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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission File Number 0-18865
LEASING TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
UTAH 87-0401400
(State or other jurisdiction (I.R.S. Employer
of Identification Number)
incorporation or organization)
102 WEST 500 SOUTH, SUITE 400, SALT LAKE CITY, UTAH, 84101 (Address of
principal executive offices, including zip code)
(801) 363-8961
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has: (1) 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) been subject to such
filing requirements for the past 90 days. Yes X No
Number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date.
Class Outstanding as of June 30, 1996
Common Stock, par value $.001 36,704,644
<PAGE>
TABLE OF CONTENTS
Heading Page
PART I. FINANCIAL STATEMENTS
Item 1. Consolidated Balance Sheets - June 30, 1996 and 4-5
March 31, 1996
Consolidated Statements of Operations and Accumulated 6
Deficit - Three months ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows - Three months ended 7
June 30, 1996 and 1995
Notes to Consolidated Financial Statements 8-18
Item 2. Management's Discussion and Analysis of Financial Condition 19-20
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Securities Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
<PAGE>
PART I
Item 1. Financial Statements
The following, unaudited Consolidated Financial Statements for the period
ended June 30, 1996, include all adjustments which management believes are
necessary for the financial statements to be presented in conformity with
generally accepted accounting principals.
(THIS SPACE INTENTIONALLY LEFT BLANK)
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Consolidated Balance Sheets
ASSETS
June 30, March 31,
1996 1996
--------------- --------------
CURRENT ASSETS (Unaudited)
Cash $ 3,002,269 $ 790,744
Accounts receivable (Note 1) 110,778 92,153
Inventories (Note 1) 686,656 748,010
Marketable securities 58,024 58,024
--------------- ------------
Total Current Assets 3,857,727 1,688,931
---------------- ------------
PROPERTY AND EQUIPMENT (Note 1)
Rental property 17,852 17,852
Non-rental property 52,414 52,414
--------------- ------------
Total depreciable assets 70,266 70,266
Less: accumulated depreciation (64,906) (63,901)
--------------- ------------
Net Property and Equipment 5,360 6,365
--------------- ------------
OTHER ASSETS
Land held for development, net
of long-term commitment payable (Notes 1, 7) 5,701,444 5,287,605
Deposits 1,970 1,970
---------------- ------------
Total Other Assets 5,703,414 5,289,575
---------------- ------------
TOTAL ASSETS $ 9,566,501 $ 6,984,871
================ ============
The accompanying notes are an integral part of these financial statements
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, March 31,
1996 1996
------------- ------------
CURRENT LIABILITIES (Unaudited)
Accounts payable - trade $ 611,323 $ 765,956
Accrued interest payable 592,336 551,986
Current portion of notes payable (Note 4) 942,071 1,156,014
------------- -----------
Total Current Liabilities 2,145,730 2,473,956
------------- -----------
LONG-TERM DEBT
Commission payable (Note 7) 90,000 90,000
Notes payable (Note 4) 3,415,044 1,415,044
------------- -----------
Total Long-Term Debt 3,505,044 1,505,044
------------- -----------
Total Liabilities 5,650,774 3,979,000
------------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 9) - -
------------- -----------
MINORITY INTEREST (Note 1) - -
------------- -----------
STOCKHOLDERS' EQUITY (NOTE 5)
Preferred stock, par value $0.001 per share:
10,000,000 shares authorized; issued and
outstanding: 102,220 and Class B shares,
150,000 and 150,000 Class C shares -0- and
-0- Class A shares at June 30, 1996 and March
31, 1996, respectively (in order of
liquidation rights) (See Note 8) 252 252
Common stock, par value $0.001 per share:
125,000,000 shares authorized; issued and
outstanding: 36,704,644 and 36,704,644 shares
issued and 33,488,244 and 33,488,244 shares
outstanding at June 30, 1996 and March 31, 1996,
respectively 36,705 36,705
Additional paid-in capital 12,849,331 11,910,212
Accumulated deficit (8,970,561) (8,941,298)
------------- -----------
Total Stockholders' Equity 3,915,727 3,005,871
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,566,501 $ 6,984,871
============= =============
The accompanying notes are an integral part of these financial statements
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Consolidated Statements of Operations and Accumulated Deficit
For the Three Months Ended
June 30,
---------------------------
1996 1995
------- --------
(Unaudited) (Unaudited)
INCOME
