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 SEPTEMBER 30, 1999 Commission File 2-77085
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SOUTHWARD VENTURES DEPOSITARY TRUST
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 59-6737200
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(State or other Jurisdiction of IRS Employer Identification Number
Incorporation or Organization)
c/o Gino J. Dimarco, Trustee
2499 Glades Road, Suite 203
Boca Raton, Florida 33431
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(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (561) 347-8663
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NOT APPLICABLE
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(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 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 at each of the Issuer's classes of
common stock, as of the close of the period covered by this report:
CLASS OUTSTANDING SEPTEMBER 30, 1999
- ----------------------------- -------------------------------
Units of Beneficial Interest, Trust Certificate, No Par Value
No Par Value 28,724
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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>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999 (Unaudited) and December 31, 1998 (Audited)
<PAGE>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED BALANCE SHEETS
At September 30, 1999 (Unaudited) and December 31, 1998 (Audited)
<TABLE>
<CAPTION>
ASSETS 1999 1998
-------- --------
<S> <C> <C>
Cash $ 15,494 $ 17,443
Land and improvements held for development or sale 634,388 634,575
Property & equipment, net 151,162 165,016
Other assets 11,159 55,040
-------- --------
$812,203 $872,074
======== ========
LIABILITIES AND TRUST CERTIFICATE HOLDERS' EQUITY
Accounts payable and accrued liabilities $241,819 $119,302
Notes payable to related parties 79,980 20,000
Deposits on sales contracts -- 5,000
-------- --------
Total liabilities 321,799 144,302
Commitments
Trust certificate holders' equity 490,404 727,772
-------- --------
$812,203 $872,074
======== ========
</TABLE>
See accompanying notes.
<PAGE>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(237,368) $ 109,291
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 13,854 8,822
Provision for uncollectible GHM receivable and deferred asset 80,767 --
Net reductions of land and improvements held for development or sale 187 6,570
Increase in other assets (36,886) (13,143)
Increase (decrease) in account payable and accrued liabilities 122,517 13,957
Decrease in deposits on sales contracts (5,000) (35,150)
--------- ---------
Net cash (used in) provided by operating activities (61,929) 90,347
Cash flow from financing activities:
Purchase of property and equipment -- (72,784)
Proceeds of issuance of notes payable to related parties 79,980 --
Principal payments on notes payable to related parties (20,000) (15,000)
--------- ---------
Net cash provided by (used in) financing activities 59,980 (87,784)
--------- ---------
Net (decrease) in cash and cash equivalents (1,949) 2,563
Cash at beginning of period 17,443 42,147
--------- ---------
Cash at end of period $ 15,494 $ 44,710
========= =========
</TABLE>
See accompanying notes.
<PAGE>
SOUTHWARD VENTURES DEPOSITARY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS AND TRUST CERTIFICATE HOLDER'S EQUITY
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Real estate sales $ -- $ -- $ 10,000 $ 350,586
Rental income 20,928 20,928 63,284 62,784
Other income 9,000 -- 9,000 --
Interest income -- -- -- --
Profit recognized from real estate sales -- -- -- --
--------- --------- --------- ---------
29,928 20,928 82,284 413,370
Costs & expenses:
Cost of sales -- -- 187 6,570
Selling expenses -- -- -- 47,134
General & administrative 8,199 16,524 29,329 42,128
Trustee fees 11,400 11,400 34,200 34,200
Legal & professional fees 25,519 6,121 130,390 72,113
Secretarial & bookkeeping fees 6,000 6,021 18,000 18,021
Other operating expenses 5,637 51,644 10,025 72,626
Provision for uncollectable GHC receivable 35,167 -- 35,167 --
Provision for uncollectable deferred asset 45,600 -- 45,600 --
Depreciation 4,618 2,940 13,854 8,822
--------- --------- --------- ---------
142,140 94,650 316,752 301,614
--------- --------- --------- ---------
Income (loss) before interest expense (112,212) (73,722) (234,468) 111,756
Interest expense 1,509 2,465 2,900 2,465
--------- --------- --------- ---------
Net income (loss) (113,721) (76,187) (237,368) 109,291
Trust certificate holders' equity, beginning of period 604,125 826,839 727,772 641,361
Less distributions paid -- -- -- --
--------- --------- --------- ---------
Trust certificate holders' equity, end of period $ 490,404 $ 750,652 $ 490,404 $ 750,652
========= ========= ========= =========
Net income (loss) per trust certificate $ ( 3.96) $ (2.65) $ (8.26) $ 3.80
========= ========= ========= =========
Certificates used in computing net loss per
trust certificate 28,735 28,735 28,735 28,735
========= ========= ========= =========
</TABLE>
See accompanying notes.
