FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996
2-96366-A
(Commission File Number)
VANDERBILT SQUARE CORP.
(Exact name of Registrant as specified in its charter)
Florida 59-2483405
(State of other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
3040 East Commercial Blvd., Ft. Lauderdale, FL 33308
(Address of Principal Executive Offices)
(954) 776-0902
(Registrant's Telephone Number, including area code)
Not Applicable
(Former name, former address and former fiscal years,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
There were 16,490,756 shares of Common Stock, $.0001 par value, issued and
outstanding at November 13, 1996. Of that total, 84,000 shares are held by
the Company in its treasury.
<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1996
(Unaudited) and December 31, 1995.
Consolidated Statement of Operations - Three months
and nine months ended September 30, 1996 and 1995
(Unaudited).
Consolidated Statement of Shareholders' Equity -
December 31, 1992 through September 30, 1996.
Consolidated Statement of Cash Flows - Nine months
ended September 30, 1996 and 1995 (Unaudited).
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
PART I - FINANCIAL INFORMATION
Item I. Financial Statements
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 323,216 $ 197,182
Notes receivable - current:
Affiliate 3,300 14,298
Other 96,244 98,695
Investment in marketable
trading securities - at market 446,378 320,920
Accounts receivable - other 26,035 26,297
Accrued interest receivable - 1,037
Net investment in direct
financing leases - current 3,385 3,976
Deferred income taxes - current 4,966 4,966
TOTAL CURRENT ASSETS 903,524 667,371
INVESTMENT IN UNCONSOLIDATED
SUBSIDIARY 274,244 214,316
NOTES RECEIVABLE - NON-CURRENT
Affiliate - 179
Other 10,544 25,561
NET INVESTMENT IN DIRECT FINANCING
LEASES - non-current 9,743 4,610
DEFERRED INCOME TAXES - non current 8,873 8,873
$1,206,928 $ 920,910
</TABLE>
See accompanying notes to consolidated financial statements.
-4(a)-
<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ - $ 34,818
Income taxes payable 72,685 5,992
TOTAL CURRENT LIABILITIES 72,685 40,810
SHAREHOLDERS' EQUITY:
Common stock $.0001 par value;
authorized 50,000,000 shares;
issued 16,490,756 shares at
September 30, 1996 and 14,991,600
shares at December 31, 1995;
outstanding 16,406,756 shares
at September 30, 1996 and
13,935,850 shares at
December 31, 1995 1,649 1,499
Additional paid-in capital 1,137,363 970,557
Retained earnings (deficiency) 5,263 (9,221)
1,144,275 962,835
Less treasury stock - 84,000 shares
at September 30, 1996; and
1,055,750 shares at December 31,
1995, at cost (10,032) (82,735)
1,134,243 880,100
$1,206,928 $ 920,910
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995*
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Interest income $ 8,726 $ 9,458 $ 26,457 $ 24,107
Realized and unrealized
gain (loss) on invest-
ment in marketable
trading securities (2,687) (29,533) 264,829 56,889
Consulting fees - 3,000 - 18,000
Direct finance lease income 274 241 728 761
6,313 (16,834) 292,014 99,757
OPERATING EXPENSES:
General and
administrative expenses 21,457 22,614 84,263 42,418
INCOME (LOSS) FROM OPERATIONS (15,144) (39,448) 207,751 57,339
OTHER INCOME (EXPENSES):
Equity in earnings (loss)
of unconsolidated subsidiary 3,148 9,944 50,689 32,828
Other Income - - - 100
INCOME (LOSS) BEFORE INCOME TAXES (11,996) (29,504) 258,440 90,267
PROVISION FOR INCOME TAXES - - 77,000 11,000
NET INCOME (LOSS) $ (11,996) $ (29,504) $ 181,440 $ 79,267
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 14,979,555 14,291,511 14,540,641 14,276,224
NET INCOME PER COMMON SHARE $ - $ - $ .01 $ .01
</TABLE>
*Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FROM DECEMBER 31, 1992 THROUGH SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Common Stock
$.0001 Par Value Additional Retained
Authorized 50,000,000 Shares Paid-In Earnings Treasury
Shares Amount Capital (Deficit) Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1992 12,105,750 $ 1,499 $ 640,411 $ (271,844) $ (27,616) $ 342,450
Purchase of Treasury Stock (172,000) - - - (11,880) (11,880)
Issuance of stock in
settlement of debt 2,700,000 - 330,146 - 19,853 349,999
Net Income for the period - - - 254,483 - 254,483
Balance - December 31, 1993 14,633,750 1,499 970,557 ( 17,361) (19,643) 935,052
Purchase of Treasury Stock (204,000) - - - (16,596) (16,596)
Net income for the period - - - 6,642 - 6,642
Balance - December 31, 1994 14,429,750 1,499 970,557 (10,719) (36,239) 925,098
Purchase of Treasury Stock (826,900) - - - (71,477) (71,477)
Sales of Treasury Stock 333,000 - - - 24,981 24,981
Net Income for the period - - - 1,498 - 1,498
Balance - December 31, 1995 13,935,850 1,499 970,557 (9,221) (82,735) 880,100
10% stock dividend 1,499,156 150 166,806 (166,956) - -
Purchase of treasury stock (214,000) - - - (25,517) (25,517)
Sale of treasury stock 1,185,750 - - - 98,220 98,220
Net income for the perio - - - 181,440 - 181,440
Balance - September 30, 1996(a) 16,406,756 $ 1,649 $1,137,363 $ 5,263 $ (10,032) $1,134,243
</TABLE>
a) Reflected on the accompanying
balance sheet as:
Issued: 16,490,756
Treasury Shares: 84,000
16,406,756
See accompanying notes to financial statements.