Sales - real estate $ 133,000 $ 87,800
----------- ----------
Total Income 133,000 87,800
----------- ----------
COST OF SALES
Cost of sales - real estate 76,582 45,234
----------- ----------
Total Cost of Sales 76,582 45,234
----------- ----------
Gross Profit 56,418 42,566
----------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
Depreciation and amortization 1,005 1,002
General expenses 319,123 145,829
----------- ----------
Total General and Administrative
Expenses 320,128 146,831
----------- ----------
Net Operating Income (Loss) (263,710) (104,265)
----------- ----------
OTHER INCOME AND (EXPENSES)
Interest income 2,038 3,455
Other income 2,906 -
Gain on sale of assets 236,583 28,517
Interest expense (7,080) (6,569)
----------- ----------
Total Other Income and (Expenses) 234,447 25,403
----------- ----------
Net Income (Loss) Before Income Tax (29,263) (78,862)
Less: Provisions for (Income Tax) - -
----------- ----------
NET INCOME (LOSS) (29,263) (78,862)
BEGINNING ACCUMULATED DEFICIT (8,941,298) (5,155,153)
----------- ----------
ENDING ACCUMULATED DEFICIT $(8,970,561) $(5,234,015)
=========== ===========
EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00)
=========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 33,488,244 33,488,244
The accompanying notes are an intergral part of these financial statements
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Consolidated Statements of Cash Flows
For the Three Months Ended
June 30,
---------------------------
1996 1995
------ --------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES
Net loss $ (29,263) $ (78,862)
Adjustments to Reconcile Net
Income to Net Cash Provided by Operating Activities:
Depreciation and amortization 1,005 1,002
Decrease in inventory 61,354 42,360
(Increase) in accounts receivable (18,625) 27,842
Increase in accounts payable and other
current liabilities (300,058) 75,075
Decrease (Increase) in other current assets 39,119 -
----------- ---------
Net Cash Provided (Used) by Operating
Activities (246,468) 67,417
----------- ---------
INVESTING ACTIVITIES
Investment in land (413,839) (313,518)
----------- ---------
Net Cash Provided (Used) by Investing
Activities (413,839) (313,518)
FINANCING ACTIVITIES
Common stock of subsidiary issued for cash 900,000 168,383
Long-term borrowings 2,000,000 -
Payment on long-term debt (28,168) (8,345)
Borrowings from related parties - 109,316
---------- ---------
Net Cash Provided (Used) by Financing
Activities 2,871,832 269,354
---------- --------
Increase in Cash and Cash Equivalents 2,211,525 23,253
Cash and Cash Equivalents,
Beginning of Period 790,744 16,994
---------- --------
Cash and Cash Equivalents,
End of Period $3,002,269 $ 40,247
========== ==========
Cash Paid For:
Interest $ 7,080 $ 7,654
Income Taxes - -
The accompanying notes are an intergral part of these financial statements
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Leasing Technology Incorporated (the Company) was formed as a Utah
corporation on March 31, 1983 for the purpose of leasing equipment. The
Company has significantly increased its investing activities which include
startup companies, real estate development, and/or other projects.
Operations include related and non related party transactions.
b. Property and Equipment
Property and equipment are recorded at cost. When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts, and any resulting gain or loss is reflected in
income for the period.
The costs of maintenance and repairs are charged to income as incurred.
Renewals and betterments are capitalized and depreciated over their
estimated useful lives.
c. Depreciation
Depreciation is computed using the declining-balance method over the
estimated useful life of the assets (usually three years).
d. Earnings (Loss) Per Share
Earnings (loss) per common share is computed based on the weighted average
number of common shares outstanding during the period (there are no common
stock equivalents).
e. Income Taxes
Income taxes consist of Federal Income and State Franchise taxes. The
Company has elected a March 31 fiscal year-end.
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No.109 (SFAS No. 109), "Accounting for Income
Taxes."
f. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Estimates
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of commitments and contingencies, and the
reported revenues and expenses.
h. Concentrations of Risk
The Company maintains its cash in bank deposit accounts at high credit
quality financial institutions. The balances, at times, may exceed federally
insured limits. At March 31, 1996 and June 30, 1996, the Company exceeded
the insured limit by approximately $584,380 and $2,702,269, respectively.
