<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- -----
Exchange Act of 1934
For the quarterly period ended March 31, 1997
- ----- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
---------------------- ----------------------
Commission File Number 0-8628
--------------------------------------------------------
FOUR CORNERS FINANCIAL CORPORATION (as of April 12, 1988)
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2044086
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 East Avenue, Rochester, New York 14604
- -------------------------------------------------------------------------------
(Address of principal executive offices - Zip Code)
(716) 454-2263
- -------------------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
At May 9, 1997 there were 3,293,733 of the registrant's $.04 par value common
stock outstanding.
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of 1-2
March 31, 1997 (Unaudited) and
December 31, 1996
Consolidated Statements of Operations for the 3
Three Months Ended March 31, 1997 and 1996
(Unaudited)
Consolidated Statements of Changes in 4
Stockholders' Investment for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)
Consolidated Statements of Cash Flows for the 5
Three Months Ended March 31, 1997 and 1996
(Unaudited)
Notes to Condensed Consolidated Financial 6-12
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 13-14
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Default Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of 15
Security Holders
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 18,355 $ 36,612
Cash - escrow deposits 113,234 74,540
Accounts receivable - trade, net of
allowance for doubtful accounts of $84,000
in 1997 and 1996 493,396 510,762
Prepaid expenses 3,327 5,914
Other receivables 5,564 ---
Current portion of note receivable 7,500 7,500
Income tax receivable --- ---
---------- ----------
Total current assets 641,376 635,328
---------- ----------
TITLE PLANT 419,905 419,905
---------- ----------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 125,146 142,523
---------- ----------
OTHER ASSETS:
Note receivable, net of current portion --- ---
Cash value of life insurance 18,618 18,618
Other assets 6,377 8,760
---------- ----------
24,995 27,378
---------- ----------
$1,211,422 $1,225,134
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 1 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Line-of-credit $ 50,000 $ 50,000
Current portion of notes payable 95,552 97,050
Current portion of obligations under
capital leases --- ---
Notes payable to officers/principal
stockholders 18,000 18,000
Accounts payable 488,306 425,697
Accounts payable - related parties 28,761 21,400
Escrow deposits 113,234 74,540
Accrued income taxes 1,500 1,500
Other accrued expenses 32,246 63,953
---------- ----------
Total current liabilities 827,599 752,140
---------- ----------
LONG-TERM LIABILITIES:
Notes payable, net of current portion 116,423 140,171
Obligations under capital leases, net
of current portion --- ---
Due to officer/principal stockholder 212,000 216,500
---------- ----------
Total long-term liabilities 328,423 356,671
---------- ----------
Total liabilities 1,156,022 1,108,811
---------- ----------
STOCKHOLDERS' INVESTMENT:
Common stock, $.04 par value, 15,000,000
shares authorized, 3,348,733 issued and
3,293,733 outstanding in 1997 and 1996 133,752 133,752
Additional paid-in-capital 835,402 835,402
Accumulated deficit (883,129) (822,206)
----------- ----------
86,025 146,948
Less: Treasury stock at cost (30,625) (30,625)
---------- ----------
Total stockholders' investment 55,400 116,323
---------- ----------
$1,211,422 $1,225,134
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 2 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUE:
Title insurance premiums $ 243,400 $ 340,293
Abstract and appraisal fees 541,049 548,441
---------- ----------
784,449 888,734
---------- ----------
DIRECT COSTS OF REVENUE:
Title insurance (68,572) (116,128)
Abstract and appraisal services (91,856) (85,993)
---------- -----------
(160,418) (202,121)
---------- -----------
Gross profit 624,031 686,613
OPERATING EXPENSES: (671,330) (707,159)
---------- ----------
Loss from operations (47,299) (20,546)
---------- ----------
INTEREST, NET: (13,624) (15,374)
---------- ----------
NET LOSS $ (60,923) $ (35,920)
========== ==========
NET LOSS PER SHARE $ (.02) $ (.01)
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 3-
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' INVESTMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
----- Common Stock ----- Additional Total
Paid-in- Accumulated Treasury Stockholders'
Shares Amount Capital Deficit Stock Investment
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 3,343,802 $ 133,752 $ 835,402 $(907,924) $ (5,625) $ 55,605
Net loss for the three months ended
March 31, 1996 (Unaudited) -- -- -- (35,920) -- (35,920)
--------- --------- --------- --------- --------- ---------
