<PAGE>
FORM 10-Q
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 September 30, 1999
------------------
[ ] 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
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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.)
c/o Kenneth M. Dalton, President
26 Tamarade Drive, Littleton, Colorado 80127
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(Address of principal executive offices)
(303) 978-1475
--------------------------------------------------
(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 October 18, 1999.
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PART I -FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SOUTHSHORE CORPORATION
BALANCE SHEET (Unaudited)
<TABLE>
<CAPTION>
March 31 Sept 30
1999 1999
CURRENT ASSETS
<S> <C> <C>
Cash 84,317 103,670
Other Receivable 0 0
Notes Receivable 0 0
Inventory 0 0
_________ __________
Total Current Assets 84,317 103,670
OTHER ASSETS
Land 435,173 0
Property and Equipment,
-net of accum depr. of
$3,638,049 and $0 Respect. 890,921 0
Deposits 17,245 17,245
Prepaids 0 0
Other Assets 0 0
Debt Offering Costs,
-net of accum amort 0 0
_________ __________
Total Assets 1,427,656 120,915
CURRENT LIABILITIES
Notes Payable -Current 770,881 0
Notes Payable -Related Parties 76,800 0
Property Taxes Payable 644,963 7,550
Accrued Interest 234,100 0
Accounts Payable -Trade 27,223 0
Deferred Income 1,000 0
Accrued Payroll 173,716 0
Other Accrued Expenses 13,886 0
____________ __________
Total Current Liabilities 1,942,571 7,550
Notes Payable
-net of current portion 0 0
Notes Payable -Related Parties
-net of current portion 0 0
_____________ ___________
Total Liabilities 1,942,571 7,550
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 (4,895,100) (4,266,820)
___________ _____________
Total Stockholders' Equity (514,915) 113,365
Total Liabilities and
Stockholders' Equity 1,427,656 120,915
</TABLE>
Page 1
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THE SOUTHSHORE CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Sept 30, Ended Sept 30,
1999 1998
Revenue
<S> <C> <C>
Sales -Admissions 0 597,904
Sales -Food, Merchandise 0 161,213
Sales -Other 0 1,680
Corporate Sponsorships 0 4,750
__________ ____________
Total Sales 0 765,547
Cost of Sales 0 18,581
__________ ____________
Gross Profit 0 745,966
Operating Expenses
Salaries 8,333 384,700
Payroll Taxes (485) 25,773
Operating Supplies 15 2,940
Chemicals 0 5,792
Repairs & Maintenance 0 6,998
Advertising 0 21,177
Outside Services (135) 19,134
Utilities 5 65,558
Insurance (62) 9,776
Depreciation & Amort 0 140,539
Property Taxes 7,550 24,374
Other 411 17,988
___________ ___________
Total Operating Exp 15,632 724,747
Excess of Revenue Over
Expense (Before Other
Income/Expense) (15,632) 22,219
Other Income 1,175 2,604
Interest Expense (Net) 0 (13,047)
____________ ___________
Net Profit(Loss) (14,457) 11,776
Net Profit (Loss) Per Share (0.01) 0.01
</TABLE>
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<PAGE>
THE SOUTHSHORE CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Sept 30, Ended Sept 30,
1999 1998
Revenue
<S> <C> <C>
Sales -Admissions 0 777,617
Sales -Food, Merchandise 0 207,595
Sales -Other 0 4,195
Corporate Sponsorships 0 10,500
__________ ____________
Total Sales 0 999,907
Cost of Sales 0 24,284
__________ ____________
Gross Profit 0 975,624
Operating Expenses
Salaries & Bonuses 12,944 456,324
Payroll Taxes (959) 33,916
Operating Supplies 222 9,428
Chemicals 0 12,229
Repairs & Maintenance 0 18,398
Advertising 486 5,803
Outside Services 22,107 30,922
Utilities (587) 79,732
Insurance 841 19,877
Depreciation & Amort 0 280,755
Property Taxes 5,885 48,643
Other 1,128 20,271
___________ ___________
Total Operating Exp 41,629 1,076,298
Excess of Revenue over Expense
(Before Other Income/Expense) (41,629) (100,674)
Other Income 2,773 8,129
Interest Expense (Net) (4,488) (37,133)
Amort. of Debt Offering 0 0
Gain/Loss on Sale of Assets 831,436 0
