such time as is necessary
to carry out his responsibilities as an Officer of the Company.
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Richard Schreck
Mr. Schreck has been a Director of the Company since its inception in November,
1996. He is a real estate broker with a wide variety of contacts and financial
knowledge in the real estate business. For the past year, he has been a Vice
President, Brokerage, for Fuller and Company, a real estate brokerage firm in
Denver, Colorado. Prior to that, he was associated with Grubb & Ellis from 1992
until he joined Fuller and Company. He has also worked for The Broe Companies,
and Vantex Properties, among others. He has a Bachelors Degree in Organizational
Behavior from Miami University. He is involved in numerous charitable
activities. Mr. Schreck shall devote such time as may be necessary to carry out
his responsibilities as a Director of the Company.
The Board of Directors has established no committees. Members of the Board
of Directors receive no additional compensation for their service on the Board
of Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
---------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires the Company's officers and directors and persons owning more than ten
percent of the Company's Common Stock, to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Additionally, Item 405 of Regulation S-B under the 34 Act requires the Company
to identify in its Form 10-KSB and proxy statement those individuals for whom
one of the above referenced reports was not filed on a timely basis during the
most recent fiscal year or prior fiscal years. Given these requirements, the
Company has the following report to make under this section. None of the
Officers or Directors of the Company made timely filings of their Forms 3 and 5
in the last fiscal year. All such persons eventually made the filings and have
been counseled concerning their responsibilities regarding future compliance
with these rules.
Item 10. Executive Compensation.
- --------------------------------
The Officers and Directors of the Company have received the common shares
which they own as their sole compensation for being involved with the Company.
Mr. Burden, an Officer an Director of the Company, was paid an aggregate of
$40,104 in total compensation for fiscal year 1997 and a total of $59,259.48 in
total compensation for fiscal year 1998.
Otherwise, none of the Company's officers and/or directors receive any
compensation for their respective services rendered to the Company, nor have
they received such compensation in the past.
The Company has no retirement, pension, sharing, stock option, insurance or
other similar programs but plans to establish such programs in the future,
although there are no definitive plans to do so at this time.
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Item 11. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The following sets forth the number of shares of the Registrant's $.0000001
par value common stock beneficially owned by (i) each person who, as of December
31, 1998, was known by the Company to own beneficially more than five percent
(5%) of its common stock; (ii) the individual Directors of the Registrant and
(iii) the Officers and Directors of the Registrant as a group. As of December
31, 1998, there were 1,165,965 common shares issued and outstanding.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership (1)(2) Class
- ------------------- --------------------------- -----
J. Dean Burden 525,000 45.03%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
David J. Gregarek 475,000(3) 40.74%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Michael J. Delaney 50,000(4) 4.28%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Pat Kimminau 5,000 .429%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Richard Schreck 5,000 .429%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Officers and Directors 1,060,000 90.91%
as a Group (5 Persons)
(1) All ownership is beneficial and of record, unless indicated otherwise.
(2) Beneficial owner listed above has sole voting and investment power with
respect to the shares shown, unless otherwise indicated.
(3) Mr. Gregarek resigned from all offices and sold all of his shares in April,
1999.
(4) Mr. Delaney resigned from all offices and sold all of his shares in April,
1999.
14
<PAGE>
Item 12. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The Company had a note payable to J. Dean Burden, an officer and director
of the Company. This note is for the sum of $22,500 at ten percent per annum
interest and was due and payable with accrued interest and principal on February
3, 1998. This note has been paid in full.
Mr. Burden also secured a $25,000 note of the Company to an independent
third party. This note has been paid in full.
PART IV
-------
Item 13. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) The following financial information is filed as part of this report:
(1) Financial Statements
(2) Schedules
(3) Exhibits. The following exhibits required by Item 601 to be filed
herewith are incorporated by reference to previously filed
documents:
Exhibit No. Description
- ----------- -----------
+ 3A Articles of Incorporation
+ 3B Bylaws
+ Previously Filed.
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K during
the fourth quarter of the fiscal year ended December 31, 1998.
15
<PAGE>
SIGNATURES
----------
In accordance with 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.
Centennial Banc Share Corp.
Dated: 4/13/99 By: /s/ J. Dean Burden
------- ----------------------------------
J. Dean Burden
President and 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 and on the dates indicated.
