SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSBA
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year Commission File
June 30, 1998 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 (I.R.S. 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 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 aggregate market value of the 1,205,744 shares of common
stock of the Registrant held by non-affiliates on June 30, 1998,
was approximately $856,078.
On June 18, 1998, 1,205,744 shares of common stock (the
Registrant's only class of voting stock) were outstanding.
Transitional Small Business Disclosure Format:
Yes No X
PART I
Item 1. Business
TIME FINANCIAL SERVICES, INC. (FORMERLY MARKET DATA CORP.)
On January 7, 1997, the shareholders approved the name change of
the corporation and change of domicile to Nevada. Time Financial
Services, Inc. a Nevada corporation was formed and Market Data
Corporation was merged into that corporation. This merger was
finally recognized by the state of Texas on October 5, 1998.
Included in this document is a copy of the State of Texas
Certificate of Merger dated October 5, 1998.
The Company has three major income producing segments.
1. The Text Division which publishes Wall Street Whispers a daily
digest of wall street newsletters. This is provided as content to
on-line service providers including Prodigy, DTN, BMI, Data
Broadcasting, etc. This five year old publication has its own web
site, www.wallstwhispers.com. It can now be subscribed to directly
by the public for $19.95 a month. The major income generator has
been Prodigy (Classic Division). Prodigy Classic is being phased
out and being replaced by Prodigy Internet. This has caused large
revenue declines for Wall St. Whispers. Management has decided to
sell this publication to minimize losses for this product. In
addition, the publication is located in Houston, Texas and all
other operations are in Orange, California.
2. Time Lending, California (TLC), is a wholly owned subsidiary
located in Orange, California. TLC is a Mortgage broker. It is an
approved broker for Countrywide Mortgage, 1st Union, Homeside
Mortgage and World Savings.
3. In addition to mortgages, TLC buys and sells real estate for
profit. The Company currently owns seven 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 sale.
4. TLC has a joint venture agreement with Signature Marketing
Associates, Inc. to provide direct mail marketing services to the
mortgage brokerage industry. There are 36,000 brokers nationwide
who offer mortgages to consumers. Direct mail is the leading
marketing tool for them to develop leads. The market shifts as
interest rates rise and fall. This will lead to declines in
mailings when the mortgage market is in flux, with interest rates
low, direct mail increases. Two mortgage products have dominated,
125% loan to value junior mortgages and FHA/UA streamline
refinances.
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 / real estate markets which are now and
look to remain strong over the next two - three years. Interest
rates always remain the biggest factor in business volume. While
rising from historic lows, interest rates still remain low enough
to provide a positive business environment for 1999.
Management's Discussion and Analysis
The major factor in the decline in revenue in the Text division was
the decline from Prodigy Classic. The on-line industry has shifted
from specialized services to internet service providers. The
growth of the internet is spectacular, but Prodigy was slow to
respond and lost customers to giant AOL.
The Company's financial condition has improved with the acquisition
of seven real estate properties and the continued strength of the
Direct Mail operation. The company's cash position has improved
and should continue to improve as real estate assets are bought and
sold in our single family (foreclosure/fixer) operation grows.
Managements decision to sell the Text Division should improve
operations by reducing losses and improve cash through its sale.
Management expects to produce $30,000 to $70,000 cash upon sale of
the text division. Increased cash will allow for increases in
marketing expenditure in the Mortgage and Direct Mail business.
This should result in increased sales and revenues.
Interest rates remain near historic lows and have stimulated the
refinance market. Time Lending's volume of loans is growing to
11,000,000 in loans as of 6/30/98 compared to 6/30/97 at
$9,000,000. In April 1997, Time Lending entered into a Marketing
Agreement with Signature Marketing Associates, Inc. for the
purposes of setting up and providing Direct Mail Marketing Services
to Lenders. With startup in April 1997, it attained
profitability by year end. It provides full direct mail
services to consumers with the direct response inquiry for a real
estate loan. To date these programs have been very successful for
it's clients. The volume of mailings has declined due to the
loss of the 125% loan market.
In August 1997, the Company purchased real estate with the
approximate market value of $846,000. The purchase assumed the
current financing and traded common treasury stock and convertible
preferred for the equity (i.e. the difference between the market
value and the balance owed on the financing).
