U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
XX 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 0-26777
-------
APTA HOLDINGS, INC.
------------------
(Exact name of business issuer as specified in its charter)
Delaware 22-3662292
-------- ----------
(State or other jurisdiction (IRS Employer Identification
of incorporation) number)
215 West Main Street, Maple Shade, New Jersey 08052
---------------------------------------------- -------
(Address of principal executive offices) (Zip code)
(856) 667-0600
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 XX No
---- ----
The Company had 1,760,500 shares of common stock, par value $.001 per share,
outstanding as of November 10, 2000.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [XX]
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<PAGE>
APTA HOLDINGS, INC. AND SUBSIDIARIES
INDEX
PAGE
PART 1. FINANCIAL INFORMATION ----
ITEM 1. FINANCIAL STATEMENTS
APTA HOLDINGS, INC. AND SUBSIDIARIES
-------------------------
CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 30, 2000 AND 1999.................................3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999...........4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999...........5
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999...........................6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.......................11
PART II. OTHER INFORMATION................................................16
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K..................17
SIGNATURES...........................................................18
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<PAGE>
APTA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
ASSETS
2000 1999
---- ----
Cash $ 21,942 $ 5,431
Notes receivable 248,651 298,523
Prepaid expenses 8,461 6,846
Property and equipment, net 2,988 2,151
---------- ----------
TOTAL ASSETS $ 282,042 $ 312,951
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Notes payable $ 93,750 $ 165,000
Accounts payable -0- 1,200
Accrued expenses 1,500 7,409
Dealer holdbacks 21,354 13,185
Net liabilities of discontinued operations 166,519 228,816
---------- ----------
TOTAL LIABILITIES $ 283,123 $ 415,610
Minority Interest 27,796 25,680
Commitments and contingencies
Stockholders' Deficit
Common stock, $.001 par value
2,000,000 shares authorized,
1,760,500 and 1,000,000 shares issued
and outstanding 1,761 1,000
Additional paid in capital 360,990 149,000
Accumulated deficit (391,628) (278,339)
--------- ---------
Total stockholders' deficit ( 28,877) (128,339)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 282,042 $ 312,951
========== =========
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APTA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
Financial services revenues $ 51,864 $ 25,285
Operating expenses
Administrative expenses 72,080 11,889
Other general operating expenses 1,938 4,433
Depreciation and amortization 1,245 773
-------- --------
TOTAL OPERATING EXPENSES 75,263 17,095
-------- --------
Operating income (loss) from
continuing operations (23,399) 8,190
Other income (expense)
Interest income 370 118
Interest expense ( 13,939) ( 7,358)
--------- --------
Total other income (expense) ( 13,569) ( 7,240)
--------- --------
Gain (loss) from continuing operations
before minority interest (36,968) 950
Minority interest ( 1,888) ( 661)
-------- --------
Net gain (loss) from continuing operations ( 38,856) 289
Discontinued operations
Loss from discontinued operations (42,587) ( 44,677)
-------- --------
Net loss ($81,443) ($44,388)
========= =========
Basic net loss per share
Loss before minority interest ($.03) -0-
Minority interest -0- -0-
Loss from discontinued operations ($.03) ($.04)
--------- --------
Net loss ($.06) ($.04)
========= =========
Average number of common
shares outstanding - basic 1,376,659 1,000,000
========= =========
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<PAGE>
APTA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
Cash flows from operating activities
Net loss ($81,443) ($44,388)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Loss from discontinued operations 42,587 44,677
Minority interest in net income
(loss) of consolidated subsidiary 1,888 661
Depreciation and amortization expense 1,245 773
(Increase) decrease in:
Prepaid expenses ( 3,929) ( 3,246)
Increase (decrease) in:
Accounts payable -0- 1,200
Accrued expenses -0- (47,691)
-------- ---------
Net cash used in continuing operations (39,652) (48,014)
Net cash provided by
(used in) discontinued operations 10,776 34,622
-------- ---------
Net cash provided by (used in)
operating activities (28,876) (13,392)
-------- ---------
Cash flows from investing activities:
