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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT FILED PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission file No. 0-5141
Princeton American Corporation
(Exact name of small business issuer as specified in its Charter)
Nevada 22-1848644
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2222 East Camelback Road, Suite 105, Phoenix, AZ 85016
(Address of Principal Executive Offices, including Zip Code)
Issuer's telephone number, including area code: (602) 522-2444
Indicate by check mark whether the registrant (1) has filed all reports
required 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 periods
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 [ ]
14,148,047 shares of Common Stock, par value $.001 per share, were
outstanding at August, 31, 2000
Transitional Small Business Disclosure Format (Check One) : Yes [ ]
No [X]
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PRINCETON AMERICAN CORPORATION
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
Part I Financial Information Page
<S> <C>
Item 1 - Financial statements (unaudited)
Balance Sheet - August 31, 2000 3
Statements of Operations and Comprehensive Loss -
Three Months ended August 31, 2000 and 1999 5
Statements of Cash Flows - Three Months ended 6
August 31, 2000 and 1999.
Notes to Financial Statements
7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8
PART II Other Information
Item 6 Exhibits and Reports on Form 8-K. 10
Signatures
</TABLE>
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PRINCETON AMERICAN CORPORATION
Unaudited Condensed Balance Sheet
August 31, 2000
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $ 24,161
Notes receivable, current portion 1,047
Investments in marketable securities 83,289
Prepaid expenses 37,722
----------
Total current assets 146,219
----------
Notes receivable, net of current portion 16,950
Investment in commission contract 203,672
Property and equipment, net 1,252,020
----------
$1,618,861
==========
</TABLE>
See accompanying notes to financial statements
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PRINCETON AMERICAN CORPORATION
Unaudited Condensed Balance Sheet
August 31, 2000
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
Current liabilities:
<S> <C>
Notes payable - current portion $ 28,854
Notes payable, officers 130,000
Accounts payable 158,277
Bankruptcy claims 679,289
Liabilities in dispute 619,603
Accrued interest 136,391
Accrued real estate taxes 213,872
Payroll and sales taxes payable 14,839
Advance rental income and tenant security deposits 24,171
-----------
Total current liabilities 2,005,296
Tenant security deposits - long term 42,872
Mortgage notes payable 1,766,110
-----------
3,814,278
-----------
Stockholders' deficit:
Common stock
approximately 15,000,000 shares issued and outstanding 15,000
Additional paid-in-capital 2,460,350
Accumulated deficit (4,271,600)
-----------
(1,796,250)
Net unrealized loss on marketable securities (399,167)
-----------
Total stockholders' deficit (2,195,417)
-----------
Total liabilities and stockholders' deficit 1,618,861
===========
</TABLE>
See accompanying notes to financial statements
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PRINCETON AMERICAN CORPORATION
Unaudited Condensed Statements of Operations and Comprehensive Loss
For the Three Months Ended August 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
--------- --------
<S> <C> <C>
Revenues
Rental income $ 224,478 224,564
Parking and other 77,245 2,640
--------- --------
301,723 227,204
--------- --------
Costs and expenses
Building operating costs 88,512 88,968
Professional fees 60,278 31,709
Payroll and payroll taxes 35,073 33,974
Ground lease 31,035 29,478
Depreciation 32,588 32,588
Consulting 17,550 20,000
Other 11,461 8,888
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Total costs and expenses 276,497 245,605
--------- --------
Income (loss) from operations 25,226 (18,401)
--------- --------
Other income (expense)
Interest and dividend income 4,949 5,590
Interest expense (54,761) (49,569)
Other (3,294) (2,392)
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(53,106) (46,371)
--------- --------
Net loss before income tax (27,880) (64,772)
Income taxes -- 50
--------- --------
Net loss $ (27,880) (64,822)
========= ========
Net loss per common share, basic and diluted $ (0.00) (0.00)
========= ========
Net loss $ (27,880) (64,822)
Net unrealized gain (loss) on marketable securities (23,976) (550)
--------- --------
Comprehensive loss $ (51,856) (65,372)
========= ========
</TABLE>
See accompanying notes to financial statements
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PRINCETON AMERICAN CORPORATION
Unaudited Condensed Statements of Cash Flows
For the Three Months Ended August 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net loss $(27,880) (64,822)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation 32,588 32,588
Interest income on investment contract (4,604) (4,525)
Decrease in receivables -- 198
Decrease (increase) in prepaid expenses (17,555) 5,350
Increase (decrease) in accounts payable and accrued expenses (10,026) 43,845
Increase in accrued interest 14,228 13,627
Increase (decrease) in rent deposits 9,654 (23,588)
-------- -------
Net cash provided by (used in) operating activities (3,595) 2,673
-------- -------
Cash flows from investing activities:
Payments on notes receivable 152 475
Purchase of property and equipment (873) --
Payments on investment contract 3,688 3,563
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Net cash provided by investing activities 2,967 4,038
