U. S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to ______________
Commission file number 811-0969
The First Connecticut Capital Corporation
-----------------------------------------
(Exact name of small business issuer as)
(specified in its charter)
Connecticut 06-0759497
- - - - - - - - - - - - - - --------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1000 Bridgeport Avenue, Shelton, Connecticut 06484
--------------------------------------------------
(Address of principal executive offices)
(203) 944-5400
--------------
(Issuer's telephone number)
1000 Lafayette Boulevard, Bridgeport, Connecticut 06604
-------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
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
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,173,382
Transitional Small Business Format: Yes [ ] No [ X ]
<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
BALANCE SHEET, JUNE 30, 1998
(Dollars in thousands,except share and per share amounts)
(Unaudited)
<S> <C>
ASSETS
Investments:
Loans - net .................................................. $ 462
-------
Investments-net ........................................ 462
-------
Cash and cash equivalents .................................... 337
Restricted cash .............................................. 282
Loans held for sale .......................................... 0
Accrued interest ............................................. 42
Servicing rights ............................................. 14
Fixed assets ................................................. 35
Notes Receivable ............................................. 422
Other assets ................................................. 36
-------
TOTAL ASSETS ................................................. $ 1,630
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and other accrued expenses .................. 267
-------
TOTAL LIABILITIES ............................................ 267
-------
STOCKHOLDERS' EQUITY:
Common stock, no par value, stated value $.50
per share, authorized 3,000,000 shares,
issued and outstanding 1,173,382 shares ................... 587
Paid-in surplus .............................................. 9,253
Accumulated deficit .......................................... (8,477)
-------
TOTAL STOCKHOLDERS' EQUITY ................................... 1,363
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................... $ 1,630
=======
</TABLE>
See notes to financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)
(Unaudited)
Three Months Three Months
Ended Ended
Jun. 30, 1998 Jun. 30, 1997
------------- -------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans ........................ $ 30 $ 25
--------- ---------
OTHER OPERATING INCOME:
Servicing fees .................................... 26 42
Loan Origination fees ............................. 50 31
Other fees ........................................ 19 2
--------- ---------
Total Other Operating Income .................. 95 75
--------- ---------
TOTAL INCOME ...................................... 125 100
--------- ---------
OTHER OPERATING EXPENSES:
Officers' salaries ................................ 31 31
Other salaries .................................... 8 10
Directors' fees ................................... 2 5
Professional services ............................. 6 13
Miscellaneous taxes ............................... 4 5
Employee and general insurance .................... 9 11
Rent .............................................. 6 7
Communications .................................... 3 3
Advertising and promotions ........................ 1 2
Stock record and other financial expenses ......... 2 1
Employees' pension plan ........................... -- 1
Depreciation expense .............................. 2 4
Other operating expenses .......................... 17 16
--------- ---------
Total Other Operating Expenses ................ 91 109
--------- ---------
NET INCOME (LOSS) ................................. $ 34 $ (9)
========= =========
INCOME (LOSS) PER COMMON SHARE .................... $ 0.03 ($0.01)
========= =========
Weighted average number of
common shares outstanding ....................... 1,173,382 1,173,382
========= =========
</TABLE>
See notes to financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Dollars in thousands, except share and per share amounts)
(Unaudited)
Common Stock
--------------------- Total
Number Of Paid-In Accumulated Stockholders'
Shares Amount Surplus Deficit Equity
--------- ---- ------ ------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1997 1,173,382 $587 $9,253 ($8,794) $1,046
Net Loss (9) (9)
--------- ---- ------ ------- ------
BALANCE, JUNE 30, 1997 1,173,382 $587 $9,253 ($8,803) $1,037
========= ==== ====== ======= ======
BALANCE, MARCH 31, 1998 1,173,382 $587 $9,253 ($8,511) $1,329
Net Income 34 34
--------- ---- ------ ------- ------
BALANCE, JUNE 30, 1998 1,173,382 $587 $9,253 ($8,477) $1,363
========= ==== ====== ======= ======
</TABLE>
See notes to financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Dollars in thousands)
(Unaudited)
Three Months Three Months
Ended Jun 30, 1998 Ended Jun 30, 1997
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) .................................................... $ 34 ($ 9)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation ..................................................... 2 4
Amortization of discount on note receivable ...................... (2) --
Principal collected on note receivable ........................... 30 --
Origination of loans held for sale ............................... (2,350) (1,271)
Proceeds from sale of loans held for sale ........................ 2,444 1,551
Decrease in Partnership loans .................................... 91 --
Increase in accrued interest receivable .......................... (21) (5)
(Increase) in other assets ...................................... (1) 3
Increase (Decrease) in accounts payable and other accrued expenses 125 (29)
Increase in restricted cash ...................................... (233) --
------- -------
Net cash provided by operating activities ................... 119 244
------- -------
INVESTING ACTIVITIES
Principal collected on investments ................................... 4 7
------- -------
Net cash provided by investing activities ................... 4 7
------- -------
FINANCING ACTIVITIES
Decrease in warehouse line of credit .................................. 0 (308)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................... 123 (57)
CASH AND CASH EQUIVALENTS, BEGINNING .................................... 214 211
------- -------
CASH AND CASH EQUIVALENTS, ENDING ....................................... $ 337 $ 154
======= =======
</TABLE>
See notes to financial statements.
