UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
--------------
Commission File Number: 0-18201
-------
EQUIVEST FINANCE, INC.
----------------------
(Exact name of Registrant as specified in its charter)
Florida 59-2346270
- ------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
2 CLINTON SQUARE, SYRACUSE, NEW YORK 13202
- ------------------------------------ -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (315) 422-9088
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act Of 1934 during
the preceding 12 months (or for such shorter period that the Company was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
As of April 30, 1998, 21,905,706 shares of common stock of Equivest Finance,
Inc. were outstanding.
1
<PAGE>
EQUIVEST FINANCE, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTER ENDED MARCH 31, 1998
INDEX
PART I FINANCIAL STATEMENTS PAGE
----
Item 1. Financial Statements 3
Consolidated Financial Information:
Consolidated Balance Sheets - March 31, 1998(unaudited)
and December 31, 1997 3
Unaudited Consolidated Income Statements - Three Months
Ended March 31, 1998 and 1997 4
Unaudited Consolidated Statement of Equity Accounts 5
Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 6
Notes to Interim Consolidated Financial Information 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION 13
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements
EQUIVEST FINANCE, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(Unaudited)
ASSETS March 31, 1998 December 31, 1997
- ----------------------------------------------------------- -------------- -----------------
<S> <C> <C>
Cash $ 2,711,158 $ 4,620,479
------------- -------------
Receivables:
Accounts receivable 1,540,957 1,437,928
Notes and advance receivable 125,517,915 119,210,250
Less allowance for doubtful receivables (2,667,983) (2,442,244)
------------- -------------
124,390,889 118,205,934
------------- -------------
Accounts receivable - related parties 36,042 -0-
Notes receivable - related party 2,939,018 4,023,431
------------- -------------
Total Receivables 127,365,949 122,229,365
------------- -------------
Deferred financing costs, net 4,014,926 4,125,972
Cash - restricted 841,364 855,138
Accrued interest receivable 503,051 341,107
Deferred taxes 1,141,536 1,141,536
Other Assets 271,407 170,370
------------- -------------
$ 136,849,391 $ 133,483,967
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------
Liabilities:
Accounts Payable and Other Liabilities:
Accounts payable $ 471,141 $ 434,072
Accounts payable - related parties -0- 11,235
Accrued expenses and other liabilities 1,248,203 519,109
------------- -------------
Total Accounts Payable and Other Liabilities 1,719,344 964,416
------------- -------------
Notes payable 101,136,489 99,961,354
------------- -------------
102,855,833 100,925,773
------------- -------------
12.5% REDEEMABLE CONVERTIBLE PREFERRED STOCK
$3 par value; 1,000,000 shares authorized, -0- outstanding in
1998 and 9,915 shares outstanding in 1997 -0- 29,745
PREFERRED AND COMMON STOCK AND OTHER CAPITAL
Cumulative Redeemable Preferred Stock--Series 2 Class A,
$3 par value; 15,000 shares authorized, 10,000 shares
issued and outstanding 30,000 30,000
Common Stock, $.05 par value; 50,000,000 shares authorized,
21,905,706 shares outstanding in 1998 and 21,834,443 shares
outstanding in 1997 1,095,286 1,091,723
Additional paid-in capital 32,401,421 32,078,721
Retained earnings (deficit) 466,851 (671,995)
------------- -------------
33,993,558 32,528,449
------------- -------------
$ 136,849,391 $ 133,483,967
============= =============
</TABLE>
See Accompanying Notes To Consolidated Financial Statements.
