SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year Commission File
June 30, 1999 Number 33-22264-FW
Time Financial Services, Inc.
(Exact name of registrant as specified in its charter)
NEVADA 33-0317819
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
1182 N. Tustin Street, Orange, CA 92806"
(Address of principal executive offices)
(714) 288-5901
(Registrant's telephone number, including area code)
Name of each exchange on which registered: N/A
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (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 registrant was required to file
such reports, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No ___
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and do disclosure
will be contained, to the best of Registrant's knowledge, in
definitive proxy of information statements incorporated by
reference in Part III of this Form 10KSB or any amendment to this
Form 10-KSB. X
The aggregate market value of the 1,592,755 shares of common stock
of the Registrant held by non-affiliates on June 30, 1999 was
approximately $11,354,856.
Transitional Small Business Disclosure Format: Yes ____ No X
Item 1. Business
TIME FINANCIAL SERVICES, INC.
The Company has three major income producing segments.
Time Lending, California (TLC) is a wholly owned subsidiary located
in Orange, California. TLC is a Mortgage and Real Estate Broker.
It is an approved broker for Countrywide Mortgage, 1st Union,
Homeside Mortgage, North American Mortgage, World Class Mortgage
and various others. TLC generates its loan business through the
marketing efforts of the Direct Mail Marketing Division which sends
out mail pieces on behalf of TLC.
In addition to mortgages, TLC buys and sells real estate for
profit. The Company currently owns six single family homes in
California and Nevada. The Company intends to buy and sell homes
in its normal course of business. The Company will purchase
foreclosures, repair them and resell them at market, capturing a
gain on sales.
TLC has liquidated its joint venture agreement with Signature
Marketing and has set up its own direct mail business separate from
Signature Marketing Associates. The Company intends to continue
growing this segment.
The Text Division published Wall Street Whispers a daily digest of
Wall Street Newsletters. This publication was sold to Lela Elliot
of Houston, Texas on June 1, 1999 for $120,000 in the form of a
note payable in monthly installments of $5,000 per month over two
years.
The competition in each segment is as always strong, yet, because
of the Company's low overhead, it is able to remain competitive in
price and service. Management with its many years of real estate
and mortgage experience is able to respond quickly to market shifts
and provide excellent service in all areas. There is no dependence
on a single customer or product/service line. The Company is
dependent on the mortgage and real estate markets, which are now
and look to remain strong over the next two years. Interest rates
always remain the biggest factor in business volume. While the
Federal reserve is slowly raising rates to head off inflation, the
increases forecast for the third and forth quarters of 1999 will
have only a slight effect on TLC's business volume. This will be
offset by management's increased marketing effort.
Management's Discussion and Analysis
Revenues were up 54.4% in for the Fiscal Year ended June 30, 1999.
Profit was up 314% for the same period. This was a reflection of
our first year of operation under the Management's aggressive
Business and Marketing Plan. The selling the Text Division
management is able to concentrate on the business it knows best -
real estate and loan marketing. Reducing the total revenue by the
Text Division's $133,721, the net increase is still 141% increase
over the prior year.
The sale of Wall Street Whispers resulted in a one-time income of
$120,000. This will come to the Company in payments over the next
24 months. The sale of one property (Bellinger) resulted in a gross
gain of $70,000 before expenses. Management expects that the
average gain on sale of each real property will be less than 1/3
that amount. The Company's cash position improved through these
sales and will allow management to invest in improvements on other
owned properties and ready them for sale next year.??
The California and Nevada real estate markets continue to be strong
and will remain so over the next two years. Management intends to
sell all six remaining properties and buy 4 to 6 more through the
next year.
The six remaining homes show on the Company's balance sheet as of
September 30, 1997. Property No. 4 (Bellinger) was sold and closed
as of November 19, 1998 for $365,000.
