UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
FORM 10-KSB / A
(Mark One)
Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995
Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Commission File Number 33-2248-FW
COMPULOAN ORIGINATIONS, INC.
(Name of small business issuer in its charter)
Delaware 75-2072205
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1935 East Vine Street, Suite 400, Salt Lake City, Utah 84121
(Address of principal executive offices) (Zip Code)
Issuer's telephone no.: (801) 278-9944
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: Common
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 No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.
State the issuer's revenues for its most recent fiscal year. $ 238,530
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and ask prices of such stock as of a specified date within 60
days. No firm market exists, therefore, no value is computed.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding as of May 10, 1996
Common Stock, Par Value $.0001 per share 7,079,659
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format. Yes No
<PAGE>
COMPULOAN ORIGINATIONS, INC.
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business . . . . . . . . . . . . . . . . . 1
Item 2. Description of Property . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 5
Item 4. Submission of Matter to a Vote of Security Holders. . . . 5
PART II
Item 5. Market for Common Equity and Related Stockholder Matters. . . 5
Item 6. Management's Discussion and Analysis or Plan of Operation . . . 6
Item 7. Financial Statements. . . . . . . . . . . . . . . . . . . 9
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 22
PART III
Item 9. Directors, Executive Officers, Promoters and Control persons;
Compliance with Section 16(a) of the Exchange Act. . . . . . . . . . . . . . 22
Item 10. Executive Compensation. . . . . . . . . . . . . . . . . . 24
Item 11. Security Ownership of Certain Beneficial Owners and Management. 25
Item 12. Certain Relationships and Related Transactions. . . . . . 26
PART IV
Item 13. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 27
SIGNATURES . . . 28
-i-
PART I
Item 1. Description of Business
History
CompuLoan Originations, Inc. (the "Company") is primarily in the business of
acting as a mortgage broker and marketing a computer loan origination ("CLO")
system for mortgage loan processing in response to changes in mortgage
banking and real estate laws, known as the Real Estate Settlement Procedures
Act of 1974 (RESPA).
The Company was originally organized on November 12, 1985 under the laws of
the State of Delaware as Lone Star Ventures, Inc. to engage in the
acquisition of assets and properties which the Company's management believed had
good business potential.
In 1986, pursuant to a registration statement on Form S-18 filed with the
Securities and Exchange Commission, the Company publicly sold 20,000,000
shares of its common stock at the offering price of $.01 per share. As a
result of this offering, the Company realized net proceeds of approximately
$153,000 after deducting commissions and expenses. Also in 1986, the Company
issued 13,333,333 shares of common stock to its officers and directors.
Prior to 1988, the Company was primarily involved in the search for potential
merger and/or acquisition candidates.
In 1988 the Company acquired all of the issued and outstanding capital stock of
IntelliChip, Inc., a California corporation ("IntelliChip"), in exchange for
shares of the Company's authorized but previously unissued common stock
representing a controlling interest in the Company. IntelliChip became a
wholly owned subsidiary of the Company and the Company changed its name to
IntelliChip Holdings Corporation. IntelliChip was engaged in developing a
read/write ID Chip and component system designed to achieve error proof
identification for use by the medical industry. However, IntelliChip was
never able to complete development of its system and in July 1989, the
Company entered into a redemption agreement whereby the acquisition of
IntelliChip was reversed.
As a result of reversing the IntelliChip acquisition, from July 1989 to
September 1992, the Company had no directors and no management and was
inactive. In 1992, by a shareholder consent resolution, a new Board of
Directors was elected. Following their election, the new directors
determined that the Company should become active in seeking potential
operating businesses and business opportunities with the intent to acquire or
merge with such businesses. The Board then began to consider and search for
potential business opportunities.
On October 20, 1995, the Company entered into a Stock Purchase Agreement (the
"Agreement") with CompuLoan Originations, Inc., a Utah corporation
("CompuLoan"), relating to the acquisition by the Company of CompuLoan and
its subsidiaries. Pursuant to the terms of the Agreement, the Company
changed its authorized capitalization to 10,000,000 shares of common stock,
par value $.0001 per share, and 1,000,000 shares of preferred stock, par
value $.0001 per share, and effected a reverse stock split of its then issued
and outstanding shares of common stock on a one (1) share for one hundred
(100) shares basis. Also, the Company acquired 100% of the issued and
outstanding capital shares of CompuLoan in exchange for 5,150,000 post-split
shares of the Company's authorized but previously unissued common stock. The
Agreement further called for the resignation of the existing Board of
Directors and the directors of CompuLoan were appointed as the new directors
and officers of the Company. The Company also changed its name to CompuLoan
Originations, Inc.
The Company's principal executive offices are presently located at 1935 East
Vine Street, Suite 400, Salt Lake City, Utah 84121, and its telephone number
is (801) 278-9944.
Business Development
The Company, through its wholly owned subsidiary, CompuLoan, has developed a
software package that allows real estate professionals to be compensated for
taking loan applications and electronically transferring them to the
CompuLoan offices for loan processing. This software was developed to take
advantage of changes in mortgage banking and real estate laws, known as the
Real Estate Settlement Procedures Act of 1974 (RESPA).
CompuLoan is the creator, exclusive marketer and holds all rights, titles and
interests to the FasTrak computer loan origination system which complies with
RESPA requirements. Computerized Loan Originated (CLO) loans are defined as any
loan application taken via a computer. For the purposes of CompuLoan and this
document a CLO loan is a loan originated by a real estate professional via a
computer in compliance with the RESPA regulations.
