<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 June 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
______________________________
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
_______________________________________________
(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 July 21, 1999.
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PART I -FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SOUTHSHORE CORPORATION
BALANCE SHEET (Unaudited)
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1999
<S> <C> <C>
CURRENT ASSETS
Cash 84,317 40,134
Other Receivable 0 153,442
Notes Receivable 0 0
Inventory 0 0
____________ ____________
Total Current Assets 84,317 193,576
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 1,427,656 210,821
CURRENT LIABILITIES
Notes Payable -Current 770,881 0
Notes Payable -Related Parties 76,800 0
Property Taxes Payable 644,963 0
Accrued Interest 234,100 0
Accounts Payable -Trade 27,223 2,498
Deferred Income 1,000 0
Accrued Payroll 173,716 15,667
Other Accrued Expenses 13,886 64,834
____________ ____________
Total Current Liabilities 1,942,571 82,998
Notes Payable
-net of current portion 0 0
Notes Payable -Related Parties
-net of current portion 0 0
____________ ____________
Total Liabilities 1,942,571 82,998
STOCKHOLDERS' 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) (4,252,363)
____________ ____________
Total Stockholders' Equity (514,915) 127,823
Total Liabilities and
Stockholders' Equity 1,427,656 210,821
</TABLE>
2
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THE SOUTHSHORE CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended June 30, Ended June 30,
1999 1998
<S> <C> <C>
Revenue
Sales -Admissions 0 179,713
Sales -Food, Merchandise 0 46,382
Sales -Other 0 2,515
Corporate Sponsorships 0 5,750
___________ ___________
Total Sales 0 234,360
Cost of Sales 0 5,703
___________ ___________
Gross Profit 0 228,657
Operating Expenses
Salaries 4,611 71,634
Payroll Taxes (474) 8,144
Operating Supplies 207 6,489
Chemicals 0 6,437
Repairs & Maintenance 0 11,400
Advertising 48 44,626
Outside Services 22,242 11,788
Utilities (592) 14,174
Insurance 903 10,102
Depreciation & Amort 0 140,217
Property Taxes (1,665) 24,270
Other 718 2,282
___________ ___________
Total Operating Exp 25,998 351,561
Excess of Expense Over
Revenue (Before Other
Income/Expense) (25,998) (122,904)
Other Income (1,598) 5,525
Interest Expense (Net) 4,488 (24,085)
Gain on Sale of Assets (831,436) 0
Property Sale Commissions/Fees 104,617 0
Demolition Expense 55,195 0
___________ ___________
Net Profit(Loss) 642,737 (141,464)
Net Profit (Loss) Per Share 0.25 (0.05)
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From March 31, through June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Additional Retained
Number of Common Paid-In Earnings
Date Shares Stock 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 3
Months Ended
June 30, 1999 642,737 642,737
Balance at
June 30, 1999 2,610,470 2,611 4,377,574 (4,252,362) 127,823
</TABLE>
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THE SOUTHSHORE CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ending June 30 Ending June 30
1999 1998
<S> <C> <C>
Cash flows from Operating Activities
Net Profit(Loss) 642,737 (141,464)
Adjustments to Reconcile Net(Loss)
to Net Cash (Used In) Operating Activities
Amortization and Depreciation 0 140,217
(Increase) in Accounts/Other Receivable (153,442) (14,109)
(Increase) in Inventory 0 (5,264)
Increase in Accounts Payable
and Accrued Expenses (1,011,892) 80,485
Other, net 0 30,429
__________ __________
Net Cash (Used In) Operating Activities (522,597) 90,293
Cash flows from Investing Activities
Deposits 0 (40)
Land, Property, Equipment 1,326,094 0
__________ __________
Net Cash (Used In) Investing Activities 1,326,094 (40)
Cash flows from Financing Activities
Increase(Decrease) Debt (847,681) (47,748)
Issuance of Stock, Net of Offering Costs 0 0
__________ __________
Net Cash Provided by Financing Activities (847,681) (47,748)
__________ __________
Increase(Decrease) in Cash (44,184) 42,505
Cash, Beginning of Period 84,317 1,841
Cash, End of Period 40,134 44,346
__________ __________
Income Taxes Paid 0 0
Interest Paid 238,588 2,119
</TABLE>
5
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THE SOUTHSHORE CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 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. Currently the
Company is engaged in removal of certain improvements from the property as
required by the purchase agreement, and for which $150,000 of the purchase
price was withheld pending completion. The Company estimates it will have the
removal completed in July 1999.
(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 footnotedisclosures
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 June 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 equipment. As of April 21, 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.
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(3) Net Profit and Loss Per Common Share
Net profit and loss per common share for the three month period ended
June 30, 1999 and 1998 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 primerate. 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 June 30, 1999,
there was no balance payable on this note and the bank line of credit has
expired.
(5) 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.
(6) 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.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF
OPERATIONS
Financial Condition
At June 30, 1999, working capital was $110,578 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 June 30, 1999, the Company's shareholders' equity was $127,823 an
increase of $642,738 over March 31, 1999, due entirely to the gain on sale of
the company's waterpark property.
Results of Operations -Three Months Ended June 30, 1999 Compared to Three
Months Ended June 30, 1998.
The Company did not have any revenues for the current three months ended
June 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 June 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 three months reflects legal and
auditing expenses associated with the sale of the waterpark property and
completion of the Company's year-end audit. (see Liquidity and Capital
Resources). 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 $160,000
relating to the sale.
Liquidity and Capital Resources
At June 30, 1999, the Company had $82,998 in current obligations,
primarily composed of accrued expenses associated with accounting, legal and
demolition expenses. The Company at June 30, 1998, had $ 40,134 in cash and
$150,000 due from Bedford Property Investors payable upon approval of
demolition and removal of the property improvements to the specifications of
Bedford Property Investors.
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.
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). Currently the Company is engaged in
removal of the improvements from the property as required by the purchase
agreement, and for which $150,000 of the purchase price was withheld pending
8
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completion. The Company at the date of this filing has completed the
demolition and removal and is awaiting the approval of Bedford and subsequent
release of monies held in escrow. 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<FN1>
3.2 Bylaws<FN1>
10.3 Incentive Stock Option Plan<FN1>
10.12 Indenture of Trust and 10% Secured Promissory Note<FN2>
10.29 Stock Option 61,250 shares -Kenneth M. Dalton<FN3>
10.31 Purchase - Bedford Property Investors<FN4>
27.1 Financial Data Schedule
___________________________
<FN1> Incorporated by reference to Form S-18 Registration Statement,
File No. 33-42730-D, filed September 11, 1991
<FN2> Incorporated by reference to Form 10-K for year ended March 31,
1993 filed July 16, 1993 File No. 0-19949
<FN3> Incorporated by reference to Form 8-K filed December 30, 1994,
File No. 0-19949
<FN4> 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 June 30, 1999.
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) August 5, 1999
(Name and Title) Kenneth M. Dalton, President
and Principal Executive Officer
BY(Signature) /s/ Eric L. Nelson
(Date) August 5, 1999
(Name and Title) Eric L. Nelson
Principal Accounting Officer
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<TABLE> <S> <C>
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<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> JUN-30-1999
<CASH> 40,134
<SECURITIES> 0
<RECEIVABLES> 153,442
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,576
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 210,821
<CURRENT-LIABILITIES> 82,998
<BONDS> 0
<COMMON> 2,610,470
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 210,821
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 25,998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,488
<INCOME-PRETAX> (25,998)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 831,436
<CHANGES> 0
<NET-INCOME> 642,737
<EPS-BASIC> .25
<EPS-DILUTED> .25
</TABLE>