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995*
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 181,440 $ 79,267
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
(Gain) loss on sale of
marketable securities (265,025) (50,173)
Equity in (earnings) or loss
of unconsolidated subsidiary (50,689) (32,828)
Allowance for market decline
of securities 197 (6,716)
Changes in operating assets and liabilities:
(Decrease) in accounts
payable and accrued expenses (34,818) (61,808)
Decrease in accrued interest receivable 1,037 302
(Increase) decrease in
accounts receivable 24,456 -
Increase in income taxes payable 66,693 11,476
Proceeds from sale of marketable
trading securities 632,013 161,101
Purchase of marketable trading
securities (440,007) (435,886)
Net cash provided by (used in)
operating activities 115,297 (335,265)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan advance to affiliates - (3,000)
Principal collections of loans
to affiliates 11,177 27,700
Advance paid on notes receivable
- other (9,250) (50,000)
Principal collections of notes
receivable - other 26,718 177,279
Principal collections of direct
financing leases 2,558 4,824
Purchase of equipment for lease (7,100) -
Investment in unconsolidated
subsidiaries (18,119) (13,023)
Proceeds from sale of investment in
unconsolidated subsidiaries 4,753 469,255
Net cash provided by
(used in) investing activities 10,737 613,035
</TABLE>
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 126,034 $ 277,770
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 197,182 27,996
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 323,216 $ 305,766
</TABLE>
*Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
-7(b)-
<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE 1 - FAIR PRESENTATION
The consolidated balance sheet as of September 30, 1996, the consolidated
statement of operations for the three months and nine months ended September
30, 1996 and 1995, the consolidated statement of shareholders' equity as of
September 30, 1996, and the consolidated statement of cash flows for the nine
months ended September 30, 1996 and 1995, have been prepared by the Company
without audit. In the opinion of management, all adjustments necessary to
present fairly the financial position and results of operations at September
30, 1996 and for all period presented have been made.
The operations for the nine months ended September 30, 1996 are not
necessarily indicative of the results of operations to be expected for the
Company's fiscal year.
The condensed financial statements as of December 31, 1995, 1994 and 1993 have
been derived from audited financial statements.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the consolidated
financial statements and notes thereto as of December 31, 1995 and for the
year then ended.
NOTE 2 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Vanderbilt
Square Corp. and its wholly-owned subsidiary, Hi-Tech Leasing, Inc.. All
significant intercompany accounts and transaction have been eliminated in
consolidation.
NOTE 3 - DIRECT FINANCING LEASES
The net investment in direct financing leases consists of the gross amount of
the lease, net of deferred interest and allowance for doubtful accounts.
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE 4 - EARNINGS (LOSS) PER SHARE
Per share information was computed using the weighted average number of common
shares outstanding during the reporting periods. Per share information
computed to be less than one cent is not shown on the accompanying financial
statements.
NOTE 5 - INVESTMENT IN MARKETABLE TRADING SECURITIES
Marketable trading securities are stated at market value at the balance sheet
date. Market values of investments in marketable trading securities amounted
to $446,378 at September 30, 1996, and $320,920 at December 31, 1995. The
cost of these investments is $479,680 and $366,314 respectively. Unrealized
gains and losses resulting from fluctuations in the market price of the
related securities are currently reflected in the consolidated statement of
operations under the caption "Realized and unrealized gain (loss) in
marketable trading securities".
NOTE 6 - OTHER
On August 6, 1996, the Board of Directors of the Company declared a 10% stock
dividend of the outstanding Common Stock of the Company. The stock dividend
was paid on September 24, 1996 to all stockholders of record at the close of
business on August 23, 1996.
