SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JUNE 30, 1998 Commission File 2-77085
----------------- -------
SOUTHWARD VENTURES DEPOSITARY TRUST
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 59-6737200
- ------------------------------- ----------------------------------
(State or other Jurisdiction of IRS Employer Identification Number
Incorporation or Organization)
c/o Gino J. DiMarco, Trustee
2900 High Ridge Road
Boynton Beach, Florida 33426
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (561) 582-2755
--------------------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed since Last Report)
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be fled 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 at each of the issuer's classes of
common stock, as of the close of the period covered by this report:
CLASS OUTSTANDING JUNE 30, 1998
- --------- -------------------------
Unit of Beneficial Interest, 26,675 (does not include those units
No Par Value of beneficial interest that were
subsequently presented for exchange
prior to the exchange program
termination date of July 25, 1998)
<PAGE>
SOUTHWARD VENTURES DEPOSITARY TRUST
INDEX
-----
PART I: PAGE NO.:
- ------- ---------
Financial Statements (Rider A) 5
PART II:
Other Information
Items 1 through 9 3
PART III:
Signature Page 4
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. CHANGES IN SECURITY FOR REGISTERED SECURITIES.
None.
Item 4. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 5. INCREASE IN AMOUNT OF OUTSTANDING SECURITIES OR INDEBTEDNESS.
None.
Item 6. DECREASE IN AMOUNT OF OUTSTANDING SECURITIES OR INDEBTEDNESS.
On July 25, 1998 the exchange program for outstanding units was
terminated. As of July 1, 1998 there were 26,675 new units outstanding that were
held by 120 unitholders. As of the same date, there were 237,135 old units
outstanding that were held by 405 unitholders.
Item 7. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 8. OTHER MATERIALLY IMPORTANT EVENTS.
None.
Item 9. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS:
27 Financial Data Schedule
B. REPORTS ON FORM 8-K:
On June 19, 1998, the Registrant filed a Form 8-K
pertaining to the execution of a Purchase and Sale Agreement by Indeco, Inc. and
T.D. Fender, who is the sole Shareholder and President of Southward Acquisition
Corporation. Southward Acquisition Corporation is the owner of 21,103 units of
beneficial interest of the Registrant which constitutes 73.44% of its
outstanding post-exchange units (assuming all unitholders entitled to complete
the ongoing exchange program did so prior to its July 25, 1998 termination
date). The Agreement provides for the sale of the units of beneficial interest
owned by Southward Acquisition Corporation as well as all of the outstanding
shares of the following privately owned affiliated parties: Great Harbour Cay
Water and Sewer Utility Company Limited, Great Harbour Management Company
Limited, and Great Harbour Development and Construction Company Limited. The
Agreement also provides for the sale of three parcels of land not owned by the
Registrant which are located on Great Harbour Cay or in its immediate vicinity.
<PAGE>
PART III
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 hereunto duly authorized.
SOUTHWARD VENTURES DEPOSITARY TRUST
Dated: August 6, 1998 BY: /S/ GINO J. DIMARCO, TRUSTEE
-------------------------------------
GINO J. DiMARCO, Trustee
<PAGE>
PART I
(Rider A)
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997 (AUDITED)
<PAGE>
<TABLE>
<CAPTION>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 185,478 $ 135,546
Adjustments to reconcile net income to net cash provided
in operating activities:
Depreciation 5,882 5,262
Net reductions of land and improvements held for
development or sale 6,570 5,622
Increase in other assets ( 21,962) ( 16,793)
Decrease in account payable and accrued liabilities ( 29,201) ( 52,611)
Decrease in deposits on sales contracts ( 35,150) ( 10,000)
Decrease in net payable to GHC Management ( 15,000) -
--------- ---------
Net cash provided by operating activities 96,617 67,026
--------- ---------
Cash flows from financing activities:
Purchase of property and equipment ( 55,873) -
--------- ---------
Net cash used in financing activities ( 55,873) -
--------- ---------
Net increase in cash and cash equivalents 40,744 67,026
Cash at beginning of period 42,147 28,273
--------- ---------
Cash at end of period $ 82,891 $ 95,299
========= =========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS AND TRUST CERTIFICATE HOLDERS' EQUITY
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Real estate sales $ 260,000 $ - $ 350,586 $ 300,000
Rental income 20,928 20,928 41,856 41,856
Other income - - - -
Interest income - - - -
Profit recognized from
real estate sales - - - -
----------- ----------- ----------- -----------
280,928 20,928 392,442 341,856
Costs & expenses:
Cost of sales 4,872 - 6,570 5,622
Selling expenses 36,400 500 47,134 56,038
General & administrative 13,914 9,828 25,604 26,832
