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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2004

[  ]   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 O-24512
 

Anza Capital, Inc.
(Exact name of registrant as specified in its charter)
 
Nevada
(State or other jurisdiction of
incorporation or organization)
 
 
88-1273503
(I.R.S. Employer
Identification No.)
3200 Bristol Street, Suite 700
Costa Mesa, CA
(Address of principal executive offices)
 
92626
(Zip Code)

Registrant’s telephone number, including area code (714) 866-2100
 
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 (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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ___   No _X_    

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
 
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___    No ___      

Applicable only to corporate issuers

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. As of March 18, 2004, there were 8,967,460 shares of common stock issued and 4,829,960 shares of common stock outstanding.

 
     
 
 
ANZA CAPITAL, INC. 
 
TABLE OF CONTENTS
 

 


PART I
 
 
 
ITEM 1
Financial Statements
3
 
 
 
ITEM 2
Management’s Discussion and Analysis
15
 
 
 
ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
27
 
 
 
ITEM 4    

 Controls and Procedures

27

     
PART II
ITEM 1
Legal Proceedings
29
 
 
 
ITEM 2
Changes in Securities and Use of Proceeds
29
 
 
 
ITEM 3
Defaults Upon Senior Securities
30
 
 
 
ITEM 4
Submission of Matters to a Vote of Security Holders
30
 
 
 
ITEM 5
Other Information
30
 
 
 
ITEM 6
Exhibits and Reports on Form 8-K
28

 

 
  2  
 

PART I

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading “Management’s Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Company’s future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

ITEM 1    Financial Statements

 
  3  
 
 

ANZA CAPITAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
  
 
 
 
  
January 31, 2004
April 30, 2003
 
  
(Unaudited)
 
ASSETS
    
 
    
 
  
Current assets:
    
 
    
 
  
Cash and cash equivalents
  
$
3,829,939
  
$
2,755,659
  
Commissions and accounts receivable
    
1,629,806
    
2,512,741
  
Loans held for sale, net
    
1,926,480
    
7,601,623
  
Secured note receivable, current portion
    
30,000
    
-
  
Prepaids and other current assets
    
72,597
    
76,748
  
   
 
 
Total current assets
    
7,488,822
    
12,946,771
  
 
    
 
    
 
  
Property and equipment, net
   
341,468
    
253,723
  
Goodwill
   
-
    
195,247
  
Secured note receivable
    
150,000
    
-
  
Other assets
    
63,910
    
22,879
  
   
 
 
 
  
$
8,044,200
  
$
13,418,620
  
   
 
 
 
    
 
    
 
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
 
    
 
  
Current liabilities:
    
 
    
 
  
Accounts payable
  
$
425,428
  
$
677,951
  
Commissions payable
    
3,234,361
    
2,687,511
  
Warehouse line of credit
    
1,901,667
    
7,514,209
  
Accrued liabilities
    
622,410
    
532,337
  
Other current liabilities
    
386,825
    
75,601
  
   
 
 
Total current liabilities
    
6,570,691
    
11,487,609
  
 
    
 
    
 
  
Stockholders’ equity:
    
 
    
 
  
Preferred stock, 2,500,000 shares authorized:
    
 
    
 
  
Class D convertible preferred stock, no par value; liquidation
value of $126.81 per share; 15,000 shares authorized; 8,201.5
shares outstanding as of January 31, 2004 and April 30, 2003
    
1,040,222
    
1,040,222
  
Class E convertible preferred stock, no par value; liquidation
value of $1.00 per share; 250,000 shares authorized; 149,593
and 217,278 shares issued and outstanding as of January 31, 2004
and April 30, 2003, respectively
    
149,593
    
217,278
  
Class F convertible preferred stock, no par value; liquidation
value of $16.675 per share; 25,000 shares authorized, 18,800
shares issued and outstanding as of January 31, 2004 and April 30,
2003
    
 
313,490
    
313,490
  
Common stock, $0.001 par value; 100,000,000 shares
authorized; 8,967,460 and 4,967,460 shares issued at
January 31, 2004 and April 30, 3003, respectively, and
4,829,960 shares outstanding as of January 31, 2004
and April 30, 2003
    