Cash received from acquisition -0- 85,100
Purchases of property and equipment ( 2,303) ( 348)
Purchases of property and equipment
for discontinued operations (36,738) (14,823)
Collection of installment notes receivable 254,448 17,151
Loans made (155,309) (164,136)
------- -------
Net cash provided by (used in)
investing activities 60,098 (77,056)
Cash flows from Financing Activities
Repayment of mortgage notes payable
of discontinued operations (28,112) (25,899)
Repayment of short term notes (75,000) (50,000)
Repayment of short term notes of
discontinued operations (103,426) ( 3,900)
Proceeds from notes payable -0- 135,000
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<PAGE>
APTA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
Proceeds from notes payable of
discontinued operations 30,000 10,000
Issuance of common stock 153,251 -0-
Minority interest -0- 15,000
------- -------
Net cash provided by (used in)
financing activities (23,287) 80,201
------- -------
Increase (decrease) in cash 7,935 (10,247)
Cash, beginning 14,007 15,678
------- -------
Cash, ending $ 21,942 $ 5,431
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash investing and financing activities:
On June 28, 1999, assets and liabilities of ARCA Corp. were transferred to
the Company as follows:
Accrued expenses $ 55,100
Notes payable 30,000
--------
Cash received from predecessor $ 85,100
========
Issuance of common stock during the nine months ended September 30, 2000 was
as follows:
Issuance of common stock
Issuance of common stock, net of
stock issuance costs of $72,500 $265,751
Satisfaction of note payable to stockholder
in exchange for common stock (17,500)
Satisfaction of accrued expenses (95,000)
--------
Net proceeds from issuance of common stock $153,251
========
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APTA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Additional Total
By Common Stock Paid-in Accumulated Stockholder's
Predecessor Shares Amount Capital Deficit Deficit
----------- ----------------- -------- ------------ -------------
Balance,
01/01/99 $( 83,951) 0 $ 0 $ 0 $ 0 $ ( 83,951)
Net loss
prior to
spin-off (42,486) 0 0 0 0 (42,486)
Initial
capitali-
zation
resulting
from
spin-off 126,437 1,000,000 1,000 149,000 (276,437) 0
Net loss
subsequent
to
spin-off 0 0 0 0 ( 1,902) ( 1,902)
------------ --------- ----- -------- ----------- -------
Balance
09/30/99 $ 0 1,000,000 $1,000 $149,000 $(278,339) $(128,339)
============ ========= ===== ======== =========== =======
Balance
01/01/00 $ 0 1,084,000 $1,084 $95,916 $(310,185) $(213,185)
Issuance
of common
stock 0 434,000 434 186,566 0 187,000
Issuance
of common
stock 0 242,500 243 78,508 0 78,751
Net loss 0 0 0 0 (81,443) ( 81,443)
------------ --------- ----- -------- ----------- -------
Balance
09/30/00 0 1,760,500 $1,761 $360,990 ($391,628) $( 28,877)
============ ========= ===== ======== =========== =======
</TABLE>
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APTA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Note 1 - Organization
APTA Holdings, Inc. ("APTA"), a Delaware corporation, ("the Company")
was formed on June 4, 1999, as a subsidiary of ARCA Corp. ("ARCA"), a New
Jersey corporation, in connection with a transaction in which ARCA was merged
into Agate Technologies, Inc. ("Agate") on June 28, 1999. Immediately prior
to the closing of the merger, ARCA transferred all of its assets and
liabilities to APTA. On June 28, 1999, the common stock of APTA was spun off
to the common shareholders of ARCA. Eligible ARCA shareholders of record on
June 28, 1999 ("Dividend Record Date") received one share of APTA's common
stock for each share of ARCA's common stock held on the Dividend Record Date.
On June 28, 1999, 1,000,000 shares of $.001 par value APTA common stock was
issued to eligible ARCA shareholders.
Note 2 - Summary of Significant Accounting Policies
The summary of significant accounting policies is included in the notes
to the consolidated financial statements for the years ended December 31,
1999 and 1998 which were audited and appear in the Form 10-KSB previously
filed by the Company.
Note 3 - Unaudited Financial Statements
The consolidated balance sheets as of September 30, 2000 and 1999 and
the related consolidated statements of operations, cash flows and
stockholders' deficit for the nine months ended September 30, 2000 and 1999,
and the related information contained in these notes have been prepared by
management without audit. In the opinion of management, all accruals
(consisting of normal recurring accruals) which are necessary for a fair
presentation of financial position and results of operations for such periods
have been made. Results for an interim period should not be considered as
indicative of results for a full year.