3
<PAGE>
EQUIVEST FINANCE, INC. AND SUBSIDIARIES
(UNAUDITED)
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
3 Months Ended March 31,
1998 1997
---------- ----------
<S> <C> <C>
Revenues:
Interest $4,749,698 $3,677,103
Gain on Sales of Contracts -0- 29,689
Other Income 333,240 10,236
---------- ----------
5,082,938 3,717,028
---------- ----------
Costs and Expenses:
Provision for doubtful receivables 225,000 --
Interest 1,653,228 2,164,099
Debt related costs including amortization of financing costs 341,103 252,198
Selling, general and administrative 756,609 491,744
---------- ----------
2,975,940 2,908,041
---------- ----------
Income Before Provision for Taxes 2,106,998 808,987
Provision for Income Taxes
Current 655,000 84,000
Deferred -0- -0-
---------- ----------
Total Provision for Taxes 655,000 84,000
---------- ----------
Net Income $1,451,998 $ 724,987
========== ==========
Basic earnings per common share $ .06 $ .06
========== ==========
Diluted earnings per common share $ .06 $ .03
========== ==========
</TABLE>
See Accompanying Notes To Consolidated Financial Statements.
4
<PAGE>
EQUIVEST FINANCE, INC. AND SUBSIDIARIES
(UNAUDITED)
CONSOLIDATED STATEMENT OF EQUITY ACCOUNTS
<TABLE>
<CAPTION>
Redeemable
Additional Preferred Retained
Common Stock Paid in Stock-Series Earnings
Total Shares Amount Capital 2 Class A (Deficit)
------------ ------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1997 $32,528,449 21,834,443 $1,091,723 $32,078,721 $30,000 $ (671,995)
Dividends on 12.5%
Redeemable Convertible
Preferred Stock (8,819) (8,819)
Convert 12.5% Redeemable
Convertible Preferred
Stock to Common Stock 21,930 20,541 1,027 20,903
Dividends on Series 2
Class A Preferred Stock
paid in Common Stock -0- 50,722 2,536 301,797 (304,333)
Net Income 1,451,998 1,451,998
----------- ---------- ---------- ----------- ------- --------
Balances at March 31, 1998 $33,993,558 21,905,706 $1,095,286 $32,401,421 $30,000 $466,851
=========== ========== ========== =========== ======= ========
</TABLE>
See Accompanying Notes To Consolidated Financial Statements.
5
<PAGE>
EQUIVEST FINANCE, INC. AND SUBSIDIARIES
(UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
3 Months Ended March 31,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
Net Income $ 1,451,998 $ 724,987
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 315,801 238,687
Provision for doubtful receivables 225,000 -0-
Provision for deferred taxes -0- -0-
Gains on sales of contracts -0- (29,689)
Changes in assets and liabilities:
(Increase) decrease in other assets (402,091) (311,667)
Increase in accounts receivable - related parties (36,042) (527,555)
(Increase) decrease in restricted cash 13,774 4,722
Decrease in accounts payable and accrued
Expenses 766,163 (227,410)
Decrease in accounts payable--related parties (11,235) (80,449)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES 2,323,368 (208,374)
CASH FLOWS USED IN INVESTING ACTIVITIES
(Increase) decrease in receivables, net (6,410,694) 6,800,205
(Increase) decrease in receivables, net (37,763) -0-
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (6,448,457) 6,800,205
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on loans payable--related party -0- -0-
Payments on notes receivable - related party 1,084,413 169,277
Proceeds on loans payable - related party -0- 481,164
Proceeds from recourse notes payable 7,154,117 3,290,097
Payments on recourse notes payable (6,470,192) (5,372,640)
Proceeds from non-recourse notes payable 1,382,118 5,691,156
Payments on non-recourse notes payable (918,069) (5,728,495)
Payment of preferred stock dividends (8,819) -0-
Redemption of preferred stock (7,800) -0-
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,215,768 (1,469,441)
----------- -----------
INCREASE (DECREASE) IN CASH (1,909,321) 5,122,390
----------- -----------
Cash at beginning of period 4,620,479 4,037,201
----------- -----------
CASH AT END OF PERIOD $ 2,711,158 $ 9,159,591
=========== ===========
</TABLE>
See Accompanying Notes To Consolidated Financial Statements.