CompuLoan's FasTrak program provides the medium whereby the real estate
professional can earn an additional fee (up to 1% of the loan amount) in
addition to the standard real estate commissions. A $150 CLO transaction fee is
paid to CompuLoan at closing by the real estate professional.
As originally written, RESPA specifically prohibited any referral fee or
kickback of any kind to real estate professionals or builders from the mortgage
banking lenders as a gratuity for guiding customers to them. In 1992, RESPA was
changed by Congress in response to the need to provide better service and alter-
natives to consumers.
As amended, RESPA allows real estate professionals to be paid a fee from the
buyer for providing certain services to the consumer as it relates to the
origination of loan processing and documentation. Thus, since 1992 it has been
legal for real estate professionals to be paid additional fees, but the process
and regulations that specifically outline the steps to be taken were only
clarified in major regulation statements made by the Department of Housing and
Urban Development (HUD) in July of 1994.
The new regulations establish that the consumer is better served with several
choices when trying to find mortgage funds. The rule changes allow for the
creation of a CLO system that would make it possible for the real estate
professional to display a variety of mortgage lending rates and provide other
specific services to the consumer.
According to the regulations the real estate professional must perform the
following duties in order to be compensated for originating a loan:
1. Counsel and advise their client on their mortgage options.
2. Provide multiple/neutral mortgage loan rates to the client.
3. Create a "computer generated" loan application with the client.
4. Electronically transfer the loan application to the mortgage company.
In order for the real estate professionals to become part of the Company's
program they must pay to the Company an initial registration fee of $1,000 per
brokerage office and $250 per agent, for the license, software and associated
training to properly become a loan originator. The Company has field
representatives that provide one-on-one training and personally set up each
computer for each agent as necessary. The software is user-friendly and
accommodating to individuals having little or no prior computer knowledge or
experience. All training is comprehensive and very thorough.
The Company is currently marketing its financial services to real estate agents,
brokers and builders, giving them the ability to preview multiple mortgage
rates, pre-qualify potential clients, originate mortgage loans and track the
progress of the loans for their clients and receive additional compensation for
providing these services. This approach is unique to the industry. With the
FasTrak program real estate professionals can monitor the progress of a
buyer's loan via either a computer modem or a touch-tone phone at any time
without the need to wait for a return call from the loan processor. The CLO
system allows the real estate professional to offer a higher level of service to
the client and generate additional income without creating increased cost to the
client. The Company's marketing efforts are reaching real estate agents,
brokers and builders.
The Company has completed development of its CLO system software, infra-
structure, hardware, management team, and has its key staff personnel in place.
As of March 25, 1996, the Company has signed up 769 independent agents and is
actively seeking national accounts. Management intends to add necessary
hardware, staff and management as business warrants and funds are available.
Marketing
The Company is currently marketing its financial services to real estate agents,
brokers and builders. In addition to its current marketing efforts, the Company
is in the final stages of software development for establishing a direct
marketing campaign by way of "direct response advertising" that will allow real
estate professionals nationwide to access and sign up on the Company's system
without the need of a face to face live presentation. By way of a mass mailing,
real estate agents and brokers will receive a computer diskette that will allow
them to communicate directly with the Company's officers via modem, to sign on
to the Company's CLO system, and download appropriate working files without
personal contact with the Company's sales persons. The Company intends to
introduce its services to the real estate industry using direct mail and
Internet marketing.
Competition
In marketing its CLO system, the Company will be in competition with other
mortgage companies, banks, and specialty financial services organizations
offering the same or similar services. Most of these competitors will be larger
and will have available to them greater financial and personnel resources.
Initially, the Company is marketing its services to real estate agents, brokers
and builders. These persons are also the targets of several competing companies
offering similar services.
Management believes that the key competitive advantage of its CLO system is
that it includes the real estate agents in the financing process and provides an
opportunity for the agents to be compensated. Also, the FasTrak software system
is designed to be simple and relies on the real estate agent or broker to only
originate the loan.
Afterwards, the bulk of the work necessary to complete the application is
performed by the Company's mortgage professionals. Further, using the Company's
system allows the real estate broker or agent to stay involved with their
clients until the closing of the transaction.
Government Regulation
The processing and resale of residential mortgages is subject to the RESPA (Real
Estate Settlement Procedures Act) a Federal agency and certain state laws and
regulations to which the Company must comply. The Company believes that it is
in compliance with local laws and regulations in relation to its existing
properties. The Company is also subject to certain capital requirements and
internal auditing and quality controls established by the U.S. Department of
Housing and Urban Development in July 1993. The Company has been advised by its
independent auditors that it may not be in compliance with certain net worth
requirements as set by HUD and that the Company has not fully implemented
certain quality control procedures. The Company has been further advised that
continued noncompliance of these regulations could result in sanctions by HUD
and the potential loss of future business.
To remedy this situation, management is actively pursuing an equity restruc-
turing of the Company to meet or exceed the minimum HUD net worth requirements,
which for the Company is $75,000. Based on preliminary discussions and negotia-
tions with potential private investment groups, management is confident that the
Company will be in compliance with all HUD requirements during the third quarter
of 1996.
Employees
Currently, the Company has 45 full time employees who are involved in
management, marketing and loan processing. The Board of Directors actively
manages the operations of the Company. The Company anticipates adding new
employees as warranted by increased business activity.
Facilities
The Company's principal place of business is located at 1935 E. Vine Street,
Suite 400, Salt Lake City, Utah. The office space consists of approximately
12,000 square feet and is subject to a lease that expires March 1, 1998.
Management believes that this facility meets all the current and future needs of
the Company.