NOTE 7 - POST BALANCE SHEET EVENT
On October 30, 1996, the Company accepted the resignation of Ronald A. Martini
as an officer and director of the Company. In addition, the Board of
Directors of the Company appointed Glenn Shaffren to the vacancy on its Board
of Directors and elected Mr. Shaffren as Vice President/Chief Operating
Officer of the Company, both effective on November 1, 1996.
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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The analysis of the Company's financial condition, liquidity, capital
resources and results of operations should be reviewed in conjunction with the
accompanying financial statements, including the notes thereto.
Financial Condition
At September 30, 1996, the Company had current assets of $903,524, compared
to $667,371 at December 31, 1995; total assets of $1,206,928 as compared to
$920,910 at December 31, 1995; current liabilities of $72,685 as compared to
$40,810 at December 31, 1995, and a current net worth of $1,134,243 as
compared to $880,100 at December 31, 1995. (See "Financial Statements"). The
increase in total assets and net worth are principally due to the increase in
net income generated by operations.
Liquidity
As of September 30, 1996, the Company had cash and cash equivalents of
$323,216, which was an increase of $126,034 from December 31, 1995. The
Company believes it has sufficient cash and cash equivalents to meet its
current liquidity requirements. In the event the Company requires additional
cash, the Company can readily liquidate marketable securities.
The Company's operating expenses have continued to be kept at what the Company
believes to be a minimal level. The Company has no present commitments that
are reasonably likely to result in its liquidity increasing or decreasing in
any material way. In addition, the Registrant knows of no trend, additional
demand, event or uncertainties that will result in, or that are reasonably
likely to result in, the Company's liquidity increasing or decreasing in any
material way.
Capital Resources
The Company has no material commitments for capital expenditures. The Company
knows of no material trends, favorable or unfavorable, in the Registrant's
capital resources.
The Company has no outstanding credit lines or credit commitments in place and
has no current need for financial credit. In the event of any future need,
the Company believes that it will be able to borrow at prevailing terms
through loans collateralized, if necessary, by its assets.
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<PAGE>
Results of Operations
The Company's revenues for the nine months ended September 30, 1996, and
September 30, 1995, were principally derived from interest income and activity
related to marketable securities transactions.
The Company's revenues for the nine months and three months ended September
30, 1996, was $292,014 and $6,313 as compared to $99,757 and ($16,834) for the
comparable periods last year. The principal reason for the increase in
revenues for the nine months and three months ended September 30, 1996 was the
increase in gain on investment in marketable trading securities.
Operating expenses increased to $84,263 for the nine months ended September
30, 1996, as compared to $42,418 for the comparable period last year. The
principal reason for the increase in operating expenses was an increase in
consulting fees. Operating expenses decreased slightly to $21,457 for the
three months ended September 30, 1996, as compared to $22,614 for the
comparable period last year. Income before provision for income taxes for the
nine months ended September 30, 1996, was $258,440 as compared to $90,267 for
the same period last year. The increase in income of $168,173 is principally
due to an increase in gain on investment in marketable securities of $207,940
and an increase in equity of an unconsolidated subsidiary of $17,861.
Registrant knows of no trends or uncertainties that have had, or that the
Company reasonably expects will have a materially favorable or unfavorable
impact on net sales or revenues or income from continuing operations.
Moreover, Registrant knows of no other events that will cause a material
change in the relationship between its costs and revenues.
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<PAGE>
PART II
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
On August 6, 1996, the Board of Directors of the Company declared a 10% stock
dividend of the outstanding Common Stock of the Company. The stock dividend
was paid on September 24, 1996 to all stockholders of record at the close of
business on August 23, 1996.
On October 30, 1996, the Company accepted the resignation of Ronald A. Martini
as an officer and director of the Company. In addition, the Board of
Directors of the Company appointed Glenn Shaffren to the vacancy on its Board
of Directors and elected Mr. Shaffren as Vice President/Chief Operating
Officer of the Company, both effective on November 1, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable.
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<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.
VANDERBILT SQUARE CORP.
Date: November 13, 1996 By: /s/ Norman H. Becker
Norman H. Becker, President
<PAGE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statements of Cash Flows and Notes thereto
incorporated in Part I., Item 1. of this Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 323,216
<SECURITIES> 446,378
<RECEIVABLES> 128,964
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 903,524
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,206,928
<CURRENT-LIABILITIES> 72,695
<BONDS> 0
0
0
<COMMON> 1,649
<OTHER-SE> 1,132,594
<TOTAL-LIABILITY-AND-EQUITY> 1,206,928
<SALES> 0
<TOTAL-REVENUES> 292,014
<CGS> 0
<TOTAL-COSTS> 84,263
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 258,440
<INCOME-TAX> 77,000
<INCOME-CONTINUING> 181,440
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181,440
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
