SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 0-20806
FIRSTMARK CORP.
(Name of Small Business Issuer in its Charter)
Maine 01-0389195
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
222 Kennedy Memorial Drive,
Waterville, Maine 04901
(Address of Principal Executive Offices) (Zip Code)
(207) 873-6362
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.20 par value
(Title of Class)
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 past 90 days.
Yes __X__ No _____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. __X__
The issuer's revenues for the fiscal year ended December 31, 1997 were
$__________.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of March 31, 1998 was $__________.
The number of shares outstanding of Common Stock, as of December 31,
1997 was 5,299,876.
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TABLE OF CONTENTS
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PART I
Page
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Item 1. Description of Business.......................................................................3
Item 2. Description of Property.......................................................................9
Item 3. Legal Proceedings............................................................................10
Item 4. Submission of Matters to a Vote of Security Holders..........................................11
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.....................................11
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operation.....................................................................12
Item 7. Financial Statements.........................................................................15
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.......................................................16
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act............................................16
Item 10. Executive Compensation.......................................................................18
Item 11. Security Ownership of Certain Beneficial Owners and Management...............................18
Item 12. Certain Relationships and Related Transactions...............................................20
Item 13. Exhibits, List and Reports on Form 8-K.......................................................20
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PART I
Item 1. Description of Business
General
Firstmark Corp. (the "Company") was incorporated in Maine in January
1982. Through a subsidiary, Southern Title Insurance Corporation ("STIC"), the
Company is principally engaged in the business of issuing title insurance. The
Company also makes venture capital and real estate investments either in the
form of pure equity investments or in the form of loans with an equity
participation feature and makes control investments in situations where the
Company's management actually operates the business. Currently, the Company has
numerous minority interest investments and one control investment in title
insurance. Until January 24, 1997, the Company also actively traded public
stocks and bonds and provided financial consulting services to a select number
of individuals and institutions. See "-- Recent Developments."
Recent Developments
Acquisition of STIC. In June 1996, Southern Capital Corp. ("SCC"), the
parent company of STIC, was merged with and into Southern Capital Acquisition
Corp. ("SCAC"), a subsidiary of the Company. As part of the merger, the
shareholders of SCC received 40,000 shares of the Company's Series B,
cumulative, non-voting preferred stock, par value $.20 per share (the "Series B
Preferred Stock"). The Series B Preferred Stock was not convertible by the
holders, but could be converted by the Company, subject to approval by the
Federal Communications Commission ("FCC"), into not less than 2,000,000 shares
of the Company's common stock, par value $.20 per share (the "Common Stock"),
subject to adjustment if the market price of the Common Stock is less than $4.00
per share at the time of conversion. The Series B Preferred Stock began accruing
dividends on January 1, 1997 and, if not converted by the Company sooner, would
have been redeemable at the option of the holders at a price of $200 per share
after June 30, 1998. The Series B Preferred Stock was converted into shares of
Common Stock in October 1997.
SCC, through its subsidiary, STIC, is principally engaged in the
business of issuing title insurance. SCC also reviews investment opportunities
for its own account. Currently, SCC is an investor in Champion Broadcasting
Corp. ("Champion"), a small market radio acquisition company that acquires
multiple stations in single markets ranked below the top 150 markets by
Arbitron.
The title insurance industry is highly sensitive to the volume of real
estate transactions and to interest rate levels. The Company believes that it
has limited exposure to environmental litigation.
Board Review of Company Operations. At the end of 1996, the Company
reviewed several of its operations, which were unprofitable. First, Firstmark
Prime Securities, located in Portland, Maine was closed in December 1996. Robert
A. Rice, who had supervised the Portland operations, resigned as an officer and
director of the Company. The Board of Directors also concluded that it was
unlikely that the Company could profitably conduct certain operations located in
Waterville, Maine. Those operations included financial planning, investment
management, estate and tax planning, insurance planning and securities
brokerage. Generally, it was determined that the revenue stream from those
businesses was too uncertain and uneven to justify the related operating
expenses.
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In addition to reducing operating expenses, the Board of Directors also
determined that it was important to improve the Company's liquidity by
converting non-cash assets to cash and, if possible, extending the maturity of
some or all of the Company's convertible notes, which, if not extended, were due
on April 21, 1997. See Item 7., "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources," below.
Based on these conclusions, the Company devised a plan intended to help
it achieve its short-term goals of reducing expenses and improving liquidity,
consistent with its clients' interests and its contractual obligations to
officers and others.
Sale of Subsidiaries and Resignation of Officers. Effective January 24,
1997, the Company transferred the stock of three subsidiaries, Firstmark Capital
Corp., Firm Investment Corp. and Firstmark Properties, Inc. to Ivy L. Gilbert.
These subsidiaries conducted the operations that the Company decided to
discontinue. At the time of the transfers, Firstmark Capital Corp. had total
assets of approximately $156,000 and net assets of approximately $56,000; Firm
Investment Corp. had total assets of approximately $47,000 and net assets of
approximately $47,000; and Firstmark Properties, Inc. had total assets of
approximately $1,000 and net assets of approximately $1,000. When the stock of
the subsidiaries was transferred to Ms. Gilbert, she resigned as an officer and
employee of the Company. Ms. Gilbert agreed to serve the Company as a consultant
until July 1997. In addition to the transfer of the subsidiaries, Ms. Gilbert
received $30,000, payable over six months, for her services as a consultant and
an additional $28,500 for other assistance relating to the extension of the
maturity of $585,000 of the Company's convertible notes. Ms. Gilbert assigned
the right to receive the payments for her services as a consultant to Firstmark
Capital Corp.
On January 24, 1997, James F. Vigue resigned as President and Chief
Executive Officer of the Company. Mr. Vigue continues as the Chairman of the
Board of Directors and was a consultant to the Company from his resignation in
1997. For his services as a consultant, Mr. Vigue received $90,000, payable over
12 months. Mr. Vigue assigned the right to receive these payments to Firstmark
Capital Corp.