These assets show on the company's balance sheet as of September
30, 1997
Property No. 4 (Bellinger) was sold and closed on November 19, 1998
for $365,000.
A summary of these transactions is below:
Property Market Assumed Equity at Common
Value Loans Market Issued
Lauglin, NV
1. 1683 Esteban $ 97,000 $ 71,831 $ 25,169 8,427
2. 1692 Esteban 97,000 65,677 31,323 10,487
3. 30 Palm Garden 100,000 83,813 16,187 5,419
Huntington Beach, CA
4. 6421 Bellinger 295,000 222,000 73,000 24,333
Rialto, CA Preferred
5. 216 E. Morgan 94,000 70,000 24,000 22 shares
6. 216 Van Koverig 88,000 68,000 20,000 30 shares
7. 1550 Etiwanda 75,000 58,000 17,000 25 shares
TOTAL $846,000 $ 639,321 $206,679
The Company has seven full time and four part time employees, plus
four commissioned loan officers.
Business Plans for Fiscal 1999
The Company plans to reduce the number of business segments by
selling the Wall Street Whispers publication. This will reduce
losses and cut fixed overhead significantly by eliminating the
Houston, Texas operation. The remaining segments are all housed in
Orange, California and that location is maintained with minimal
fixed overhead. Cash will be generated through the sale of the
Wall Street Whispers, publication and real estate.
In the mortgage brokering segment, there is minimal fixed costs.
Most of the fixed cost are attributed to the direct mail marketing
business with Signature Marketing. This business is basically
prepaid before each mailing. There is little risk.
With low fixed overhead and ready sources of cash liquidity through
sale of real estate or additional real estate borrowing the Company
should withstand any down side for the next fiscal year.
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.
Item 2. Properties
The Company (TFS) presently leases 1400 square feet in Houston,
Texas consisting of offices and storage facilities. The lease
expired in December 1997 and a new lease was signed expiring
November 2000.
Time Lending (TLC) presently leases 1,400 square feet in Orange,
California. This lease was signed in December 1997 and will expire
December 1999. TLC added 1000 square feet of space in October to
expand its loan telemarketing efforts.
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, 1998, the range of high and low bid quotations for the
Company's common 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, mark-down or
commission and may not represent actual transactions.
<TABLE>
<S> <C> <C>
Quarter Ended High Bid Low Bid
____________________ _________ _________
September 30, 1995 $ .50 $ .375
December 31, 1995 $ .375 $ .25
March 31, 1996 $ .62 $ .25
June 30, 1996 $ .50 $ .25
September 30, 1996 $ .1875 $ .1875
December 31, 1996 $ .1875 $ .125
March 31, 1997 $ .21 $ .0875
June 30, 1997 $ .10 $ .750
September 30, 1997 $ 1.25 $ .750
December 31, 1997 $ 1.25 $ .750
March 31, 1998 $ 1.25 $ .750
June 30, 1998 $ 1.25 $ .710
</TABLE>
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 assurance, 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, 1998, the Company had 171 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
1998 Compared to 1997
Operations were conducted and revenues were generated in the fiscal
year. The Company had $31,755 in cash at year end and $831,093 in
assets compared to $8,673 cash at June 30, 1997 and $18,925 in
total assets. The Company had current liabilities of $715,473 at
June 30, 1998 compared to current liabilities of $66,337.
The extraordinary changes in 1997 created a $563,907 loss carry
forward that will be used to reduce income taxes in future years.
Of that total, $335,182 represent the amount due from InfoPlan and
its owner.
Liquidity and Capital Resources
During the year ended June 30, 1997, the Company reorganized and
took an extraordinary write off of non-performing assets. This
included the distribution of Renet, the write off of assets
obtained from Renet and the note and receivable balances over due
from InfoPlan International, Inc.
Results of Operations
1998 Compared to 1997
During the fiscal year ended June 30, 1998, the company incurred
$84,000 in services of officers. In 1998, the Company incurred
$312,910 in General and Administrative expenses, and $686,000
business income on operations. Accordingly, the reported financial
information herein may not be indicative of future operating
results. Loss on operations in 1998 was ($65,478) compared to the
1997 loss on operations ($45,340).
