FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: September 30, 2000
Commission file number: 000-28453
Ameri-First Financial Group, Inc.
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(exact name of registrant as specified in its charter)
Nevada 84-0849132
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(State of Incorporation) (IRS ID No.)
4514 Cole Avenue, Suite 806, Dallas, Texas 75205
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 214-599-9050
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 [ ].
Shares of common stock outstanding at September 30, 2000:
15,230,262
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements 1 - 7
Item 2. Managements's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II - OTHER INFORMATION 9
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<TABLE>
<CAPTION>
AMERI-FIRST FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2000 and December 31, 1999
ASSETS
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Sept 30, 2000 Dec 31, 1999
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 0 $ 0
Commission and other receivables 390,900 349,368
Deposits with clearing organizations 100,000 221,319
Securities owned 1,070,000 711,225
Investment receivable 205,000
Prepaid expenses 108,611 100,539
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Total current assets $ 1,874,511 $ 1,382,451
PROPERTY AND EQUIPMENT:
Property - real estate (net of $1,336,722 depreciation) 40,180,651 0
Furniture and fixtures 182,068 23,224
Vehicles 0 97,437
Computer system 12,758 10,512
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Total property and equipment 40,375,477 131,173
Accumulated depreciation (1,346,618) (12,191)
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Total property and equipment, net of depreciation 39,028,859 118,982
OTHER ASSETS: (11,207)
Goodwill (net of $4,214 amortization) 164,319
Deposits 1,000,000
Other assets 149,900 11,500
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Total other assets 1,303,012 11,500
TOTAL ASSETS $ 42,206,382 $ 1,512,933
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES
Bank overdraft $ 0 $ 12,142
Accounts payable and accrued expenses 571,093 575,240
Payable to clearing organizations 662 735,750
Payable to hotel operator 173,787
Current portion of notes payable 14,441
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Total current liabilities 745,542 1,337,573
LONG TERM LIABILITIES
Notes payable 22,692,601 1,255,280
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TOTAL LIABILITIES 23,438,143 2,592,853
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value 15,230 4,706
Additional paid-in-capital 28,625,950 8,138,559
Retained deficit (9,872,941) (9,223,185)
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Total Stockholders' Equity 18,768,239 (1,079,920)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 42,206,382 $ 1,512,933
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</TABLE>
1
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AMERI-FIRST FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended September 30, 2000 and 1999
Three months Three months
ended ended
Sept 30, 2000 Sept 30, 1999
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Revenue $ 1,231,341 $ 66,084
Operating expenses:
Selling expenses 15,918 19,845
Operating expenses 1,445,627
Depreciation and amortization 1,340,770
General and administrative 286,781 207,043
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Total Operating Expense 3,089,096 226,888
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Net operating income (1,857,755) (160,804)
Other income (expense):
Other income 55,781
Interest income 14,545 566
Interest expense (181,653) (10,458)
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Net income (1,969,082) (170,696)
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Weighted average shares outstanding 11,784,382 4,706,114
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INCOME (LOSS) PER SHARE ($0.17) ($0.04)
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2
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<TABLE>
<CAPTION>
AMERI-FIRST FINANCIAL GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
December 31, 1999 to September 30, 2000
Common Paid In Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1999 4,706,114 4,706 7,584,976 (9,223,165) (1,633,483)
Shares issued for 100% of
Ameri-First Securities Corp. 1,890,002 1,890 943,154 945,044
Shares issued for 100% of
Itronics Comm. Corp. 50,000 50 50
Paid in capital by shareholder 261,173 261,173
Shares issued for hotel
properties 4,500,000 4,500 16,452,901 16,457,401
Net income - three months:
ended March 31, 2000 389,509 389,509
ended June 30, 2000 929,797 929,797
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Balance
June 30, 2000 11,146,116 11,146 25,242,204 (7,903,859) 17,349,491
Shares issued for:
Services 150,000 150 14,850 15,000
Purchase hotel properties 448,718 449 699,551 700,000
Debt - related party 2,434,000 2,434 1,670,396 1,672,830
Deposit on purchase of
broker dealers 1,051,428 1,051 998,949 1,000,000
Net income - three months:
ended September 30, 2000 (1,969,082) (1,969,082)
----------- ----------- ----------- ----------- -----------
Balance
September 30, 2000 15,230,262 15,230 28,625,950 (9,872,941) 18,768,239
=========== =========== =========== =========== ===========
</TABLE>
3
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<TABLE>
<CAPTION>
AMERI-FIRST FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended September 30, 2000 and 1999
Three months Three months
ended ended
Sept 30, 2000 Sept 30, 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,969,082) ($170,696)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Items not requiring cash - depreciation and amortization 1,340,770
issue stock for services 15,000 23,000
(Increase) decrease in current assets 1,031,200 (50,452)
Increase (decrease) in current liabilities (171,560) 37,431
(Increase) decrease in other assets (58,346)
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NET CASH (USED) BY OPERATING ACTIVITIES 187,982 (160,717)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (6,305,151) 0
Disposal of fixed assets (net)
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NET CASH FROM INVESTING ACTIVITIES (6,305,151) 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock
Issuance of common stock for assets 700,000
Issuance of common stock for debt 1,672,830
Capital contributed by shareholder 164,600
Increase (decrease) in notes payable 3,742,172
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NET CASH FROM FINANCING ACTIVITIES 6,115,002 164,600
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NET INCREASE IN CASH ($2,167) $ 3,883
CASH, BEGINNING OF PERIOD (9,051) (12,132)
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CASH, END OF PERIOD ($11,218) ($8,249)
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</TABLE>
4
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Ameri-First Financial Group, Inc.
