<PAGE> 1
UNITED STATES
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
OR
[ ] 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 000-24057
Rushmore Financial Group, Inc.
------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-2375969
----- ----------
(State of Incorporation) (I. R. S. Employer Identification No.)
13355 Noel Road, Suite 650, Dallas, Texas 75240
-----------------------------------------------
972-450-6000
-----------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer 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 the court.
Yes No
------ ------
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 XXX No
------ ------
State the number of shares outstanding of each of the issuer's classes
of common equity as of September 30, 1998: 2,977,124 shares of common stock,
$0.01 par value.
Transitional Small Business Disclosure Format;
Yes No XXX
------ ------
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE> 3
RUSHMORE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
-------------- --------------
ASSETS
<S> <C> <C>
Investments:
Cash and cash equivalents $ 2,621,486 $ 1,218,362
Amounts on deposit with reinsurer 31,770,146 30,483,274
Bonds available for sale; amortized cost $308,426 305,078 --
Equity securities available for sale 122,917 687
-------------- --------------
Total investments 34,819,627 31,702,323
Deferred policy acquisitions costs 2,089,441 2,295,697
Present value of future profits -- 763,327
Notes, accounts receivable and uncollected premiums 1,106,434 464,588
Prepaid expenses and deposits 213,161 80,098
Equipment, net of accumulated depreciation 183,411 110,877
Deferred federal income taxes 96,074 10,072
Goodwill 248,770 255,060
Other assets and intangibles 13,467 196,341
-------------- --------------
Total assets $ 38,770,385 $ 35,878,383
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Future policy benefits $ 91,424 $ 86,192
Universal life contract liabilities 34,096,345 32,880,011
Present value of future profits 279,921 --
Claims payable 194,982 308,866
Notes payable 2,295 87,295
Due to reinsurers 590,597 995,883
Accrued expenses & other liabilities 340,364 411,937
-------------- --------------
Total liabilities 35,595,928 34,770,184
-------------- --------------
Shareholders' Equity:
Preferred stock-9% cumulative preferred stock, $10 par value,
2,000 shares issued and outstanding at September 30, 1998 and
4,300 shares issued and outstanding at December 31, 1997 20,000 43,000
Preferred stock-Series A cumulative preferred stock, $10 par
value, 13,687 shares issued and outstanding at September 30, 1998
and 13,792 shares issued and outstanding at December 31, 1997 136,870 137,920
Common stock-$0.01 par value, 10,000,000 shares authorized,
3,066,597 shares issued and 2,977,124 outstanding at September 30, 1998;
10,000,000 shares authorized and 2,187,016 issued and 2,105,036
outstanding at December 31, 1997 30,666 21,870
Common stock subscribed, 4,567 shares at $1.92 at
December 31, 1997 -- 46
Additional paid in capital 6,038,686 2,486,244
Treasury stock, 89,473 shares at cost (116,346) (78,881)
Retained earnings (deficit) (2,844,131) (1,340,897)
Accumulated other comprehensive income (loss) (14,989) (110)
Shareholder/affiliate loans:
Common stock subscriptions receivable -- (8,769)
Shareholder loans (76,299) (102,460)
Receivable from affiliates -- (49,764)
-------------- --------------
Total shareholders' equity 3,174,457 1,108,199
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 38,770,385 $ 35,878,383
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 4
RUSHMORE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------------- ---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Revenue from Insurance Services:
Insurance policy income $ 798,468 $ 819,401 $ 2,413,619 $ 1,634,677
Net Investment income 666,791 533,034 1,763,862 1,049,637
Agency Management fee -- 24,900 -- 73,552
Revenue from Investment Services:
Commissions and fees 651,095 611,833 1,767,725 1,620,573
Asset management 52,461 39,226 151,939 103,262
Other 2,860 12,432 48,071 39,233
-------------- -------------- -------------- --------------
Total revenues 2,171,675 2,040,826 6,145,216 4,520,934
-------------- -------------- -------------- --------------
Expenses:
Insurance Services Expenses:
Other insurance services expenses 349,873 291,150 961,385 695,216
Policyholder benefits 798,592 759,016 1,927,167 1,534,001
Amortization of deferred policy
acquisition costs 337,708 80,057 766,571 163,254
Amortization of present value of insurance in force 341,101 130,847 1,043,248 259,345
Equity in losses of subsidiary -- -- -- 19,264
Investment services expenses:
Commission expense 548,509 523,373 1,526,578 1,425,141
Other investment services expenses 23,522 23,468 77,705 60,181
General and administrative 618,958 236,188 1,327,373 613,648
