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 June 30, 1997
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 August 8, 1997. Of that total, 92,400 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 - June 30, 1997 (Unaudited) and
December 31, 1996.
Consolidated Statement of Operations - Three months and six
months ended June 30, 1997 and 1996 (Unaudited).
Consolidated Statement of Shareholders' Equity - December
31, 1993 through June 30, 1997.
Consolidated Statement of Cash Flows - Six months ended
June 30, 1997 and 1996 (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>
June 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 197,309 $ 250,209
Notes receivable - current:
Affiliate 3,857 38,478
Other 30,657 20,544
Investment in marketable
trading securities - at market 429,386 443,067
Accounts receivable - other 10,707 4,334
Accrued interest receivable - 143
Net investment in direct
financing leases - current 3,594 3,453
Prepaid income taxes 5,199 3,749
TOTAL CURRENT ASSETS 680,709 763,977
INVESTMENT IN UNCONSOLIDATED
SUBSIDIARY 247,818 250,008
NOTES RECEIVABLE - NON-CURRENT
Affiliate 13,236 34,347
Other 35,269 6,733
NET INVESTMENT IN DIRECT FINANCING
LEASES - non-current 7,020 8,854
$ 984,052 $1,063,919
</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>
June 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ - $ 40,109
Deferred income taxes - current 8,338 8,338
TOTAL CURRENT LIABILITIES 8,338 48,447
DEFERRED INCOME TAXES - NON-CURRENT 3,226 3,226
11,564 51,673
SHAREHOLDERS' EQUITY:
Common stock $.0001 par value;
authorized 50,000,000 shares;
issued 16,490,756 shares at
June 30, 1997 and December 31,
1996; outstanding 16,398,356
shares at June 30, 1997 and
December 31, 1996 1,649 1,649
Additional paid-in capital 1,137,363 1,137,363
Retained earnings (deficiency) (156,492) (116,734)
982,520 1,022,278
Less treasury stock - 92,400 shares
at June 30, 1997 and
December 31, 1996 (10,032) (10,032)
972,488 1,012,246
$ 984,052 $1,063,919
</TABLE>
See accompanying notes to consolidated financial statements.
-4(b)-
<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Interest and dividend income $ 9,749 $ 9,577 $ 17,660 $ 17,731
Realized and unrealized
gain (loss) on invest-
ment in marketable
trading securities (9,068) 235,628 (8,436) 267,516
Direct finance lease income 223 289 464 454
902 245,494 9,688 285,701
OPERATING EXPENSES:
General and
administrative expenses 21,472 50,257 33,653 62,806
INCOME (LOSS) FROM OPERATIONS (20,570) 195,237 (23,965) 222,895
OTHER INCOME (EXPENSES):
Equity in earnings (loss)
of unconsolidated subsidiary (396) 24,402 (13,293) 47,541
INCOME (LOSS) BEFORE INCOME TAXES (20,966) 219,639 (37,258) 270,436
PROVISION FOR INCOME TAXES - 69,000 2,500 81,000
NET INCOME (LOSS) $ (20,966) $ 150,639 $ (39,758) $ 189,436
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 16,398,356 14,552,458 16,398,356 14,248,033
NET INCOME PER COMMON SHARE $ - $ .01 $ - $ .01
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FROM DECEMBER 31, 1993 THROUGH JUNE 30, 1997
<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, 1993 14,633,750 1,499 970,557 (17,361) (19,643) 935,052
Purchase of Treasury Shares (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)
Sale 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 (249,100) - - - (33,070) (33,070)
Sale of Treasury Stock 1,212,450 - - - 105,773 105,773
Net income for the period - - - 59,443 - 59,443
Balance -
December 31, 1996 16,398,356 1,649 1,137,363 (116,734) (10,032) 1,012,246
Net loss for the period - - - (39,758) - (39,758)
Balance - June 30, 1997 16,398,356(a) $ 1,649 $1,137,363 $(156,492) $ (10,032) $ 972,488
</TABLE>
(a) Reflected on the accompanying
balance sheet as:
Issued: 16,490,756
Treasury Shares: 92,400
16,398,356
See accompanying notes to financial statements.
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VANDERBILT SQUARE CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (39,758) $ 189,436
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
(Gain) loss on sale of
marketable securities (27,569) (258,755)
Equity in (earnings) or loss
of unconsolidated subsidiary 13,293 (47,541)
Allowance for market decline
of securities 36,005 (8,761)
Changes in operating assets and liabilities:
(Decrease) in accounts
payable and accrued expenses (40,109) (34,818)
Decrease in accrued interest receivable 143 1,037
(Increase) decrease in
accounts receivable 2,493 24,456
(Decrease) Increase in income
taxes payable (1,450) 78,900
Proceeds from sale of marketable
trading securities 61,918 534,961
Purchase of marketable trading
securities (65,539) (267,289)
Net cash provided by (used in)
operating activities (60,573) 211,626
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collections of loans
to affiliates 3,085 8,132
Advance paid on notes receivable
- other (2,000) (5,000)
Principal collections of notes
receivable - other 15,998 22,361
Principal collections of direct
financing leases 1,693 1,753
Purchase of equipment for lease - (7,100)
Investment in unconsolidated
subsidiaries (11,103) (12,814)
Proceeds from sale of investment in
unconsolidated subsidiaries - 4,753
Net cash provided by
(used in) investing activities 7,673 12,085
</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>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ (52,900) $ 223,711
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 250,209 197,182
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 197,309 $ 420,893
</TABLE>
See accompanying notes to consolidated financial statements.
