<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
COMMISSION FILE NUMBER 0-16631
BOCA RATON CAPITAL CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-2763089
-------------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
6516 Via Rosa, Boca Raton, FL 33433
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(Address of principal executive offices)
(407) 750-2252
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(Issuer's telephone number)
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 X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,125,270 shares as of
May 8, 1996.
<PAGE>
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
QUARTER ENDED MARCH 31, 1996
Page No.
- ---- ---
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 3
Consolidated Statements of Operations -
Three Months Ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements - 6
Item 2 Management's Discussion and Analysis - 8
PART II OTHER INFORMATION
Item 3 Defaults Upon Senior Securities 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
- ------- ----------- -----------
(Unaudited) *
<S> <C> <C>
Cash and cash equivalents $ 142,788 $ 2,900,888
Portfolio investments at fair value 1,089,375 1,089,375
Other 38,500 -
---------- ----------
Total assets $ 1,270,663 $ 3,990,263
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable and accrued interest $ 601,675 $ 588,029
Accounts payable and accrued expenses 75,132 126,220
---------- ----------
Total senior indebtedness 676,807 714,249
---------- ----------
Total liabilities 676,807 714,249
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Stockholders' equity:
Common stock, $.001 par value; authorized
40,000,000 shares; issued and outstanding,
1,125,270 shares at March 31, 1996 and
December 31, 1995, respectively 1,125 1,125
Additional paid-in capital 4,002,937 6,534,795
Accumulated deficit (3,410,206) (3,259,906)
---------- ----------
Total stockholders' equity 593,856 3,276,014
---------- ----------
Total liabilities and stockholders' equity $ 1,270,663 $ 3,990,263
---------- ----------
---------- ----------
</TABLE>
*From audited financial statements
See accompanying notes to consolidated financial statements.
3
<PAGE>
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1996 1995
------------- --------------
<S> <C> <C>
Investment income:
Interest income $ 25,043 $ 22,972
Other - 29,213
--------- ---------
25,043 52,185
--------- ---------
Operating expenses:
General and administrative 120,490 47,815
Legal 29,667 52,101
Audit and tax 8,600 21,850
Interest 16,587 6,000
--------- ---------
Total operating expenses 175,344 127,766
--------- ---------
Operating loss (150,301) (75,581)
--------- ---------
Unrealized gains on investments:
Net increase in unrealized appreciation
of investments - 628,906
--------- ---------
Unrealized gains on investments 0 628,906
--------- ---------
Net income (loss) $ (150,301) $ 553,325
--------- ---------
--------- ---------
Earnings per share:
Weighted average number of shares 1,125,270 1,125,270
--------- ---------
--------- ---------
Net income $ (0.13) $ 0.49
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (Loss) $ (150,301) $ 553,325
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Increase in appreciated value of investments - (641,406)
Increase in other assets, net (38,500) (64,213)
Decrease in accounts payable
and accrued expenses (37,441) (120,638)
----------- ----------
Net cash provided by (used in) operating
activities (226,242) (272,932)
----------- ----------
Cash flows from financing activities:
Payment of special cash distribution on
common stock (2,531,858) -
----------- ----------
Net increase in cash (2,758,100) (272,932)
Cash, beginning of period 2,900,888 1,331,744
----------- ----------
Cash, end of period $ 142,788 $1,058,812
----------- ----------
----------- ----------
Supplemental disclosures of cash flow
information
Cash paid during the year for interest $ 2,937 -
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The consolidated financial statements of Boca Raton Capital Corporation
and Subsidiaries (the Company) included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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 consolidated financial statements
contain all adjustments which are of a recurring nature, and disclosures
necessary to present fairly the consolidated balance sheets of the Company as
of March 31, 1996 and December 31, 1995, the related consolidated statements
of operations for the three months ended March 31, 1996 and 1995, and the
consolidated statements of cash flows for the three months ended March 31,
1996 and 1995.
The Company was a non-diversified, closed-end investment company, which
had elected and was granted the status as a Business Development Company
("BDC") under the Investment Company Act of 1940 (the "1940 Act"). During
1995, the Company's Board of Directors were of the opinion that the
shareholders' return on assets was not sufficient to continue operations as a
BDC. As such, the Company's election to withdraw from its status as a BDC was
filed with the Securities and Exchange Commission and became effective on
December 22, 1995. It is the Company's current intention to seek to be merged
with an operating company. No material impact to the financial statements
resulted from the change of status.
