United States
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, 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: 0-24344
Citizens Capital Corp.
(Name of Small Business Issuer as specified in its charter)
Texas 75-2368452
(State or other jurisdiction (IRS Employer
of incorporation organization) Identification No.)
8214 Westchester, Suite 500, Dallas, Texas 75225* Mailing Address: P. O. Box
670406, Dallas, Texas 75367
(Address of principal executive offices)
Issuer's telephone number, including area code: (972) 960-2643
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ] No [x]
Number of shares outstanding of the issuer's common stock as of August 10, 1999:
40,500,000 shares of common stock, no par value.
Transitional Small Business Disclosure Format:
Yes [ ] No [x]
2
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<CAPTION>
INDEX TO FORM 10-QSB
Page No.
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PART I
<S> <C>
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis 7
of Financial Condition
PART II
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of 9
Securities Holders
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
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PART I-FINANCIAL INFORMATION
The balance sheet as of June 30, 1999; statements of operations; statement of
cash flows for the second quarter ended June 30, 1999 and 1998 were taken from
the Company's books and records without audit. However, in the opinion of
management, such information includes all adjustments (consisting only of normal
recurring accruals) which are necessary to properly reflect the financial
position of the Company as of June 30, 1999 and results of operations for the
second quarter ended June 30, 1999 and 1998. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed and omitted,
although management believes the disclosures are adequate to make the
information presented not misleading. These interim unaudited financial
statements should be read in conjunction with the Company's audited annual
financial statements for the years ended December 31, 1998 and 1997 located in
the Company's Form 10-SB registration statement filed with the Securities and
Exchange Commission on March 19, 1999.
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INDEX TO FINANCIAL STATEMENTS
Page No.
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Consolidated Balance Sheets 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 6
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<CAPTION>
Item 1. Financial Statements
CITIZENS CAPITAL CORP.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
For the Six Months Ended June 30, 1999 and 1998
AND THE PERIOD FROM INCEPTION(MARCH 12, 1991) TO
JUNE 30, 1999
(Unaudited)
ASSETS
------
CURRENT ASSET -
<S> <C>
Cash $ 3,350
OFFICE EQUIPMENT, net of accumulated depreciation of $3,338 222
INTANGIBLE ASSETS, net 350
-------------
Total assets $ 3,922
=============
LIABILITIES AND STOCKHOLDER'S EQUITY
-------------------------------------
CURRENT LIABILITIES -
Accounts payable $ 1,750
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 stated value, 5,000,000 shares authorized;
1,000,000 shares issued and outstanding 1,000,000
Common stock, no par value, 100,000,000 shares authorized;
40,500,000 shares issued and outstanding ($.01 stated value) 405,000
Additional paid-in capital 48,795,009
Note receivable from ESOP (50,100,000)
Deficit accumulated during the development stage (97,837)
-------------
Total stockholders' equity 2,172
-------------
Total liabilities and stockholders' equity $ 3,922
=============
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<CAPTION>
CITIZENS CAPITAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the SIX Months Ended June 30, 1999 and 1998
AND THE PERIOD FROM INCEPTION(MARCH 12, 1991) TO
JUNE 30, 1999
(Unaudited)
SIX Months Ended June 30, Period from
-------------------------- March 12, 1991 to
1999 1998 JUNE 30, 1999
------------ ------------ ---------------
<S> <C> <C> <C>
SALES $ 0 $ 438 $ 438
COST OF SALES 0 275 275
------------ ------------ ---------------
0 163 163
GENERAL AND ADMINISTRATIVE EXPENSES 5,556 4,379 98,000
------------ ------------ ---------------
NET LOSS $ (5,556) $ (4,216) $ (97,837)
============ ============ ===============
NET LOSS PER SHARE (BASIC AND DILUTED) $ -- $ --
Weighted Average Shares 40,500,000 22,500,000
============ ============
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<CAPTION>
CITIZENS CAPITAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the SIX Months Ended June 30, 1999 and 1998
AND THE PERIOD FROM INCEPTION(MARCH 12, 1991) TO
JUNE 30, 1999
(Unaudited)
six months
Ended June 30, Period from
------------------ March 12, 1991 to
1999 1998 June 30, 1999
-------- -------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,556) $(4,216) $ (97,837)
================
Adjustments to reconcile net loss to cash used by
operating activities:
Expenses paid by stockholder 3,693 3,048 79,684
Depreciation and amortization 98 168 3,388
Increase in accounts payable 750 1,000 1,750
-------- -------- ----------------
Net cash used by operating activities (1,015) - (13,015)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment - - (3,560)
Payment for intangible assets - - (250)
-------- -------- ----------------
Net cash used by investing activities - - (3,810)
CASH FLOWS FROM FINANCING ACTIVITIES -
Sale of stock and contribution by stockholder 3,350 865 20,175
-------- -------- ----------------
NET INCREASE (DECREASE) IN CASH 2,335 865 3,350
CASH, beginning of period 1,015 150 1,015
-------- -------- ----------------
CASH, end of period $ 3,350 $ 1,015 4,365
======== ======== ================
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Citizens Capital Corp.