BALANCE, March 31, 1996 (Unaudited) 3,343,802 $ 133,752 $ 835,402 $(943,844) $ (5,625) $ 19,685
========= ========= ========= ========= ========= =========
BALANCE, December 31, 1996 3,293,733 $ 133,752 $ 835,402 $(822,206) $ (30,625) $ 116,323
Net loss for the three months ended
March 31, 1997 (Unaudited) -- -- -- (60,923) -- (60,923)
--------- --------- --------- --------- --------- ---------
BALANCE, March 31, 1997 (Unaudited) 3,293,733 $ 133,752 $ 835,402 $(883,129) $ (30,625) $ 55,400
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 4 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(Unaudited) (Unaudited)
- - - - - - - - - - - - - -
<S> <C> <C>
CASH FLOW OPERATING ACTIVITIES:
Net loss $ (60,923) $ (35,920)
Adjustments to reconcile net loss to
net cash flow from operating activities:
Depreciation and amortization 17,377 21,131
Decrease/(increase) in accounts receivable 17,366 (23,890)
Decrease/(increase) in other current assets (2,977) 5,200
Increase in accounts payable 69,970 60,483
Decrease in other current liabilities (31,707) (19,314)
----------- -----------
Net cash flow from operating activities 9,106 7,690
----------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment,
net of disposals --- (3,323)
Decrease in other assets 2,383 ---
---------- ----------
Net cash flow from investing activities 2,383 (3,323)
---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Decrease in notes payable, net (25,246) (27,002)
Decrease in obligations under
capital leases, net --- (10,934)
Increase in line-of-credit --- ---
Decrease in amount due to
officer/principal stockholder (4,500) (4,500)
----------- -----------
Net cash flow from financing activities (29,746) (42,436)
----------- -----------
NET DECREASE IN CASH AND EQUIVALENTS: (18,257) (38,069)
CASH AND EQUIVALENTS - beginning of period 36,612 62,791
---------- ----------
CASH AND EQUIVALENTS - end of period $ 18,355 $ 24,722
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
- 5 -
<PAGE>
FOUR CORNERS FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(Unaudited)
(1) General
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate in order that
the information presented is not misleading. All adjustments for a
fair presentation of financial information contained herein have been
made.
(2) Organization
The Company -
Four Corners Financial Corporation (FCFC) and its Subsidiaries, Four
Corners Abstract Corporation (FCAC) and Proper Appraisal Specialists,
Inc. provide services and products including real estate title
searching, preparation of abstracts of title, issuance of title
insurance as an agent for certain national underwriting companies and
real estate appraisals, primarily in western and central New York
State. All of these services and products are required in connection
with the mortgaging, sale or purchase of real property.
Unless otherwise indicated, the term "Company" refers to Four Corners
Financial Corp. and its Subsidiaries. The Company operates in one
business segment.
(3) Summary of Significant Accounting Policies
Principles of Consolidation -
The consolidated financial statements include the accounts of FCFC and
all of its subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Cash and Equivalents -
Cash and equivalents include time deposits and other instruments with
a maturity of three months or less at the time of purchase. The
Company maintains cash balances at several banks. Accounts at each
institution are insured by The Federal Deposit Insurance Corporation
up to $100,000.
- 6 -
<PAGE>
(3) Summary of Significant Accounting Policies (Continued)
Property and Equipment -
Property and equipment is stated at cost and is depreciated using
accelerated and straight-line methods over the following useful lives:
Buildings 15 - 31.5 years
Furniture and Equipment 3 - 10 years
Vehicles 5 years
Leasehold Improvements Life of lease
At the time of retirement or other disposition of property, the cost
and accumulated depreciation are removed from the accounts and any
gain or loss is reflected in the statements of operations. Repairs and
maintenance costs are charged to expense when incurred.
Intangible Assets -
Intangible assets consist of goodwill and covenants not-to-compete
resulting from the 1987 acquisition of the Albany branch, the 1989
acquisition of Livingston Abstract Corporation, the 1990 acquisition
of Picciano Abstract Company, Inc. and the 1991 acquisition of Proper
Appraisal Specialists, Inc. These assets were fully amortized during
1995.
Title Plant -
Title plant consists of copies of public records, maps and other
relevant historical documents which facilitate the preparation of
title abstract reports without the necessity of manually searching
official public records.
The Company has incurred identifiable costs related to the activities
necessary to construct a title plant which are reflected as assets. A
title plant is regarded as a tangible asset having an indefinite
economic life; accordingly, title plant costs are not depreciated.