Dated: 4/13/99 By: /s/ J. Dean Burden
------- ----------------------------------
J. Dean Burden
Chief Financial and Accounting
Officer, Director
Dated: 4/13/99 By: /s/ Pat Kimminau
------- ----------------------------------
Pat Kimminau
Director
Dated: 4/13/99 By: /s/ Richard Shreck
------- ----------------------------------
Richard Shreck
Director
16
<PAGE>
CENTENNIAL BANC SHARE CORP.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Centennial Banc Share Corporation
Denver, Colorado
We have audited the accompanying balance sheet of Centennial Banc Share
Corporation as of December 31, 1998 and the related statements of operations,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Centennial Banc Share
Corporation, as of December 31, 1998 and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
Denver, Colorado
March 22, 1999
<PAGE>
CENTENNIAL BANC SHARE CORPORATION
Balance Sheet
December 31, 1998
With Comparative Totals for December 31, 1997
1998 1997
--------- ---------
ASSETS:
- -------
Current Assets:
Cash $ 79,714 $ 111,093
Notes Receivables -- 4,700
Prepaid Expenses 1,102 --
--------- ---------
Total Current Assets 80,816 115,793
Property & Equipment:
Net of accumulated depreciation of $2,283 9,133 3,274
for 1998 and $200 for 1997
Other Assets:
Deposit 1,828 25,000
--------- ---------
TOTAL ASSETS $ 91,777 $ 144,067
========= =========
LIABILITIES AND EQUITY
- ----------------------
Current Liabilities:
Accounts payable $ 342 $ 524
Accrued Expenses 1,310 3,730
Accrued Expenses - Mort. 2000 262 --
Notes Payable 22,500 34,382
--------- ---------
Total Current Liabilities 24,414 38,636
Stockholder's Equity:
Preferred stock, $.0000001 Par Value
1,000,000 Shares Authorized. None Issued -- --
Common stock, $.0000001 Par Value
50,000,000 Shares Authorized, 1,165,965 were
issued and outstanding as of Dec. 31, 1998, 1 1
1,147,500 were issued and outstanding as
of Dec. 31, 1997
Additional Paid-In Cash 138,008 108,510
Retained Earnings (Deficit) (70,646) (3,080)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 67,363 105,431
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY: $ 91,777 $ 144,067
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
CENTENNIAL BANC SHARE CORPORATION
Statement of Operations
For the Year Ended December 31, 1998
With Comparative Totals for December 31, 1997
1998 1997
----------- -----------
REVENUE:
Brokerage Fees $ 899,554 $ 145,647
Miscellaneous Income 6,370 367
----------- -----------
Total Revenue $ 905,924 $ 146,014
=========== ===========
OPERATING EXPENSES:
Salary & Wages 59,107 22,308
Payroll Taxes 5,767 1,975
Bonus 5,475 --
Advertising 9,354 2,145
Marketing -- 5,829
Telemarketing -- 2,666
Contract Labor 5,341 73,813
Office Expenses 327 7,234
Professional Fees 14,174 5,722
Maintenance & Repairs 650 280
Insurance 1,074 --
Legal & Audit Fees 7,973 --
Office Supplies 1,195 4,014
Equipment Lease 1,031 1,121
Equipment Repairs 2,100 --
Internet Expense 2,485 --
Rent 21,933 3,250
Telephone 8,345 3,064
Dues & Subscriptions 52 1,600
Travel 9,328 852
Meals & Entertainment -- 3,603
Postage 950 352
Printing 2,670 1,083
Appraisal Fees 10,689 3,200
Credit Reports 3,522 1,206
Loan Originator Fees 57,857 --
Stoncreek Loan Expenses 691,210 --
Processing Fees 3,823 1,159
Mortgage 2000 - Expenses 38,446 --
Charitable Contributions 105 --
Bank Charges 2,430 474
Interest Expense 1,799 320
Licenses 178 1,240
Miscellaneous Expense 2,017 384
Depreciation Expense 2,083 200
----------- -----------
Total Operating Expenses 973,490 149,094
----------- -----------
NET DEFICIT $ (67,566) $ (3,080)
=========== ===========
NET LOSS PER COMMON STOCK (0.06) (0.003)
----------- -----------
WEIGHTED AVERAGE SHARES OUTSTANDING 1,131,496 1,111,192
----------- -----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
CENTENNIAL BANC SHARE CORPORATION
STOCKHOLDER'S EQUITY
DECEMBER 31, 1998
Additional Retained Total
COMMON STOCKS Paid- In Earnings Stockholder's
Shares Amount Capital (Deficit) Equity
------ ------ ------- --------- ------
<S> <C> <C> <C> <C> <C>
Issuance of Stock for Cash & Services 1,147,500 1 108,510 -- 108,511
Net Deficit 12/31/97 (3,080) (3,080)
