U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 10-QSB
(Mark One)
___ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended: March 31, 1996
___ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from _______ to _______.
Commission file number: 0-19154.
AMERICAN ASSET MANAGEMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2902677
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Morristown Road, Suite 108, Bernardsville, New Jersey 07924
(Address of principal executive offices)
Issuer's telephone number, including area code: (908) 766-1701
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past
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___ NO_X_.
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As
of August 1, 1997 there were 936,119 shares outstanding of the
issuer's no par value common stock.
Transitional Small Business Disclosure Format (check one):
YES___ NO_X_
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
_________________________________________________________________
March 31, December 31,
___1996___ ____1995____
_____________ASSETS________________
Cash & cash equivalents $ 29,709 $ 274,354
Mortgage loans receivable - 658,426
Notes receivable 34,830 34,254
Prepaid and other current assets 70,430 55,926
Total current assets 134,969 1,022,960
Land and development costs 1,503,015 1,490,386
Furniture & equipment, at cost,
less accumulated depreciation 22,864 23,384
Other assets 4,447 17,225
Total assets 1,665,295 2,553,955
__LIABILITIES AND STOCKHOLDERS' EQUITY__
Current liabilities:
Accounts payable & accrued expenses $ 266,547 $ 375,733
Liability for land development 160,417 160,417
Loans payable 156,616 277,080
Lot deposits 424,000 358,000
Warehouse loans payable - 639,750
Mortgages payable 228,248 228,248
Total current liabilities 1,235,828 2,039,228
Stockholders' equity:
Common stock, no par value;
10,000,000 shares authorized;
936,119 shares issued and
outstanding 2,434,325 2,434,325
Additional paid-in capital 231,207 231,207
Accumulated deficit (2,236,065) (2,150,805)
Total stockholders' equity 429,467 514,727
Total liabilities and
stockholders' equity 1,665,295 2,553,955
See accompanying Notes to Consolidated Financial Statements.
<PAGE> -2-
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
_________________________________________________________________
For the Three Months
______Ended March 31,______
____1996____ ____1995____
Revenues:
Mortgage origination fees $ 49,038 $ 49,146
Application fees 5,325 19,325
Mortgage interest income 10,932 -
Total revenues 65,295 68,471
Selling, general and
administrative expenses:
Salaries and benefits 85,052 244,423
Commissions and related expenses 9,258 11,503
Other expenses 56,822 101,539
Total selling, general and
administrative expenses 151,132 357,465
Income/(loss) from operations (85,837) (288,994)
Other income 577 1,559
Income before provisions for
state income taxes (85,260) (287,435)
Provision for state income taxes - -
Net income/(loss) $ (85,260) $ (287,435)
Net income/(loss) per share $ (0.09) $ (0.31)
Weighted average number of shares
of common stock outstanding 936,119 916,119
See accompanying Notes to Consolidated Financial Statements.
<PAGE> -3-
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
_________________________________________________________________
For the Three Months
____Ended March 31,____
____1996___ ____1995___
Cash flows from operating activities:
Net loss $ (85,260) $ (287,435)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 3,459 6,018
Changes in assets & liabilities:
Increase(decrease) in:
Notes receivable (576) (695)
Mortgage loans receivable 658,426 -
Fees and interest receivable - (11,264)
Prepaid & other assets (1,726) (639)
Increase(Decrease) in:
Accounts payable & accrued expenses (114,822) 61,909
Commissions payable 4,346 9,519
Deferred income 1,290 36,574
Warehouse line payable (639,750) -
Net cash (used in) provided by
operating activities (174,613) (186,013)
Cash flows from investing activities:
Lot deposits 66,000 -
Increase in land & development costs (12,629) -
Purchase of fixed assets (2,939) (8,300)
Net cash (used in)provided by
investing activities 50,432 (8,300)
Cash flows from financing activities:
Purchase of common stock - -
Loans payable (120,464) -
Net cash (used in)provided by
financing activities (120,464) -
Net increase/(decrease) in cash (244,645) (194,313)
Cash at beginning of period 274,354 212,239
Cash at end of period $ 29,709 $ 17,926
See accompanying Notes to Consolidated Financial Statements.