A summary of these transactions is below:
Property Market Assumed Equity at Common Estimated
Value Loans Market Issued Market
Lauglin, NV
1. 1683 Esteban $97,000 $71,831 $25,169 8,427 $105,000
2. 1692 Esteban 97,000 65,677 31,323 10,487 105,000
3. 30 Palm Garden 100,000 83,813 16,187 5,419 110,000
Rialto, CA
4. 216 E. Morgan 94,000 70,000 24,000 105,000
5. 216 Van Kovering 88,000 68,000 20,000 100,000
6. 1550 Etiwanda 75,000 58,000 17,000 95,000
The Company has five full time, and three part time employees, plus
three commissioned loan officers.
Business Plans for Fiscal 2000.
The Company plans to increase its emphasis on its direct mail
segment and its mortgage lending segment.
In the mortgage brokering segment, there is minimal fixed costs.
Most of the fixed costs are attributed to the direct mail business.
The direct mail business is basically prepaid before each mailing.
There is little risk.
The Company will add a mortgage lending web site under "Time
Lending.com"
The mortgage segment specializes in specialty loan programs, such
as loans for homeowner who went through a bankruptcy, home
improvement loans for homeowners who recently purchased their home.
This type of home loan is less rate sensitive than traditional
mortgage refinancing.
The Company business plan calls for increased marketing costs.
These dollars will be generated by sales and put back into the
business to create additional growth. Loan marketing will include
increasing the number of loan officers by 20% and increasing direct
mail to generate leads for them. The direct mail marketing will be
increased by focusing on home equity lenders.
Time Lending (TLC) presently leases 1,400 square feet in Orange,
California. This lease was signed on December 1997 and will expire
December 1999.
Item 3. Legal Proceedings
None
PART II
Item 5. Market for the Company's Common Stock and Related
Stockholder Matters.
The common stock of the Company commenced trading in the
over-the-counter market on November 19, 1988. The following table
sets forth, for the periods indicated through the fiscal year ended
June 30, 1999, the range of high and low bid quotations for
Company's stock as reported by a market-maker in the Company's
securities. The quotations, which appear below, reflect
inter-dealer prices, without retail mark-up, markdown or commission
and may not represent actual transactions.
Quarter Ended High Bid Low
Bid
September 30, 1995 $ 0.50 $ 0.38
December 31, 1995 $ 0.38 $ 0.25
March 31, 1996 $ 0.62 $ 0.25
June 30, 1996 $ 0.50 $ 0.25
September 30, 1996 $ 0.1875 $ 0.1875
December 31, 1996 $ 0.1875 $ 0.1250
March 31, 1997 $ 0.21 $ 0.0875
June 30, 1997 $ 0.10 $ 0.75
September 30, 1997 $ 1.25 $ 0.75
December 31, 1997 $ 1.25 $ 0.75
March 31, 1998 $ 1.25 $ 0.75
June 30, 1998 $ 1.25
September 30, 1998 $ 1.25 $ 0.71
December 31, 1998 $ 1.25 $ 0.75
March 31, 1999 $ 1.25 $ 0.71
June 30, 1999 $ 1.25 $ 0.71
The Company has not paid any dividends on its common stock and the
Board of Directors of the Company presently intends to pursue a
policy of retaining earnings, if any, for use in the Company
The Company has not paid any dividends on its common stock and the
Board of Directors of the Company presently intends to pursue a
policy of retaining earnings, if any, for use in the Company's
operations and to finance expansion of the business. The
declaration and payment of dividends in the future, of which there
can be no assurances, will be determined by the Board of Directors
in light of conditions then existing, including the Company's
earnings, financial conditions, capital requirements, and other
factors.
As of June 30, 1999, the Company had 170 shareholders of record,
which does not include shareholders whose shares are held in street
or nominee names.??
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
1999 Compared to 1998
During the fiscal year ended June 30, 1999, the Company incurred
$84,000 in services of officers. In 1999, the Company incurred
$327,986 in General and Administrative expenses, and $1,1059,096
business income from operations. Accordingly, the reported
financial information herein may not be indicative of future
operating results. For the period ended June 30, 1999 the profit
from operations was $140,303 compared to a loss on operations for
the period ended June 30, 1998 of ($65,478). This was a gain per
share of $0.11, compared to a loss of ($6.06) per share for fiscal
1998.??
