U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
December 31,1996
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.
incorporation or organization) Employer I.D. No.)
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:
January 31, 1997
Common Voting Stock - 22,430,000
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
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NOTE BANKERS OF AMERICA, INC.
Consolidated Balance Sheets
December 31, 1996
ASSETS
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CASH $ 32,910
LOANS HELD FOR RESALE 972,096
FURNITURE, FIXTURES AND EQUIPMENT, at cost, less
accumulated depreciation of $11,188 9,588
REAL ESTATE OWNED 127,229
ACCRUED INCOME AND OTHER ASSETS 21,586
GOODWILL 63,771
$1,227,180
LIABILITIES AND STOCKHOLDERS' DEFICIT
BANK LINE OF CREDIT $ 227,433
ESCROW DEPOSITS 58,886
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 179,789
NOTES PAYABLE 1,136,910
STOCKHOLDERS' DEFICIT
Preferred Stock, No Par Value; 150,000,000
shares authorized; none issued -
Common Stock, $.001 par value; 500,000,000
shares authorized, 22,430,000 shares
issued and outstanding 22,430
Paid In Capital 73,231
Accumulated Deficit (471,499)
Total Stockholders' Deficit (375,838)
$1,227,180
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NOTE BANKERS OF AMERICA, INC.
Consolidated Statements of Operations
3 Months 3 Months 6 Months
Ended Ended Ended
12/31/96 9/30/96 12/31/96
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REVENUE:
Brokerage Income $ 133,804 $ 108,551 $ 242,355
Gain on Loan Sales 18,037 4,658 22,695
Interest on Loans 35,501 40,407 75,908
Loan Servicing Fees 1,910 1,906 3,816
Total Revenue 189,252 155,522 344,774
OPERATING EXPENSES
Brokerage Commissions 40,685 53,157 93,842
Interest Expense 41,418 40,290 81,708
Salaries and Benefits 96,303 105,378 201,681
Occupancy 6,932 6,763 13,695
Legal and Accounting Expense 35,568 36,802 72,370
Amortization and Depreciation 876 876 1,752
Other 27,815 30,311 58,126
Total Operating Expenses 249,597 273,577 523,174
LOSS FROM OPERATIONS (60,345) (118,055) (178,400)
OTHER INCOME
Gain on Sale of Real Estate 10,903 1,992 12,895
Other Income 5,503 5,715 11,218
Total Other Income 16,406 7,707 24,113
NET LOSS (43,939) (110,348) (154,287)
Net Losses of Subsidiaries Prior
to Acquisition 20,031 20,031
CONSOLIDATED NET LOSS $ (43,939) $ (90,317) $(134,256)
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NOTE BANKERS OF AMERICA, INC.
Consolidated Statement of Change in Stockholders' Equity
For the Three Months Ended 9-30-96 and 12-31-96
Common Stock Paid In Retained Stockholders'
Shares Amount Capital Earnings Equity
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Balances June 30, 1996 227,000 227 4,472,279 (4,495,506) (23,000)
Net Loss - 3 months ended 9/30/96 (90,317) (90,317)
Issue Common Stock 22,203,000 22,203 27,797 50,000
Pooling of Interest :
Combination
(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 combiner company (62,430) (62,430)
Balances September 30, 1996 22,430,000 22,430 0 (427,560) (405,130)
Net Loss - 3 months ended 12/31/96 (43,939) (43,939)
Debt cancelled in exchange
for common stock 58,231 58,231
Sale of Common Stock 15,000 15,000
Balances December 31, 1996 22,430,000 22,430 73,231 (471,499) (375,838)
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NOTE BANKERS OF AMERICA, INC.