Note 4 - Basis of Presentation
The consolidated financial statements for the nine months ended
September 30, 1999 include periods prior to the spin off and include only
those assets and liabilities contributed by ARCA as described above. These
financial statements have been prepared using ARCA's historical basis of the
assets and liabilities and the historical results of operations and have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission applicable for subsidiaries which have been spun off.
These rules stipulated that statements shall be prepared as if the entity had
existed prior to the existence of the new company. Such statements are not
those of a real entity, but describe a hypothetical "accounting predecessor"
to APTA Holdings, Inc. The financial statements presented include all the
operations of the Company as well as the operations of the Company's
predecessor prior to the spin-off, and have been accounted for in a manner
similar to that in a pooling of interests.
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<PAGE>
APTA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Note 4 - Basis of Presentation (continued)
In management's opinion, the accompanying consolidated financial
statements include all common and corporate level expenses which would have
been incurred on behalf of the accounting predecessor by ARCA. Management has
allocated such expenses based on its best estimate of the actual time and
effort expended for the benefit of APTA, and believes such allocation to be
reasonable.
Net loss per Share
Net loss per share prior to the spinoff has been computed giving effect
to the distribution ratio of 1 common share of APTA for each common share of
ARCA. Accordingly, weighted average common shares outstanding for the
accounting predecessor, have been computed based on the shares outstanding of
ARCA for the respective period. Calculated earnings per share may not be
representative of earnings per share subsequent to the transfer of the assets
and liabilities from ARCA since the level of other expenses incurred by APTA
may be higher than was incurred on a historical basis.
Note 5 - Discontinued Operations
On August 7, 2000, APTA transferred all of the assets and liabilities
of its wholly owned subsidiary, Spring Village Holdings, Inc., to Gavella
Corp., also a wholly owned subsidiary of APTA formed for the purpose of
effectuating the spinoff of APTA's real estate operations in exchange for
2,000,000 shares of $.001 par value Gavella Corp. common stock. The
operating results of Gavella Corp. and Subsidiary for the nine months ended
September 30, 2000 have been treated as discontinued operations, and the 1999
financial statements have been restated to conform with this presentation.
No income tax expense or benefits were recognized due to the Company's net
operating loss carryforwards. Gavella Corp. and its subsidiary recorded
revenues of $624,559 and $600,293 for the nine months ended September 30,
2000 and 1999.
The components of the net liabilities of discontinued operations
included in the consolidated balance sheet as of September 30, 2000 and 1999
are as follows:
2000 1999
---- ----
Assets
Rental property, net $3,222,115 $3,261,279
Cash 122,967 66,486
Cash held in escrow 42,646 43,943
Accounts receivable 4,458 6,361
Prepaid expenses 65,045 59,257
Deferred financing costs 60,411 69,051
---------- ----------
3,517,642 3,506,377
---------- ----------
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<PAGE>
APTA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Note 5 - Discontinued Operations (continued)
2000 1999
---- ----
Less liabilities
Mortgage notes payable (3,327,423) (3,364,530)
Notes payable ( 198,103) ( 225,000)
Accrued interest ( 41,636) ( 41,876)
Accounts payable ( 6,608) ( 15,220)
Accrued expenses ( 33,130) ( 23,188)
Security deposits payable ( 77,261) ( 65,379)
----------- ----------
(3,684,161) (3,735,193)
----------- ----------
Net liabilities from
discontinued operations ($ 166,519) ($ 228,816)
=========== ==========
Note 6 -Related Party Transactions
During the nine months ended September 30, 2000, 245,000 shares of
common stock were issued to two officers/directors of the Company at $.50 per
share for cash of $122,500. In addition, 37,500 shares of common stock were
issued to an officer/director at $.50 per share in exchange for satisfaction
of a $17,500 note payable plus accrued interest.
A summary of related party transactions for the year ended December 31,
1999 appears in the Form 10-KSB previously filed by the Company and is hereby
incorporated by reference.
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<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in
this Form 10-QSB and in the previously filed Form 10-KSB for the period
ending December 31, 1999.
General
-------
Apta Holdings, Inc. ("Apta" or the "Company") was incorporated on June 4,
1999 in the State of Delaware as a wholly owned subsidiary of ARCA Corp. On
June 28, 1999, the Company acquired 100% of the assets and liabilities of the
parent, ARCA, as part of a merger by ARCA with Agate Technologies, Inc.
Included in the assets acquired by Apta were ARCA's wholly owned real estate
subsidiary, Spring Village Holdings, Inc. and ARCA's 80% owned finance
company subsidiary, Beran Corp. The following discussion of the business of
the Company includes the businesses of the two subsidiaries and incorporates
the prior activities of ARCA Corp.
