U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
OR
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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: 0-28168
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STRATEGIC CAPITAL RESOURCES, INC. |
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(Exact name of registrant as specified in its charter) |
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Florida |
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11-3289981 |
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(State or other Jurisdiction of |
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(I.R.S Employer |
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7900 Glades Road, Suite 610, |
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33434 |
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(Address of principal executive offices) |
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(Zip Code) |
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(561) 558-0165 |
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(Registrant’s Telephone Number, Including Area Code) |
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Indicate by check mark whether the Registrant (1) has 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, and (2) has been subject to such filing requirements for the past 90 days.
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Yes x |
No o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
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Yes o |
No x |
The aggregate market value of the Registrant’s outstanding Common Stock held by non-affiliates of the Registrant is not determinable due to lack of reported trading in such securities. There were 77,190 shares of Common Stock outstanding as of November 10, 2003.
TABLE OF CONTENTS
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PAGE |
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Index |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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Condensed Consolidated Balance Sheets as of September 30, 2003 (unaudited) and June 30, 2003 |
3 |
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4 |
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5 |
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6 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
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Item 3. |
18 |
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Item 4. |
18 |
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PART II |
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Item 1. |
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Item 2. |
19 |
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Item 3. |
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Item 4. |
19 |
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Item 5. |
19 |
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Item 6. |
Exhibits and Reports on Form 8-K (§ 229.601 of this Chapter) |
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20 |
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CERTIFICATIONS |
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THE REST OF THIS PAGE IS LEFT INTENTIONALLY BLANK
2
STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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September 30, 2003 |
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June 30, |
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ASSETS |
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REVENUE PRODUCING ASSETS |
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Net investment in direct financing arrangements: |
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Model homes |
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$ |
5,191,886 |
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$ |
7,013,523 |
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Residential real estate |
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12,686,677 |
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18,437,797 |
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Model homes under operating leases, net of accumulated depreciation of $306,208 |
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32,976,205 |
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25,981,488 |
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Total Revenue Producing Assets |
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50,854,768 |
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51,432,808 |
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OTHER ASSETS |
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Cash and cash equivalents |
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484,305 |
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6,448,089 |
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Deferred charges, net |
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283,258 |
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537,664 |
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Deferred operating lease income receivable |
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297,507 |
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171,187 |
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Prepaid income taxes |
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203,447 |
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89,101 |
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Total Other Assets |
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1,268,517 |
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7,246,041 |
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TOTAL ASSETS |
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$ |
52,123,285 |
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$ |
58,678,849 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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LIABILITIES |
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Mortgages and notes payable |
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$ |
40,027,787 |
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$ |
47,874,223 |
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Accounts payable and accrued expenses |
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874,296 |
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807,400 |
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Unearned income |
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19,932 |
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46,410 |
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Current income taxes |
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91,994 |
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— |
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Deferred income taxes |
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373,749 |
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373,749 |
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Stockholder loans |
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1,200,000 |
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300,000 |
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Total Liabilities |
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42,587,758 |
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49,401,782 |
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COMMITMENTS AND CONTINGENCES |
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STOCKHOLDERS’ EQUITY |
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Preferred stock, $.01 par value, 5,000,000 shares authorized, -0- shares issued and outstanding |
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— |
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— |
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Common stock, $.001 par value, 25,000,000 shares authorized, 77,195 shares issued and 77,190 shares outstanding at September 30, 2003 and 87,560 at June 30, 2003, respectively |
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78 |
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88 |
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Additional paid-in capital |
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8,389,848 |
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8,847,616 |
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Treasury stock, 5 and 10,370 shares at cost, respectively |
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(221 |
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(457,999 |
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Retained earnings |
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1,145,822 |
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887,362 |
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Total Stockholders’ Equity |
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9,535,527 |
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9,277,067 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
52,123,285 |
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$ |
58,678,849 |
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See accompanying notes to condensed consolidated financial statements
3
STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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For the three months ended |
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For the three months ended |
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Revenue and other income: |
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Interest income on direct financing arrangements: |
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Model homes |
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$ |
170,434 |
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$ |
436,847 |
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Residential real estate |
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481,722 |
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1,813,735 |
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Multi-family residential property (sold March, 2003) |
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— |
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226,520 |
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Rental income on operating leases |
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859,499 |
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— |
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Gain on sales of model home properties under direct financing arrangements |
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321,077 |
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7,952 |
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Other interest and other income |
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11,798 |
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8,780 |
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Total revenues and other income |
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1,844,530 |
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2,493,834 |
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Cost and operating expenses: |
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Interest and financing charges to financial institutions |
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515,096 |
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1,054,074 |
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Interest and financing charges to stockholders |
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8,137 |
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34,364 |
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Model home depreciation |
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131,232 |
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— |
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Amortization |
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248,363 |
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355,901 |
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Corporate selling, general and administrative |
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591,248 |
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448,085 |
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Impairment charges |
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— |
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250,000 |
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Total costs and operating expenses |
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1,494,076 |
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2,142,424 |
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Income before income tax expense |
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350,454 |
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351,410 |
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Income tax expense |
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91,994 |
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152,313 |
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Net income |
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258,460 |
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199,097 |
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Preferred stock distributions |
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— |
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5,000 |
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Income applicable to common stockholders |
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$ |
258,460 |
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$ |
194,097 |
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Earnings per share data: |
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Basic and diluted earnings per share |
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$ |
3.35 |
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$ |
2.51 |
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Weighted average number of common shares outstanding: |
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Basic and diluted |
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77,190 |
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77,190 |
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See accompanying notes to condensed consolidated financial statements
THE REST OF THIS PAGE IS LEFT INTENTIONALLY BLANK
4
STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
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For the three months ended |
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For the three months ended |
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Retained earnings at beginning of period |
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$ |
887,362 |
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$ |
11,115 |
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Net income |
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258,460 |
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199,097 |
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Cash dividends distributed |
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— |
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(5,000 |
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Retained earnings at end of quarter |
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$ |
1,145,822 |
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$ |
205,212 |
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See accompanying notes to condensed consolidated financial statements
THE REST OF THIS PAGE IS LEFT INTENTIONALLY BLANK
5
STRATEGIC CAPITAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the three months ended |
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For the three months ended |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
258,460 |
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$ |
199,097 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Gain on sales of model home properties under direct financing arrangements |
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(321,077 |
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(7,952 |
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Deferred operating lease income |
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(126,320 |
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— |
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Interest expense from implicit interest on multi-family residential property |
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— |
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31,717 |
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Depreciation |
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131,232 |
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— |
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Amortization |
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248,363 |
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355,901 |
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Deferred income taxes |
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— |
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(147,686 |
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Changes in operating assets and liabilities: |
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(Increase) in other assets |
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— |
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(106,056 |
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(Decrease) increase in current income taxes |
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(22,352 |
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— |
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(Decrease) increase in accounts payable and accrued expenses |
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66,896 |
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348,999 |
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(Decrease) increase in unearned income |
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(26,478 |
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3,501 |
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Total adjustments |
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(49,736 |
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478,424 |
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Net cash provided by operating activities |
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208,724 |
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677,521 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Investment in properties under direct financing arrangements: |
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Residential real estate |
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(786,682 |
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(700,226 |
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Investment in properties under operating lease arrangements: |
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Model homes |
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(7,125,949 |
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— |
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Proceeds from sales of properties under direct financing arrangements |
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834,081 |
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836,233 |
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Net cash (used in) provided by investing activities |
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(7,078,550 |
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