Property Sale Commission/Fees (104,617) 0
Demolision Expense (55,195) 0
Net Profit(Loss) 628,280 (129,678)
Gain (Loss) Per Share 0.24 (0.05)
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From March 31, through September 30, 1999
(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, 1999 2,610,470 2,611 4,377,574 (4,895,100) (514,915)
Net Profit Six
Months Ended
September 30,
1999 628,280 628,280
Balance at
June 30, 1999 2,610,470 2,611 4,377,574 (4,266,820) 113,365
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ending Sept 30 Ending Sept 30
1999 1998
<S> <C> <C>
Cash flows from Operating Activities
Net Profit(Loss) 628,280 (129,678)
Adjustments to Reconcile Net(Loss)
to Net Cash (Used In) Operating Activities
Amortization and Depreciation 0 280,755
(Increase) in Accounts/Other Receivable 0 (39,954)
(Increase) in Inventory 0 0
Increase in Accounts Payable
and Accrued Expenses (1,087,340) 391,955
Other, net 0 (43,804)
___________ _________
Net Cash (Used In) Operating Activities (459,060) 459,275
Cash flows from Investing Activities
Deposits 0 200
Land, Property, Equipment 1,326,094 (2,895)
_________ ___________
Net Cash (Used In) Investing Activities 1,326,094 (2,695)
Cash flows from Financing Activities
Increase(Decrease) Debt (847,681) (230,827)
Issuance of Stock, Net of Offering Costs 0 0
__________ __________
Net Cash Provided by Financing Activities (847,681) (230,827)
__________ __________
Increase(Decrease) in Cash 19,3522 25,752
Cash, Beginning of Period 84,317 1,841
Cash, End of Period 103,670 227,593
__________ __________
Income Taxes Paid 0 0
Interest Paid 4,488 6,069
</TABLE>
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THE SOUTHSHORE CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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
The Southshore Corporation ("Company") was incorporated under the
laws of Colorado on March 26, 1990 for the purpose of engaging in any
lawful business; however since 1992 through April 21, 1999 the Company
had been engaged in the operation of a water park located in the
Southeast Denver Metropolitan Area. The park property was sold on
April 21, 1999 for $1,972,680. The Company has completed the
removal of certain improvements from the property as required by the
purchase agreement. $150,000 of the purchase price which was held in
escrow pending completion of the removal has been released.
(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, 1999. The
results of operation for the period ended September 30, 1999 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
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equipment. As of September 30, 1999, the Company has no depreciable
assets.
(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
September 30, 1999 and 1998 has been computed based on the weighted
number of shares outstanding during the respective periods.
(4) 10% Secured Notes -$970,000
---------------------------
The Company used the proceeds of the sale of its water park property on
April 21, 1999 for $1,972,680 to retire the 10% secured notes for
$716,250 as per an agreement with the noteholders.
(5) Property Tax Lien
-----------------
First Union National Bank (New Jersey) held a property tax certificate
from Arapahoe County, Colorado in the amount of $769,850 for prior
delinquent property taxes and interest through April 21, 1999. This
certificate was convertible into a tax deed at the request of First
Union. On April 21, 1999, the Company used the proceeds of the sale of
its waterpark property to pay this obligation in full, as well as, all
other property tax obligations at that date.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
- -------------------
At September 30, 1999, working capital was $96,120 as compared to a
negative $1,858,254 at March 31, 1999. The principal reasons for the
increase in working capital was sale of the Company's waterpark property and
liquidation of its property. See "Liquidity and Capital Resources" below.
