<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Check One)
[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) UNDER THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period ended June 30, 2000
[ ] TRANSITIONREPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period _________________ to ____________________
Commission File No._____________________
HOME FINANCING CENTERS, INC
(Exact Name of Small Business Issuer as specified in its charter)
NEVADA 93-1249831
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
112-114 Burrill Street Swampscott, Massachusetts 01907-1808
(Address of principal executive offices)
(781) 596-1992
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since
last report)
APPLICABLE ONLY TO ISSUERS INVOLVED BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers classes of common
equity, as of the last practicable date:
17,802,124 as of August 10, 2000..
Transitional Small Business Disclosure Format (Check One) Yes [X] No [ ]
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HOME FINANCING CENTERS, INC.
(FORMERLY KENTEX ENERGY, INC.)
BALANCE SHEET
As of
June 30, 2000
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash $ 25,391
Restricted Cash 79
Shareholder Loan Receivable 138,390
--------
$163,860
Fixed Assets:
Office Furniture 6,123
Office Equipment 32,968
--------
39,091
Less: Accumulated Depreciation 15,516
--------
$ 23,575
Other Assets:
Cash Surrender Value of Officer's Life Insurance 4,515
Deposits 1,243
Computer Software, Net of Amortization 80,211
Prepaid Taxes 29,579
--------
$115,548
--------
Total Assets $302,983
========
</TABLE>
SEE ACCOUNTANTS' COMPILATION REPORT
<PAGE> 3
Home Financing Centers, Inc.
(Formerly Kentex Energy, Inc.)
Balance Sheet
As of
June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
LIABILITIES
Current Liabilities
Current Portion of Long Term Debt $ 9,824
Line of Credit 25,000
Accounts Payable 17,581
Accrued Profit Sharing 30,000
Accrued Taxes 9,138
---------
$ 91,543
Long Term Debt
Note Payable $ 49,250
Less: Less Current Portion 9,824
---------
$ 39,426
---------
Total Liabilities $ 130,969
SHAREHOLDER'S EQUITY
Common Stock, ($0.01 Par Value), $50,000,000 Shares Authorized,
17,802,824 Shares Issued & Outstanding 236,991
Convertible Preferred Stock, ($0.01 Par Value
2,000,000 Shares Authorized; 1,615 Issued & Outstanding) 9,002
Additional Paid In Capital 351,327
Retained Earnings (425,306)
---------
$ 172,014
---------
Total Liabilities & Shareholder's Equity $ 302,983
=========
</TABLE>
SEE ACCOUNTANTS' COMPILATION REPORT
<PAGE> 4
Home Financing Centers, Inc.
(Formerly Kentex Energy, Inc.)
Statement of Retained Earnings (Deficit)
For the Six Months Ended
June 30, 2000
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
Balance--January 1, 2000 $(238,685)
Net Income (Loss) (71,671)
---------
Balance--March 31, 2000 $(310,356)
Net Income (Loss) (114,950)
---------
Balance--June 30, 2000 $(425,306)
=========
</TABLE>
SEE ACCOUNTANTS' COMPILATION REPORT
<PAGE> 5
Home Financing Centers, Inc.
(Formerly Kentex Energy, Inc.)
Income Statements
For the Three Months Ended
March 31 to June 30, 2000
&
For the Six Months Ended
June 30, 2000
-------------------------------------------------------------------------------
<TABLE>
For the Three For the Six For the Three
Months Months Months
March 31, to Ended Ended
June 30, 2000 June 30, 2000 March 31, 2000
-------------- ------------- --------------
<S> <C> <C> <C>
Net Mortgage Fees Earned $ 77,478 $ 108,251 $ 30,773
--------- --------- --------
Cost Of Closing
Appraisal Fees 3,795 4,970 1,175
Closing Expenses 11,402 11,921 519
Referral Fees 700 1,735 1,035
Credit Report Fees (3,110) 1,756 4,866
Internet Services 4,057 15,933 11,876
Other Miscellaneous Fees 896 982 86
--------- --------- --------
Total Costs Of Closing $ 17,740 $ 37,297 $ 19,557
--------- --------- --------
Gross Profit $ 59,738 $ 70,954 $ 11,216
Selling, General & Administrative Expenses $ 191,204 $ 284,303 $ 93,099
--------- --------- --------
Operating Income (Loss) $(131,466) $(213,349) $(81,883)
Other (Deductions):
Interest Income $ 81 $ 81 $ --
Interest Expense (770) (2,932) (2,162)
--------- --------- --------
Income (Loss) Before Income Tax Expense (Benefit) $(132,155) $(216,200) $(84,045)
Income Tax Expense (Benefit) $ (17,205) $ (29,579) $(12,374)
--------- --------- --------
Net Income (Loss) $(114,950) $(186,621) $(71,671)
========= ========= ========
</TABLE>
SEE ACCOUNTANTS' COMPILATION REPORT
<PAGE> 6
Home Financing Centers, Inc.
