SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
March 31, 2002.
[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from to .
------------ --------------
Commission file number: 0-31417
-------
BOTTOMLINE HOME LOAN, INC.
--------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0356064
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
- ---------------------------------------------------------- --------------------
200 South Los Robles Avenue, Suite 230, Pasadena California 91101
-----------------------------------------------------------------
(Address of principal executive office) (Zip Code)
(626) 432-1500
(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 XX No
The number of outstanding shares of the issuer's common stock, $0.001 par value
(the only class of voting stock), as of May 10, 2002 was 16,039,000.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS.................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............4
PART II
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES..............................6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................6
SIGNATURES....................................................................6
INDEX TO EXHIBITS.............................................................7
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Bottomline Home Loan, Inc., a
Nevada corporation, unless otherwise indicated. Unaudited, condensed interim
financial statements including a balance sheet for the Company as of the quarter
ended March 31, 2002, and statements of operations, and statements of cash flows
for the interim period up to the date of such balance sheet and the comparable
period of the preceding year and cumulative amounts are attached hereto as Pages
F-1 through F-8 and are incorporated herein by this reference.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
3
BOTTOMLINE HOME LOAN, INC.
FINANCIAL STATEMENTS
MARCH 31, 2002
F-1
INDEX TO FINANCIAL STATEMENTS
Unaudited Balance Sheet as of March 31, 2002..............................F-3-4
Unaudited Statement of Operations for the three and nine months ended
March 31, 2002 and 2001.....................................................F-5
Unaudited Statement of Cash Flows for the nine months ended
March 31, 2002 and 2001.....................................................F-6
Notes to Condensed Financial Statements...................................F-7-8
F-2
BOTTOMLINE HOME LOAN, INC.
Unaudited Consolidated Balance Sheet
March 31, 2002
ASSETS
- ---------------------------------------------------------- --------------------
Current Assets
- ---------------------------------------------------------- --------------------
Cash $309,496
- ----------------------------------------------------------
Marketable securities - trading 3,122
- ----------------------------------------------------------
Accounts receivable 31,796
- ----------------------------------------------------------
Receivables from loan sales 938,157
- ---------------------------------------------------------- --------------------
Total Current Assets 1,282,571
- ----------------------------------------------------------
- ---------------------------------------------------------- --------------------
Long-term Assets
- ---------------------------------------------------------- --------------------
Furniture and equipment, net 34,595
- ---------------------------------------------------------- --------------------
Note receivable net of current portion 285,330
- ----------------------------------------------------------
Deposits 5,672
- ---------------------------------------------------------- --------------------
- ----------------------------------------------------------
TOTAL ASSETS $1,608,168
- ---------------------------------------------------------- ====================
See accompanying notes to financial statements
F-3
BOTTOMLINE HOME LOAN, INC.
Unaudited Consolidated Balance Sheet (continued)
March 31, 2002
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------ -----------------
Current Liabilities
- ------------------------------------------------------------
Accounts payable and accrued expenses $ 78,729
- ------------------------------------------------------------
Payable to related party 8,154
- ------------------------------------------------------------
Warehouse line of credit 855,295
- ------------------------------------------------------------
Notes payable - current portion 18,747
- ------------------------------------------------------------ -----------------
Total Current Liabilities 960,925
- ------------------------------------------------------------
- ------------------------------------------------------------ -----------------
Long-Term Liabilities
- ------------------------------------------------------------
Notes payable - net of current portion 285,799
- ------------------------------------------------------------ -----------------
TOTAL LIABILITIES 1,246,724
- ------------------------------------------------------------ -----------------
- ------------------------------------------------------------ -----------------
MINORITY INTEREST 92,594
- ------------------------------------------------------------ -----------------
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
- -------------------------------------------------------------------------------
Preferred stock - 5,000,000 shares authorized at $0.001
par, none issued and outstanding 0
- -------------------------------------------------------------------------------
Common stock - 100,000,000 shares authorized at $0.001 par;
16,039,000 shares issued and outstanding 16,039
- -------------------------------------------------------------------------------
Paid in capital 716,383
- -------------------------------------------------------------------------------
Retained earnings (deficit) (463,572)
- -------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 268,850
- -------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,608,168
- ---------------------------------------------------------- ===================
See accompanying notes to financial statements
F-4
BOTTOMLINE HOME LOAN, INC.
