FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from
Commission file number 33-24299
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
(Exact name of registrant as specified in its charter)
Colorado 93-0962072
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) (Identification No.)
5525 Erindale Drive, Suite 201
Colorado Springs, Colorado 80918
(Address of principal executive offices) (Zip Code)
(719) 260-8509
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
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 XX No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Class of Stock Amount Outstanding
$.0001 par value 1,529,546 shares
Common Stock outstanding
at August 12, 1996
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
Index
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations
Part II - OTHER INFORMATION
SIGNATURES
Consolidated Capital of North America, Inc.
Consolidated Balance Sheet
Unaudited Audited
June December
30, 1996 31, 1995
ASSETS
Current Assets:
Cash And Cash Equivalents $7,819 $6,494
Notes Receivable & Accrued Interest 164,140 162,173
Notes Receivable & Accrued Interest -
Related Party 161,594 143,609
Total Current Assets 333,553 312,276
Undeveloped Real Estate, at cost 0 284,687
Property and Equipment (Net of Accumulated
Depreciation) 0 0
Other Assets:
Long-Term Portion Of Notes Receivable
& Accrued Interest 487,285 84,240
Equipment Held For Resale 21,009 25,209
Prepaid Expenses 0 6,166
Marketable Securities 37,500 37,500
Total 545,794 153,115
TOTAL ASSETS $879,347 $750,078
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Current Portion - Notes Payable $0 $193,000
Current Portion - Notes Payable
- - - Related Party 23,700 11,700
Accounts Payable - Trade 40,054 28,631
Accrued Expenses 43,353 26,348
Total 107,107 259,679
Long-Term Portion Of Notes Payable 0 0
Total Liabilities 107,107 259,679
Minority Interest 271,222 124,172
SHAREHOLDERS' EQUITY:
Preferred Stock, Par Value $.01 Per Share;
Authorized 10,000,000 Shares; Series A:
authorized, issued and outstanding -0- at
June 30, 1996 and -0- Shares at Dec. 31, 1995.
Common Stock, $.0001 Par Value;
Authorized 50,000,000 Shares; Issued
and outstanding shares 1,529,546 and
1,529,546 shares 153 153
Additional Paid-In Capital 832,075 832,075
Retained Deficit (331,210) (466,001)
TOTAL SHAREHOLDERS' EQUITY 501,018 366,227
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $879,347 $750,078
See Accompanying Notes To These Consolidated Financial Statements.
Consolidated Capital of North America, Inc.
Unaudited
Consolidated Statement Of Operations
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
Revenue:
Sale Of Real Estate $668,250 $168,638
Cost Of Real Estate Sold 345,016 34,803
Gross Profit 323,234 133,835
Depreciation And Amortization 4,813 0
General And Administrative 14,385 18,334
Interest 2,877 0
Personnel And Consulting 9,000 15,931
Taxes - Payroll & Property 177 9,164
Total Expenses 31,252 43,429
Operating Profit (Loss) 291,982 90,406
Other Income (Expense):
Minority Interest In Profit of
Joint Venture (150,314) (56,637)
Equity (Loss) 0 (11,465)
(Loss) On Asset Sales (1,750) 0
Interest 7,379 3,644
Other 0 (11,235)
Total (144,685) (75,693)
Net Income $147,297 $14,713
Net Income Per Common Share $0.10 $0.01
Common Shares Outstanding 1,529,546 1,529,546
See Accompanying Notes To These Consolidated Financial Statements.
Consolidated Capital of North America, Inc.
Unaudited
Consolidated Statement Of Operations
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
Revenue:
Sale Of Real Estate $668,250 $168,638
Cost Of Real Estate Sold 346,591 34,803
Gross Profit 321,659 133,835
Depreciation And Amortization 6,166 0
General And Administrative 20,804 25,781
Interest 8,227 21,205
Personnel And Consulting 18,000 29,181
Taxes - Payroll & Property 244 0
Total Expenses 53,441 76,167
Operating Profit (Loss) 268,218 57,668
Other Income (Expense):
Minority Interest In Profit of
Joint Venture (147,050) (52,217)
Equity (Loss) 0 (19,606)
(Loss) On Asset Sales (1,750) 0
Interest 15,373 7,415
Other 0 3,633
Total (133,427) (60,775)
Net Income $134,791 (3,107)
Net Income Per Common Share $0.09 ($0.00)
Common Shares Outstanding 1,529,546 1,529,546
See Accompanying Notes To These Consolidated Financial Statements.
Consolidated Capital of North America, Inc.
