<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission File Number 0-19949
-------
THE SOUTHSHORE CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1153522
----------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10750 East Briarwood Avenue, Englewood, Colorado 80112
---------------------------------------------------------
(Address of principal executive offices)
(303) 649-9875
--------------------------------------------------
(Registrant's telephone number, including area code)
________________________________________________________________
(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_X_ 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 last practicable date.
The registrant had 2,610,470 shares of its $.001 par value common stock
outstanding as of December 31, 1997.
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PART I -FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
THE SOUTHSHORE CORPORATION
BALANCE SHEET (Unaudited)
<TABLE>
<CAPTION>
March 31 Dec 31
1997 1997
CURRENT ASSETS
<S> <C> <C>
Cash 3,035 0
Acounts Receivable 2,815 0
Notes Receivable 0 0
Inventory 0 3,767
_________ _________
Total Current Assets 5,850 3,767
OTHER ASSETS
Land 435,173 435,173
Property and Equipment,
-net of accum depr. of
$2,520,572 and $2,940,057 Respect. 1,975,101 1,559,933
Deposits 17,245 17,485
Prepaids 6,223 16,763
Debt Offering Costs,
-net of accum amort 8,347 0
__________ __________
Total Assets 2,447,939 2,033,021
CURRENT LIABILITIES
Bank Overdraft - 153
Notes Payable -Current 1,432,071 1,060,769
Notes Payable -Related Parties 97,400 97,400
Payroll Taxes Payable 4,868 5,179
Property Taxes Payable 483,651 542,284
Accrued Interest 89,390 154,882
Accounts Payable -Trade 30,276 7,711
Deferred Income 39,156 16,626
Accrued Payroll 0 0
Other Accrued Expenses 2,360 0
__________ _________
Total Current Liabilities 2,179,172 1,885,003
Notes Payable
-net of current portion 65,377 42,073
Notes Payable -Related Parties
-net of current portion 0 120,699
__________ __________
Total Liabilities 2,244,548 2,047,775
STCOCKHOLDERS' EQUITY
Preferred Stock, $.01 Par Value
25,000,000 Shares Authorized
None Issued and Outstanding
Common Stock, $.001 Par Value
100,000,000 Shares Authorized;
2,610,470 issued and outstanding
respectively 2,611 2,611
Additional Paid-In Capital 4,377,574 4,377,574
Retained Earnings (4,176,794) (4,394,839)
__________ __________
Total Stockholders' Equity 203,391 (14,654)
Total Liabilities and
Stockholders' Equity 2,447,939 2,033,021
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Dec 31, Ended Dec 31,
1997 1996
Revenue
<S> <C> <C>
Sales -Admissions 1,973 208
Sales -Food, Merchandise 0 216
Sales -Other 0 388
Corporate Sponsorships 0 0
________ ________
Total Sales 1,973 812
Cost of Sales 0 285
________ ________
Gross Profit 1,973 527
Operating Expenses
Salaries 18,804 20,294
Payroll Taxes 1,514 759
Operating Supplies 698 1,582
Chemicals 0 0
Repairs & Maintenance 627 (1,120)
Advertising 2,346 235
Outside Services 2,961 (9,527)
Utilities 4,947 3,488
Insurance 10,156 9,724
Depreciation & Amort 139,847 140,035
Property Taxes 13,151 30,154
Other 2,912 2,545
_________ ________
Total Operating Exp 197,964 198,168
Excess of Expense Over
Revenue (Before Other
Income/Expense) (195,991) (197,641)
Other Income 0 304
Extraordinary Loss (60,966)
Interest Expense (Net) (46,456) (45,008)
Amort. of Debt Offering (1,462) (5,263)
_________ ________
Net Profit(Loss) (243,909) (308,574)
Net Profit (Loss) Per Share (0.09) (0.12)
</TABLE>
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<PAGE>
THE SOUTHSHORE CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Dec 31, Ended Dec 31,
1997 1996
Revenue
<S> <C> <C>
Sales -Admissions 767,508 820,968
Sales -Food, Merchandise 203,882 221,950
Sales -Other 4,730 12,940
Corporate Sponsorships 17,750 25,050
__________ __________
Total Sales 993,870 1,080,908
Cost of Sales 22,889 23,714
__________ _________
Gross Profit 970,982 1,057,194
Operating Expenses
Salaries 217,979 241,447
Payroll Taxes 28,932 37,489
Operating Supplies 9,798 16,415
Chemicals 10,784 13,106
