UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM - 10QSB
[ x ] QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition from ___________ to _________
Commission File Number: 1-15277
Rampart Capital Corporation
(Exact Name of Registrant as specified in its charter)
TEXAS 6159 76-0427502
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
700 Louisiana
Suite 2510
Houston, Texas
(Address of Principal Executive Office)
77002
(Zip Code)
713-223-4610
(Registrant's Telephone Number)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ]
No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
As of July 24, 2000, the number of shares outstanding of the registrant's
only class of common stock was 2,911,862.
Transitional Small Business Disclosure Format (check one):
Yes [ ]
No [ X ]
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1. Unaudited Consolidated Financial Statements PAGE NO.
Consolidated Balance Sheets at December 31, 1999 (Audited) and June 30, 2000 (Unaudited) . . . . . . . . . . . . . 2
Unaudited Consolidated Statement of Operations for the Three Months and Six Months ended June 30, 1999 and 2000 . . 3
Unaudited Consolidated Statement of Cash Flows for the Six Months ended June 30, 1999 and 2000 . . . . . . . . . 4
Notes to the Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
1
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<TABLE>
<CAPTION>
RAMPART CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999 JUNE 30, 2000
(AUDITED) (UNAUDITED)
----------- -----------
ASSETS
<S> <C> <C>
Cash $ 2,741,787 $ 328,443
Purchased asset pools, net 2,447,194 2,283,830
Commercial ventures, net 3,657,423 7,443,708
Investment real estate 1,405,889 1,986,749
Notes receivable from related parties 460,754 473,041
Notes receivable other 850,000 3,325,490
Property and equipment, net 371,493 523,933
Other assets 63,162 151,407
----------- -----------
Total assets $11,997,702 $16,516,601
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 580,173 $ 6,008,973
Accounts payable and accrued expenses 481,563 425,171
Deferred tax liability 279,000 279,000
----------- -----------
Total liabilities 1,340,736 6,713,144
----------- -----------
Commitments and contingencies
Stockholders' equity
Common stock ($.01 par value; 10,000,000
shares authorized; 3,050,000 and
2,983,173 shares issued and outstanding
at December 31, 1999 and June 30,
2000 respectively 30,500 30,500
Paid-in-capital 6,194,255 6,194,255
Treasury stock, 66,827 shares, at cost - (193,845)
Retained earnings 4,432,211 3,772,547
----------- -----------
Total stockholders' equity 10,656,966 9,803,457
----------- -----------
Total liabilities and
stockholders' equity $11,997,702 $16,516,601
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
<TABLE>
<CAPTION>
RAMPART CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1999 2000 1999 2000
-------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net gain on collections on asset pools $ 443,333 $ 199,081 $ 714,429 $ 432,584
Investment real estate income 310,417 14,698 382,741 27,498
Commercial ventures income 189,789 563,599 413,288 923,359
Interest and other income 31,542 101,263 84,375 145,841
----------- ----------- ----------- ------------
Total revenue 975,081 878,641 1,594,833 1,529,282
Costs of real estate sales (165,604) (54,574) (203,104) (54,574)
Operating and other costs (163,839) (350,874) (251,067) (656,073)
General and administrative expenses (406,740) (731,467) (802,659) (1,422,900)
Interest expense (148,907) (67,208) (267,616) (78,399)
----------- ----------- ----------- ------------
Net income(loss) before income tax benefit 89,991 (325,482) 70,387 (682,664)
Income tax benefit 36,231 - 44,035 23,000
----------- ----------- ----------- ------------
Net income(loss) $ 126,222 $ (325,482) $ 114,422 $ (659,664)
----------- ----------- ----------- ------------
Basic net income(loss) per common share $ .06 ($.11) $ .05 ($.22)
----------- ----------- ----------- ------------
Diluted net income(loss) per common share $ .06 ($.11) $ .05 ($.22)
----------- ----------- ----------- ------------
Average common shares outstanding 2,250,000 2,999,458 2,250,000 2,978,112
----------- ----------- ----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
RAMPART CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS
ENDED JUNE 30,
--------------------------
1999 2000
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income(loss) $ 114,422 $ (659,664)
Adjustments to reconcile net income(loss) to net cash
provided (used) by operating activities:
Depreciation 22,418 76,793
Accrued interest income (52,500) (66,565)
Asset pool costs deducted in net gain on collections 363,065 194,514
Change in loan loss reserve 12,225 (41,789)
Cost of real estate 203,104 54,574
Purchase of asset pools (60,619) (6,647)
Other costs capitalized (2,014) (109,630)