Industry Segments
No information is presented as to industry segments. The Company is presently
engaged in the marketing of a software package that allows real estate
professionals to be compensated for taking loan applications and electronically
transferring them to the CompuLoan offices for loan processing. Reference is
made to the statements of operations contained in the Company's financial state-
ments included herewith for a statement of the Company's revenues and operating
profit (loss) for the past fiscal year.
Item 2. Description of Property
The Company does not own or control any material property.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Company is a party
or to which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's Securities Holders during
the fourth quarter of the Company's fiscal year ending December 31, 1995. The
Company last held a Special Meeting in Lieu of Annual Meeting of Shareholders on
August 28, 1995 to approve the acquisition of CompuLoan and other related
matters.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company intends to make an application to the NASD for the Company's shares
to be quoted on the OTC Bulletin Board. The Company's application to the NASD
will consist of current corporate information, financial statements and other
documents as required by Rule 15c2-11 of the Securities Exchange Act of 1934, as
amended. Inclusion on the OTC Bulletin Board permits price quotations for the
Company's shares to be published by such service. The Company is not aware of
any current established trading market for its common stock nor is there any
record of any recent reported trades in the public market. The Company's common
stock last traded in a public market in approximately 1988.
If and when the Company's common stock is traded in the over-the-counter market,
most likely the shares will be subject to the provisions of Section 15(g) and
Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth
certain requirements for transactions in penny stocks and Rule 15g-9(d)(1)
incorporates the definition of penny stock as that used in Rule 3a51-1 of the
Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities
exchange meeting specified criteria set by the Commission; authorized for
quotation on The Nasdaq Stock Market; issued by a registered investment company;
excluded from the definition on the basis of price (at least $5.00 per share) or
the issuer's net tangible assets; or exempted from the definition by the
Commission. If the Company's shares are deemed to be a penny stock, trading in
the shares will be subject to additional sales practice requirements on broker-
dealers who sell penny stocks to persons other than established customers and
accredited investors, generally persons with assets in excess of $1,000,000 or
annual income exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker-dealers to
trade and/or maintain a market in the Company's common stock and may affect the
ability of shareholders to sell their shares.
As of December 31, 1995 there were 264 holders of record of the Company's common
stock. Currently, there are no reported bid or asked prices for the Company's
shares.
Dividend Policy
The Company has not declared or paid cash dividends or made distributions in the
past, and the Company does not anticipate that it will pay cash dividends or
make distributions in the foreseeable future. The Company currently intends to
retain and reinvest future earnings to finance its operations.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this Form 10-KSB.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets," and SFAS No. 123, "Accounting for Stock Based
Compensation." SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles be reported at the lower of the carrying amount or
their estimated recoverable amount and the adoption of this statement by the
Company is not expected to have an impact on the Company's financial statements.
SFAS No. 123 encourages the accounting for stock-based employee compensation
programs to be reported within the financial statements on a fair value based
method. If the fair value based method is not adopted, then the statement
requires pro-forma disclosure of net income and earnings per share as if the
fair value based method had been adopted. The Company has not yet determined
how SFAS No. 123 will be adopted nor its impact on the Company's financial
statements. Both statements are effective for years beginning after December
15, 1995.
Results of Operations
The Company's financial information set forth below is for the period from
January 24, 1995 to December 31, 1995. On October 20, 1995, the Company
completed a Stock Purchase Agreement (the "Agreement") with CompuLoan
Originations, Inc., a Utah corporation ("CompuLoan"), relating to the
acquisition by the Company of CompuLoan and it's subsidiaries. CompuLoan was
incorporated in April 1995 and owns CompuLoan Financial Services Group, L.L.C.
("Financial Services"), which was incorporated under the laws of the State of
Utah on January 24, 1995. Because the former shareholders of CompuLoan now
control the Company, the acquisition under the terms of the Agreement was
accounted for as a reorganization. The financial information presented herein
includes the accounts of CompuLoan from January 24, 1995, the date of the
formation of Financial Services, through December 31, 1995.
For the Year Ended December 31, 1995
Total revenues for the year ended December 31, 1995 ("1995") were $238,530,
comprised primarily of commissions of $226,909 (95%). Brokerage fees and
interest income made up the remaining 5%. These results reflect the limited
marketing of the Company's CLO system which began in approximately September
1995.
Total expenses for 1995 were $1,943,482 resulting in a net loss for 1995 of
$1,704,952. Approximately 46% of the Company's expenses were for salaries and
related taxes which reflects certain start-up costs including developing and
writing software and putting the management team in place prior to meaningful
revenues being generated. Depreciation and amortization accounted for approx=
imately 13% of total expenses due to the depreciation of computer and office
equipment and the amortization of certain notes payable. Approximately 9% of
the Company's total expenses were for rent of its office facilities and
principal place of business. Management believes that its current facilities
are adequate to accommodate a significant increase in the Company's business and
therefore, as business and revenues increase in the future, the percentage of
rental expenses compared to total expenses and total revenues should decrease
significantly.
Other notable expense items for 1995 were advertising and promotion expense (5%)
and travel (4%) which reflects the Company's initial marketing efforts for its
CLO system, consulting fees (3%) attributed to the issuance of 125,000 shares of
the Company's common stock for consulting services rendered valued at $62,500,
and legal and accounting expense (3%) which was impacted by the Company's
acquisition of CompuLoan. Management believes that as the Company moves from
developing its software to actually marketing its services, these expenses
will become more in line with revenues.
