FRESHSTART VENTURE CAPITAL CORP.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED MAY 31, 1998, 1997 AND 1996
<PAGE>
TABLE OF CONTENTS
Page
Independent Auditors' Report ............................................ F-1
Statements of Financial Position of Freshstart
Venture Capital Corp. as of May 31, 1997 and 1998 ..................... F-2
Statements of Operations for the Years
Ended May 31, 1996, 1997 and 1998 ..................................... F-4
Statements of Stockholders' Equity for the Years
Ended May 31, 1996, 1997 and 1998 ..................................... F-5
Statements of Cash Flows for the Years
Ended May 31, 1996, 1997 and 1998 ..................................... F-6
Notes to the Financial Statements ....................................... F-7
Supplemental Schedules .................................................. F-12
Selected Per Share Data and Ratios ...................................... F-13
<PAGE>
Board of Directors
Freshstart Venture Capital Corp.
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying Statements of financial position of Freshstart
Venture Capital Corp. (the "Company") as of May 31, 1998 and 1997 and the
related statements of operations, stockholders' equity and cash flows for each
of the three years in the period ended May 31, 1998 and selected per share data
and ratios for each of the five years in the period ended May 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 audits provide a reasonable basis for our opinion.
We have reviewed the procedures used by the Board of Directors in arriving at
its estimate of such securities and have inspected underlying documentation,
and, in the circumstances, we believe the procedures are reasonable and the
documentation appropriate. However, because of the inherent uncertainty of
valuation, those estimated values differ significantly from the values that
would have been used had a ready market for the securities existed, and the
differences could be material.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of May 31, 1998
and 1997 and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
New York, New York
July 16, 1998
Michael C. Finkelstein
Certified Public Accountant
F-1
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
STATEMENTS OF FINANCIAL POSITION
ASSETS
May 31,
----------------------------
1997 1998
------------ -------------
Portfolio Securities:
Loans Receivable (Notes 2 and 3) $ 14,308,959 $ 24,442,206
Less: Unrealized Depreciation on
Loans Receivable (Note 3) (180,558) (319,815)
------------ ------------
14,128,401 24,122,391
Less: Current Maturities - Loans Receivable (1,984,365) (3,375,072)
------------ ------------
Total Loans Receivable -
Net of Current Maturities 12,144,036 20,747,319
------------ ------------
CURRENT ASSETS
Cash (Note 13) 2,869,861 1,528,168
Accrued Interest (Notes 2 and 3) 127,974 256,760
Current Maturities - Loans Receivable 1,984,365 3,375,072
Prepaid Expenses and Other Assets 205,473 326,375
------------ ------------
Total Current Assets 5,187,673 5,486,375
------------ ------------
Fixed Assets - Net of Accumulated Depreciation
of $22,366 and $28,364
respectively (Note 2) 19,906 13,908
------------ ------------
Total Assets $ 17,351,615 $ 26,247,602
============ ============
See Notes to the Financial Statements
F-2
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
STATEMENTS OF FINANCIAL POSITION
LIABILITIES AND STOCKHOLDERS' EQUITY
May 31,
-------------------------
1997 1998
----------- -----------
LONG TERM DEBT:
Debentures Payable to SBA (Note 5) $ 8,450,000 $12,360,000
4% Cumulative, 15 Year Redeemable
Preferred Stock 1,410,000 1,410,000
----------- -----------
Total Long Term Debt 9,860,000 13,770,000
----------- -----------
CURRENT LIABILITIES:
Notes Payable - Bank -- 5,000,000
Accrued Interest 182,344 317,723
Other Current Liabilities 76,824 57,732
Dividends Payable (Note 7) 14,100 9,400
----------- -----------
Total Current Liabilities 273,268 5,384,855
----------- -----------
Total Liabilities 10,133,268 19,154,855
----------- -----------
Commitments and Contingencies
(Notes 12 and 13) -- --
STOCKHOLDERS EQUITY:
4% Cumulative, 15 Year Redeemable Preferred
Stock- $1 Par Value; 10,000,000 Shares
Authorized, 1,410,000 Shares Issued and
Outstanding, (See Long Term Debt) -- --
3% Cumulative Preferred Stock - $1 Par Value:
No Shares Issued and Outstanding
(Note 6) -- --
Common Stock - $.01 Par Value: 3,000,000 Shares
Authorized, 2,172,688 Shares
Issued and Outstanding (Note 10) 21,726 21,726
Additional Paid in Capital (Note 10) 6,857,817 7,048,816
Retained Earnings 147,805 22,205