(Formerly Kentex Energy, Inc.)
Statements of Cash Flow
March 31 to June 30, 2000
&
For the Six Months Ended
June 30, 2000
<TABLE>
<CAPTION>
For the Three For the Six For the Three
Months Months Months
March 31, to Ended Ended
June 30, 2000 June 30, 2000 March 31, 2000
------------- ------------- --------------
<S> <S> <S> <S>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $(114,950) $(186,621) $ (71,671)
Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities:
Depreciation 1,845 3,352 1,496
Amortization 4,325 6,082 1,757
Change in Current Assets and Liabilities:
Decrease in Accounts Receivable -- 100,000 100,000
Increase in Shareholder Receivable (1,516) (1,536) --
Decrease in Prepaid Insurance 657 1,643 986
Increase in Prepaid Taxes (17,205) (29,579) (12,374)
Increase (Decrease) in Accounts Payable 6,892 (160,535) (167,427)
Increase in Accrued Profit Sharing -- -- --
Decrease in Accrued Taxes -- (3,000) (3,000)
Total Adjustments ---------- --------- ---------
$ (5,013) $ (83,573) $ (78,560)
---------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $(119,963) $(270,194) $(150,231)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (7,500) (9,095) (1,595)
Development of Website Software (51,350) (83,873) (32,523)
Additional Paid in Capital Received 51,827 351,327 299,500
Issuance of Common Stock -- 28,000 28,000
---------- --------- ---------
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES $ (7,023) $ 286,359 $ 293,382
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease (Increase) in Restricted Cash Accounts 544 52 (492)
(Increase) in Cash Surrender Value of Officer's Life
Insurance -- -- --
Payments on Line of Credit (66,666) (71,166) (4,500)
Borrowings on Line of Credit 5,439 14,500 9,061
Payments on Note (750) (750) --
Borrowings on Note 50,000 50,000 --
---------- --------- ---------
NET CASH (USED BY) FINANCING ACTIVITIES $ (11,433) $ (7,364) $ 4,069
---------- --------- ---------
NET (DECREASE) IN CASH $(138,419) $ 8,801 $ 147,220
---------- --------- ---------
CASH BALANCE, BEGINNING OF PERIOD $ 163,810 $ 16,590 $ 16,590
---------- --------- ---------
CASH BALANCE, END OF PERIOD $ 25,391 $ 25,391 $ 163,810
========== ========= =========
CASH PAID DURING THE PERIOD FOR: $ 770 $ 2,932 $ 2,162
========== ========= =========
Interest
</TABLE>
SEE ACCOUNTANTS' COMPILATION REPORT
<PAGE> 7
Home Financing Centers, Inc.
(Formerly Kentex Energy, Inc.)
Notes to Financial Statements
June 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of HOME FINANCING CENTERS, INC.
(FORMERLY KENTEX ENERGY, INC.) (the Company) is presented to assist in
understanding the financial statements. The financial statements and notes are
representations of the Company's management who is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Business Activity
The Company was formed in May, 1993 to provide residential mortgage loans,
refinancing and home equity loans. The company's offices are located in
Swampscott, Massachusetts.
On January 13, 2000, the Company shareholder exchanged his stock with Kentex
Energy, Inc. Over the Counter (OTCBB). As part of the exchange Kentex Energy,
Inc. agreed to change its name to Home Financing Centers, Inc. pursuant to a
planned reorganization.
Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on the accrual basis
of accounting. The accounting method recognizes revenues in the accounting
period in which they are earned and expenses when they are incurred regardless
of when cash is paid or received.