1997 Compared to 1996
During the fiscal year ended June 30, 1997, the Company incurred
$255,332 general and administrative expenses, and $96,000_ for
services contributed by officers. In 1996, the Company incurred
$375,872 in General and Administrative expenses and $96,000 for
services rendered by officers. Accordingly, the reported financial
information herein may not be indicative of future operating
results. Loss on operations in 1997 was ($45,340) compared to the
1996 loss on operation ($90,330) in extraordinary items of gain on
settlement of debt.
The Text Service Division income decreased ($87,398) to $216,387 or
28% for the year. The subscription base of Prodigy declined due to
Prodigy's sale and conversion to an Internet Service Provider.
This has caused its volume on Prodigy Classic to continue to
decline. The Company has established its own web site for Wall
Street Whispers. It is http://www.wallstwhispers.com. Management
had decided to sell this business and concentrate on real estate
and mortgages. The sale to JV Web of Houston fell thorough when
its financing fell through.
Time Lending, California is the mortgage operation. The revenue
for fiscal 1998 was $167,533 a decline of $11,756 or 6.5% over
1997. This was primarily in mortgage loan commissions. With
continuing lower interest rates, revenues in this line should
increase in 1999.
Time Lending's joint venture with Signature Marketing generated
$254,681 in revenue to the Company in fiscal 1998. The total
revenue for the Company for fiscal 1998 was $686,000. This is an
increase of $170,603 or 33.1% over 1997.
Net Income
The Company lost ($65,478) in operations for 1998. This was due to
the cost of compensation to consultants in the form of stock
covering the pending sale of the Text Division and other
consulting. This compares to a loss of ($45,340) for 1997.
Overall expenses were $751,478 including $130,000 paid for with
stock.
Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F-5
Item 8. Changes In and Disagreements with Accounts on Accounting
and Financial Disclosures.
There were no changes or disagreements with the Company's public
accountants.
In connection with audits of 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 the
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:
<TABLE>
<S> <C> <C> <C>
Name Age Position Since
__________________ ____ ________________ _____________
Michael F. Pope 49 Director March 1996
President August 1996
Philip C. LaPuma 59 Director March 1996
Secretary August 1996
Treasurer August 1996
Victoria Pope 50 Director January 1997
</TABLE>
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 or 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 49, 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 - Long
Beach. He holds a real estate brokers license in the State of
California.
Philip C. LaPuma, age 59, has been Director of the Company since
March 1996 and Secretary / Treasurer since August 1996. Mr. LaPuma
holds 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 50, has been a Director of the Company since
January 1997. She has been active in the mortgage industry the
past seven 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 person 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 than 10% shareholders are required by the
Securities and Exchange Commission regulation to furnish the
Company with copies of all Section 16(a) filings.
1. The following people did not file any reports under Section
16(a) during the most recent fiscal year:
a. Michael F. Pope President and Director
b. Philip C. LaPuma Secretary and Director
c. Victoria A. Pope Vice President and Director
Item 11. Executive Compensation
The following table sets forth the summary compensation for all
officers for services during the three fiscal years ended June 30,
1998.
Annual Compensation Long Term
Name & Period Salary Bonus Options
Principal Position
Michael F. Pope 6/30/98 $48,000
Director 6/30/97 $48,000
President 6/30/96 $48,000
Philip C. LaPuma 6/30/98 $48,000
Director 6/30/97 $48,000
Secretary-Treasurer 6/30/96 $48,000
Aggregated Option Exercises and Fiscal Year End Option Values
Number of Unexercised Value of Unexercised In-
Options at Fiscal Year The-Money Options at
End Exercise or Fiscal Year End
Name Exercisable (#) Base Price Exercisable
________________ ______________ ____________ ___________________
Michael F. Pope 535,875 $ .43 $ 0
Philip C. LaPuma 535,875 $ .43 $ 0
The Company does not have any long-term incentive plans nor pension
plans.
(Except for compensation of Officers who are also Directors which
Compensation is listed in Summary Compensation Table of Executives)
<TABLE>
<S> <C> <C> <C> <C> <C>
Cash Compensation Security Grants
Name Annual Meeting Consulting Number of Number of
Retainer Fees($) Fees/Other Shares(#) Securities
Fees ($) Fees ($) Underlying
Options/SARs
(#)
A. 0 0 0 0 0
Michael F. Pope
B. 0 0 0 0 0
Philip C. LaPuma
C. 0 0 0 0 0
Victoria A. Pope
</TABLE>
The Company's Board of Directors served as the Compensation
Committee during the last fiscal year. There are not any
interlocking board arrangements among the directors.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of June 30, 1998 no officers of directors were known 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.