6
<PAGE>
EQUIVEST FINANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
The accompanying consolidated interim financial statements as of March 31,
1998 and 1997 and for the three-month period ended March 31, 1998 and 1997 have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month periods ended March 31, 1998 and
1997, are not necessarily indicative of the results expected for the year ended
December 31, 1998. For further information, please refer to the consolidated
financial statements and footnotes thereto included in Equivest Finance, Inc.'s
(the "Company") Form 10-KSB for the year ended December 31, 1997.
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, Equivest Capital Funding, Inc. (inactive), and
Resort Funding, Inc. ("Resort Funding") and its subsidiary, BFICP Corporation.
All significant intercompany balances and transactions have been eliminated in
consolidation.
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and costs and expenses during
the reporting period. Actual results could differ from the Company's estimates.
The Company recognizes interest income on consumer financing contracts
using the interest method over the term of the contract. It recognizes interest
income on outstanding resort acquisition and development loans when earned,
based on the terms of the loan agreements. The accrual of interest on an
impaired loan is discontinued when accrued and unpaid interest, together with
the loan principal outstanding, exceeds the loan's projected cash flow or the
loan's net collateral value.
Gains on sales of contracts result from periodic non-recourse sales of
consumer receivables. A gain is recorded to the extent the net proceeds exceed
the net investment in the consumer receivables sold.
Other income primarily represents fees, which are recognized as income
when Resort Funding performs the related service. These services include billing
services for developers and loan commitment, chargeback and collection fees
charged to resorts.
Receivables have been reduced by an allowance for doubtful receivables.
The allowance is an amount which management believes will be adequate to absorb
possible losses on existing receivables. The evaluation incorporates past loss
experience, known and inherent risks in the portfolio, adverse conditions that
may affect the borrower's ability to repay, the estimated value of underlying
collateral, and current economic conditions. Receivables are charged against the
allowance when management believes that collectibility is unlikely. Because of
uncertainties in the estimation process, it is at least reasonably possible that
management's estimate of loan losses inherent in the loan portfolio and the
related allowance will change in the near term.
7
<PAGE>
The Company follows Statement of Financial Accounting Standards No. 114
(SFAS 114) "Accounting by Creditors for Impairment of a Loan". Under SFAS 114,
the allowance for doubtful receivables for loans identified as impaired is
specifically determined using the loan's projected discounted cash flow or its
net collateral value.
In July 1997, a Las Vegas, Nevada developer and customer of Resort Funding
filed for bankruptcy court protection. As of April 30, 1998, the developer had
outstanding indebtedness on its acquisition and development loans of
approximately $6,300,000, secured by first and third mortgages on a hotel and
casino located in Las Vegas. This amount owed includes principal, accrued
interest, and certain other fees relating to such loans. The appraised value of
this property is substantially in excess of the debt owed to Resort Funding.
Resort Funding filed secured claims in the developer's bankruptcy case relating
to the acquisition and development loans. On December 31, 1997 the bankrupt
developer filed its disclosure statement and joint plan of reorganization. The
plan of reorganization lists Resort Funding's claims among the class of secured
claims which, if allowed, the developer proposes to pay in full, together with
all accrued unpaid interest. On March 30, 1998, the bankruptcy court confirmed
the developer's plan of reorganization. On May 8, 1998, the proposed purchaser
of the property notified counsel for the debtor that the purchaser had elected
not to proceed with the transaction and was withdrawing its offer. Absent a
comparable new proposal from a viable purchaser to replace the withdrawn offer,
the debtor's plan of reorganization will not be fulfilled. Resort Funding is
evaluating its options, including proceeding with a foreclosure action. A loss
by Resort Funding on these loans could have a material impact on Resort
Funding's financial statements, and the Company.
