SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-2290
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SOUTHERN ACCEPTANCE CORPORATION
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-0898219
- -------------------------------- --------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
277 Pat Mell Road, Suite A, Marietta, GA 30060
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(Address of principal executive offices)
(770) 432-6684
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(Issuer's telephone number)
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
---
As of August 8, 1996 the number of shares of the issuer's
common stock outstanding was 5,238,905.<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SOUTHERN ACCEPTANCE CORPORATION AND SUBSIDIARIES
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash and Cash Items $ 200,105
Other Current Assets 479
----------
Total Current Assets 200,584
Property, Plant and Equipment,
at cost 165,487
Accumulated Depreciation (124,420)
----------
41,067
----------
TOTAL ASSETS $ 241,651
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts and Notes Payable $ 16,868
Other Current Liabilities 825
----------
Total Current Liabilities 17,693
Long-Term Debt 37,003
Stockholders' Equity:
Common Stock 521,347
Additional paid-in capital 2,615,506
Retained-earnings (deficit) (2,949,898)
----------
186,955
----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 241,651
=========
</TABLE>
See notes to condensed consolidated financial statements.
-2-<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
SOUTHERN ACCEPTANCE CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------- ------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income:
Interest $ 2,276 $ 916 $ 4,096 $ 2,546
Rental income 2,475 2,300 4,217 6,106
Sales commissions -0- 2,342 6,242 2,342
Sales of property held
for resale -0- -0- -0- 127,922
-------- -------- -------- --------
Gross revenues 4,751 5,558 14,555 138,916
Expenses:
Interest 1,035 1,819 2,091 4,800
Commissions -0- 1,756 9,461 8,777
Cost of sales of property
held for resale -0- 1,140 -0- 125,470
Administrative and general 27,122 19,332 54,984 47,842
Depreciation 2,800 3,510 5,600 7,020
-------- -------- -------- --------
Total expenses 30,957 27,557 72,136 193,909
-------- -------- -------- --------
Net (loss) $(26,206) $(21,999) $(57,581) $(54,993)
======== ======== ======== ========
Net (loss) per share $ (.005) $ (.004) $ (.011) $ (.010)
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
SOUTHERN ACCEPTANCE CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------- -----------------
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Net cash provided
by (used in):
Operating activities $(16,948) $ 53,837 $(49,247) $142,408
Investing activities -0- (3,694) 122,381 (3,694)
Financing activities (889) (817) (1,757) (24,405)
-------- -------- -------- --------
Net increase (decrease)
in cash and cash
equivalents (17,837) 49,326 71,377 114,309
Cash and cash equivalents
at beginning of period 217,942 76,076 128,728 11,093
-------- -------- -------- --------
Cash and cash equivalents
at end of period $200,105 $125,402 $200,105 $125,402
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
-3-<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SOUTHERN ACCEPTANCE CORPORATION AND SUBSIDIARIES
June 30, 1996
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Accordingly, they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included.
The results of operations for the quarter and the six-month
period ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the full year. These financial
statements should be read in conjunction with the Company's
financial statements and related notes in the Company's 1995
Annual Report on Form 10-K.
Note B - Proposed Merger
On January 22, 1996 the Company entered into an Agreement
and Plan of Merger (the "Merger") with Efficiency Lodge, Inc.
("ELI"), a Georgia corporation, pursuant to which ELI would be
merged into the Company. As part of the Merger, the ELI
shareholders would receive approximately 95% of the shares of the
surviving corporation. Shareholders of the Company would receive
one share of stock in the surviving corporation for each one
hundred shares of stock of the Company held by them prior to the
Merger and collectively would hold 5% of the shares of the
surviving corporation. On January 25, 1996, the Company filed a
preliminary proxy statement with the SEC concerning the proxy
statement to be mailed to the shareholders of the Company in
connection with the proposed Merger. Since then the Company has
filed two amendments in response to letters of comment from the
SEC. Following a final review of the proxy statement by the SEC,
the Company will call a special meeting of its shareholders to
consider the proposed merger.
Note C - Change in Fiscal Year
On September 12, 1995, the Company's Board of Directors
voted to change the Company's fiscal year from September 30 to
December 31 in anticipation of the proposed merger discussed in
Note B, and a Form 8-K to report this event was filed with the
SEC.
-4-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Interest income for the quarter ended June 30, 1996
increased 148% over the corresponding quarter in the preceding
year due to investing the proceeds from the sale of the Company's
last piece of investment property in certificates of deposit.
While rental income for the quarter ended June 30, 1996 increased
8% over the year earlier quarter, rental income for the six
months ended June 30, 1996 decreased 31% from the comparable
period in 1995. Inasmuch as there was no residential sales
activity during the quarter ended June 30, 1996, the quarter was
otherwise uneventful except for work on the proposed Merger which
gave rise to an increase in administrative and general expenses.
While the Company is exercising tight expense controls, it
continues to suffer from a lack of sufficient operating revenues
to cover administrative and general expenses. Management hopes
that consummation of the proposed Merger will revitalize the
Company's operations.
The Company's financial condition is stable, with a current
ratio of 11 to 1. The Company hopes to use some of these funds
to buy and sell property at a profit in order to generate
capital. There is no assurance, however , that such transactions
will materialize. Management anticipates that some of the
Company's funds will continue to be used to pay legal, accounting
and other expenses in connection with the proposed Merger.
<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 Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The following exhibit is filed as a part of this
report:
Exhibit 27 - Financial Data Schedule
(b) None
<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.
SOUTHERN ACCEPTANCE CORPORATION
(Registrant)
Date August 14, 1996 /s/ J. A. Cochran
J. A. Cochran, President
Date August 14, 1996 /s/ Bonnie L. Byers
Bonnie L. Byers, Vice President and
Secretary-Treasurer
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092066
<NAME> SOUTHERN ACCEPTANCE CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 200,105
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 200,584
<PP&E> 165,487
<DEPRECIATION> 124,420
<TOTAL-ASSETS> 241,651
<CURRENT-LIABILITIES> 17,693
<BONDS> 37,003
0
0
<COMMON> 521,347
<OTHER-SE> (334,392)
<TOTAL-LIABILITY-AND-EQUITY> 241,651
<SALES> 0
<TOTAL-REVENUES> 14,555
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 72,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,091
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (57,581)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,581)
<EPS-PRIMARY> (.011)
<EPS-DILUTED> (.011)
</TABLE>
