U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB/A
Amendment No. 1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from _______________ to _______________
Commission File No. 0-12240
NOTE BANKERS OF AMERICA, INC.
(Name of Small Business Issuer in its Charter)
TEXAS 84-0882076
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
770 S. Post Oak Lane Suite 690
Houston, Texas 77056
(Address of Principal Executive Offices)
Issuer's Telephone Number: (713) 840-0230
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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.
(1) Yes /X/ No / / (2) Yes /X/ No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
November 15, 1996
Common Voting Stock - 22,430,000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996
ASSETS
<S> <C>
CASH $ 31,648
LOANS HELD FOR RESALE 1,063,939
FURNITURE, FIXTURES AND EQUIPMENT, at cost, less
accumulated depreciation of $10,357 10,419
REAL ESTATE OWNED 125,782
ACCRUED INCOME AND OTHER ASSETS 24,828
GOODWILL 63,771
-----------
$1,320,387
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
BANK LINE OF CREDIT $ 227,433
ESCROW DEPOSITS 46,248
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 185,847
NOTES PAYABLE 1,265,989
STOCKHOLDERS' DEFICIT
Preferred Stock, No Par Value; 150,000,000
shares authorized; none issued
Common Stock, $.001 par value; 25,000,000
shares authorized, 22,430,000 shares
issued and outstanding 22,430
Accumulated Deficit 427,560
-----------
Total Stockholders' Deficit $ (405,130)
-----------
$1,320,387
===========
</TABLE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
<S> <C>
REVENUE:
Brokerage Income $ 108,551
Gain on Loan Sales 4,658
Interest on Loans 40,407
Loan Servicing Fees 1,906
----------
Total Revenue 155,523
----------
OPERATING EXPENSES
Brokerage Commissions 53,157
Interest Expense 40,290
Salaries and Benefits 105,378
Occupancy 6,763
Legal and Accounting Expense 36,802
Amortization and Depreciation 876
Other 30,311
----------
Total Operating Expenses 273,578
----------
LOSS FROM OPERATIONS 118,055
----------
OTHER INCOME
Gain on Sale of Real Estate 1,992
Other Income 5,715
----------
Total Other Income 7,707
----------
NET LOSS (110,348)
Net Losses of Subsidiaries Prior to Acquisition This Period 20,031
----------
CONSOLIDATED NET LOSS $ 90,317
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
CONSOLIDATED STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
Common Common Stock
Stock Stock Paid In Retained holder's
Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
Balances
June 30, 1996 227,000 227 4,472,279 (4,495,506) (23,000)
Net Loss (90,317) (90,317)
Issue Common
Stock 22,203,000 22,203 27,797 5,000
Pooling of
Interest (a
reverse
acquisition) (4,500,076) 4,495,506 (4,570)
Private
Mortgage
Bankers, Inc.,
Retained
Earnings
Deficit June 30, 1996 (274,813) (274,813)
Par value of
stock issued in
excess of book
value of the
combined
company (62,430) (62,430)
---------- ------ ----------- ----------- ---------
Balances
September 30,
1996 2,430,000 22,430 0 (427,560) (405,130)
========== ====== =========== =========== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) (110,348)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and Amortization 876
Expenses paid by a shareholder on behalf of the company
and accounted for as contributed capital 4,801
Amortization of unearned
discounts and fees (6,035)
Changes in operating assets and liabilities:
Decrease (increase) in accrued
income and other assets (1,260)
(Decrease) increase in accounts payable and accrued expenses 21,095
Less accrued expenses paid by a shareholder on behalf of
the company and accounted for as contributed capital (15,199)
Gain on sale of loans (4,658)
Gain on sale of real estate (1,992)
Net cash used in operating
activities $(102,322)
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Loans (103,602)
Proceeds from sale of loans 95,743
Payments received on loans 27,757
Purchase of real estate and improvements (732)
Proceeds from sale of real estate 31,602
Increase in Loans to Stockholders 3,000
----------
Net cash provided by (used in)
investing activities 47,769
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in escrow
deposits 10,346
Payments on bank line of credit (18,500)
Proceeds from notes payable 85,274
Payments on notes payable (63,719)
Proceeds from sale of stock 3,000
----------
Net cash provided by (used in)
financing activities 63,401
----------
(DECREASE) INCREASE IN CASH 8,847
CASH - beginning of quarter 22,801
----------
CASH - end of quarter $ 31,648
==========
SUPPLEMENTAL CASH FLOWS
INFORMATION:
Escrow deposits transferred to
Mortgage Payments $ 10,442
==========
Notes given for purchase of
Private Mortgage Bankers Inc. Stock $ 60,000
==========
Note given for purchase of
Life Today Financial Services, Inc. Stock $ 25,000
==========
Note given for purchase of
Life Today, Inc. Stock $ 25,000
==========
</TABLE>
NOTE BANKERS OF AMERICA, INC.