Consolidated Statements of Cash Flow
3 Months 3 Months 6 Months
Ended Ended Ended
12/31/96 9/30/96 12/31/96
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) (43,940) (110,348) (154,288)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and Amortization 876 876 1,753
Expenses paid by a shareholder on behalf of the company
and accounted for as contributed capital 4,801 4,801
Amortization of unearned
discounts and fees (4,104) (6,035) (10,139)
Changes in operating assets and liabilities:
Decrease (increase) in accrued
income and other assets 2,291 (1,260) 1,031
(Decrease) increase in accounts payable and accrued expenses (9,463) 21,095 11,632
Less accrued expenses paid by a shareholder on behalf of
the company and accounted for as contributed capital 15,199 15,199
Gain on sale of loans (18,037) (4,658) (22,695)
Gain on sale of real estate (11,363) (1,992) (13,355)
Net cash used in operating
activities (83,740) (82,322) (166,061)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Loans (30,619) (103,602) (134,221)
Proceeds from sale of loans 148,318 95,743 244,061
Payments received on loans 27,459 27,757 55,216
Purchase of real estate and improvements (23,887) (732) (24,619)
Proceeds from sale of real estate 33,803 31,602 65,405
Increase in Loans to Stockholders 3,000 (3,000) 0
Net cash provided by (used in)
investing activities 158,075 47,768 205,843
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in escrow
deposits 12,639 10,346 22,985
Payments on bank line of credit 0 (18,500) (18,500)
Proceeds from notes payable 50,365 85,274 135,639
Payments on notes payable (151,077) (63,719) (214,796)
Proceeds from sale of stock 15,000 30,000 45,000
Net cash provided by (used in)
financing activities (73,073) 43,401 (29,672)
(DECREASE) INCREASE IN CASH 1,262 8,847 10,109
CASH - beginning of period 31,648 22,801 22,801
CASH - end of period 32,910 31,648 32,910
SUPPLEMENTAL CASH FLOWS
INFORMATION:
Escrow deposits transferred to
Mortgage Payments 10,442 10,442
Notes given for purchase of
Private Mortgage Bankers Inc. Stock 60,000 60,000
Note given for purchase of
Life Today Financial Services, Inc. Stock 25,000 25,000
Note given for purchase of
Life Today, Inc. Stock 25,000 25,000
Accounts payable exchanged for
Note Bankers of America stock 8,231 8,231
Notes payable exchanged for
Note Bankers of America stock 50,000 50,000
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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. 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 policies of terminally ill individuals to other 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 $67,000 for
the par value of stock issued to accomplish the acquisition in excess of the
book value of the combiner 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 of 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.
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 a life insurance policy is sold to another
investor life insurance company 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 policy. If the sale is rescinded,
the sales proceeds and the commission is returned to the purchasing insurance
company. The Company accounts for any rescissions during the month the life
insurance policy was originally sold. Since inception, the Company has not
had a policy sale rescinded.
(10) Commitments and Contingencies:
The company executed a "Loan Acquisition, Servicing and Repurchase Agreement"
with a bank in 1991 under the terms of which the company brokered certain
mortgage loans to the bank and provides servicing of the loans for the bank.
The agreement includes a default agreement under which the company is to "buy
back" mortgage loans that become delinquent. As of December 31, 1996 there
were 24 loans being serviced by the company with a amortized cost basis to the
bank of approximately $549,325. All of the loans are secured by single family,
owner occupied residences in the greater Houston area and only one(cost basis
of approximately $17,242.00) was 60 days past due at December 31, 1996.
Performance under the agreement is guaranteed by a major stockholder of the
Company and a former stockholder of a subsidiary corporation. No significant
loss to the company under this agreement is anticipated by management.
(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 December 31,
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 which matured 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 December 31, 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 a major stockholder of the Company and
a former stockholder of a subsidiary corporation.
At December 31, 1996, the Company had a note payable to the a mortgage
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 December 31, 1996 was $17,382.
On December 31, 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 December 31, 1996 the notes
payable to individuals pursuant to this arrangement totaled $693,781.
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. In such liquidation, funds from sources other than the
underlying mortgage loans would be required. The collateralized notes total
$141,769 and the unsecured notes total $126,086 at December 31, 1996.
The Company has 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 December 31, 1996 was at
$50,550.