---------- ---------- --------------------------------------
Balance December 31, 1997 1,147,500 1 108,510 (3,080) 105,431
========== ========== ======================================
Feb, 1998 Issuance of Stock for Cash 4,300 -- 10,750 -- 10,750
May, 1998 Cancelled Stock (2,500) -- (6,250) -- (6,250)
July, 1998 Issuance of Stock for Cash 16,665 -- 24,998 24,998
-- (67,566) (67,566)
---------- ---------- --------------------------------------
1,165,965 1 $ 138,008 $ (70,646) $ 67,363
========== ========== ======================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
CENTENNIAL BANC SHARE CORPORATION
Statement of Cash Flow
For the Year Ended December 31, 1998
With Comparative Totals for December 31, 1997
1998 1997
---- ----
Cash Flows from Operating Activities:
Net Income (Loss) $ (66,823) $ (3,080)
Depreciation 2,083 200
Changes in Assets & Liabilities:
Notes Receivable 4,700 (4,700)
Deposits 23,172 (25,000)
Prepaid Expenses 1,102 --
Accounts Payable (182) 524
Notes Payable (11,882) 34,382
Accrued Expenses (2,174) 3,730
--------- ---------
Net Cash Provided by Operating Activities (50,004) 6,056
Cash Flows Used for Investing Activities:
Capital Expenditures (7,050) (3,474)
--------- ---------
Net Cash Used for Investing Activities (7,050) (3,474)
Cash Flows from Financing Activities:
Issuance of Common Stocks 25,675 108,511
--------- ---------
Net Cash Provided by Financing 25,675 108,511
Net Increase in Cash & Cash Equivalents (31,379) 111,093
Cash & Cash Equivalents at Beginning of Period 111,093 --
--------- ---------
Cash & Cash Equivalents at End of Period $ 79,714 $ 111,093
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest 1,479 50
Income Taxes -- --
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
CENTENNIAL BANC SHARE CORP.
Notes to Financial Statements
December 31, 1998
Note 1 - Organization and Summary of Significant Accounting Policies:
- ---------------------------------------------------------------------
Organization
- ------------
The Company was formed on November 8, 1996, and incorporated under the laws of
the State of Colorado. The Company spent several months of preparation and
research before beginning formal operations on March 10, 1997. No financial
transactions occurred in 1996.
The Company is a Colorado corporation organized for the purpose of developing
and maintaining the business associated with mortgage banking. The Company name
has been approved by the State of Colorado division of banking. The Company is
an approved broker which has a correspondent relationship with several large
wholesale banks. The Company lends to all markets in the mortgage business.
However the main thrust of the Company's business is concentrated in the niche
market lending to borrowers whose credit is less than perfect. The market is
known in the industry as the B & C grade market. The Company has discovered what
it perceives as a great need for this type of financing and is aggressively
pursuing these customers. It appears to the Company that the future of the B & C
grade clientele is not necessarily affected by changing interest rates but
thereby affords a substantial opportunity for the Company.
Basis of Presentation:
- ----------------------
The Company is primarily engaged in mortgage brokering. The authorized capital
stock of the corporation is 50,000,000 shares of common stock at $.0000001 and
1,000,000 shares of preferred stock at $.0000001 par value. No preferred stock
has been issued.
Cash and Cash Equivalents:
- --------------------------
The Company considers all highly-liquid debt instruments, purchased with an
original maturity of ninety (90) days, to be cash equivalents.
Property and Equipment
- ----------------------
Property and equipment is stated at cost. The cost of ordinary maintenance and
repairs is charged to operations while renewals and replacements are
capitalized. Depreciation is computed on the straight -line method over the
following estimated useful lives:
Furniture and fixtures 5 years
Revenue Recognition:
- --------------------
Revenue is recognized when earned and expenses are recognized when they occur.
<PAGE>
CENTENNIAL BANC SHARE CORP.