The Company builds and develops real property in Southern Utah. In the
normal course of business the Company extends secured credit to its
customers.
i. Principles of Consolidation
The accompanying consolidated financial statements include Leasing
Technology Incorporated and its subsidiary, Golf Ventures, Inc. (GVI).
During the year ended March 31, 1994, the Company reduced ownership in its
subsidiary TKI, to the point where it no longer has control, therefore, its
investment is accounted for under the equity method.
Due to losses of TKI, the investment has been reduced to $0.
All significant intercompany transactions have been eliminated in the
consolidated financial statements. The only significant intercompany
transactions are loans made by the Company to GVI. The notes receivable on
the books of the Company and the accrued interest receivable have been
eliminated against the liability on the books of the subsidiaries and the
related accrued interest payable. The interest income accrued by the Company
has been eliminated against the interest expense accrued by the subsidiary.
j. Inventories
Inventories are stated at the lower of cost or market using the first-in,
first-out method. Inventories consist of the following:
June 30, March 31,
1996 1996
---------- ------------
Real estate held for resale $ 686,656 $ 748,010
---------- ---------
Total inventory $ 686,656 $ 748,010
========= =========
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
k. Income Recognition
The Company recognized lease income from automobiles and equipment monthly,
according to the terms of lease contracts.
GVI recognizes gain on real estate sales in accordance with the provisions
of FASB-66.
l. Accounts Receivable
Accounts receivable are shown net of the allowance for bad debts of $5,000
at March 31, 1996 and June 30, 1996.
NOTE 2 - COMMON STOCK ISSUED BUT NOT OUTSTANDING
The Company has issued 3,216,400 shares of common stock which have been
offered to the holders of the class "B" preferred stock and the debentures.
The shares have not been accepted by the holders of those investments as of
the date of the financial statements.
NOTE 3 - INCOME TAXES
The Company had net operating loss carry-forwards available to offset future
taxable income. The Company has net operating loss carry-forwards of
approximately $8,500,000 to offset future tax liabilities. The loss
carry-forwards will begin to expire in 2007.
Deferred income taxes payable are made up of the estimated federal and state
income taxes on items of income and expense which due to temporary
differences between books and taxes are deferred. The temporary differences
are primarily caused by the use of the equity method for reporting
investment in subsidiaries.
The source and deferred tax effect of these differences are as follows:
June 30, March 31,
1996 1996
---------- -----------
Net operating loss carryover
equity subsidiary * $ (53,373) $ (53,373)
--------- ---------
Deferred income taxes payable $ - $ -
========= =========
* (Note - no deferred tax asset is recorded in accordance with F.A.S.B. 109,
because it can not be reasonably determined if the net operating loss will
be useable.)
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 4 - NOTES PAYABLE
Notes payable are comprised of the following:
June 30, March 31,
1996 1996
Convertible subordinated debentures,
due June 30, 1996 bearing interest at
12% per annum. Interest payable
quarterly, secured by land. $ 208,500 $ 210,500
Promissory note payments through August
15, 2016 at $30,524 per year including
interest at 10% per annum. 204,435 204,435
Promissory note secured by land, bearing
interest at 9.75%, payable in full including
accrual interest on June 18, 1997. 355,000 355,000
Trust deed note secured by land. Interest
accrued at 10% per annum, payable monthly
at $5,000 per month through January 30, 1996
at which time the balance including accrued
interest will be due. 401,366 401,366
Trust deed note payable, secured by land.
Interest accrued at 8% per annum. Payable
$100,000 per year plus the accrued interest
for that year. 359,370 459,370
Brighton Bank, note payable bearing interest
at 13.75%, monthly payments of $806 through
February 1998, secured by personal property
of officers. 7,452 7,452
Trust deed note, secured by land and 50,000
shares of the Company's common stock.
Interest accrued at 15% per annum. Principal
and interest due May 31, 1995. 174,490 211,433
--------- ----------
Page totals $ 1,710,613 $1,849,556
----------- ----------
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 4 - NOTES PAYABLE (Continued)
June 30, March 31,
1996 1996
------------ ------------
Balance forward $ 1,710,613 $ 1,849,556
Promissory note secured by land.