<TABLE>
<S> <C> <C> <C>
Common Stock Infinity Marketing 159008 13%
1182 N. Tustin St.
Orange, CA 92867
Common Stock Signature Marketing 130193 11%
1182 N. Tustin ST.
Orange, CA 92867
Common Stock Steve Naremore 121365 10%
3910 FM 1960 W. #130
Houston, TX 77068
Common Stock Ward Enterprises 100000 8%
384 Sanctuary Ct.
Henderson, NV 89014
Common Stock 10th Street Inc. 75000 6%
1182 N. Tustin St.
Orange, CA 92867
Common Stock Joseph George, Inc. 75000 6%
6566 Corte Cosco
Carlsbad, CA 92009
Common Stock All Officers and 10954 1%
Directors
</TABLE>
Item 13. Certain Relationships and Related Transactions
There were no transactions, or series of transactions, for the
fiscal year ended June 30, 1998, 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 percent shareholders or any member of the immediate
family of the foregoing person, have or will have a direct or
indirect material interest.
ITEM IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
The following documents are filed as part of this report:
Exhibits:
Articles of Incorporation - Nevada,
Certificate of Merger - Texas
Financial Data Schedule
INDEX
Regulation Form 10-KSB Consecutive
S-K Number Page Numbers
Exhibit
3.1 Articles of Incorporation *Incorporated by
Texas reference to
Registration
Statement
3.2 Bylaws *Incorporated by
reference to
Registration Statement
3.3 Articles of Incorporation
Nevada
3.4 Certificate of Merger
Texas
27.1 Financial Data Schedule
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.
September 28, 1998 TIME FINANCIAL SERVICES, INC.
(Date) (Registered)
Michael F. Pope
(signature)
Philip C. LaPuma
(signature)
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report has been signed below by the
following persons, which include the principal executive officer,
principal financial officer and a majority of the Board of
Directors, on behalf of the Registrant in capacities and on the
dates indicated.
Signature Title Date
Michael F. Pope Director 09/21/99
(Signature) (Date)
(Principal Executive Officer)
Philip C. LaPuma Director 09/21/99
(Signature) (Principal Financial Officer) (Date)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
Consolidated
Independent Auditors' Report
Balance Sheet for year ended June 30, 1998
Statement of Operations for year ended June 30, 1998
Statement of Cash Flows for year ended June 30, 1998
Statement of Stockholders' Equity for the year
ended June 30, 1998
Notes to financial statements
(a) (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 YEARS ENDED JUNE 30, 1998 AND 1997
MICHAEL B. JOHNSON & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
9175 EAST KENYON AVE. SUITE 100
DENVER, CO 80237
Michael B. Johnson C.P.A. Telephone (303) 795-0099
Member A.I.C.P.A.
Colorado Society of C.P.A.'s
INDEPENDENT AUDITORS' REPORT
Board of Directors
Time Financial Services, Inc.
Orange, CA
We have audited the accompanying Balance Sheet of Time Financial
Services, Inc. as of June 30, 1998 and 1997, and the related
statements of operations, stockholders' equity and cash flows for
years 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. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audit
provides a reasonable basis for our opinion.
As shown in the financial statements, the company incurred a net
loss of $65,478 for 1998 and has incurred a net loss in the prior
year. At June 30, 1998, current liabilities exceeded current
assets by $22,448. These factors indicate that the Company has
substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary
in the event the company cannot continue in existence.
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, 1998 and 1997, and the
results of their operations and their cash flows for the years then
ended inconformity with generally accepted accounting principles.
Michael B. Johnson & Co., P.C.
Denver Colorado
November 26, 1998
TIME FINANCIAL SERVICES, INC.