Repairs & Maintenance 16,148 20,269
Advertising 120,999 91,198
Outside Services 21,463 10,857
Utilities 90,008 90,981
Insurance 30,201 28,675
Depreciation & Amort 419,486 419,791
Property Taxes 69,658 90,461
Other 6,066 15,339
__________ __________
Total Operating Exp 1,041,523 1,076,027
Excess of Revenue over Expense
(Before Other Income/Expense) (70,542) (18,833)
Other Income 5,668 3,869
Extraordinary loss 0 (60,966)
Interest Expense (Net) (143,329) (142,385)
Amort. of Debt Offering (9,809) (15,788)
_________ __________
Net Profit(Loss) (218,011) (234,102)
Gain (Loss) Per Share (0.09) (0.09)
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From March 31, through Dec 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Retained
Number of Common Additional Earnings
Date Shares Stock Paid-In Capital (Deficit) Total
<S> <C> <C> <C> <C> <C>
Balance at March
31, 1997 2,610,470 2,611 4,377,574 (4,176,828) 203,357
Net Loss 9 Months
Ended December 31,
1997 (218,011) (218,011)
Balance at Dec 31,
1997 2,610,470 2,611 4,377,574 (4,394,839) (14,654)
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ending Dec 31 Ending Dec 31
1997 1996
Cash flows from Operating Activities
<S> <C> <C>
Net Profit(Loss) (218,011) (234,102)
Adjustments to Reconcile Net(Loss)
to Net Cash (Used In) Operating
Activities
Amortization and Depreciation 429,295 435,579
Decrease in Accounts Receivable 2,815 (1,374)
(Increase) in Inventory (3,767) 0
Increase in Accounts Payable
and Accrued Expenses 99,511 (5,708)
Other, net (33,103) (29,654)
_________ ________
Net Cash (Used In) Operating
Activities 276,738 164,741
Cash flows from Investing Activities
Deposits (240) 31,300
Land, Property, Equipment (5,779) (26,340)
_______ _________
Net Cash (Used In) Investing
Activities (6,019) 4,961
Cash flows from Financing Activities
Increase(Decrease) Debt (273,908) (200,870)
Issuance of Stock, Net of Offering Costs 0 0
_________ ________
Net Cash Provided by Financing Activities (273,908) (200,870)
_________ ________
Increase(Decrease) in Cash (3,188) (31,168)
Cash, Beginning of Period 3,035 1,625
Cash, End of Period (153) (29,543)
________ ________
Income Taxes Paid 0 0
Interest Paid 72,175 109,299
</TABLE>
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THE SOUTHSHORE CORPORATION
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
(1) Summary of Accounting Policies
-------------------------------
A summary of significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows:
(a) General
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The Southshore Corporation ("Company") was incorporated under the laws
of Colorado on March 26, 1990 for the purpose of engaging in any lawful
business. The company operates a waterpark in southeast Denver metro
area.
(b) Unaudited Financial Statements
------------------------------
The accompanying financial statements have been prepared by the
registrant without audit and are the responsibility of the Company's
management. Management is of the opinion that all adjustments that
should be made to the accompanying financial statements in order for
them to present fairly the financial position, results of operations
and cash flows for the periods presented have been made.
Management has elected to omit substantially all the footnote
disclosures required by generally accepted accounting principles.
The accompanying financial statements should be read in conjunction with
the Company's audited financial statements as of March 31, 1997. The
results of operation for the period ended December 31, 1997 are not
indicative of the operating results for the full year.
(c) Property and Equipment
----------------------
Property and equipment are stated at cost. The original park water
features are depreciated using a straight line method based on a 7 year
estimated useful life. A 20 year estimated useful life on a straight
line basis is utilized on the buildings. Park improvements since 1994
have been depreciated using a modified accelerated cost recovery method
over 31.5 years for buildings and 7 years for equipment.
