SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB-A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________to___________.
Commission File Number 000-18887
COLONIAL TRUST COMPANY
----------------------
(Exact name of registrant as specified in its charter)
Arizona 75-2294862
------- ----------
(State of Incorporation) (IRS Employer Identification
Number)
5336 North 19th Avenue
Phoenix, Arizona 85015
----------------------
(Address of principal executive offices)
602-242-5507
------------
(Registrant's telephone number)
NONE
----
(Former name, address and 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 X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes X No
----- -----
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date: 7,777,401 as of January 31,
1996.
Transitional Small Business Disclosure Format (check one):
Yes X No
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2
<PAGE>
COLONIAL TRUST COMPANY
INDEX
Page
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Part I. Financial Information:
Item 1: Consolidated Financial Statements 4
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Operations 5
Condensed Consolidated Statement of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis or Plan of Operation 10
Part II. Other Information
Item 1: Legal Proceedings 13
Item 2: Changes in Securities 13
Item 3: Default Upon Senior Securities 13
Item 4: Submission of Matters to a Vote of Security Holders 13
Item 5: Other Information 13
Item 6: Exhibits and Reports on Form 8-K 13
SIGNATURES
3
<PAGE>
COLONIAL TRUST COMPANY
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
December 31, 1995 and March 31, 1995
December 31, 1995 March 31, 1995
ASSETS (Unaudited)
----------------- --------------
Cash and cash equivalents $ 183,022 132,349
Notes receivable 329,398 310,262
Property and equipment, net 640,153 608,390
Investments available for sale 470,277
Other assets 348,550 99,807
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$1,971,400 1,150,808
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and
accrued liabilities $ 52,719 26,479
Notes payable 540,000
Income taxes payable 16,091 23,836
Deferred income tax 19,434 19,434
---------- ---------
628,244 69,749
Stockholders' equity:
Common stock, no par value;
10,000,000 shares authorized,
7,777,401 issued and outstanding 669,400 500,000
Additional paid-in capital 390,889 390,889
Retained earnings 279,142 190,170
Unrealized gain 3,725
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Total stockholders' equity 1,343,156 1,081,059
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$1,971,400 1,150,808
========== =========
See accompanying notes to condensed consolidated financial statements.
4
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COLONIAL TRUST COMPANY
Condensed Consolidated Statements of Operations (Unaudited)
Three-month periods ended Nine-month periods ended
December 31, December 31,
1995 1994 1995 1994
-------- -------- -------- --------
Revenues from trust services:
Bond servicing income $227,274 143,978 637,198 419,275
IRA servicing fees 37,536 24,232 127,857 80,667
Fee income 31,991 31,991
Interest income 7,896 15,182 24,510 40,502
-------- -------- -------- --------
304,697 183,392 821,556 540,444
======== ======== ======== ========
General and administrative
expenses 246,651 134,962 672,092 383,455
--------- ------- -------- --------
Income before income taxes 58,046 48,430 149,464 156,989
--------- ------- -------- --------
Income taxes 23,509 23,443 60,533 58,307
--------- ------- -------- --------
Net income $ 34,537 24,987 88,931 98,682
========= ======= ======== ========
Net income per common share $ .004 .004 .012 .014
========= ======= ======== ========
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
COLONIAL TRUST COMPANY
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine-month periods
ended December 31,
1995 1994
--------- --------
Cash flows from operating activities:
Net income $ 88,931 98,682
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and Amortization 35,976 25,153
Increase in other assets (14,536) (27,798)
Increase (decrease) in accounts payable,
accrued liabilities and taxes payable 18,495 (5,762)
-------- -------
Net cash provided by operating activities 128,866 90,275
Cash flows from investing activities:
Purchase of furniture & equipment (43,527) (21,251)
Increase of notes receivable (19,066) 118,098
Increase in trust obligations (26,547)
Net cash paid for acquisition (15,600)
-------- -------
Net cash provided by (used in)
investing activities (78,193) 70,300
-------- -------
Increase in cash and
cash equivalents 50,673 160,575
Cash and cash equivalents at beginning
of period 132,349 701,658
-------- -------
Cash and cash equivalents at
end of period $183,022 862,233
======== =======
See accompanying notes to condensed consolidated financial statements.