BALANCE SHEET
JUNE 30,
<TABLE>
<S> <C> <C>
1998 1997
_____________ _____________
ASSETS:
Current Assets:
Cash and cash equivalents $ 31,755 $ 8,623
Accounts receivable 0 50
_____________ _____________
Total Current Assets 31,755 8,673
Property and Equipment, net of accumulated
depreciation of $93,587 and $91,074
at June 30, 1998 and 1997 respectively 7,489 10,102
Other Assets:
Investment in equity securities 150 150
Employee advance 5,000 0
Property investment 786,699 0
_____________ ____________
Total Other Assets 791,849 150
_____________ ____________
TOTAL ASSETS $ 831,093 $ 18,925
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 24,186 $ 63,855
Accrued Expenses 21,966 2,482
Current portion of long-term debt 8,051 0
_____________ ___________
Total Current Liabilities $ 54,203 66,337
Long-Term Debt 661,270 0
_____________ ___________
Total Liabilities 715,473 66,337
Stockholders' Equity:
Preferred stock, no par value 100,000
Shares authorized, 83 issued and
outstanding at June 30, 1998 83,000 0
Common stock, .001 par value;
50,000,000 shares authorized,
1,205,744 and 838,327 issued
and outstanding at June 30,
1998 and June 30, 1997, respectively 1,205 838
Additional paid-in capital 459,703 314,560
Retained earnings (deficit) (428,288) (362,810)
_____________ ____________
Total Stockholders' Equity 115,620 (47,412)
_____________ ____________
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 831,093 $ 18,925
============= ============
</TABLE>
TIME FINANCIAL SERVICES, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<S> <C> <C>
1998 1997
REVENUE:
Marketing income $ 254,681 $ 0
Product and software sales 216,387 303,785
Loan fees 167,533 179,289
Other revenue 47,399 32,323
_____________ _____________
Total Revenue 686,000 515,397
COSTS AND EXPENSES:
Loan officer commissions 215,364 160,967
Operating costs 223,204 144,438
General and administrative 312,910 773,899
_____________ _____________
Total Operating Expenses 751,478 1,079,304
_____________ _____________
NET INCOME (LOSS) (65,478) (563,907)
============= =============
BASIC (LOSS) PER SHARE (0.06) (0.67)
============= =============
BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 1,070,035 838,327
============= =============
DILUTED LOSS PER SHARE (0.06) 0
============= =============
DILUTED WEIGHED AVERAGE OUTSTANDING $ 1,090,785 $ 0
============= =============
</TABLE>
TIME FINANCIAL SERVICES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30,
<TABLE>
<S> <C> <C>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(65,478) $(563,907)
Reconciliation of net income (loss) to
net cash (used in) operating activities:
Depreciation and amortization 2,513 12,421
(Increase) Decrease in:
Accounts receivable 50 64,491
Employee advance (5,000) 0
Inventory 0 5,058
Prepaid expenses 0 4,157
Receivable from InfoPlan 0 42,569
Investment (786,699) 23,850
Note receivable from InfoPlan
Increase (Decrease) in:
Accounts payable (39,669) 41,302
Accrued expenses 19,484 1,433
_____________ ___________
Net Cash Provided by (Used in)
Operating Activities (874,799) (3,800)
CASH FLOWS USED FOR
INVESTING ACTIVITIES:
Capital additions net of retirement 0 (12,615)
_____________ ___________
Net Cash Used in Investing Activities 0 (12,615)
_____________ ___________
CASH FLOWS USED FOR
INVESTING ACTIVITIES:
Issuance of preferred stock 83,000 0
Issuance of common stock 145,510 0
Real Estate property mortgages 669,321 0
_____________ ___________
Net Cash from Financing Activities 897,831 0
Net Increase (Decrease) in Cash
and Cash Equivalents 23,132 (16,415)
Cash and Cash Equivalents-
Beginning of Period 8,623 25,038
____________ ____________
Cash and Cash Equivalents-
End of Period $31,755 $ 8,623
============ ============
SUPPLEMENTAL DISCLOSURE
CASH PAID DURING THE YEAR FOR:
Interest $27,490 $ 0
Income Taxes 0 0
The accompanying notes are an integral part of the financial
statements. F-4
</TABLE>
TIME FINANCIAL SERVICES, INC
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C>
PREFERRED STOCK COMMON STOCK
Shares Amount Shares Amount
Balance
June 30, 1996 (1) 0 $ 0 838,327 $ 838
Net Loss 0 0 0 0
__________ __________ __________ __________
Balance 0 0 838,327 838
June 30, 1997
Issuance of Stock 83 83,000 0 0
Issuance of Stock 0 0 367,417 367
Net Loss 0 0 0 0
__________ __________ __________ __________
Balance
June 30, 1998 83 $83,000 1,205,744 $ 1,205
========== ========== ========== ==========
Additional Retained Total
Paid-In Earnings Stockholders'
Capital (Deficit) Equity
Balance-
June 30, 1996 (1) $ 314,560 $ 201,097 $ 516,495
Net Loss 0 (563,907) (563,907)
___________ ___________ ____________
Balance-
June 30, 1997 314,560 (362,810) (47,412)
Issuance of Stock 0 0 83,000
Issuance of Stock 145,143 0 145,510
Net Loss 0 (65,478) (65,478)
___________ ___________ ____________
Balance-
June 30, 1998 $459,703 (428,288) 115,620
============ =========== ============
</TABLE>
(1) REFLECTING 20 TO 1 REVERSE STOCK SPLIT EFFECTIVE JULY 1, 1997
TIME FINANCIAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 and JUNE 30, 1997
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.