Notes to Consolidated Financial Statements
(1) Organization:
-------------
General Genetics Corporation was formed in 1982, but business
activity has been substantially discontinued since 1986. In July of 1996
Life Today Inc., purchased Life Today Financial Services, Inc., and later that
month Private Mortgage Bankers, Inc., purchased Life Today, Inc.
On August 30, 1996, 100% of the outstanding shares of private Mortgage
Bankers Inc., were acquired by General Genetics Corporation in exchange for
20,313,000 shares of common stock of General Genetics Corporation in
a transaction accounted for as a reverse acquisition. Upon completion
of the acquisition, the stockholders of the Company became the controlling
stockholders of General Genetics Corporation.
September 25, 1996, General Genetics Corporation was merged into NOTE
BANKERS OF AMERICA, INC.
(2) Business Activities:
--------------------
The Company purchases privately-held, owner financed mortgages from
individuals who have personally financed the sale of real property
throughout Texas. The Company either holds the loans for investment purposes
or sells them to individual investors, banks or other institutions. The
Company is also in the business of brokering owner-financed mortgages.
Another principal business activity of the Company is to broker life
insurance benefits of terminally ill individuals to individual investors or
institutions. The life insurance policyholder receives a percentage of the
face amount of the policy, determined by certain factors, including the
insured's life expectancy. The Company receives a commission to provide this
brokerage service.
(3) Consolidation Accounting Policies:
------------------------------------
The financial statements reflect the acquisitions of Life Today
Financial Services, Inc., by Life Today, Inc., and the acquisition of Life
Today by Private Mortgage Bankers, Inc., as purchases resulting in Goodwill
(excess of purchase price over net worth) of $63,771. The acquisition of
Private Mortgage Bankers, Inc., by the Registrant represents and has been
accounted for as a pooling of interest and a reverse acquisition whereby
Private Mortgage Bankers, Inc., was the acquiror and for financial statement
purposes, the historical financial statements, of the Registrant will be those
of Private Mortgage Bankers, Inc. Therefore, the registrants Paid in Capital
of $4,472,279 has been offset against the registrants deficit of $4,495,506 as
of June 30, 1996, and the acquiror's net deficit has been charged $63,430 for
the par value of stock issued to accomplish the acquisition in excess of the
book value of the combined company. All intercompany transactions are
eliminated in consolidation.
(4) Furniture, Fixtures and Equipment:
-------------------------------------
Furniture, fixtures and equipment is stated at cost less accumulated
depreciation. Depreciation of furniture, fixtures and equipment is computed
using the straight-line method over estimated useful lives of the assets of
five years.
(5) Loans Held for Resale:
------------------------
Loans to be held for an indefinite period of time are classified as
available for sale and are carried at the lower of cost or market. Cost is
computed as the principal amount outstanding, net of unearned discounts and
deferred loan fees and expenses. Unearned discounts on loans are recognized as
income over the term of the loans on a level-yield method. These loans are
sold in response to changes in market interest rates, liquidity needs or other
similar factors.
The allowance for credit losses is established through a provision for
credit losses charged to operating expense. The allowance represents an amount
which, in management's judgement will be adequate to absorb possible losses on
existing credits which may become uncollectible. Management's judgement in
determining the adequacy of the allowance is based on evaluations of the
collectibility of loans. These evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, current
economic conditions, overall portfolio quality and review of specific credits.
