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Previous: SCIENCE APPLICATIONS INTERNATIONAL CORP, S-3/A, 1997-11-19 |
Next: USF&G CORP, S-4/A, 1997-11-19 |
<PAGE>
FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Qtr. Ended: September 30, 1997 File No.: 2-72849-NY
IMN FINANCIAL CORP.
(formerly N G T Enterprises, Inc.)
(Exact name of registrant as specified in its charter)
DELAWARE 11-2558192
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
520 BROADHOLLOW ROAD MELVILLE NEW YORK 11746
(Address of principal executive offices)
(516) 844-9805
(Registrant's telephone number, including area code)
N G T ENTERPRISES, INC.
100 GARDEN CITY PLAZA SUITE 200 GARDEN CITY NEW YORK 11350
(Former Name or Former Address, 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 .
___
Indicate the number of shares outstanding of each of the registrant's classes of
stock as of
November 17, 1997:
Common stock, $.001 par value - 23,957,917 shares outstanding.
1
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS (Unaudited)
Condensed Consolidated Balance Sheets -
September 30, 1997 and September 30, 1996 3-4
Condensed Consolidated Statement of Income -
Nine Months Ended September 30, 1997 and 1996 5
Three Months Ended September 30, 1997 and 1996 6
Condensed Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1997 and 1996 7-8
Condensed Consolidated Statement of Stockholders Equity 9
Notes to Financial Statements 10-12
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS 13
PART II - OTHER INFORMATION 14
Exhibit 27 - Financial Data Schedule
Exhibit 99.1 - Proforma Condensed Consolidated Statement of
Income for the Nine Months
Ended September 30, 1997 and 1996
SIGNATURES 15
2
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
9/30/97 9/30/96
Unaudited Audited
------------ ---------
ASSETS
Cash $ 725,620 $ 0
Mortgage inventory 23,170,998
Points and fees receivable 671,113
Stock subscription receivable 4,894,488
Other current receivables 477,916
Marketable securities 5,000,000
Investments 660,293
Prepaid expenses 2,142,222
Property and equipment - net 989,6130 0
Mortgage receivable 2,290,574
Intangible assets - net 2,155,735
Other assets 91,869
------------ ---------
Total Assets $ 43,270,441 $ 0
------------ ---------
------------ ---------
3
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES & STOCKHOLDERS' EQUITY
9/30/97 9/30/96
Unaudited Audited
------------ -------------
LIABILITIES
Accounts payable and accrued expenses $ 2405,325 $ 0
Warehouse lines of credit 22,563,966
Borrowers escrow funds 306,930
Capital lease obligations 330,740
Due to related party 2,504,488
Deferred income 348,259
Other liabilities 966
------------ -------------
Total Liabilities 28,460,674 0
Stockholders' Equity
Preferred stock - authorized
5,000,000 shares
$.001 par value per share 0 0
Common stock - authorized 45,000,000
shares, $.001 par value per share,
the number of shares outstanding at
September 30, 1997 and
September 30, 1996 - 23,957,917 and
4,257,199, respectively. 2,396 426
Additional paid in capital 14,715,858 16,867
Retained earnings 91,513 (17,293)
------------ -------------
Total Stockholders' Equity 14,809,767 0
------------ -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 43,270,441 $ 0
------------ -------------
------------ -------------
4
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Nine Months Nine Months
Ended Ended
9/30/97 9/30/96
------------ -------------
OPERATING INCOME
Points, Fees and Premium Income $ 6,757,052 $ 0
Interest Income 702,909 0
------------ -------------
Total Operating Income 7,459,961 0
------------ -------------
OPERATING EXPENSES
Field and Direct Expenses 2,243,605 0
Interest Expense 693,035 0
------------ -------------
Total Operating Expenses 2,936,640 0
------------ -------------
Gross Profit 4,523,321 0
------------ -------------
General and Administrative Expenses 4,414,515 16,900
------------ -------------
Income (Loss) from Operations $ 108,806 $ (16,480)
Other Income (Expenses) 0 0
------------ -------------
Income (Loss) before Provision for
Income Taxes 108,806 (16,900)
------------ -------------
Provision for Income Taxes 0 0
------------ -------------
Net Income (Loss) $ 108,806 $ (16,900)
------------ -------------