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(2) Liquidity and Capital Resources
-------------------------------
See Management's Discussion for disclosure related to liquidity and
capital and the related contingencies and commitments.
(3) Net Profit and Loss Per Common Share
------------------------------------
Net profit and loss per common share for the three month period ended
December 31, 1997 and 1996 has been computed based on the weighted
number of shares outstanding during the respective periods.
(4) Bank Line of Credit -Note to President
--------------------------------------
On April 25, 1994, the Company issued a five year promissory note in the
amount of $400,000 to its President. The note was issued pursuant to an
arrangement whereby the President became personally obligated and
personally secured a $400,000 bank line of credit, the proceeds of which
were made available to the Company. The Company is required to pay
interest on the line at the bank's prime rate. The Company's President
has the right to purchase common stock at $2.25 per share in an amount
equal to what he is at risk on the bank line of credit. On default
of the note he may convert the outstanding balance to common stock at
$1.00 per share. At December 31, 1997, the balance was $120,699 as
compared to $356,000 on March 31, 1997. The reduction was funded from
operations. The $120,699 due on December 31, 1997 was recast as
long term since the note is not due until April 25, 1999.
(5) 10% Secured Notes -$970,000
---------------------------
The Company was required to pay down the principal balance of its
outstanding 10% Secured Notes by 25% on September 30, 1994, June 30,
1995, June 30, 1996 and June 30, 1997 respectively. The Company failed
to make most of these payments, however it has obtained deferrals from
holders of $735,000 in these notes as to payments of principal through
September 30, 1997. The Company failed to make these payments due
September 30, 1997. Additionally, the trustee under the Indenture
relating to these notes resigned as trustee effective November 4, 1994.
(6) Property Tax Lien
-----------------
First Union National Bank (New Jersey) holds a property tax certificate
from Arapahoe County, Colorado in the amount of $444,371 plus interest
of $130,492, at January 31, 1998, on the Company's 16-acre water park
property. The tax certificate draws interest at 13% per annum and may
be converted into a tax deed at the request of First Union. The
Company would have the right to redeem the certificate for a period of
approximately four months from the time First Union requests a deed by
paying the full amount of the property tax certificate plus accrued
interest (a total of $574,864 at Janaury 31, 1997). As of the date of
this report First Union had not requested Arapahoe County to issue a
tax deed.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Financial Condition
At December 31, 1997, working capital was a negative $1,881,236 as
compared to a negative $2,173,322 at March 31, 1997. The principal reasons
for the working capital shortfalls are unpaid and accrued property taxes of
$542,284, accrued interest on property taxes, trade payables, and $955,000 in
notes currently in default. See "Liquidity and Capital Resources" below.
At December 31, 1997, the Company's shareholders' equity was a negative
$14,654, down from $203,391 at March 31, 1997, due entirely from operating
losses for fiscal 1998.
0Results of Operations -Three Months Ended December 31, 1997 Compared to Three
Months Ended December 31, 1996.
Revenues for the three months were minimal for both comparison periods
as any revenues recorded are residule revenues received from the previous
summer.
Total off-season operating expenses were vitually the same for both
comparison periods. Any difference per expense category is due generally to
bookkeeping timing differences and adjustments made in a period. The
exceptions are salaries and payroll taxes were down 3.5% in 1997 over 1996.
Property taxes reflect a 56% decrease due to mill-levy reductions for tax
year 1997 taken in the three months ending December 31, 1997. Depreciation
and amortization remained basically the same for the two periods. The
interest expense for the period is consistent with the debt.
Results of Operations -Nine Months Ended December 31, 1997 Compared to Nine
Months Ended December 31, 1996.
Revenues for the current nine months were down 8% compared to the same
period in 1996. This decrease is accounted for almost entirely by the
monsoon rains that hit the Denver area during the prime attendance periods of
mid-July thru mid-August.