Changes in operating assets and liabilities:
Other assets 1,801 (88,246)
Accounts payable and accrued expenses (63,647) (56,392)
Taxes payable (8,500) -
Deferred tax liability (87,900) -
------------ ------------
Net cash provided (used) by operating activities 441,855 (703,052)
------------ ------------
Cash flows from investing activities:
Purchase of commercial real estate (1,828,858) (4,338,498)
Purchase of investment real estate (537,952) (5,896)
Proceeds from notes receivable related parties - 1,610
Purchase of notes receivable - (2,453,125)
Proceeds from notes receivable - 30,303
Purchase of treasury stock - (193,845)
Purchase of assessment rights (850,000) -
Proceeds from purchased assessments - 17,285
Purchase of property and equipment (250,042) (196,926)
------------ ------------
Net cash used by investing activities: (3,466,852) (7,139,092)
------------ ------------
Cash flows from financing activities
Proceeds from notes payable to related parties 1,400,000 -
Proceeds from purchased paying assessments 9,656 -
Proceeds from notes payable 2,302,711 6,559,890
Payments on notes payable (1,094,199) (1,131,090)
------------ ------------
Net cash provided by financing activities 2,618,168 5,428,800
------------ ------------
Net decrease in cash (406,829) (2,413,344)
Cash at beginning of period 583,629 2,741,787
------------ ------------
Cash at end of period $ 176,800 $ 328,443
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
RAMPART CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim financial information
-------------------------------
The accompanying unaudited financial statements for periods ended June
30, 1999 and June 30, 2000 have been prepared without audit in
accordance with generally accepted accounting principles for interim
financial information on a basis consistent with the annual audited
consolidated financial statements and with the instructions to Form
10-QSB and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
results of operations of interim periods are not necessarily
indicative of results to be expected for an entire year. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) and disclosures considered necessary for a fair presentation
of the results of operations and cash flows for the periods presented
have been included. The consolidated financial statements should be
read in conjunction with the Company's audited consolidated financial
statements included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1999.
Principles of Consolidation
-----------------------------
The consolidated financial statements include the assets of Rampart
Capital Corporation and its wholly owned subsidiaries. The Company
owns a 51% interest in a partnership that is reported using the full
consolidation method. The consolidated financial statements of the
Company include 100% of the assets and liabilities of the partnership
and the ownership interests of minority participants are recorded as
minority interest. All material inter-company balances have been
eliminated.
Commercial real estate
------------------------
Rents collected on commercial rental property are recognized as rental
income as collected, and revenues from the operation of commercial
properties are recognized as earned. Expenses of operating commercial
properties are charged to operations as incurred. Sales of commercial
real estate are generally recorded using the full accrual method of
accounting for sales of real estate, assuming the conditions for
recognition are met.
Other income
-------------
Other income is comprised of interest income and miscellaneous
revenue. Revenue is recognized as earned.
Reclassifications
-----------------
Certain reclassifications have been made to the 1999 financial
statements to conform with the 2000 presentation. These
reclassifications have no effect on the 1999 net income or
stockholders' equity.
NOTE 2 - NET INCOME(LOSS) PER COMMON SHARE
Net income(loss) per common share has been computed for all periods
presented and is based on the weighted average number of shares of common
stock and common stock equivalents outstanding during each period. There
are no common stock equivalents resulting from dilutive stock purchase
warrants.
NOTE 3- ACQUISITIONS
On January 7, 2000 the Company finalized the acquisition of a 51% interest
in Greater Houston Gulf Partners, LTD (the "Partnership). The Partnership
was formed to acquire, own, and manage a condominium redevelopment project
(the "Project"). In connection with the acquisition, the Company made a
loan to the Partnership for $1.1 million to provide financing for the
acquisition of the Project. The balance of the Project purchase price and
developmental funds were provided to the Partnership by a bank loan in the
amount of $2.1 million and additional loans of $300,000 by the partners.