In September 1997, Resort Funding commenced foreclosure proceedings
against a resort property located in Hilton Head, South Carolina which was
approximately four months delinquent in payment of its obligations to Resort
Funding under an acquisition and development loan agreement. On November 3,
1997, Resort Funding reached an agreement with the developer to settle the
arrears. As part of the agreement, the developer paid Resort Funding all past
due amounts in full and remitted payment in advance for installments due for
October, November and December, 1997. As additional security for future
payments, the developer agreed to grant Resort Funding a deed in lieu of
foreclosure to be held in escrow pending Resort Funding's receipt of all other
payments as they were to become due. However, in January, 1998, the developer
refused to deliver the deed in lieu of foreclosure and terminated the November 3
agreement. On March 17, 1998, the developer filed an answer and counterclaims in
the foreclosure action alleging, among other things, that it was not in default
of the loan agreements. Resort Funding intends to pursue vigorously its claims
and defend the counterclaims. As of April 30, 1998, the balance owed to Resort
Funding under the referenced loan was approximately $3,600,000. Resort Funding's
acquisition and development loan agreement provides that principal will be
repaid through release fees on interval units sold. As of April 30, 1998, the
developer had not sold any interval units. There can be no assurance Resort
Funding will receive principal payments relating to this obligation in the short
term, or that it will not incur a loss on this loan.
Deferred financing costs represent unamortized expenses associated with
issuing certain debt and fees payable pursuant to certain bank settlement
transactions. Amortization of these costs is computed on a straight-line basis
over the term of the associated debt and does not differ materially from that
computed using the effective interest method.
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 (SFAS 109). SFAS 109 is an asset and liability
approach to accounting for deferred income taxes. This method requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, the Company
generally considers all expected future events other than enactments of changes
in tax laws or rates. A valuation allowance reduces deferred tax assets when it
is more likely than not that some portion or all of the deferred tax assets will
not be realized.
8
<PAGE>
The Company computes earnings per share under Statement of Financial
Accounting Standards No. 128 "Earnings Per Share" (SFAS 128). SFAS 128
supersedes Accounting Principles Board Opinion No. 15 and became effective for
periods ending after December 15, 1997. Earnings per share for 1997 have been
restated to reflect SFAS 128. SFAS 128 requires the presentation of earnings per
share by all entities that have common stock or potential common stock (such as
options, warrants and convertible securities) outstanding that trade in a public
market. Those entities that have only common stock outstanding present basic
earnings per share amounts. All other entities present basic and diluted per
share amounts. Diluted per share amounts assume the conversion, exercise or
issuance of all potential common stock instruments unless the effect is to
reduce a loss or increase the income per common share from continuing
operations.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Income before income taxes increased 160.4% to $2,107,000 for the three months
ended March 31, 1998, from $809,000 for the same period in 1997. Net income
increased 100.3% to $1,452,000 for the three months ended March 31, 1998
compared to $725,000 for the same period in 1997. The increase was due primarily
to an increase in interest income as a result of growth in portfolios being held
for investment, higher fee income and lower interest expenses. These increases
were partially reduced by an increased provision for income taxes, higher
selling, general and administrative costs, along with a higher provision for
doubtful accounts. During the first quarter of 1998, the Company utilized the
balance of its net operating loss carryforwards. The Company provided a
provision for incomes taxes of $655,000 for the first quarter of 1998, a 679.7%
increase over the $84,000 provision for income taxes provided during the first
quarter of 1997. Revenues increased 36.7% to $5,082,900 for the three months
ended March 31, 1998, from $3,717,000 for the same period in 1997. The increase
was due primarily to an increase in interest income as a result of portfolio
growth and an increase in fee income. Total originations rose 92.4% to $18.7
million for the first quarter of 1998, compared to $9.7 million for the same
period in 1997.