Trustee fees 11,400 11,400 22,800 22,800
Legal & professional fees 41,740 42,785 65,992 66,925
Secretarial & bookkeeping fees 5,000 6,000 12,000 12,000
Other operating expenses 16,900 2,271 20,982 10,831
Depreciation 2,941 2,631 5,882 5,262
----------- ----------- ----------- -----------
133,167 75,415 206,964 206,310
----------- ----------- ----------- -----------
Income (loss) before interest expense 147,761 (54,487) 185,478 135,546
Interest expense - - - -
----------- ----------- ----------- -----------
Income (loss) before unusual item 147,761 (54,487) 185,478 135,546
Unusual item:
Loss on cancellation of mortgage note - - - -
----------- ----------- ----------- -----------
Net loss 147,761 (54,487) 185,478 135,546
Trust certificate holders' equity,
beginning of period 679,078 775,362 641,361 585,329
Less distributions paid - - - -
----------- ----------- ----------- -----------
Trust certificate holders' equity,
end of period $ 826,839 $ 720,875 $ 826,839 $ 720,875
=========== =========== =========== ===========
Net income (loss) per trust certificate $ 5.14 $ ( 0.02) $ 6.45 $ 0.04
=========== =========== =========== ===========
Certificates used in computing net loss per
trust certificate 28,735 3,177,019 28,735 3,177,019
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997 (AUDITED)
1998 1997
-------- --------
ASSETS
<S> <C> <C>
Cash $ 82,891 $ 42,147
Land and improvements held for development or sale 634,575 641,145
Property & equipment, net 133,877 83,886
Other assets 55,443 33,481
-------- --------
$906,786 $800,659
======== ========
LIABILITIES AND TRUST CERTIFICATE HOLDERS' EQUITY
Accounts payable and accrued liabilities $ 74,947 $104,148
Net payable to GHC Management 15,000
-
Deposits on sales contracts 5,000 40,150
-------- --------
Total liabilities 79,947 159,298
Commitments
Trust certificate holders' equity 826,839 641,361
-------- --------
$906,786 $800,659
======== ========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
SOUTHWARD VENTURES DEPOSITARY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND DECEMBER 31, 1997
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited and have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q
promulgated by the Securities and Exchange Commission. These financial
statements reflect all adjustments which, in the opinion of management,
are necessary for a fair presentation of financial position, results of
operations and cash flows for the periods presented. All such adjustments
are of a normal recurring nature. The results of operations for interim
periods are not necessarily indicative of the results to be expected for
a full year. The statements should be read in conjunction with the
financial statements and footnotes thereto included in the Company"
Annual Report on Form 10-K for the year ended December 31, 1997.
2. COMMITMENTS AND CONTINGENCIES
PENDING LITIGATION
In 1993, the Trust filed a complaint against an individual asserting
claims for conversion and civil theft in relation to computer hardware
and software which was ordered, paid for, but never delivered to the
specified entity . The Trust did not prevail in a jury trial of the
civil theft case. The Trust has undertaken to appeal the adverse
decision that was entered on April 15, 1997.
Since the Trust was not successful in that claim, the defendant's
attorney fees and costs could be assessed against the Trust. In the
opinion of the Trustee, it is not possible at this time to assess the
amount of such fees and costs. However, as the matter has been
vigorously litigated since 1993, these fees and costs could be
substantial and have a material effect on the financial statements. A
Motion to Tax Costs was heard on September 26, 1997. Although the
judgement has not been entered as of this date, it is expected that the
Defendant will be awarded against the Trust approximately $2,634 plus
interest from the date the judgement is signed.
BAHAMIAN REAL PROPERTY TAXES
The Trust has been advised by the Ministry of Finance of the
Commonwealth of the Bahamas that property taxes pertaining to lots
located on Great Harbour Cay were not included in a prior settlement
that was understood to encompass all of the Trusts' properties on Great
Harbour Cay. The Trust does not currently possess sufficient information
to reasonably estimate the amount of liability to be recorded. However,
the Trust believes that based upon future developments and
determinations, it is possible the amount could have a material effect
on the financial statements.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 82,891
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 634,575
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 906,786
<CURRENT-LIABILITIES> 79,947
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 906,786
<SALES> 260,000
<TOTAL-REVENUES> 280,928
<CGS> 0
<TOTAL-COSTS> 133,167
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 147,761
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 147,761
<EPS-PRIMARY> 5.14
<EPS-DILUTED> 0
</TABLE>
