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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, 1996
[ ] 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 0-22934
DEVELOPMENT BANCORP, LTD.
(Exact Name of Small Business Issuer as specified in its Charter)
Washington 91-1268870
(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.)
14 Quai du Seujet, Geneva, Switzerland CH-1201
(Address of principal executive offices) (Zip Code)
(011) 4122-9081598
(Issuer's telephone number)
Check whether the Issuer (1) 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
Indicate the number of shares outstanding of each of the issuer's
classes of Common Equity, as of the latest practicable date.
Common Stock, no par value 1,044,923
Title of Class Number of Shares outstanding
at September 30, 1996
No exhibits included.
<PAGE>
<TABLE>
<CAPTION>
DEVELOPMENT BANCORP, LTD.
CONSOLIDATED BALANCE SHEET
September 30, 1996
(Unaudited)
ASSETS
Current assets:
<S> <C>
Cash and equivalents $ 839,388
Commissions receivable 74,242
Other receivables 193,875
Marketable securities 1,297,547
Other current assets 345,535
------------
Total current assets 2,750,587
Investments 880,160
Intangible assets, net 236,385
Property and equipment, net 182,065
------------
Total assets $4,049,197
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Note payable - bank $ 50,000
Notes payable - related parties 228,331
Accounts payable 413,914
Accrued payroll and commissions 189,724
Other accrued liabilities 359,157
Current portion of long-term debt 20,511
-------------
Total current liabilities 1,261,637
Long-term debt - related party 35,000
-------------
Total liabilities 1,296,637
Commitments and contingencies -
Shareholders' equity:
Class B convertible preferred stock, no par value; 110,000
shares designated, issued and outstanding 165,000
Common stock, no par value; 50,000,000 shares
authorized, 1,044,923 shares issued and outstanding 3,727,496
Accumulated deficit (1,400,050)
Translation adjustment 260,114
------------
Total shareholders' equity 2,752,560
Total liabilities and shareholders' equity $4,049,197
</TABLE>
The accompanying selected information is
an integral part of the financial
statements.
2
<PAGE>
<TABLE>
<CAPTION>
DEVELOPMENT BANCORP, LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Month Period
Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------
Revenues:
<S> <C> <C>
Commissions and consulting fees $ 1,097 $ 50,521
Consulting fees - related parties - -
----------------- ------------
Total revenues 1,097 50,521
General and administrative expenses 331,155 119,966
------------ ------------
Loss from operations ( 330,058) ( 69,445)
------------ -------------
Other income (expense):
Gain on sale of marketable securities - -
Unrealized gain (loss) on marketable
securities portfolio - -
Interest income 9,978 14,563
Interest expense ( 7) -
Foreign currency transaction gain (loss) ( 3,985) ( 7,121)
Miscellaneous - 444
----------------- ---------------
Total other income 5,986 7,886
-------------- --------------
Net loss $( 324,072) $( 61,559)
=========== ============
Per share information:
Net loss per share $( .31) $( .05)
=============== ===============
Weighted average number
of common shares outstanding 1,044,923 1,139,923
=========== ===========
</TABLE>
The accompanying selected information is
an integral part of the financial
statements.