The Nevada Company is a corporation duly organized under the laws
of the State of Nevada having been incorporated January 29, 1997,
had 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 the 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.
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 borrowing with
comparable terms and conditions.
Earnings Per Share
In 1998, the Company adopted the provisions of SFAS No. 128,
"Earnings per Share," which requires presentation on the face of
the income statement of both basic and diluted earnings per share.
Basic and diluted earnings per share have replaced the previously
presented primary earnings per share. There were no preferred
stock issued in prior years. In Note 6 it indicates that the Class
A preferred shares may be converted at a price that is 35% below
the price established by the trading market. This discount
represents an assured incremental yield imbedded in the conversion
terms of the preferred shares and its reflected the diluted
earnings per share calculation.
NOTE 3- PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<S> <C> <C>
June 30, 1998 June 30, 1997
Furniture and fixtures $ 39,996 $ 39,996
Computer equipment and software 56,253 56,253
Demonstration equipment 3,295 3,295
Leased equipment 1,650 1,650
____________ _____________
101,176 101,176
Less: Accumulated depreciation 93,587 91,074
____________ _____________
$ 7,589 $ 10,102
============ =============
</TABLE>
NOTE 4- OPERATING LEASES:
The Company leases office space under an operating lease agreement
which expires December 31, 1999 and January 31, 2001.
Future minimum lease payments as of June 30, 1998 are as follows:
1999 $23,640
2000 17,940
2001 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 operated 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,
---------------------
1998 1997
_____________________
Operating Revenues
Marketing $ 254,681 $ 0
Product and Software Sales 216,387 303,785
Loan Fees 167,533 179,289
Other Revenue 47,399 32,323
__________ ___________
$ 686,000 $ 515,397
========== ===========
Operating Profit (Loss)
Marketing $ 29,184 $ 0
Product and Software Sales 6,938 (213,892)
Loan Fees (57,614) (165,063)
Other Revenue (43,986) (184,952)
__________ __________
Capital Expenditures
Marketing $ 0 $ 0
Product and Software Sales 0 0
Loan Fees 0 12,615
Other Revenue 786,699 0
__________ __________
$ 786,699 12,615
========== ===========
Identifiable Assets
Marketing $ 21,135 $ 0
Product and Software Sales 10,598 2,120
Loan Fees 12,661 16,805
Other Revenue 786,699 0
___________ __________
$ 831,093 $ 18,925
=========== ===========
</TABLE>
NOTE 7 - CLASS A PREFERRED STOCK:
The Company, through a private placement memorandum, offered a
maximum of 500 shares of Class A Preferred Stock, no par value, for
a purchase price of $1,000 per share (total offering: $500,000),
and a minimum offering of 250 shares(total offering of 250,000).
The offering contains a provision to convert the Class A Preferred
Stock to common stock at 65% of the bid price or $4.00; whichever
is less, after fourteen (14) months. Every share of Preferred
Stock will earn 12% per year, cumulative dividend which will be
paid at the rate of (3%) quarterly. The Company will escrow the
first year's interest from the proceeds of the offer with the
second year coming from operations. The value of the common stock
shall be based on the average bid price for the 30-day period
ending 10 days prior to the conversion date. On the date of
Conversion, the Company will issue the number of shares that is
necessary to give the investor his shares at 65% of the market
price or $4.00 per share, whichever is less, at that time. The
common share will be free trading at the time of issuance and the
shareholders principle amount will be converted to common shares at
65% of the value. The Company subsequently amended the minimum
amount of the offering. Eighty-three shares were purchased for a
value of $83,000.
