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 September 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 outstanding
Common Stock at November 1, 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
September December
30, 1996 31, 1995
ASSETS
Current Assets:
Cash And Cash Equivalents $11,577 $6,494
Notes Receivable & Accrued Interest 165,755 162,173
Notes Receivable & Accrued Interest -
Related Party 146,825 143,609
Total Current Assets 324,157 312,276
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 501,408 84,240
Equipment Held For Resale 21,009 25,209
Prepaid Expenses 0 6,166
Marketable Securities 37,500 37,500
Total 559,917 153,115
TOTAL ASSETS $884,074 $750,078
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Current Portion - Notes Payable $0 $193,000
Current Portion - Notes Payable
- - Related Party 22,700 11,700
Accounts Payable - Trade 38,837 28,631
Accrued Expenses 52,798 26,348
Total 114,335 259,679
Long-Term Portion Of Notes Payable 0 0
Total Liabilities 114,335 259,679
Minority Interest 277,478 124,172
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. 0 0
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 (339,967) (466,001)
TOTAL SHAREHOLDERS' EQUITY 492,261 366,227
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $884,074 $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
September 30, September 30,
1996 1995
Revenue:
Sale Of Real Estate $0 $0
Cost Of Real Estate Sold 0 0
Gross Profit 0 0
Depreciation And Amortization 0 0
General And Administrative 8,459 7,031
Personnel And Consulting 11,000 11,566
Taxes - Payroll & Property 0 0
Total Expenses 19,459 18,597
Operating Profit (Loss) (19,459) (18,597)
Other Income (Expense):
Minority Interest In Profit of
Joint Venture (6,257) 4,049
Equity (Loss) 0 (13,875)
(Loss) On Asset Sales 0 0
Interest Income 18,834 6,444
Interest (Expense) (1,875) (15,755)
Other 0 525
Total 10,702 (18,612)
Net Income ($8,757) ($37,209)
Earnings Per Common Share ($0.01) ($0.02)
Weighted Average 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
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
Revenue:
Sale Of Real Estate $668,250 $342,991
Cost Of Real Estate Sold 346,591 209,156
Gross Profit 321,659 133,835
Depreciation And Amortization 6,166 0
General And Administrative 26,763 32,812
Personnel And Consulting 31,500 40,747
Taxes - Payroll & Property 244 0
Total Expenses 64,673 73,559
Operating Profit (Loss) 256,986 60,276
Other Income (Expense):
Minority Interest In Profit of
Joint Venture (153,307) (48,168)
Equity (Loss) 0 (33,481)
(Loss) On Asset Sales (1,750) 0
Interest Income 34,207 13,859
Interest (Expense) (10,102) (36,960)
Other 0 4,158
Total (130,952) (100,592)
Net Income $126,034 ($40,316)
Earnings Per Common Share $0.08 ($0.03)
Weighted Average 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
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
Cash Flows From Operating Activities:
Net Profit (Loss) $126,034 ($40,316)
Amortization And Depreciation 6,166 0
Equity Loss In Affiliate 0 33,481
Minority Interest Gain 153,306 48,168
(Loss) On Asset Sales 1,750 0
(Increase) In Accounts Receivable 0 (824)
(Increase) In Interest Receivable (12,543) 0
Decrease In Inventory-Other Assets 0 3,000
Decrease In Inventory-Land 284,687 36,803
Increase In Accounts Payable & Accrued
Liabilities 36,656 398
Net Cash Flows From Operations 596,056 80,710
Cash Flows From Investing Activities:
Notes Receivable From Land Sales (605,750) (255,074)
Payments Received From Notes Receivable 190,000 72,000
Payments Received From Notes Receivable -
Related Parties 10,514 0
Advances Made To Related Parties (6,187) 0
Proceeds From Asset Sales 2,450 0
Net Cash Flows Provided By Investing: (408,973) (183,074)
Cash Flows From Financing Activities:
Proceeds From Borrowing 0 350,000
Proceeds From Investments 0 23,367
Payments To Related Party (1,000) (81,344)
Payments Of Debt (193,000) (132,200)
Minority Interest in Subsidiary 12,000 22,074
Distributions To Joint Venture Partners 0 (81,650)
Net Cash Flows Provided By Financing (182,000) 100,247
Net Increase (Decrease) In Cash 5,083 (2,117)
Cash At Beginning Of Period 6,494 1,676
Cash At End Of Period $11,577 ($441)
Supplementary Disclosure Of Cash Flow Information:
Noncash Financing Activities: $0 $0
Common Stock Issued for Preferred Shares: $0 $4,500
Cash Paid For Interest: $805 $36,960
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
nine months ended September 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 manufactured
homesites.