1998 Compared to 1997
During the fiscal year ended June 30, 1998, the Company incurred
$312,910 in general and administrative expenses and $84,000 for
services contributed by officers. In 1997, the Company incurred
$255,322 in General and Administrative expenses and $84,000 for
services rendered by officers. Loss on operations in 1998 was
($65,478) compared to the 1997 loss on operations of ($90,330).
Segment Results
The Text Services Division income decreased ($84,666) to $133,721
or 38% for the year ended June 30, 199. The subscription base of
Prodigy continued to decline due to Prodigy's conversion to and
Internet service provider. The publication "Wall Street Whispers"
was sold to Lela Elliot of Houston, Texas for a $120,000 note.
Time Lending California is the mortgage operation. The revenue for
fiscal 1999 was $253,737 an increase of $86,204 or 51.5% over 1998.
This was primarily in mortgage loan commissions. With continuing
lower interest rates, revenues in this line continued to increase
in 1999. One property was sold (Bellinger) for $365,000 that was
originally purchased for $295,000.
Time Lending's Direct Mail Marketing segment generated $335,628 in
revenue to the Company in fiscal 1999 an increase of $80,947 or
31.8% over fiscal 1998. The total revenue for the Company for
fiscal 1999 was $1,059,096. This is an increase of $373,096 or
54.4% over 1998.
Net Income
The Company earned $140,303 in operations for 1999; the result of
increased sales in the Marketing and Mortgage segments along with
the sales of one real estate property and "Wall Street Whispers."
This compares to a loss of ($65,478) for 1998. Overall expenses
were $918,773 including an increase of $166,825 or 22% over 1998.
Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F5.
Item 8. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosures.
There were no changes or disagreements with the Company's public
accountants.
In connection with the audits of the two most recent fiscal years
and any interim period preceding resignation, no disagreements
exist with practices, financial statement disclosure, or auditing
scope of procedure, which disagreements if not resolved to the
satisfaction of the former accountant would have caused him to make
reference in connection with his report to the subject matter of he
disagreement(s).
The principal accounts' reports on the financial statements for any
of the past two years contained no adverse opinion or a disclaimer
of opinion nor was qualified as to uncertainty, audit scope, or
accounting principles except for the "going concern" qualification.
Item 9. Director and Executive Officers of Registrant
The present directors and executive officers of the Company, their
ages, positions held in the Company and duration of service are as
follows:
Name Age Position Since
Michael F. Pope 50 Director March 1996
President August 1996
Philip C. La Puma 60 Director March 1996
Secretary August 1996
Treasurer August 1996
Victoria A. Pope 51 Director January 1997
The term of office of each director and executive officer ends at,
or immediately after, the next annual meeting of shareholders of
the Company. Except as otherwise indicated, no organization by
which any director of officer has been previously employed is an
affiliate, parent, or subsidiary of the Company.
Business Experience
The following is a brief account of the business experience during
at least the past five years of each director and executive
officer, including the principal occupation and employment during
that period, and the name and principal business of the
organization in which such occupation and employment were carried
out.
Michael F. Pope, age 50, has been Director of the Company since
March 1996, and President since August 1996. Mr. Pope was one of
the founders of Renet Financial Corporation in 1988. He has a
Bachelor of Arts degree in Economics from California State
University, Long Beach. He holds a real estate brokers license in
the State of California.
Philip C. La Puma, age 60, has been Director of the Company since
March 1996 and Secretary/Treasurer since August 1996. Mr. La Puma
hold a Bachelors of Science degree in Industrial Engineering from
Stanford University and an MBA in General Management from the
University of Southern California. He also co-founded Renet. He is
a Registered Professional Engineer in the State of California.
Victoria Pope, age 51, has been a Director of the Company since
January 1997. She has been active in the mortgage industry the past
eight years working in various loan production positions from
processing through administration at Renet Financial Corporation.
She is the spouse of Michael F. Pope and they have two adult
children. Mrs. Pope has many years of mortgage management
experience.