5
<PAGE>
RAMPART CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
NOTE 4 - SEGMENT REPORTING
The Company operates in four business segments: (i) purchased asset
pools, (ii) commercial ventures, (iii) investment real estate, and
(iv) project financing. The purchased asset pools segment involves the
acquisition, management, servicing and realization of income from
collections on or sales of portfolios of undervalued financial assets,
and in some instances real estate the Company may acquire as part of
an asset pool or from foreclosing on the collateral underlying an
acquired real estate debt. The commercial ventures segment involves
holding foreclosed and acquired improved real estate and operating
businesses for appreciation and the production of income. The
investment real estate segment involves holding foreclosed and
acquired unimproved real estate for future appreciation and acquiring
unimproved real estate in conjunction with short-term funding for
developers. The project financing segment is comprised of short-term
financing of real estate at high yields and real estate notes held by
the Company from financing the sale of Company assets. The notes are
fully secured with real estate or other collateral. Financial
information by reportable operating segment is as follows:
<TABLE>
<CAPTION>
As of and for the Six months ended June 30, 2000
-----------------------------------------------------------------------------
Purchased Commercial Investment Project
Asset Pools Ventures Real Estate Financing Unallocated Totals
------------ ---------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 432,584 $ 923,359 $ 27,498 $ 124,850 $ 20,991 $ 1,529,282
Segment profit 107,177 (627,638) (52,852) 62,407 (171,758) (682,664)
Segment assets 2,283,830 7,908,174 1,986,749 3,325,490 1,012,358 16,516,601
Depreciation and amortization - 67,582 - - 9,211 76,793
Capital expenditures 6,647 4,503,100 115,526 2,453,125 33,325 7,111,723
Interest expense - 47,375 - 31,024 - 78,399
</TABLE>
<TABLE>
<CAPTION>
As of and for the Six months ended June 30, 1999
-----------------------------------------------------------------------------
Purchased Commercial Investment Project
Asset Pools Ventures Real Estate Financing Unallocated Totals
------------ ---------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 714,429 $ 413,288 $ 382,741 $ 84,375 $ - $ 1,594,833
Segment profit 208,482 (260,758) 102,258 51,205 (30,800) 70,387
Segment assets 3,236,178 2,797,554 1,435,579 1,427,500 677,784 9,574,595
Depreciation and amortization - 17,897 - - 4,521 22,418
Capital expenditures 62,633 528,577 537,952 - - 1,129,162
Interest expense 97,130 122,410 26,061 22,015 - 267,616
</TABLE>
6
<PAGE>
RAMPART CAPITAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Revenues decreased $65,551 from $1,594,833 during the six months ending June 30,
1999 to $1,529,282 during the first half of 2000. The decrease in revenues
consisted of declines in investment real estate revenues ($355,243), and net
gain on collections on asset pools ($281,845), offset by growth in commercial
ventures revenues of $510,071, project financing revenue of $40,475, and
unallocated interest income of $20,991. The decrease in investment real estate
revenues was mainly due to the sale of land in 1999 for which there was no
corresponding sale during the first half of 2000. The decrease in net gain on
collections on asset pools was due to timing of collections in normal business
operations. The increase in commercial real estate revenue was primarily due to
an increase of $488,141 in the Newport Golf Club and Conference Center
("Newport") operations, an increase of $66,591 in revenues from the Greater
Houston Gulf Partner ("GHGP") condominium conversion venture, offset by a
($44,661) decline in rentals primarily at our Dallas retail center.
General and administrative expenses ("G&A") increased $620,241 from $802,659 in
the first six months of 1999 to $1,422,900 in the same period of 2000. The
significant increase in G&A was due to increases of $349,997 related to Newport,
and to increases in SEC compliance costs of $69,168, franchise taxes of $50,108,
labor costs of $104,977, and $45,991 in other expenses. The increase in SEC
compliance cost was related to our being publicly held in the first half of 2000
and privately held in the same period of 1999. Labor costs increased due to the
additional labor needed to comply with the reporting requirements of a public
company and general wage increases. The increase in costs at Newport was mainly
due to increased tax valuation, increased utilization of the facilities in 2000
as compared to 1999, and an additional two months of operations in 2000. While
Newport was acquired in February 1999, the golf course was shut down for
renovation from the first week of May 1999 through November 1999. The franchise
tax increase was primarily related to the increase in equity from our initial
public offering in September 1999.