The Company has two notes payable for the purchase of stock in Private
Mortgage Bankers, Inc. of $30,000 each due August 15, 1999 with interest
payable monthly at the rate of eight percent.
(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 December 31, 1996 are as follows:
Residential real estate:
Single Family residential $ 1 147,319
Multi-Family residential 25,919
Commercial 15,156
Land 9,780
-------------
1 198,174
Less:
Loan fees and unearned discounts 216,079
Allowance for credit losses 10,000
----------------
$ 972,095
==============
(20) Events Subsequent to the Balance Sheet Date:
Maturity of Revolving Bank Line of Credit and Sale of Mortgages
The Bank Revolving Line of Credit referred to in Note 16 above matured on
January 23, 1997, and PMB commenced liquidating a portion of the loans held
for resell by PMB by selling the loans to unaffiliated third parties. The
Company intends to use the proceeds from such sales to retire said debt. Said
debt is further guaranteed by several individuals.
Item 2.
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Management's Discussion and Analysis or Plan of Operation.
This report on Form 10-QSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company intends that such
forward-looking statements be subject to its safe harbors created thereby.
The following is a discussion and analysis of the consolidated financial
condition of the Company as of December 31, 1996 and of the results of
operations for the Company for the three and six months ended December 31,
1996 and 1995, and of certain factors that may affect the Company's
prospective financial condition and results of operations. The following
should be read in conjunction with the unaudited consolidated financial
statements and related notes appearing elsewhere herein.
Prior to September 30, 1996, the Company, formerly known as General
Genetics Corporation, was essentially dormant with no business activities.
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 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. On September 25,
1996, General Genetics Corporation was merged into Note Bankers of America,
Inc. These events make period to period and trend analysis of the Company's
statements difficult. Comparative discussions herein are based upon current
and prior period proforma financial statements prepared by management for each
of its primary operating subsidiary units (PMB and Life Today Companies),
which proforma financial statements are included as footnotes to this
discussion to facilitate meaningful comparison. In the opinion of management,
all adjustments considered necessary for a fair presentation have been
included.
OVERVIEW
The Company is a speciality financial services holding company that
primarily conducts business in two distinct areas:
(1) providing viatical settlements for terminally ill individuals by
purchasing life insurance policies ("Viatical Receivables") from terminally
ill individuals, both acting as a broker and acting for its own principal
investment account; and
(2) purchasing, brokering, acquiring, repackaging, holding for
investment and acting as a dealer in portfolios of "owner financed"
residential and "light"commercial real property first mortgage loans,
primarily originated as owner financed ("Mortgage Receivables").
The Company's financial statements consolidate the assets, liabilities
and operations of Private Mortgage Bankers, Inc. ("PMB"), the Company's
wholly-owned special purpose subsidiary through which the Company conducts it
mortgage purchase operations, and Life Today, Inc. ("Life today"), the
Company's wholly-owned special purpose subsidiary through which the Company
conducts its viatical settlement business operations.
RECENT DEVELOPMENTS
Through December 31, 1996, PMB and Life Today have primarily acted as
brokers in the purchase of Mortgage Receivables and Viatical Receivables by
originating and packaging the Receivables for presentation for purchase by
prospective third party investors. PMB and Life Today have developed a
continuing relationship with several individual investors who provided
financing for the purchase of their current profolio of Receivables. Current
investors in these Receivables include primarily high net worth individuals
and individual pension and retirement accounts. However, dependence upon
individual third party investor-purchasers has necessarily limited the ability
of PMB and Life Today to significantly expand the volume of their purchases
and thereby has limited their ability to generate profits. Management
believes that future profitability is dependent upon increasing the volume of
Receivables purchased and purchasing Receivables as principal for its own
account, thereby increasing the return realized on each Receivable. If the
Company is to significantly increase the volume of Receivables purchased,
management believes that it must provide for the marketing of funds through
its own investment program and utilize those funds for the purchase of
Receivables as principal for its own account.