The Company is currently engaged in two lines of business; owning and
operating income producing real estate, and the originating and servicing of
loans to businesses, generally secured by real estate or other business
assets ("business lending"), and to individuals, generally secured by
vehicles or other personal property ("consumer lending"). The Company plans
to spin off its real estate business in order to focus on its business
lending and consumer lending subsidiary.
On December 31, 1995, the Company acquired through a subsidiary, for $50,000,
an 80% controlling interest in a 124 unit apartment complex located in Sharon
Hill, Pennsylvania. The Company secured bridge financing to make certain
improvements needed to refinance the property. Upon completion of the
improvements, rents, occupancy and net cash flow increased and the property
was successfully refinanced on September 19, 1997. Subsequent to the
refinancing, the Company has used its positive operating cash flow to reduce
debt.
On March 31, 1998, Beran Corp. was incorporated in the State of Delaware, and
on May 28, 1998, entered into business lending through the acquisition of the
business lending operations of a real estate development company.
On November 24, 1998, Beran became a licensed lender in the State of New
Jersey. Beran started making secured consumer loans in the first quarter of
1999. Beran reported $51,864 in financial services revenues for the nine
month period ending September 30, 2000, and had $248,651 in loans
outstanding.
On June 21, 2000, Apta incorporated Gavella Corp. ("Gavella") in the State of
Delaware as a wholly owned subsidiary. On August 7, 2000, APTA transferred
all of the assets and liabilities of its 100% wholly owned subsidiary, Spring
Village Holdings, Inc. to Gavella in exchange for 2,000,000 shares of $.001
par value Gavella common stock. The transfer of Spring Village Holdings, Inc.
to Gavella
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<PAGE>
was due to a decision by Apta's Board of Directors to separate the finance
business and the real estate business into two separate corporations. The
Apta Board of Directors has also authorized that the Apta shareholders will
receive one share of Gavella for each share of Apta owned by the
shareholders. The record date for such spin-off will be determined after the
SEC and any other relevant regulatory body has completed its review. It is
anticipated that the spinoff will occur before December 31, 2000, and that
Apta will retain approximately 10% of the Gavella shares after the spin-off.
After the proposed spin-off of the real estate business, Apta intends to
focus its efforts on the expansion of its consumer finance business. The
real estate business has been reflected as a discontinued operation.
Business
--------
The Company, through its 80% owned subsidiary Beran Corp., originates, sells
and services loans to businesses secured by real estate and other business
assets ("Business Purpose Loans"), and consumer loans typically to credit
impaired borrowers, including automobile loans secured by the title to the
automobile and the unconditional guarantee of participating dealers or
individual guarantors pre-approved by Beran.
The Company's customers currently consist primarily of two groups. The first
category of customers includes credit impaired borrowers who are generally
unable to obtain financing from banks, savings and loan associations or other
finance companies that have historically provided loans only to individuals
with favorable credit characteristics. These borrowers generally have
impaired or unsubstantiated credit characteristics and/or unverifiable
income, and respond favorably to the Company's marketing efforts. The second
category of customers includes borrowers who would qualify for loans from
traditional lending sources but elect to utilize the Company's products and
services. The Company's experience has indicated that these borrowers are
attracted to the Company's loan products as a result of its marketing
efforts, the personalized service provided by the Company's staff, and the
timely response to loan requests. Historically, both categories of customers
have been willing to pay the Company's fees and interest rates which are
generally higher than those charged by traditional lending sources.
The Company markets its services primarily by "networking". With respect to
Business Purpose Loans, the Company obtains new borrowers from
recommendations of existing borrowers and business associates. With respect
to automobile loans, an officer of the Company meets with dealers, salesmen
and finance managers, and provides them with detailed information about the
Company's auto loan program. Through this "network", loan requests flow into
the Company, which are promptly accepted or rejected based on the Company's
underwriting criteria. The Company does no mass media advertising.
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<PAGE>
The Company began operations in 1998 and initially offered Business Purpose
Loans. The Company currently originates Business Purpose Loans in
Pennsylvania and New Jersey. The Company focuses its marketing efforts on
small businesses, including suppliers, vendors and subcontractors of Beran or
Apta Holdings, Inc. who do not meet all of the credit criteria of commercial
banks.