NOTE 2: VALUATION OF PORTFOLIO INVESTMENTS
During 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Under SFAS No. 115, investments are classified as either
held to maturity, trading or available for sale depending upon whether the
investment is a debt or equity security and management's intent with regards
to the investment. The Company's investment in RailAmerica has been
classified as trading which calls for the investment to be carried at fair
value and changes in market value be credited or charged to income.
Investments for which market quotations are readily available are valued at
market. In the absence of market quotations, investments are valued as
determined in good faith by the Board of Directors. Due to the inherent
uncertainty of this valuation, these estimates may differ significantly from
the values that would have been used had a ready market for the investments
existed. Although SFAS No. 115 generally does not apply to restricted
securities, it is management's belief that the current restrictions on the
resale of the RailAmerica shares will be removed within the next year. As a
result of this, SFAS No. 115 is applicable. The adoption of SFAS No. 115
6
<PAGE>
BOCA RATON CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: VALUATION OF PORTFOLIO INVESTMENTS - continued
had no material impact on the results of operations of the Company because
under its status as a BDC for part of 1995, the Company valued its
investments in the same manner as required by SFAS No. 115.
The Company's investment in RailAmerica, Inc., as of March 31, 1996, is
comprised of 375,000 shares of common stock, which represents approximately
8% interest in RailAmerica, Inc.. The fair value of this investment as
determined by the Board of Directors was $1,089,375, compared to the
Company's cost of $626. At March 31, 1996, all shares were subject to a
lock-up agreement that restricts the Company's ability to sell the shares. In
light of this, at March 31, 1996, the Board of Directors reduced the fair
value of these shares by twenty percent from the average of the bid and asked
prices. Transfer of the shares are also subject to the provisions of Rule
144.
NOTE 3: INCOME TAXES
For income tax purposes, the Company had a change in ownership during
1993 in connection with its private placement offering. The change in
ownership results in an annual limitation on the amount of pre-change
ownership net operating loss carryforwards which can be utilized to offset
the Company's future taxable income. The annual limitation is approximately
$128,000 and will be increased by the Company's pre-change built in gains
when recognized.
As of December 31, 1995, the Company has available for federal income
tax reporting purposes pre-change net operating losses of approximately
$3,086,000 and post-change net operating losses of $381,000. The net
operating loss carryforwards expire in years 1998 through 2008.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The Company reported net income (loss) of $(150,301) and $553,325 for
the three months ended March 31, 1996 and 1995, respectively. Included in
net income for the three months ended March 31, 1995 was a net increase of
$628,906 in the unrealized appreciation of investments for the three months
ended March 31, 1995. The balance of net income consisted of investment
income of $25,043 and $52,185 less operating expenses of $175,344 and
$127,766 for the three months ended March 31, 1996 and 1995, respectively.
Total investment income of $25,043 for the three months ended March 31,
1996 consisted of interest income. This is compared to total investment
income of $52,185 for the three months ended March 31, 1995 which consisted
of other income of $29,213 and interest income of $22,972. The decrease in
investment income is a result of the other income received in 1995.
Operating expenses for the three months ended March 31, 1996 consisted
of general and administrative expenses of $120,490, professional fees of
$38,267 and interest expense of $16,587. Such expenses for the comparable
period of 1995 consisted of general and administrative expenses of $47,815,
professional fees of $73,951 and interest expense of $6,000. The increase of
$72,675 in general and adminitrative expenses was primarily a result of the
payment in January 1996 of an annual retainer fee for 1996 of $10,000 per
director ($50,000 in the aggregate), an increase from $5,700 to $8,500 per
month in the aggregate monthly fees paid to two officers of the Company and
costs related to a special meeting of shareholders. The increases in general
and administrative and interest expenses were partially offset by decreases
in professional fees of $35,684 for the three months ended March 31, 1996
compared to the three months ended March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has $142,788 in cash and total liabilities of $676,807 at
March 31, 1996. The Company has no liabilities due longer than twelve months.
The Company has no sources of cash flow at present apart from interest
income. The Company has minimal current operating expenses.