3
<PAGE>
<TABLE>
<CAPTION>
DEVELOPMENT BANCORP, LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Month Period Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------
Revenues:
<S> <C> <C>
Commissions and consulting fees $2,524,442 $ 78,050
Consulting fees - related parties 130,000 -
------------ ------------
Total revenues 2,654,442 78,050
General and administrative expenses 3,513,928 215,327
----------- ------------
Loss from operations ( 859,486) ( 137,277)
------------ ------------
Other income (expense):
Gain on sale of marketable securities 136,864 44,093
Unrealized gain (loss) on marketable
securities portfolio ( 49,894) -
Interest income 36,581 29,903
Interest expense ( 6,940) -
Foreign currency transaction gain (loss) 138,596 ( 61,124)
Miscellaneous - 1,176
----------------- --------------
Total other income 255,207 14,048
------------ -------------
Net loss $( 604,279) $( 123,229)
=========== ===========
Per share information:
Net loss per share $( .58) $( .11)
=============== ===============
Weighted average number
of common shares outstanding 1,044,120 1,114,923
=========== ===========
</TABLE>
The accompanying selected information is
an integral part of the financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
DEVELOPMENT BANCORP, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Month Period Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net loss $( 324,072) ( 61,559)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 14,895 3,165
Foreign currency transaction gain - -
(Increase) decrease in assets: ( 5,398) -
Other receivables 5,481 ( 28,183)
Marketable securities 324,518 ( 4,784)
Other current assets 773 36,493
Increase (decrease) in liabilities:
Accounts payable ( 1) ( 26,646)
------------------ -------------
Net cash used in used in operating activities 16,196 ( 81,514)
-------------- -------------
Cash flows from investing activities:
Sale of investments - 275,867
Purchase of property and equipment ( 1,075) ( 9,098)
Net increase in loans receivable - ( 651,309)
------------------ ------------
Net cash used in investing activities ( 1,075) ( 384,540)
--------------- ------------
Effect of exchange rate changes on cash ( 1,536) ( 248,648)
--------------- ------------
Increase (decrease) in cash and equivalents 13,585 ( 714,702)
Cash and equivalents - beginning of period 825,803 1,974,441
------------- -----------
Cash and equivalents - end of period $ 839,388 $1,259,739
============ ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 7 $ -
================= ===========
</TABLE>
Supplemental disclosure of non-cash investing and financing activities: During
1995:
The Company incurred $350,169 of debt in exchange for foreign exchange
contracts. Additionally, the Company redeemed 150,000 shares of its
common stock valued at $800,000 in the sale of oil and gas investments
valued at $790,428.
The accompanying selected information is
an integral part of the financial
statements.
5
<PAGE>
<TABLE>
<CAPTION>
DEVELOPMENT BANCORP, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Month Period Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net loss $( 604,279) $( 123,229)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 58,525 4,811
Unrealized (gain) loss on marketable securities 66,699 -
(Increase) decrease in assets:
Commissions receivable 170,632 -
Other receivables ( 101,147) ( 47,769)
Marketable securities 216,583 ( 80,501)
Other current assets ( 223,247) ( 2,522)
Increase (decrease) in liabilities:
Accounts payable ( 68,553) ( 2,934)
Accrued liabilities 43,861 -
-------------- -------------
Net cash used in used in operating activities ( 440,926) ( 252,144)
------------- ------------
Cash flows from investing activities:
Purchase of property and equipment ( 58,721) ( 29,504)
Net increase in loans receivable - ( 651,309)
------------------- ------------
Net cash used in investing activities ( 58,721) ( 680,813)
--------------- ------------
Cash flows from financing activities:
Repayment of notes payable - related parties ( 76,544) -
Repayment of long-term debt ( 13,140) -
Proceeds from issuance of common stock 54,000 270,000
-------------- ------------
Net cash provided by (used in) financing activities ( 35,684) 270,000
-------------- ------------
Effect of exchange rate changes on cash ( 143,608) 197,250
------------- ------------
Increase (decrease) in cash and equivalents ( 678,939) ( 465,707)
Cash and equivalents - beginning of year 1,518,327 1,725,446
------------ -----------
Cash and equivalents - end of period $ 839,388 $1,259,739
============ ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 26,610 $ -
============= ===========
</TABLE>
Supplemental disclosure of non-cash investing and financing activities: During
1995:
The Company incurred $350,169 of debt in exchange for foreign exchange
contracts. Additionally, the Company redeemed 150,000 shares of its
common stock valued at $800,000 in the sale of oil and gas investments
valued at $790,428.
The accompanying selected information is
an integral part of the financial
statements.