Revenue Recognition -
Title insurance is provided to purchasers or financiers of real
property purchases. The related revenue is recognized when policies
become effective, generally at the property or mortgage loan closing.
Under terms of the Company's agreements with its title insurance
underwriters, a commission of 15% to 20% is paid to its underwriter on
all title insurance policies written. Pricing is based on a rate
schedule established by the Insurance Department of the State of New
York which provides for varying rates for services rendered.
Commission expense is reflected as a direct cost of title insurance
revenue in the statement of operations.
- 7 -
<PAGE>
(3) Summary of Significant Accounting Policies (Continued)
Revenue Recognition - (Continued)
The Company also performs title abstract research and provides
appraisals on real properties under an exclusive arrangement with a
local appraisal company. Abstract and appraisal revenue is recognized
as earned. Direct costs of abstract and appraisal revenue reflects the
cost of work performed by subcontractors in geographical areas where
the Company does not maintain an office, among other direct costs.
(4) Acquisitions
The Company acquired Proper Appraisal Specialists, Inc. (1991),
Picciano Abstract Company, Inc. (1990), Livingston Abstract
Corporation (1989) and Mid-State (1988) for cash, notes and common
stock totalling approximately $185,000. These acquisitions were
accounted for as purchases. Goodwill, representing the excess of
purchase price over the fair value of tangible assets acquired related
to these acquisitions, totalled approximately $66,000 and is being
amortized over five years. These companies were subsequently merged
into FCAC.
(5) Income Taxes
During 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes". SFAS 109
requires an asset and a liability approach to measuring deferred
income taxes. Previous standards required an income statement
approach.
There were no material temporary differences at December 31, 1996 or
at March 31, 1997. Therefore, no deferred taxes have been provided.
At December 31, 1996, the Company has available a net operating loss
carry-forward of approximately $202,000, which begins to expire in
2002. The Company has recorded a valuation allowance equal to the
deferred tax asset related to the carryforward.
(6) Escrow Deposits
As a service to its customers, FCAC administers escrow deposits
representing undisbursed amounts received for settlements of mortgage
loans or property sales and indemnities against specific title risks.
These funds, totalling $113,234 and $74,540 at March 31, 1997 and
December 31, 1996, respectively, are recorded as both a current asset
and a current liability in the accompanying consolidated balance
sheets.
- 8 -
<PAGE>
(7) Notes Payable and Obligations Under Capital Leases
Notes Payable -
On December 13, 1995, the amount outstanding on the note payable to a
bank, $133,333, and $185,000 of the amount borrowed under its
line-of-credit agreement were refinanced with the same bank. The note
payable and line-of-credit have been classified in accordance with the
new agreement as of December 31, 1996. The note payable to the bank
requires the company to meet certain financial covenants at December
31, 1996 as follows:
a. Working capital of at least $20,000
b. Current ratio of 1.1 to 1
c. Minimum tangible net worth of at least $400,000
d. Total liabilities to tangible net worth of not more than 1.9 to 1.
e. Net income before taxes of $110,000, and
f. Debt service ratio of not less than 1.75 to 1.
The agreement also limits the Company's ability to make acquisitions,
pay dividends and make capital expenditures, and requires the Company
to submit certain financial information. At December 31, 1996 the
Company was not in compliance with certain of the covenants.
Subsequent to year end, the Company obtained a waiver from the bank
for these covenants as of December 31, 1996.
Notes payable consisted of the following:
March 31, December 31,
1997 1996
--------- ------------
Note payable to Marine Midland Bank, due
in monthly installments of $7,674
through October, 1997 and $6,230 through
October, 1999 plus interest at the
bank's prime rate plus 1.25%. This note
is guaranteed by the officers/
stock-holders of the Company and is
collateralized by substantially all of
the Company's assets. $ 203,229 $ 226,250
Various notes payable in aggregate
monthly installments of $835 and $550
for December 1996 and March 1997
respectively, including interest at
rates ranging from 8% to 9%. These notes
mature through June, 1997 and are
collateralized by the related equipment. 8,746 10,971
---------- ----------
211,975 237,221
Less: Current Portion (95,552) (97,050)
---------- ----------
$ 116,423 $ 140,171
========== ==========
- 9 -
<PAGE>
(8) Lines-of-Credit
The Company may borrow up to $50,000 under the terms of a
line-of-credit agreement with a bank through October 31, 1997. Amounts
borrowed bear interest at the bank's prime interest rate plus 1% and
are collateralized by substantially all assets of the Company and are
guaranteed by the officers/stockholders of the Company. At December
31, 1996 and March 31, 1997, there was $50,000 outstanding under this
line-of-credit.