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's officers and directors
and persons who own more than 10% of a registered class of the
Company's equity securities to file reports of ownership and
changes in ownership of equity securities of the Company with the
Securities and Exchange Commission and NASDAQ. Officers, directors,
and greater that 10% shareholders are required to furnish the
Company with copies of all Section 16(1) filings.
The following people did not file any reports under Section 16(A)
during the most recent year:
a. Michael F. Pope President and Director
b. Philip C. La Puma Secretary and Director
c. Victoria A. Pope Director
Item 11. Executive Compensation
The following table sets forth the summary compensation for all
officers for services during three fiscal years ended June 30,
1999.
Name & Period Annual Compensation Long Term
Principal Position Salary Bonus Options
Michael F. Pope 6/30/99 $48,000 0 0
Director 6/30/98 $48,000
President 6/30/97 $48,000
Philip C. La Puma 6/30/99 $48,000 0 0
Director 6/30/98 $48,000
Sec.-Treasurer 6/30/97 $48,000
The Company does not have any long-term incentive plans nor pension
plans.
(Except for compensation of Officers who are Directors which
Compensation is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
Name Annual Meeting Consulting Number of Number of
Retainer Fees($) Fees/Other Shares (#) Securities
Fees($) UnderlyingOptions/SARs
Michael F. Pope 0 0 0 0 0
Philip C. LaPuma 0 0 0 0 0
Victoria A. Pope 0 0 0 0 0
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of June 30, 1999 no officer or director was know to own or
control beneficially more than 5% of the Company's stock. The table
below sets forth the total number of shares of the Company's
outstanding voting stock owned by individuals, organizations, and
officers of the Company and of all officers and directors as a
group.
Common Stock Percentage
Time Lending, California 289201 18.1%
1182 N. Tustin Street
Orange, California 92867
Steve Naramore 121365 7.6%
3910 FM 1960 W. #130
Houston, TX 77068
10th Street Inc. 75,000 4.75%
1182 N. Tustin Street
Orange, CA 92867
Joseph George, Inc. 75,000 4.75%
6566 CorteCosco
Carlsbad, CA 92009
Common Stock.
All officers and 10,954 0.7%
Directors
There were no transactions, or series of transactions, for the
fiscal year ended June 30, 1999, nor are there any current proposed
transactions, or series of the same, to which the Company is a
party, in which the amount exceeds $60,000 and in which, to the
knowledge of the Company, any director, executive officers,
nominee, five % shareholders of any member of the immediate family
of the foregoing person, have or will have a direct of indirect
material interest.
Item 14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
The following document is filed as part of this report:
Exhibits:
Financial Data Schedule
INDEX
S-K Number
27.1 Financial Data Schedule F-1 to F-12
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
Consolidated
Independent Auditors' Report
Balance Sheet for year ended June 30, 1999
Statement of Operations for year ended June 30, 1999
Statement of Cash Flows for year ended June 30, 1999
Statement of Stockholders' Equity for the year ended
June 30, 1999
Notes to financial statements
(1) Financial Statement Schedules
A Financial Data Schedule, Article 5 of Regulation S-X
will follow this report as an exhibit.
TIME FINANCIAL SERVICES, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1999
Michael Johnson & Co., LLC
Certified Public Accountants
9175 East Kenyon Ave., Suite 100
Denver, Colorado 80237
Michael B. Johnson C.P.A. Telephone: (303) 796-0099
Member: A.I.C.P.A. Fax: (303) 796-0137
Colorado Society of C.P.A.s
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Time Financial Services, Inc.
Orange, CA
We have audited the accompanying balance sheet of Time Financial
Services, Inc. as of June 30, 1999 and the related statements of
operations, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted
auditing standards. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Time
Financial Services, Inc. as of June 30, 1999, and the results of
it's operations and cash flows for the year then ended in
conformity with generally accepted accounting principles.
[Michael Johnson & Co., LLC.]
Denver, Colorado
August 28, 1999
<TABLE>
TIME FINANCIAL SERVICES, INC.