Restricted Capital - Realized Gain on
Redemption (Note 6) 190,999 --
----------- -----------
Total Stockholders' Equity 7,218,347 7,092,747
----------- -----------
Total Liabilities and Stockholders' Equity $17,351,615 $26,247,602
=========== ===========
Net Assets Per Share $ 3.32 $ 3.26
=========== ===========
See Notes to the Financial Statements
F-3
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended May 31,
------------------------------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
REVENUE:
Interest Earned on
Outstanding Receivables $1,027,815 $1,231,318 $2,415,527
Interest Income - Idle Funds 6,129 39,397 48,816
---------- ---------- ----------
Total Revenue (Note 2) 1,033,944 1,270,715 2,464,343
---------- ---------- ----------
EXPENSES:
Interest (Notes 4 and 5) 307,764 360,678 967,003
Professional Fees 50,776 59,945 156,772
Officers' Salaries (Notes 8 and 11) 145,146 141,225 121,620
Other Salaries (Note 11) 23,126 25,966 33,704
Other Operating Expenses 90,450 123,811 103,499
Pension Expense (Note 8) 16,180 14,123 15,532
Depreciation and Amortization (Note 2) 9,710 15,915 38,908
---------- ---------- ----------
Total Expenses 643,152 741,663 1,437,038
---------- ---------- ----------
Net Investment Income 390,792 529,052 1,027,305
Unrealized Depreciation in Value of
Investments (Notes 2 and 3) 35,000 -- 139,257
---------- ---------- ----------
355,792 529,052 888,048
PROVISION FOR TAXES:
Current Income Taxes (Note 2) 1,567 2,528 1,224
---------- ---------- ----------
Net Income $ 354,225 $ 526,524 $ 886,824
========== ========== ==========
Earnings Per Share of Common Stock
(Note 2) $ 0.27 $ 0.29 $ 0.38
========== ========== ==========
Dividends Paid Per Share
of Common Stock $ 0.27 $ 0.21 $ 0.44
========== ========== ==========
Weighted Average Shares of Common
Stock Outstanding 1,096,688 1,627,318 2,172,688
========== ========== ==========
</TABLE>
See Notes to the Financial Statements
F-4
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Years Ended May 31,
------------------------------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
4% Cumulative, 15 Year Redeemable
Preferred Stock - $1 Par Value:
10,000,000 Shares Authorized,
1,410,000 Shares Issued and
Outstanding (See Long Term Debt) $ -- $ -- $ --
---------- ---------- ----------
Common Stock - $.01 Par Value:
3,000,000 Shares Authorized, 2,172,688
Shares Issued and Outstanding 2,742 5,483 21,726
2 For 1 Stock Split 2,741 5,483 --
Sale of 1,076,000 Shares of Common Stock -- 10,760 --
---------- ---------- ----------
Balance, End of Period 5,483 21,726 21,726
---------- ---------- ----------
Additional Paid in Capital -
Beginning of Period 2,579,342 2,767,600 6,857,817
Proceeds from Sale of 1,076,000 Shares
of Common Stock -- 3,904,700 --
2 For 1 Stock Split (2,741) (5,483) --
Amortization of Restricted
Capital (Note 6) 190,999 191,000 190,999
---------- ---------- ----------
Balance, End of Period 2,767,600 6,857,817 7,048,816
---------- ---------- ----------
Retained Earnings -
Beginning of Period 13,660 15,379 147,805
Net Income 354,225 526,524 886,824
Dividends Paid and Accrued (352,506) (394,098) (1,012,424)
---------- ---------- ----------
Balance, End of Period 15,379 147,805 22,205
---------- ---------- ----------
Restricted Capital
Gain on Redemption of 3% Preferred
Stock (See Note 6) 572,998 381,999 190,999
Amortization of Gain (190,999) (191,000) (190,999)
---------- ---------- ----------
Balance, End of Period 381,999 190,999 --
---------- ---------- ----------
Total Stockholder's Equity $3,170,461 $7,218,347 $7,092,747
========== ========== ==========
</TABLE>
See Notes to the Financial Statements
F-5
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended May 31,
------------------------------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net Income $ 354,225 $ 526,524 $ 886,824
Depreciation and Amortization Expense 9,710 15,915 38,908
Provision for Losses on Loans Receivable 35,000 -- 139,257
(Increase) in Accrued Interest (21,449) (35,028) (128,786)
Decrease (Increase) in Other Assets (57,326) 71,960 (153,812)
Increase (Decrease) in Accrued Liabilities (346) 103,072 111,587
Dividends Paid and Accrued (352,506) (502,200) (1,012,424)
---------- ---------- ----------
Net Cash (Used) Provided By Operating Activities (32,692) 180,243 (118,446)
---------- ---------- ----------
CASH FLOWS (USED) BY
INVESTING ACTIVITIES:
Increase in Loans Receivable (4,594,750) (9,556,400) (23,415,660)
Repayment of Loans Receivable 2,115,540 3,609,690 8,474,842
Increase in Loan Participations 2,227,000 3,145,900 5,087,500