The Company began accounting for impaired loans in 1995 as prescribed in
Statement of Financial Accounting Standards No.118, "Accounting by Creditors
for Impairment of a Loan" (SFAS No.118). Impaired loans are measured on the
present value of expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's observable market
price or the fair value of the collateral if the loan is collateral dependent.
The adoption of SFAS No.118 had no material impact upon the financial
statement of the Company.
(6) Loan Origination Costs:
------------------------
Loan origination costs are deferred and amortized over the lives of the
related loans as an adjustment of yield.
(7) Real Estate Owned:
--------------------
Real estate owned represents property purchased for investment or
acquired through foreclosure. Real estate owned is carried at the lower of
cost or fair value. Reductions in the balance of real estate owned at the time
of foreclosure are charged to the allowance for credit losses. Any subsequent
writedowns to reflect current fair value are charged to operating expense.
(8) Income Taxes:
--------------
The Company recognizes income taxes in accordance with Statement of
Financial Accounting Standards No.109, "Accounting for Income Taxes"(SFAS
No.109). Under this method, deferred income taxes are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax basis (temporary differences.)
Under SFAS No.109, deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carryforwards,
and then a valuation allowance is established to reduce that deferred
tax asset if it is "more likely than not" that the related tax benefits
will not be realized.
(9) Brokerage Income:
------------------
Revenue is recognized when the life insurance benefit are sold
and both parties are funded. Under insurance regulations, the insured has 15
calendar days, after receipt of the proceeds, to rescind the sale of the life
insurance benefits. If the sale is rescinded, the sales proceeds and the
commission is returned to the purchaser. The Company accounts for any
rescissions during the month the life insurance benefits were originally
sold. Since inception, the Company has not had a sale rescinded.
(10) Commitments and Contingencies:
-------------------------------
The Company entered into a consulting agreement during 1995 with a prior
stockholder. The Company agreed to pay the prior stockholder $1,000 per month
for twenty-four consecutive or non-consecutive months depending on the
available cash in the Company. Consulting fees to the prior owner,
included in general and administrative expense, were $13,000 for the
3 months ended September 30, 1996.
(11) Estimates:
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(12) Fair Value of Financial Instruments
---------------------------------------
The Company's only financial instruments are accounts payable and
accrued expenses. Management believes the carrying amount of these financial
instruments approximate their fair values.
(13) Loss Per Common Share:
------------------------
The loss per share data was computed based on the weighted average number
of common shares outstanding. The Company authorized a 1 share of new
for 20 old share reverse stock split on August 30, 1996. All share and per
share amounts have been adjusted to give effect to the stock split.
(14) Marketable Equity Securities:
------------------------------
The Company has certain marketable equity securities, at June 30, 1996
deemed by management to have no fair value.
(15) Notes Receivable - Other:
----------------------------
The Company had certain notes receivable, dated in 1984, for
approximately $150,000 of which management had deemed uncollectible and had
fully reserved for all years presented in the accompanying financial
statements.
(16) Revolving Line of Credit:
---------------------------
The Company has a revolving line of credit with a bank in the maximum
amount of $250,000 maturing on January 23,1997. The line of credit is used by
the Company solely to finance the purchase of single family residential loans
and the holding of such loans until they are sold.
(17) Notes Payable:
--------------
At September 30, 1996, the Company had a note payable to a bank for
$47,339 due January 23, 1997, including all interest accrued thereon
at the bank's prime rate plus 2%. The note is collateralized by a single
family residential property and guaranteed by stockholders of the Company.
At September 30, 1996, the Company had a note payable to the Company,
payable in monthly installments of $216 through June 1, 2007. Interest on the
note is payable monthly at a 9.125% and the note is collateralized by single
family residential real estate. The balance outstanding on the note at
September 30, 1996 was $17,630.
On September 30, 1996, the Company had financial arrangements with
various individuals through their individual retirement (IRA) accounts,
which were originated to finance the purchase of mortgage loans and
real estate. Notes collateralized by mortgage loans mature at various dates
from 1997 to 2021. The notes become due and payable immediately upon demand of
individuals. Principal and interest are payable monthly, at rates ranging from
11% to 12 %. In the event of foreclosure, the notes payable are collateralized
by the underlying real estate; principal payments are discontinued and
interest only is payable monthly. Upon the Company's sale of the real estate
and creation of a new mortgage loan, principal payments and interest are
due monthly, based on the term and maturity date of the new mortgage loan.