The Business Purpose Loans originated by the Company generally are secured by
real estate, cash flow from investment real estate, or other assets. The
Company's Business Purpose Loans are generally originated with fixed rates
and typically have origination fees of 2%. The weighted average interest
rate received on the Business Purpose Loans originated by the Company at
September 30, 2000 was 15%.
The Company is also in the business of underwriting, purchasing and servicing
high-yield retail automobile installment loan contracts. Contracts will be
acquired from approved dealerships and other financial institutions. Vehicle
loans purchased by the Company are generally made to first time buyers and
others with impaired credit ratings. Therefore, the original interest rates
on the loans range from 18% to 25% per annum, and require a minimum 20% down
payment by the automobile purchaser. Each loan must also be unconditionally
guaranteed by the automobile dealer or a pre-approved individual guarantor
acceptable to Beran.
In addition to the guarantee, the Company "holds back" 10% of each loan as
additional security for the loans purchased by the Company. The holdback is
retained by the Company as a reserve against possible loan defaults.
Holdbacks from automobile dealers by lenders are common in this industry, but
vary in amount and terms from lender to lender. The Company's holdback
policy is similar to other lenders with which the Company competes.
The Company does not anticipate any shortfalls in the reserve account. The
Company can, if necessary, sell repossessed automobiles at a price which
significantly reduces the potential losses on defaulted loans.
Currently the Company has $248,651 in loans outstanding. The Company intends
to increase the loans outstanding to $300,000 by December 31, 2000. In order
to meet its stated goal, the Company has been and anticipates that it will
originate approximately $15,000 per month in new consumer loans.
Results of Operations
----------------------
The following discussion is for the nine months ending September 30, 2000 and
1999, respectively. The real estate business has been accounted for as a
discontinued operation.
Financial services revenues increased by $26,579 or 105%, from $25,285 in
1999 to $51,864 in 2000, due to more loans outstanding.
Administrative expenses increased to $72,080 in 2000 from $11,889 in 1999,
primarily due to costs related to the start-up of our finance company and
professional fees related to becoming a reporting public company. Total
operating expense increased by $58,168, from $17,095 in 1999 to $75,263 in
2000.
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<PAGE>
Operating income declined from $8,190 in 1999 to a loss of $23,399 in 2000,
primarily due to the increases in expenses discussed above, which were only
partially offset by the increase in revenues.
Interest expense, net of interest income, increased by $6,329 from $7,240 in
1999 to $13,569 in 2000.
Loss from continuing operations before minority interest increased by $37,918
from a profit of $950 in 1999 to a loss of $36,968 in 2000.
Minority interest, which represents the minority shareholder's share of the
net income of Beran Corp., increased from $661 in 1999 to $1,888 in 2000.
Though Beran Corp. runs at an operating profit, the consolidated results of
Apta Holdings, Inc. reflect operating losses due to public company corporate
overhead.
Net loss from continuing operations was $38,856 in 2000, compared to a net
profit of $289 in 1999.
Loss from discontinued operations decreased from $44,677 in 1999 to $42,587
in 2000. This reflects the net losses incurred by the real estate business
the Company intends to spin off.
Net loss increased by $37,055 from $44,388 in 1999 to $81,443 in 2000. Basic
net loss per share was ($.04) in 1999 and ($.06) in 2000.
The Company is taxed as a C-corporation for federal and state income tax
purposes. As such, the Company will pay taxes on its net income as defined
by the Internal Revenue Code. No tax attributes of the Company flow through
to the shareholders except for the regular taxation of dividends paid, if
any.
Liquidity and Capital Resources
--------------------------------
At September 30, 2000, the Company had working capital of $162,450. The
Company needs additional financing to expand its business and carry out its
business plan.
On January 1, 2000, the Company had $14,007 in cash.
During the nine months ending September 30, 2000, the Company received
$153,251 from the sale of stock, and $30,000 proceeds from notes payable.
The Company collected $254,448 from installment notes receivable during the
period. Operations used $28,876. The Company used $39,040 to purchase
property and equipment, made $155,309 in loans, repaid $178,426 in short term
debt, and reduced mortgage debt by $28,112. The net increase in cash for the
period was $7,935. The Company had $21,942 in cash on September 30, 2000.
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<PAGE>
The Company's balance sheet is highly leveraged. The Company plans to reduce
this leverage through future equity offerings as well as by funds generated
from operations. The Company believes it can support operations and planned
capital expenditures for at least twelve months. Thereafter, the Company's
continued success will be dependant upon its ability to expand and increase
profitability of its finance company.