Repayment of Loan Participations (67,763) (2,910,134) (279,929)
Increase in Fixed Assets (25,936) -- --
Decrease in Assets Acquired in Liquidation 13,344 -- --
---------- ---------- ----------
Net Cash (Used) By Investing Activities (332,565) (5,710,944) (10,133,247)
---------- ---------- ----------
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES:
Net Proceeds from sale of 1,076,000
Shares of Common Stock -- 3,915,460 --
Increase (Decrease) in Line of Credit (5,000) -- 5,000,000
(Decrease) in Restricted Capital (190,999) (191,000) (190,999)
Increase in Debentures Payable to SBA (Net) 40,000 4,070,000 3,910,000
Increase in Additional Paid in Capital 190,999 191,000 190,999
---------- ---------- ----------
Net Cash Provided by Financing Activities 35,000 7,985,460 8,910,000
---------- ---------- ----------
Net (Decrease) Increase in Cash (330,257) 2,454,759 (1,341,693)
Cash Balance - Beginning of Period 745,359 415,102 2,869,861
---------- ---------- ----------
Cash Balance - End of Period $ 415,102 $2,869,861 $1,528,168
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest $ 314,491 $ 299,922 $ 831,624
---------- ---------- ----------
Taxes $ 1,567 $ 2,528 $ 1,224
---------- ---------- ----------
</TABLE>
See Notes to the Financial Statements
F-6
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1998 AND 1997
NOTE 1 ORGANIZATION
Freshstart Venture Capital Corp., a New York Corporation (the
"Company"), was formed on March 4, 1982 for the purpose of
operating as a specialized small business investment company
("SSBIC"), licensed under the Small Business Investment Act of
1958 and regulated and financed in part by the U.S. Small
Business Administration ("SBA"). The Company has also
registered as an investment company under the Investment
Company Act of 1940. The Company's business is to provide
financing to persons who qualify under SBA regulations as
socially or economically disadvantaged and to entities which
are at least fifty (50%) percent owned by such individuals.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
applied by the Company in the preparation of its financial
statements. The Company maintains its accounts and prepares
its financial statements on the accrual basis of accounting in
conformity with generally accepted accounting principles for
investment companies.
Valuation of Loans and Investments
The Board of Directors has valued the investment portfolio
based upon the cost of such investments, less a provision for
loan losses. However, because of the inherent uncertainty of
the valuation, the estimated values might otherwise be
significantly higher or lower than values that would exist in
a ready market for such loans, which market has not in the
past and does not now exist. The provision for loan losses
represents a good faith determination by the Board of
Directors maintained at a level that, in its judgment, is
adequate to absorb losses. The balance in the reserve account
is adjusted periodically by the Board of Directors on the
basis of the fair value of the collateral held and past loss
experience. Approximately seventy nine (79%) percent of the
Company's loan portfolio consists of loans made for the
financing of taxi cab medallions and related assets. The
remaining portion of the loans are made to various small
commercial enterprises. Substantially all loans are
collateralized by either NYC taxi medallions or real estate
and the personal guarantees of the individual owners.
Depreciation and Amortization
Depreciation and amortization of furniture, fixtures and
leasehold improvements is computed on the straight line method
at rates adequate to allocate the costs of applicable assets
over their expected useful lives.
Recognition of Interest Income
It is the Company's policy to record interest on loans and
debt securities only to the extent that management and the
Board of Directors anticipate such amounts may be collected.
Interest on doubtful accounts and accounts which are 180 days
past due is not recorded until actually received.
F-7
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1998 AND 1997
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Income Taxes
The Company has elected to be taxed as a regulated investment
company under the Internal Revenue Code. A regulated
investment company can generally avoid taxation at the
corporate level to the extent that ninety (90%) percent of its
income is distributed to its stockholders. Therefore, no
provision for federal income taxes has been made. The
financial statements include provisions for New York State and
local minimum taxes.