Unaudited
Consolidated Cash Flow Statement
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
Cash Flows From Operating Activities:
Net Profit (Loss) $134,791 ($3,107)
Amortization And Depreciation 6,166 0
Equity Loss In Affiliate 0 19,606
Minority Interest Gain 147,050 52,217
(Loss) On Asset Sales 1,750 0
(Increase) In Accounts Receivable 0 (824)
(Increase) In Interest Receivable (6,540) 0
(Increase) Decrease In Inventory-Other Assets 0 2,999
(Increase) Decrease In Inventory-Land 284,687 34,803
Increase (Decrease) In Accounts Payable 28,428 (11,730)
Net Cash Flows From Operations 596,332 93,964
Cash Flows From Investing Activities:
Notes Receivable From Land Sales (605,750) (196,630)
Payments Received From Notes Receivable 190,000 0
Payments Received From Notes Receivable -
Related Parties 5,480 0
Advances Made To Related Parties (6,187) 0
Proceeds From Asset Sales 2,450 0
Net Cash Flows Provided By Investing: (414,007) (196,630)
Cash Flows From Financing Activities:
Proceeds From Borrowing 0 350,000
Proceeds From Joint Venture Partner 0 21,072
Payments To Related Party 0 (87,967)
Payments Of Debt (193,000) (124,000)
Advances From Related Parties 12,000 0
Distributions To Joint Venture Partners 0 (57,045)
Net Cash Flows Provided By Financing (181,000) 102,060
Net Increase (Decrease) In Cash 1,325 (606)
Cash At Beginning Of Period 6,494 1,676
Cash At End Of Period 7,819 1,070
Supplementary Disclosure Of Cash Flow Information:
Noncash Financing Activities: $0 $0
See Accompanying Notes To These Consolidated
Financial Statements.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. Unaudited Information. The information furnished herein was
taken from the books and records of the Company without audit.
The Company believes, however, that it has made all adjustments
necessary to reflect properly the results of operations for the
interim periods presented. The adjustments consist only of
normal reoccurring accruals. The results of operations for the
six months ended June 30, 1996, are not necessarily indicative of
the results to be expected for the year ended December 31, 1996.
2. Notes. Management has elected to omit substantially all
notes to the Company's financial statements. Reference is made
to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995, as this Report incorporates the notes to the
Company's year-end financial statements.
3. Termination of Development State Status. Management has
determined that the Company is no longer in the development stage
and has therefore not included the additional financial
information required by FASB-7.
4. Stock Split. All references to Common Stock outstanding have
been adjusted retroactively to reflect a 200-for-1 reverse stock
split effective January 15, 1991.
5. Basis Of Presentation. The Company was incorporated under
the laws of the State of Delaware on November 24, 1987, and
reincorporated as a Colorado corporation on March 17, 1992. The
Company's primary business is in the real estate and manufactured
home industries. The unaudited Consolidated Financial Statements
of the Company include the Company and its majority owned
subsidiary, Northcrest Joint Venture.
6. Equity Investment The Company formerly accounted for its
interest in investments for which it has less than a 50% interest
under the equity method. Under this method, the Company's
proportionate share of the equity investment's income or loss
either increased or decreased the Company's investment. As of
December 31, 1995, the Company discontinued using the equity
method because its share of the investee's losses reduced the
investment below zero.
7. Bear Star Limited Liability Company. During 1995, notes
receivable of the Company were assigned to Bear Star in
connection with the reorganization of that entity. This
reorganization resulted in the Company owning approximately 19%
of Bear Star (as compared to an indirect interest of 12% in 1994)
and acquiring a note receivable of $22,897 from Columbine. Bear
Star is organized to sell developed and undeveloped home sites.
The Company's original indirect interest in Bear Star was
acquired through advances of approximately $114,000. Bear Star
has substantial obligations, including notes payable of
$1,757,361 as of June 30, 1996. In addition, certain
improvements must be made to the property prior to the sale of
lots for modular homes. The Company has not guaranteed these
obligations, but the ultimate realization of its advances will be
dependent upon Bear Star's satisfaction of such obligations and
the ability to raise capital to make necessary improvements
to the property. The Company believes that financial commitments
from other members of Bear Star, as well as future sales of Bear
Star home sites to other sales companies will enable it to meet
such obligations.
8. Sale of Real Estate. In a transaction effective June 21,
1996, the Company's majority owned subsidiary, Northcrest, sold
the balance of its real estate inventory to an independent third
party. The property was sold for a price of $668,250, which was
reduced by an improvement credit of $50,000 given to the buyer,
prior buyer's deposits of $5,000 and miscellaneous closing
costs paid by the Company of $1,629. The remaining balance due
was $611,620, of which $5,870 was paid at closing and the balance
of $605,750 represented by a non-recourse promissory note in
favor of Northcrest. Principal is payable in equal monthly
installments of $10,000 commencing October 21, 1996, and
continuing until May 21, 1998. Thereafter the monthly payments
increase to $16,000 until the note is paid in full or June 21,
2000, when the remaining principal and accrued interest are
payable in full. All such monthly payments shall be applied
towards the outstanding principal amount of the promissory note.