Interest Income
Interest on loans increased 29.2% to $4,749,700 for the three months ended March
31, 1998, from $3,677,100 for the same period in 1997, primarily due to the
growth in portfolio held for investment. Interest on consumer notes increased
37.6% to $3,289,600 for the three months ended March 31, 1998 from $2,391,400
for the same period in 1997, as a result of growth in the portfolio held for
investment. Interest on developer loans increased 34.4% to $1,326,100 for the
three months ended March 31, 1998 from $987,000 for the same period in 1997, as
a result of higher average outstanding balances. The growth in interest income
was offset $98,900 by interest income on notes receivable from a related party,
which had higher average outstanding balances for the same period a year
earlier.
Gain on Sale of Contracts
Interest revenue was partially offset by a decrease of 100.0% on gains on the
sale of consumer contracts, which fell to $0 for the three months ended March
31, 1998 from $29,700 for the same period in 1997. This decrease was due to
management's decision not to sell contracts.
Other Income
Other income increased by 3,155.4% to $333,200 for the three months ended March
31, 1998, from $10,200 for the same period in 1997. The increase was primarily
due to an increase in fee income.
Provision for Doubtful Accounts
The provision for doubtful receivables increased to $225,000 for the three
months ended March 31, 1998, from $0 for the same period in 1997, as a result of
increased levels of outstanding receivables.
10
<PAGE>
Interest Expense
Notwithstanding higher aggregate loan balances, interest expense decreased 23.6%
to $1,653,200 for the three months ended March 31, 1998, from $2,164,100 for the
same period in 1997, primarily due to lower interest rates and the elimination
of the intercompany debt. The elimination of the intercompany debt
(approximately $25,000,000) saved the Company approximately $480,000 of interest
expense in the first quarter of 1998, compared to the same period in 1997. The
interest expense on the Company's consumer receivable financing facility
decreased 5.2% to $837,100 for the first quarter of 1998, from $883,100 for the
first quarter of 1997, due to lower interest rates. The consumer receivable
facility had higher average outstanding balances of almost $9,000,000 for the
first quarter of 1998, compared to the same period in 1997, but interest rates
were approximately 270 basis points lower. Interest expense on other bank notes
increased 2.7% to $749,400 for the three months ended March 31, 1998, from
$729,900 for the same period in 1997, due to higher average outstanding
balances. The average outstanding balance on other bank notes increased 16.4% to
approximately $49 million for the first quarter of 1998, from $42 million for
the same period in 1997. The average interest rates on other bank notes
decreased to 6.1% for the first quarter of 1998, from 7.0% for the same period
in 1997. The decrease in interest rates is due to the addition of a revolving
facility of $30 million from Credit Suisse First Boston Mortgage Capital LLC for
funding acquisition and development loans to developers, and certain loans
relating to the settlement of the claims made by several lenders (the "Banks")
in the bankruptcy case of Bennett Funding Group, Inc. ("BFG") and its affiliate,
Aloha Capital Corporation (collectively, the "Debtors"), arising out of
lease-financing agreements pursuant to which the Banks made loans to the
Debtors. The settlements, which were approved by the United States Bankruptcy
Court for the Northern District of New York (the "Bankruptcy Court"), required
the Banks to make new, interest-only term loans to Resort Funding at favorable
1/2 to 4% interest rates (the "Settlement Loans"), ranging in term from 30 to
120 months, with an average duration of 70 months. Additional such settlements
have been entered into from time to time with a total amount through March 31,
1998, of approximately $22,900,000. The weighted average interest rate on the
Settlement Loans is 2.07%. The beneficial effect of the extremely low interest
rates of the Settlement Loans is partially offset by a 3% per annum arrangement
fee paid by Resort Funding to BFG, which is accounted for as a cost of debt
issuance.
Selling, General and Administrative
Selling, General and Administrative costs increased 53.9% to $756,600 for the
three months ended March 31, 1998, from $491,700 for the same period in 1997.