Unaudited consolidated Statements of
Operations for the three months and nine months ended
March 31, 2002 and 2001
Three months Nine months
ended March 31, ended March 31
2002 2001 2002 2001
Revenues $ 889,181 $ 305,831 $ 2,033,024 $ 1,018,141
Operating expenses
Salaries and direct loan costs 506,576 180,440 1,053,763 594,329
General and administrative costs 314,649 106,289 801,414 430,377
Total operating expenses 821,225 286,729 1,855,177 1,024,706
----------------------------------------------- ---------------
Net income (loss) from operations 67,956 19,102 177,847 (6,565)
Other income (expense)
Interest income - - 3,094 -
Interest expense (28,378) (27,116) (83,826) (58,460)
Unrealized gain (loss) on securities - - (7,290) -
----------------------------------------------- ---------------
Total other income (expense) (28,378) (27,116) (88,022) (58,460)
----------------------------------------------- ---------------
Income (loss) before minority interest and
tax provision 39,578 (8,014) 89,825 (65,025)
Minority share of (income) loss (9,895) - (26,966) -
Provision for income taxes - - - -
----------------------------------------------- ---------------
Net income (loss) $ 29,683 $ (8,014) $ 62,859 $ (65,025)
=============================================== ===============
Net income (loss) per common share $ 0.0 $ 0.0 $ 0.00 $ 0.00
=============================================== ===============
Weighted average shares outstanding 16,039,000 16,039,000
See accompanying notes to financial statements
F-5
BOTTOMLINE HOME LOAN, INC.
Unaudited consolidated Statements of Cash Flows
for the nine months ended March 31, 2002 and 2001
Nine months Nine months
ended ended
March 31, March 31,
2002 2001
------------------- -------------------
Cash Flows from Operating Activities:
Net Income (loss) $ 62,859 $ (60,025)
Adjustments to reconcile net income (loss) to net cash used for
operating activities:
Depreciation and amortization 8,229 9,619
Loss on sale of securities 7,290 -
Loss on disposal of property - 15,612
Decrease (increase) in advances receivable (31,796) (89,108)
Decrease (increase) in receivables from sale of loans 779,693 (195,721)
Increase - deposits (500) -
Increase (decrease) in accrued expenses 29,725 (7,872)
Increase in related party payable 8,154 -
Increase (decrease) in minority interest 26,967 -
Increase (decrease) in warehouse line payable (796,649) 246,810
------------------- -------------------
Net Cash Provided by/(Used in) Operating Activities 93,972 (85,685)
Cash Flows from Investing Activities:
Decrease (increase) in notes receivable (179,180) 4,804
Decrease (increase) in other investments 12,500 -
Net decrease (increase) in marketable securities 56,788 (200,551)
Purchase of property and equipment (3,833) -
------------------- -------------------
Net Cash Provided by/(Used in) Investing Activities (113,725) (195,747)
Cash Flows from Financing Activities:
Proceeds from long term debt 277,764 -
Principal payments on long term debt (10,187) (27,004)
Issuance of common stock for cash - 291,000
Issuance of subsidiary stock for cash 20,000 -
Receipt of dividends - 26,960
------------------- -------------------
Net Cash Provided by/(Used in) Financing Activities 287,577 290,956
Net Increase(decrease) in Cash 267,824 9,524
Beginning Cash Balance 41,672 26,932
Ending Cash Balance $ 309,496 $ 36,456
See accompanying notes to financial statements
F-6
BOTTOMLINE HOME LOAN, INC.
Notes to the Unaudited Financial
Statements For the Nine Months ended March 31, 2002
NOTE 1 Summary of Significant Accounting Policies
Nature of Operations
The Company incorporated under the laws of the State of Nevada on
February 15, 1996 as CyberEnergy, Inc. The name of the Company was
changed to Bottomline Home Loan, Inc. on May 4, 2001. The Company was
a development stage company until June 26, 2001, when it acquired 76%
of the outstanding common stock of Bottomline Mortgage, Inc. The
transaction was accounted for as a reverse acquisition using the
purchase method of accounting. The Company's ownership percentage of
Bottomline Mortgage was subsequently reduced to 75% due to the sale of
Bottomline Mortgage common stock. The Company assists individuals,
brokers and others in obtaining long term trust deed (mortgage)
financing. The Company processes loan applications, effects loan
underwriting and receives purchase commitments from investor groups
for mortgage backed loans prior to funding the loans, primarily at its
corporate office in Pasadena, California. Loan applications are also
solicited and received at office locations in Salt Lake City, Utah and
San Marcos, Texas. The Company is a Loan Correspondent,
non-supervised, as defined by the U.S. Department of Housing and Urban
Development (HUD), and is therefore required to conform to certain net
worth, liquid assets and other conditions and requirements and to
follow certain specific regulations issued from time to time by HUD.
