UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1998
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Commission File No.: 33-11309
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THE IDAHO COMPANY
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(Exact name of registrant as specified in its charter)
IDAHO 82-0410913
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
9512 Fairview Avenue, Boise, Idaho 83704
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(Address of principal executive offices) (Zip Code)
(208) 375-8099
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(Registrant's telephone number, including area code)
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 period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
1,618 shares of no par value common stock
were outstanding at 06-30-98.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The financial information set forth herein is unaudited and reflects all
adjustments which are, in the opinion of management, necessary to the
presentation of a fair statement of the interim period presented.
(The remainder of this page intentionally left blank.)
THE IDAHO COMPANY
CONDENSED BALANCE SHEETS
June 30, 1998 December 31, 1997
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ASSETS
Cash $ 30,596 $ 64,898
Loans receivable 939,299 1,343,585
Less allowance for loan losses (95,008) (81,465)
---------- ----------
Net loans 844,291 1,262,120
Short term market investments 1,865 1,865
Interest and other receivables 30,011 21,088
Prepaid expenses 5,268 10,609
Securities available for sale 125,000 25,000
Fixed assets 2,368 2,222
Other real estate owned 271,443 0
Other assets 20,016 0
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Total Assets $1,330,858 $1,387,802
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accrued expenses $ 5,840 $ 10,780
Payroll tax payable 3,457 5,391
Fees collected, unearned 0 3,352
Notes payable 203,500 269,877
Lease reserve 1,434 0
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214,231 289,400
Excess of net assets acquired over
cost, net of accumulated accretion
of $92,447 at June 30, 1998 and
$80,891 at December 31, 1997 23,112 34,668
---------- ----------
Total Liabilities 237,343 324,068
STOCKHOLDERS' EQUITY
Common stock, no par value,
Authorized 500,000 shares; 1,618
shares issued and outstanding 982,825 982,825
Retained earnings 110,690 80,909
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1,093,515 1,063,734
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $1,330,858 $1,387,802
========== ==========
THE IDAHO COMPANY
CONDENSED STATEMENTS OF OPERATIONS
Six Six
Quarter Months Quarter Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1998 1997 1997
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REVENUE
Consulting Income $ 0 $ 0 $ 407 $ 922
Loan Fees 7,750 26,584 9,135 9,285
Interest Income - Loans 26,640 60,719 39,480 79,381
Interest Income - Other 4,126 8,732 343 395
Late Fees 1,687 2,857 0 0
Premiums 10,206 14,393 0 0
Negative Goodwill
& Other Income 11,142 85,039 7,349 13,827
-------- --------- ---------- ----------
Total Revenue 61,551 198,324 56,714 103,810
EXPENSES
Operating Expenses 71,557 155,090 40,607 85,272
Provision for Loan Loss 5,811 13,453 555 1,028
--------- -------- -------- --------
Total Expenses 77,368 168,543 41,162 86,300
NET INCOME (LOSS) $ (15,817) $ 29,781 $ 15,552 $ 17,510
======== ======== ======== ========
AVERAGE NUMBER SHARES
OUTSTANDING 1,618 1,618 1,618 1,618
BASIC AND DILUTED INCOME
(LOSS) PER SHARE OF
COMMON STOCK $ (9.78) $ 18.41 $ 9.61 $ 10.82
THE IDAHO COMPANY
STATEMENTS OF CASH FLOWS
Six Months Ended
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June 30, 1998 June 30, 1997
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INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 29,781 $ 17,510
Net cash provided by (used in)
operating activities:
Accretion of excess of net assets
acquired over cost (11,556) (11,556)
Provision for loan losses 13,543 1,028
Depriciation expense 540 (2,735)
Changes in operating assets
and liabilities:
Interest and other receivables (8,923) (4,532)
Prepaid expenses 5,341 6,134
Other assets (20,016) 0
Accrued expenses (4,940) 2,612
Payroll tax payable (1,934) 199
Fees collected, unearned (3,352) (6,535)
Interest payable 0 (350)
Lease reserve 1,434 0
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Total adjustments (29,863) (15,735)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (82) 1,775
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans receivable disbursed (1,364,940) (162,007)
Loans receivable collected 1,669,572 496,443
Purchase of securities available for sale (100,000) 0
Other real estate owned (171,789) 0
Purchase of fixed assets (686) 0
NET CASH PROVIDED BY -------- --------
INVESTING ACTIVITIES 32,157 334,434
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds form issuance of debt 842,110 0
Principal payments on debt (908,487) (184,921)
NET CASH USED IN -------- --------
FINANCING ACTIVITIES (66,377) (184,921)
INCREASE (DECREASE) IN CASH (34,302) 151,288
CASH AT BEGINNING OF PERIOD 64,898 15,697
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CASH AT END OF PERIOD $ 30,596 $ 166,924
======== ========
SUPPLEMENTAL SCHEDULE OF
NON-CASH ACTIVITIES
Other real estate owned $ 99,654 0
THE IDAHO COMPANY
NOTES TO FINANCIAL STATEMENTS
Quarter Ended June 30, 1998
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited, condensed financial statements have been prepared in
accordance with the instructions to Form 10-Q, and therefore, do not include all
information and footnotes necessary for a complete presentation of the results
of operations, the financial position, and cash flows, in conformity with
generally accepted accounting principles. This report on Form 10-Q for the
three months ended June 30, 1998 should be read in conjunction with the
Company's annual report on form 10-K for the year ended December 31, 1997.