Net Operating Losses
The Company has accumulated approximately $1,600,000 of net operating loss
carryforwards as of December 31, 1995, which may be offset against future
taxable income through the year 2010 when the carryforwards expire. The use of
these losses to reduce future income taxes will depend on the generation of
sufficient taxable income prior to the expiration of the net operating loss
carryforwards. In the event of certain changes in control of the Company, there
will be an annual limitation on the amount of net operating loss carryforwards
which can be used.
No tax benefit has been reported in the financial statements for the year ended
December 31, 1995 because the Company believes there is a 50% or greater chance
the carryforward will expire unused. Accordingly, the potential tax benefits of
the loss carryforward is offset by valuation allowance of the same amount.
Liquidity and Capital Resources
During 1995, the Company's working capital needs were satisfied from the sale of
securities and from loans made to the Company, primarily from shareholders.
Working capital at December 31, 1995 was a negative $856,645. Cash of $82,845
accounted for almost all of the Company's current assets. The Company's current
liabilities include $150,000 in notes payable due in 1996, of which the $50,000
note has been repaid and the $100,000 note has been renegotiated and is
guaranteed by collateral pledged by third parties. Also as of December 31,
1995, the Company had $147,000 in notes payable due to related parties at
various time throughout 1996 and a royalty payment of $314,410, payments on
which commence in January 1996 and continue for twenty-three months thereafter.
Presently, the Company is attempting to renegotiate the terms of the royalty
payment and will seek outside financing to satisfy these obligations if not
extended.
The Company anticipates meeting its initial working capital needs during the
1996 fiscal year by investigating the possibility of equity or debt financing
through private sources. Although management has not made any arrangements or
definitive agreements, the Company is contemplating both the private placement
of securities and/or a public offering. If the Company is able to secure
adequate financing from the sale of its securities or from private lenders,
management believes that starting in approximately the third quarter of 1996,
the Company will be able to sustain its working capital requirements from its
operations.
As of December 31, 1995, the Company had total assets of $904,699, cash of
$82,845 and a total stockholders' deficit of a negative $387,937. Total current
liabilities equaled $940,553. The Company's only long term liability is the
$352,083 balance of the royalty payable which is payable through 1997.
Management intends to seek additional equity or debt capital through private
sources in order to satisfy its working capital needs in 1996, although there
can be no assurance such funds will be available.
As of December 31, 1995, the Company was not in compliance with certain net
worth requirements established by the U.S. Department of Housing and Urban
Development in July 1993. The Company has been advised by its independent
auditors that continued noncompliance of these regulations could result in
sanctions by HUD and the potential loss of future business. The Company is
presently negotiating with a private investment group which would provide the
necessary funding to restructure the Company's equity and come into compliance
with the HUD net worth requirements. Although there can be no assurance that
such funding will be obtained by the Company, management believes that the
transaction could be finalized and financing made available to the Company
during the second quarter of 1996.
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
Plan of Operation
For the fiscal year ending December 31,1996 ("1996"), the Company intends
to aggressively market its CLO system to real estate agents, brokers and
builders. The Company's marketing of its services in 1996 will primarily be by
direct contact, by mail, and by Internet advertising. Management estimates that
the Company cash needs for 1996 will be approximately $1,500,000. Of this
amount, $400,000 will be used to retire existing debt and other financial
obligations. The balance, or $1,100,000, will be used as working capital in
conducting the Company's ongoing business. Management further projects that the
Company will need to secure outside financing to provide its working capital
until at least the third quarter of 1996, at which time it is estimated that
projected revenue will exceed projected operational costs. To overcome the
Company's projected cash flow shortage for at least the first half of 1996,
management intends to seek additional equity or debt capital through private
sources, although there can be no assurance such funds will be available. As of
the date hereof, although the Company is in active negotiations, it has not
entered into any firm agreements or understanding for the raising of capital
from private sources.
Management forecasts that if adequate funding is secured, new loans per
month will increase at a rate of 300 per month by the end of 1996 as a result of
their unique approach to marketing. By increasing the new loans at a rate of
300 per month the Company would be processing up to 10,000 loans each month
after a three year period. In order to accomplish its objectives, the Company
will continue to seek out funding from both private and public sources during
the next two years, although there can be no assurance that such funding will be
available.
Item 7. Financial Statements
The Company's financial statements as of and for the fiscal year ended
December 31, 1995 have all been examined to the extent indicated in their report
by Jones, Jensen & Company, independent certified accountants, and have been
prepared in accordance with generally accepted accounted principles and pursuant
to Regulation S-B as promulgated by the Securities and Exchange Commission. The
aforementioned financial statements are included herein in response to Item 7 of
this Form 10-KSB.<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CompuLoan Originations, Inc.
