U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] 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)
One Riverway, Suite 1700
Houston, Texas 77056
(Address of Principal Executive Offices)
Issuer's Telephone Number: (713) 961-2696
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:
September 30, 1998
Common Voting Stock - 23,555,000
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Prior to November 1997, the Company was a specialty financial services
holding company that primarily conducted 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
consolidated the assets, liabilities and operations of Private Mortgage Bankers,
Inc. ("PMB"), the Company's wholly-owned special purpose subsidiary through
which the Company conducted its mortgage purchase operations, and Life Today,
Inc. ("Life today"), the Company's wholly-owned special purpose subsidiary
through which the Company conducted its viatical settlement business operations.
In November 1997 the Company, essentially dormant, engaged in a
reorganization consisting of the disposition of its wholly owned subsidiaries
Private Mortgage Bankers, Inc. ("PMB") and Life Today, Inc. ("Life Today"). As
a result of this reorganization, the Company became a "blank check" company
without significant assets and whose sole business activity is to seek an
adequate acquisition candidate.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principals for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations, and
cash flows for all periods presented have been made. The results of operations
for the three month period ended September 30, 1998 are not necessarily
indicative of the operating results that may be expected for the entire year
ended June 30, 1999. These financial statements should be read in conjunction
with the Company's June 30, 1998 financial statements and accompanying notes
thereto.
The disposition of PMB and Life Today, representing the totality of the
Company's business operations, make period to period and trend analysis of the
Company's statements meaningless. Therefore the financial statements omit
comparisons to prior financial periods.
<PAGE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
BALANCE SHEET
SEPTEMBER 30, 1998
ASSETS
<S> <C>
Total Assets . . . . . . . . . . . . . . . . . . . . . . $ 0
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
ACCOUNTS PAYABLE AND ACCRUED EXPENSES. . . . . . . . . . 28,089
STOCKHOLDERS' DEFICIT
Preferred Stock, No Par Value; 150,000,000
shares authorized; none issued
Common Stock, $.001 par value; 500,000,000
shares authorized, 23,550,000 shares
issued and outstanding . . . . . . . . . . . . . . . 23,555
Additional Paid-in Capital . . . . . . . . . . . . . 148,073
Accumulated Deficit. . . . . . . . . . . . . . . . . (199,717)
---------------
Total Stockholders' Deficit. . . . . . . . . . . . . . $ (28,089)
---------------
$ 0
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
STATEMENT OF OPERATIONS
SEPTEMBER 30, 1998
<S> <C>
REVENUE: $ 0
OPERATING EXPENSES: 934
------
LOSS FROM OPERATIONS 934
------
NET LOSS (934)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
Common Stock Common Stock Paid In Capital Retained Stock
Shares Amount Earnings holder's
Equity
------------ ------------ --------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balances 23,555,000 23,555 148,073 (198,783) (27,155)
June 30, 1998
Net Loss (934) (934)
Balances September 30, 1998
23,555,000 23,555 148,073 (199,717) (28,089)
============ ============ =============== ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE BANKERS OF AMERICA, INC.
STATEMENT OF CASH FLOW
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) (934)
(Decrease) increase in accounts payable and accrued expenses 934
------
Net cash used in operating
activities $ 0
------
CASH - beginning of quarter 0
------
CASH - end of quarter $ 0
======
</TABLE>
<PAGE>
NOTE BANKERS OF AMERICA, INC.
Notes to Financial Statements
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company in accordance with the rules and regulations of the Securities and
Exchange Commission and do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly present the financial
position, results of operations and cash flows as of September 30, 1998 and for
all periods presented have been made. These financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended June
30, 1998. No significant changes in accounting principles have occurred
subsequent to June 30, 1998.
The results of operation for the period ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full year.
(2) Business Activities:
--------------------
The Company has not conducted business operations of any kind since the
disposition of its operating subsidiaries on November 6, 1997. Since that time
the Company has been a "blank check" company without significant assets and
whose sole business activity is to seek an adequate acquisition candidate.
(3) 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.
(4) 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.
(5) 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.
<PAGE>
(6) Loss Per Common Share:
------------------------
The loss per share data was computed based on the weighted average number of
common shares outstanding.
ITEM 2. 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 financial condition of
the Company as of September 30, 1998 and of the results of operations for the
Company for the three months ended September 30, 1998, 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
financial statements and related notes appearing elsewhere herein.
OVERVIEW
Since August 1996 Registrant has been a holding company and has not
conducted any operations directly. From August 1996 to November 1997, the
Company was a specialty financial services holding company that primarily
conducted 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 consolidated the assets,
liabilities and operations of Private Mortgage Bankers, Inc. ("PMB"), the
Company's wholly-owned special purpose subsidiary through which the Company
conducted its mortgage purchase operations, and Life Today, Inc. ("Life today"),
the Company's wholly-owned special purpose subsidiary through which the Company
conducted its viatical settlement business operations.