Accounting Method
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States,
applicable to a going concern, which contemplates the realization of
assets and the liquidation of liabilities in the normal course of
business.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Bottomline Home Loan, Inc. (formerly known as CyberEnergy, Inc.) and
its 75% subsidiary, Bottomline Mortgage, Inc. Minority interest
represents minority shareholders' proportionate share of the equity in
Bottomline Mortgage, Inc. All significant intercompany balances and
transactions are eliminated.
Net Income Per Common Share
Net income per common share is based on the weighted average number of
shares outstanding during the period. Weighted average number of shares
outstanding during the period was calculated as the number of common
shares of parent stock received in exchange for the then outstanding
common shares of Bottomline Mortgage, Inc.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect
F-7
BOTTOMLINE HOME LOAN, INC.
Notes to the Financial Statements
For the Nine Months ended March 31, 2002
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fiscal Year
The Company in 2001 adopted June 30 as its fiscal year end. Previous
financial statements of the Company have been issued based on a
December 31 fiscal year end.
Note 2 Unaudited Consolidated Financial Statements
The unaudited consolidated financial statements include the accounts of
the Company and include all adjustments (consisting of normal recurring
items), which are, in the opinion of management, necessary to present
fairly the financial position as of March 31, 2002 and the results of
operations and cash flows for the three months and nine months ended
March 31, 2002. The results of operations for the three months and nine
months ended March 31, 2002, are not necessarily indicative of the
results to be expected for the entire year.
Note 3 Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form
10-QSB and, therefore, do not include all information and footnotes
required by accounting principles generally accepted
in the United States of America and should, therefore, be read in
conjunction with the Company's Form 10-KSB, filed with the Securities
and Exchange Commission. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended June 30,
2002.
F-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
General
Bottomline Home Loan, Inc. was formed under Nevada law on
February 15, 1996, under the name Cyber Energy, Inc. The name was
changed to Bottomline Home Loan, Inc. on July 20, 2001. On June 26,
2001, Bottomline Home Loan, Inc. signed an agreement to acquire a 76%
interest in Bottomline Mortgage, Inc. (BottomLine) in exchange for
10,000,000 of the common shares of the Company or a 62% interest in
the issued and outstanding shares of its common stock. Bottomline then
became an operating subsidiary of the Company effective July 1, 2001.
The executive office is located at 200 South Los Robles Avenue, Suite
230, Pasadena, California 91101, and our telephone number is (800)
520-5626. The registered statutory office in Nevada is located at 711
S. Carson Street, Suite 1, Carson City, Nevada 89701. We use the terms
"Company" and "we" in this report to refer to Bottomline Home Loan,
Inc., unless the context indicates otherwise.
The Company's operations are conducted primarily through its subsidiary
Bottomline, Bottomline is an independent retail mortgage
banking company engaged in the business of originating and selling
residential mortgage loans. Bottomline offers a broad array of
residential mortgage products targeted at high-credit-quality borrowers
over the Internet, as well as through 14 commission-compensated loan
originators. Bottomline operates from a principal office in Pasadena,
California and a call center in San Marcos, Texas to service the 20
states in which it is currently approved to originate mortgages.
Bottomline operates primarily as a mortgage banker, underwriting,
funding and selling its loan products to various buyers. In the year
2000, Bottomline originated approximately $17.3 million
in loans, of which 48.8% were first mortgages and 51.2% were second
mortgages made to owners seeking to refinance property they already
owned. Bottomline originated and closed approximately
$33.2 million in loans during 2001, of which 85% were first mortgages
and the balance of 15% were second mortgages made to owners seeking to
refinance property they already owned. Our revenues increased
significantly during the past nine months due to the opening of the San
Marcos, Texas call center in June of 2001 and interest rate cuts during
the period from late 2000 through late 2001. Revenues for the nine
months ended March 31, 2002, were almost double what they were for the
nine months ended March 31, 2001. Total revenues for the nine months
ended March 31, 2002 were $2,033,024 compared to $1,018,141 for the
same period during ending March 31, 2001. Our net income/(loss) for
the nine months ended March 31, 2002 and March 31, 2001 was $62,859
and ($65,025) respectively. The number of actual mortgages funded
during this nine month period was up 51.3%, from 189 loans in 2001 to
286 during the same nine-month period in 2001.