(Formerly Itronics Communications Corporation)
Notes to Consolidated Financial Statements
September 30, 2000
(1) Summary of Significant Accounting Policies and Practices
(a) General
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Ameri-First Financial Group, Inc. and subsidiaries (the Company) is
engaged in investment banking and securities business. In January 2000, the
Company purchased Ameri-First Securities, Inc., an NASD registered broker
dealer.
(b) Principles of Consolidation
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The consolidated financial statements include the financial statements
of Ameri-First Financial Group, Inc. and its related subsidiaries. All
significant intercompany balances have been eliminated in consolidation.
(c) Cash Equivalents
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For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.
(d) Revenue Recognition
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Revenue is recognized upon shipment of product. Allowances for
estimated returns and discounts are provided when the related revenue is
recorded.
(e) Inventories
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Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.
(f) Property and Equipment
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Property and equipment are stated at cost. Depreciation of plant and
equipment is calculated on the straight-line method over the estimated useful
lives of the assets.
(g) Income Taxes
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Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
5
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Ameri-First Financial Group, Inc.
(Formerly Itronics Communications Corporation)
Notes to Consolidated Financial Statements
September 30, 2000
(2) Summary of Significant Accounting Policies and Practices (con't)
(h) Income (loss) per Share
-----------------------
Basic net income (loss) per share is based on the weighted average
number of actual shares outstanding during the period. Options to purchase
common stock are included in the calculation of income (loss) per share provided
their impact is not dilutive. As of September 30, 2000, no stock option plan was
in place, and therefore, no stock options or other common stock equivalent
instruments have been issued.
(2) Acquisitions
In January 2000, the Company purchased 100% of the outstanding stock of
Ameri-First Securities, Inc. for the issuance of 1,890,002 shares of newly
issued restricted common stock.. The acquisition was accounted for as a
purchase.
In March 2000, the Company purchased 100% of the outstanding stock of
Itronics Communications Corporation for the issuance of 50,000 shares of newly
issued restricted common stock.. The acquisition was accounted for as a
purchase.
In June 2000, the Company purchased five hotels. In August 2000, the
Company purchased three hotels.
(3) Notes Payable to Shareholders
Notes payable to shareholders at September 30, 2000 consist of the following:
Various notes payable to shareholder, principal due on demand, interest at 10%
due monthly, secured by equipment and receivables of the Company. $ 1,255,000
6
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Ameri-First Financial Group, Inc.
(Formerly Itronics Communications Corporation)
Notes to Consolidated Financial Statements
September 30, 2000
(4) Income Taxes
As of June 30, 1999 and 1998, the Company has Federal tax loss carryforwards of
approximately $9,000,000 and $196,000 respectively.
The future tax benefits of the net operating loss carryforwards have not been
recognized since their realization is dependent upon the Company's ability to
generate future earnings.
Due to the uncertainty of the Company's ability to generate future earnings, the
Company has established offsetting deferred tax assets (generated from the
aforementioned tax loss carryforwards) and related valuation allowances.
7
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Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The Company is engaged in the securities business and investment
banking and through its subsidiary, Ameri-First Securities, Inc., which is a
full service NASD registered broker/dealer.
The Company's liquid position at September 30, 2000 was $1,987,683,
which represented a decrease of $1,289,165 over the prior quarter. Most of this
increase came from the stock it received from an investment banking
transaction(s) whose market value at June 30, 2000 was $1,800,000. The increase
in the working capital position represents an increase of 184%. The income also
was $0.14 per share which compares to prior periods when there was always
losses.
In the quarter ended September 30, 2000, the Company purchased three
hotels for which it paid $34,000,000. This amount was paid with $450,000 cash,
$17,262,000 in assumed debt and issued 448,718 newly issued restricted common
stock of the company. Under the agreement of purchase, HomeGate Corporation will
operate the hotels for a management fee.
The Company is currently negotiating the sale of its hotels at a profit
and plans to concentrate on its securities and investment banking business.
8
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not involved in any legal proceedings.
Item 2. Changes in Securities.
Registrant has made no changes in its securities.
Item 3. Defaults Upon Senior Securities.
Registrant has no senior securities and accordingly no defaults.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were presented to a vote of security holders.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
9
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Ameri-First Financial Group, Inc.
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(Registrant)
BY: /s/ Jeffrey Bruteyn
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Jeffrey Bruteyn
Its: President
DATE: November 17, 2000
Dallas, Texas
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