As a result of these developments, the Company was released from
several obligations. First, in connection with the transfer of the stock of the
subsidiaries to Ms. Gilbert, Firstmark Capital Corp. assumed the Company's
obligations under the lease, dated January 1, 1993, between the Company, as
tenant, and Pinnacle Investment Group ("Pinnacle"), as landlord, for
approximately 4,000 square feet of commercial space at the Company's office in
Waterville, Maine. Currently, the rent under the lease, which terminates on
December 31, 2003, is approximately $43,980 per year. The Company owned the
parcel of land on which its administrative office was located. On January 27,
1997, Pinnacle purchased the land for $55,000.
In addition, in connection with their respective resignations, both Mr.
Vigue and Ms. Gilbert, as officers of the Company, canceled employment
agreements with the Company. Both agreements were for three-year terms that
commenced on May 17, 1996, with renewals by mutual consent of the parties for
successive terms of one year each. Under the agreements, Mr. Vigue and Ms.
Gilbert were each entitled to base compensation of $120,000 per year and
additional compensation based on any fees or commissions that he or she
generated as employees of the Company and its subsidiaries.
Both Mr. Vigue and Ms. Gilbert continue to serve as directors of the
Company. Donald V. Cruickshanks, President of STIC, was appointed President and
Chief Executive Officer of the Company on January 24, 1997. Lewis M. Brubaker,
Jr., chief financial officer of SCC at that time, was appointed Chief
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Financial Officer of the Company on the same date. Mr. Brubaker resigned on
April 25, 1997 to take advantage of a new employment opportunity.
Conversion of Series B Preferred Stock. On February 25, 1997, in a
special meeting of the Company's shareholders, the Company presented two
proposals that would allow for the conversion of the Series B Preferred Stock.
These two proposals were:
(1) an amendment to the Company's Articles of
Incorporation to increase the amount of authorized Common Stock from
5,000,000 to 30,000,000 shares.
(2) an amendment to the Company's Articles of
Incorporation to opt out of Section 910 of the Maine Business
Corporation Act.
The shareholders approved both proposals, which are described in
further detail in the Company's definitive Proxy Statement for a Special Meeting
of Stockholders, which was filed with the Securities and Exchange Commission on
February 5, 1997.
On March 12, 1997, the Company approved the conversion of the shares of
Series B Preferred Stock into shares of Common Stock, effective in April 1997,
subject to the approval of the FCC. Each outstanding share of Series B Preferred
Stock was converted into 80.7571 shares of Common Stock, which figure was
calculated based on the average bid and asked stock prices of the Common Stock
during a 20-day period prior to the date of conversion.
The Series B Preferred Stock entitled the holders to dividends
beginning January 1, 1997, and, with the approval of the conversion, dividends
no longer accrued after March 12, 1997. The preferred stock dividend accrued to
that date ($3.16 per share) was be paid on August 13, 1997. Additionally, the
approval of the conversion of the Series B Preferred Stock eliminated the
obligation to establish a sinking fund beginning April 1, 1997, for the
redemption of such stock.
Extension of Notes. In March 1997, holders of $585,000 of the Company's
8% convertible notes due April 21, 1997, agreed to extend the maturity date of
the indebtedness evidenced by these notes to March 1, 1999 and at interest rate
of 9%. This amount represents approximately 57% of the $1,035,000 of such notes
outstanding. The holders of the remaining $450,000 of notes redeemed their notes
in April 1997.
Related Industry Segments
The following description is a summary of the Company's historical
operations by industry segment.
Title Insurance
The title insurance related subsidiaries derive their revenues from
policy premiums and other related fees for title abstracts, binder preparations
and escrow closings. Title insurance policies are issued to buyers of real
property and secured real property lenders. These policies customarily insure
against title defects, liens and encumbrances that are not specifically exempted
in the policy. Title insurance differs from other types of insurance because it
is related to past events which affect title to the property at the time of
closing and not to unforeseen future events. Revenues are generated from 10
directly owned and operated offices as well as an agency network of over 100
agents. The majority of these revenues are generated in the Commonwealth of
Virginia. The sales and marketing efforts of STIC are generally targeted at the
residential housing and commercial real estate markets.
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Venture Capital and Real Estate
The venture capital segment derives its revenue from interest earned on
loans to companies in venture capital situations and from equity returns.
Investment real estate transactions are also considered a source of revenues for
this segment.
Financial Services
Until their sale to Ivy Gilbert on January 24, 1997, the financial
services subsidiaries derived their revenue from commissions and fees generated
from consulting, investment banking, the creation of proprietary investment
products and the marketing of investment and insurance products of other
companies. In addition, the Company invested its own capital in marketable
securities and other investments and made various business and other loans.
There was no geographical limitation of the financial services and
investment segment.
Subsidiaries
The following lists the Company's subsidiaries after the January 24,
1997 transfer of three subsidiaries to Ivy Gilbert (see "-- Recent
Developments") and the services that they provide:
QFAN Marketing Services, Inc. Founded: 1984
This subsidiary held certain real estate holdings of the
Company. Its principal holding was sold in April 1997.
Southern Capital Acquisition Corp. Founded: 1996
This subsidiary was established to serve as the corporation
used to acquire the stock of SCC and SCC's subsidiaries. See "--
General." In addition, this subsidiary holds certain securities
holdings of the Company.
Investors Southern Corporation Acquired: 1996
Investors Southern Corporation serves as the holding company
for the title insurance and related operations.
Subsidiaries of Investors Southern Corporation:
Southern Title Insurance Corporation Acquired: 1996
(Founded in 1925)
This subsidiary is a title insurance underwriter. It
operates through a combination of 10 direct offices and over
100 agents.
Southern Title Agency Corporation Acquired: 1996
This subsidiary is a title insurance agency for two
of the national title insurance underwriters.
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Southern Abstractors Corporation Acquired: 1996
This subsidiary performs all title examinations and
abstracts for all of the title insurance operations. Title
examinations and abstracts involve the researching of court
and other land records to find the status of title to that
particular property.