6
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COLONIAL TRUST COMPANY
Notes to Condensed Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
In the opinion of Colonial Trust Company (the "Company"), the accompanying
unaudited condensed consolidated financial statements contain all
adjustments necessary to present fairly the financial position, the results
of operations and cash flows for the periods presented. The accompanying
statements do not include all disclosures considered necessary for a fair
presentation in conformity with generally accepted accounting principles.
Therefore, it is recommended that these accompanying statements be read in
conjunction with the financial statements appearing in the Company's 1995
annual report on Form 10-KSB.
(a) Nature of Business
The Company was incorporated on August 15, 1989 in the State of
Arizona for the purpose of engaging in the business of acting as a
fiduciary. The Company is domiciled in the State of Arizona, is
regulated by the Arizona State Banking Department, and its Common
Stock is registered under the Securities Exchange Act of 1934.
The Company serves as trustee under various bond indentures for
issuers of bonds in 24 states. The issuers are primarily churches and
other non-profit organizations. As trustee, the Company receives,
holds, invests, and disburses the bond proceeds as directed by the
applicable trust indenture and receives weekly or monthly sinking fund
payments from the issuer of the bonds, and in turn, pays the
semi-annual principal and interest payments to the bondholders.
The Company also serves as trustee of self-directed individual
retirement accounts for certain bondholders or employees of religious
organizations.
On November 1, 1995, the Company purchased all the issued and
outstanding capital stock of Camelback Trust Company ("Camelback").
Camelback serves as trustee or agent, providing investment management,
administration, and custodial services for customers with various
securities held in trust, or investment agency accounts. The
accompanying consolidated financial statements include the results of
Camelback from November 1, 1995.
7
<PAGE>
COLONIAL TRUST COMPANY
Notes to Condensed Consolidated Financial Statements
(b) Revenue Recognition
Under the trust indentures with organizations issuing bonds, the
Company, for its services, principally earns revenues based on three
fee structures. The first fee structure allows the Company to invest
trust funds held for disbursement and retain the gains and earnings
therefrom. The second fee structure requires the issuing institution
to pay a percentage of the bond proceeds to the Company for set-up and
printing costs during the first year. Additionally, an annual
maintenance fee is required each succeeding year. The third fee
structure entitles the Company to interest earnings up to 2.5% of
daily trust funds held in bond program fund accounts in lieu of a
set-up fee. Annual maintenance fees and bond printing costs are
charged as a percentage of the related bond issuance.
The Company also receives fees for services provided as custodian for
self-directed individual retirement accounts.
Camelback earns revenue based on a two-fee structure. The first
structure is established as a percentage of the fiduciary assets which
the company holds as trustee or agent. Fees are assessed on a
quarterly basis to individual accounts according to the quarter's end
fair market value of the supporting fiduciary assets. The second fee
structure relates to an annual fee which is set up to cover the
maintenance of fiduciary assets which Camelback holds in both trust
and self-directed IRA accounts.
(c) Computation of Net Income Per Common Share
Income per share included in the consolidated financial statements is
based on 7,777,401 shares of Common Stock outstanding. There were no
share equivalents or other potentially dilutive securities outstanding
during any of the years presented.
(2) NOTE RECEIVABLE
On December 1, 1990, the Company entered into a Master Note and Letter
Agreement with Church Loans. The Master Note, in the maximum amount of
$1,000,000, is due on demand, bears interest payable monthly at 1% less
than the prime rate and is unsecured. Amounts advanced from time
8
<PAGE>
COLONIAL TRUST COMPANY
Notes to Condensed Consolidated Financial Statements
to time may be prepaid and reborrowed. The balance owing on the Master Note was
$310,262 and $329,398 on March 31 and December 31, 1995, respectively.
