U. S. 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, 2001
___ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from _______ to _______.
Commission file number: 0-19154.
AMERICAN ASSET MANAGEMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2902677
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Morristown Road, Suite 108, Bernardsville, New Jersey 07924
(Address of principal executive offices)
Issuer's telephone number, including area code: (908) 766-1701
(Former name, former address and former fiscal year,
if changed since last report)
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_X_ NO___.
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As
of May 14, 2001 there were 1,316,989 shares outstanding of the
issuer's no par value common stock.
Transitional Small Business Disclosure Format (check one):
YES___ NO_X_
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
_________________________________________________________________
March 31, December 31,
___2001___ ____2000____
_____________ASSETS________________
Cash & cash equivalents $ 183,547 $ 371,012
Mortgage loans held for sale 5,583,116 3,762,229
Mortgage loans receivable 24,000 24,000
Notes receivable 28,946 28,946
Prepaid expenses &
other current assets 115,804 52,721
Total Current Assets 5,935,413 4,238,908
Land Development Costs 506,887 408,985
Property & Equipment, net of accumulated
depreciation & amortization 10,901 14,035
Total Assets 6,453,201 4,661,928
__LIABILITIES AND STOCKHOLDERS' EQUITY__
Current Liabilities:
Warehouse finance facility 5,471,718 3,690,458
Deferred income 29,776 17,622
Accounts payable, accrued expenses
and other current liabilities 251,852 133,665
Total Current Liabilities 5,753,346 3,841,745
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, no par value;
10,000,000 shares authorized;
1,316,989 shares issued
and outstanding
at 3/31/01 & 12/31/00 3,852,825 3,852,825
Additional paid-in capital 231,207 231,207
Accumulated deficit (3,384,177) (3,263,849)
Total Stockholders' Equity 699,855 820,183
Total Liabilities and
Stockholders' Equity 6,453,201 4,661,928
See accompanying Notes to Consolidated Financial Statements.
-2-
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
_________________________________________________________________
For the Three Months
______Ended March 31,______
____2001____ ____2000____
Revenues:
Mortgage origination fees $ 179,930 $ 98,602
Land sales -0- 145,924
Application and commitment fees 3,300 3,340
Mortgage interest income 74,917 21,480
Total revenues 258,147 269,346
Expenses:
Employee compensation & benefits 99,905 86,133
Commissions 132,127 49,494
Other expenses 105,276 89,051
Land development costs -0- 146,971
Interest expense 43,668 16,501
Total expenses 380,976 388,150
Loss from operations (122,829) (118,804)
Other income 2,501 2,320
Loss before provisions for
income taxes (120,328) (116,484)
Provision for income taxes -0- -0-
Net loss (120,328) (116,484)
LOSS PER COMMON SHARE,
Basic $ (0.09) $ (0.09)
Diluted (0.09) (0.09)
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING,
Basic 1,316,989 1,316,989
Diluted 1,316,989 1,316,989
See accompanying Notes to Consolidated Financial Statements.
-3-
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
_________________________________________________________________
For the Three Months
____Ended March 31,____
____2001___ ____2000___
Cash flows from operating activities:
Net loss $ (120,328) $ (116,484)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 3,134 3,133
Changes in assets & liabilities:
Mortgage loans held for sale (1,820,887) (736,600)
Mortgage loans receivable -0- 242,273
Prepaid expenses &
other current assets (63,083) (37,760)
Land development costs (97,902) 144,945
Warehouse finance facility 1,781,260 704,335
Deferred income (12,154) 11,255
Accounts payable & accrued expenses 118,187 (46,391)
Net cash provided by/(used in)
operating activities (187,465) 168,706
Cash flows from investing activities:
Purchases of fixed assets -0- (1,869)
Proceeds from notes receivable -0- 24,500
Net cash provided by
investing activities -0- 22,631
Net increase/(decrease) in
cash and cash equivalents (187,465) 191,337
Cash and cash equivalents
at beginning of period 371,012 340,906
Cash and cash equivalents
at end of period $ 183,547 $ 532,243
Supplemental Disclosure of
Cash Flow Information:
Cash paid during the
period for interest $ 43,668 $ 16,501
See accompanying Notes to Consolidated Financial Statements.
-4-
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
_________________________________________________________________
1. BACKGROUND AND BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements of
American Asset Management Corporation and subsidiaries (the
"Company") are unaudited. In the opinion of management, all
adjustments and intercompany eliminations necessary for a fair
presentation of the results of operations have been made and were
of a normal recurring nature. These interim consolidated
financial statements should be read in conjunction with the
consolidated financial statements and related notes thereto
contained in the Company's 2000 Annual Report on Form 10-KSB.
