U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 2000
/_/ Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from __________ to __________
Commission file number: 333-71091
IBF VI - Secured Lending Corporation
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(Exact name of Small Business Issuer as Specified in Its Charter)
Delaware 52-2139510
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1733 Connecticut Avenue, N.W.,
Washington, D.C. 20009
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(Address of Principal Executive Offices)
(202) 588-7500
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(Issuer's Telephone Number, Including Area Code)
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___
Number of shares outstanding of each of the issuer's classes of common
equity, as of September 30, 2000: 1,000 shares of Common Stock, $1.00 par
value per share.
Transitional Small Business Disclosure Format:
Yes ___ No_X__
<PAGE>
IBF VI - SECURED LENDING CORPORATION
FORM 10-QSB September 30, 2000
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets.....................................................3
Statements of Operations...........................................4
Statement of Cash Flows............................................5
Notes to Financial Statements......................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................7
PART II OTHER INFORMATION..................................................9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I Financial Information
Item 1. Financial Statements
IBF VI -- SECURED LENDING CORPORATION
(A Development Stage Enterprise)
BALANCE SHEET
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
(unaudited) (audited)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,683 $ 189,122
DEBT ISSUANCE COSTS 648,365 180,322
--------- ---------
$ 652,048 $ 369,444
========= =========
STOCKHOLDER'S EQUITY
--------------------
COMMON STOCK, $1 par value, 1,000 shares authorized, $ 1,000 $ 1,000
issued and outstanding
PAID IN CAPITAL $ 720,372 $ 409,018
ACCUMULATED DEFICIT (69,324) (40,574)
--------- ---------
$ 652,048 $ 369,444
========= =========
</TABLE>
<PAGE>
IBF VI -- SECURED LENDING CORPORATION
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, 2000 September 30, 2000
------------------ ------------------
<S> <C> <C>
REVENUE $ -- $ --
EXPENSES
General and administrative expenses $ 10,513 $ 28,750
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Total expenses $ 10,513 $ 28,750
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NET LOSS: $ 10,513 $ 28,750
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Weighted average shares of common stock
outstanding 1,000 1,000
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Net loss per share $ (10.51) $ (28.75)
======== ========
</TABLE>
<PAGE>
IBF VI -- SECURED LENDING CORPORATION
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30, 2000
------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (28,750)
---------
Adjustments to reconcile net loss to net cash used
in operating activities
Debt issuance costs (468,043)
---------
NET CASH USED BY OPERATIONS (496,793)
---------
CASH FLOWS FROM INVESTING ACTIVITIES --
CASH PROVIDED BY FINANCING ACTIVITIES:
Capital contributions 311,354
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 311,354
---------
NET (DECREASE) INCREASE IN CASH (185,439)
---------
CASH, beginning of the period 189,122
---------
CASH, end of the period $ 3,683
=========
Supplemental disclosures of cash flow information:
Taxes paid $ --
=========
Interest paid $ --
=========
</TABLE>
<PAGE>
IBF VI -- SECURED LENDING CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation:
The accompanying unaudited financial statements of IBF VI- Secured Lending
Corporation (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to prepare them for inclusion as part of the Form 10QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The financial statements for the period ended September 30, 2000 are unaudited
and include all adjustments necessary to a fair statement of the results of
operations for the periods then ended. All such adjustments are of a normal
recurring nature. The results of the Company's operations for any interim
period are not necessarily indicative of the results of the Company's
operations for a full fiscal year. For further information, refer to the
financial statements and footnotes thereto included in the Company's audited
report, dated February 17, 2000 for the period June 8, 1998 (inception)
through December 31, 1999.
2. The Company:
The Company engages in the business of purchasing, holding and disposing of
debt and equity securities, instruments, or other ownership interest or assets
issued by/owned by, as the case may be, individuals, corporation and other
entities. The investments will usually take the form of debt securities or
instruments and/or equity securities.
3. Income (Loss) Per Share:
The Company adopted SFAS No. 128, "Earnings per Share". SFAS No. 128
eliminates the presentation of primary and fully dilutive earnings per share
("EPS") and requires presentation of basic and diluted EPS. Basic EPS is
computed by dividing income (loss) available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted
EPS is based on the weighted-average number of shares of common stock and
common stock equivalents outstanding for the period.
4. Capital Contributions:
InterBank Funding Corporation incurred $ 311,354 of expenditures on behalf of
the Company.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following information should be read in conjunction with the
Company's Financial Statements and the accompanying notes thereto included in
Item 1 of this Quarterly Report.