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Cash flows from financing activities:
Refund of deposit -- 9,930
Proceeds from loan from officers 30,000 --
Payments on mortgage notes payable (6,861) (6,336)
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Net cash provided by financing activities 23,139 3,594
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Net increase in cash and cash equivalents 22,511 10,305
Cash and cash equivalents, beginning of year 1,650 5,820
-------- -------
Cash and cash equivalents, end of period $ 24,161 16,125
======== =======
Supplementary Disclosure of Cash Flow Information
Cash paid during the period for interest $ 40,533 35,942
======== =======
Cash paid during the period for income taxes $ -- 50
======== =======
</TABLE>
See accompanying notes to financial statements
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PRINCETON AMERICAN CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2000 AND 1999
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the Company,
without audit, and reflect all adjustments that are, in the opinion of
management, necessary for a fair statement of the results for the
interim periods. The statements have been prepared in accordance with
generally accepted accounting principles for interim financial
reporting and Securities and Exchange Commission regulations. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the financial statements
reflect all adjustments (of a normal and recurring nature) which are
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods. The results of
operations for the three months ended August 31, 2000 are not
necessarily indicative of the results to be expected for the entire
fiscal year.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's annual report on
Form 10K-SB for the fiscal year ended May 31, 2000.
2. CANCELLATION OF OUTSTANDING SHARES AND ISSUANCE OF NEW SHARES
On September 15, 2000, the Bankruptcy Court ordered Princeton American and
its transfer agent, American Stock Transfer & Trust ("AST") to cancel
all outstanding Princeton American share certificates and issue new
share certificates reflecting the allowed interest of shareholders
under the Plan of Reorganization for Princeton American and the Court's
prior orders. The Court further ordered that Princeton American and AST
are not subject to any claim based upon the cancellation of outstanding
share certificates and the issuance of new certificates in accordance
with the Court's orders. The final order became final and
non-appealable on September 29, 2000.
Princeton American is in the process of implementing the Court's order, and
new share certificates will be issued for the allowed interests as soon
as reasonably practicable. In connection with the issuance of new
certificates, Princeton American has also initiated a process to change
its trading symbol. Effective as of October 9, 2000, the trading
symbol, PELT, has been officially cancelled, and no further trades will
be made under that symbol. After new certificates have been issued to a
majority of those shareholders possessing an allowed interest, a new
trading symbol will be issued to Princeton American.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this report discuss future
expectations, contain projections of results of operations or financial
condition or state other "forward-looking" information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and was
derived using numerous assumptions. Important factors that may cause actual
results to differ from forward-looking statements and projections include, for
example:
- a downturn in the Phoenix, Arizona real estate market, particularly
one which would adversely affect commercial lease rates;
- an adverse result in the Weiss or other litigation referred to in this
report;
- any change in tax laws which would change the Company's ability to
utilize its tax loss carryforward or the inability under existing tax
laws for the full utilization of such tax loss carryforward;
- an inability of the Company to regain listed or trading status on the
Over-the-Counter Bulletin Board, NASDAQ, the American Stock Exchange,
or some other recognized market or exchange;
- certain operations of the Company, including the formation of
alliances with other entities, will remain under the jurisdiction of
and be subject to the confirmation and approval of the U.S. Bankruptcy
Court. The decisions of the Bankruptcy Court, with respect to Company
operations retained under its jurisdiction, could affect the business
of the Company;
- the inability of the Company to secure renewals of existing leases at
commercially reasonable rates or to promptly replace tenants following
the expiration of existing leases;
- the effect of changing economic conditions; and
- other risks which may be described in our future filings with
Securities and Exchange Commission. We do not promise to update
forward-looking information to reflect actual results or changes in
assumptions or other factors that could affect those statements.
RESULTS OF OPERATIONS:
Since the filing of the 10KSB on August 29, 2000, Management has focused on:
- Settlement negotiations with Harry and Irene Weiss with respect to
their claim which is currently the subject of several appeals by both
parties in the Federal District Court of Arizona and the 9th Circuit
Court of Appeals. A tentative agreement has been reached to submit the
dispute to mediation before a Bankruptcy Court Judge in Phoenix,
hopefully in the next fiscal quarter. There is no assurance that the
mediation process, if undertaken, will be successful.