Bottomline was founded in 1989. Bottomline has focused on growing
its origination volume through the construction of a retail
origination network as a result of internal growth and through
operation of an Internet mortgage web site,www.bottomlinemortgage.com.
The operations of the Company are more fully set forth in the June 30,
2001 10-KSB/A filed on December 6, 2001.
Results Of Operations
The Company's results of operations for the periods described below are
not necessarily indicative of results of operations for future periods,
which depend upon numerous factors including the Company's future
ability to enter new markets and introduce additional and new products
into its markets.
4
Three months ending March 31, 2001 and 2002
Revenues for the three months ended March 31, 2002 were $889,181,
compared to revenues of $305,831 for the three months ended March 31,
2001, due to growth in the number of loans written during the quarter
and as a result of the increased number of mortgages closed during the
more recent period.
General and administrative expenses were $314,649 for the three months
ended on March 31, 2002, and $106,289 for the comparable period in
2001, an increase of $208,360 or approximately 196%. The increase was
a result of the expansion of loan activity and the addition of the San
Marcos, Texas calling center.
Net income (loss) for the quarters ended March 31, 2002 and 2001 was
$29,683 and $(8,014), respectively.
As a percentage of revenue, net income for the three month period ended
March 31, 2002, was 3.34% as compared to the loss equal to 2.6% of
revenues for the three month period ended March 31, 2001. The increase
in revenues over the comparable period can be attributed to an increase
in loan activity resulting from the opening of the new call center in
Texas and the lowering of interest rates.
Nine months ending March 31, 2002 and 2001.
Revenues for the nine months ended March 31, 2002 were $2,033,024,
compared to revenues of $1,018,141 for the nine months ended March 31,
2001, due to growth in the number of loans written during the period
and as a result of the increased number of mortgages closed during the
more recent period.
General and administrative expenses were $801,414 for the nine months
ended on March 31, 2002, and $430,377 for the comparable period in
2001, an increase of $371,037 or approximately 86%. The increase was a
result of the expansion of loan activity and the addition of the San
Marcos, Texas calling center.
Net income (loss) for the nine month period ended March 31, 2002 and
2001 was $62,859 and $(65,025), respectively. As a percentage of
revenue, net income for the nine month period ended March 31, 2002,
was 3.09% as compared to the loss equal to 6.38% of revenues for the
nine month period ended March 31, 2001. The increase in revenues over
the comparable period can be attributed to an increase in loan activity
resulting from the opening of the new call center in Texas and the
lowering of interest rates.
Liquidity and Capital Resources
The Company had ending cash balance of $309,496 at March 31, 2002, as
compared to $36,456 at March 31, 2001.
Total stockholders' equity in the Company was $268,850 as of March 31,
2002, compared to stockholder's equity of $242,543 as of December 31,
2001.
Cash flows provided by operations was $93,972 for the nine months ended
March 31, 2002 as compared to cash flows used by operations of $85,685
for the nine months period ended March 31, 2001.
5
Cash flows used in investing activities was $113,725 for the nine
months ended March 31, 2002 as compared to cash flows used in investing
activities of $195,747 for the nine month period ended March 31, 2001.
PART II
ITEM 1 LEGAL PROCEEDINGS
There have been no material changes in the status of legal proceedings
as reported in the Company's 10-KSB/A as filed on December 6, 2001.
ITEM 2 RECENT SALES OF UNREGISTERED SECURITIES
There have been no sales of unregistered securities since the filing of
the Company's 10-KSB/A as filed on December 6, 2001.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits on page 6 of this Form 10-QSB, and are
incorporated herein by this reference.
(b) Reports on Form 8-K. No reports on Form 8-K
------------------- were filed during the quarter.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, hereunto duly
authorized, this 15th day of May, 2002.
BOTTOMLINE HOME LOAN, INC.
/s/ Buster Williams, Jr.
--------------------------------------------
Buster Williams. Jr.
CEO and Director
6
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company
(incorporated herein by reference from Exhibit No.
3(i) of the Company's Form 10-SB as filed with the
Securities and Exchange Commission on August 30, 2000).
3(ii) * Bylaws of the Company, as amended (incorporated herein
by reference from Exhibit 3(ii) of the Company's Form
10-SB as filed with the Securities and Exchange
Commission on August 30, 2000).
* Incorporated herein by reference from the referenced filings
previously made by the Company.
7