The accompanying unaudited condensed financial balance sheets, statements of
operations and cash flows reflect all normal recurring adjustments which are, in
management's opinion, necessary for a fair presentation of the Company's
financial position, results of operation, and cash flows. The results of
operations for the interim period ended June 30, 1998 are not necessarily
indicative of the results to be expected for the full year.
NOTE 2 NET EARNINGS PER SHARE
On December 31, 1997, the Company adopted the provisions FAS No. 128, Earnings
Per Share, FAS 128 requires the presentation of both basic and diluted earnings
per share (EPS). Basic EPS is the amount of net income or loss divided by the
weighted average number of shares plus all potentially dilutive common shares.
In calculating EPS, the earnings were the same for both the basic and diluted
calculation.
NOTE 3 YEAR 2000
During 1998, the Company has been developing a plan to deal with the Year 2000
problem. Currently, some computer systems are not Year 2000 compliant, while a
few have been updated. The Year 2000 problem is the result of the computer
programs being written using two digits rather than four to define the
applicable year. During the first quarter 1998 the Company converted to a new
accounting software program in order to be Year 2000 compliant. All system
changes are being expensed as incurred. Steps are being taken to evaluate all
companies with whom the Company works with, in order to determine any effects of
the Year 2000 problem on those relationships.
NOTE 4 NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Financial Accounting Standards No. 130 (SFAS 130), Reporting
Comprehensive Income, effective January 1, 1998. SFAS 130 establishes standards
for reporting and displaying comprehensive earnings and its components in
financial statements. As of June 30, 1998, the Company has no items to report
as components of comprehensive income.
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
Disclosures about Segments of an Enterprise and Related Information. The
provisions of this statement require disclosure of financial reports issued to
shareholders. This statement is effective for fiscal years beginning after
December 15, 1997, however, it is not required to be applied for interim
reporting in the initial year of application.
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement
addresses the accounting for derivative instruments including certain derivative
instruments embedded in other contracts, and hedging activities. This statement
is effective for fiscal quarters of all fiscal years beginning after June 15,
1999. The Company is currently studying the future effects of adopting this
standard.
NOTE 5 INCOME TAXES
The Company has net operating loss carryforwards from prior years which will
exceed the income generated in the first six months of 1998. The deferred tax
asset related to these carryfowards was fully reserved for as of December 31,
1997. Accordingly, no income tax expense is being reported for the period ended
June 30, 1998.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS. The quarter ended June 30, 1998 resulted in net loss
of $15,817 compared to net income of $15,552 for the quarter ended June 30,
1997. This loss was due to the following two factors. First, for the second
quarter 1998, the Company foreclosed on a parcel of real estate. This property
is on the market for sale and has office space that will be leased in the
meantime. Second, an SBA loan is in the process of foreclosure. This loan is
in non-accrual status and the guaranteed portion of the loan was repurchased
from the secondary market. Between these two items, the Company has
approximately $440,000 in non-earning assets as of June 30, 1998. The
management estimates that any losses on the two foreclosures will be immaterial.
The increase in operating expenses mirrors the increase in volume of business
transactions, as well as one additional employee, an office in Idaho Falls,
Idaho, continued financial support for the Small Business Investment Company,
and the continuation of a severance package to a past employee.
Shareholders' equity on June 30, 1998, was $1,093,515 compared to shareholders
equity of $1,063,734 on December 31, 1997.
Inflation has had no significant impact upon the operating overhead, lending or
investing activities of the company.
LIQUIDITY AND CAPITAL RESOURCES. As of June 30, 1998, the Company held
$30,596 in cash accounts (including interest bearing accounts) to fund loans and
operating expenses. The Company has available a line of credit in the amount of
$300,100 at a rate of Prime plus 1.5 percent, another line of credit of
$150,000 at Prime plus 1.5 percent, and an operating line of $750,000 at
sub-prime adjusted daily. At June 30, 1998, the current portion of loans
receivable totaled $365,071 net of guaranteed portions of SBA loans and loan
participations with other lending institutions. No extraordinary capital
expenditures were anticipated at quarter end. Management believes that
existing cash, the lines of credit, and cash generated from operations will be
sufficient to allow the Company to meet its obligations as they come due.
One loan totaling $99,654 was foreclosed on in February. The Company bought out
a first deed of trust totaling $171,789 in order to assume first position on the
property. The balance of the loan was taken from loans receivable. This
balance and expenses surrounding the foreclosure are reported on the balance
sheet under Other Real Estate Owned.
The Company has two non-interest convertible debt instruments in software
companies located in Idaho Falls, Idaho. The Company has also taken a preferred
stock interest in a mid-market brokerage firm headquartered in Boise, Idaho.
The balance of these investments is reported on the balance sheet as Securities
Available for Sale.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOR THE IDAHO COMPANY
Diane Rigby
President
Date: June 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE IDAHO
COMPANY'S BALANCE SHEET AT JUNE 30, 1998, AND STATEMENT OF INCOME FOR THE SIX
MONTHS ENDED JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
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<SECURITIES> 126865
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<COMMON> 982825
<OTHER-SE> 110690
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<LOSS-PROVISION> (15817)
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