Balance Sheet
June 30,
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 97,976 $ 31,755
Accounts receivable 8,900 0
------------- --------------
Total Current Assets 106,876 31,755
Property and Equipment, net of accumulated
Depreciation of $96,083 and $93,587 at
June 30, 1999 and 1998 respectively 7,489 7,489
Other Assets:
Investment in equity securities 0 150
Employee advance 5,000 5,000
Deposit 800 0
Note Receivable 120,000 0
Property investment 491,699 786,699
_____________ ____________
Total Other Assets 617,499 791,849
------------- ------------
Total Assets 731,864 861,093
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable 12,649 24,186
Accrued expenses 28,825 21,966
Current portion of long-term debt 10,750 8,051
___________ ____________
Total Current Liabilities 52,224 54,203
Long-Term Debt 392,717 661,270
____________ ____________
Total Liabilities 444,941 715,473
Stockholders' Equity:
Preferred stock, no par value 100,000
Shares authorized, 83 issued and outstanding at
June 30, 1998, none outstanding as of
June 30, 1999 0 83,000
Common stock, $.001 par value:
50,000,000 shares Authorized, 1,562,755 and
1,205,744 issued and outstanding at
June 30, 1999 and June 30, 1998, respectively 1,562 1,205
Additional paid-in capital 573,346 459,703
Retained earnings (deficit) (287,985) (428,288)
____________ ____________
Total Stockholders' Equity 286,923 115,620
____________ ____________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 731,864 $ 831,093
</TABLE>
The accompanying notes are an integral part of the financial statements.
TIME FINANCIAL SERVICES,INC.
Statement of Operations
For the Year Ended June 30,
<TABLE>
<S> <C> <C>
REVENUE: 1999 1998
Marketing income $335,628 $254,681
Product and software sales 133,721 216,387
Loan fees 253,737 167,533
Gain on Sales of Property
and Stocks 273,393 0
Other revenue 62,617 47,399
Total Revenue 1,059,096 686,000
COSTS AND EXPENSES:
Loan officer commissions 266,125 215,364
Operating costs & Marketing
Expenses 324,682 223,204
General and administrative 327,986 312,910
Total Operating Expenses 918,793 751,478
NET INCOME (LOSS) 140,303 (65,478)
BASIC (LOSS) PER SHARE $0.11 (0.06)
BASIC WEIGHTED AVERAGE
SHARES OUTSTANDING 1,265,246 1,070,035
DILUTED LOSS PER SHARE 0 (0.06)
DILUTED WEIGHTED
AVERAGE OUTSTANDING 0 1,090,785
</TABLE>
TIME FINANCIAL SERVICES, INC.
Statement of Cash Flow
For the Year Ended June 30,
<TABLE>
<S> <C> <C>
CASH FLOWS FROMOPERATING ACTIVITIES 1999 1998
Net income (loss) $ 140,303 $ (65,478)
Depreciation and amortization 2,513 2,513
(Increase) Decrease In:
Accounts receivable (8,900) 50
Employee advance 0 (5,000)
Prepaid expenses (800) 0
Notes Receivable (120,000) 0
Investment 295,000 (786,699)
(Increase) Decrease In:
Accounts payable 11,537 (39,569)
Accrued expenses (18,221) 19,484
_____________ ___________
Net Cash PRovided by (Used in)
Operating Activities 301,432 (874,699)
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Issuance of preferred stock (83,000) 83,000
Issuance of common stock 113,643 145,510
Real Estate property mortgages (265,854) 669,321
_____________ ___________
Net Cash from Financing Activites (235,211) 897,831
Net Increase (Decrease) in Cah and
Cash Equivalents 66,221 23,132
Cash and Cash Equivalents
Beginning of Period 31,755 8,623
------------- -----------
Cash and Cash Equivalents
End of Period 97,976 31,755
============= ============
SUPPLEMENTAL DISCLOSURE
CASH PAID DURING THE YEAR FOR;
Interest 36,432 27,490
_____________ ____________
Income Taxes 0 0
_____________ ____________
</TABLE>
The accompanying notes are an integral part of the financial statements.