Cost of real estate sales declined by $148,530 from $203,104 for the six months
ending June 30, 1999 to $54,574 for the same period in 2000. The decline
consisted of a $203,104 reduction in the cost of investment real estate sales
made in 1999, with no corresponding sale in 2000, offset by $54,574 of costs
from commercial real estate sold in 2000. The 2000 real estate sale involved a
condominium that was part of the GHGP project started in early 2000.
Operating and other costs of $251,067 incurred during the quarter ending June
30, 1999 and $656,073 for the same period in 2000, relate to the direct costs of
operations of Newport. Although there has been a significant increase in
facility utilization, it has not yet reached breakeven. Management believes the
quarterly losses will decrease, with breakeven operations expected in the third
or fourth quarter of 2000.
Interest expense decreased from $267,616 in the first quarter of 1999 to $78,399
for the same period in 2000. The decrease in interest expense was primarily due
to a reduction in the weighted average corporate debt outstanding resulting from
the retirement of the majority of our debt with proceeds from the September 1999
initial public offering. Interest of $157,159, relating to the bank loan
secured by a 90-unit condominium redevelopment project started in January 2000,
was capitalized as work in progress.
The net loss before income taxes increased $753,051 from net income of $70,387
during the first six months of 1999 to a net loss of ($682,664) for the same
period in 2000. The increased loss consists of ($366,880) on commercial
ventures, ($155,110) in investment real estate sales, ($101,305) in decreased
net gains on collection on asset pools, and ($140,958) of unallocated losses,
offset by $11,202 of increased profit from project financing. With allocated
corporate overhead, the loss at Newport increased by ($333,922) over 1999, as a
result of management's emphasis on re-development and re-marketing programs for
the facility. The facility was acquired in February 1999 from a bankruptcy
estate and had not been actively marketed in many years. The ($155,110)
reduction in earnings from investment real estate was primarily due to sales in
1999 for which there were no recurring sales in 2000. The net loss was offset
by an increase in interest income of $20,991 offset by an increase in general
and administrative expense of $161,949 primarily from increases in SEC
compliance costs and franchise taxes.
Income tax benefit was $44,035 in 1999 compared to $23,000 in 2000. We have
available significant net operating loss carryforwards that were primarily
generated from the acquisition of certain corporate subsidiaries and assets of
MCorp Trusts in June 1997. Due to the availability of net operating loss
carryforwards and other net deferred tax assets, we offset our taxable income
during 1999 and adjusted its valuation allowance accordingly.
7
<PAGE>
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Revenues decreased $96,440 from $975,081 during the three months ending June 30,
1999 to $878,641 during the second quarter of 2000. The decrease in revenues
consisted of declines in investment real estate revenues ($295,719), net gain on
collections on asset pools ($244,252), and interest income of $20,991, offset by
growth in commercial ventures revenues of $373,810 and project financing revenue
of $48,730. The decrease in investment real estate revenues was mainly due to
the sale of land in 1999 for which there was no corresponding sale during the
second quarter of 2000. The decrease in net gain on collections on asset pools
was due to timing of collections in normal business operations. The increase in
commercial real estate revenue was primarily due to an increase of $381,415 in
Newport operations, an increase of $60,375 in revenues from the Greater Houston
Gulf Partners condominium conversion venture, offset by a ($67,980) decline in
rents primarily at our Dallas retail center. The project financing increase is
due to new projects ($2.8 million) being financed late in the second quarter.
General and administrative expenses ("G&A") increased $324,727 from $406,740 in
the second quarter of 1999 to $731,467 in the same period of 2000. The
significant increase in G&A was due to increases of $201,067 related to Newport
and to increases in SEC compliance costs of $11,928, franchise taxes of $31,984,
labor costs of $70,308, and $9,440 of other expenses. The increase in SEC
compliance cost was related to our being publicly held in the second quarter of
2000 and privately held in the same period of 1999. Labor costs increased due
to the additional labor needed to comply with the reporting requirements of a
public company and general wage increases. The increase in costs at Newport was
mainly due to increased tax valuation, increased utilization of the facilities
in 2000 as compared to 1999, and an additional two months of operations in 2000.
While Newport was acquired in February 1999, the golf course was shut down for
renovation from the first week of May 1999 through November 1999. The franchise
tax increase was primarily related to the increase in equity as a result of our
initial public offering in September 1999.
