U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number: 0-2664
INVESTORS FINANCE, INC.
(Name of small business issuer in its charter)
___________________
Hawaii 99-0112763
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 South Beretania Street, Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (808) 533-7437
___________________
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, no par value
(Title of class)
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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 [ ] No[ x ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ x ]
Issuer's revenues for its most recent fiscal year: $288,050.
Aggregate market value of the issuer's common stock held by non-affiliates
as of December 31, 1996: $543,751.
Number of shares outstanding of the issuer's common stock as of December 31,
1996: 1,252,246.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format (check one):
Yes [ x ] No [ ]
<PAGE>
PART I
Item 1. Description of Business
General
Investors Finance, Inc. (the "Company") is a Hawaii corporation engaged in the
business of mortgage brokerage and real estate, commercial, and consumer loans.
Total loan volume increased to $542,931 on December 31, 1996 compared to
$392,626 for December 31, 1995. Total mortgage brokerage commissions for 1996
were $187,035 compared to $198,250 for 1995.
The Company's executive offices are located at 50 South Beretania St.,
Honolulu HI 96813. The Company's phone number is (808) 533-7437.
Development of Business
The Company was organized under the laws of the State of Hawaii on September 15,
1960. On March 14, 1995, the Company entered into an "Assumption and Purchase
Agreement" to sell certain loans and assign deposit liabilities to Realty
Finance. The second phase of the plan was to request a cancellation of the
Company's affiliation with the FDIC. The FDIC approved the Company's request
on June 28, 1996.
Business
Management believes the consolidation of the business operations and focusing
on the resale of mortgage loans provides the shareholders with much lower costs
regarding legal and regulatory expenses.
Principal Products and Services
The principal services of the Company are the origination and resale of
Residential and Commercial mortgages. The Company continues to make
"in house" loans as funds are available.
Competition
The Mortgage originating business in the State of Hawaii is very competitive.
There are a number of Competitors within the state with substantial operating
histories and financial reserves. Management believes the Company can be
profitable by controlling expenses and operating with a low overhead.
Government Approvals and Regulations
The products and services provided by the Company are not subject to government
approval. The Company operating as an Industrial Loan Company and is regulated
by the State of Hawaii, Commissioner of Financial Institutions.
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Directors, Executive officers and Significant Employees
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Jerrold McClung 53 Chief Executive Officer,
Director, and Chairman of the Board
Wade Richardson 56 Secretary and Director
Daniel Jeffers 43 Treasurer, Director
Data Processing Consultant
Mike Monaco 32 Director,
President of San Diego Home Loan
Malcolm McCloud 55 Director, Partner Abel Appraisers
Karen Oani 43 Vice-President, Office Manager
</TABLE>
Directors and Officers received no remuneration for services during 1996 with
the exception of Ms. Oani, who received $23,400 as salary.
PART II
ITEM 1. Market Price and Dividends on the Company's Equity
and other Shareholder Matters.
Market Information
There has been only limited trading activity in the Company's common stock
during 1996. The following table sets forth quotes obtained from Abel Behnke
Corporation and listed in the Pacific Business News.
<TABLE>
<CAPTION>
Quarter Ended Bid Price
<S> <C>
March 31, 1996 37.5 cents
June 30, 1996 37.5 cents
October 31, 1996 37.5 cents
December 31, 1996 37.5 cents
</TABLE>
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Holders
The number of record holders of the Company's common stock as of December 31,
1996 was approximately 1,027.
Dividends
The Company has not paid dividends with respect to its common stock, and does
not intend to pay dividends in the foreseeable future. it is the present
intention of management to utilize all available funds for the development of
the Company's business.
Item 2. Legal Proceedings
To management's knowledge, the Company is not a party to any material pending
legal proceedings and is not aware of any material threatened legal proceedings.
Further, to the knowledge of management, no director, officer, affiliate or
record or beneficial owner of more than 5% of the common voting stock of the
Company is a party adverse to the Company or has a material adverse interest
to the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants.
The Company did not change nor have any disagreements with its principal
accountants.
Item 4. Submissions of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the security holders during the fourth
quarter ended December 31, 1996.
Item 5. Reports on Form 8-K.