Notes to Consolidated Financial Statements
(Unaudited)
1. Unaudited Information
- --------------------------
See notes to the Company's audited financial statements included in the
Company's Form 10-SB registration statement filed with the Securities and
Exchange Commission on March 19, 1999.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
Citizens Capital Corp. (the "Company") is a development stage, acquisition
oriented, holding company whose objectives are to acquire and/or develop
operating entities, assets and/or marketing rights which provide the Company
with an initial entry into new markets or serve as complementary additions to
existing operations, assets and/or products.
Currently, the Company's plans contemplate operating and taking acquisition
initiatives in the following three market segments: 1) residential mortgage
loan marketing, commercial and residential real estate investment and
development; 2) news print publishing and 3) the design, marketing and
distribution of branded athletic shoes and apparel, through its three 97% owned
subsidiaries: Landrush Realty Corporation ("Landrush"); Media Force Sports &
Entertainment, Inc. ("Media Force"); and SCOR Brands, Inc. ("SCOR"). Operations
since inception have primarily included expenditures related to development of
the Company's planned business ventures.
Results of Operations
Six Months Ended June 30, 1999
REVENUES. Revenue of $0 for the second quarter of 1999 compares to $438 for the
second quarter of 1998. For the second quarter end 1999 and 1998 respectively,
the Company's products and services were not fully introduced into their
respective markets. Revenue for the second quarter ended June 30, 1998 consist
entirely of products offered by the Company's SCOR Brands unit. Moreover, for
the same period ended June 30, 1999, the Company's revenue decreased due to a
change in its operational strategy. While very competitive, the Company
believes that the markets for each of its products and services remain strong.
In order to facilitate the entry of its initial products and services into their
respective markets, the Company elected to implement a strategy of purchasing
revenue streams through the acquisition of those certain operating entities,
assets and/or marketing rights which provide the Company with an initial entry
into new markets or serve as complementary additions to existing operations,
assets and/or products.
While the Company's revenue for the comparative period reported reflects a
decrease, the Company believes that its strategy of seeking to purchase revenue
streams through the merger and acquisition process will allow the Company to
leverage any assets acquired, gain greater access to capital and thereby
expedite revenue growth for each of its business segments.
In addition to introducing its own products and services into their respective
markets, the Company intends to utilize the remainder of its 1999 fiscal year
focusing on identifying, evaluating and pursuing suitable merger and/or the
acquisition of those operating, revenue producing entities which offer products
and/or services similar to, or the same as, those proposed by the Company. The
Company continues in direct contact with various companies who may be suitable
acquisition candidates for the Company. Moreover, the Company maintains ongoing
relationship with investment banks and business intermediaries who represent
companies operating in various industries who are seeking to be acquired.
GROSS PROFIT. Gross profit of $0 for the second quarter of 1999 compares to
$163 , or 37.2 percent of revenues, for the second quarter of 1998. The
reduction of gross profit in the current quarter is attributable to the lack of
revenue generated in the second quarter of 1999.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expenses of $5,556 for the second quarter of 1999 compares to
$4,379 for the second quarter of 1998. The increase in selling, general and
administrative expenses reflects an increase in the cost associated with the
Company's ongoing identification, evaluation and pursuit of suitable acquisition
candidates. As the Company intensifies its efforts for the remainder of its
1999 fiscal year, the Company expects that cost associated with the Company's
ongoing identification, evaluation and pursuit of suitable acquisition
candidates will increase.
OTHER INCOME (EXPENSES). The Company did not generate any other items of income
or expense for the second quarter of 1999 nor the second quarter of 1998.
NET INCOME (LOSS). A net loss of $5,556 on revenue of $0 for the second quarter
of 1999 compares to a net loss of $4,216 on revenue of $438 for the second
quarter of 1998.