- Leasing the vacant space at 4808 North 22nd Street, Phoenix. A
"Preliminary Agreement" to lease the second floor of the office
building has been entered into with Alliance Investors, LLC, a
residential development company. Alliance has 420 employees (with 44 in
the Phoenix office) and over a billion dollars of real estate under
management. The lease is for five years at an average annual rate of
$20.44 per square foot for a total of $ 1,046,960 in revenues to
Princeton over the term of the lease. Occupancy is scheduled for
January 1, 2000. When this tenant completes its move in, the building
will be fully leased with projected revenues of $390,312 annually.
Alliance is a former affiliate of BRE which occupies 10,889 square feet
of office space on the second floor of the Company's 2222 East
Camelback office building. The extension of BRE's original lease
expires on August 31, 2000. Alliance will continue to occupy two of the
three suites at the Camelback address formerly leased to BRE until it
moves into its new quarters at 4808 North 22nd Street. Princeton is
required under the terms of the lease to provide $70,000 of tenant
improvements in the form of reduced rent over a period of ten months
commencing February 1, 2001.
- Implementing the adjustments of outstanding shares and shareholders. On
July 31, 2000, Princeton filed its Motion For Order (1) Approving
Cancellation Of Outstanding Share Certificates and Issuance Of New
Certificates, and (2) Barring Claims. The order sought to implement the
February 3 and May 10, 2000 orders establishing the Company's
shareholder base. After the hearing on September 7, 2000, the
Bankruptcy Court, on September 15, issued its Order granting the Motion
in its entirety. A copy of the Order is contained in the Form 8-K set
forth in Item 6 hereof, which shall be deemed fully incorporated herein
by reference.
Pursuant to the Order, American Stock Transfer & Trust has been
directed to cancel all outstanding shares of the Company. As of October
9, 2000, Princeton's trading symbol "PELT" has been officially
cancelled and no further trades will be made under that symbol. As soon
as practicable, new certificates will be issued by American Stock
Transfer to those shareholders possessing an allowed interest and a new
trading symbol will be issued to Princeton American Corporation. Once
this process is completed Princeton will have approximately 15,000,000
shares issued and outstanding. The Company has applied to the NASD for
registration of the Company's shares for trading on the Over the
Counter Bulletin Board Market (OTCBB).
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THREE MONTHS ENDED AUGUST 31, 2000 COMPARED TO THREE MONTHS ENDED
AUGUST 31, 1999
We believe that our cash position of $ 24,161 as of August 31, 2000,
coupled with the increased revenues resulting from the lease-up of 4808
North 22nd Street, will be sufficient to continue operations for the
next twelve months under bankruptcy court supervision.
During the current quarter the Company received $75,000 from Southwest
Commercial Lending (the new bank tenant at 2222 East Camelback Road) as
reimbursement for the cancellation fee of $50,000 paid by Princeton to
the former tenant to acquire the balance of its lease.
The company is required to pay all unsecured and administrative claims
(aggregating $679,289, but not including the Weiss claim) in order to
emerge from bankruptcy proceedings. In order to raise the capital
necessary to accomplish this, we plan to either: (1) Sell 4808 North
22nd Street or (2) refinance the two office buildings. Either of these
alternatives (or a combination thereof) should produce sufficient funds
to discharge these obligations. Efforts have been made (and are
ongoing) to sell the 4808 building. We have had a tentative commitment
from a lender to refinance both buildings, pending resolution of
outstanding bankruptcy issues.
PART II -- OTHER INFORMATION
Item 1 -- Legal Proceedings.
There have been no material changes or events in the legal proceeding since
May 31, 2000, except as disclosed in the Company's Form 8-K filed on or about
October 10, 2000, relating to the cancellation of existing certificates and the
issuance of new certificates for those shareholders with claims approved or
accepted by the Bankruptcy Court.
Item 2 -- Changes in Securities and Use of Proceeds
(a) Pursuant to the U.S. Bankruptcy Court order disclosed on the Company's
Form 8-K filed on or before October 10, 2000, all share certificates of
the Company were cancelled. The Company is in the process of issuing
new stock certificates for those shareholders with claims approved or
accepted by the Bankruptcy Court.
Item 6 -- Exhibits and Reports on Form 8-K
(a) None for 1st Quarter, FYE 5/31/2001
5
(b) Reports on Form 8-K
Form 8-K filed by the Company on or about October 10, 2000 disclosing the
Bankruptcy Court order canceling the outstanding share certificates of the
Company, authorizing the issuance of new certificates to those shareholders with
claims approved and accepted by the Bankruptcy Court, and other matters.
<PAGE> 10
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.
Date: October 16, 2000
PRINCETON AMERICAN CORPORATION
/s/ William C. Taylor
----------------------------
William C. Taylor
President
/s/ Roderick W. McKinnon
----------------------------
Roderick W. McKinnon
Corporate Secretary
<PAGE> 11
Index to Exhibits
Exhibit 27