Glasgow Enterprises Corp. Acquired: 1996
This subsidiary is involved in title agency joint
ventures with various partners. These joint ventures and the
percentage of ownership are as follows:
Southern Title of Ohio, Inc. 75%
Southern Title of Ohio, Limited 75%
Southern Title of the Peninsula, LLC 70%
Southern Title of Chesapeake, Inc. 70%
Southern Title of North Carolina, LLC 70%
Southern Agency, LC 70%
Southern Title of Roanoke, LLC 33%
TBD Settlement LLC 50%
Southern Title Services, Inc. Acquired: 1996
This company is a subsidiary of STIC and currently
provides special title insurance and real estate transaction
accommodation functions, such as exchanger in like kind
exchanges and mechanics' lien agent for construction loans in
Virginia.
Firstmark and all of its subsidiaries are collectively referred to
herein as the "Company."
The following lists three of the Company's former subsidiaries, which
were transferred to Ms. Gilbert, effective January 24, 1997, and the services
that they provided:
Firstmark Capital Corp. Acquired: June 1982
Firstmark Capital Corp. was the Company's financial planning
subsidiary and offered investment management services to affiliated
partnerships by serving as general partner. The subsidiary also offered
investment management, financial planning, estate and tax planning, and
insurance planning. The subsidiary's revenues were derived from
charging fees and receiving commissions on various products. The
subsidiary had been in business since 1972 and was a Federally
Registered Investment Advisory firm, with two certified financial
planners and five financial advisors.
Firm Investment Corp. (formerly Acquired: January 1986
Firstmark Investment Corp.)
This subsidiary also served as the Company's investment
banking and consulting subsidiary. Firm Investment Corp. marketed the
Company's proprietary investment products to other firms and served as
advisor and manager in some cases to the Company's equity
funds.
Firstmark Properties Inc. Founded: 1985
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This subsidiary offered commercial and investment real estate
brokerage services primarily to the Company's own holdings. The
subsidiary also advised its former parent company on real estate
related acquisitions and projects. This subsidiary had five State of
Maine Real Estate Agent licensed professionals affiliated with it.
Employees
The Company and its subsidiaries have approximately 73 total employees,
of which nine are part-time, as of December 31, 1997. The Company believes that
its relations with its employees are good.
Significant Customers
The Company does not receive more than 10% of its business or revenues
from any single customer.
Company Operations -- Title Insurance
Competition. The title insurance business is very competitive.
Competition is based primarily on price, service, and expertise. Competition
within the title insurance industry has increased as new local and regional
title insurance operations as well as national companies are vying for market
share. Title insurance underwriters also compete for agents on the basis of
service and commission levels.
Insured Risk and Loss Reserves. The insured risk or "face amount" of
insurance under a title insurance policy is generally equal to either the
purchase price of the property or the amount of the loan secured by the
property. The insurer is also responsible for the cost of defending claims
against the insured title. The insurer's actual exposure at any time is
significantly less than the total face amount of policies in force because the
risk on an owner's policy is often reduced over time as a result of subsequent
transfers of the property and the reissuance of title insurance by other title
insurance underwriters, and the coverage of the lender's policy is reduced and
eventually terminated as a result of payment of the mortgage loan. Because of
these factors, there is no practical way to ascertain the total contingent
liability of a title underwriter on outstanding policies.
In the ordinary course of business, STIC represents and defends the
interests of their insureds and provides on its books for estimated losses and
loss adjustment expenses. In recent years, the cost of defending policy claims
has increased. Title insurers are also sometimes subject to claims arising
outside the insurance contract, such as for alleged negligence in search,
examination or closing, alleged improper claims handling and alleged bad faith.
The damages alleged in such claims may often exceed the stated liability limits
of the policies involved.
Liabilities for estimated losses and loss adjustment expenses are
accrued when premium revenues are recognized and are based upon historical and
anticipated loss experience. The resulting liability reflects estimates of net
costs to settle all reported claims and claims incurred but not yet reported to
the company. Loss reserve calculations are based on annual reviews of the actual
paid claims experience. Reserves for losses incurred but not reported (IBNR) are
estimated based on the use of actuarial methods.
Regulation. The title insurance businesses, in common with those of
other insurance companies, are subject to comprehensive, detailed regulation in
the jurisdictions in which they do business. Such regulation is primarily for
the protection of policyholders rather than for the benefit of investors.
Although their scope varies from place to place, insurance laws in general grant
broad powers to
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supervisory agencies or officials to examine companies and to enforce rules or
exercise discretion touching almost every significant aspect of the conduct of
the insurance business. These powers include the licensing of companies and
agents to transact business, the imposition of monetary penalties for rules
violations, varying degrees of control over premium rates, the forms of policies
offered to customers, financial statements, periodic reporting, permissible
investments and adherence to financial standards relating to surplus, dividends
and other criteria of solvency intended to assure the satisfaction of
obligations to policyholders.
State holding company acts also regulate changes of control in
insurance holding companies and transactions and dividends between an insurance
company and its parent or affiliates. Although the specific provisions vary, the
holding company acts generally prohibit a person from acquiring a controlling
interest in an insurer incorporated in the state promulgating the act or in any
other controlling person of such insurer unless the insurance authority has
approved the proposed acquisition in accordance with the applicable regulations.
In many states, including Virginia, where STIC is domiciled, "control" is
presumed to exist if 10% or more of the voting securities of the insurer are
owned or controlled by a party, although the insurance authority may find that
such control in fact does or does not exist where a person owns or controls
either a lesser or a greater amount of securities. The holding company acts also
impose standards on certain transactions with related companies, which generally
include, among other requirements, that all transactions be fair and reasonable
and that certain types of transactions receive prior regulatory approval either
in all instances or when certain regulatory thresholds have been exceeded.
The Insurance Law of Virginia limits the maximum amount of dividends
which may be paid without approval by the Virginia Bureau of Insurance.
Reinsurance. STIC reinsures portions of title insurance risks with
unaffiliated insurance companies under traditional indemnity reinsurance
agreements. In such reinsurance agreements, the reinsurer accepts that part of
the risk which STIC, as the primary insurer, decides not to retain, in
consideration for a portion of the premium. Generally, STIC enters into
traditional reinsurance arrangements to diversify its risk and to limit loss
exposure on risks that exceed STIC's policy retention limits. These limits are
considered prudent by STIC's management and are well below the $3.4 million
limit allowed by statute, as of December 31, 1997. STIC, however, remains liable
to the insureds for the total risk, whether or not the reinsurer meets its
obligations.