The Company, essentially dormant at the end of the quarter ending September
30, 1997 because of a lack of revenues, engaged in a reorganization effective
November 6, 1997 consisting of the disposition of its wholly owned subsidiaries
Private Mortgage Bankers, Inc. ("PMB") and Life Today, Inc. ("Life Today"). As
a result of this reorganization, the Company became a "blank check" company
without significant assets and whose sole business activity is to seek an
adequate acquisition candidate.
The Company's financial statements prior to the reorganization consolidated
the assets, liabilities and operations of Private Mortgage Bankers, Inc.
("PMB"), the Company's wholly-owned special purpose subsidiary through which the
Company conducted its mortgage purchase operations, and Life Today, Inc. ("Life
today"), the Company's wholly-owned special purpose subsidiary through which the
Company conducted its viatical settlement business operations. The disposition
of PMB and Life Today, representing the totality of the Company's business
operations, make certain period to period and trend analysis of the Company's
statements meaningless. Therefore this discussion will omit comparisons to
prior financial periods.
Results of Operations: Quarter Ended September 30, 1998 Compared to the Quarter
- --------------------------------------------------------------------------------
Ended September 30, 1997
- ---------------------------
<PAGE>
The following discussion should be read in conjunction with the Financial
Statements and related notes thereto included elsewhere in this Form 10-QSB and
in the Company's 1998 annual report on Form 10-KSB. The business
operations of the Company were discontinued in November 1997, and the
subsidiaries conducting those operations were disposed of at that time. The
Company has not conducted business operations of any kind since the
disposition of these operating subsidiaries. Since November 6, 1997 the
Company has been inactive with no operations.
Sales: The Company is currently inactive with no sales or revenues.
General and administrative expenses: General and administrative
expenses for the quarter ended September 30, 1998, consisted primarily of $934
in transfer agent fees.
Net Income/Loss: Net loss for the quarter ended September 30, 1998 was
$934.
Liquidity and Capital Resources
Since the disposition of its operating subsidiaries in November 1997, the
Company has had no working capital. At the present time the Company does not
have access to any external sources of working capital except as may be
provided by working capital loans or advances from management. All working
capital requirements have been met by the Registrant's sole director and
officer.
Registrant has no employees and pays no salaries, wages, fees or similar
compensation. From November 1997 through the end of its fiscal year ended June
30, 1998 and through September 30, 1998, Registrant's administrative
requirements, such as they are, were handled without charge by M. Stephen
Roberts, Esq. and Registrant made it headquarters at the offices of M. Stephen
Roberts, Esq. at One Riverway, Suite 1700, Houston, Texas 77056, for which it
paid no rent or other office charges or overhead.
Plan of Operation
The Company has limited overhead expense and no employees and intends that
its cash payments for general, administrative and overhead expenditures be
minimized.
Mr. Roberts, the company's majority shareholder and sole director, may
advance funds to the Company to cover general and administrative costs which may
be expected to be reimbursed from future available funds. Mr. Roberts intends to
continue to provide to the Company such general and administrative services,
which will include the cost of the use of office space, personnel, facilities
and equipment, as may be required for the Company's business. The Company
believes that such space and services will be adequate for the business of
Registrant into the foreseeable future. Mr. Roberts has agreed that any fees
for providing such general and administrative services shall be paid only out of
additional capital raised through a sale of equity and, in the absence thereof,
shall be paid solely out of such additional capital or earnings generated by the
Company's business.
While the Company has not engaged in any business activities since
November 1997, Management believes that it may be possible to recover some
value for the stockholders by restructuring the Company to effect a
business combination transaction with a suitable privately-held company
that has both business history and operating assets.
<PAGE>
Management believes the Company will offer owners of a suitable
privately-held company the opportunity to acquire a controlling interest in a
public company at substantially less cost than would otherwise be required to
conduct an initial public offering. Nevertheless, Management is not aware
of any empirical statistical data that would independently confirm or
quantify Management's beliefs concerning the perceived value of a merger or
acquisition transaction for the owners of a suitable privately-held company.
The owners of any existing business selected for a business combination
with the Company will incur significant costs and expenses, including the
costs of preparing the required business combination agreements and related
documents, the costs of preparing a Current Report on Form 8-K describing the
business combination transaction and the costs of preparing the documentation
associated with any future reporting under the Securities Act.
The Company expects to initiate a search for a suitable privately-held
company in 1999. If successful, this type of business combination is often
referred to as a "blind pool" because stockholders will not ordinarily have an
opportunity to analyze the various business opportunities presented to the
Company, or to approve or disprove the terms of any business combination
transaction that may be negotiated by Management on behalf of the Company.
Consequently, the Company's potential success will be heavily dependent on the
efforts and abilities of its officers and directors, who will have virtually
unlimited discretion in searching for, negotiating and entering into a business
combination transaction. Management has had limited experience in effecting
these type of business combinations. Although Management believes the Company
will be able to enter into a business combination within 12 months, there can be
no assurance as to how much time will elapse before a business combination is
effected, if ever. The Company will not restrict its search to any specific
business, industry or geographical location, and the Company may participate in
a business venture of virtually any kind or nature.