Interest at the rate of 9 1/4% per annum shall be paid on the
maturity date. The promissory note is secured by a deed of trust
on the property in favor of Northcrest.
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The liquidity and capital resources of Consolidated Capital
of North America, Inc. ("the Company") improved from December
31, 1995 to June 30, 1996. Working capital increased from
$52,597 to $226,446, an increase of $173,849. This improvement
is attributable solely to the sale of real property held by the
Company for sale. Proceeds from the sale of that property were
used to retire a note payable in the amount of $193,000,
substantially reducing the Company's current liabilities at June
30, 1996. Such current liabilities were reduced from $259,679 to
$107,107, a decrease of $152,572. Current assets also increased
slightly, from $312,276 at December 31, 1995 to $333,553
at June 30, 1996.
Notwithstanding the improvement in financial condition, the
Company continues to require cash from outside sources to satisfy
its liabilities. Substantially all of the Company's assets
consist of notes receivable which cannot be readily converted
into cash. A promissory note in the principal amount of $605,750
received by the Company in connection with the sale of property
in June, 1996 is payable in monthly installments of $10,000
commencing October, 1996 and continuing until May, 1998, when the
monthly installments are increased to $16,000. At June 30, 1996,
$120,000 of this note was classified as current. However, the
Company does not anticipate receiving payments until October,
1996 at the earliest. The Company also has a note receivable
from a related party which is currently in arrears. Finally, a
portion of the amount due from the Company's Bear Star affiliate
is currently due, although the Company does not anticipate
payments will be received until such time as Bear Star is
successful in selling a portion of the property comprising that
entity. Accordingly, the Company will continue to require cash
from outside sources to pay its current and future expenses.
The Company will continue to require capital from outside
source until it can increase its asset base and attain
profitable operation on a consistent basis. Management
anticipates that while the Company's assets, including notes
receivable, will be sufficient to satisfy the Company's existing
and anticipated liabilities for the foreseeable future, the
Company will continue to require capital from outside sources
to continue as a going concern. In order to meet that objective,
management is continuing to explore mergers, acquisitions or
other reorganizations to expand operations.
Results of Operations
For the six month period ended June 30, 1996, the Company
realized gross revenues of $668,250 and net income of $134,791.
Revenues increased from $168,638 for the six months ended June
30, 1995 while net income was increased $137,898 from the net
loss of $3,107 for the six months ended June 30, 1995. Net
income for the three months ended June 30, 1996 of $147,297
represents an increase of $132,584 for the three months ended
June 30, 1995. All of the Company's revenues during 1996
are attributable to the sale of a portion of the Northcrest
property.
In an transaction effective June 21, 1996, the Company sold
the balance of its interest in Northcrest. The gross selling
price was $668,250. This was reduced by an improvement credit of
$50,000 given to the buyer, prior buyer's deposits of $5,000 and
miscellaneous closing costs paid by the Company of $1,629. The
remaining balance due was $611,620, of which $5,870 was paid at
closing and the balance of $605,750 represented by a non-recourse
Promissory Note ("Note") payable to Northcrest. Principal is
payable in equal monthly installments of $10,000 commencing
October 21, 1996, and continuing until May 21, 1998. Thereafter
the monthly payments increase to $16,000 until the note is paid
in full or June 21, 2000, when the remaining principal and
accrued interest are payable in full. All such monthly payments
shall be applied towards the outstanding principal amount of the
promissory note. Interest at the rate of 9 1/4% per annum shall
be paid on the maturity date. The Note is secured by a deed of
trust on that portion of the Northcrest development which was
transferred at closing, with partial release provisions as
payments are received on the Note.
As of the date of filing this Report, the Company is also
negotiating to sell its interest in Bear Star.
Gross profit on the sale of the real estate was $321,659.
That amount was offset by total expenses of $53,441 and other
expenses of $133,427 including the minority interest in
Northcrest of $147,050 for the six months ended June 30, 1996.
Operating expenses for the six months ended June 30, 1996 were
reduced from the comparable period ended June 30, 1995, despite
an increase in depreciation and amortization. Interest decreased
substantially, as the Company repaid notes payable associated
with the Northcrest property.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits: None
B. Reports on Form 8-K: None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
(Registrant)
Date: August 14, 1996
\s\ Raymond E. McElhaney
By: Raymond E. McElhaney
President/Treasurer,
Chief Executive Officer,
Financial Officer and
Chairman of the Board of Directors
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THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 6/30/96 FORM
10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
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<NAME> CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
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