At December 31, 1997, STIC ceded all of its reinsurance liability to
one carrier, Fidelity National Title Insurance Company ("Fidelity"), with which
STIC has had a treaty reinsurance agreement since October 1, 1992. Under this
agreement, STIC has reinsured all single policy risk in excess of $250,000 from
October 1, 1992 to August 1, 1996 and all single policy risk in excess of
$300,000 since August 1, 1996. For the years ended December 31, 1997, 1996 and
1995, STIC ceded to Fidelity $282 million, $291 million and $336 million,
respectively.
Item 2. Description of Property
Corporate Real Estate
Prior to January 24, 1997, the Company leased its executive and
administrative offices, consisting of approximately 4,000 square feet of
commercial space, from the Pinnacle Investment Group ("Pinnacle"), a group
consisting of four individuals, one of whom was an officer of the Company. This
facility was leased from Pinnacle under a fifteen year lease terminating on
December 31, 2003. The lease was renewable and negotiable after five years.
Effective January 24, 1997, Firstmark Capital Corp.
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assumed the lease obligation. The Company owned the parcel of land on which its
administrative offices were located. On January 27, 1997, Pinnacle purchased the
land for $55,000. For further information, see Item 1., "Description of Business
- -- Recent Developments," above.
The Company owns 5,716 square feet of land and a two-story office
building containing 3,842 square feet that contains the Charlottesville,
Virginia office of STIC. The building is not encumbered and is in good operating
condition. The brick structure was built in 1920 and renovated in 1985.
Investment Real Estate
Investments in real estate are made for possible development of the
property or immediate re-sale. Most real estate held by the Company consists of
lakefront property, but non-lakefront property is also owned. The majority of
the real estate owned by the Company is either developed or undeveloped raw
land. In January 1997, the Company sold a single-family housing unit that was
acquired in connection with the moving of an employee.
The Company's real estate properties are reviewed for impairment
whenever events or circumstances indicate that the carrying value of such
properties may not be recoverable.
Item 3. Legal Proceedings
The Company is involved in litigation from time to time in the ordinary
course of business. Except as noted below, as of December 31, 1997, the Company
was not involved in any litigation outside the ordinary course of business.
On August 7, 1996, Lake Anna Development, L.C. ("Lake Anna") filed a
Motion for Judgment against STIC in the Circuit Court of Louisa County in the
Commonwealth of Virginia. The Motion for Judgment alleges that STIC breached a
contractual obligation under a title insurance policy that contained affirmative
mechanics' lien coverage when STIC denied liability under the exclusions of the
title insurance policy. STIC issued the title insurance policy at issue to the
lender, a federal savings bank, in connection with the development of the
insured project. Lake Anna alleges that it has succeeded to the position of the
lender. The Motion for Judgment seeks relief in the amount of $1,342,374.38 plus
interest from May 6, 1996. STIC denies any liability to the lender and is
vigorously defending the claims asserted against it.
On June 20, 1997, the beneficiaries of the DiBello Loving Trust filed a
civil lawsuit against James Vigue, former President and Chief Executive Officer
of the Company, Ivy Gilbert, former Treasurer and Chief Financial Officer of the
Company, and the Company. The lawsuit is pending in the Maine Superior Court for
Kennebec County. The beneficiaries allege that James Vigue, as trustee of the
trust, mismanaged the trust, breached his duties as trustee, made
misrepresentations to them, was negligent in the management of the trust and
violated the Maine Securities Act and the Maine Unfair Trade Practices Act. They
allege that Ivy Gilbert participated in the breach of trust. They allege that
the Company is liable for Mr. Vigue's actions and is liable as a trustee and for
violation of the Maine Securities Act and the Maine Unfair Trade Practices Act.
The beneficiaries claim compensatory damages in a range of $500,000 to $1
million, plus punitive damages. Pretrial discovery is in its initial stages.
Thus, the
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Company is unable to assess the likelihood of an adverse result. The Company has
denied all liability and it intends to defend the lawsuit vigorously.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the transition period covered by
this report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Common Stock of the Company is traded on the Nasdaq SmallCap Market
under the symbol of "FIRM".
The following table sets forth the high and low bid information for the
Common Stock on the Nasdaq SmallCap Market for the quarters indicated.
Bid Information
---------------
High Low
---- ---
Fiscal Year Ended June 30, 1996
1st quarter................................... 4.75 3.38
2nd quarter................................... 4.50 4.00
3rd quarter................................... 4.75 4.25
4th quarter................................... 4.88 3.88
Transition Period Ended December 31, 1996
July 1 to September 30........................ 4.63 4.25
October 1 to December 31...................... 4.63 3.25
Fiscal Year Ended December 31, 1997
1st quarter................................... 3.75 2.00
2nd quarter................................... 2.63 1.50
3rd quarter................................... 2.03 1.50
4th quarter................................... 1.75 0.75
As of December 31, 1997, there were approximately _____ shareholders of
the Common Stock.
The Company has never declared any cash dividends on the Common Stock,
and any future payment of dividends is solely in the discretion of the Board of
Directors and is dependent upon the earnings and financial condition of the
Company and such other factors as the Board of Directors from time to time may
deem relevant.
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Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operation
In June 1996, SCC was merged with and into SCAC, a subsidiary of the
Company. For further information on this transactions, see Item 1., "Description
of Business - General," above. Accordingly, the Company's results of operations
for the year ended December 31, 1997 include the results of SCC for the entire
year, while the results of operations for previous periods include the results
of SCC only for the period from June 7, 1996 forward.
In addition, on February 4, 1997, the Company changed its fiscal year
end from June 30 to December 31. As a result, the accompanying financial
statements and following discussion include results for the six-month transition
period from July 1, 1996 to December 31, 1996. References in the following
discussion to fiscal 1996 or any earlier fiscal year are references to the
fiscal years ended June 30, 1996 or earlier.