The Company may also borrow up to $100,000 under the terms of an
unsecured line-of-credit with another bank. Amounts borrowed bear
interest at the bank's prime rate plus 1%. Borrowings under this
line-of-credit are personally guaranteed by the Company's principal
officer/stockholder. At March 31, 1997 and December 31, 1996, there
were no borrowings on this line-of-credit.
(9) Stockholders' Investment
Stock Options -
In July, 1992, the Company's Board of Directors adopted and the
stockholders approved the 1992 Stock Option Plan (1992 Plan) which
replaced the 1988 Stock Incentive Plan (1988 Plan).
Under the 1992 Plan, the Company may issue incentive stock options,
non-statutory options, non-employee director options and reload
options. The exercise price of incentive, non-statutory and reload
options will not be less than fair market value at date of grant.
Incentive and non-statutory options will generally expire ten years
from date of grant. Reload options will have a term equal to the
remaining option term of the underlying option.
The 1992 Plan also provides for annual grants of stock options to
purchase 500 shares of the Company's common stock to non-employee
directors of the Company with an exercise price not less than fair
market value at date of grant. These options will expire ten years
from date of grant.
Options issued under the 1992 and 1988 Plans expire in 1995. No
further options will be granted under the 1988 Plan.
The Company has reserved 647,500 common shares for issuance under the
1992 plan.
At March 31, 1997 and December 31, 1996, there were 271,000 options
outstanding under the 1992 and 1988 Plans.
- 10 -
<PAGE>
(10) Related Party Transactions
Due to Officers/Principal Stockholders -
During 1996, 1995 and 1994, one of the Company's principal officers/
stock-holders made advances to the Company. These advances bear
interest at the prime rate plus 3% and repayment is subordinated to
the amounts outstanding under all other bank debt agreements.
Principal repayment is scheduled for $18,000 per year.
At March 31, 1997 and December 31, 1996, the amount outstanding on
this debt was $230,000 and $234,500 respectively.
Note Payable to Officers/Principal Stockholders -
At March 31, 1997 and December 31, 1996 the Company owed approximately
$2,800 and $3,300 respectively to a law firm for which the Company's
principal stockholder is a partner for legal fees paid on behalf of
the Company. These amounts have been included in accounts payable for
these periods.
Office Lease Commitment -
The Company leases its Rochester facility from a party related through
common management. The Company has a five year lease agreement through
June 30, 2000 at an annual rental of $72,000. Rent and common area
charges were approximately $72,000, $72,000 and $58,000 in 1996, 1995
and 1994, respectively. The Company owed approximately $20,000 for
unpaid rent at March 31, 1997 and December 31, 1996. During 1994,
total unpaid rent of $109,000 was forgiven by the related party. This
amount has been reflected as an extraordinary item, net of income
taxes, of $44,000.
Significant Customer -
In 1996, 1995 and 1994, 4% of revenue was derived from a related
party.
(11) Lease Commitments
FCAC leases other office facilities under lease agreements expiring
through December, 2000.
Minimum lease payments under non-cancelable lease agreements are as
follows at December 31, 1996:
1997........................................ 71,313
1998........................................ 55,564
1999........................................ 11,036
2000........................................ 5,903
--------
$143,816
========
- 11 -
<PAGE>
Rent expense related to these operating leases was approximately
$121,000, $124,000 and $135,000 for the years ended December 31, 1996,
1995 and 1994, respectively.
(12) Reverse Stock Split
In July, 1992, the Company's stockholders approved a one-for-four
reverse stock split. In conjunction with this reverse stock split, the
authorized number of shares was reduced to 15,000,000 and par value
was increased to $.04 per share. These actions have been retroactively
reflected in the financial statements.
- 12 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Company's cash flow results from operations, bank loans, advances made by
principal stockholders and from sales of common stock.
During the first three months of 1997, cash reserves of $36,612, cash flow from
operating activities of $9,106 and investing activity cash flow of $2,383 were
sufficient to fund a negative cash flow from debt financing activities of
$29,746.
Cash Flow from Operations: The Company had positive cash flow from operating
activities through the first three months of 1997 of $9,106 compared to $7,690
for the same period in 1996. The slight increase in total operating cash flow
was primarily due to an increase in accounts payable of $69,970 offset by a
greater net loss of $60,923.