The increase was primarily a result of increased payroll-related costs and a
non-recurring outside service expenditure. The increased payroll related cost is
mainly due to a reduction in payroll costs allocated to the Debtors for certain
of the Company's employees during the first quarter of 1998, compared to the
same period in 1997.
Debt Issue Costs and Amortization
Debt issue costs and amortization increased 35.2% to $341,100 for the three
months ended March 31, 1998, from $252,200 for the same period in 1997. The
increase was mainly attributable to an increase in the 3% per annum arrangement
fee charged by the bankrupt estate of BFG and other affiliated companies (the
"Estate") relating to the Settlement Loans. Resort Funding is obligated to pay
the arrangement fee to the Estate based on the unpaid principal balance of the
new term loans. The increase was also attributable to the amortization of common
stock warrants issued in connection with a credit facility the Company obtained
in 1997. The value of the warrants is being accounted for as a discount in
consideration for making the loan and will be amortized as interest expense over
the term of the agreement.
11
<PAGE>
Provision for Income Taxes
The provision for income taxes for the three months ended March 31, 1998 was
$655,000, compared to a provision of $84,000 for the same period in 1997,
representing an increase of 679.7%. The current-period tax provision results
from the availability of net operating loss carryforwards of approximately
$675,000 in 1998 which partially shelter the Company's book income from federal
taxes, and the adjustment of the deferred tax asset to reflect the state
component on the provision for doubtful accounts. The current portion of the
provision relates to currently payable federal and state income taxes. The
provision for income taxes for the three months ended March 31, 1997 also
reflects utilization of the net operating loss carryforwards (but only for the
period after February 16, 1997) and the deferred tax provision relating to the
provision for doubtful accounts.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding certain litigation involving the Company, its
subsidiaries and affiliates, reference is made to the Company's Form 10-KSB for
the year-ended December 31, 1997, which is incorporated herein by reference.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. (a) Exhibits
The following exhibits are filed herewith:
11.1 Statement re: computation of earnings per share
(b) Reports on Form 8-K
None.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this Report to be signed on its behalf by
the undersigned, there unto duly authorized.
EQUIVEST FINANCE, INC.
BY:____________________
Gerald L. Klaben, Jr.
Executive Vice President and Chief Financial Officer
Dated:________________1998
14
Exhibit 11.1
EQUIVEST FINANCE, INC.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
For the Quarter Ended March 31, 1998
------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Net Income $1,451,998
Less: Preferred Stock dividends (150,454)
----------
Basic earnings per share:
Income available to common stockholders 1,301,544 21,845,505 $.06
====
Effect of dilutive securities:
12.5% Redeemable Convertible preferred stock 454 13,621
Warrants 83,887
Stock options 359,379
---------- ----------
Diluted earnings per share:
Income available to common stockholders
plus assumed conversions $1,301,998 22,302,392 $.06
========== =========== ====
<CAPTION>
For the Quarter Ended March 31, 1997
------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Net Income $724,987
Less: Preferred Stock dividends (173,430)
--------
Basic earnings per share:
Income available to common stockholders 551,557 9,484,847 $.06
====
Effect of dilutive securities:
Cumulative Convertible--Series 2 preferred stock 7,500,000
12.5% Redeemable Convertible preferred stock 930 27,861
-------- ----------
Diluted earnings per share:
Income available to common stockholders
plus assumed conversions $552,487 17,012,708 $.03
======== ========== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,711,158
<SECURITIES> 0
<RECEIVABLES> 130,033,932
<ALLOWANCES> (2,667,983)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 136,349,391
<CURRENT-LIABILITIES> 0
<BONDS> 101,136,489
30,000
0
<COMMON> 1,095,286
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 136,849,391
<SALES> 0
<TOTAL-REVENUES> 5,082,938
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 756,609
<LOSS-PROVISION> 225,000
<INTEREST-EXPENSE> 1,994,331
<INCOME-PRETAX> 2,106,998
<INCOME-TAX> 655,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,451,998
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