Earnings Per Share
Earnings per share are based on a weighted average number of
shares outstanding during the period, less accrued dividends
on cumulative preferred stock.
Accounting Standard for Impairment of Loans
Statement of Financial Accounting Standard No. 114,
"Accounting by Creditors for Impairment of a Loan" ("SFAS
114") was issued in May 1993 and is effective for fiscal years
beginning after December 15, 1994. SFAS 114 generally requires
all creditors to account for impaired loans, except those
loans that are accounted for at fair value or at the lower of
cost or fair value, at the present value of expected future
cash flows discounted at the loans' effective interest rate.
Creditors may account for impaired loans at the fair value of
the collateral or at the observable market price of the loan
if one exists. Due to the nature of the Company's loan
portfolio, SFAS 114 is not expected to have a material effect
on the Company's financial condition or results of operations.
Other
Certain information from the prior years has been reclassified
to conform its presentation to the current financial
statements.
NOTE 3 LOANS RECEIVABLE
The Company's loan portfolio includes participations with
other lenders as presented in the following schedule. The
following is a breakdown of the outstanding loans receivable:
May 31,
------
1997 1998
---- ----
Outstanding Loans $17,040,332 $31,981,150
Loan Participations (2,731,373) (7,538,944)
----------- -----------
Net Loans Outstanding $14,308,959 $24,442,206
=========== ===========
Loans on non-accrual status as of May 31, 1998 and 1997 were
approximately $1,026,133 and $1,038,294, respectively.
Additionally, the cumulative amount of accrued interest income
not recorded was $976,694 and $823,642 as of May 31, 1998 and
1997, respectively.
F-8
<PAGE>
NOTE 3 LOANS RECEIVABLE
(Continued)
Reconciliation of Loan Loss Reserve
A reconciliation of loan loss reserve is as follows:
Year Ended May 31,
------------------------------------------
1996 1997 1998
--------- --------- ---------
Balance, Beginning $ 180,558 $ 180,558 $ 180,558
Provision for Loan Losses 35,000 -- 139,257
Charge-Offs (35,000) -- --
--------- --------- ---------
Balance, Ending $ 180,558 $ 180,558 $ 319,815
========= ========= =========
NOTE 4 LOANS PAYABLE - LINE OF CREDIT
Effective March 6, 1997, the Company established a $5,000,000
line of credit with Israel Discount Bank. All advances bear
interest at 1.75% above the LIBOR rate. Pursuant to the terms
of the line of credit, the Company is required to comply with
certain terms, covenants and conditions. The line of credit is
unsecured and the Company is required to maintain a minimum
$100,000 compensating balance with the bank.
NOTE 5 LONG TERM DEBT
The long term debt to the SBA consisted of the following
subordinated debentures as of May 31, 1997 and 1998 with
interest payable semi-annually:
<TABLE>
<CAPTION>
May 31,
Interest Rate Period 1997 1998
Maturity Date First Second Face Amount Face Amount
------------- ----- ------ ----------- -----------
<S> <C> <C> <C> <C>
June 1, 2005 6.690% 6.690% $ 520,000 $ 520,000
December 1, 2005 6.540% 6.540% 520,000 520,000
March 17, 1998 5.625% 8.625% 75,000 --
March 17, 1998 5.625% 8.625% 75,000 --
September 22, 1999 5.000% 8.000% 750,000 750,000
June 9, 1999 6.000% 9.000% 750,000 750,000
December 16, 2002 4.510% 7.510% 1,300,000 1,300,000
March 1, 2007 7.380% 7.380% 4,210,000 4,210,000
June 1, 2006 7.710% 7.710% 250,000 250,000
September 1, 2007 7.760% 7.760% -- 4,060,000
----------- -----------
$ 8,450,000 $12,360,000
=========== ===========
</TABLE>
During the fiscal period ended May 31, 1997 the Company paid
off $390,000 in subsidized debentures and sold two
additional debentures totaling $4,460,000 due June 1, 2006
and March 1, 2007 with interest at 7.710% and 7.380%,
respectively.
During the period ended May 31, 1998, the Company paid off
$150,000 in subsidized debentures and sold an additional
debenture for $4,060,000 due September 1, 2007 with interest
and fees totaling 7.760% per annum.
Under the terms of the subordinated debentures, the Company
may not repurchase or retire any of its capital stock or
make any distributions to its stockholders other than
dividends out of retained earnings without the prior written
approval of the SBA.