<PAGE>
SOUTHWARD VENTURES DEPOSITARY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
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 that, 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, 1998.
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 undertook an appeal of the adverse decision that
was entered on April 15, 1997. On February 24, 1999 the Trust's appeal
was denied.
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 for
costs plus interest from the date the judgement is signed. The amount of
attorneys' fees to be awarded, if any, will require judicial
determination at a future date.
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>
3. LEASE WITH GREAT HARBOUR MANAGEMENT LTD.
In August 1996, the Trust consented to a ten year operating lease
("Lease") of the marina, warehouse, and fuel dock areas, the airport and
Links Apartments with Great Harbour Management Ltd. ("GHM"), a related
party at the time of the transaction. The Lease may be terminated at any
time upon thirty days written notice of the sale of the leased properties
or any portion thereof.
The Lease requires annual rental amounts of $60,000. The rent provision
in the Lease provides for rent of $72,000 per annum for the fourth
through fifth years of the Lease term, and $84,000 per annum for the
remaining five years of the Lease term. The rent is due on the first of
every month with the exception that during the first four months of the
Lease, rent was waived in exchange for substantial repairs performed by
GHM on the properties subject to the Lease. Additionally, GHM is
responsible for payment of all real estate taxes and other assessments on
the properties; for repairing and maintaining the properties; for
providing all necessary insurance and licenses; and for operating the
various facilities subject to the Lease during specific business hours.
As of August 14th, the lease with Great Harbour Management Ltd. is in
default due to non-payment of rent for the months of March, April, May,
June and July, 1999. Additionally, insurance premiums that were required
to be paid by GHM pursuant to the Lease were paid by the Trust as a
result of non-payment by GHM. The amounts of rent and insurance premiums
due are currently subject to a dispute as a result of certain offsets
claimed by the tenant. The collection of these amounts are uncertain and
have therefore been fully reserved for in the amount $37,167.
Due to the escalation clause in the Lease, revenue is recognized pursuant
to Financial Accounting Standards No. 13, "Accounting for Lease
Transactions". Accordingly, the total value of the amounts due for the
ten-year lease period is amortized on a straight-line basis to determine
the annual amount of revenue to be recognized. The difference between the
amount of rent received and the amount recognized from the inception of
the Lease term through September 30, 1999 amounts to $43,600 and is
recorded as a deferred asset and included in other assets on the Balance
Sheet. Due to Lease termination negotiations between the Trustee and GHM,
the ultimate recognition of the deferred asset is doubtful and has
therefore been fully reserved and included as an expense on the
Statements of Operations at September 30, 1999.
<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. However, since that date an extensive search has been conducted to
locate missing unitholders in order to provide them with the opportunity to
participate in the exchange program and to identify those accounts which are to
be escheated. As of September 30, 1999 there were 28,724 new units outstanding
that were held by 212 unitholders. As of the same date, there were 54,280 old
units outstanding that were held by 100 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.
27 Financial Data Schedule
<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: November 12, 1999 BY: /S/ GINO J. DIMARCO, TRUSTEE
-----------------------------------------
GINO J. DiMARCO, Trustee
SV-10Q-99
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 15,494
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 812,203
<PP&E> 151,162
<DEPRECIATION> 4618
<TOTAL-ASSETS> 812,203
<CURRENT-LIABILITIES> 312,799
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 812,203
<SALES> 0
<TOTAL-REVENUES> 29,928
<CGS> 0
<TOTAL-COSTS> 142,140
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (112,212)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (112,212)
<EPS-BASIC> (3.96)
<EPS-DILUTED> 0
</TABLE>