At March 31, 1996 the Company did not maintain lines of credit, and none
are anticipated. The Company's only material asset, other than cash,
consisted of 375,000 unregistered shares of RailAmerica, Inc. common stock
which may be sold under rule 144 of the Securities Act of 1933, as amended,
provided, however, such shares are subject to a contractual restriction on
transfer. The Company does, however, have the right to pledge such restricted
shares. As of March 31, 1996, the 375,000 shares of RailAmerica, Inc. had an
approximate market value of $1,089,375.
8
<PAGE>
On March 11, 1996, the Company paid a special cash distribution (the
"Special Distribution) of $2.25 per share on each share of Common Stock
outstanding of record on January 11, 1996. The special cash distribution was
declared, by the Board of Directors, subject to shareholder approval, on
January 11, 1996. The Company's shareholders approved the Special
Distribution at the 1996 Special Meeting held on February 29, 1996. See "Item
4 - Submission of Matters to a Vote of Security Holders." The payment by the
Company of dividends, if any, in the future rests within the discretion of
its Board of Directors, subject to shareholder approval, and will depend
upon, among other things, the Company's earnings, its capital requirements
and its financial condition, as well as other relevant factors. Except for
the Special Distribution, the Company has not paid any cash dividends since
its inception and does not intend to pay any cash dividends on the Common
Stock in the foreseeable future, but presently intends to retain all
earnings, if any, for use in its business operations.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
An instrument of indebtedness reflecting an obligation of the Company
was in default at March 31, 1996. The following information identifies the
indebtedness, indicates the nature and amount of the default, and the total
arrearage as of a recent date. The Company is engaged in settlement
negotiations on this obligation.
Prime plus 1.5% $315,400 unsecured promissory note dated
April 5, 1990, due April 4, 1992. Principal of $303,300
is in default. Total arrearage was $601,675 as of
March 31, 1996.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the first quarter of fiscal 1996, the approval of a special cash
distribution (the "Special Distribution") of $2.25 per share of common stock
of the Company, $.001 par value per share ("Common Stock"), payable out of
the Company's capital surplus, on each share of the Common Stock outstanding
of record at the close of business on January 11, 1996 was submitted to a
vote of security holders at a special meeting (the "1996 Special Meeting") of
shareholders held on February 29, 1996. At the 1996 Special Meeting, the
shareholders approved the Special Distribution. The Special Distribution was
paid by the Company on March 11, 1996. The record date for the 1996 Special
Meeting was the close of business on January 11, 1996. On that date, the
Company had 1,125,270 shares of Common Stock outstanding. There were 941,612
shares present in person or represented by proxy at the 1996 Special Meeting.
The shares present in person or represented by proxy were voted as follows:
Proposal - - Special Distribution
In Favor Against Abstained Unvoted
-------- ------- --------- -------
940,916 85 611 None
There were an aggregate of 611 broker non-votes and abstentions. Broker
non-votes were treated as shares present and entitled to vote at the 1996
Special Meeting for determining whether a quorum was present. However,
broker non-votes were not considered as votes cast at the 1996 Special
Meeting.
10
<PAGE>
ITEM 5 - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedules
(b) On January 11, 1996 the Company filed a report on Form 8-K in connection
with the withdrawal of its election of status as a business development
company under the Investment Company Act of 1940, as amended, and on March
21, 1996 the Company filed a report on Form 8-K in connection with the
payment of a special cash distribution of $2.25 per share on each outstanding
share of its Common Stock of record at the close of business on January 11,
1996.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: May 9, 1996 /s/ Alan L. Jacobs
-------------------------
Alan L. Jacobs, President
(Principal Executive Officer)
Date: May 9, 1996 /s/ Franklyn B. Weichselbaum
----------------------------
Franklyn B. Weichselbaum
Chief Financial Officer & Treasurer
12
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
27.1 Financial Data Schedules
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 142,788
<SECURITIES> 1,089,375
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,270,663
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,270,663
<CURRENT-LIABILITIES> 75,132
<BONDS> 601,675
0
0
<COMMON> 1,125
<OTHER-SE> 592,731
<TOTAL-LIABILITY-AND-EQUITY> 1,270,663
<SALES> 0
<TOTAL-REVENUES> 25,043
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 175,344
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (150,301)
<INCOME-TAX> 0
<INCOME-CONTINUING> (150,301)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (150,301)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