6
<PAGE>
DEVELOPMENT BANCORP, LTD.
SELECTED INFORMATION
For the Nine Month Period Ended September 30, 1996 and 1995
(Unaudited)
Note 1: Organization and Significant Accounting Policies
Nature of Organization:
Development Bancorp, Ltd. ("Development" or "the Company")
is a holding company organized in the state of Washington
for the purpose of providing international investment
banking services through its majority-owned subsidiaries:
Development Corp Services Limited (Ireland - 99.93%
owned), SFD Societe Financere De Distribution Geneve SA
(Switzerland - 99.3% owned), and KSM Holding Corporation
("KSM") (United States - 99.93% owned). KSM is the parent
company of wholly-owned Global Financial Group ("Global")
(United States).
Basis of Presentation:
The accompanying unaudited consolidated balance sheets as
of September 30, 1996 and the unaudited consolidated
statements of operations and cash flows for the nine month
periods ended September 30, 1996, include the accounts of
Development Bancorp, Ltd. and its wholly-owned
subsidiaries, Development Corp Services Limited, SFD
Societe Financiere De Distribution Geneve SA, and KSM
Holding Corporation. For the nine months ended September
30, 1995, the consolidated financial statements include
the accounts of Development Bancorp, Ltd. and its
wholly-owned subsidiaries, Development Corp Services
Limited and SFD Societe Financiere De Distribution Geneve
SA. All references to "the Company" in these financial
statements relate to the consolidated entity. All
significant intercompany accounts and transactions are
eliminated in consolidation.
These financial statements reflect all adjustments which,
in the opinion of management, are necessary for a fair
presentation of the Company's financial position, the
results of operations and its cash flows for the nine
months ended September 30, 1996 and 1995. The results for
the period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the
year ending December 31, 1996. This report should be read
in conjunction with the Financial Statements and Notes
contained in the Company's Annual Report for the year
ended December 31, 1995.
Net Income (Loss) Per Share:
Income (loss) per share is calculated based on the
weighted average number of common shares outstanding as
the effect of including common stock equivalents would be
anti-dilutive.
Reclassifications:
Certain reclassifications have been made in the 1995
financial statements in order to conform with 1996
financial statement presentation. These reclassifications
have no effect on accumulated deficit or net loss, as
originally reported.
7
<PAGE>
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion regarding the financial statements of the Company
should be read in conjunction with the financial statements and notes thereto
included elsewhere in this Report.
The Company did not engage in operations until the quarter ended June 30, 1995,
and the results for the nine months ended September 30, 1995 are not indicative
of the entire year's results.
The Company acquired KSM Financial Holdings and Global Financial, Inc.
in November 1995, but the acquisition was mutually rescinded in November 1996.
The results of operations for the nine months ended September 30, 1996 do not
include the results of operations of these former subsidiaries.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTER 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: None
9
<PAGE>
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.
Date: January 10, 1997 By: /s/ Dempsey K. Mork
--------------------
Dempsey K. Mork
(Chief accounting and financial officer
and duly authorized officer)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
AS OF SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000915337
<NAME> DEVELOPMENT BANCORP, LTD.
<MULTIPLIER> 1
<CURRENCY> US dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jul-01-1996
<PERIOD-END> Sep-30-1996
<EXCHANGE-RATE> 1
<CASH> 839,388
<SECURITIES> 1,297,547
<RECEIVABLES> 268,117
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,750,587
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,049,197
<CURRENT-LIABILITIES> 1,261,637
<BONDS> 0
0
165,000
<COMMON> 3,727,496
<OTHER-SE> 1,139,936
<TOTAL-LIABILITY-AND-EQUITY> 4,049,197
<SALES> 0
<TOTAL-REVENUES> 1,097
<CGS> 0
<TOTAL-COSTS> 331,155
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (324,072)
<INCOME-TAX> 0
<INCOME-CONTINUING> (324,072)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (324,072)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> (.31)
</TABLE>
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