Results of Operations
Fiscal Year Ended December 31, 1997 vs. Fiscal Year Ended December 31, 1996
Total revenues during the year ended December 31, 1997 increased to
$11.8 million, a 46% increase over the prior year, primarily due to the
inclusion of the results of operations of Southern Capital Corp. for the entire
year as compared to just over six months in the prior year. Title insurance
revenues amounted to approximately $10.8 million of revenues in the current year
as compared to $6.6 million of revenues in the prior year. Revenues from
commissions and fees decreased from $1.2 million in the prior year to less than
$6,000 in the current year. This change was the result of Management's decision
to close certain business operations, which were not considered profitable, in
the latter part of 1996 and to transfer several subsidiaries to the former chief
financial officer in January 1997 in exchange for the surrender of certain
employment and compensation benefits. For further information, see Item 1.,
"Description of Business - Recent Developments," above. Interest and dividends
increased approximately $150,000 to $432,000 in the current year as compared to
$282,000 in the prior year. This again was primarily the result of the inclusion
of the title insurance operations for a longer portion of the current year and
consists of the interest and dividends earned on the funds held to cover
reserves for policyholders. Additionally, approximately $59,000 in interest
income was recognized in a negotiated settlement with respect to a loan
receivable from a Canadian company. Net investment gains (losses) amounted to
$6,000 in the current year as compared to a loss of $1.7 million in the prior
year. In the current year a gain (approximately $381,000) recognized on the
receipt of shares of Intercel stock previously held in escrow and an additional
gain of $98,000 when these and other shares of Intercel were ultimately sold
were offset by approximately $233,000 in writedowns of the Company's investment
in Champion and $182,000 in writedowns or writeoffs of other investments. For
further information, see Item 1., "Description of Business - Recent
Developments," above. In the prior year the $1.7 million loss primarily related
to the writeoffs of principally venture capital investments and loans in several
startup companies, where the future value and collectibility of such amounts
were uncertain.
Operating expenses and general and administrative expenses increased
approximately $3.7 million to $12.8 million in the current year compared to $9.1
million in the prior year. This increase also results from the inclusion of the
title insurance operations, which are very labor intensive, for the full year as
compared to less than seven months of such operations in the prior year.
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Results of Operations
Six Months Ended December 31, 1996 vs. Six Months Ended December 31, 1995
The six months ended December 31, 1996 proved to be a difficult period
for the Company, as management continued to evaluate each of its business
operations and investments to determine if they were to continue as a viable
source of profits for the Company. As a result of this process, additional
write-offs and losses from the closing of non-profitable operations were
recorded during the period. These include the closing of the securities
brokerage office in Portland, Maine and the write-off or write-down of
additional loans and investments deemed uncollectible or permanently impaired.
As a result, the Company incurred a net loss of approximately $841,000 for the
six months ended December 31, 1996 as compared to a $440,000 net profit for the
six months ended December 31, 1995.
During the period, revenues decreased by $677,000 or 10% over the same
period in 1995 to $6.24 million. This decrease was a result of a $1.17 million
or 153% decrease in investment gains and a $494,000 or 51% decrease in
commissions and fees offset by an increase in title insurance revenues of
$974,000 or 20%. The decrease in investment gains was a result of two factors.
The first factor was the fact that the 1995 amounts included a gain of $649,000
on the Intercel stock (see page 15 of the December 31, 1996 audited financial
statements for a more detailed explanation of the Intercel transaction). The
second factor was the $229,000 write-down of the Company's investment in
Industrial Technologies, Inc. ("Intech"). The Company's investment in Intech was
viewed by management to have a permanent diminution in value. The commission fee
income decreased because of management's decision to change the focus of the
Company's investment direction from venture capital investments, which generated
much of the fee income in 1995, and the closing of the securities brokerage
office in Portland, Maine in October 1996. The Company also showed declines in
financial services revenue during the period. As a result of management's review
of this operation, the Company decided in January 1997 to transfer the operation
to the former Chief Financial Officer. For further information on this transfer,
see Item 1., "Description of Business -- Recent Developments," above. The
increase in title insurance premiums can be attributed primarily to the joint
ventures started during the last six months of 1995 and 1996 fully contributing
to the revenues for the last six months of 1996. Also an increase in title
insurance revenues from non-affiliated agencies was generated in the second half
of 1996.
Total expenses increased for the six months ended December 31, 1996 by
$1.1 million or 17% to $7.49 million as compared to the same period of 1995.
This increase was mainly a result of employee compensation and benefits
increasing $718,000 or 17% to $5.0 million and general and administrative
expenses increasing by $214,000 or 11% to $2.1 million for the six months ended
December 31, 1996 versus the same period in 1995. The increase in both of these
categories can be attributed to two factors. First, the increase in agency
revenues as noted above resulted in an increase in agency commissions for the
period of approximately $292,000 more than the comparable period of 1995.
Second, the new title insurance operations started during the last six months of
1995 are escrow closing operations, which are very labor intensive, resulting in
increases in salaries and benefits as well as general and administrative costs.
Write-offs of loans and investments increased $37,000 or 24% to $187,000 as a
result of management's continued review of the investments held by the Company.
The loss on retirement of fixed assets of $45,000 and the write-down of the
excess of cost over fair value of $81,000 are a result of the closing of the
brokerage operations in Portland, Maine.
Results of Operations
Fiscal Year Ended June 30, 1996 vs. Fiscal Year Ended June 30, 1995
The fiscal year ended June 30, 1996 was one of significant change for
the Company. On June 7, 1996, the Company completed the acquisition of SCC, and
as a result the Company's assets increased
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<PAGE>
$11.4 million or 164%. As more fully explained in Note 2 to the Consolidated
Financial Statements, the assets of SCC were merged into a wholly owned
subsidiary of the Company in exchange for 40,000 shares of the Company's
Preferred Series B, cumulative, non-voting preferred stock. It is anticipated
that shares of the Preferred Stock will be converted into at least 2,000,000
shares of the Common Stock. This larger balance sheet will allow the Company a
broader base on which to build.