In an effort to reduce its auditing expense, the Company solicited and received
an engagement letter from a local CPA, who, after further researching his
licensing requirements, informed the company that he would be unable to perform
the audit. The Company has attempted to re-engage its previous auditor,
Grant Thornton, who, although willing to perform the audit, has informed the
company that it would be unable to begin an audit until at least the 3rd quarter
of 1997 due to staffing limitations. In the meantime, the company is actively
seeking any other qualified auditing firm to perform the 1996 audit as
expediently as possible.
PART III
Financial Statements (unaudited)
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<TABLE>
<CAPTION>
INVESTORS FINANCE, INC.
STATEMENT OF INCOME & EXPENSE
AS OF: DECEMBER 31, 1996
FOR: ALL PROFIT CENTERS
--- DECEMBER, 1996 --- BUDG ----- YEAR TO DATE ---- PREV
ACTUAL BUDGET VAR ACTUAL BUDGET VAR
----------- ---------- >10% ----------- ---------- >10%
<S> <C> <C> <C> <C> <C> <C>
OPERATING INCOME
INTEREST INCOME:
EARNED INTEREST - CONSUMER LOANS 1,180 10,118
EARNED INTEREST - R.E. LOANS 3,106 35,300
EARNED INTEREST - COMMERCIAL LOANS 1,434 19,916
EARNED LATE CHARGES 164 3,609
LOAN ORIGINATION FEES 232 1,404
INTEREST ON INVESTMENTS 320 14,426
----------- ---------- ----------- ----------
6,436 84,773
LOSS ON INVESTMENTS (1,556) (1,556)
INTEREST EXPENSE (5)
----------- ---------- ----------- ----------
NET INTEREST SPREAD 4,880 83,213
OTHER INCOME:
COMMISSIONS EARNED 13,463 187,035
INCOME FROM CHARGED-OFF LOANS 877 14,763
INCOME FROM IDEAL FIN ACCTS 67
COMMISSION ON INSURANCE 53
MISCELLANEOUS INCOME 182 2,919
----------- ---------- ----------- ----------
19,402 288,050
----------- ---------- ----------- ----------
TOTAL OPERATING INCOME 19,402 288,050
OPERATING EXPENSES
PERSONNEL EXPENSES:
SALARIES & WAGES 1,905 44,460
SALARIES & WAGES-M/D COMMISSIONS 7,738 76,345
PAYROLL TAXES 737 7,956
EMPLOYEE BENEFITS 117 6,560
CONSULTANT'S EXPENSE (500)
----------- ---------- ----------- ----------
10,497 134,820
OCCUPANCY EXPENSES:
REAL PROPERTY - TAXES 190 2,263
DEPRECIATION EXPENSE 2,157 23,774
INSURANCE EXPENSE 828 8,924
RENT ON OFFICE SPACE 3,418 35,631
UTILITIES 347 3,753
MAINTENANCE & REPAIRS 918 10,678
PARKING EXPENSE 512
----------- ---------- ----------- ----------
7,859 85,534
(CONTINUED ON NEXT PAGE)
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<CAPTION>
INVESTORS FINANCE, INC.
STATEMENT OF INCOME & EXPENSE
AS OF: DECEMBER 31, 1996
FOR: ALL PROFIT CENTERS
--- DECEMBER, 1996 --- BUDG ----- YEAR TO DATE --- PREV
ACTUAL BUDGET VAR ACTUAL BUDGET VAR
----------- ---------- >10% ------------- ------- >10%
<S> <C> <C> <C> <C> <C> <C>
OTHER OPERATING EXPENSES:
SOH DCCA ASSESSMENT 248 1,417
F.D.I.C. ASSESSMENT 1,000
ADVERTISING EXPENSE 50 1,130
AUDITING EXPENSE (6,500) 16,045
CREDIT REPORTS 1,143
LEGAL FEES 2,606
POSTAGE EXPENSE 198 3,540
OFFICE EXPENSE 171 4,089
PRINTING & STATIONERY 159 1,048
LEASE RENTAL 25 25
COMPUTER EXPENSE 624 7,706
GOVERNMENT LICENSE FEES 8 242
BANK SERVICE CHARGES 150
BROKERAGE CHARGES 825
TELEPHONE 2,825 18,511
DUES/FEES - MORTGAGE DIVISION (439) 419
DUES/FEES - HEAD OFFICE 55 619
DONATIONS 545
SUBSCRIPTIONS - HEAD OFFICE 52
SUBSCRIPTIONS - MORTGAGE DEPT 1,981
TRAVEL & PER DIEM 105 1,332
COLLECTION FEES 32 419
PROMOTIONAL EXPENSE (87) 3,640
EXPENSES ON REPOSSESSED ITEMS 121
OTHER EXPENSE - (MISC.) (86) 640
OUTSIDE SERVICES 9,899 12,590
NOTARY EXPENSE 96
TITLE FEE - AUTO 40
----------- ---------- ----------- ----------
7,288 81,971
----------- ---------- ----------- ----------
TOTAL OPERATING EXPENSES 15,801 292,482
----------- ---------- ----------- ----------
NET INCOME (LOSS) FROM OPERATIONS (8,513) (14,275)
NON-OPERATING EXPENSES:
STOCKHOLDER'S EXPENSES:
STOCK TRANSFER AGENT 5,262
----------- ---------- ----------- ----------
5,262
----------- ---------- ----------- ----------
TOTAL NET INCOME (LOSS) (8,513) 0 (19,537) 0
=========== ========= ============ ==========
</TABLE>
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<TABLE>
<CAPTION>
INVESTORS FINANCE, INC.