FORWARD LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-QSB, the words or phrases
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "projected," or similar expressions are intended to identify
"forward looking statements". Such statements are subject to certain risks and
uncertainties, including but not limited to changes in interest rates, the
Company's dependence on debt financings, securitizations and short-term
warehouse loan facilities to fund its operations, the Company's ability to
implement its growth strategy and fluctuations in operating results. Such
factors, which are discussed in Management's Discussion and Analysis of
Financial Condition and Results of Operations, could affect the Company's
financial performance and could cause the Company's actual results for future
period to differ materially from any opinion or statements expressed herein
with respect to future periods. As a result, the Company wishes to caution
readers not to place undue reliance on any such forward looking statements,
which speak only as of the date made.
BALANCE SHEET INFORMATION
In August 2000, the Company went effective on its proposed public sale of
certain unsecured current interest and accretion subordinated bonds (the
"Bonds"). The Company has not closed escrow on its issuance of the Bonds and,
therefore, has not commenced any lending or asset acquisition activities.
The Company has no operating history. The Company currently has only
nominal assets and has received no income. To date, the Company's expenses
have related to its organization and expenses incurred in connection with the
registration of the Bonds.
In the future, the Company's revenues will be derived solely from its
investments in residential and commercial mortgage loans, other real estate
related assets and other commercial loans and short term investments. The
Company's future expenses will increase substantially as the Bonds are sold
and will include management fees under the management agreement with IBF
Management Corp. ("IBF Management"), interest on the Bonds, interest on
warehouse lines of credit and collateralized mortgage bonds and operating
expenses such as attorney fees, marketing expenses and corporate income taxes.
The principal sources of the Company's funds will be the proceeds of the
Bonds, the proceeds of the private purchase by InterBank Funding Corporation
("InterBank"), the Company's parent company, of the Company's preferred stock
described below and short and long-term borrowings collateralized by the
mortgage loans and other real estate related assets and the investment
revenues described above.
Management expects that some of the loans made or acquired by the Company
with the proceeds of the Bonds will generate revenue in the first year
following the offering in amounts sufficient to cover interest expense on the
bonds and operating expenses. After the payment of any senior obligations,
revenue will be applied first to payment of interest on the Bonds and other
expenses not covered by the management fee, and second to payment of the
management fee to IBF Management. The management fee will be deferred if
revenue is not sufficient to pay the fee after paying interest and other
expenses.
Provided at least the minimum amount of Bonds is sold, management
believes the net proceeds will be adequate to implement its loan business and
generate revenue sufficient to meet the interest and operating expenses of the
Company without seeking additional financing. Fixed interest expense on the
Bonds in the first year following the offering is not expected to exceed $5
million, and operating expenses, including the management fee, are not
expected to exceed $1.1 million. If the maximum amount of bonds is sold in the
offering and the Company is able to achieve its target return, gross revenue
would be approximately $7.8 million, which management expects to be sufficient
to meet the Company's obligations on the Bonds.
InterBank is expected to acquire cumulative preferred stock in one or
more private transactions during the period the Bonds are offered. The amount
of the initial preferred stock sold to InterBank will be determined at the
time an initial pool of mortgage loans is identified for purchase by the
Company through its wholly owned subsidiary, IBF VI - Asset Securitization
Corp. or "IBF VI SPV", and will equal the difference between the acquisition
price of the mortgage loans and the proceeds the Company or IBF VI SPV expects
to obtain through short-term warehouse financing or the issuance of
collateralized mortgage bonds. The initial proceeds from the sale of preferred
stock is expected to be between approximately $2.5 million and $5.0 million.
In addition, InterBank may obtain additional preferred stock of the Company on
future dates as may be required for the Company to make additional leveraged
acquisitions.
The Company's profits are likely to be adversely affected during any
period of rapid changes, either upward or downward, in interest rates. Any
future rise in interest rates may adversely affect the following:
o borrower demand for the Company's lending products;
o the Company's cost of funds;
o the spread between the rate of interest the Company receives on loans and
interest rates the Company must pay under its outstanding credit
facilities and debt securities; and
o the profit the Company will realize from offerings of collateralized
mortgage bonds or sales of loans.
Any future decrease in interest rates could also reduce the amounts which
the Company may earn on the Company's newly originated loans. This could
reduce the spread between the interest the Company earns on loans and the
interest the Company pays under its outstanding credit facilities and the
debt. A decline in interest rates could also decrease the size of the loan
portfolio by increasing the level of prepayments, because borrowers tend to
refinance as interest rates fall.
PART II Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IBF VI - SECURED LENDING CORPORATION
Date: November 13, 2000 By: /s/ Simon A. Hershon
_____________________________
Simon A. Hershon
President