Upon the Company's sale of real estate for cash, the note payable becomes
unsecured. The Company is obligated to make a best effort to collateralize the
note with a new mortgage loan purchase or real estate purchase. Unsecured
notes and notes secured by real estate have no stated maturity date. Interest
is payable monthly at rates ranging from 11% to 12%. At September 30, 1996 the
notes payable to individuals pursuant to this arrangement totaled $771,929.
The Company has various notes to two individuals, having no written
terms, including the maturity dates and interest rates. Some of the notes are
due upon the maturity of the underlying mortgage loan collateral; and the
other notes have no stated maturity date and are unsecured. Interest rates
vary between 12% to 13% and for some notes, interest is payable monthly; for
others, interest is due at maturity of the underlying mortgage loan
collateral. Should an individual desire to liquidate his account, upon
written notice, the Company will employ its best efforts and has up to six
months to sell the underlying collateral for cash proceeds to be remitted to
the individual. The collateralized notes total $141,769 and the unsecured
notes total $126,086 at September 30, 1996.
At September 30, 1996, the Company had two notes payable to individuals,
having no written terms including the maturity dates and interest rates. The
notes were initially funded to purchase real estate. The notes are
collateralized by mortgage loans and real estate. The balance at September
30, 1996 was at $50,550.
(18) Concentrations of Credit Risk
--------------------------------
The Company's financial instruments which are exposed to
concentrations of credit risk consist primarily of loans receivable
secured by single family residential mortgages in Houston and
surrounding area. The Company assesses its credit risk and provides an
allowance for credit loss for any loans which it deems doubtful of collection.
(19) Loans Receivable:
-----------------
Major classifications of loans at September 30, 1996 are as follows:
Residential real estate: $ 1,252,421
Single Family residential 28,294
Multi-Family residential 15,566
Commercial 10,475
------------
Land 1,310,756
Less loan fees and unearned
discount (236,817)
Allowance for credit losses (10,000)
------------
$ 1,063,939
============
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27.1 Financial Data Sheet
(b) Reports on Form 8-K.
The Company filed one report on Form 8-K during the quarter
ended September 30, 1996; an amendment dated September 3, 1996 and designated
Amendment No. 1 to that report; an amendment dated November 4, 1996 and
designated Amendment No. 2 to that report; and an amendment dated January 30,
1997 and designated Amendment No. 3 to that report. The original report,
dated September 3, 1996, Amendment No. 1 thereto dated November 4, 1996,
Amendment No. 2 thereto dated November 4, 1996, and Amendment No. 3 thereto
dated January 30, 1997 provided the details of the Company's change in control
and consummation of the share exchange with PMB and matters related thereto.
These reports are incorporated by reference herein.
<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.
NOTE BANKERS OF AMERICA, INC.
/S/ E. Donald DeYoung
Date: January 30, 1997 By ____________________________________
E. Donald DeYoung, Director
President
/S/ Allen E. Myers
Date: January 30, 1997 By ____________________________________
Allen E. Myers, Director
CEO
/S/ Louis J. Blenderman
Date: January 30, 1997 By ____________________________________
Louis J. Blenderman, Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<FISCAL-YEAR-END> JUN-30-1996
<CASH> 31,648
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,063,939
<CURRENT-ASSETS> 1,095,587
<PP&E> 146558
<DEPRECIATION> 10357
<TOTAL-ASSETS> 1,320,387
<CURRENT-LIABILITIES> 459,528
<BONDS> 1,265,989
<COMMON> 22,430
0
0
<OTHER-SE> (427,560)
<TOTAL-LIABILITY-AND-EQUITY> 1,320,387
<SALES> 0
<TOTAL-REVENUES> 163,230
<CGS> 0
<TOTAL-COSTS> 273,578
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (90317)
<INCOME-TAX> 0
<INCOME-CONTINUING> 20031
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90317)
<EPS-PRIMARY> .005
<EPS-DILUTED> .005
</TABLE>