<PAGE> -4-
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
_________________________________________________________________
1. BACKGROUND AND BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements of
American Asset Management Corporation and subsidiaries (the
"Company") are unaudited. In the opinion of management, all
adjustments and intercompany eliminations necessary for a fair
presentation of the results of operations have been made and were
of a normal recurring nature. The consolidated financial
statements of the Company include the operations of both
wholly-owned subsidiaries, Capital Financial Corp. and American
Asset Development Corporation. The Company's operations consist
of specialized and mortgage banking services and real estate
development. These interim consolidated financial statements
should be read in conjunction with the consolidated financial
statements and related notes thereto contained in the Company's
1995 Annual Report on Form 10-KSB. The results of the three
months ended March 31, 1996 are not necessarily indicative of the
results of the full year.
2. REVENUE AND EXPENSE RECOGNITION
Application fees and commitment fees are recorded when
received and other fee income is recorded when loans close.
Expenses are recognized as they are incurred.
3. NET INCOME/(LOSS) PER COMMON SHARE
Net income/(loss) per common share is based on the weighted
average number of shares of Common Stock outstanding. No effect
has been given to shares issuable upon exercise of outstanding
warrants as the effect would be antidilutive.
4. RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform
with the current year's presentation.
-5-
<PAGE>
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF PLAN OF OPERATION
_________________________________________________________________
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 Compared to the Three Months
Ended March 31, 1995.
Revenues for the three months ended March 31, 1996 were
$65,295 compared to $68,471 for the three months ended March 31,
1995, a decrease of $3,176 or 4.6%. The decrease was
attributable to decreased application fees of Capital Financial
Corp. ("Capital"), the Company's mortgage banking subsidiary.
During September 1995 the Company closed, and sold to a
non-affiliated entity, its two branch offices and thereby
eliminating the majority of its sales force, which caused the
Company to experience a substantial reduction in the origination
of new applications received and in process during the three
months ended March 31, 1996. Capital closed 13 residential
mortgage loans in the principal amount of approximately
$2,451,500 in the three months ended March 31, 1996 compared to
14 loans closed in the principal amount of approximately
$2,400,000 in the three months ended March 31, 1995, decreases of
7.1% in number of loans. At March 31, 1996, the Company had
approximately 28 residential mortgage applications in process in
the principal amount of approximately $4,500,000 compared to 69
residential mortgage applications in process in the principal
amount of approximately $14,800,000, at March 31, 1995, decreases
of 59.4% and 69.6% respectively.
Total selling, general and administrative expenses ("SG&A")
for the three months ended March 31, 1996 were $151,132, a
decrease of $206,333 or 57.5% from $357,465 in the comparable
1995 period due to a reduction in Capital's employee
compensation and other expenses as a result of Capital's
reduction in the number of its mortgage loan originators and
other employees.
As a result of the foregoing, the Company's net loss for the
three months ended March 31, 1996 was $85,260 or $0.09 per share,
compared to net loss of $287,435 or $0.31 per share for the
comparable 1995 period.
-6-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position has remained substantially
unchanged during the period ended March 31, 1996 versus the cash
position as of March 31, 1995. This is primarily due to proceeds
of partial payments received upon execution of contracts of sale
of building lots and revenues generated by its mortgage banking
operations, in addition to the deferment of certain executive
officers compensation and all directors fees in order to obtain
and preserve cash.
Loans in process have increased from 22 loans with a
principal amount of approximately $4,567,547 as of December 31,
1995 to 28 loans aggregating approximately $4,569,997 at March
29, 1996 increases of 27% in number and unchanged in dollar
amount. However, since the Company estimates that 85% of its
loans in process will close approximately 90 days from date of
application, the Company will continue to incur losses until such
time, if ever, that future revenues are sufficient to offset
operating costs.
In October 1993, the Company received final subdivision
approval by municipal authorities on the Company's real estate
development in Hunterdon County, New Jersey, known as Murray Hill
Estates. As a condition of receiving final approval and prior to
completing the sale of any lots, the Company will be required to
complete certain improvements to the property or post
Performance bonds in lieu thereof. In August 1994, the Company
received a commitment from a commercial bank for two lines of
credit aggregating $700,000, consisting of a $250,000 site
improvement loan and a $450,000 revolving line of credit to
finance construction of a model home and up to two residences in
the subdivision. The site improvement loan which closed in
November 1994, is secured by a first mortgage on the development
and collateralized by personal guarantees of the Company's
President and Executive Vice President. The interest rate on
the site improvement loan is the bank's prime interest rate plus
1% and is payable monthly. The loan expires on November 30,
1996.
At June 30, 1996, the Company utilized $228,248 of the
$250,000 site improvement loan. At June 30, 1996 the interest
rate on the loan was 10.5%.