The increase in assets was offset in part by $1.2 million of write-offs
and reserves for venture capital investments in and loans to several startup
companies. Due to the uncertainty of these investments and loans, the Company's
Board of Directors decided that it was prudent to make such adjustments. The
progress of these investments and the repayment of these loans will be actively
managed for improvements which may allow the Company to recover certain of these
write-offs and reserves.
The statement of earnings for the year ended June 30, 1996 as shown in
the Consolidated Financial Statements only includes the consolidated results of
operations for SCC for the period from June 7, 1996 to June 30, 1996. It is
anticipated that in the future the title insurance revenues will become the
Company's major source of revenues.
Earnings (losses) before income taxes decreased $1.5 million or 200%
from 1995 largely as a result of the write-offs and reserves noted above.
Revenues increased $.3 million or 11% from 1995 mainly as a result of
$.8 million in title insurance revenues which were not present in 1995. This
increase was offset by a decrease in real estate and timber revenues of $.7
million or nearly 100%. There were no timber revenues in 1996 as all timber had
been harvested. The real estate market continues to be sluggish. The Company
continues to believe that its properties, located largely on Maine lakes, will
prove to be profitable investments over the longer term. As a result of
management's review of the real estate holdings, the Company added an additional
$20,000 to the reserve against real estate holdings. Investment gains increased
$.2 million or 50% from 1995 mainly as a result of the Intercel stock
distribution. See Note 3 to the Consolidated Financial Statements for additional
information on this investment.
Expenses before write-offs of loans and investments increased $.6
million or 27% from 1995. This increase was mainly from increased employee
compensation and benefits costs of $.7 million or 59% from 1995. This increase
is attributed largely to SCC's insurance operations as the title insurance
operations are highly labor intensive.
During the fiscal year ended June 30, 1996 the Company had to make some
hard decisions concerning its venture capital investments. The Investment
Committee of the Board of Directors, which was established subsequent to the
acquisition of SCC, examined the Company's venture capital investment portfolio.
After its review, the Investment Committee concluded that several such
investments and one loan had experienced significant value diminution, which,
together with the overall risk and uncertainties inherent in the venture capital
business, prompted the Investment Committee to recommend to the Board of
Directors certain adjustments in the carrying values of such investments and the
creation of certain reserves against these investments. Such adjustments were
made to bring the carrying values of these investments in line with management's
best estimate of realizable value at June 30, 1996.
Prior to the fiscal year ended June 30, 1996, venture capital
investments were a relatively minor business for the Company, in both number of
transactions and dollars invested. At June 30, 1995, such venture capital
investments and loans totaled $1,574,789. At June 30, 1996, such investments
totaled $3,275,523 before adjustments and $2,026,176 after adjustments. These
investments were made by the Company's management prior to the acquisition of
SCC.
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<PAGE>
With these decisions behind the Company and with the addition of the
Southern Capital Corp. companies, management is implementing strategies to
reduce operating expenses and improve liquidity. The Company conducted a review
of all of its businesses. Businesses that could not produce acceptable profits,
in management's opinion, have been transferred or shut down. Similarly,
management is examining all assets of the Company to determine those assets that
should be sold, with the proceeds to be redeployed into more profitable
businesses. For further information, see Item 1., "Description of Business --
Recent Developments," above.
Along with the reduction of expenses, management is concentrating on
returning the Company to profitability. The title insurance industry has
experienced consolidation in recent years. The Company believes that this trend
will continue and, through another subsidiary, STIC, is looking at opportunities
for growth and expansion in this industry. The Company is interested primarily
in growing through joint ventures, expanded agency operations and possible
acquisition of small title insurance companies. The Company's geographical focus
in the title insurance industry centers on areas with prospects for growth,
including markets in Virginia where STIC does not currently have a presence and
in other states. If the Company is able to return to an acceptable level of
liquidity, it will then consider other investment opportunities.
Liquidity and Capital Resources
The Company's cash and cash equivalents were approximately $2,293,000
at December 31, 1997, and $1,833,000 at December 31, 1996. However, a
significant portion of the cash and cash equivalents (approximately $1,707,000
at December 31, 1997 and $1,136,000 at December 31, 1996) was held by STIC and
is subject to certain regulatory requirements as to use.
The Company intends to satisfy its obligations through cash on hand,
income tax refunds, sales of marketable securities and other assets and payments
received on loans receivable. Management believes that its available and
expected sources of cash will be sufficient to enable the Company to satisfy its
obligations as they come due. Additionally, the Company has an available line of
credit of $500,000, for which no borrowings are outstanding as of December 31,
1997.
Reference is made to Item 1., "Description of Business - Regulation,"
above concerning payments of dividends from the title insurance companies.
Item 7. Financial Statements
The Company's financial statements for the years ended December 31,
1997, 1996 and 1995 have not been completed. The Company expects to file an
amendment to this report to include such financial statements within the next
five business days.
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<PAGE>
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
No changes in the Company's independent accountants or disagreements on
accounting and financial disclosure required to be reported hereunder have taken
place.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Directors. The business experience of the Directors of the Company for
the past five years is summarized below.
JAMES F. VIGUE, 48, is Chairman of the Board of Directors and founder
of the Company. Mr. Vigue served as President, Chairman of the Board of
Directors and Chief Executive Officer of the Company from the Company's
inception in March 1981 to January 24, 1997. Mr. Vigue is also President and a
Director of Firstmark Capital Corp., Firm Investment Corp. and Firstmark
Properties Inc., all of which were formerly subsidiaries of the Company, and,
prior to his resignation from the Company, was President and a Director of QFAN
Marketing Services, Inc. and Southern Capital Acquisition Corp., both of which
are subsidiaries of the Company. Mr. Vigue is a 1972 graduate of Colby College
and was the first practicing Certified Financial Planner in the State of Maine.
Mr. Vigue is the author of WEALTH POWER: How to Work With Your Financial
Advisors to Maximize, Protect and Control Your Assets.
IVY L. GILBERT, 36, has been a Director since June 1993. Ms. Gilbert
served as Corporate Secretary and Chief Financial Officer of the Company from
June 1986 to January 24, 1997 and Treasurer from June 1992 to January 24, 1997.