------------ -------------
Weighted Average Number of Shares
Outstanding 10,115,928 3,931,199
Net Income per Share $ 0.0108 $ (0.0043)
------------ -------------
------------ -------------
5
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Three Months
Ended Ended
9/30/97 9/30/96
------------ -------------
OPERATING INCOME
Points, Fees and Premium Income $ 4,460,278 $ 0
Interest Income 552,771 0
------------ -------------
Total Operating Income 5,013,049 0
------------ -------------
OPERATING EXPENSES
Field and Direct Expenses 1,191,304 0
Interest Expense 521,555 0
------------ -------------
Total Operating Expenses 1,712,859 0
------------ -------------
Gross Profit 3,300,190 0
General and Administrative Expenses 3,399,907 0
------------ -------------
Income (Loss) from Operations (99,717) 0
Other Income (Expenses) 0 0
Income (Loss) before Provision for
Income Taxes (99,717) 0
Provision for Income Taxes 0 0
------------ -------------
Net Income (Loss) $ (99,717) $ 0
------------ -------------
------------ -------------
6
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Nine Months
Ended Ended
9/30/97 9/30/96
------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 108,806 $ (16,900)
Adjustments to reconcile net income
to net cash
provided by operating activities:
Amortization 67,882 0
Depreciation 50,632 0
Changes in assets and liabilities (1,076,102) 16,900
------------ ------------
Net cash provided (used) by operating
activities (848,782) 0
------------ ------------
Cash Flows From Investing Activities
Purchase of fixed assets (347,680) 0
Purchase of intangible assets (402,433) 0
Mortgages originated - net (124,537,793) 0
Mortgages sold 115,072,077 0
------------ ------------
Net cash provided (used) by investing
activities (10,215,829) 0
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 1,705,512 0
Advances from related parties 800,585 0
Proceeds from warehouse line
of credit 113,122,588 0
Repayments of warehouse line
of credit (103,962,756) 0
Collection of notes receivable 7,541 0
------------ ------------
Net cash provided by financing activities 11,673,470 0
------------ ------------
Net increase (decrease) in cash
and equivalents 608,859 0
Cash Balance at Beginning of Period 116,761 0
------------ ------------
Cash Balance at End of Period $ 725,620 $ 0
------------ ------------
------------ ------------
7
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Nine Months
Ended Ended
9/30/97 9/30/96
------------ ------------
SUPPLEMENTAL DISCLOSURES:
Interest expense $ 693,035 $ 0
------------ ------------
------------ ------------
Income taxes $ 0 $ 0
------------ ------------
------------ ------------
Assets acquired thru the issuance
of common
stock $5,971,042 $ 0
------------ ------------
------------ ------------
Equipment acquired thru capital lease
obligations $181,969 $ 0
8
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(Unaudited)
Common Common Additional
Stock Stock Paid-In Retained
Date (Shares) ($) Capital Earnings TOTAL
- ------- ---------- -------- ----------- ---------- -----------
10/1/93 3,930,926 $ 393 $ 0 $ (393) $ 0
9/30/94 273 0
---------- -------- ----------- ---------- -----------
3,931,199 393 0 (393) 0
9/30/96 326,000 33 16,867 16,900
9/30/96 Net loss (16,900) (16,900)
---------- -------- ----------- ---------- -----------
4,257,199 426 16,867 (17,293) 0
12/31/96 Net income 0 0
---------- -------- ----------- ---------- -----------
4,257,199 426 16,867 (17,293) 0
(1)5/05/97 (3,192,899) (319) 319 0 0
(2)5/05/97 20,221,700 2,022 7,173,020 0 7,175,042
(3)5/19/97 1,100,000 110 3,300,000 3,300,110
(4)6/04/97 200,000 20 (150,902) (150,882)
(3)6/24/97 1,100,000 110 3,300,000 3,300,110
(5)8/01/97 144,906 14 695,535 695,549
(6)9/16/97 110,344 11 331,021 331,032
(7)9/18/97 16,667 2 49,998 50,000
9/30/97 Net income 108,806 108,806
---------- -------- ----------- ---------- -----------
23,957,917 $2,396 $14,715,858 $ 91,513 $14,809,767
---------- -------- ----------- ---------- -----------
---------- -------- ----------- ---------- -----------
(1) Stock split preceding transaction #2 (below).
(2) Common shares issued, valued at $.21 per share (Note 3).
(3) Common shares issued, valued at $3.00 per share (Note 4).