Cost of real estate sales declined by $111,030 from $165,604 for the three
months ending June 30, 1999 to $54,574 for the same period in 2000. The decline
consisted of a $165,604 reduction in the cost of investment real estate sales
made in 1999, with no corresponding sale in 2000, offset by $54,574 of costs
from commercial real estate sold in 2000. The 2000 real estate sale involved a
condominium that was part of the GHGP project started in early 2000.
Operating and other costs of $163,839 incurred during the quarter ending June
30, 1999 and $350,874 for the same period in 2000, relate to the direct costs of
operations of Newport. During the second quarter, increases in Newport revenue
($381,415) exceeded increases in direct operating and other costs ($187,035) by
$194,380. This is the first quarter that incremental revenues have exceeded
incremental direct operating costs since the purchase of Newport. Management
believes that this second quarter operating performance is the result of the
emphasis on re-development and re-marketing of the facility. Although the
facility operated at an overall loss after considering facility administrative
costs, management believes the quarterly losses will decrease, with breakeven
operations expected in the third or fourth quarter of 2000.
Interest expense decreased from $148,907 in the second quarter of 1999 to
$67,208 for the same period in 2000. The decrease in interest expense was
primarily due to a reduction in the weighted average debt corporate outstanding
resulting from the retirement of the majority of our debt with proceeds from the
September 1999 initial public offering. Interest of $124,259, relating to the
bank loan secured by a 90-unit condominium redevelopment project started in
January 2000, was capitalized as work in progress.
The net loss before income taxes increased $415,471 from net income of $89,991
during the second quarter of 1999 to a net loss of $(325,482) for the same
period in 2000. The increased loss consists of ($70,336) on commercial
ventures, ($159,707) in investment real estate sales, ($140,958) of unallocated
losses, and decreased net gain on collections on asset pools of ($55,010),
offset by increased profits on project financing of $10,538. The increased loss
on commercial ventures was related to Newport. The ($159,707) reduction in
earnings from investment real estate was primarily due to sales in 1999 for
which there were no recurring sales in 2000.
Income tax benefit was $36,231 in 1999 of which there was no such tax benefit
recorded in 2000. We have available significant net operating loss
carryforwards which were primarily generated from the acquisition of certain
corporate subsidiaries and assets of MCorp Trusts in June 1997. Due to the
availability of net operating loss carry forwards and other net deferred tax
assets, we offset our taxable income during 1999 and adjusted its valuation
allowance accordingly.
LIQUIDITY AND CAPITAL RESOURCES
We had cash and cash equivalents of $2,741,787 at December 31, 1999 compared to
approximately $328,443 at June 30, 2000.
During 2000, we continued to invest a substantial portion of our cash reserves
in various projects, most notably was a $1.25 million investment in a 90-unit
condominium redevelopment project. This investment represented a loan to a
single purpose commercial real estate company, which we control, earning
interest at prime rate plus two percent. The minority interest owners
guaranteed the loan.
Cash flow from financing activities during the first half of 2000 was $5.4
million, consisting of a third party first mortgage of $2.1 million, secured by
the condominium redevelopment project owned by Greater Houston Gulf Partners,
Ltd., a 51% majority owned partnership, and draws against our credit facility of
$3.3 million. We believe that we have structured the condominium development
project so that Rampart is insulated from any direct liability on the $2.1
million first mortgage. If the minority interest owners default, we can
foreclose their interest and, at our option, service or pay off the debt. The
$3.3 million in draws against our credit facility were used to acquire $2.4
million in high-yield loans secured by real estate projects, $108,000 in
investment real estate, $450,000 in improvements at Newport, and to fund the
operating losses at Newport.
8
<PAGE>
Due to the capital-intensive nature of our business, we have experienced, and
expect to continue to experience substantial working capital needs. We believe
that cash flows from operations and future borrowings available under our
revolving credit facility will be sufficient to fund our capital expenditures
and working capital requirements as they come due.
On April 30, 2000, we renewed our $5,000,000 revolving promissory note to mature
on December 31, 2000. This revolving credit facility is secured by notes
receivable and real estate in the purchased asset pools, the commercial and
investment real estate, the notes receivable from project financing, and
equipment. Principal is payable at maturity with interest payable monthly at
the bank's prime rate plus 1.0% per annum (9.50% and 10.5% as of December 31,
1999 and June 30, 2000, respectively). During 1999, we repaid the outstanding
debt balance of $3,660,000 and accrued interest with proceeds from our initial
public offering. Management is negotiating with this bank and other financial
institutions to increase the amount of credit facilities available. The
Revolving Credit Facility provides for certain financial covenants. As of the
filing date of this quarterly report, we are in compliance with these covenants.