Ms. Gilbert is Corporate Secretary and Treasurer of Firstmark Capital Corp.,
Firm Investment Corp. and Firstmark Properties Inc., all of which were formerly
subsidiaries of the Company, and, prior to her resignation from the Company, was
Corporate Secretary and Treasurer of QFAN Marketing Services, Inc. and Southern
Capital Acquisition Corp., both of which are subsidiaries of the Company. Ms.
Gilbert is a 1981 graduate of Thomas College and is also Chief Executive Officer
of The Hamilton Foundation, a non-profit organization. Ms. Gilbert is the
founder of Women & Investing and the author of Women's Financial Wisdom: How to
Become a Woman of Wealth.
DONALD V. CRUICKSHANKS, 40, has been President and Chief Executive
Officer of the Company since January 24, 1997 and has been a Director since June
1996. He served as President of Southern Capital Corp. from 1992 through 1996,
and has served as President and Chief Executive Officer
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<PAGE>
of Southern Title Insurance Corporation since 1984. Mr. Cruickshanks is also
Chairman of Southern Title Insurance Corporation. Mr. Cruickshanks is also
President of Southern Abstractors Corporation, Southern Title Agency
Corporation, Glasgow Enterprises Corp. and Southern Title Services, Inc., all of
which are subsidiaries of Southern Title Insurance Corporation. He is a 1979
graduate of Randolph Macon College.
H. WILLIAM COOGAN, JR., 44, has been a Director of the Company since
June 1996. He has served as Chairman and Chief Executive Officer of Southern
Capital Corp. since April 1995 and is currently a Director and Chief Investment
Officer of its subsidiary, Southern Title Insurance Corporation, and Chairman of
Champion Broadcasting Corporation. From June 1992 to April 1995, he was Managing
Director of Libra Investments, Inc., a high-yield debt and special situation
investment firm based in Los Angeles. From May 1991 to May 1992, he was a
private investor. From August 1990 to April 1991, he was a Managing Director and
Head of Corporate Finance at Wheat First Butcher Singer and, from September 1982
to July 1990, was an investment banking partner of CS First Boston in New York,
San Francisco and Los Angeles. Mr. Coogan received his undergraduate degree from
the University of Vermont and his MBA degree from the University of Virginia. He
is also a director of Wireless Financial, Inc.
SUSAN C. COOGAN, 43, has been a Director of the Company since June
1996. From 1992 to 1996, she was a Director of Southern Capital Corp. From 1994
to 1995, she was a member and Executive Vice President of CKC Advisors and
Chesapeake Capital Lending Fund, L.P., a SBIC applicant. From 1987 to 1990, she
served as Executive Vice President and Chief Operating Officer of Country Wide
Mortgage Investments, a real estate management trust. In 1987, Ms. Coogan joined
Countrywide Credit Industries, Inc., a mortgage banking firm headquartered in
Pasadena, CA. She was Senior Vice President responsible for all capital raising
activities. Ms. Coogan received her undergraduate degree from Hollins College
and a MBA from the Colgate Darden Graduate Business School of the University of
Virginia. Ms. Coogan is currently on the Board of Directors of Regency
Bancshares, a Richmond, Virginia bank holding company.
Executive Officers. The business experience of Donald V. Cruickshanks,
the Company's President and Chief Executive Officer, for the past five years is
summarized above. The business experience of Ronald C. Britt, the current Chief
Financial Officer for the past five years is summarized below:
RONALD C. BRITT, 46, has been Chief Financial Officer and Treasurer of
the Company since 1997. Prior to his engagement by the Company, Mr. Britt was
self-employed as an accounting and business consultant. He is a certified public
accountant and has over 15 years experience in public accounting. Mr. Britt is a
1974 graduate of the University of Virginia.
Family Relationships. James F. Vigue and Ivy L. Gilbert are husband and
wife, and H. William Coogan, Jr. and Susan C. Coogan are husband and wife.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires the Company's directors and executive officers, and any persons who own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission ("SEC") reports of ownership and changes in ownership of the
Company's Common Stock. Officers and directors are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms that they file. Based
solely on review of the copies of such reports furnished to the Company or
written representation that no other reports were required, the Company believes
that, during fiscal year 1997, all filing requirements applicable to its
officers and directors were complied with.
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<PAGE>
Item 10. Executive Compensation
The following table summarizes the compensation paid or accrued to the
Chief Executive Officer of the Company and its other most highly paid executive
officers for the last fiscal year in all capacities in which they served the
Company and its subsidiaries.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
Securities
Name and Other Annual Underlying
Principal Position Year Salary ($) Bonus ($) Compensation Options (1)
- ------------------ ---- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Donald V. Cruickshanks, 1997 (5) -
President and Chief Executive 1996 (3) 68,282 0 (5) -
Officer (2) 1996 (4) 126,975 0 (5) -
1995 124,375 7,979 (5) -
James F. Vigue, Chairman of the 1997 10,000 82,500 -
Board (6) 1996 (3) 70,000 (7) 0 - (5) 5,000
1996 (4) 0 0 205,351 5,000
1995 0 0 177,241 5,000
H. William Coogan, Jr., Chairman 1997 (5) -
and Chief Executive Officer of 1996 (3) 68,282 1,540 9,187 (9) -
SCC (8) 1996 (4) 126,975 0 (5) -
1995 124,375 6,250 (5) -
</TABLE>
- ----------------
(1) The options listed in the table were not approved by the Company's
stockholders and were terminated in connection with the resignation of
Mr. Vigue as an employee and an officer of the Company.
(2) Mr. Cruickshanks was elected President and Chief Executive Officer on
January 24, 1997. Prior to January 24, 1997, he served as President of
SCC. SCC merged with and into a subsidiary of the Company on June 7,
1996. For further information, see Item 1., "Description of Business --
Recent Developments," above.
(3) Six months ended December 31, 1996. (4) Fiscal year ended June 30,
1996.
(5) The value of perquisites and other personal benefits did not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus shown in
the table.
(6) Mr. Vigue served as President and Chief Executive Officer until January
24, 1997.
(7) As of March 28, 1996, per contract, the Chairman of the Board was
entitled to receive a base compensation of $120,000 per year. This
employment agreement was terminated on January 24, 1997. For further
information, see Item 1., "Description of Business -- Recent
Developments," above.