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
$1,046,434 as of September 30, 1996. In addition, certain
additional 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 financial
commitments from other members of Bear Star, as well as future
sales of Bear Star homesites 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 seller of $1,629. The remaining balance due of
$605,750 represented by a non-recourse promissory note in favor
of Northcrest. Principal is payable in equal monthly installment
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
principal and accrued is 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.
9. Subsequent Events. Effective October 3, 1996, Northcrest
discounted a portion of the note receivable described in Note 8
above. The Joint Venture accepted payment in the amount of
$172,000 in payment of that portion of the Note represented by
the $10,000 installments due and payable commencing October 21,
1996. The Company's portion of the proceeds were utilized to
reduce current liabilities, including trade payables and notes
payable to related parties. Remaining installments under the
Note are scheduled to commence in 1998.
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 September 30, 1996, although remained substantially
unchanged from the prior quarter ended June 30, 1996. Working
capital at September 30, 1996 was $209,822, compared to $52,597
at December 31, 1995 and $226,446 at June 30, 1996. The
improvement from fiscal year end is attributable solely to the
sale of real property held by the Company for sale. That
transaction was completed during the quarter ended June 30, 1996.
Since that date, the Company's working capital has decreased
only slightly, as a result of payment of general and
administrative expenses.
Management anticipates that existing liquidity and capital
resources are sufficient for the balance of the current fiscal
year and the foreseeable portion of fiscal 1997. The Company's
only immediate needs for working capital are general and
administrative expenses, including salaries and consulting, legal
and accounting fees incurred by the Company. Proceeds from the
payment of current and long-term notes receivable should be
sufficient to defray these cash requirements for the foreseeable
future. Development at the Bear Creek property, in which the
Company owns an interest through a limited liability company, is
not anticipated to require substantial capital in the foreseeable
future.
In an effort to enhance its liquidity, the Company is
currently exploring alternatives for sale of the Bear Creek
property. The assets of that entity consist of partially
developed real estate utilized as a manufactured home community.
The limited liability company had previously marketed lots on an
individual basis to manufactured home dealers located in and
around Colorado Springs in which the community is located. The
Company is currently negotiating to sell the entire project,
although as of the date of filing this Report, no definitive
agreement has been reached. It is anticipated that the Company
will continue these negotiations in an effort to maximize
proceeds of the sale.
On a long term basis, the Company will require additional
capital resources from an outside source until it can increase
its asset base and attain profitable operation on a consistent
basis. Management continues to exploration alternatives to meet
that objective. Management is currently considering additional
opportunities in the real estate industry, or a merger with, or
acquisition of, a privately held company engaged in a variety of
industries. The Company's ultimate objective is to obtain assets
and operations sufficient to qualify for listing in NASDAQ to
increase interest in the Company's stock.
Results of Operations
For the nine month period ended September 30, 1996, the
Company realized gross revenues of $668,250 and net income of
$126,034, or $.08 per share. The Company's revenues were
unchanged from the three months ended June 30, 1996, as no
additional sales were recorded during the current period. All of
the Company's revenues during 1996 are attributable to the sale
of real estate in which the Company held an interest. Since all
of the Northcrest property was sold earlier this year, any
remaining sales would come from sale of the Bear Creek property,
of which there is no assurance.
Net income for the nine months ended September 30, 1996
increased $166,350 or 413 % over the comparable period of 1995.
Such increase is attributable to greater revenues from the sale
of real estate during 1996. Overhead expenses, such as general
and administrative, depreciation and amortization, remained
generally constant for the first nine months of 1996, compared to
the comparable period in 1995.
Management is unable to predict with any degree of certainty
future operating results, pending identification and evaluation
of additional business opportunities. However, it is not
anticipated that the Company will generate substantial revenues,
profits or losses until the Company completes an additional
merger or acquisition.
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: November 06, 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 9/30/96 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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