The Construction line of credit may be used to construct a
model home on the development and up to two residences upon
receipt of contracts of sale. Construction financing cannot
exceed $150,000 for each residence and no more than three
construction loans can be outstanding at any one time under the
revolving line of credit. As of June 30, 1996 the company had
not utilized the construction line of credit and has no
intentions of doing so in the future.
-7-
<PAGE>
The Company plans on completing the balance of the required
improvements to the property when it has the funds to do so and
then aggressively seek to sell some, if not all of the remaining
unsold lots to pay off debt and restore working capital to the
Company. There can be no assurance the Company will be
successful in this endeavor.
In May 1995, the Company received a $5,000,000 warehouse
line of credit from a mortgage warehouse lender which enables the
Company to borrow funds secured by residential mortgage loans
which will be temporarily accumulated or warehoused, and then
sold.
On August 4, 1995 the Company closed on a $100,000 line of
credit secured by a second mortgage on land the Company owns in
Hunterdon County, New Jersey. The line of credit was also
secured by the personal guarantee of the Company's President.
The term of the loan was for six months at 10% interest. In
January 1996, the Company issued to the lenders an aggregate of
20,000 shares of Common Stock, with registration rights, as an
inducement to secure the credit line which the Company used as
additional working capital. The loan was repaid in full in
January 1996.
In January 1996, the Company entered into a contract to sell
to a real estate development corporation 5 building lots which
range in size from 3 to 5 1/2 acres for a total purchase price of
$487,500. The Company received a $250,000 nonrefundable deposit,
in December 1995, which entitles the purchaser to receive deeds
to two building lots and the deed to a third lot once the balance
of $42,500 is paid to the Company and when the Company is legally
able to transfer title to the lots.
In March 1996, the Company hired a Senior Vice
President/Sales Manager with 11 years of mortgage banking
experience to expand its commissioned sales personnel and to
assist management in expanding the Company's relationships with
sources of additional mortgage loan applications.
The Company requires an immediate infusion of capital in
order to meet its obligations and to continue its operations and
successfully implement its operational plans. The Company is
seeking additional capital through among other means, an infusion
of additional noncollateralized loans, the sale of additional
equity in the Company and issuance of debt collateralized by the
real estate project in Hunterdon County, New Jersey. However,
there can be no assurance that the Company will be able to obtain
additional capital on terms acceptable to the Company, if at all.
-8-
<PAGE>
In the event the Company's plans change, its assumptions
change or prove to be inaccurate due to unanticipated expenses,
delays, problems or otherwise, or if the Company is unsuccessful
in raising additional working capital, the Company could be
required to cease its mortgage banking operations as presently
conducted.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule (For SEC use only)
Changes in Registrant's Certifying Accountant.
On March 4, 1996, the Registrant and its principal
independent auditor, Coopers & Lybrand, LLP mutually agreed to
cease their auditor-client relationship. Neither of Coopers &
Lybrands reports on the financial statements of the Registrant
for the years ended December 31, 1993 or December 31, 1994
contained an adverse opinion or disclaimer of opinion, nor was
modified as to uncertainty, audit scope or accounting principles.
The decision to change accountants was approved by the
Registrant's Board of Directors. During the year ended December
31, 1993 and December 31, 1994 and during the period from January
1, 1995 through March 4, 1996, there were no disagreements with
Coopers & Lybrand, LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure or any reportable event.
On April 15, 1996 the Registrant engaged R. D. Hunter &
Company, LLP as its principal independent accountant who will
report on the financial statements of the Registrant for the year
ending December 31, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant cause this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN ASSET MANAGEMENT CORPORATION
(Registrant)
Date: August 1, 1997 By:_s/Richard G. Gagliardi____________
Richard G. Gagliardi
Chairman, President and Chief
Executive Officer (Principal
Executive and Financial Officer)
-9-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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<RECEIVABLES> 34,830
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 134,969
<PP&E> 70,430
<DEPRECIATION> 3,459
<TOTAL-ASSETS> 1,665,295
<CURRENT-LIABILITIES> 1,235,828
<BONDS> 0
0
0
<COMMON> 2,434,325
<OTHER-SE> 231,207
<TOTAL-LIABILITY-AND-EQUITY> 1,665,295
<SALES> 65,295
<TOTAL-REVENUES> 65,295
<CGS> 0
<TOTAL-COSTS> 94,310
<OTHER-EXPENSES> 56,822
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (85,260)
<INCOME-TAX> 0
<INCOME-CONTINUING> (85,260)
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<NET-INCOME> (85,260)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
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