(8) SCC merged with and into a subsidiary of the Company on June 7, 1996.
(9) Amount represents consulting fees earned.
The executive officers of the Company participate in other benefit
plans provided to all full-time employees of the Company who meet eligibility
requirements, including group life insurance, hospitalization and major medical
insurance.
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<PAGE>
Key Man and Officers' Insurance. James F. Vigue was formerly a key
officer of the Company, and his contribution to the Company had been a
significant factor in the Company's plans and operations. Prior to his
resignation from the Company, the Company maintained key-man life insurance
policies on Mr. Vigue with aggregate face values of approximately $3,000,000. In
addition, the Company presently maintains a key-man life insurance policy on H.
William Coogan, Jr., a Director of the Company and an officer of SCC, with an
aggregate face value of approximately $3,000,000.
Compensation of Directors. The Company does not compensate its
Directors for attending meetings of the Board of Directors.
Employment Agreements. STIC and Donald V. Cruickshanks, the President
and Chief Executive Officer and a Director of the Company, are parties to an
employment agreement for a term commencing January 2, 1998, and terminating
December 31, 2000. The agreement provides for his employment as President and
Chief Executive Officer of STIC. Under the agreement, Mr. Cruickshanks is
entitled to base compensation of $140,000 per year, with an increase in
compensation of $5,000 per year. Mr. Cruickshanks is entitled further to receive
additional compensation in an amount up to 10% of the annual after-tax profits
of STIC. Mr. Cruickshanks may terminate his employment at any time by giving
STIC 30 days' notice of such termination.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 31, 1998 by (i) each person who
is known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, and (iii)
all of the directors and executive officers of the Company as a group. For the
purposes of the following table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 under the Exchange Act, under
which, in general, a person is deemed to be a beneficial owner of a security if
he or she has or shares the power to vote or direct the voting of the security
or the power to dispose or direct disposition of the security, or if he or she
has the right to acquire beneficial ownership of the security within 60 days.
Except as otherwise indicated (i) each stockholder identified in the table
possesses sole voting and investment power with respect to his shares, and (ii)
the mailing address of each individual is Firstmark Corp., P.O. Box 1398,
Richmond, Virginia 23218.
Name Common Stock Percent
- ---- ------------ -------
Directors
Donald V. Cruickshanks 1,065,995 20.1%
James F. Vigue (1)(2) 110,986 2.1%
Ivy L. Gilbert (1)(3) 161,511 3.0%
H. William Coogan, Jr. 1,001,389 18.9%
Susan C. Coogan (4) 1,162,903 21.9%
All Directors and executive officers as a
group (6 persons) 3,391,798 64.0%
The H. William Coogan Irrevocable Trust 1,162,903 21.9%
4712 Charmian Road
Richmond, Virginia 23226
- --------------
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<PAGE>
(1) Mailing address is One Financial Place, 222 Kennedy Memorial Drive,
Waterville, Maine 04901.
(2) Amount includes 4,324 shares held by his spouse, Ivy L. Gilbert.
(3) Amount includes 50,525 shares held as custodian for her minor children
and 106,662 shares held by her spouse, James F. Vigue.
(4) Amount includes 1,162,903 held by The H. William Coogan Irrevocable
Trust, of which Ms. Coogan is sole trustee.
Item 12. Certain Relationships and Related Transactions
The Company obtains certain related party receivables and payables in
the normal course of business and through advances for accommodation. In
addition, the Company has certain loans receivable from related parties at terms
consistent with those provided to other customers. The loans are substantially
secured by real estate mortgages. Balances at December 31, 1997 are as follows:
Advances to Related Parties $__________
Loans to Related Parties $__________
Prior to January 24, 1997, the Company leased its executive and
administrative offices, consisting of approximately 4,000 square feet of
commercial space, from the Pinnacle Investment Group ("Pinnacle"), a group
consisting of four individuals, one of whom was an officer of the Company. This
facility was leased from Pinnacle under a fifteen year lease terminating on
December 31, 2003. The lease was renewable and negotiable after five years.
Effective January 24, 1997, Firstmark Capital Corp. assumed the lease
obligation. The Company owned the parcel of land on which its administrative
offices were located. On January 27, 1997, Pinnacle purchased the land for
$55,000. For further information, see Item 1., "Description of Business --
Recent Developments," above.
For related party information, see Note ___ to the Consolidated
Financial Statements.
Item 13. Exhibits, List and Reports on Form 8-K
(a) Exhibits.
3a Articles of Incorporation, as amended, incorporated by
reference to the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1994.
3b Bylaws, as amended, incorporated by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June
30, 1994.
4a Stock Certificate, incorporated by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June
30, 1994.
4b Convertible notes, incorporated by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended June
30, 1994.
4c Preferred "A" stock certificate, incorporated by reference to
the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1994.
4d Preferred "A" stock warrant, incorporated by reference to the
Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1994.
4e Preferred "B" stock certificate, incorporated by reference to
the Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1996.
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<PAGE>
11a Lease, incorporated by reference to the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1994.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the last
quarter of the period covered by this report.
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FIRSTMARK CORP.
Date: April 15, 1998 By: /s/ Donald V. Cruickshanks
-------------------------------------
Donald V. Cruickshanks
President and Chief Executive Officer
In accordance with Section 13 or 15(d) of the Exchange Act, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ Donald V. Cruickshanks President and Chief Executive April 15, 1998
- ------------------------------------------- Officer and Director
Donald V. Cruickshanks (Principal Executive Officer)
/s/ Ronald C. Britt Chief Financial Officer, Secretary and April 15, 1998
- ------------------------------------------- Treasurer (Principal Financial and
Ronald C. Britt Principal Accounting Officer)
Chairman of the Board April __, 1998
- -------------------------------------------
James F. Vigue
Director April __, 1998
- -------------------------------------------
Ivy L. Gilbert
Director April __, 1998
- -------------------------------------------
H. William Coogan, Jr.
Director April __, 1998
- -------------------------------------------
Susan C. Coogan
</TABLE>