(4) Common shares issued, valued at $5.00 per share.
(5) Common shares issued, valued at $4.80 per share (Note 3).
(6) Common shares issued, valued at $3.00 per share (Note 3).
(7) Common shares issued, valued at $3.00 per share (Note 3).
9
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information as set forth in Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. It should be noted that the Registrant was involved in a reverse
acquisition, as disclosed in Note 3 below, and that certain required
disclosures are included herein on the Company's Form 8-K, dated May 5, 1997.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
It should be noted that the Company has filed Form 8-K on May 5, 1997 and
August 1, 1997, respectively, relating to acquisitions subsequent to December
31, 1996 (Note 3). The Company has also filed Form 10-QSB for the quarters
ended March 31, 1997 and June 30, 1997, respectively. In addition, the
Company filed an additional Form 8-K on September 15, 1997 and a transitional
Form 10-QT dated December 31, 19965, as a result of changes in its certifying
accountant and fiscal year end, respectively. Any disclosures not contained
herein are contained in each of the above filings.
NOTE 2 - EARNINGS PER SHARE
Earnings per share have been computed on the basis of the total weighted
average number of shares outstanding at September 30, 1997.
September 30, September 30,
1997 1996
-------------- --------------
Number of shares outstanding
- Start Up Period 1,064,300 3,931,199
Increases of shares 22,893,617 0
-------------- --------------
Number of shares outstanding
- End of period 23,957,917 3,931,199
-------------- --------------
-------------- --------------
Weighted Average Number of Shares
Outstanding 10,115,928 3,931,199
-------------- --------------
-------------- --------------
10
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - ACQUISITIONS
On May 5, 1997, the Company acquired 100% of the outstanding common stock of
Donald Henig, Inc. ("DHI"), First Equities Commercial Corp. ("Commercial"),
First Equities Service Corp. ("Service") and holdings in the Aristocrat
Endeavor Fund from IMN Equities, Inc. for 20,221,700 shares of its common
stock. This item (a significant acquisition) is explained more fully, along
with financial and proforma information in the Company's 8-K-A, dated August
1, 1997, attached hereto.
On August 1, 1997, the Company acquired 100% of the outstanding common stock
of Green Shield Mortgage Corporation ("GSM"). In consideration for the
acquisition of GSM , the Company delivered to the principal of GSM: 1) One
hundred forty four thousand nine hundred six (144,906) shares of the
Company's common stock in the name of the principle; 2) the Belansen note
receivable as set forth on the December 31, 1996 financial statement of GSM,
valued at approximately one hundred forty seven thousand dollars ($147,000)
as of August 1, 1997; and 3) direct payment to the principal in the amount
of three hundred fifty thousand dollars ($350,000). This item (not a
significant acquisition) is explained more fully in the Company's 8-K-A,
dated August 1, 1997, attached hereto.
During the quarter ended September 30, 1997, the Company acquired three
additional corporations, which individually and collectively are not
significant acquisitions. In conjunction with these acquisitions, the Company
issued 127,011 shares of the company common stock as part of the purchase
price, along with other assets of $226,874.
NOTE 4 - CONSULTING ARRANGEMENT
In May of 1997, the Company entered into S-8 consulting agreements with
various companies. In exchange for certain consultation services, each
agreement called for the issuance of 1,100,000 options at $3.00. Both options
were exercised under a subscription agreement on May 19 and June 24, 1997,
respectively.
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options. Under APB 25,
because the exercise of the Company's stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized.
NOTE 5 - PROFORMA FINANCIAL STATEMENT
The proforma financial statement included herewith present the results of
operations as if the acquisition of DHI took place on the first day of the
current fiscal year.
11
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 - RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, The Financial Accounting Standards Board issued FASB
Statement No. 128, "Earnings Per Share." This new standard establishes
standards for computing and presenting earnings per share (EPS) and applies
to entities with publicly held common stock. FASB Statement No. 128
simplifies the standards for computing earnings per share previously found in
APB Opinion No. 15 and makes them comparable to international EPS standards.
It replaces the presentation of primary EPS with a presentation of basic EPS.
It also requires dual presentation of basic and diluted EPS on the face of
the statement of earnings for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the diluted
EPS computation. FASB Statement No. 128 is effective for financial statements
issued for periods ending December 15, 1997, and earlier application is not
permitted.