-------------- -------------- -------------- --------------
Total expenses 3,018,263 2,044,099 7,630,027 4,770,050
-------------- -------------- -------------- --------------
Operating income (loss) (846,588) (3,273) (1,484,811) (249,116)
Interest expense 124 1,639 7,673 4,163
-------------- -------------- -------------- --------------
Income (loss) from continuing
operations before income taxes (846,712) (4,912) (1,492,484) (253,279)
Provision for income taxes 7,990 49,033 10,750 (29,614)
-------------- -------------- -------------- --------------
Income (loss) from continuing operations (854,702) (53,945) (1,503,234) (223,665)
Discontinued operations (net) -- -- -- (25,992)
-------------- -------------- -------------- --------------
Net income (loss) $ (854,702) $ (53,945) $ (1,503,234) $ (249,657)
============== ============== ============== ==============
Income (loss) from continuing operations
applicable to common shareholders $ (858,232) $ (58,015) $ (1,514,905) $ (235,877)
============== ============== ============== ==============
Net income (loss) applicable to common
shareholders $ (858,232) $ (58,015) $ (1,514,905) $ (261,869)
============== ============== ============== ==============
Basic and diluted:
Income (loss) from continuing operations per
share of common stock, after dividends on
preferred stock $ (0.29) $ (0.03) $ (0.56) $ (0.14)
============== ============== ============== ==============
Net income (loss) per share of common stock,
after dividends on preferred stock $ (0.29) $ (0.03) $ (0.56) $ (0.15)
============== ============== ============== ==============
Weighted average common shares outstanding - basic 2,984,617 2,005,489 2,705,699 1,737,588
============== ============== ============== ==============
Weighted average common shares outstanding - diluted 2,984,617 2,005,489 2,705,699 1,737,588
============== ============== ============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 5
RUSHMORE FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
---------------------------------
SEPTEMBER 30,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (1,503,234) $ (249,657)
Adjustments to reconcile net (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 24,871 19,552
Loss from equity investment -- 19,264
CHANGE IN ASSETS AND LIABILITIES NET OF
EFFECTS FROM PURCHASE OF RUSHMORE LIFE:
(Increase) decrease in assets:
Notes, accounts receivable & uncollected premiums (641,846) 123,998
Prepaid expenses and deposits (133,063) (102,107)
Deferred policy acquisition costs 206,256 (158,555)
Present value of future profits 1,043,248 259,345
Amounts on deposit with reinsurer (1,286,872) (1,105,549)
Net deferred federal income taxes (86,002) 30,038
Increase (decrease) in liabilities:
Accrued expenses and other liabilities (71,573) 350,293
Due reinsurers (405,286) 102,877
Future policy benefits 5,232 (3,360)
Universal Life liabilities 1,216,334 835,849
Claims payable (113,884) 12,321
-------------- --------------
Net cash flows provided (used) by operating activities (1,745,819) 134,309
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to officers and affiliate 84,694 (30,428)
Purchase of equipment (91,115) (50,373)
Cash acquired in acquisition of Rushmore Life net of cash paid -- 1,181,143
Purchase of equity securities available for sale (133,761) (775)
Purchase of bonds available for sale (308,426) --
Collateral loan made -- (75,000)
-------------- --------------
Net cash flows provided (used) by investing activities (448,608) 1,024,567
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of Common Stock, net of offering cost 3,755,737 62,188
Preferred stock redeemed (24,050) --
Purchase of treasury stock (37,465) --
Preferred Stock dividends paid (11,671) (12,212)
Borrowings under term loans -- 25,000
Payments on term loans (85,000) (1,002)
-------------- --------------
Net cash flows provided by financing activities 3,597,551 73,974
-------------- --------------
Change in cash and cash equivalents 1,403,124 1,232,850
Cash and cash equivalents at beginning of period 1,218,362 117,738
-------------- --------------
Cash and cash equivalents at end of period $ 2,621,486 $ 1,350,588
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 9,374 $ 4,163
Cash paid for income taxes $ 86,558 $ 50,000
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Rushmore
Financial Group, Inc. ("RFGI") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although RFGI believes that the
disclosures contained herein are adequate to make the information presented not
misleading. In the opinion of management, the information furnished in the
unaudited consolidated financial statements reflects all adjustments which are
ordinary in nature and necessary to present fairly RFGI's financial position,
results of operations and changes in financial position for such interim period.