TIME FINANCIAL SERVICES, INC
Equity Statement
June 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Additional Retained Total
PREFERRED STOCK COMMON STOCK Paid-In Earnings Stockholders'
Shares Amount Shares Amount Capital (Deficit) Equity
Balance - June 30, 1996(1) 0 0 838,327 838 314,560 201,097 516,495
Net Loss 0 0 0 0 0 (563,907) (563,907)
____________________________________________________________________
Balance - June 30, 1997 0 0 838,327 838 314,560 (362,810) (47,412)
Issuance of Stock 83 83,000 0 0 0 0 83,000
Issuance of Stock 0 0 367,417 367 145,143 0 145,510
Net loss 0 0 0 0 0 (65,478) (65,478)
____________________________________________________________________
Balance - June 30, 1998 83 83,000 1,205,744 1,205 459,703 (428,288) 115,620
Conversion of Pref. Stock (83) (83,000) 202,011 202 82,798 0 0
to Common Stock
Issuance of Stock for Services 0 0 155,000 155 30,845 0 31,000
Net Income 0 0 0 0 0 140,303 140,303
______________________________________________________________________
Balance - June 30, 1999 0 0 1,562,755 1,562 573,346 (287,985) 286,923
======================================================================
</TABLE>
(1) REFLECTING 20 TO 1 REVERSE STOCK SPLIT EFFECTIVE JULY 1, 1997
The accompanying notes are an integral part of the financial statements.
TIME FINANCIAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 - ORGANIZATION AND PRESENTATION:
Market Data Corporation was incorporated in the state of Texas
on March 15, 1988. Market Data Corporation, a Texas Corporation,
and Renet Financial Corporation, a California corporation, merged
on March 1, 1996. During November 1996 the California Corporation
was demerged and the shares of the Corporation were distributed to
the shareholders of the Company.
The Company, at a shareholders' meeting on January 7, 1997,
completed its name change to Time Financial Service, Inc. effective
July 1, 1997. Market Data Corporation also changed its state of
domicile from Texas to Nevada by merging with Time Financial
Service, Inc., a Nevada corporation. In the articles of merger,
the Board of Directors of each company deem it advisable and
generally to the welfare of each company that the Texas Company
merge with and into the Nevada Company under and pursuant to the
provisions of Section 5.07 of the Texas Business Corporation Act
and Section 78.475 of the Nevada Revised Statues and in accordance
with Section 368(a)(1)(f) of the Internal Revenue Code of 1986 as
amended in order to change the domicile of the Texas Company to the
State of Nevada.
The merger was treated as a reverse acquisition for accounting
purposes with Time Financial Services, Inc. as the acquirer and
Market Data Corp. as the acquiree based upon Time Financial
Services, Inc.'s then current officers and directors assuming
management control of the resulting entity and the value and
ownership interest being received by current Time Financial
Services, Inc. stockholders exceeding that received by Market Data
Corp. stockholders. The Merger, for accounting purposes, was
treated as if Time Financial Services, Inc. issued additional
capital stock to Market Data Corp. shareholders for cash.
The Nevada Company is a corporation duly organized under the
laws of the State of Nevada having been incorporated January 29,
1997, has authorized capital stock consisting of 5,100,000 shares
of which, 5,000,000 are voting shares of common stock $.001 par per
each. 100,000 are non-voting shares of preferred stock with no par
value. This change also includes a reverse split of the stock. For
every twenty shares of Market Data Corporation common stock the
shareholder received one share of Time Financial Services stock.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
These financial statements are presented on the accrual method
of accounting in accordance with generally accepted accounting
principles. Significant principles followed by the Company and the
methods of applying those principles, which materially affect the
determination of financial position and cash flows, are summarized
below:
Description of Business
Time Financial Services, Inc. markets financial information
systems, software and on-line subscription financial data. The
Company develops subscription based, daily financial text products
that are marketed throughout the financial community. The company
also receives mortgage origination fees and marketing service fees.