STOCK REPURCHASES
On January 11, 2000, the Board of Directors approved a stock repurchase plan
under Rule 10b-18 promulgated under the Securities Exchange Act of 1934, for the
purchase of up to $2.0 million worth of our outstanding common stock in open
market transactions. Acquired shares will be held as treasury stock, and will
be available for future acquisitions and financing or for awards granted under
our 1998 Stock Compensation Plan. As of June 30, 2000, we had acquired 66,827
shares at a total cost of $193,845 or $2.90 per share. We intend to continue
repurchasing shares subject to SEC restrictions and the American Stock Exchange
continued listing requirements.
On July 10, 2000, in a privately negotiated transaction, the Company purchased
65,798 shares of it's common stock from the underwriter used by the Company in
it's initial public offering, at a purchase price of $2.50 per share.
FORWARD LOOKING STATEMENTS
This quarterly report on Form 10-QSB contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this report including,
without limitation, statements regarding our business strategy, plans,
objectives, expectations, intent, and beliefs of management for future
operations are forward-looking statements. Such statements are based on certain
assumptions and analyses made by our management in light of their experience and
their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. The
forward-looking statements included in this report are also subject to a number
of material risks and uncertainties. Important factors that could cause actual
results to differ materially from our expectations include (1) tightening of the
credit markets, (2) volatility in the real estate markets and interest rates,
(3) emerging competition, (4) changes in regulations in the industries we serve,
and (5) general economic declines, particularly within the regions in which we
operate. Forward-looking statements are not guarantees of future performance
and actual results, as developments and business decisions may differ from those
contemplated by such forward-looking statements.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held May 24, 2000, the shareholders
elected the five persons nominated for election to the Company's Board of
Directors and ratified the selection of Pannell Kerr Forster of Texas, P.C. as
our independent public auditors. The results of the election were as follows:
1. Election of Directors
Number of Shares Voted
-----------------------------
Name and Nominee For Against Abstained
--------------------- --------- ------- ---------
Charles W. Janke 2,849,759 15,200 0
J. H. (Jim) Carpenter 2,849,759 15,200 0
James W. Christian 2,849,759 15,200 0
James J. Janke 2,849,759 15,200 0
Robert A. Shuey, III 2,849,759 15,200 0
2. Ratification of Independent Auditors
Number of Shares Voted
-----------------------------
Name and Nominee For Against Abstained
--------------------- --------- ------- ---------
Pannell Kerr Forster 2,862,309 600 2050
of Texas, P.C.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See "Index of Exhibits" below which lists the documents filed
as exhibits herewith.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended June 30, 2000.
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Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Rampart Capital Corporation
By: /s/ C. W. JANKE August 12, 2000
C. W. Janke
Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)
By: /s/ J. H. CARPENTER August 12, 2000
J. H. Carpenter
President
Chief Operating Officer
By: /s/ CHARLES F. PRESLEY August 12, 2000
Charles F. Presley
Vice-President
Chief Financial Officer
Treasurer
(Principal Financial Officer)
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<TABLE>
<CAPTION>
RAMPART CAPITAL CORPORATION
EXHIBITS TO FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX OF EXHIBITS
EXHIBIT
<S> <C>
NO. DESCRIPTION
----- ----------------------------------------------------------------------------------------------------------------------
3.1 Restated Articles of Incorporation (Exhibit 3.1 to Rampart's Registration Statement on Form SB-2 (Reg. No. 333-71089)
and incorporated herein by reference.)
3.2 Bylaws (Exhibit 3.2 to Rampart's Registration Statement on Form SB-2 (Reg. No. 333-71089) and incorporated herein by
reference.)
4.1 Form of Warrant Agreement Between Rampart and American Stock Transfer and Trust Company (Exhibit 4.1 to Rampart's
Registration Statement on Form SB-2 (Reg. No. 333-71089) and incorporated herein by reference).
*27.1 Financial Data Schedule.
</TABLE>
---------------------------------------
* Filed herewith.
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