These interim financial statements should be read in conjunction with RFGI's
financial statements and the notes thereto as of December 31, 1997, included in
RFGI's annual report on Form 10-KSB/A for the year ended December 31, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months Ended September 30, 1998 and 1997
Revenues
The following table sets forth the components of the Company's revenues for the
periods indicated:
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
-------------- --------------
<S> <C> <C>
Insurance services $ 1,465,259 $ 1,377,335
Investment services 703,556 651,059
Other 2,860 12,432
-------------- --------------
Total revenues $ 2,171,675 $ 2,040,826
</TABLE>
Total revenues increased 6% from $2,040,826 for the third quarter of 1997 to
$2,171,675 during the third quarter of 1998. The increase resulted from an
increase in investment income in the insurance division of $133,757 and an
increase in variable annuity commission income in the investment services
division of $66,003. These increases were partially offset by a decline in
experience refund income from $142,229 in the third quarter of 1997 to $98,269
during the third quarter of 1998.
Rushmore Insurance Services, Incorporated ("Rushmore Agency") is an insurance
agency and an affiliate of the Company by means of service agreements. The
Company has entered into an administrative services agreement whereby net
revenues and expenses are charged via a management fee to the Company. During
1998 the Company has not recognized any of the revenues generated by the Career
Partners Division of Rushmore Agency as expenses have exceeded revenues. During
the three months ended September 30, 1998 the Company has incurred expenses
totaling $104,026 related to the recruiting and selling efforts of this
division. The result has been steady increases in new annualized premium
submitted from $257,000 in the first quarter of 1998, to $408,000 during the
second quarter, to $611,000 during the third quarter and $375,000 for the month
of October. This premium, net of denials and lapses, will ultimately produce
commission overrides ranging from 4% to 15%. However, the bulk of that
commission revenue will be realized in 1999.
6
<PAGE> 7
Expenses
Insurance services expenses increased $566,204 or 45% due to an increase in
amortization of the present value of insurance in force from $130,847 during the
third quarter of 1997 to $341,101 during the same quarter of 1998. Based on the
expected future profits of policies in force at the time of the acquisition of
Rushmore Life, an asset was established in the amount of $1,155,908. Expected
future profits used in determining such values are based on actuarial
determinations of future premium collection, mortality, morbidity, surrenders,
operating expenses and yields on assets held to back policy liabilities as well
as other factors. The expected future profits derived from these assumptions
combined with the contract features and guarantees are positive in early
durations and negative in later durations. The initial present value of these
profits is positive, while later present values are negative producing a net
liability. Amortization was then established based on the expected pattern of
those future profits. Insurance services expenses also increased due to an
increase in amortization of deferred policy acquisition costs of $257,651.
Insurance services expenses also included charges totaling $123,000 which
represent the net expenses of Rushmore Insurance Services Incorporated, the
Company's insurance marketing arm. These expenses have been incurred as a
result of increased efforts in recruiting and training.