Notes to Financial Statements
December 31, 1998
Use of estimates:
- -----------------
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Note 2 - Federal Income Taxes:
- ------------------------------
The Company adopted statement of financial Accounting Standards No. 109,
"Accounting For Income Taxes." FAS 109 requires the recognition of deferred tax
liabilities and assets for the anticipated future tax effects of temporary
differences that arise as a result of differences in the carrying amounts and
tax bases of assets and liabilities. There was no material effect on the
financial statements as a result of adopting FAS 109.
Note 3 - Notes Payable
- ----------------------
The following is a summary of notes payable.
Note payable to Jerrod D. Burden payable
in a lump sum due upon demand.
Interest rate is ten percent. $22,500
Note is secured by an officer and director of the corporation.
Total: $22,500
=======
Note 4 - Related Party Transactions
- -----------------------------------
Jerrold Burden, an officer and director of the corporation has loaned and
secured loans for the corporation. During the organizational meeting of the
corporation 1,107,500 shares were issued to officers and directors of the
company at par value for past services rendered.
Note 5 - Concentration of Business and Geographic Market
- --------------------------------------------------------
Over 90% of the Company's business comes from the State of Colorado. The
mortgage banking business is highly competitive, with hundreds of brokers and
wholesalers competing for the same consumer dollar. The Company's operational
activities centers primarily in the mortgage loan origination business, in which
there is a great deal of competition. It is anticipated that competition will
come from a number of sources, many of whom will have greater resources and
experience than the Company. All lenders in the Rocky Mountain United States
region are potential competitors. The Company believes with the use of the
internet system and the sophisticated electronics data exchange system being
developed by the Company, that it will be doing business all over the United
States as well an internationally.
<PAGE>
CENTENNIAL BANC SHARE CORP.
Notes to Financial Statements
December 31, 1998
Note 6 - Impact of Recently Issued Accounting Standards
- -------------------------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement No.
129, disclosure of Information about Capital Structure (SFAS No. 129). In June
1997, the Financial Accounting Standards Board issued Statement No. 130,
Reporting Comprehensive Income (SFAS No. 130), and Statement No. 131, Disclosure
about Segments of an Enterprise and Related Information (SFAS No. 131). The
Company is required to adopt these statements in 1998. SFAS No. 129 consolidates
the existing guidance from several other pronouncements relating to an entity's
capital structure. SFAS No. 130 establishes new standards for reporting and
displaying comprehensive income and its components. SFAS No. 131 requires
disclosure of certain information regarding operating segments, products and
services, geographic areas of operation and major customers. Adoption of these
statements is expected to have no impact on the Company's financial position,
results of operations, or cash flows.
Note 7 - Officer's Compensation
- -------------------------------
During the organization meeting of the corporation 1,107,500 shares of common
stock were issued to the officers and directors of the Company at par value for
past service rendered. During the period from January 1, 1997 to December 31,
1997 no further compensation was issued to the officers or directors for their
contributed services during the preparation and research period.
Note 8 - Common Stock
- ---------------------
The Common Stock issued as of December 31, 1997 was 1,147,500. In February,
1998, an additional 4,300 shares were issued at $2.50 per share. In May, 1998
stock in the name of Carlton Pirkey were cancelled at $2.50 per share. In July,
1998 16,685 shares of common stock were issued at $1.50 per share. As of
December 31, 1998 there are 1,165,965 of common stock outstanding.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
EXHIBITS
TO
Centennial Banc Share Corp..
<PAGE>
INDEX TO EXHIBITS
Exhibit Page or
Number Description Cross Reference
- ------ ----------- ---------------
+ 3A Articles of Incorporation
+ 3B Bylaws
+ Previously Filed.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 79,714
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,102<F1>
<CURRENT-ASSETS> 80,816
<PP&E> 11,416
<DEPRECIATION> 2,283
<TOTAL-ASSETS> 91,777
<CURRENT-LIABILITIES> 24,414
<BONDS> 0
0
0
<COMMON> 138,009
<OTHER-SE> (70,646)
<TOTAL-LIABILITY-AND-EQUITY> 91,777
<SALES> 899,554
<TOTAL-REVENUES> 905,924
<CGS> 973,490
<TOTAL-COSTS> 973,490
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,799
<INCOME-PRETAX> (67,566)
<INCOME-TAX> 0
<INCOME-CONTINUING> (67,566)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,566)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
<FN>
<F1> Prepaid Expenses
</FN>
</TABLE>