Revenue Recognition
Marketing Income is from a direct mail marketing joint venture
project. Time Financial Services, Inc. records its income on a
cash basis as it is received from the joint venture project.
Product and Software Sales are sales of on-line subscription
financial data and software. Revenue is recognized at the time of
sale.
Loan Fees are primarily mortgaged origination fees. Revenue
is recorded at the time of mortgage closing.
Accounts Receivables are written off when deemed uncollectable
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments,
purchased with an original maturity of three months or less, to be
cash equivalents.
Accounting for Impairments in Long-Lived Assets:
Long-lived assets and identifiable intangibles are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amounts of assets may not be recoverable.
Management periodically evaluates the carrying value and the
economic useful life of its long-lived assets based on the
Company's operating performance and the expected future
undiscounted cash flows and will adjust the carrying amount of
assets which may not be recoverable. On June 30, 1997 the Company
recorded a charge against operations of $518,567 related to the
write-off of other assets. The write-off was comprised of $394,780
loss on receivables and a write-down to fair value of an investment
of $123,787. Through June 30, 1998 no such provision for
impairment was necessary. Management believes that remaining
long-lived assets in the balance sheet are appropriately valued.
Property and Equipment
Property and equipment is stated at cost. The cost of
ordinary maintenance and repairs is charged to operations while
renewals and replacements are capitalized. Depreciation is
computed on the straight-line method over the following estimated
useful lives:
Furniture and fixtures 5 years
Computer equipment and software 3-5 years
Demonstration equipment 5 years
Leased equipment 3 years
Federal Income Tax:
The Company accounts for income taxes under SFAS No. 109, which
requires the asset and liability approach to accounting for
income taxes. Under this approach, deferred income taxes are
determined based upon differences between the financial statement
and tax bases of the Company's assets and liabilities and operating
loss carryforwards using enacted tax rates in effect for the years
in which the differences are expected to reverse. Deferred tax
assets are recognized if it is more likely than not that the future
tax benefit will be realized.
Use of Estimates:
The preparation of 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 disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Operating Segments:
In 1998, the Company adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. This statement
requires the disclosure of certain information regarding the
Company's operating segments
Fair Value of Financial Instruments:
The Company's financial instruments include cash, cash
equivalents and notes payable. Estimates of fair value of these
instruments are as follows:
Cash and cash equivalents - The carrying amount of cash
and cash equivalents approximates fair value due
to the relatively short maturity of these instruments.
Notes payable - The carrying amount of the Company's
notes payable approximate fair value based on
borrowing rates currently available to the Company for borrowings
with comparable terms and conditions.
NOTE 3 - PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<S> <C> <C>
June 30, 1998 June 30, 1998
Furniture and fixtures $ 42,474 $ 39,996
Computer equipment and software 56,253 56,253
Demonstration equipment 3,295 3,295
Leased equipment 1,650 1,650
____________ ____________
103,672 101,176
Less: Accumulated depreciation 96,083 93,587
------------ ------------
$ 7,589 $ 7,589
============ ============
</TABLE>
NOTE 4 - OPERATING LEASES:
The Company leases office space under two operating lease
agreement which expire December 31, 1999 and January 31, 2001.
Future minimum lease commitments as of June 30, 1999 are as follows:
2000 $10,465
2001 10,465
2002 10,465
NOTE 5 - PROPERTY INVESTMENT:
The real estate division acquired seven single-family rental
properties in August 1997. Three are located in Laughlin, Nevada
and four in Southern California. These properties were purchased
from four different individuals at a cost of $786,699.
NOTE 6 - OPERATING SEGMENTS AND RELATED INFORMATION:
In 1998, the Company adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. This
statement requires the disclosure of certain information regarding
the Company's operating segments. The Company operates
principally in four industry segments.
Direct mail marketing, product and software mortgage loan
origination, and other revenues, which are primarily rental income.