(Formerly Intellichip Holdings Corporation)
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheet of CompuLoan
Originations, Inc. and subsidiary (formerly Intellichip Holdings Corporation) as
of December 31, 1995 and the related consolidated statement of operations,
stockholders' equity (deficit), and cash flows from inception on January 24,
1995 through December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CompuLoan
Originations, Inc. and subsidiary (formerly Intellichip Holdings Corporation)
as of December 31, 1995 and the results of their operations and their cash flows
from inception on January 24, 1995 through December 31, 1995 in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Computation of HUD Adjusted Net
Worth (Schedule 1) on page 14 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements take as a whole.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11 to the
financial statements, the Company has suffered losses from operations and has a
net capital deficiency, which raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters also
are described in Note 11. The financial statements do not include any adjust-
ments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
March 6, 1996
<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Consolidated Balance Sheet
ASSETS
December 31,
1995
CURRENT ASSETS
Cash (except escrows) (Note 2) $ 82,845
Pre-paid expenses 1,063
Total Current Assets 83,908
NON-CURRENT ASSETS
Pre-paid interest 444,086
Note receivable - related party, net of allowance
for bad debts of $49,900 (Note 5) 149,700
Goodwill, net of accumulated amortization (Note 4) 64,000
Property and equipment, net of accumulated
depreciation (Note 3) 134,917
Organization costs, net of accumulated
amortization (Note 4) 16,034
Deposits 12,054
Total Non-Current Assets 820,791
TOTAL ASSETS $ 904,699<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31,
1995
CURRENT LIABILITIES
Accounts payable $ 136,206
Accrued expenses 192,937
Royalty payable (Note 9) 314,410
Notes payable (Note 6) 150,000
Notes payable - related parties (Note 7) 147,000
Total Current Liabilities 940,553
LONG-TERM LIABILITIES
Royalty payable (Note 9) 352,083
TOTAL LIABILITIES 1,292,636
COMMITMENTS AND CONTINGENCIES (Note 9) -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 10,000,000 shares
authorized of $0.0001 par value, 6,689,659
shares issued and outstanding 669
Additional paid-in capital 1,316,346
Accumulated deficit (1,704,952 )
Total Stockholders' Equity (Deficit) (387,937 )
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 904,699<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Consolidated Statement of Operations
From
Inception on
January 24,
1995 through
December 31,
1995
REVENUES
Commissions $ 226,909
Brokerage fees 9,315
Interest income 2,306
Total Revenue 238,530
EXPENSES
Salaries and related taxes 892,908
Rent 177,918
Legal and accounting 57,043
Advertising and promotion 90,732
Bad debt expense 49,900
Depreciation and amortization 257,484
Commissions 10,728
Consulting Fees 62,500
Royalties 16,493
Loan costs 46,985
Travel 72,827
Insurance 37,058
Maintenance and repairs 13,675
Supplies 54,024
Telephone and utilities 51,830
Dues and licenses 24,849
Shipping 13,656
Interest 5,445
Other operating expenses 7,427
Total Expenses 1,943,482
NET INCOME (LOSS) $ (1,704,952 )
NET LOSS PER SHARE $ (0.25 )<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Consolidated Statement of Stockholders' Equity (Deficit)
<TABLE>
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balances, January 24, 1995 - $ - $ - $ -
Acquisition of A+ Mortgage - - 11,058 -
Issuance of shares to acquire
CompuLoan Originations, Inc. 5,150,000 515 324,485 -
Liabilities paid by officer prior
to acquisition of CompuLoan
Originations, Inc. - - 3,557 -
Acquisition of Intellichip, Inc. 249,459 25 (125) -
Common stock issued for cash 1,165,200 117 715,283 -
Additional paid-in capital for
territorial rights - - 199,600 -
Common stock issued for
consulting services 125,000 12 62,488 -
Net loss for the year ended
December 31, 1995 - - - (1,704,952)
Balances, December 31, 1995 6,689,659 $ 669 $1,316,346 $(1,704,952)<PAGE>
</TABLE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Consolidated Statement of Cash Flows
From
Inception on
January 24,
1995 through
December 31,
1995
Cash Flows From Operating Activities:
Income (loss) from operations $(1,704,952)
Depreciation and amortization 257,484
Changes in operating assets and liabilities:
(Increase) decrease in pre-paid expenses (1,063)
(Increase) decrease in deposits (12,054)
(Increase) decrease in other assets (730,000)
(Increase) decrease in accounts receivable (149,700)
(Decrease) increase in accounts payable 136,206
(Decrease) increase in accrued expenses 859,330
Net Cash (Used) by Operating Activities (1,344,749)
Cash Flows from Investing Activities:
Purchase of fixed assets (166,478)
Organizational costs (20,043)
Net Cash (Used) by Investing Activities (186,521)
Cash Flows from Financing Activities:
Issuance of common stock 1,317,115
Issuance of notes payable 297,000
Net Cash Provided by Financing Activities 1,614,115
Net Increase (Decrease) in Cash and Cash Equivalents 82,845
Cash and Cash Equivalents at Beginning of Year -
Cash and Cash Equivalents at End of Year $ 82,845
<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Notes to the Consolidated Financial Statements
December 31, 1995
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements presented are those of CompuLoan
Originations, Inc. (Originations). Originations was incorporated in April
of 1995 under the laws of the State of Utah. Originations owns CompuLoan
Financial Services Group, L.L.C. (Financial Services), which was
incorporated under the laws of the State of Utah on January 24, 1995.
These two companies were organized to conduct and promote the service of
providing commercial and residential mortgages, and to develop, own and
operate computer loan origination systems.
On October 20, 1995, Intellichip Holdings Corporation (Intellichip) and
CompuLoan Originations, Inc. completed a stock purchase agreement whereby
Intellichip issued 5,150,000 shares of its common stock in exchange for
all of the outstanding common stock of Originations. Pursuant to this
reorganization, the name of Intellichip was changed to CompuLoan
Originations, Inc.
Since the shareholders of Originations control the Company, the
acquisition was accounted for as a reorganization by Originations.
The accompanying consolidated financial statements include the accounts of
Originations from January 24, 1995, the date of the formation of Financial
Services, through December 31, 1995. Collectively, Originations and
Financial Services are referred to herein as "the Company".