12
<PAGE>
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed consolidated
financial statements.
RESULTS OF OPERATIONS - SEPTEMBER 30, 1997 VS. SEPTEMBER 30, 1996
The increase of revenue, operating expenses, gross profit, general and
administrative expenses and net income (loss) for both the year ended September
30, 1997 and the three months ended September 30, 1997, verses the same periods
in 1996, are completely due to the acquisition by the Company of Donald Henig,
Inc., an active mortgage banker, in May of 1997, and other subsequent subsidiary
acquistions.
RESULTS OF OPERATIONS (PROFORMA) -SEPTEMBER 30, 1997 VS. SEPTEMBER 30, 1996
The increase of revenue, operating expenses, gross profit, general and
administrative expenses and net income (loss) for the proforma nine months ended
September 30, 1997, verses the proforma nine months ended September 30, 1996
was due to the Company's expansion program. Under this program, the Company
opened several new branch offices in New York State as well as expanding into
several new states.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that current operations will provide adequate cash flow to
meet current obligations. The Company has $4,894,488 in subscription receivables
and marketable securities of $5,000,000 as its present capital resources.
Management believes that these resources provide adequate working capital for
the Company.
13
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The exhibits filed as part of this report are listed below.
DESCRIPTION
a) Exhibits
1 Proforma Condensed Consolidated Statement of Income for the
Year Ended September 30, 1997 and 1996
27 Financial Data Schedule
b) Reports
* Form 8-K dated May 5, 1997
* Form 8-K-A dated August 1,1997
* Form 8-K dated September 16, 1997
* Form 10QSB - For the Quarter Ended March 31, 1997
* Form 10QSB - For the Quarter Ended June 30, 1997
Form 10QT - For the Transition Period October 1, 1996 to
* December 31, 1996
* Incorporated by reference.
14
<PAGE>
SIGNATURES
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.
IMN FINANCIAL CORP. AND SUBSIDIARIES.
Dated: November 17, 1997
/s/ EDWARD CAPUANO
_________________________________________
EDWARD CAPUANO - President, Principal
Executive Officer and Principal Financial
Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS CERTAIN SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS DATED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 725,620
<SECURITIES> 5,000,000
<RECEIVABLES> 5,372,404
<ALLOWANCES> 0
<INVENTORY> 23,170,998
<CURRENT-ASSETS> 37,742,650
<PP&E> 989,613
<DEPRECIATION> 0
<TOTAL-ASSETS> 43,270,441
<CURRENT-LIABILITIES> 28,460,674
<BONDS> 0
0
0
<COMMON> 2,641
<OTHER-SE> 14,807,126
<TOTAL-LIABILITY-AND-EQUITY> 43,270,441
<SALES> 0
<TOTAL-REVENUES> 7,459,961
<CGS> 0
<TOTAL-COSTS> 2,936,640
<OTHER-EXPENSES> 2,243,605
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 693,035
<INCOME-PRETAX> 108,806
<INCOME-TAX> 0
<INCOME-CONTINUING> 108,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,806
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
</TABLE>
<PAGE>
EXHIBIT 99.1
IMN FINANCIAL CORP. (FORMERLY N G T ENTERPRISES, INC.) AND SUBSIDIARIES
FORM 10 - Q (EXHIBIT 1)
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
------------ ------------
OPERATING INCOME
Points, Fees and Premium Income $9,618,790 $4,409,628
Interest Income 942,417 237,640
------------ ------------
Total Operating Income 10,561,207 4,647,268
------------ ------------
OPERATING EXPENSES
Field and Direct Expenses 3,562,484 3,134,461
Interest Expense 962,085 307,549
------------ ------------
Total Operating Expenses 4,524,569 3,442,010
------------ ------------
Gross Profit 6,036,638 1,205,258
------------ ------------
General and Administrative Expenses 6,221,717 1,098,778
------------ ------------
Income (Loss) from Operations (185,079) 106,480
Other Income (Expenses) 0 0
------------ ------------
Income (Loss) before Provision for
Income Taxes (185,079) 106,480
Provision for Income Taxes 0 59,454
------------ ------------
Net Income (Loss) $ (185,079) $ 47,026
------------ ------------
------------ ------------
Weighted Average Number of Shares
Outstanding 10,115,928 3,931,199
Net Income per Share $ (0.0183) $ 0.0120
------------ ------------
------------ ------------
16
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