Interest accrued at 10% per annum,
payable in shares of the Company's
common stock. $120,000 plus a
percentage of the proceeds of lot
sales payable annually beginning on
February 1, 1991 through February 1,
1997 at which time the balance will
be due as a balloon payment. $2,000
from each Red Hawk lot sale also
applies to the note 646,502 721,502
Trust deed note, dated June 10, 1996,
to be repaid after 36 months.The note
is secured by a trust deed on 616 acres
of the Red Hawk property. The note bears
interest at 10.5% per annum which is
payable monthly. 2,000,000 -
---------- --------
Subtotal 4,357,115 2,571,058
Less current portion (942,071) (1,156,014)
---------- ----------
Long-term portion $ 3,415,044 $ 1,415,044
============ ============
Maturities of long-term debt are as follows:
March 31, 1996 $ 942,071
1997 588,872
1998 233,219
1999 2,196,884
2000 145,936
Thereafter 250,133
-----------
$ 4,357,115
===========
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 5 - STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Common Stock Preferred Stock Additional Stock-
Shares Shares Paid-in Accumulated holders'
(in 000s) Amount (in 000s) Amount Capital Deficit Equity
----------- -------- ---------- -------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1995 36,705 $ 36,705 252 $252 $7,679,394 $ (5,155,153) $2,561,198
Capital contributed by stock
issuances of the subsidiary - - - - 4,230,818 - 4,230,818
Net (loss) - - - - - (3,786,145) (3,786,145)
------- ---------- ---- ---- ---------- ------------ ----------
Balance, March 31, 1996 36,705 36,705 252 252 11,910,212 (8,941,298) 3,005,871
Capital contributed by stock
issuances of the subsidiary - - - - 939,119 - 939,119
Net (loss) - - - - - (29,263) (29,263)
------- ---------- ---- ---- ---------- ------------- ----------
Balance, June 30, 1996 36,705 $ 36,705 252 $252 $12,849,331 $ (8,970,561) $3,915,727
======= ========== ==== ===== =========== ============= ==========
</TABLE>
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 6 - DISCONTINUED OPERATIONS
In agreements made with TechKNOWLOGY, Inc. (TKI) during 1989, the Company
acquired 49% (490 shares) of TKI's outstanding common stock. The investment
in TKI was shown under the equity method through December 31, 1990.
On September 28, 1990 the Company acquired an additional 35% of the common
stock of TKI. The Company changed from reporting under the equity method to
the consolidation method effective October 1, 1990. The balance sheets at
December 31, and March 31, 1993 include the accounts of TKI and the
statement of income and retained earnings includes 100% of the operations of
TKI.
On June 30, 1993, the Company entered into a certain Settlement Agreement
and General Release (the "Settlement Agreement") with various parties
including the Company's subsidiary, TechKNOWLOGY, Inc. ("TKI"), and the
founders of TKI. The premise of the Settlement Agreement was to provide the
basis for TKI to transfer all of its assets into TechKNOWLOGY Acquisition,
Inc., a newly formed Texas corporation ("Newco"), in exchange for common
stock of Newco and the assumption by Newco of TKI's trade and bank debt.
Upon completion of this transaction, TKI was to be liquidated and the
shareholders of TKI, as shareholders, would become entitled to a pro rata
portion of the assets of TKI, subject to the costs of winding up the Company
and the payment of any and all claims against TKI. It is anticipated that
such assets will consist almost entirely of shares of Newco common stock. As
a result of these transactions, the Company was entitled to receive, through
the liquidation of TKI, 2,775,000 shares of Newco common stock which
initially represented approximately 66.8% of the total outstanding shares of
Newco common stock. Upon liquidation of TKI, the Company's shares in Newco,
together with the shares of the other parties of the Settlement Agreement,
were placed in a liquidating trust until March 31, 1995, subject to the
payment of the costs of winding up the business and affairs of TKI and
payment of any claims that may be made against TKI. The Company will also
have the right to participate, on a pro rata basis, in any registration
rights granted to the holders of Newco preferred stock.