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting. The Company has elected a calendar year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. At December
31, 1995, the Company had $8,849 of client funds held in escrow. Also,
the company has a certificate of deposit in the amount of $50,000 which
collateralizes a note payable with a financial institution (See Note 6).
c. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Income Taxes
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $1,600,000 that may be offset against future taxable income
through 2010. Because the Company cannot reasonably estimate the future
benefit of this carryforward, no deferred tax asset has been reported.<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Notes to the Consolidated Financial Statements
December 31, 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Allowance for Bad Debts
At December 31, 1995, allowance for bad debts was accrued in the amount of
25% of the related party receivable.
f. Principles of Consolidation
The consolidated financial statements include those of Originations and
its wholly-owned subsidiary, Financial Services.
All material intercompany accounts and transactions have been eliminated.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major additions and
improvements are capitalized; however, minor replacements, maintenance and
repairs that do not increase the useful lives of the assets are expensed
as incurred. Depreciation of property and equipment is determined using
accelerated methods over the expected useful lives of the assets of five
to seven years. The activity in the property and equipment accounts
during 1995 is summarized as follows:
Purchases of furniture, fixtures
and leasehold improvements $ 31,141
Purchases of computers and equipment 135,337
Sub-Total 166,478
Less: accumulated depreciation (31,561)
Property and equipment, net $ 134,917
NOTE 4 - INTANGIBLE ASSETS
Goodwill in the amount of $80,000 resulted from the purchase of A+
Mortgage. This amount is being amortized over 5 years, resulting in
amortization expense of $16,000 for the period ended 1995, leaving a net
amount of goodwill of $64,000.
Organization costs are recorded at the original cost of $20,043. These
costs are being amortized over 5 years, resulting in amortization expense
of $4,009 for the period ended 1995, leaving a net amount of organization
costs of $16,034.<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Notes to the Consolidated Financial Statements
December 31, 1995
NOTE 5 - NOTE RECEIVABLE - RELATED PARTY
During the period ending December 31, 1995, an independent representative
agreement was entered into with a shareholder in California. Per this
agreement, the shareholder agreed to pay $199,600 for the right to act as
an independent representative in Southern California and the Company
agreed to pay the shareholder $100 for each broker contract and $50 for
each agent contract. In addition, the commission shall be $50 for each
loan that is submitted and funded by the contracted builders, real state
agents and brokers. The Company shall withhold 15% of the commissions due
until the shareholder's obligation is fulfilled.
NOTE 6 - NOTES PAYABLE
Notes payable at December 31, 1995, consisted of the following:
Note payable to West One Bank,
bears an interest rate of 7%,
payable in a lump sum in
February of 1996, collateralized
by certificate of deposit $ 50,000
Note payable to an individual,
bears an interest rate of 18%,
due in a lump sum in March of 1996 100,000
Total notes payable $ 150,000
NOTE 7 - NOTES PAYABLE - RELATED PARTIES
Notes payable to related parties at December 31, 1995, consisted of the
following:
Note payable to shareholder, bears
an interest rate of 8%, payable in
monthly installments of $5,000 of
principal and interest, due May 22,
1996, personally guaranteed by
officers of the Company $ 35,000
Note payable to shareholder, bears no
interest rate, payable in a lump
sum in March of 1996 27,000
Note payable to shareholder, bears no
interest rate, payable in a lump
sum in March of 1996 27,000
Note payable to shareholder/officer,
bears no interest rate, payable in a
lump sum in February of 1996 50,000
Balance $139,000<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Notes to the Consolidated Financial Statements
December 31, 1995
NOTE 7 - NOTES PAYABLE - RELATED PARTIES (Continued)
Balance forward $ 139,000
Note payable to shareholder, bears an
interest rate of 8%, payable in monthly
installments of $2,000 until balance
is paid off 8,000
Total notes payable to related parties $ 147,000
NOTE 8 - OPERATING LEASES
The Company has entered into a lease agreement for office space until
March 1, 1998. Minimum future rental obligations will be $184,980,
$192,378, and $49,038 for the years ending December 31, 1996, 1997 and
1998, respectively.
The Company has also entered into a lease agreement for office furniture
until August 5, 1997. Minimum future rental obligations will be $24,422
and $16,281 for the years ended December 31, 1996 and 1997, respectively.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Return of Capital and Guaranteed Payments to a Shareholder
One shareholder has an agreement with the Company to receive double the
amount of his initial $325,000 capital contribution. The total amount to
be paid to the shareholder is to be made in twenty-four equal monthly
payments. The payments to the shareholder are to start on the first day
of the thirteenth month following the formation of the Company in January
1995 and continue on the first day of each succeeding twenty-three months.
$650,000 has been recorded as a royalty payable with an offset to pre-paid
interest. Pre-paid interest will be amortized over a three year period,
from the time the original $325,000 investment was made to the time the
commitment is paid off.
Royalty Payments
The same shareholder that has an agreement for the "return of capital and
guaranteed payments," as noted above, also has an agreement with the
Company to receive royalty payments. The payments are based on gross
revenues for each calendar year after the formation of the Company. The
royalty payments will be paid on the tenth day of the fourth month after
formation of the Company and continue on the tenth day of each succeeding
month thereafter. The following is a schedule of the royalty percentages
for future calendar years:
Calendar year 1996 8%
Calendar year 1997 7%
Calendar year 1998 6%
Calendar year 1999 and thereafter 5%<PAGE>
COMPULOAN ORIGINATIONS, INC.
(Formerly Intellichip Holdings Corporation)
Notes to the Consolidated Financial Statements
December 31, 1995
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
The agreement also states that when the aforementioned "return of capital
and guaranteed payments" have been totally paid to the shareholder, the
royalty payments shall immediately be reduced to five percent of gross
revenues.