Management anticipates that the selection of a business opportunity
for the Company will be complex and extremely risky, because of general
economic conditions, rapid technological advances being made in some
industries, and shortages of available capital. Management believes there
are numerous privately-held companies seeking the perceived benefits of a
publicly traded corporation. Such perceived benefits may include facilitating
debt financing or improving the terms on which additional equity may be
sought, providing liquidity for the principals of the business, creating a
means for providing incentive stock options or similar benefits to key
employees, providing liquidity for all stockholders and other factors.
Potential opportunities may occur in many different industries and at
various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
extremely difficult and complex. Management anticipates that the Company
will be able to participate in only one business venture. This lack of
diversification should be considered a substantial inherent risk because it will
not permit the Company to offset potential losses from one venture
against gains from another. Moreover, due to the Company's lack of any
meaningful financial, managerial or other resources, Management believes the
Company will not be viewed as a suitable business combination partner for
either developing companies or established businesses that are in need
of substantial additional capital.
Acquisition Opportunities
In implementing a particular business combination transaction, the
Company may become a party to a merger, consolidation, reorganization,
joint venture, franchise or licensing agreement with another corporation or
entity. It may also purchase stock or assets of an existing business. After
the consummation of a business combination transaction, it is likely
that the present stockholders of the Company will only own a small
minority interest in the combined companies. In addition, as part of the
terms of the acquisition transaction, all of the Company's officers and
directors will ordinarily resign and be replaced by new officers and directors
without vote of the stockholders. Management does not intend to obtain the
approval of the stockholders prior to consummating any acquisition other
than a statutory merger that requires a stockholder vote.
<PAGE>
It is anticipated that any securities issued in a business
combination transaction will be issued in reliance on exemptions from
registration under applicable Federal and state securities laws. In some
circumstances, however, as a negotiated element of a business combination,
the Company may agree to register such securities either at the time the
transaction is consummated or at some specified time thereafter. The
issuance of substantial additional securities and their potential sale into
any trading market that may develop may have a depressive effect on such
market. While the actual terms of a transaction to which the Company may
be a party cannot be predicted, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation of a taxable
event and thereby structure the acquisition in a so called "tax free"
reorganization under Sections 368 or 351 of the Internal Revenue Code of
1986, as amended (the "Code"). In order to obtain tax free treatment under
the Code, it may be necessary for the owners of the acquired business to own
80% or more of the voting stock of the surviving entity. In such event the
stockholders of the Company would retain less than 20% of the combined
companies, which could result in significant dilution in the equity of such
stockholders. The Company intends to structure any business combination
transaction in such manner as to minimize federal and state tax consequences to
the Company and any target company.
As part of the Company's investigation of potential business
opportunities, Management may visit and inspect material facilities,
obtain independent analysis or verification of certain information provided,
check references of management and key personnel, and take other reasonable
investigative measures, to the extent of the Company's limited resources
and Management's limited expertise. The manner in which the Company
participates in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, and the relative
negotiating strength of the Company and such other management.
With respect to any business combination negotiations, Management
will ordinarily focus on the percentage of the Company which target
company stockholders would acquire in exchange for their ownership
interest in the target company. Depending upon, among other things, the target
company's assets and liabilities, the Company's current stockholders will in
all likelihood only own a small minority interest in the combined companies
upon completion of the business combination transaction. Any business
combination effected by the Company can be expected to have a significant
dilutive effect on the percentage of shares held by the Company's current
stockholders.
<PAGE>
Upon completion of a business combination transaction, there can be no
assurance that the combined companies will have sufficient funds to
undertake any significant development, marketing and manufacturing activities.
Accordingly, the combined companies may be required to either seek additional
debt or equity financing or obtain funding from third parties, in
exchange for which the combined companies might be required to issue a
substantial equity position. There is no assurance that the combined
companies will be able to obtain additional financing on terms acceptable
to the combined companies.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants,
attorneys and others. If a decision is made not to participate in a specific
business opportunity the costs incurred in the related investigation would
not be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to consummate
that transaction may result in the loss to the Company of the related
costs incurred.
Management is currently keeping operations and related expenditures at a
minimum while investigating possible alternative courses of action, primarily
seeking a suitable acquisition candidate.
As of September 30, 1998, the Company's current liabilities exceeded
current assets by $28,089. The Company had no available cash.
The Company generated no revenues during the three month period ending
September 30, 1998. Management anticipates that the Company will not generate
any significant revenues until the Company accomplishes its business objective
of acquiring a business through merger or acquisition of assets. The Company
presently has no liquid financial resources to offer such a candidate and must
rely upon an exchange of its capital stock to completer such a merger or
acquisition.
Because the Company is not required to pay rent or salaries to any of its
officers or directors, management believes that the Company has sufficient
resources, including management cash advances, to continue its search for an
acquisition candidate.
<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.
<PAGE>
(a) Exhibits.
27 Financial Data Sheet
(b) Reports on Form 8-K.
None.
<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.
Date: July 15, 1999 By /S/ M. Stephen Roberts
--------------------------------------
M. Stephen Roberts, Sole Director
President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 28089
<BONDS> 0
<COMMON> 171628
0
0
<OTHER-SE> (199717)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (934)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (934)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (934)
<EPS-BASIC> 0
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</TABLE>