KUKUI PLAZA SUITE C117B
50 SOUTH BERETANIA STREET
HONOLULU, HI 96813
COMPARATIVE BALANCE SHEET
AS OF: DECEMBER 31, 1996
ASSETS
CURRENT YEAR PRIOR YEAR
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
<S> <C> <C>
CASH - NON-INTEREST-BEARING 18,627.55 70,016.59
CASH IN INTEREST-BEARING ACCOUNTS 2,135.50 1,542.19
CASH IN BROKERAGE ACCOUNTS 13,479.63 10,874.99
CORPORATE SECURITIES 51,975.00
------------------ ------------------
86,217.68 82,433.77
RECEIVABLES:
NOTES RECEIVABLE 542,931.37 392,625.76
ACCOUNTS RECEIVABLE 43,668.39 2,048.65
COMMISSIONS ADVANCED-RECEIVABLE 2,898.83
LOAN LATE CHARGES RECEIVABLE 186.06 53.10
ACCRUED INCOME 7,609.45 3,515.21
------------------ ------------------
TOTAL RECEIVABLES: 597,294.10 398,242.72
LESS:
RESERVE FOR LOAN LOSSES (36,919.25) (40,660.87)
DEFERRED LOAN ORIGINATION FEES (2,747.12) (2,651.07)
DEFERRED LOAN ORIGINATION COSTS 459.85 504.67
------------------ ------------------
558,087.58 355,435.45
FURNITURE & FIXTURES 269,801.24 225,563.74
ALLOWANCE FOR DEPREC.- FURN. & FIXTURES (209,549.09) (192,110.24)
------------------ ------------------
60,252.15 33,453.50
REAL ESTATE - KUKUI PLAZA 322,337.10 322,337.10
RESERVE FOR DEPRECIATION - KUKUI PLAZA (90,025.08) (83,690.16)
------------------ ------------------
232,312.02 238,646.94
SECURITY DEPOSITS 3,040.13 2,662.00
PREPAID EXPENSE 4,649.47 5,076.03
------------------ ------------------
TOTAL ASSETS 944,559.03 717,707.69
================== ==================
<PAGE>
<CAPTION>
INVESTORS FINANCE, INC.
KUKUI PLAZA SUITE C117B
50 SOUTH BERETANIA STREET
HONOLULU, HI 96813
COMPARATIVE BALANCE SHEET
AS OF: DECEMBER 31, 1996
LIABILITIES
CURRENT YEAR PRIOR YEAR
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
<S> <C> <C>
NOTES PAYABLE - STOCKHOLDERS 382,884.35
CUSTOMER TRUST ACCOUNTS 5,031.35
OTHER ACCRUED LIABILITIES 17,923.77 787.55
------------------ ------------------
TOTAL LIABILITIES 400,808.12 5,818.90
EQUITY
CAPITAL STOCK NO-PAR 1,372,303.04 1,372,303.04
CAPITAL - TREASURY STOCK (148,601.00)
RETAINED EARNINGS (660,414.25) (660,414.25)
------------------ ------------------
563,287.79 711,888.79
NET INCOME/(LOSS) YEAR-TO-DATE (19,536.88)
------------------ ------------------
TOTAL EQUITY 543,750.91 711,888.79
------------------ ------------------
TOTAL LIABILITIES & EQUITY 944,559.03 717,707.69
================== ==================
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