Cash Flow from Investing Activities: There were no capital expenditures
incurred by the Company during the first three months of 1997 related to
capital improvements for the Rochester corporate office building. The Company
made no title plant investment during the first quarter of 1997. In addition,
the Company maintains an investment in a Keyman life insurance policy with a
cash surrender value of $18,618 as of the end of the first quarter. At March,
31, 1997, the Company had no material purchase commitments.
Cash Flow from Financing Activities: Primary cash flows from financing
activities relate to changes in financing under lines-of-credit, notes payable
and advances made by principal stockholders. Despite the effort to support the
ongoing operations during the first quarter of 1997, the Company was able to
repay a portion of its borrowings from its principal officer/stockholder by
$4,500. Additional borrowings of $25,246 were repaid during the same period of
the 1997 calendar year. Approximately the same amounts were repaid for the same
period of the previous year. This negative cash flow was adequately funded
through positive operating and investing cash flows as well as the cash reserve
available at the beginning of 1997.
The Company expects that the cash flow generated from operations and bank
lines-of-credit currently available will be adequate to meet its working
capital and capital expenditure needs for the remainder of 1997.
- 13 -
<PAGE>
Results of Operations
Total revenues for the first three months of 1997 were $784,449 as compared to
$888,734 for the same three month period of 1996. This decrease of $104,285 or
12% resulted from a continued decrease in sales order volume resulting from
weak economic conditions (slightly higher interest rates on mortgage loans).
The revenues generated from title insurance premiums decreased by 28% to
$243,400 as compared to $340,293 for the first quarter of the 1996 calendar
year. Despite this sizable decrease associated with title operations, revenues
from abstract and appraisal fees during the first three months of 1997 remained
relatively stable at $541,049 as compared to $548,441 for the same period in
1996.
Due to the increased sales order volume in areas where the Company does
business, as well as a reduction in internal staffing the need for
subcontractor services for abstract and appraisal orders escalated during the
first three months of 1997. This increase however was offset by the large
decrease in direct costs relating to title insurance. Accordingly, total direct
costs of revenues decreased by 20% from $202,121 in 1996 to $160,418 in 1997.
Correspondingly, direct costs of revenue increased to 22.7% of revenues for
this time period of 1996. As a result of a decrease in revenue, gross profit
for the quarter ended March 31, 1997 was $624,031 or 79.6% of revenues as
compared to $686,613 or 77.3% for the first quarter of 1996. Operating expenses
for the quarter ended March 31, 1997 were $671,330 as compared to $707,159 for
the same period of 1996. The reduction in operating expenses is primarily due
to a sizeable decrease in personnel and the related variable payroll costs. The
Company anticipates an increase in revenues during the remaining quarters of
1997 and a corresponding percentage reduction in operating costs sufficient to
offset the net loss incurred during the first quarter of 1997 of $60,923 and to
return the company to profitability by year end 1997. Despite a significant
drop in revenue, the net loss in the first quarter 1997 is modestly higher than
the $35,920 loss shown in the same period in 1996.
The Company's ratio of current assets to current liabilities at March 31, 1997
and December 31, 1996 was .78:1 and .84:1, respectively. Accordingly, the
Company had a working capital deficit of $186,223 as of March 31, 1997 compared
to $116,812 as of December 31, 1996.
- 14 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default 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
a. Exhibits
None
b. Reports on Form 8-K
None
- 15 -
<PAGE>
SIGNATURE
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.
FOUR CORNERS FINANCIAL CORPORATION
Date May 14, 1997 By /s/ William S. Gagliano
------------------------ ---------------------------------
William S. Gagliano
Executive Vice President and
Chief Accounting Officer
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 18,355
<SECURITIES> 0
<RECEIVABLES> 577,396
<ALLOWANCES> 84,000
<INVENTORY> 0
<CURRENT-ASSETS> 641,376
<PP&E> 1,047,116
<DEPRECIATION> 921,970
<TOTAL-ASSETS> 1,211,422
<CURRENT-LIABILITIES> 827,599
<BONDS> 0
0
0
<COMMON> 133,752
<OTHER-SE> (78,352)
<TOTAL-LIABILITY-AND-EQUITY> 1,211,422
<SALES> 784,449
<TOTAL-REVENUES> 784,449
<CGS> 160,418
<TOTAL-COSTS> 671,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,624
<INCOME-PRETAX> (60,923)
<INCOME-TAX> 0
<INCOME-CONTINUING> (60,923)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,923)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