-5-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of The First
Connecticut Capital Corporation (the "Corporation"), formerly The First
Connecticut Small Business Investment Company, have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair representation have been included.
Operating results are not necessarily indicative of the results that may be
expected for the year ending March 31, 1999. For further information, refer to
the financial statements and footnotes thereto included in the Corporation's
annual report filed on Form 10-KSB for the year ended March 31, 1998.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Corporation had net income for the three months ended June 30, 1998
of $34,000 compared to a net loss of $9,000 for the comparable period of the
prior year.
The Corporation is currently licensed in the States of Connecticut and
Massachusetts to operate as Mortgage Lender/Broker.
Interest Income and Other Operating Income
Interest and fees on loans has increased $5,000 for the three months
ended June 30, 1998 as compared to the three months ended June 30, 1997. This
increase is the result of interest collected on Partnership loans and Loans held
for sale.
Loan origination fees increased $19,000 for the three months ended June
30, 1998 as compared with the comparable period of the prior year. This increase
was due to the increase of mortgage loans originated and funded by the
Corporation. Other fee income increased by $17,000 from the prior year due to a
non-recurring management fee of $5,000 and interest earned on idle funds.
Servicing fees declined by $16,000 for the three months ended June 30,
1998 as compared to the prior period. This decline is due to the continued
reduction and liquidation of the portfolio sold under the Loan and Real Property
Purchase Agreement dated June 29, 1993 (and amended on October 29, 1993).
-6-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
Other Operating Expense
Other operating expenses declined $18,000 during the three months ended
June 30, 1998 as compared to the comparable period of the prior year due
primarily to a decreases in legal and directors fees, and an overall reduction
in all operating expenses.
Plan of Operation
The Corporation is engaged in the mortgage banking business, which
involves the origination, purchase, sale and servicing of mortgage loans secured
by residential properties and other real estate. These loans are predominately
secured by first mortgage liens on residential properties and are sold to
qualified investors with origination and servicing fees retained by the
Corporation. The Corporation's revenues consist of loan servicing fees, loan
origination fees, interest on mortgage loans held prior to sale and mortgage
servicing rights. Since January 1996, the Corporation has expanded its Portfolio
Loan Program to include short-term mortgages for construction, remodeling and
additions.
THE FIRST CONNECTICUT CAPITAL CORPORATION
It is anticipated that the Corporation will continue to increase its
level of activities in these areas creating servicing fees and interest income.
The Corporation has approximately $337,000 of unrestricted cash and
cash equivalents and approximately $1.363 million of Stockholders' Equity at
June 30, 1998.
The Corporation currently anticipates that during the year ending March
31, 1999, its principal financing needs will consist of funding its mortgage
loans held for sale and the ongoing net cost of mortgage loan originations and
cash flow used in operations. Future cash flow requirements will depend
primarily on the level of the Corporation's activities in originating and
selling mortgage loans, as well as cash flow required by its operations
The Corporation continues to investigate and pursue alternative and
supplementary methods to finance its operations and to support the growth of the
Corporation
The Corporation believes that cash on hand and the internally generated
funds will be sufficient to meet its corporate, general and administrative
working capital and other cash requirements during the year ending March 31,
1999. The Corporation took certain action steps during the year ended March 31,
1997 to decrease its cash flow requirements for the years ended March 31, 1998
and 1997. Those steps included an overall salary reduction and a restatement and
termination of the pension plan. As a result of the Note with Walsh Securities
the Corporation's cash flow will increase by $120,000 a year. Management also
believes additional steps can be taken if necessary.
-7-
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
PARTNERSHIP
The Corporation has formed a Limited Partnership known as First Connecticut
Capital Mortgage Fund A, Limited Partnership (the "Partnership") as to which the
Corporation is the General Partner. The intent of this new entity is to sell
units in the Partnership to investors in a private placement, up to a maximum of
$5 million in $50,000 units for the purpose of funding a short-term Portfolio
Loan Program for the Partnership. The limited partners will be limited to
investors who qualify as "Accredited Investors" as defined in Regulation D,
promulgated under the Securities Act of 1933. This program would generate income
to the Corporation in the form of loan origination fees and servicing fees in
excess of a guaranteed income return to the limited partners in connection with
mortgage loans that would be purchased by the Partnership from the funds
invested by the limited partner. As of June 30, 1998 the Corporation has sold 33
units.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
NONE
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 duly authorized.
THE FIRST CONNECTICUT CAPITAL
CORPORATION
(Registrant)
Date: July 29, 1998 By: /s/David Engelson
-----------------
David Engelson
President and Chief Financial
Officer
-8-
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 619
<SECURITIES> 0
<RECEIVABLES> 1276
<ALLOWANCES> (300)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 241
<DEPRECIATION> (206)
<TOTAL-ASSETS> 1630
<CURRENT-LIABILITIES> 267
<BONDS> 0
0
0
<COMMON> 587
<OTHER-SE> 776
<TOTAL-LIABILITY-AND-EQUITY> 1630
<SALES> 125
<TOTAL-REVENUES> 125
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 91
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 34
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