F-9
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1998 AND 1997
NOTE 6 RESTRICTED CAPITAL - UNREALIZED GAIN ON REDEMPTION
Repurchase of 3% Preferred Stock
The Company and the SBA entered into a repurchase agreement
dated May 10, 1993. Pursuant to the agreement, the Company
repurchased all 1,520,000 shares of its $1 par value, 3
percent cumulative preferred stock from the SBA for a purchase
price of $.36225670 per share, or an aggregate of $550,630.
The repurchase price was at a substantial discount to the
original sale price of the 3 percent preferred stock which was
sold to the SBA at par value or $1.00 per share.
The Company issued the SBA a liquidating interest in a newly
created restricted capital surplus account which was equal to
the amount of the repurchase discount. This repurchase
discount was amortized over a sixty month period and was fully
amortized as of May 31, 1998.
NOTE 7 DIVIDENDS
Dividends paid to the SBA for each of the fiscal years ended
May 31, 1998 and 1997 were $56,400. Total dividends paid to
common stockholders for the fiscal years ended May 31, 1998,
1997 and 1996 were $955,985 and $337,698 and $296,108,
respectively. The Company is contingently liable to the SBA
for $9,400 in preferred dividends due for the two months ended
May 31, 1998.
NOTE 8 MONEY PURCHASE PLAN
Effective for the fiscal year ending May 31, 1989 the Company
initiated a defined contribution pension plan. The eligibility
requirements for participation in the plan are a minimum age
of 21 years old and 24 months of continuous employment with
the Company. Contributions are currently limited to ten
percent of each participants compensation. Total contributions
made for the fiscal years ended May 31, 1998, 1997 and 1996
were $15,532, $14,123, and $16,180 respectively. All
contributions to the plan have been funded on a current basis.
NOTE 9 MANAGEMENT FEES
The SBA approved the Company's total compensation of $225,000.
Compensation is inclusive of officers' and staff salaries and
pension contributions.
NOTE 10 STOCKHOLDERS' EQUITY
On January 12, 1996, the Company filed an amendment to its
certificate of incorporation which increased the number of
authorized shares to 13,000,000 shares of capital stock
consisting of 10,000,000 shares of $1 par value, 4 percent
cumulative, 15 year redeemable preferred stock and 3,000,000
shares of $.01 par value, common shares. The financial
statements are presented after giving effect to these changes.
The amended certificate of incorporation also provided for a 2
for 1 stock split with respect to the Company's shares of
common stock, $.01 par value per share, for two shares of
common stock for $.01 par value per share. The effect of the
amendment increased the 274,172 issued and outstanding shares
of common stock to 548,344 shares. Additionally, effective
October 24, 1996, the Company amended the certificate of
incorporation, providing for a 2 for 1 stock split. The effect
of this amendment increased the 548,344 issued and outstanding
shares of common stock to 1,096,688 shares.
F-10
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1998 AND 1997
NOTE 11 STOCKHOLDERS' EQUITY
(Continued)
On December 3, 1996, the Company successfully completed its
initial public offering of 1,076,000 shares of its common
stock, including 76,000 shares of common stock pursuant to the
exercise of the underwriters over allotment option. The gross
proceeds from the sale aggregated $5,380,000. The net proceeds
received by the Company after deducting underwriting discounts
and various costs of the offering totaled $3,904,708.
NOTE 11 RELATED PARTY TRANSACTION
The Company currently leases office space from a real estate
partnership, whose partners consist of certain officers and
directors of the Company, for $1,500 per month plus certain
extraordinary operating expenses. The lease is month to month
with a minimum annual rental of $18,000. Total rental expense
under this lease was $18,000 for each of the years ended May
31, 1998, 1997 and 1996.
Certain officers and directors of the Company are also
shareholders of the Company. Officers' salaries are set by the
Board of Directors and are also subject to maximum
compensation set by the SBA. For the fiscal years ended May
31, 1998, 1997 and 1996, officers' salaries, including pension
contributions, were $133,782, $155,348 and $159,661,
respectively.
NOTE 12 SIGNIFICANT CONCENTRATION OF CREDIT RISK
Approximately seventy nine (79%) percent of the Company's loan
portfolio consists of loans made for the financing and
purchase of New York City taxicab medallions and related
assets.
NOTE 13 FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISKS
The Company maintained approximately $1,225,193 in one bank in
excess of amounts that would be insured by the Federal
Depository Insurance Corporation. Management of the Company
feels that the bank is well capitalized under FDIC guidelines.