NOTE 8- INCOME TAXES:
Significant components of the Company's deferred tax liabilities
and assets are as follows:
<TABLE>
<S> <C> <C>
June 30
1998 1997
Deferred Tax Liability $ 0 $ 0
========== ==========
Deferred Tax Assets
Net Operating Loss Carryforwards 428,000 363,000
Book / Tax Differences in
Bases of Assets 103,000 124,000
Less Valuation Allowance (531,000) (487,000)
---------- ----------
Total Deferred Tax Assets $ 0 $ 0
========== ==========
Net Deferred Tax Liability $ 0 $ 0
========== ==========
</TABLE>
As of June 30, 1998, 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 a 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 assets, 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 9 - LONG-TERM DEBT:
Following is a summary of long-term debt at June 30, 1998
<TABLE>
<S> <C>
Amount
________
7.9% Note Payable to Washington Mutual $222,000
with monthly payments of $1,907,
maturity date is October 13, 2027
9.5% Note Payable to Nations Bank 65,677
with monthly payments of $619,
maturity date is January 15, 2016
7.5% Notes Payable to Mellon Mortgage 71,831
with monthly payments of $521, maturity
date is March 1, 2019
10.125% Note Payable to First Union 83,813
Mortgage Corporation with monthly payments
of $777, maturity date is April 1, 2020.
7.48% Note Payable to Home Savings of 74,000
America with monthly payments of $585,
maturity date is February 2019.
10.5% Note Payable to GMAC Mortgage with 76,000
monthly payments of $818, maturity date
is January 1, 2019
11.0% Note Payable to GMAC Mortgage with 76,000
monthly payments of $813, maturity date
is October 1, 2018
_______
Total 669,321
Less Current Maturities 8,051
________
$661,270
=========
</TABLE>
The following are maturities of long-term
debt for each of the next five years:
1999 $ 8,906
2000 9,860
2001 10,875
2002 12,077
2003 13,424
___________
55,142
___________
Remaining Balance 606,128
___________
Total Long-Term Debt $661,270
===========
NOTE 10- GOING CONCERN:
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern.
However, the Company has sustained a substantial operation loss
this year. As shown in the financial statements, the Company
incurred a net loss of $65,478 for 1998 and had incurred a net loss
in the prior year. At June 30, 1998, current liabilities exceed
current assets by $22,448. These factors indicate that the Company
has substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
In view of these matters, realization for a major portion of the
assets in the accompanying balance sheet is dependent upon
continued operations of the Company, which in turn is dependent
upon the Company's ability to meet its financial requirements, and
the success of its future operations. Management believes that
actions presently being taken to revise the Company's operating and
financial requirements provide the opportunity for the Company to
continue as a going concern.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 31,755
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,755
<PP&E> 7,489
<DEPRECIATION> 0
<TOTAL-ASSETS> 831,093
<CURRENT-LIABILITIES> 54,203
<BONDS> 0
0
83
<COMMON> 1,205,744
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 831,093
<SALES> 686,000
<TOTAL-REVENUES> 686,000
<CGS> 0
<TOTAL-COSTS> 751,478
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (65,478)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65,478)
<EPS-BASIC> (0.000)
<EPS-DILUTED> (0.060)
</TABLE>
ARTICLES
OF
INCORPORATION
OF:
TIME FINANCIAL SERVICES, INC.
ARTICLE I.
The complete name of the Corporation is to be:
TIME FINANCIAL SERVICES, INC.
ARTICLE II.
Its principal office in the state of Nevada is to be located at 318
North Carson Street, Suite 208, in the City of Carson City, County
of Carson. The registered agent in charge thereof is Paracorp
Incorporated.
ARTICLE III.
The purpose of this Corporation is to engage in any lawful act or
activity for which a Corporation may be organized under the general
Corporation laws of Nevada.
ARTICLE IV.
This Corporation shall have the authority to issue 2 classes of
capital stock the total of which shall be 5,100,000 shares. The
classification and par value of 5,000,000 shares shall be common
voting stock having a par value of $.001 each share, each share
shall be entitled to the same dividend, liquidation, and voting
rights; the classification and par value of 100,000 shares shall be
preferred stock with no par value each share. Said preferred stock
may be issued from time to time in one or more classes or series
with such dividend rates, voting rights, rights of conversion,
rights upon dissolution or liquidation, and with such designations
or restrictions thereof as shall be determined by resolution
adopted by the Board of Directors at the time such stock is issued
without further approval of shareholders.