Another agreement was entered into with another investor where a royalty
of one dollar per closed mortgage loan for all loans originated after
July 24, 1995, shall be paid to the investor until the investor has
received all of his original investment of $100,000 back.
In addition, a stock purchase and royalty agreement was entered into
between the Company and two investors on August 14, 1995. The investors
agreed to invest $500,000 and the Company agreed to issue 1,000,000
shares and pay a royalty of five percent of gross income (not including
escrow flow deposits and disbursements) beginning January 1, 1996.
NOTE 10 - SUBSEQUENT EVENTS
Subsequent to December 31, 1995, the Company sold 390,000 shares of its
common stock at $0.50 per share for $195,000 cash. The Company also
received $43,000 from an officer in return for a note payable.
NOTE 11 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and allow it to continue
as a going concern. It is the intent of the Company to seek additional
financing through equity transactions and to re-negotiate all royalty
agreements.<PAGE>
COMPULOAN ORIGINATIONS, INC.
Computation of Adjusted Net Worth to Determine
Compliance with FHA Net Worth Requirements
December 31, 1995
Schedule 1
1995
Adjusted Net Worth (Deficit)
Stockholders' equity per balance sheets $(387,937)
Less:
Non acceptable assets for computation of
adjusted net worth (80,034)
Adjusted net worth $(467,971)
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
This Item is not Applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The following table sets forth the names, ages, and offices held with the
Company by it's directors and executive officers:
<TABLE>
<S> <C> <C> <C>
Name Position Director Since Age
Leon J. Petersen Chairman, C.E.O. January 1995 51
and Director
James R. Jeppson President, C.O.O. January 1995 52
and Director
O. Russell Crandall Secretary and Director January 1995 52
Eric Stilson Director August 1995 49
Arben K. Andersen Director August 1995 53
Stuart Palmer C.F.O. January 1995 46
</TABLE>
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. The Company has not
compensated its directors for service on the Board of Directors or any committee
thereof, but directors are reimbursed for expenses incurred for attendance at
meetings of the Board of Directors and any committee of the Board of Directors.
Executive officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors. The
Executive Committee of the Board of Directors, to the extent permitted under
Delaware law, exercises all of the power and authority of the Board of Directors
in the management of the business and affairs of the Company between meetings of
the Board of Directors.
The business experience of each of the persons listed above during the past
five years is as follows:
Leon J. Petersen founded CompuLoan and has been Chairman, Chief Executive
Officer and a director of the Company since January 1995. For eighteen years
through 1992, Mr. Petersen was an outside sales representative for Bullo
International. From 1993 to 1994, Mr. Petersen served as President of the
marketing division of Aim Mortgage, a mortgage company in Salt Lake City, Utah,
where he was responsible for the development of a mortgage loan program to
replace the popular mortgage refinance emphasis the company previously relied
upon for the majority of its business. In July 1994, Mr. Petersen founded
A Plus Mortgage in St. George, Utah which was subsequently acquired by
CompuLoan. Mr. Petersen's prior experience includes multiple sales and
management positions in the metal building construction and insulation
industry. Mr. Peterson will participate and direct specific marketing efforts
for the Company on the state and national level setting up accounts and CLO
regional directors. He will also assist in the growth of the Company the
investigation of possible mergers and/or acquisitions of existing mortgage
processing centers.
James R. Jeppson has been the President, Chief Operating Officer and a
director of the Company since January 1995. Mr. Jeppson has 19 years of
experience in marketing, management and new product development, including real
estate, insurance, toys, sporting goods and computer software. Until recently,
Mr. Jeppson was the Chief Operating Officer for Exerhealth, a Salt Lake City,
Utah home exercise equipment company. He joined that company in May, 1992, as
the fourth person hired and the only person with new product development and
computer systems skills. Mr. Jeppson created and directed the marketing plan,
negotiated with celebrities for advertising, negotiated with and re-aligned the
original stockholders positions to allow for an infusion of capital, directed
the manufacturing of the product and created the database system for customer
service and order entry. Prior to 1992, Mr. Jeppson was self employed as a
business consultant and software creator and writer. Previously, Mr. Jeppson
acquired computer skills by creating a personal financial planning software
program, including writing the actual code for the program. Mr. Jeppson is also
familiar with the real estate industry, having owned a Century 21 franchise in
Salt Lake City which primarily served four new home subdivisions plus a joint
venture with Amoco Oil Company in Evanston, Wyoming to provide a single family
subdivision and a 12-plex town home complex. Mr. Jeppson will direct the
Company's marketing efforts at all levels. He will also oversee and interface
the next generation computer program development and training with the Company's
marketing efforts.
O. Russell Crandall has been corporate Secretary and a director of the
Company since January 1995. Mr. Crandall has considerable experience in
mortgage loan processing, loan origination, real estate marketing, real estate
project development and construction. Prior to joining the Company's
predecessor, CompuLoan, in 1994, Mr. Crandall worked with Salt Lake Mortgage,
a Utah mortgage company, as a branch manager and loan officer in its Las Vegas,
Nevada office, and from 1992 to 1993, he was a loan officer for Commonwealth
United Mortgage and Interwest Mortgage Services. From 1988 to the present, Mr.
Crandall has been active as a licensed real estate agent in the State of Utah.
In 1994, together with Leon J. Petersen, Mr. Crandall founded A Plus Mortgage in
St. George, Utah, which was subsequently acquired by CompuLoan. Mr. Crandall
directs the loan processing and closing department operations for the Company.