As a result of this transaction, the Company's ownership percentage fell
below 50%. Previously, TKI was consolidated with the Company for financial
reporting purposes. However, since the ownership percentage fell below 50%,
the investment in TKI is now reported under the equity method of accounting
for investments. All periods presented in these financial statements have
been restated to reflect this change. The investment has been valued at
zero. This is due to the fact that the Company's share of losses incurred by
TKI has exceeded the balance of the investment.
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 7 - LAND HELD FOR DEVELOPMENT
On March 30, 1990 the Company purchased 486 acres from Karl Stucki and the
Stucki Family Trust for $3,004,356, and on July 31, 1990 the Company
purchased 130 acres from Dynamic American Corporation for $610,000 which
makes up the Red Hawk real estate development. On December 28, 1992, this
real estate development, together with Cotton Manor/Cotton Acres was
transferred to Golf Ventures, Inc. (GVI) in exchange for 3,273,728 shares of
GVI common stock. The Red Hawk land (616 acres) is undeveloped, and in order
for GVI to realize its investment, adequate financing will need to be
obtained.
The purchase price was comprised as follows:
Cash $ 49,356
Assumption of commission obligation 90,000
Trust deed note:
Stucki Income Trust 2,865,000
--------------------
Total $ 3,004,356
====================
The purchase of the property is recorded on a "cash basis" whereby the
cost in the financial statements reflects only the cash invested in the
land and debts assumed from the seller. The trust deed note is excluded
because of the uncertainty of obtaining adequate development financing.
The principal paid on the trust deed note is added to the cost when it
is paid.
For the year ended March 31, 1996 the Company capitalized $514,687 in
construction period interest costs. The costs of the land is less than
the estimated net realizable value of the land.
NOTE 8 - PREFERRED STOCK
The shareholders of the Company have authorized 10,000,000 shares of
preferred stock with a par value of $0.001. The terms of the preferred
stock are to be determined when issued by the board of directors of the
Company.
CLASS A:
The Class A preferred shares could have been redeemed by the Company at
any time on or before March 15, 1994 for $5.00 per share plus 18% per
annum accrued from April 1, 1991 less the dividends that have been paid.
Each share could have been exchanged for 10 shares of free trading
common stock any time on or before March 31, 1994.
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 8 - PREFERRED STOCK (Continued)
CLASS B:
Each share of Class "B" preferred stock may, at the option of the holder
thereof any time on or before March 31, 1995, be converted into shares of
the Company's common stock, none of the shares were converted.
In the event TKI elects to file a registration statement with the Securities
and Exchange Commission for the purpose of making a public distribution of
its shares, shareholders who have not previously converted their Class "B"
preferred stock, will be given the opportunity to convert preferred stock
into TKI common stock at either the ratio listed in the schedule above, or
at the price equal to a percentage discount off the public offering price up
to a maximum of 50%, the exact price to be negotiated between the Company
and the underwriter.
In the event of a recapitalization, stock split or stock dividend by either
the Company or TKI, all share amounts indicated herein will be adjusted
accordingly.
CLASS C:
In September 1991, the Company purchased the Cotton Manor real estate
project as follows:
Cash $ 23,601
Debt assumed 431,449
Promissory note 1,387,000
Class "C" preferred stock 750,000
-----------
$ 2,592,050
============
The Company delivered to the seller, 150,000 shares of authorized but
previously unissued Class "C" preferred stock, which for the purpose of the
agreement were valued at $5.00 per share or a total of $750,000. The shares
of Class "C" preferred stock may be redeemed by the Company at any time
prior to September 3, 1997, by the Company paying to the seller or its
assigns, the sum of $5.50 cash per share if redeemed within 12 months from
the date hereof; $6.00 cash per share if redeemed between 12 and 24 months
from the date hereof; and $6.50 if redeemed between 24 and 36 months from
the date hereof; and $7.00 cash per share if redeemed between 36 and 48
months from the date hereof; and $7.50 cash per share if redeemed within 48
and 60 months from the date hereof. Prior to the Company redeeming the
preferred shares to be issued to the seller hereunder and prior to the 3rd
day of September, 1997, the seller will have the right to convert any
remaining shares of preferred stock into shares of the Company's common
stock at the rate of 5 shares of common stock for each share of preferred
stock converted.