Investment services expenses increased 5% from $546,841 to $572,031. Commissions
paid as a percentage of commission revenue decreased from 86% in 1997 to 84% in
1998. The commission ratio has continued to decline as a result of continued
improved margins on new representatives recruited. Direct overhead associated
with investment services remained relatively unchanged at approximately $23,500.
General and administrative expenses increased 162% from $236,188 to $618,958 due
to increases in staff and promotional expenses related to recruiting, marketing
programs and expansion. Payroll expenses and payroll taxes increased $168,803.
Fees to attorneys, accountants and consultants increased $75,325. Advertising
and promotional expenses increased $64,459.
Operating income (loss)
The Company's operating loss for the third quarter of 1998 of $846,588
represents an increase of $843,315 from the loss of $3,273 for the third quarter
of 1997. The Company's net loss applicable to common shareholders for the third
quarter of 1998 increased $800,217 from a net loss of $58,015 or $0.03 per share
(basic and diluted) to $858,232 or $0.29 per share (basic and diluted). The rise
in net loss is the result of a combination of increases in amortization and
general and administrative expenses. The combined amortization of deferred
policy acquisition costs and amortization of present value of insurance in force
increased $467,905. General and administrative expenses increased $382,770.
7
<PAGE> 8
Nine Months Ended September 30, 1998 and 1997
Revenues
The following table sets forth the components of the Company's revenues for the
periods indicated:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1998 1997
-------------- --------------
<S> <C> <C>
Insurance services $ 4,177,481 $ 2,757,866
Investment services 1,919,664 1,723,835
Other 48,071 39,233
-------------- --------------
Total revenues $ 6,145,216 $ 4,520,934
</TABLE>
Total revenues increased 36% from $4,520,934 for the first nine months of 1997
to $6,145,216 during the first nine months of 1998. The increase resulted from
the acquisition in full of Rushmore Life Insurance Company in April 1997 coupled
with continued growth of the investment services division. This increase
included $2,413,619 in insurance policy income during the first nine months of
1998 compared to $1,634,677 during the first nine months of 1997. This insurance
policy income represents Rushmore Life's quota share of policy income under
modified coinsurance agreements. Investment income also increased from
$1,049,637 to $1,763,862 as a result of that acquisition. Revenue growth was
further enhanced by an increase in revenue of the investment services division
of $195,829 or 11%.
During 1998 the Company has not recognized any of the revenues generated by the
Career Partners Division of Rushmore Agency as expenses have exceeded revenues.
During the nine months ended September 30, 1998 the Company has incurred
expenses totaling $164,240 related to the recruiting and selling efforts of this
division. The result has been steady increases in new annualized premium
submitted from $257,000 in the first quarter of 1998, to $408,000 during the
second quarter, to $611,000 during the third quarter and $375,000 for the month
of October. This premium, net of denials and lapses, will ultimately produce
commission overrides ranging from 4% to 15%. However, the bulk of that
commission revenue will be realized in 1999.
Expenses
Insurance Services expense components changed substantially due to the
consolidation of Rushmore Life beginning in April 1997. In the first quarter of
1997, insurance service expenses included only the loss of the Company's
minority ownership in Rushmore Life, accounted for on the equity method. That
loss amounted to $19,264. The first three months of 1997 included equity in
losses of subsidiary, whereas the first three months of 1998 included the
consolidated operations of Rushmore Life. As a result of consolidating the
results of Rushmore Life for the entire nine months ended September 30, 1998 and
consolidating only the second and third quarters of 1997, insurance benefits and
expenses increased proportionately. The consolidated operations of Rushmore Life
include expense categories of benefits, claims and losses, representing claims
against policies coinsured by Rushmore Life in the amount of $1,927,167 during
the first nine months of 1998 compared to $1,534,001 for the same period in
1997. Amortization of deferred policy acquisition costs increased $603,317 to
$766,571 and amortization of present value of insurance in force increased
$783,903. These increases were offset by other insurance services expenses and
policyholder benefits which increased only 30% in spite of consolidating nine
months of life company operations in 1998 and only six months in 1997. Deferred
acquisition costs are recorded for purposes of generally accepted accounting
principles as an asset consisting of the commissions and other costs of
underwriting a new
8
<PAGE> 9
insurance policy and are amortized over the life of the policy. Insurance
services expenses also included charges totaling $186,000 which represent the
net expenses of Rushmore Insurance Services Incorporated, the Company's
insurance marketing arm. These expenses have been incurred as a result of
increased efforts in recruiting and training.