Management is currently implementing plans to undertake on behalf of PMB
and Life Today private debt offerings to raise a minimum of $10,000,000 to be
used to acquire Receivables for its own account and then to "warehouse" the
Receivables it has purchased into pools. The Company intends to then offer
these pools of Receivables to institutional investors.
RESULTS OF OPERATIONS
PRIVATE MORTGAGE BANKERS, INC.(1)
BROKERAGE INCOME - The company closed 7 transactions totaling $16,967 (an
average of $2,424 each) for the three months ended December 31, 1995, and
6 transactions totaling $14,666 (an average of $2,444 each) for the three
months ended September 31, 1995. For the quarter ended December 31, 1996,
4 transactions totaling $4,864 for an average of $1,216 were closed and
for the quarter ended September 30, 1996, 3 transactions totaling $10,222
for an average of $3,407 were closed. Though the overall average per
transaction decreased for the six months ended December 31, 1995 to
1996 by $278, the overall decrease is due primarily to volume of
transactions closed.
GAIN ON LOAN SALES - The company sold 3 loans for a total gain of
$6,366 for the quarter ended December 31, 1995, and 4 loans for a total
gain of $18,037 for the quarter ended December 31, 1996. For the quarters
ended September 30, 1995 and 1996, the company sold 4 loans for a gain of
$11,834 and 2 loans for a gain of $4,658 respectively.
GAIN ON SALE OF HOUSES - The company sold 2 houses for a total gain
of $18,831 for the quarter ended December 31, 1995, and 1 house for a
total gain of $10,904 for the quarter ended December 31, 1996. For the
quarters ended September 30, 1995 and 1996, the company sold 3 houses for
a gain of $25,857 and 2 houses for a gain of $1,992 respectively.
OTHER OPERATING EXPENSE - Other operating expense decreased from
$28,773 and $23,027 in the quarters ended September 30, 1995 and December
31, 1995 to $12,713 and $7,969 for the respective quarters in 1996. The
decrease is due to managements efforts to hold costs to a minimum and
extra ordinary legal fees in 1995 on corporate identity and proposed
acquisition matters.
LIFE TODAY COMPANIES (2)
BROKERAGE REVENUE - For the quarter ended September 30, 1996 the
company closed 12 transactions for a total of $98,330 compared to 21
transactions for a total of $71,390 in the same quarter of 1995. For the
quarter ended December 31, 1996 the company closed 11 transactions for a total
of $128,940 compared to 19 transactions for a total of $82,029 for the same
quarter of 1995. Though the number of transactions decreased 42% for the above
six month periods, the average revenue per transaction increased 158%. Because
the brokerage fee on Viatical settlements is based on the face amount of the
related insurance policy, the company is concentrating their efforts to find
the largest policies available.
DIRECT COST - Direct costs as a percentage of revenue were as
follows:
1996 1995
3 mos. ended 9/30 55% 21%
3 mos. ended 12/31 28% 16%
6 mos. ended 12/31 27% 18%
The increase in direct cost as a percentage of revenue is partially due
to a long term sales consulting agreement being bought out in 1996 and certain
advance commissions being paid to a broker.
SALARIES AND BENEFITS - In 1995 salaries were paid based upon income and
cash available. In 1996 salaries are stated amounts and for the quarters ended
September 30 and December 31 included substantially all of the salaries
related to the operation of Note Bankers of America, Inc. and the related
merger and acquisitions.
GENERAL GENETICS CORPORATION (3)
Note Bankers of American, Inc. (fka General Genetics Corporation)
incurred expenses of $36,636 and $43,408 for the quarters ended September 30
and December 31, 1996 respectively. General Genetics Corporation was not
active for the related periods in 1995. The expenses incurred in 1996 are
primarily for legal and audit fees related to the merger and acquisition of
Private Mortgage Bankers, Inc. and the Life Today Companies.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash during the quarter ending December
31, 1996, were funds generated by sales of loans and real estate. The
Company's cash requirements have been and will continue to be significant.