(3) LEASE COMMITMENTS
The Company leases certain office equipment under various nonterminable
lease arrangements. The Company is also party to an office lease for
commercial office space formerly occupied by the Company. On March 15,
1995, the Company assigned its rights and obligations under the office
lease to an unrelated third party. The Company is liable for rent and other
obligations under the lease in the event the assignee defaults under the
office lease. The office lease terminates on September 30, 1996.
Camelback is party to an office lease for commercial office space formerly
occupied by Camelback as its executive office. This space currently is
utilized by Camelback as a sales office. The office lease terminates on
February 14, 1998.
9
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COLONIAL TRUST COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Under Arizona law, the Company must at all times have net capital of at
least $500,000. Therefore, its liquidity needs must be met by the capital of the
Company which is in excess of the net capital requirements. At this time, there
are no other sources of capital or liquidity available to the Company, other
than income earned and received by the Company. The Company is considering
attempting to raise additional cash through a stock offering, although the
Company has not presently committed to doing so. Management believes that income
from future operations together with existing liquidity and capital resources
will be sufficient to meet the needs of the Company for the foreseeable future,
although there may be no assurance in this regard.
On November 1, 1995, the Company purchased all the issued and outstanding
capital stock of Camelback Trust Company (Camelback). Camelback serves as
trustee or agent, providing investment management, administration, and custodial
services for customers with various securities held in trust, or investment
agency accounts.
The total consideration paid by Colonial for the net assets of Camelback
was $197,046. This amount included $27,646 cash (including $12,046 for
Camelback's furniture and equipment) and 769,999 shares of unregistered common
stock of Colonial valued at $169,400 ($.22 per share). The carrying value of
Camelback's net assets approximated their fair market value at the date of
acquisition resulting in goodwill of $182,908. In connection with the Company's
issuance of a $540,000 note payable, approximately $540,000 of investments
available for sale are held as security for certain Secured Debentures payable
by Camelback's previous sole shareholder, Bootstrap Capital Corporation, Inc.,
to its shareholders. The note payable is due in full on August 1, 1996,
including all interest from November 1, 1995 through maturity.
The Company's Cash and Cash Equivalents increased from $132,349 on March
31, 1995 to $183,022 on December 31, 1995. The Investments Available for Sale
increase from $0 on March 31, 1995 to $470,277 on December 31, 1995, while the
Note Payable increased from $0 on March 31, 1995 to $540,000 on December 31,
1995. The increase in the Cash and Cash Equivalents, the increase in the
Investments Available for Sale and the Note Payable were primarily attributable
to the acquisition of Camelback.
10
<PAGE>
RESULTS OF OPERATIONS-THREE-MONTH AND NINE-MONTH PERIODS ENDED DECEMBER 31, 1995
The Company reported an increase in net income for the three-month period
and a decrease in net income for the nine-month period ended December 31, 1995
compared to the comparable prior periods. The Company had net income of $32,569,
or $.004 per share, for the three-month period ended December 31, 1995, compared
to net income of $24,987, or $.004 per share, for the three-month period ended
December 31, 1994. The Company recognized net income of $96,021, or $.012 per
share, for the nine-month period ended December 31, 1995, compared to net income
of $98,682, or $.014 per share, for the nine-month period ended December 31,
1994. The Company had total revenue of $304,697 for the three-month period ended
December 31, 1995, compared to total revenue of $183,392 for the three-month
period ended December 31, 1994. The Company had total revenue of $821,556 for
the nine-month period ended December 31, 1995, compared to total revenue of
$540,444 for the nine-month period ended December 31, 1994.
The Company's bond servicing income increased to $227,274 for the
three-month period ended December 31, 1995, compared to $143,978 for the
three-month period ended December 31, 1994. The Company's bond servicing income
increased to $637,198 for the nine-month period ended December 31, 1995,
compared to $419,275 for the nine-month period ended December 31, 1994. The
increases were primarily attributable to the increase in the number of bond
issues for which the Company serves as Trustee and Paying Agent. As of December
31, 1995, the Company was serving as trustee for the benefit of bondholders on
308 bond offerings totaling approximately $227,000,000 in original principal; as
of December 31, 1994, the Company was serving as trustee for the benefit of
bondholders on 233 bond offerings totaling approximately $169,000,000 in
original principal amount.