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Notes to the Consolidated Financial Statements
March 31, 1996 and June 30, 1996
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Commitments include trust deed notes not recorded for accounting purposes
(see Note 7) which the Company has committed to pay to acquire the Red Hawk
real estate development. The liability and accompanying asset will be
recorded when the Company resolves the uncertainty described in Note 7.
June 30, March 31,
1996 1996
-------- ----------
Stucki Income Trust: $2,865,000 of Trust Deed
notes secured by land. Interest accrued at 10%
partially payable from the proceeds of the sale of
the 140 lots and certain other asset assignments.
Various amounts payable monthly through
May 15, 1998. $2,385,375 $2,390,725
Less Current Portion (2,385,375) (2,390,725)
---------- ----------
Long-Term Portion $ - $ -
========== ==========
Maturities of long-term commitments are as follows:
1996 $ 2,385,375
1997 -
1998 -
1999 -
2000 -
After 2000 -
------------
$ 2,385,375
============
On July 19, 1993, the Company became the subject of a formal order of
investigation captioned "In the Matter of Leasing Technology, Inc."
(NY-6027) issued by the Securities and Exchange Commission. The order states
that the Commission deems certain acts and practices to be in possible
violation of Section 19(a) of the Securities Act of 1933 and Sections 10(b),
13(a) and 15(c) of the Securities Act of 1934, and various rules thereunder.
As of the date hereof, the Company is unable to make a determination as to
the extent of the investigation or to any possible material effect that it
may have on the Company.
The Company is leasing its principle place of business pursuant to a
24-month lease for a monthly rental of $2,407. The Company shares this
office space with GVI.
<PAGE>
LEASING TECHNOLOGY INCORPORATED
Supplemental Schedules
March 31, 1996 and June 30, 1996
NOTE 10 - GOING CONCERN
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. In order to carry out its
operating plans, the Company will need to obtain additional funding from
outside sources. The Company has received funds from a private placement and
plans to continue making private placements of its preferred and common
stock. There is no assurance that the Company will be able to obtain
sufficient funds from other sources as needed or that such funds, if
available, will be obtainable on terms satisfactory to the Company.
Management also intends to renegotiate the terms of its debt for a longer
repayment period.
<PAGE>
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations
Results of Operations
First Quarter 1996 Compared to First Quarter 1995
The Company's first quarter of fiscal year 1996 resulted in an increase of
sales and a decrease in loss over the same period during 1995. Sales increased
from $87,800 to $133,000, a change of $45,200 or 51%. The net loss decreased
from ($78,862) to ($29,263) or 63%.
Sales in the current period were comprised of five lots from the Cotton
Acres subdivision with an average sales price of $26,600. The average sales
price for the lots sold during the same period last year was $21,950. The cost
of lots sold during the current period on average was $12,270 compared to a cost
of $11,308 for the lot sold in the first quarter last year. Cost of sales as a
percentage of sales was 58% in the first quarter of 1996 compared to 54% in the
first quarter of 1995. Inventory levels of fully developed lots in the Cotton
Acres is low. Cash flow has been used for land payments in the Red Hawk Country
Club development (Red Hawk). This will most likely continue until long term
financing for Red Hawk has been obtained and Red Hawk lot sales commence.
Total general and administrative expenses increased $173,297 or 118%, from
$146,831 to $320,128 due primarily to an increase in legal costs related to the
settlement of a lawsuit and the preparation of the Golf Ventures, Inc. (GVI),
504 offering and Form 10. Other income increased $209,044 or 825% from $24,403
to $234,447 due to a gain from the sale of the Company's GVI stock for $236,582.
Management believes that the future viability of the Company depends on the
Company's ability to obtain long term development financing for GVI real estate
projects, complete development of the projects, and to generate sales from these
projects.
Liquidity and Capital Resources
As of June 30, 1996, the Company had total assets of $9,566,601, total
liabilities of $5,650,774, and stockholder's equity of $3,915,727. Total assets
increased $2,581,630, 37% from March 31, 1996. The increase is due primarily to
the increase in cash (see below) and to the additions to land held for
development of $413,837. Addition to land held for development include
capitalized interest, contractor payments for Cotton Manor and payments to
Washington City for installation of a water line to Red Hawk. Total liabilities
as of June 30, 1996 increased $1,671,774, 42% over the fiscal year end March 31,
1996. The increase is due primarily to a $2,000,000 loan received from Miltex
Industries, Geneva, Switzerland.