Financial difficulties have not been uncommon in the history of the Company
and there can be no assurance that it will be able to raise the capital it now
needs. The future success of the Company, and its growth, depends on its
ability to raise additional funds. If the Company is successful in obtaining
short-term funds, they will be disbursed to accomplish the following:
Once short term capital to meet the requirements has been obtained,
management of the Company will be able to next address an updated and revised
business plan for the next twelve months of operations. It should be noted
that, even with a revised business plan, there is no assurance that the
Company will be successful in bringing sufficient long term capital to achieve
profitability.
As of December 31, 1996, the Company's current liabilities exceeded
current assets by $424,644, a ratio of 1.4 to 1. The available cash of
$32,910 represented 3% of total current assets. Cash flow required by
operating activities increased by 1.7% ($1,410) for the quarter ended
September 30, 1996 to the quarter ended December 31, 1996.
(1)
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<CAPTION>
PRIVATE MORTGAGE BANKERS, INC.
Statements of Operations
For the Three Months Ended
Sept. 30 Sept. 30
1996 1995
<S> <C> <C>
REVENUE:
Brokerage Income $ 10,222 $ 14,666
Gain on Loan Sales 4,658 11,834
Interest on Loans 40,407 36,459
Loan Servicing Fees 1,906 757
Total Revenue 57,193 63,716
OPERATING EXPENSES
Brokerage Commissions 4,339 7,377
Interest Expense 40,289 41,508
Salaries and Benefits 37,990 37,615
Occupancy 2,763 6,067
Legal and Accounting Expense 495 8,594
Amortization and Depreciation 0 0
Other 12,713 28,773
Total Operating Expenses 98,589 129,934
LOSS FROM OPERATIONS (41,396) (66,218)
OTHER INCOME
Gain on Sale of Real Estate 1,992 25,857
Other Income 5,715 4,966
Total Other Income 7,707 30,823
NET LOSS $ (33,689) $ (35,395)
</TABLE>
<TABLE>
<CAPTION>
PRIVATE MORTGAGE BANKERS, INC.
Statements of Operations
For the Three Months Ended
Dec. 31 Dec. 31
1996 1995
<S> <C> <C>
REVENUE:
Brokerage Income $ 4,864 $ 16,967
Gain on Loan Sales 18,037 6,366
Interest on Loans 35,501 33,184
Loan Servicing Fees 1,910 2,208
Total Revenue 60,312 58,725
OPERATING EXPENSES
Brokerage Commissions 3,161 6,316
Interest Expense 41,418 43,598
Salaries and Benefits 36,278 35,133
Occupancy 4,532 6,359
Legal and Accounting Expense 740 9,572
Amortization and Depreciation 0 0
Other 7,969 23,027
Total Operating Expenses 94,098 124,005
LOSS FROM OPERATIONS (33,786) (65,280)
OTHER INCOME
Gain on Sale of Real Estate 10,904 18,831
Other Income 5,503 8,350
Total Other Income 16,407 27,181
NET LOSS $(17,379) $(38,099)
</TABLE>
(2)
<TABLE>
<CAPTION>
COMBINED LIFE TODAY, INC AND
LIFE TODAY FINANCIAL SERVICES, INC.
Statements of Operations
Sept. 30 Sept. 30
1996 1995
<S> <C> <C>
BROKERAGE REVENUE $ 98,330 $ 71,390
DIRECT COSTS 53,654 14,661
Gross Profit 44,676 56,729
OPERATING EXPENSES
Advertising 4,178 1,568
Interest Expense 263 250
Salaries and Benefits 63,048 35,772
Depreciation and amortization 831 873
Other 16,338 16,919
Total Operating Expenses 84,658 55,382
LOSS FROM OPERATIONS (39,982) 1,347
OTHER INCOME
Loss on Sale of Assets
Other Income 3
Total Other Income 0 3
NET INCOME (LOSS) $ (39,982) $ 1,350
</TABLE>
<TABLE>
<CAPTION>
COMBINED LIFE TODAY, INC AND
LIFE TODAY FINANCIAL SERVICES, INC.