NOTE B - CASH - RESTRICTED BALANCES
As part of a contractual relationship with the company's lenders certain fees
earned by the company are not immediately available. The fees are required to
remain on deposit with the lendor until certain reserves are met. Additionally,
the Company acts as an escrow agent for certain closings by specific lendors.
The Company can only access these funds after a settlement sheet is presented
by the title company at closing.
-1-
<PAGE> 8
Home Financing Centers, Inc.
(Formerly Kentex Energy, Inc.)
Notes to Financial Statements
June 30, 2000
------------------------------------------------------------------------------
NOTE C - FIXED ASSETS
Fixed Assets are carried at historical cost. The depreciation of the Property
and Equipment is provided using the straight-line method for financial
reporting purposes.
The estimated useful lives of the assets are as follows:
Office Furniture 10 Years
Office Equipment 5 Years
Computer Equipment 3 Years
Capitalized Leases 5 Years
Expenditures for maintenance and repairs are charged to expense as incurred.
NOTE D - LINE OF CREDIT
The Company has a Warehouse Line of Credit in the amount of $1,000,000, with
nothing outstanding at June 30, 2000. This line bears interest at prime plus
1%. Under terms of the agreement the Company can draw funds on pre-approved
mortgages based on certain underwriting criteria. These funds are paid back as
each loan is closed with the ultimate lender. Interest is payable monthly on
construction loans and at the time of sale for all other loans. This loan
commitment can be terminated only upon 120 days written notice from either
party.
NOTE E - NOTE PAYABLE
The Company has a note payable in the amount of $50,000, with $49,250 at June
30, 2000. This note is payable over the next 46 months at $1,417 per month at
and interest rate of 15.99%.
NOTE F - COMMON STOCK
The Company has 50,000,000 shares of common stock authorized, 17,802,824 shares
issued and outstanding at a $0.01 par value.
-2-
<PAGE> 9
Item 2. Management's Discussion and Analysis or Plan of Operation
Overview
We are emerging as a leading Internet destination site for homeowners and
homebuyers, providing a fundamentally better way to finance the purchase of a
home. We are engaged in the brokerage, origination and sale of mortgage loans
secured by residential real estate.
We were incorporated in Massachusetts in 1993 and merged with Kentex
Energy Group in January 2000. We began our mortgage broker services in 1993 and
launched our website in 1996 and first derived revenues as an online mortgage
broker in 1996.
We derive our transactions revenues primarily from the brokering of home
loans. We charge a fixed processing fee, a credit report fee and a markup on the
lender's loan price. We recognize revenues when the loan is closed, at which
time the lender pays us. Additionally, we also derive revenues from origination
and sale of loans. Originated and sold loans are loans that are funded through
our own warehouse line of credit and sold to mortgage loan purchasers. Loan
origination and sale of revenues consist of proceeds in excess of the carrying
value of the loan, origination fees less certain direct origination costs, and
processing fees. We earn additional revenue from loan origination and sale
operations as compared to brokered loan operations because the dale of loans
includes a service release premium.
To date, we have generated transactions revenues primarily through our
consumer-direct channel. We reach customers online and offline through
television, radio and print media, as well as our relationships with other real
estate professionals. We intend to aggressively expand into other market
channels, including Realtors, homebuilders, financial institutions, mortgage
brokers and relocation specialists. We hope to derive mortgage fees and other
revenues from these channels in the future.
Since inception, we have relied solely on the expertise of Gary J. Kovner,
the Chief Executive Officer and sole director of the Company. We have a limited
operating history upon which investors may evaluate our business and prospects.
We intend to expend significant financial and management resources on developing
additional products and services, increasing marketing activities, improving our
technologies and expanding our operations. As a result, we expect to incur
losses and negative cash flow for the foreseeable future. Our revenues may not
increase or even continue at their current levels, and we may not achieve or
maintain profitability or generate cash from operations in future periods. Our
prospects should be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stages of development.
Three Months Ended June 30, 2000, Compared to Three Months Ended March 31, 2000
Revenues. Total revenues increased by $46,705 to $77,478 for the
<PAGE> 10
three months ended June 30, 2000 from $30,773 for the three months ended March
31, 2000. The increase in total revenues primarily resulted from an increase in
transaction revenues due to a higher number of closed loans in the second
quarter.