He is the primary contact with major mortgage lenders and oversees mortgage
sourcing and compliance of the CLO system as it relates to RESPA.
Eric Stilson became a director of the Company in August 1995. Mr. Stilson
founded in 1978 and is the CEO of Stilson and Stilson, a Utah based advertising
firm for the production of infomercials for various products. Mr. Stilson holds
a degree in advertising and marketing from the University of Utah.
Arben K. Anderson became a director of the Company in August 1995. Mr.
Anderson founded in 1987 and is the CEO of ENUF International, a Utah based
apparel manufacturer and wholesaler. Mr. Anderson has an MBA degree in finance
from Boise State University.
Stuart Palmer became the controller and Chief Financial Officer of the
Company in January 1995. Mr. Palmer holds a BS degree in accounting from
Brigham Young University and has several years experience as a controller in
both the construction and manufacturing industries. From 1991 to 1993, Mr.
Palmer was the controller of Forms Connections and from 1993 to 1995, he was the
controller of Watkins Printing. Mr. Palmer will oversee the day to day
operations of the Company's cash management, financial statement preparation,
budget forecasting and interfacing with the Company's outside public
accountants.
No officer or director of the Company is an officer or director of any
other publicly traded corporation, nor has any officer or director been
convicted in or named subject to any pending criminal proceeding, nor is he the
subject of any order, judgment, or decree involving a violation of any state or
federal securities law.
Item 10. Executive Compensation
The Company does not have a bonus, profit sharing, or deferred compensation
plan for the benefit of its employees, officers or directors, nor has the
Company entered into employment contracts with any of the aforementioned
persons.
Cash Compensation
The following table sets forth all cash compensation paid by the Company
for services rendered to the Company for the year ended December 31, 1995, to
the Company's Chief Executive Officer and to all other executive officers of the
Company who earned a salary greater than $100,000 annually.
<TABLE>
Summary Compensation Table
<S> <C> <C> <C> <C> <C>
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
Leon J. Petersen, 1995 $ 107,000 $ -0- $ -0- $ -0-
Chairman, C.E.O.
James R. Jeppson, 1995 $ 102,000 $ -0- $ -0- $ -0-
President, C.O.O.
O. Russell Crandall, 1995 $ 107,000 $ -0- $ -0- $ -0-
Secretary
</TABLE>
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best knowledge of the
Company as May 10, 1996, with respect to each person known by the Company to own
beneficially more than 5% of the Company's outstanding Common Stock, each
director and all directors and officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
Leon J. Petersen * 1,581,000 22.3%
462 South 1100 East #6
St. George, Utah 84770
James R. Jeppson * 1,535,000 21.7%
10288 South Weeping Willow Dr.
Sandy, Utah 84070
O. Russell Crandall * 1,530,000 21.6%
2133 Pinnacle Terrace #302
Salt Lake City, Utah 84121
Arben K. Andersen * 500,000 7.1%
9850 South 300 West
Sandy, Utah 84070
Eric Stilson * 509,000 7.2%
7150 Union Park/
Salt Lake City, Utah 84047
Randy Read 500,000 7.1%
9850 South 300 West
Sandy, Utah, 84070
All directors and executive 5,655,000 79.9%
officers as a group
(5 persons in group)
* Director and/or executive officer
(1) Based upon 7,079,659 shares of common stock outstanding on May 10, 1996.
Note: Unless otherwise indicated in the footnotes below, the Company has
been advised that each person above has sole voting power over the
shares indicated above.
<PAGE>
Item 12. Certain Relationships and Related Transactions
During the Company's last two fiscal years, there have been no transactions
between the Company and any officer, director, nominee for election as
director, or any shareholder owning greater than five percent (5%) of the
Company's outstanding shares, nor any member of the above referenced
individuals' immediate family, except as set forth below.
During the fiscal year ended December 31, 1995, the Company's President and
Chief Operating Officer, James R. Jeppson, made two non interest bearing
loans to the Company. On November 8, 1995, Mr. Jeppson made a $20,000 loan
to the Company and on November 20, 1995, he made a second loan for $30,000.
Subsequent to the end of the Company's 1995 fiscal year, Mr. Jeppson has
made two additional loans to the Company; a $10,000 loan on January 18, 1996
and a $33,000 loan on February 1, 1996. As of the date hereof, Mr. Jeppson
holds non interest bearing notes totaling $93,000 due to him from the
Company.<PAGE>
PART V
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit Name
*2.1 Stock Purchase Agreement between the Company, then known as
IntelliChip Holdings Corporation and CompuLoan Originations, Inc.
*3.1 Certificate of Incorporation and all amendments pertaining thereto
*3.2 Certificate of Amendment
*3.3 By-Laws
21.1 Subsidiaries
* Previously filed
(b) During the last quarter of the period covered by this report,
the Company filed two reports on Form 8-K, dated September 20,
1995 and October 12, 1995, related to its acquisition of
CompuLoan.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LOAN ORIGINATIONS, INC.
BY: /S/ Leon J. Petersen
Leon J. Petersen,
Chairman and C.E.O.
Dated: May 10, 1996
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
Chairman, C.E.O. and May 10, 1996
/S/ Leon J. Petersen Director
Leon J. Petersen
President, C.O.O. and May 10, 1996
/S/ James R. Jeppson Director
James R. Jeppson
Secretary and Director May 10, 1996
/S/ O. Russell Crandall
O. Russell Crandall
Chief Financial Officer May 10, 1996
/S/ Stuart Palmer (Principal Accounting
Stuart Palmer Officer)