Statements of Operations
For the Three Months Ended
Dec. 31 Dec. 31
1996 1995
<S> <C> <C>
BROKERAGE REVENUE $128,940 $ 82,029
DIRECT COSTS 38,630 12,776
Gross Profit 90,310 69,253
OPERATING EXPENSES
Advertising 54 8,768
Interest Expense 342 695
Salaries and Benefits 59,364 38,922
Depreciation and amortization 831 874
Other 12,828 21,255
Total Operating Expenses 73,419 70,514
LOSS FROM OPERATIONS 16,891 (1,261)
OTHER INCOME
Loss on Sale of Assets
Other Income 15
Total Other Income 0 15
NET INCOME (LOSS) $ 16,891 $ (1,246)
</TABLE>
(3)
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
fka General Genetics Inc.
Statements of Operations
For the Three Months Ended
Sept. 30 Sept. 30
1996 1995
<S> <C> <C>
REVENUE: $ 0 $ 0
OPERATING EXPENSES
Advertising 250
Interest Expense
Salaries and Benefits
Occupancy
Legal and Accounting Expense 28,448
Amortization and Depreciation 0
Other 7,938
Total Operating Expenses 36,636 0
LOSS FROM OPERATIONS 36,636 0
OTHER INCOME 0 0
NET LOSS $ 36,636 $ 0
</TABLE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
fka General Genetics Inc.
Statements of Operations
For the Three Months Ended
Dec. 31 Dec. 31
1996 1995
<S> <C> <C>
REVENUE: $ 0 $ 0
OPERATING EXPENSES
Advertising 5,395
Interest Expense 0
Salaries and Benefits 0
Occupancy 0
Legal and Accounting Expense 31,820
Amortization and Depreciation 0
Other 6,193
Total Operating Expenses 43,408 0
LOSS FROM OPERATIONS 43,408 0
OTHER INCOME 0 0
NET LOSS $ 43,408 $ 0
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2.Changes in Securities.
None; not applicable.
Item 3.Defaults Upon Senior Securities.
None; not applicable.
Item 4.Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5.Other Information.
None; not applicable.
Item 6.Exhibits and Reports on Form 8-K.
(a)Exhibits.
27Financial Data Sheet
(b)Reports on Form 8-K.
During the quarter ended December 31, 1996, the Company filed
an amendment designated Amendment No. 2 to its original report on Form 8-K
dated September 3, 1996. Subsequently, the Company filed a further amendment
designated Amendment No. 3 to its original report on Form 8-K dated September
3, 1996. The original report, dated September 3, 1996, and Amendments No. 1,
2 and 3 thereto dated November 4, 1996, provided the details of the Company's
change in control and consummation of the share exchange with PMB and matters
related thereto, including a change in Registrant's certifying accountant.
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: February 21, 1997By ____________________________________
E. Donald DeYoung, Director
President
/S/ Allen E. Myers
Date: February 21, 1997By __________________________________
Allen E. Myers, Director
CEO
/S/ Louis J. Blenderman
Date: February 21, 1997 By ___________________________________
Louis J. Blenderman, Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 32910
<SECURITIES> 0
<RECEIVABLES> 21586
<ALLOWANCES> (10000)
<INVENTORY> 982096
<CURRENT-ASSETS> 1026592
<PP&E> 148005
<DEPRECIATION> (11188)
<TOTAL-ASSETS> 1163409
<CURRENT-LIABILITIES> 1451236
<BONDS> 0
<COMMON> 22430
0
0
<OTHER-SE> 73231
<TOTAL-LIABILITY-AND-EQUITY> 1227180
<SALES> 182121
<TOTAL-REVENUES> 358838
<CGS> 153180
<TOTAL-COSTS> 193865
<OTHER-EXPENSES> 167494
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41418
<INCOME-PRETAX> (43939)
<INCOME-TAX> 0
<INCOME-CONTINUING> (43939)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43934)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