Cash increased $2,211,525, 280% for the quarter ended June 30, 1996, with
total current assets increasing $2,168,796, 128%. The increase in cash is due to
<PAGE>
a long term loan for $2,000,000. The loan is secured by the Red Hawk land and
has been deposited as security for the first phase construction on Red Hawk,
which was started on July 8, 1996.
The Company's total current assets for the first quarter were $3,857,727
and total current liabilities were $2,145,730 resulting in a current ratio of
1.80:1 compared to a current ratio of 0.39:1 as of March 31, 1996.
The Company has historically satisfied its cash needs through the sale of
real estate in its GVI subsidiary and private placements of common and preferred
stock for cash. During the quarter, the Company helped arrange for additional
long term financing for GVI and sold a portion of its investment in GVI. The
Company has land and debt payments due during the current year in GVI and
liquidity for the twelve months will be dependent on its ability to secure
additional financing for the Red Hawk project and upon the cash flow generated
from closings of lot sales in Red Hawk and from sales related to the Cotton
Manor and Cotton Acres projects. If Red Hawk does not receive its financing and
the Company should require additional cash during the year, the Company intends
to meet its obligations through borrowing, the private placement of common
and/or preferred stock for cash, and/or the private sale by the Company of a
portion of its GVI common stock.
Inflation
Management believes that inflationary effects do not have a material impact
on the Company's revenues or results of operations.
<PAGE>
PART II
Item 1. Legal Proceedings
On July 19, 1993, the Company became the subject of a formal order of
investigation captioned "In the Matter of Leasing Technology, Inc. (NY-6027)
issued by the Securities and Exchange Commission. The order states that the
commission deems certain acts and practices to be in possible violation of
Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a) and 15c of
the Securities Act of 1934, and various rules thereunder. The Company is unaware
of the circumstances concerning the order entered against LTI; furthermore, the
company has had no communication with the SEC regarding this matter since 1994,
and therefore, cannot make a judgment as to the possible effect on the Company
of the investigation.
On July 26, 1994, the company was served with a complaint entitled
Aksglade, et al. vs. Leasing Technology, Incorporated, et al., civil number 94C
345S, filed in the United States District Court for the District of Utah,
Central Division. On July 22, 1996, the complaint was dismissed with prejudice
as to the Company by an order signed by a judge of the Federal Court.
The Company is not a party to any other material, pending legal proceeding
and no such action by, or to the best of its knowledge, against the Company or
any of its officers or directors, has been contemplated or threatened.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
This item is not applicable to the Company.
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 first quarter ended June 30, 1996.
Item 5. Other Information
This Item is not applicable to the Company
Item 6. Exhibits and Reports on Form 8-K
a) This Item is not applicable to the Company.
b)No Report on form 8-K was filed by the Company during the three month
period ended June 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Leasing Technology Incorporated, the registrant, has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LEASING TECHNOLOGY INCORPORATED
Date: August 19, 1996 By: /s/ George H.Badger
GEORGE H. BADGER, President and
Chief Executive Officer
Date: August 19, 1996 By: /s/ Stephen B. Spencer
STEPHEN B. SPENCER,
Secretary/Treasurer,
Chief Accounting Officer and Chief
Financial Officer
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,002,269
<SECURITIES> 58,024
<RECEIVABLES> 110,778
<ALLOWANCES> 0
<INVENTORY> 686,656
<CURRENT-ASSETS> 3,857,727
<PP&E> 70,266
<DEPRECIATION> 64,906
<TOTAL-ASSETS> 9,566,501
<CURRENT-LIABILITIES> 2,145,730
<BONDS> 0
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<COMMON> 36,705
<OTHER-SE> 12,849,331
<TOTAL-LIABILITY-AND-EQUITY> 9,566,501
<SALES> 133,000
<TOTAL-REVENUES> 133,000
<CGS> 76,582
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,080
<INCOME-PRETAX> (29,263)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,263)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (29,263)
<EPS-PRIMARY> (0.00)
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