8
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Liquidity And Capital Resources
To continue its plan of operation for the remainder of its 1999 fiscal year, the
Company expects to undertake capital obligations in order to market, distribute
and expand the products and/or services proposed by its Landrush Realty
Corporation (Landrush); Media Force Sports & Entertainment Inc. (Media Force)
and SCOR Brands Inc. (SCOR) subsidiaries.
The Company expects to undertake initial capital obligations of $220,000 to hire
executive management and general administration personnel for itself.
Subsequently, the Company expects to incur additional capital obligations of
$290,000 to hire management, general administration, marketing and sales
personnel for each of Landrush; Media Force and SCOR. In order to fund the
continuance of its operations, the Company expects to undertake working capital
obligations of $100,000 for itself and $100,000 each for Landrush; Media Force
and SCOR.
The Company expects to expand the products and services proposed to be offered
by Landrush; Media Force and SCOR primarily by acquiring those existing, income
producing operating entities that offer products and services similar to, or the
same as, those offered by Landrush; Media Force and SCOR. To facilitate its
growth and expansion plans for Landrush; Media Force and SCOR, the Company
intends to obtain loans from affiliates of the Company in the amounts of
$415,000; $750,000 and $400,000 respectively for each of its three subsidiaries.
Plan of Operation
The Company's plan of operation for the remainder of its 1999 fiscal year is to:
(1) introduce into the consumer marketplace the products and/or services
proposed by its three subsidiaries: Landrush, Media Force and SCOR and (2)
continue to identify, evaluate and pursue suitable merger and/or acquisition of
those operating, income producing entities which offer products and/or services
similar to, or the same as, those proposed by the Company.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
The Company has 100,000 class A warrants outstanding as of June 30, 1999. Each
one (1) warrant gives the holder thereof the entitlement to purchase from, the
Company, ten (10) shares of the Company's common stock at $0.01 per share.
1,000,000 shares of the Company's class A common stock are subject to issuance
from the exercise of said 100,000 class A warrants outstanding.
Said warrants have a perpetual life until that time in which the common stock of
the Company is registered for public sale with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 ("Act") or the Exchange Act of
1934 ("Exchange Act"). After such time that the Company's registration
statement for the public sale of its Common Stock becomes effective, the
warrants herein offered shall no longer have a perpetual life. Instead, said
warrants shall have a life of 30 days. Said 30 days shall commence and take
effect and be counted from the date that the Company's registration statement
for the public sale of its common stock becomes effective under the ("Act") or
("Exchange Act") unless such time period is extended or waived by a vote of the
Company's Board of Directors.
9
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In order to forestall the immediate further dilution of its common stock
outstanding, the board of directors, at a special meeting held on June 6, 1999,
resolved to waive the requirement that holders of its class A warrants exercise
said warrants no more than 30 days from the date that the Company's registration
statement for the public sale of its common stock becomes effective pursuant to
("Exchange Act"). As a result, the Company's class A warrants retain their
perpetual life and may be exercised at the discretion of class A warrants
holders at any time.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securities Holders.
None
10
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Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
EXHIBIT INDEX
SEE "EXHIBIT INDEX" ON PAGE 11
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: August 10, 1999
By:
----------------------------
Chief Executive Officer
By: /s/ Billy D. Hawkins
----------------------------
Chief Executive Officer
Citizens Capital Corp.
- ------------------------
(Registrant)
11
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EXHIBIT INDEX
Exhibit No Description
- ---------- --------------------------------------------------------------
27.1 Financial Data Schedule for the Six Months Ended June 30, 1999
27.2 Financial Data Schedule for the Six Months Ended June 30, 1998
12
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3350
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3922
<PP&E> 222
<DEPRECIATION> 3338
<TOTAL-ASSETS> 3922
<CURRENT-LIABILITIES> 1750
<BONDS> 0
0
1000000
<COMMON> 405000
<OTHER-SE> (50100000)
<TOTAL-LIABILITY-AND-EQUITY> 3922
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 5556
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (5556)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5556)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1015
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4020
<PP&E> 320
<DEPRECIATION> 3240
<TOTAL-ASSETS> 4020
<CURRENT-LIABILITIES> 1500
<BONDS> 0
0
1000000
<COMMON> 405000
<OTHER-SE> (50100000)
<TOTAL-LIABILITY-AND-EQUITY> 4020
<SALES> 438
<TOTAL-REVENUES> 438
<CGS> 275
<TOTAL-COSTS> 4379
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (4216)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4216)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