Investment services expenses increased 8% from $1,485,322 to $1,604,283.
Commissions paid as a percentage of commission revenue decreased from 88% in
1997 to 86% in 1998. The commission ratio has continued to decline as more
representatives have been added at lower payout percentages. Direct overhead
associated with investment services increased 29% from $60,181 to $77,705. This
was primarily due to increases in staff that resulted in increases in quote
service and telephone expenses.
General and administrative expenses increased 116% from $613,648 to $1,327,373
due to increases in staff, office space and promotional expenses. Payroll
expenses and payroll taxes increased $352,156. Office rent increased $82,303.
Fees to attorneys, accountants and consultants increased $82,080. Advertising
and promotional expenses increased $66,540.
Operating income (loss)
The Company's operating loss for the first nine months of 1998 of $1,484,811
represents an increase of $1,235,695 from the loss of $249,116 for the first
nine months of 1997. The Company's net loss applicable to common shareholders
for the first three quarters of 1998 increased $1,253,036 from $261,869 or $0.15
per share (basic and diluted) to $1,514,905 or $0.56 per share (basic and
diluted). The net losses in 1998 and 1997 were reduced by deductions for
preferred dividends paid of $11,671 and $12,212 respectively. In the first
quarter of 1997, insurance services expenses included only the loss of the
Company's minority ownership in Rushmore Life, accounted for on the equity
method, whereas the first three months of 1998 included the consolidated
operations of Rushmore Life. Excluding intercompany expenses and revenues,
Rushmore Life reported a net loss of $349,696 during the first nine months of
1998 compared to a net income of $93,555 for the second and third quarters of
1997. The establishment of a deferred tax asset valuation allowance of
approximately $507,000 further increased the net loss. The increase in the
Company's net loss was also the result of increases in general and
administrative expenses of $713,725. These increases in expenses were
anticipated as the Company began implementing its business plan.
Year 2000
The Year 2000 will have a broad impact on the business environment in which the
Company operates. This is due to the possibility that many computerized systems
across all industries will be unable to process information containing dates
beginning in the Year 2000. The Company established an enterprise-wide program
in the first quarter of 1998 to prepare its computer systems, applications and
transactional bridges between internal systems and external agents for the Year
2000. The Company is utilizing both internal and external resources to identify,
correct and test the systems for Year 2000 compliance. The Company anticipates
that the majority of its modifications will be completed by December 31, 1998,
and testing efforts will be concluded by March 31, 1999. Further validations
through testing will be conducted throughout calendar year 1999. The Company
expects that all mission-critical systems will be Year 2000 compliant prior to
June 30, 1999.
Because third party failures could have a material impact on the Company's
ability to conduct business, questionnaires are being sent to all of the
Company's vendors including the clearing firms and primary insurers to certify
that plans are being developed to address the Year 2000 issue. The
questionnaires that have been returned to date, are being assessed by the
Company, and are being categorized based upon readiness for the Year 2000
issues. They are also being prioritized in order of significance to the business
of the Company. To the extent that business-critical vendors do not provide the
Company with satisfactory evidence to the readiness to handle
9
<PAGE> 10
Year 2000 issues, contingency plans will be developed. The Company intends to
make every reasonable efforts to assess the Year 2000 readiness of the critical
business partners and to create actions plans to address the identified risks.