Operations. Our operations expenses primarily consist of the cost of
closing loans, including obtaining title and credit reports, appraisals,
document shipping and handling and other expenses associated with loan closings.
Operations expenses decreased $1,817 to $17,740 for the three months ended June
30, 2000 from $ 19,557 for the three months ended March 31, 2000.
Sales and Marketing/General and Administrative Expenses
Our general and administrative expenses primarily consist of compensation and
benefits for finance, administrative and human resources personnel, fees for
professional advisors and rent and other overhead. General and administrative
expenses increased $98,105 to $191,204 for the three months ended June 30, 2000
from $93,099 for the three months ended March 31, 2000. We experienced an
increase in the second quarter because of the substantial commitment in the
second quarter to a major newspaper and radio advertising campaign and the
purchase of a highly desirable toll-free telephone number and radio jingle,
enhancement of our website, sales and marketing and higher occupancy costs
related to an increase in the square footage leased at our corporate
headquarters in Swampscott, Massachusetts. We anticipate that selling and
marketing expenses will increase as we hire additional marketing personnel and
increase expenditures for promotion and marketing.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Revenues. Total revenues decreased by $36,993 to $ 547,148 in 1999 from
$584,141 in 1998. The decrease in total revenues was primarily the result of
decreased transactions revenues due to a lower number of closed loans.
Operations. Operations expenses, which includes costs of closing loans,
decreased $22,419 to $117,051 in 1999 from $139,470 in 1998. This decrease was
primarily attributable to a decrease in the costs of credit reports and house
appraisals and other services utilized in closing loans due to increased
efficiency in technology and competition in the industry.
Sales and Marketing/General and Administrative Expenses.
General Administrative Expenses, which includes sales and marketing expenses,
increased $32,211 to $ 329,751 in 1999 from $ 297,540 in 1998. This increase was
attributable to a combination of factors, including, increase in administrative
salaries, additional insurance expenses, and sales and marketing activities.
During 1999, we also upgraded our website and began hiring additional personnel.
We expect that operations expenses
<PAGE> 11
will increase in the future as we hire additional personnel, expand our
facilities and incur associated expenses to support our anticipated growth.
Liquidity and Capital Resources
The Company has experienced a period of rapid growth that has placed a
significant strain on its resources. The Company's near and long-term strategies
focus on exploiting existing and potential competitive advantages while
eliminating or mitigating competitive disadvantages. In response to current
market conditions and as part of its ongoing corporate strategy, the Company is
pursuing several initiatives intended to increase liquidity and better position
the Company to compete under current market conditions.
<PAGE> 12
PART II OTHER INFORMATION
Item 5. Other Information
On January 5, 2000, we entered into a Plan and Agreement of Reorganization (the
"Merger Agreement") with Home Financing Centers, Inc., a Massachusetts company,
which was operating a mortgage brokerage business. Pursuant to the Merger
Agreement, we issued 13,000,000 shares of our common stock to Mr. Gary J.
Kovner, the sole shareholder of Home Financing Centers,Inc. a Massachusetts
Corporation, in exchange for all of the outstanding shares of that company.
Immediately prior to the merger, the Company changed its name to Home Financing
Centers, Inc. On or about January 13, 2000, the transaction was consummated and
we began operating as a mortgage broker.
In April, 2000, we completed a private placement of our common stock to
accredited investors. The sale of the stock was in accordance with Regulation D.
As a result of the offering, the Company raised approximately $290,000. The
company used the proceeds to further develop its website and online business.
On April 26, 2000, the Company exchanged 315,000 of its common stock with MAS
Capital, Inc. and acquired a 96.83% of MAS Acquisition X Corp., an Indiana
company that was a reporting company under the Securities and Exchange Act of
1934, as amended. Under Section 12(g)-3(a) of the Rules of the Exchange Act, we
are permitted and have elected to continue reporting by becoming a successor
issuer to MAS Acquisition X Corp.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
Current Report on Form 8-K, dated May 16, 2000.
<PAGE> 13
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: Home Financing Centers, Inc.
/s/ Gary J. Kovner
-----------------------
Gary J. Kovner, President
