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 September 30, 2001.
[ ] 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: 0-29830
Citizens Capital Corp.
(Name of Small Business Issuer as specified in its charter)
Texas 75-2368452
(State or other jurisdiction of (IRS Employer
incorporation organization) Identification No.)
1223 E. Beltline Rd., Suite 116, DeSoto, Texas 75115* 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 [x] No [ ]
Number of shares outstanding of the issuer's common stock as of November 11,
2001: 48,022,500 shares of common stock, no par value.
Transitional Small Business Disclosure Format:
Yes [ ] No [x]
INDEX TO FORM 10-QSB
Page No.
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PART I
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition 7
PART II
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of
Securities Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 9
2
PART I-FINANCIAL INFORMATION
The balance sheet as of September 30, 2001; statements of operations and
statement of cash flows for the third quarters ended September 30, 2001 and 2000
respectively and the period from inception (March 12, 1991) to September 30,
2001 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 September 30, 2001; results of
operations and cash flow for the third quarters ended September 30, 2001 and
2000 respectively. 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, 2000 and 1999 located in the Company's Form 10-KSB annual
report filed with the Securities and Exchange Commission on April 15, 2001.
INDEX TO FINANCIAL STATEMENTS
Page No.
--------
Consolidated Balance Sheets 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
3
Item 1. Financial Statements
CITIZENS CAPITAL CORP.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2001
ASSETS
------
CURRENT ASSETS -
Cash $ 63
Accounts Receivable 3,973
-------------
Total current assets 4,036
EQUIPMENT, net of accumulated depreciation of $7,059 27,447
OTHER ASSETS
Intangible Assets, net 320
Total Assets $ 31,803
-------------
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES -
Current portion of loans from stockholders $ 16,953
Accounts payable and accrued liabilities 35,115
Credit Card Cash Advances 38,418
Advances from stockholder 8,270
Total current liabilities 98,756
LONG TERM LIABILITIES
Loans from stockholders, net of current portion 14,361
Total Liabilities 113,117
-------------
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) 480,225
Additional paid-in capital 48,836,908
Stock held by subsidiary (5,000,000 common shares) (50,000)
Note receivable from ESOP (50,100,000)
Deficit accumulated during the development stage (248,447)
-------------
Total stockholders' equity (81,314)
Total liabilities and stockholders' equity 31,803
4
CITIZENS CAPITAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the NINE Months Ended SEPTEMBER 30, 2001 and 2000
AND THE PERIOD FROM INCEPTION (MARCH 12, 1991) TO
SEPTEMBER 30, 2001
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30 Period from
-------------------------- -------------------------- March 12, 1991 to
2001 2000 2001 2000 SEPTEMBER 30, 2001
------------ ------------ ------------ ------------ --------------------
SALES $ 17,461 $ 28,639 $ 58,278 $ 38,013 $ 120,804
COST OF SALES 4,296 7,476 12,747 9,053 26,618
------------ ------------ ------------ ------------ --------------------
13,165 21,163 45,531 28,960 94,186
GENERAL AND ADMINISTRATIVE EXPENSES 18,890 30,905 96,260 67,051 342,633
------------ ------------ ------------ ------------ --------------------
NET LOSS $ (5,725) $ (9,742) $ (50,729) $ (38,091) $ (248,447)
============ ============ ============ ============ ====================
NET LOSS PER SHARE (BASIC AND DILUTED) $ -- $ -- $ -- $ --
Weighted Average Shares 43,022,500 40,500,000 42,464,167 40,500,000
============ ============ ============ ============
5
CITIZENS CAPITAL CORP.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the NINE Months Ended SEPTEMBER 30, 2001 and 2000
AND THE PERIOD FROM INCEPTION (MARCH 12, 1991) TO
SEPTEMBER 30, 2001
(Unaudited)
NINE MONTHS ENDED Period from
SEPTEMBER 30, March 12, 1991 to
--------------------- ----------------------
2001 2000 SEPTEMBER 30, 2001
--------- ---------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(50,729) $ (38,091) $ (248,447)
Adjustments to reconcile net loss to cash used by
operating activities:
Expenses paid by stockholder --- --- 95,083
Depreciation and amortization --- 7,197
Change in Credit Cards advances --- 33,142 38,418
Services paid for with stock and options 25,125 --- 55,225
Change in Prepaid Expenses --- 1,000 ---
Change in accounts receivable (486) (1,887) (3,973)
Change in accounts payable and accrued
liabilities 21,176 8,477 35,115
--------- ---------- ----------------------
Net cash used by operating activities 4,914 2,641 (21,382)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and other assets --- (31,004) (34,564)
Payment for intangible assets --- (400)
--------- ---------- ----------------------
Net cash used by investing activities --- (31,004) (34,964)
CASH FLOWS FROM FINANCING ACTIVITIES -
Notes payable --- 28,653 ---
Sale of stock and contribution by stockholder --- 1,624 16,825
Loan from shareholder 4,600 --- 31,314
Stockholders advances --- --- 8,270
--------- ---------- ----------------------
Net cash provided by financing activities --- 30,277 56,409
NET INCREASE (DECREASE) IN CASH (314) 1,914 63
CASH, beginning of period 377 2,221 ---
--------- ---------- ----------------------
CASH, end of period $ 63 $ 4.135 $ 63
========= ========== ======================
6
CITIZENS CAPITAL CORP.
(a development stage company)
Notes to Consolidated Financial Statements
(Unaudited)
1. Unaudited Information
------------------------
The consolidated balance sheet as of September 30, 2001; consolidated statements
of operations and consolidated statements of cash flows for the nine month
periods ended September 30, 2001 and 2000 respectively 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 consolidated
financial position of the Company as of September 30, 2001; results of
operations and cash flow for the nine month periods ended September 30, 2001 and
2000 respectively.