ARTICLE V.
The members of the governing board of this Corporation shall be
called directors and the number thereof at the inception of this
Corporation shall be one (1). Directors need not be Shareholders
of this corporation, nor residents of the State of Nevada. The
number of Directors may from time to time be increased or decreased
in such manner as shall be provided for by the By-Laws of the
Corporation.
The name and post office address of the first Board of Directors
who shall hold office until his successor is duly elected, is as
follows:
Name: Address:
Robert L. Cashman 2153 N. Glassell Street
Orange, CA 92865
ARTICLE VI
The Capital stock of this Corporation, after the amount of the
subscription price has been paid in, shall never be assessable, or
assessed to pay debts of this Corporation.
ARTICLE VII
The name and address of the Incorporator signing these Articles of
Incorporation is as follows;
Name: Address:
Robert L. Cashman 2164 N. Glassell Street
Orange, CA 92865
ARTICLE VIII
The period of duration of this Corporation shall be perpetual
unless otherwise amended by the Shareholders.
ARTICLE IX
The Directors shall have the power to make and to alter or amend
the By-Laws; to fix the amount to be reserved as working capital
and to authorize and cause to be executed mortgages and liens,
without limit as to amount, upon the property and franchise of this
Corporation.
With the consent in writing, and pursuant to a vote of the majority
of the holders of the capital stock issued and outstanding, the
Directors shall have the authority to dispose of, in any manner,
the whole property of this Corporation.
The By-Laws shall determine whether and to what extent the accounts
and books of the Corporation, or any of them shall be open to the
inspection of the Shareholders; and no shareholder shall have any
right of inspection of any account, book or document of this
Corporation, except conferred by the law or By-Laws or by
resolution of the Shareholders.
The Shareholders and Directors shall have the power to hold
meetings and keep the books, documents an papers of this
Corporation, except as conferred by the law or By-Laws or by
resolution of the Shareholders.
The Shareholders and Directors shall have the power to hold
meetingS and keep the books, documents and papers of the
Corporation outside of the State of Nevada, at such places as may
be from time to time designated by the By-Laws or by resolution of
the Shareholders and Directors, except as otherwise required by the
laws of Nevada.
It is the intention that the objects, purposes and powers specified
in ARTICLE III hereof shall, except where otherwise specified in
ARTICLE III, be nowise limited or restricted by reference to or
inference from the terms of any other clause or ARTICLE on this
Certificate of Incorporation, but that the object, purpose, and
powers specified in ARTICLE III and each of the clauses or Articles
of this Charter shall be regarded a independent objects, purposes,
and powers.
ARTICLE X
After the formation of this Corporation, each Shareholder shall be
entitled to purchase and/or subscribe for the number of shares of
this Corporation which may hereafter be authorized and issued for
money. Each Shareholder shall have the same rights as any
individual to purchases said stock, but shall not have any pre-
emptive rights as that term is defined under NRS 78.265.
IN WITNESS WHEREOF, I, the undersigned constituting the sole
incorporator and intended Shareholder, being less than three
Shareholders, for the purpose of forming a Corporation under the
laws of the State of Nevada, do make, file and record these
articles of Incorporation, and do certify that the facts herein are
true and I have accordingly hereunto set my hand this 21st day of
January 1997.
Robert L. Cashman
(Signature)
Incorporator
The State of Texas
Secretary of State
CERTIFICATE OF MERGER
TIME FINANCIAL SERVICES, INC. (A NEVADA NO PERMIT ENTITY)
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS,
HEREBY CERTIFIES THAT THE ATTACHED ARTICLES OF MERGER OF
MARKET DATA CORP.
A TEXAS CORPORATION
WITH
TIME FINANCIAL SERVICES, INC. (A NEVADA NO PERMIT ENTITY)
HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM TO LAW.
ACCORDINGLY THE UNDERSIGNED, AS SUCH SECRETARY OF STATE, AND BY
VIRTUE OF THE AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY
ISSUES THIS CERTIFICATE OF MERGER.
DATED: OCTOBER 5, 1998
EFFECTIVE: OCTOBER 5, 1998
Alberto R. Gonzales, Secretary of State
(Signature)