The following table sets forth key operating information for each
business segment:
<TABLE>
<S> <C> <C>
Year Ended June 30,
1999 1998
Operating Revenue
Marketing $ 335,628 $ 254,681
Product & Software Sales 133,721 216,387
Loan Fees 253,737 167,533
Other Revenue 336,010 47,399
$1,059,096 $ 686,000
Operating Profit (Loss)
Marketing $ 45,792 $ 29,184
Product & Software Sales (4,849) 6,938
Loan Fees (32,709) (57,614)
Other Revenue 132,069 (43,986)
$ 140,303 $ (65,478)
Capital Expenditures
Marketing $ - $ -
Product & Software Sales - -
Loan Fees - -
Other Revenue - 786,699
___________ __________
$ -0- $ 786,699
=========== ==========
</TABLE>
NOTE 6 - OPERATING SEGMENTS AND RELATED INFORMATION (CONT):
Identifiable Assets
Marketing $ 53,281 $ 21,135
Product & Software Sales 8,900 10,598
Loan Fees 27,984 12,661
Other Revenue 641,699 786,699
$ 731,864 $ 831,093
NOTE 7 - INCOME TAXES
Significant components of the Company's deferred tax
liabilities and assets are as follows:
<TABLE>
<S> <C> <C>
June 30
1999 1998
Deferred Tax Liability $ - $ -
========== ==========
Deferred Tax Assets
Net Operating Loss
Carryforwards 287,900 428,000
Book/Tax Differences
in Bases of Assets 103,000 103,000
Less Valuation Allowance (390,900) (531,000)
Total Deferred Tax Assets $ - $ -
=========== ============
Net Deferred Tax Liability $ - $ -
=========== ============
</TABLE>
As of June 30, 1999, the Company had a net operating loss
carryforward for federal income tax purposes approximately equal to
the accumulated deficit recognized for book purposes, which will be
available to reduce future taxable income. The full realization of
the tax benefit associated with the carryforward depends
predominantly upon the Company's ability to generate taxable income
during the carryforward period. Because of the current uncertainty
of realizing such tax assets in the future, a valuation allowance
has been recorded equal to the amount of the net deferred tax
asset, which caused the Company's effective tax rate to differ from
the statutory income tax rate. The net operating loss
carryforward, if not utilized, will begin to expire in the year
2009.
NOTE 8 - LONG-TERM DEBT:
Following is a summary of long-term debt at June 30, 1999
AMOUNT
9.5% Note Payable to Nations Bank
with monthly payments of $619,
maturity date is January 15, 2016 $ 62,816
7.5% Notes Payable to Mellon Mortgage
with monthly payments of
$521, maturity date is March 1, 2019 $ 69,812
10.125% Note Payable to First Union
Mortgage Corporation with
monthly payments of $777, maturity
date is April 1, 2020 $ 81,535
7.48% Note Payable to Home Savings of
America with monthly payments of $585,
maturity date is February 10, 2019 $ 55,227
10.5% Note Payable to GMAC Mortgage with
monthly payments of $818,
maturity date is January 1, 2019 $ 68,009
11.0% Note Payable to GMAC Mortgage with
monthly payments of $813, maturity date
is October 1, 2018 $ 66,071
Total $ 403,467
Less Current Maturities $ 10,750
____________
$ 392,717
The following are maturities of long-term debt for each of the
next five years:
2000 10,750
2001 10,875
2002 12,077
2003 13,424
2004 14,757
Remaining Balance 330,834
________
Total Long-Term Debt $392,717
=========
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
November 22, 1999 TIME FINANCIAL SERVICES INC.
(Date) (Registered)
Michael F. Pope
(Signature)
Philip C. La Puma
(Signature)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 97976
<SECURITIES> 0
<RECEIVABLES> 8900
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 106876
<PP&E> 7489
<DEPRECIATION> 0
<TOTAL-ASSETS> 731864
<CURRENT-LIABILITIES> 52224
<BONDS> 0
0
0
<COMMON> 1562
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 731854
<SALES> 1059096
<TOTAL-REVENUES> 1059096
<CGS> 0
<TOTAL-COSTS> 918793
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 140303
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 140303
<EPS-BASIC> .11
<EPS-DILUTED> .11
</TABLE>