-7(b)-
<PAGE>
VANDERBILT SQUARE CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - FAIR PRESENTATION
The consolidated balance sheet as of June 30, 1997, the consolidated statement
of operations for the three months and six months ended June 30, 1997 and
1996, the consolidated statement of shareholders' equity as of June 30, 1997,
and the consolidated statement of cash flows for the six months ended June 30,
1997 and 1996, 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 June 30, 1997 and for all periods
presented have been made.
The operations for the six months ended June 30, 1997 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, 1996, 1995 and 1994 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, 1996 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
June 30, 1997
(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 $429,386 at June 30, 1997, and $443,067 at December 31, 1996. The cost of
these investments is $442,908 and $420,584 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) on marketable trading
securities".
NOTE 6 -POST BALANCE SHEET EVENT
On July 28, 1997, the Company sold all of the issued and outstanding capital
stock of Hi-Tech Leasing, Inc. to Corrections Services, Inc. ("CSI") in
exchange for 2,000,000 shares of CSI's authorized but previously unissued
restricted Common Stock.
On August 6, 1997, the Company announced that it will distribute to the
Company's stockholders an aggregate of of 2,850,000 shares of CSI restricted
Common Stock. The ratio of distribution will be 0.17 shares of CSI Common
Stock for each share of the Company's Common Stock. The record date and the
payable date for the distribution is August 26, 1997. There will be no
fractional shares issued or cash distributed in lieu of fractional shares.
One (1) full share of CSI Common Stock will be distributed for each fractional
share remaining.
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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 June 30, 1997, the Company had current assets of $680,709, compared to
$763,977 at December 31, 1996; total assets of $984,052 as compared to
$1,063,919 at December 31, 1996; current liabilities of $8,338 as compared to
$48,447 at December 31, 1996, and a current net worth of $972,488 as compared
to $1,012,246 at December 31, 1996. (See "Financial Statements"). The
decrease in total assets and net worth are principally due to the net loss
incurred for the period.
Liquidity
During the six months ended June 30, 1997, the Company had a decrease in cash
and cash equivalents of $52,900. The Company's decrease in cash was
principally attributed to the net loss incurred during the period. 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 has limited liabilities and no present commitments that are
reasonably likely to result in its liquidity increasing or decreasing in any
material way. The Company, therefore, believes that it has sufficient funds
to meet any current liquidity needs. 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 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.
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.
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<PAGE>
Results of Operations
The Company's revenues for the six months ended June 30, 1997, and June 30,
1996, were principally derived from interest income and activity related to
marketable securities transactions.
The Company's revenues for the six months amd three months ended June 30,
1997, was $9,688 and $902 as compared to $285,701 and $245,494 for the
comparable periods last year. The principal reason for the decrease in
revenues for the six months and three months ended June 30, 1997 was the
decrease in gain on investment in marketable trading securities.
Operating expenses decreased to $33,653 and $21,472 for the six months and
three months ended June 30, 1997, as compared to $62,806 and $50,257 for the
comparable periods last year. Loss before provision for income taxes for the
six months ended June 30, 1997, was ($37,258) as compared to income of
$270,436 for the same period last year. The decrease in income of $307,694 is
principally due to a decrease in gain on investment in marketable securities
of $275,952 and a decrease in equity of an unconsolidated subsidiary of
$60,834.
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 July 28, 1997, the Company sold all of the issued and outstanding capital
stock of Hi-Tech Leasing, Inc. to Corrections Services, Inc. ("CSI") in
exchange for 2,000,000 shares of CSI's authorized but previously unissued
restricted Common Stock.
On August 6, 1997, the Company announced that it will distribute to the
Company's stockholders an aggregate of of 2,850,000 shares of CSI restricted
Common Stock. The ratio of distribution will be 0.17 shares of CSI Common
Stock for each share of the Company's Common Stock. The record date and the
payable date for the distribution is August 26, 1997. There will be no
fractional shares issued or cash distributed in lieu of fractional shares.
One (1) full share of CSI Common Stock will be distributed for each fractional
share remaining.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The Registrant filed no Current Reports on Form 8-K during this reporting
period.
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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: August 8, 1997 By:/s/ Norman H. Becker
Norman H. Becker, President
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<PAGE>
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 197,309
<SECURITIES> 429,386
<RECEIVABLES> 48,815
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 680,709
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 984,052
<CURRENT-LIABILITIES> 8,338
<BONDS> 0
0
0
<COMMON> 1,649
<OTHER-SE> 970,839
<TOTAL-LIABILITY-AND-EQUITY> 984,052
<SALES> 0
<TOTAL-REVENUES> 9,688
<CGS> 0
<TOTAL-COSTS> 33,653
<OTHER-EXPENSES> 13,293
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (37,258)
<INCOME-TAX> 2,500
<INCOME-CONTINUING> (39,758)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,758)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