At September 30, 1999, the Company's shareholders' equity was $113,365
an increase of $628,280 over March 31, 1999, due entirely to the gain on
sale of the company's waterpark property.
Results of Operations -Three Months Ended September 30, 1999 Compared to
Three Months Ended September 30, 1998.
- ------------------------------------------------------------------------
The Company did not have any revenues for the current three months
ended September 30, 1999 as the Company's waterpark property was sold for
redevelopment and did not open for the summer in 1999.
Expenses for the current three months were minimal as compared to the
three months ended September 30, 1998 as the Company has ceased its
waterpark operation. The Company's President and Accounting Officer work on
a as-needed basis to complete the park demolition and to maintain current
corporate reporting. The statement of operations for the current three
months also reflect an estimated personal property tax bill due in 2000 for
tax year 1999 of $7550.
Results of Operations -Six Months Ended September 30, 1999 Compared to Six
Months Ended September 30, 1998.
- --------------------------------------------------------------------------
The Company did not have any revenues for the current six months ended
September 30, 1999 as the Company's waterpark property was sold for
redevelopment and did not open for the summer in 1999.
Expenses for the current six months were minimal as compared to the six
months ended September 30, 1998 as the Company has ceased its waterpark
operation. The Company's President and Accounting Officer work on a
as-needed basis to complete the park demolition and to maintain current
corporate reporting. Outside services for the current six months reflects
legal and auditing expenses associated with the sale of the waterpark
property and completion of the Company's year-end audit. The statement of
operations for the current three months also reflect a gain on the sale of
assets of $ 831,436 from the sale of its property. It also reflects
commissions, fees and demolition costs of approximately $160,000 relating
to the sale.
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Liquidity and Capital Resources
- -------------------------------
At September 30, 1999, the Company's only current obligation is $7,550
in estimated personal property tax bill from Arapahoe County, Colorado
payable in the year 2000. The Company anticipates no further expenses,
other than outside services of legal and accounting for corporate reporting
and legal counsel as to remaining public shell issues. The Company at
September 30, 1999, had $103,670 in cash and $17,250 due from Arapahoe
County, Colorado for a public improvement deposit. The Company anticipates
that it will recover the deposit at a undetermined future time.
The Company's ability to continue as a going concern depends the successful
merger of the corporation with another entity. Management is pursuing a
merger opportunity which it hopes would bring value to the Company's
shareholders, though there is no guarantee that this can achieved.
Therefore, there is substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
page 9
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PART II -OTHER INFORMATION
ITEM 5 OTHER INFORMATION
- ----------------------------
On April 21, 1999, the Company closed on its sale of its waterpark
property to Bedford Property Investors, based in California, for
$1,972,680 (less brokerage commissions of $98,634). The Company also has
received an additional approximate $180,000 for improvements and other
assets it was able to resell.
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)
10.29 Stock Option 61,250 shares -Kenneth M. Dalton(3)
10.31 Purchase - Bedford Property Investors(4)
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 Form 8-K filed December 30, 1994,
File No. 0-19949
(4) Incorporated by reference to Proxy Statement filed March 24,
1999, File No. 0-19949
(b) No reports on Form 8-K during the quarter ended September 30, 1999.
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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
BY(Signature) /s/ Kenneth M. Dalton
(Date) October 18, 1999
(Name and Title) Kenneth M. Dalton, President
and Principal Executive Officer
BY(Signature) /s/ Eric L. Nelson
(Date) October 18, 1999
(Name and Title) Eric L. Nelson
Principal Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the balance
sheets and statements of operations found on pages 2 and 3 of the
Company's Form 10-Q for the year to date, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 103,670
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 103,670
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 120,915
<CURRENT-LIABILITIES> 7,550
<BONDS> 0
<COMMON> 2,610,470
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 120,915
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 15,632
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14,457)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,457)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