On June 1, 2000, the Company acquired the operating assets of DeSoto, Texas
based Taylor Printing & Graphics which was integrated into the newly formed
Media Force Signs Graphics & Media division of its Media Force Sports &
Entertainment, Inc. subsidiary. The financial consideration for the purchase of
Taylor Printing & Graphics was $31,004 cash. The Company funded the $31,004 cash
purchase price from $1,004 cash on hand; the proceeds of a 3 year, 11.5%,
$25,000 loan borrowed by its Landrush Realty Corporation subsidiary and a 2
year, 8.5%, $5,000 loan borrowed from its President, Billy D. Hawkins.
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) commercial and
residential real estate investment and development; 2) commercial printing and
publishing; 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
Three Months Ended September 30, 2001
REVENUES. Revenue of $17,461 for the third quarter of 2001 compares to $28,639
for the third quarter of 2000. Effective June 1, 2000, the Company acquired
and integrated Taylor Printing and Graphics into the newly formed Media Force
Signs Graphics & Media division of its Media Force Sports & Entertainment, Inc.
subsidiary. The decrease in revenue for the third quarter end 2001 was due to a
general decline in spending in the overall economy. Said decrease in spending
has had a direct impact on business related commercial printing expenditures.
During the remainder of fiscal year 2001, the Company intends to add additional
media products and services to its commercial printing operations. Also, the
Company shall continue the evaluation, for acquisition, of other media product
and service companies to add to its Media Force Signs Graphics and Media
division. Moreover, the Company intends to open and/or acquire other locations
to be designated as Media Force Signs Graphics & Media retail outlets.
The Company, through its SCOR Brands, Inc. subsidiary has completed production
of its initial lines of SCOR Brand athletic footwear. It is the objective of
the Company to cause SCOR Brands to move its initial product lines into the
market and begin to generate revenues from the SCOR Brands unit. To facilitate
movement of said products into the market, it is the objective of the Company to
add additional SCOR Store retail outlets beginning in the Dallas,/Ft. Worth
7
market. It is the objective of the Company to add both company and franchise
owned SCOR Store retail outlets to facilitate distribution of its SCOR Brand
products. The Company believes that the market for its SCOR Brand products
remain strong and especially believes that there are great opportunities for a
new brand entrant in the $13 billion athletic footwear market.
The Company believes that the further penetration of its now developed products
and services into the market place will further its ability to increase
revenues. In addition, the Company believes that its strategy of pursuing the
continued purchase of revenue streams through the merger and acquisition process
and/or the creation of various joint ventures will allow the Company to
accelerate the rate in which it generates revenue.
The Company intends to utilize the remainder of its 2001 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 $13,165 for the third quarter of 2001 compares to
$21,163 for the third quarter of 2000. The decrease in revenue for the third
quarter end 2001 was due to a general decline in spending in the overall
economy. Said decrease in spending has had a direct impact on business
related commercial printing expenditures and thereby revenues and gross profit
for the third quarter of 2001.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expenses of $18,890 for the third quarter of 2001 compares to
$30,905 for the third quarter of 2000. The decrease in selling, general and
administrative expenses are due to a general decline in spending in the overall
economy. Said decrease in spending has had a direct impact on business
related commercial printing expenditures and thereby the Company has adjusted
its general and administrative expenses to reflect the corresponding decrease in
revenues and the cost thereof.
As the Company introduces its SCOR Brand products into the market place; expands
its media products and services and hires additional personnel during the
remainder of its 2001 fiscal year, the Company expects its selling, general and
administrative expenses to increase.
NET INCOME (LOSS). A net loss of $5,725 on revenue of $17,461 for the third
quarter of 2001 compares to a net loss of $9,742 on revenue of $28,639 for
the third quarter of 2000. The net loss reported by the Company for the third
quarter of 2001 is attributable to a higher level of general and administrative
expenses as related to revenues and gross profits for the period.
Liquidity And Capital Resources
To continue its plan of operation for the remainder of its 2001 fiscal year, the
Company expects to undertake capital obligations in order to market, distribute
and expand the products and/or services proposed by Media Force Sports &
Entertainment Inc. (Media Force) and SCOR Brands Inc. (SCOR) subsidiaries.
The Company expects to undertake initial capital obligations of up to $220,000
to hire executive management and general administration personnel for itself.
Subsequently, the Company expects to incur additional capital obligations of up
to $100,000 to hire management, general administration, marketing and sales
personnel for Media Force and SCOR respectively and $800,000 in order to procure
initial product inventories for its SCOR Brand unit. In order to fund the
continuance of its operations, the Company expects to pursue working capital
lines of credit of $100,000 for itself and $100,000 each for Media Force and
SCOR respectively.
The Company expects to expand the products and services proposed to be offered
by 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 Media Force and SCOR. To facilitate its growth and expansion
plans for Media Force and SCOR, the Company intends to pursue loans from
affiliates of the Company and/or sell a portion of its SCOR Brands unit to
procure up to $1,000,000.
8
Plan of Operation
The Company's plan of operation for the remainder of its 2001 fiscal year is to:
(1) promote, market and/or introduce into the consumer marketplace the products
and services proposed by its Media Force and SCOR units 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
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securities Holders.
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
On October 3, 2001, a report of Form 8-K was filed with the Securities and
Exchange Commission regarding Citizens Capital Corp. Class A Subscription Rights
Agreement dated August 30, 2001.
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: November 15, 2001 By: ______________________
Chief Executive Officer
Citizens Capital Corp. By: /s/ Billy D. Hawkins
------------------------ -----------------------
(Registrant) Chief Executive Officer
9
EXHIBIT INDEX
Exhibit No Description Page No.
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None
10