4,830
    
4,830
  
Additional paid-in capital
    
13,639,114
    
13,639,114
  
Accumulated deficit
    
(13,673,740
)
  
(13,283,923
)
   
 
 
Total stockholders’ equity
    
1,473,509
    
1,931,011
  
   
 
 
 
    
 
    
 
  
 
  
$
8,044,200
  
$
13,418,620
  
   
 
 
 
    
 
    
 
  
See accompanying notes

 
  4  
 
 

ANZA CAPITAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


 
  
Three Months Ended
Nine Months Ended
   
 
  
January 31, 2004
January 31, 2003
January 31, 2004
January 31, 2003
   
 
  
 
 
 
 
Revenues:
    
 
    
 
    
 
    
 
  
Broker commissions
  
$
12,431,253
  
$
14,785,313
  
$
46,858,850
  
$
40,546,084
  
Sales of loans, net
    
97,897
    
140,921
    
208,516
    
205,950
  
Notary and other
    
171,194
    
387,173
    
1,638,754
    
1,117,841
  
   
 
 
 
 
 
    
12,700,344
    
15,313,407
    
48,706,120
    
41,869,875
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Cost of revenues:
    
 
    
 
    
 
    
 
  
Broker commissions
    
8,094,274
    
9,825,448
    
32,359,506
    
28,829,652
  
Notary and other
    
136,499
    
251,462
    
1,015,000
    
739,428
  
   
 
 
 
 
 
    
8,230,773
    
10,076,910
    
33,374,506
    
29,569,080
  
   
 
 
 
 
Gross profit
    
4,469,571
    
5,236,497
    
15,331,614
    
12,300,795
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Operating expenses:
    
 
    
 
    
 
    
 
  
General and administrative
    
2,203,282
    
2,652,752
    
7,061,770
    
5,302,651
  
Salaries and wages
    
2,525,064
    
1,955,153
    
8,168,243
    
5,346,746
  
Selling and marketing
    
91,448
    
207,485
    
304,507
    
551,546
  
Impairment of goodwill
    
195,247
    
-
    
195,247
    
150,000
  
     
 
 
   
 
 
    
5,015,041
    
4,815,390
    
15,729,767
    
11,350,943
  
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Operating income (loss)
   
(545,470
)
  
421,107
    
(398,153
)
  
949,852
  
 
    
 
    
 
    
 
    
 
  
Interest expense
    
(37,004
)
  
(38,477
)
  
(336,261
)
  
(103,085
)
Interest income
    
61,556
   
41,371
   
359,700
   
96,258
 
     
 
 
   
 
Net income (loss)
  
$
(520,918
)
$
424,001
  
$
(374,714
)
$
943,025
  
   
 
 
 
 
                           
Earnings (loss) per common share:
    
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
    
 
  
Basic:
    
 
    
 
    
 
    
 
  
Weighted average number of common shares
    
4,829,960
   
2,752,442
    
4,829,960
    
2,336,113
  
Net income (loss) per common share
  
$
(0.11
)
$
0.15
  
$
(0.08
)
$
0.40
  
 
    
 
    
 
    
 
    
 
  
Diluted:
    
 
    
 
    
 
    
 
  
Weighted average number of common shares
    
4,829,960
   
8,027,033
    
4,829,960
    
7,610,705
  
Net income (loss) per common share
  
$
(0.11
)
$
0.05
  
$
(0.08
)
$
0.12
  
 
    
 
    
 
    
 
    
 
  

 
See accompanying notes

 
  5  
 

ANZA CAPITAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  
Nine Months
Ended
January 31, 2004
Nine Months
Ended
January 31, 2003
   
Cash flows from operating activities:
    
 
    
 
  
Net income (loss)
 
$
(374,714
)
$
943,025
  
Adjustments to reconcile net income (loss) to net cash provided
   by operating activities:
    
 
    
 
  
Depreciation
    
38,055
    
31,494
  
Stock-based compensation
    
-
    
173,234
  
Impairment of goodwill
    
195,247
    
150,000