NOTE 14 SUBSEQUENT EVENTS
Effective June 30, 1998, and for the four months then ended,
the Board of Directors declared a dividend of $0.11 1/2 per
share to holders of common stock, as of June 30, 1998,
aggregating $249,861. The dividend was paid July 15, 1998.
F-11
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
SUPPLEMENTAL SCHEDULES
MAY 31, 1998
<TABLE>
<CAPTION>
SCHEDULE I - LOANS RECEIVABLE
Balance
Number of Outstanding
Type of Loan Loans Interest Rate Maturity Date May 31, 1998
------------ --------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
NYC Taxi Medallion 226 9.00% - 15.00% 1 - 7 years $ 19,272,896
Services 3 14.00% 1 - 7 years 322,838
Auto Repair Service 8 10.00% - 15.00% 1 - 4 years 665,479
Import/Export 1 12.00% 1 year 97,781
Renovation and Construction 2 10.50% 5 years 164,720
Retail Establishment 6 11.25% - 13.00% 1 - 4 years 1,359,921
Restaurant 6 13.00% - 15.00% 1 year 575,075
Gasoline Service Station 3 9.50% - 12.00% 1 year 216,192
Manufacturing 1 15.00% 1 year 151,572
Laundromat and Dry Cleaners 19 11.00% - 15.00% 1 - 4 years 1,438,228
Medical Offices 2 11.63% - 15.00% 1 - 3 years 177,504
--------- ------------
TOTAL 277 $ 24,442,206
========= ============
</TABLE>
Substantially all of the above loans are collateralized by either New York City
taxi medallions or real estate holdings.
SCHEDULE VII - SHORT TERM BORROWINGS
Short term borrowing activities for the periods presented were as follows:
<TABLE>
<CAPTION>
Weighted
Balance Average Maximum Amount Average Amount
Category of End of Interest Outstanding Outstanding
Borrowing Period Rate During Period During Period
- ------------ ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
May 31, 1997 $ -- -- $ -- $ --
May 31, 1998 $ 5,000,000 7.44% $ 5,000,000 $ 416,667
</TABLE>
F-12
<PAGE>
FRESHSTART VENTURE CAPITAL CORP.
SUPPLEMENTARY INFORMATION
SELECTED PER SHARE DATA AND RATIOS
FOR THE FIVE YEARS ENDED
MAY 31, 1994, 1995, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
For the Years Ended May 31,
------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Data
Investment Income $ 1.90 $ 1.83 $ 1.88 $ 0.79 $ 1.13
Investment Expenses (1.23) (1.21) (1.17) (0.46) (0.66)
-------------- -------------- -------------- -------------- --------------
Net Investment Income 0.67 0.62 0.71 0.33 0.47
Net Realized and Unrealized
Gains and Losses on
Securities (0.14) -- (0.06) -- (0.06)
Reduction Due to
Stock Split -- -- -- (4.94) --
Dividends - Common Stock (0.48) (0.54) (0.54) (0.22) (0.44)
Dividends - Preferred Stock (0.05) (0.08) (0.11) (0.03) (0.03)
Net Sale of Common Stock -- -- -- 2.40 --
-------------- -------------- -------------- -------------- --------------
Net Increase/Decrease
in Net Asset Value -- -- -- (2.46) (0.06)
Net Asset Value - Beginning
of Period 5.78 5.78 5.78 5.78 3.32
-------------- -------------- -------------- -------------- --------------
Net Asset Value - End of
Year $ 5.78(1) $ 5.78 $ 5.78(1) $ 3.32(1) $ 3.26
============== ============== ============== ============== ==============
Net Asset Value - End of
Year Excluding Retained
Earnings $ 5.75(1) $ 5.75 $ 5.75(1) $ 3.23(1) $ 3.25
============== ============== ============== ============== ==============
Ratios
Ratio of Expenses to
Average Net Assets 21.3% 20.9% 20.3% 14.3% 22.0%
============== ============== ============== ============== ==============
Ratio of Net Income to
Average Net Assets 9.3% 10.6% 11.2% 10.1% 12.4%
============== ============== ============== ============== ==============
Weighted Average of Common
Shares Outstanding 548,344 548,344 548,344 1,627,318 2,172,688
============== ============== ============== ============== ==============
</TABLE>
(1) The net asset value includes the unamortized portion of the realized gain
from the repurchase of three 3% percent preferred stock and the
undistributed retained earnings at the end of the period.
F-13