Income from IRA Accounts increased to $37,536 for the three-month period
ended December 31, 1995, compared to $24,232 for the three-month period ended
December 31, 1994. IRA Account income increased to $127,857 for the nine-month
period ended December 31, 1995, compared to $80,667 for the nine-month period
ended December 31, 1994. This increase was due primarily to an increase in the
number of IRA accounts serviced by the Company. As of December 31, 1995, the
Company was serving as trustee for 4,245 self-directed Individual Retirement
Accounts with total assets of approximately $65,500,000; as of December 31,
1994, the Company was serving as trustee for 2,163 self-directed Individual
Retirement Accounts with total assets of approximately $29,000,000.
11
<PAGE>
Fee income for the three-month and nine-month periods totaled 31,991. The
fee income represents Camelback's revenues for the period November 1, 1995 to
December 31, 1995. Interest income decreased to $7,896 for the three-month
period ended December 31, 1995, compared to $15,182 for the three-month period
ended December 31, 1994.
Interest income decreased to $24,510 for the nine-month period ended
December 31, 1995, compared to $40,502 for the nine-month period ended December
31, 1994. The decreases were primarily attributable to the reduction of cash and
cash equivalents as a result of the Company's cash purchase of an office
building on March 15, 1995, which serves as the Company's executive offices.
General and administrative expenses increased to $246,651 for the
three-month period ended December 31, 1995, compared to $134,962 for the
three-month period ended December 31, 1994. General and administrative expenses
increased to $672,092 for the nine-month period ended December 31, 1995,
compared to $383,455 for the comparable prior period. These increases were due
primarily to the addition of nine staff members and additional expenses related
to the purchase of the office building.
The Company's income tax rate was 40.5% for the three-month and nine-month
periods ended December 31, 1995, compared to 48% and 37% for the three-month and
nine-month periods ended December 31, 1994.
12
<PAGE>
COLONIAL TRUST COMPANY
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None.
ITEM 2: CHANGES IN SECURITIES
None.
ITEM 3: DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5: OTHER INFORMATION
None.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits: None.
(b) Reports on Form 8-K:
On November 1, 1995, the Company completed its acquisition of Camelback
Trust Company ("Camelback"), an Arizona corporation headquartered in Scottsdale,
Arizona which serves as trustee for individual and corporate accounts, pursuant
to the terms of a Stock Purchase Agreement dated October 13, 1995 between the
Company and Camelback. The Company filed a Current Report on Form 8-K dated
November 6, 1995 in regards to the Camelback acquisition. On January 13, 1996,
the Company filed an amendment to such Form 8-K which included the financial
statements and other financial information required by Form 8-K.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
COLONIAL TRUST COMPANY
DATE: March 26, 1997 BY:/s/ John K. Johnson
--------------- ---------------------------------
John K. Johnson
Its: President (Principal
Executive Officer)
DATE: March 26, 1997 BY:/s/ Cecil E. Glovier
--------------- ---------------------------------
Cecil E. Glovier
Its: Chief Financial Officer
(Principal Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 183,022
<SECURITIES> 470,277
<RECEIVABLES> 329,398
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,331,247
<PP&E> 795,942
<DEPRECIATION> (155,789)
<TOTAL-ASSETS> 1,971,400
<CURRENT-LIABILITIES> 628,244
<BONDS> 0
0
0
<COMMON> 669,400
<OTHER-SE> 673,756
<TOTAL-LIABILITY-AND-EQUITY> 1,971,400
<SALES> 821,556
<TOTAL-REVENUES> 821,556
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 672,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 149,464
<INCOME-TAX> 60,533
<INCOME-CONTINUING> 88,931
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,931
<EPS-PRIMARY> .012
<EPS-DILUTED> .012
</TABLE>