Total operating expenses were down over 3% as compared to the comparable
period in 1996. Salaries were down 10%. Payroll taxes decreased 23% due to
the salary reductions and an adjustment made due to credits issued by our
workers compensation carrier. Advertising expenditures were up over 32% as
management attempts to increase exposure of the park. The cost of operating
supplies, repair and maintenance, chemicals and utilities was down 10% as the
company continues to refine its need for these products and services. The
increase in outside services expense is due to past legal fees relieved in
the nine months ending December 31, 1996. Property taxes show a $20,803
reduction for tax year 1997 over tax year 1996 due to mill-levy reductions by
Arapahoe County, Colorado. Depreciation and amortization remained basically
the same for the two periods. The interest expense for the period is
consistent with the debt.
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<PAGE>
Management expects the Company to experience an additional approximate
$275,000 in operating expenses (including depreciation and amortization) and
interest expenses during the remainder of the fiscal year ended March 31,
1998. A non-cash item, $140,000 in depreciation and amortization constitutes
approximately 51% of these operating expenses and interest expenses. Property
taxes of $25,000 and interest expense of $50,000 constitute approximately
9% and 18% of such anticipated expenses.
Liquidity and Capital Resources
At December 31, 1997, the Company had $1,884,850 in current obligations,
primarily composed of notes payables and accrued and past due property taxes.
Notes payable of $220,000 due June 30, 1997 and $735,000 due September 30,
1997 are currently in default. These notes are secured by a first mortgage
on portions of the waterpark property. The Company's waterpark property is
subject to a property tax lien that was recently issued to a banking
institution in New Jersey. For details see Note 6 to the financial
statements. The Company could be in a position in the near future where it
would have to pay the full amount of this lien or loose title to the property.
The Company's current position improved by $294,169 through a combination
of paying down the note to the president by $235,301 and reclassifying
the remainder of this debt, $120,699, as long term debt. See Note 4 to
financial statements.
The Company has appealed its property tax evaluations with Arapahoe
County, Colorado and the State of Colorado with only moderate success. The
Company will continue exploring possibilities in hopes of reducing its annual
property tax assessment, however there is no assurance that it will be
successful.
Management is currently considering alternatives to relieve its debt
obligations. These include a sale/leaseback of the property, liquidation of
the company, a merger or sale of the waterpark property.
The Company anticipates that it will not have to seek additional outside
capital for off-season expenses and start up costs for the 1998 summer season.
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PART II -OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------
(a) Exhibits
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
10.3 Incentive Stock Option Plan(1)
10.12 Indenture of Trust and 10% Secured Promissory Note(2)
10.25 Promissory Note -Vancol Industries, Inc.(3)
10.26 Convertible Promissory Note -Kenneth M. Dalton(4)
10.27 Stock Option -Kenneth M. Dalton(4)
10.28 Convertible Promissory Note $104,500 -Kenneth M. Dalton(5)
10.29 Stock Option 61,250 shares -Kenneth M. Dalton(5)
27.1 Financial Data Schedule
___________________________
(1) Incorporated by reference to Form S-18 Registration Statement,
File No. 33-42730-D, filed September 11, 1991
(2) Incorporated by reference to Form 10-K for year ended March 31,
1993 filed July 16, 1993 File No. 0-19949
(3) Incorporated by reference to Amendment No. 1 to the Form S-1,
File No. 33-73774 filed February 9, 1994
(4) Incorporated by reference to Form 8-K filed May 5, 1994, File No.
0-19949
(5) Incorporated by reference to Form 8-K filed December 30, 1994,
File No. 0-19949
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<PAGE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended June 30,
1997.
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.
(Registrant) THE SOUTHSHORE CORPORATION
(Date) March 10, 1998
By:(Signature) /s/ Kenneth M. Dalton
(Name and Title) Kenneth M. Dalton, President
and Principal Executive Officer
(Date) March 10, 1998
By:(Signature) /s/ Eric L. Nelson
(name and Title) Eric L. Nelson
Principal Accounting Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,767
<CURRENT-ASSETS> 3,767
<PP&E> 4,499,990
<DEPRECIATION> 2,940,057
<TOTAL-ASSETS> 2,033,021
<CURRENT-LIABILITIES> 1,885,003
<BONDS> 0
0
0
<COMMON> 2,610,470
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,033,021
<SALES> 1,973
<TOTAL-REVENUES> 1,973
<CGS> 0
<TOTAL-COSTS> 197,964
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,456
<INCOME-PRETAX> (243,909)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (243,909)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