In the event that the Company's plans change or its assumptions change or
prove to be inaccurate, the Company may be required to seek additional
financing sooner than currently anticipated. The Company has not identified
any potential sources of debt or equity financing and there can be no
assurance that the Company will be able to obtain additional financing if and
when needed or that, if available, financing will be on terms acceptable to
the Company.
Forward Looking Statements
---------------------------
The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of 1995.
The foregoing discussion includes forward-looking statements relating to the
business of the Company. Such forward-looking statements may be identified
by the use of terminology such as "plan", "may", "will", "expects",
"intends", "anticipates", "estimate", "should", or "continue", or the
negative there of or other variations thereon or comparable terminology.
Forward-looking statements contained herein or in other statements made by
the Company are made based on management's expectations and beliefs
concerning future events impacting the Company and are subject to
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are
beyond the control of the Company, that could cause actual results of the
Company to differ materially from those matters expressed in or implied by
forward-looking statements. The Company believes that the following
factors, among others, could affect its future performance and cause actual
results of the Company to differ materially from those expressed in or
implied by forward-looking statements made by or on behalf of the Company:
(a) the effect of changes in interest rates; (b) regulatory changes or
interpretations of such regulations; (c) uninsurable risks; (d) unexpected
loan losses, and (e) general economic conditions.
-15-
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PART II
OTHER INFORMATION
------------------
ITEM 1 LEGAL PROCEEDINGS
NONE
ITEM 2 CHANGES IN SECURITIES
Recent Sales of Unregistered Securities
---------------------------------------
The following information sets forth certain information for all
securities of the Company sold during the quarter ending March 31, 2000
without registration under the Securities Act of 1933 (the "Securities
Act"). The following pertains to each of the transactions:
. There were no underwriters involved in any of the transactions.
. All of the securities issued were restricted common stock of the
Company, and each of the certificates issued was stamped with the following
restrictive legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933. The shares have been acquired for investment and
may not be sold, transferred or assigned in the absence of an effective
registration statement for these shares under the Securities Act of 1933 or
an opinion of the Company's counsel that registration is not required under
such Act."
. No form of advertising or general solicitation was utilized in
connection with any of the offers or sales of such securities.
. Redistribution of the common stock was subject to the provisions of
Rule 144 of the Securities Act.
. Each of the offerees were furnished with the Registrant's latest
Form 10-KSB, Form 10-QSB's for the fiscal periods subsequent to the end of
the fiscal period, and all forms 8-K filed by the Registrant since the end of
the fiscal period.
. Each of the purchasers represented that the purchaser was acquiring
the securities for the purchaser's own account, for investment only, and not
with a view toward the resale, fractionalization, division or distribution
thereof, and further, the investors each represented that they had no present
plans to enter into any contract, undertaking, agreement, or arrangement for
any such resale, distribution, division or fractionalization thereof.
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<PAGE>
During September 2000, 122,500 shares of the Company's common stock were
issued to eight investors for consideration of $61,250 cash, in reliance upon
Rule 506 of Regulation D of the Securities Act.
During September 2000, the Company issued to Theodora T. Robinson,
spouse of Stephen M. Robinson, Vice President, Secretary and a director of
the Company, 25,000 shares of the Company's common stock for the
consideration of $12,500 in cash. The transaction was effected in reliance
upon Rule 4(2) of the Securities Act.
During September 2000, the Company issued to Harry J. Santoro,
President, Treasurer and a director of the Company, 65,000 shares of the
Company's common stock for consideration of $32,500 in cash. The transaction
was effected in reliance upon Rule 4(2) of the Securities Act.
During September 2000, the Company issued to Donna M. Santoro, wife of
Harry J. Santoro, President, Treasurer and a director of the Company, 30,000
shares of the Company's common stock for consideration of $15,000 in cash.
The transaction was effected in reliance upon Rule 4(2) of the Securities
Act.
ITEM 3 DEFAULTS ON 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
(a) Exhibits
Exhibit 27FDS - Financial Data Schedule
(b) Reports on Form 8-K
None
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<PAGE>
SIGNATURES
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.
APTA HOLDINGS, INC.
Dated: November 13, 2000 /s/ Harry J. Santoro
----------------------------------------
Harry J. Santoro
President, Chief Executive Officer and
Chief Financial Officer
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