In addition to safeguarding against internal and external possible malfunctions,
the Company is developing a contingency plan to operate independent of systems
that could be affected by the Year 2000 problem. The plan, which includes backup
telephone systems and manual routing of transactions such as security trades,
will be in place by June 30, 1999.
The Company anticipates that it will have substantially completed an assessment
of the Year 2000 compliance status of all information technology and
non-information technology equipment by December 31, 1998 and will the address
the year 2000 compliance of such equipment.
Testing and remediation of all of the Company's systems and applications is
expected to cost approximately $25,000 from inception in calendar year 1998
through completion in calendar year 1999. All estimated costs have been budgeted
and are expected to be funded by cash flows from operations.
The Company does not believe the costs related to the Year 2000 compliance
project will be material to its financial position or results of operations.
However, the cost of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best estimates.
These estimates were derived utilizing numerous assumptions of future events
including the continued availability of certain resources, third party
modification plans and other factors. Unanticipated failures by clearing firms
and primary insurers, as well as the failure by the Company to execute its own
remediation efforts could have a material adverse effect on the cost of the
project and its completion date. As a result, there can be no assurance that
these forward-looking estimates will be achieved and the actual cost and vendor
compliance could differ materially from those plans, resulting in material
financial risks.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither Rushmore Financial Group, Inc. nor its subsidiaries is a party to any
pending legal proceedings which management believes would have a material effect
upon the operations or financial condition of Rushmore Financial Group, Inc.
Item 2. Changes in Securities and use of proceeds
Initial Public Offering and Use of Proceeds
The Company completed its initial public offering of common stock (Commission
file no. 333-42225) in April 1998, issuing 815,341 shares of Common Stock out of
a total of 1,250,000 shares registered at $5.50 per share (total of $4,484,375)
through underwriters led by First Southwest Company. The proceeds of such
offering have been applied or allocated in the following manner:
Use of Proceeds Through September 30, 1998
<TABLE>
<S> <C>
Offering Costs
Underwriters fee $ 358,750
Legal fees 194,913
Accounting 118,076
Printing 96,481
Other 145,665
Contribution to Rushmore Life Insurance 300,000
Repayment of payable to Rushmore Life Insurance 381,825
Repayment of loan to Rushmore Life Insurance 83,693
Repayment of Note 41,657
Contribution to Rushmore Securities Corporation 111,801
Contribution to Rushmore Insurance Services 368,455
Contribution to Rushmore Investment Advisors 100,828
Acquisition of Fixed Assets 87,932
General Working Capital 543,436
----------
Total Proceeds Applied 2,933,512
----------
Planned Contributions:
Rushmore Securities Corporation 350,547
Rushmore Insurance Services 664,559
Rushmore Investment Advisors 221,217
Acquisition of Fixed Assets 314,540
----------
Total IPO Proceeds $4,484,375
==========
</TABLE>
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
Information concerning the Company's annual meeting of shareholders held July
17, 1998 was disclosed in the Company's Form 10QSB for the quarter ended June
30, 1998 and is incorporated by reference.
11
<PAGE> 12
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits. Exhibit 11 - Earnings per share
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8k. - None
SIGNATURE
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 hereunto duly authorized.
Rushmore Financial Group, Inc.
Dated: November 13, 1998 By /s/ Robert W. Hendren
-----------------------------------
By Robert W. Hendren
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
11 Earnings per share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 11 - Earnings per share
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Income (loss) from continuing operations (1,503,234) (223,665)
Less dividends on preferred stock (11,671) (12,212)
Income (loss) from continuing operations applicable
to common shareholders (1,514,905) (235,877)
Less discontinued operations 0 (25,992)
Net (loss) applicable to common shareholders (1,514,905) (261,869)
Weighted average common shares outstanding 2,705,699 1,737,588
Weighted average options vested 87,343 155,437
Net income (loss) per common share
Basic $ (0.56) $ (0.15)
Diluted $ (0.56) $ (0.15)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<DEBT-HELD-FOR-SALE> 305,078
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 122,917
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0
156,870
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2,413,619
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</TABLE>