Reference is made to the Company's annual financial statements
for the year ended December 31, 2000, for a description of the
accounting policies which have been continued without change.
Also refer to the footnotes with those annual statements for
additional details of the Company's financial condition, results
of operations and changes in cash flows. The details in those
notes have not changed except as a result of normal transactions
in the interim. The results of the three months ended March 31,
2001 are not necessarily indicative of the results of the full
year.
2. NET LOSS PER SHARE
Basic EPS and Diluted EPS for the three months ended March
31, 2001 and 2000 have been computed by dividing the net loss for
each respective period by the weighted average shares outstanding
during that period. All outstanding warrants and options have
been excluded from the computation of Diluted EPS as they are
antidilutive.
3. SEGMENT REPORTING
The Company has two primary operating segments including
originating and selling loans secured primarily by first
mortgages on one-to-four family residential properties (CFC) and
real estate development (AADC). Segment selection was based upon
the nature of operations as determined by management and all of
the operations of these segments are conducted in New Jersey.
Certain selected financial information of these segments is
described below:
CFC AADC Parent Total
March 31, 2001
Revenues 258,147 258,147
Segment Profit (Loss) (79,203) (203) (40,922) (120,328)
Net identifiable assets 5,892,333 547,017 13,851 6,453,201
CFC AADC Parent Total
March 31, 2000
Revenues 123,422 145,924 269,346
Segment Profit (Loss) (94,455) (617) (21,412) (116,484)
Net identifiable assets 1,548,807 648,181 18,282 2,215,270
-5-
Item 2.
AMERICAN ASSET MANAGEMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
_________________________________________________________________
RESULTS OF OPERATIONS
Three Months Ended March 31, 2001 Compared to the Three Months
Ended March 31, 2000.
Total revenues for the three months ended March 31, 2001
were $258,147 compared to $269,346 for the three months ended
March 31, 2000, a decrease of $11,199 or approximately 4.2%.
The decrease was primarily attributable to the absence of land
sales as compared to land sales of $145,924 during the comparable
2000 period. This decrease was offset by an increase in mortgage
origination fees to $179,930 from $98,602 in the comparable 2000
period and an increase in mortgage interest income of $53,437 of
Capital Financial Corp. ("Capital"), the Company's mortgage
banking subsidiary. During the three months ended March 31, 2001
Capital received 237 mortgage applications aggregating a
principal amount of $43,519,293 compared to 70 applications
aggregating a principal amount of $12,638,054 during the
comparable period ending March 31, 2000. The increase of 167 or
approximately 238.5% in number of applications is an increase of
$30,881,239 or approximately 244.3% in principal amount when
compared to the three months ended March 31, 2000. The increase
in applications was primarily a result of the Company increasing
wholesale sources of mortgage originations during the period and
to a lesser extent an increase in the number of refinance
applications the Company received during the period. During the
three months ended March 31, 2001, Capital closed 72 residential
mortgage loans aggregating approximately $12,131,690 compared to
30 closed loans aggregating approximately $6,145,115 an increase
in number of 42 or 140% and an increase in amount of $5,986,575
or 97.4% when compared to the three months ended March 31, 2000.
At March 31, 2001, the Company had approximately 134 residential
mortgage applications in process in the principal amount of
$25,534,257 compared to 33 residential mortgage applications in
process in the principal amount of $7,951,161 at March 31, 2000,
an increase of 101 in number or approximately 306% and an
increase of $17,583,096 in amount, or approximately 221.1%.
Total expenses for the three months ended March 31, 2001,
were $380,976, a decrease of $7,174 or approximately 1.8% from
$388,150 in the comparable 2000 period. The decrease in expenses
is due to the fact that there were no land development costs
during the three months ended March 31, 2001 as compared to
$146,971 of these costs during the same period of 2000. This was
offset by a $13,772 increase, or approximately 16.0% in employee
compensation and benefits to $99,905 from $86,133 in the same
period of 2000, an increase of $82,633 in commissions or
approximately 166.9% to $132,127 from $49,494 in the same period
of 2000, and an increase of $27,167 or approximately 164.6% in
interest expense to $43,668 from $16,501 in the same period of
2000. As a percentage of revenues, expenses were approximately
147.6% in the current period compared to 144.1% in the comparable
2000 period.
As a result of the foregoing, the Company's net loss for the
three months ended March 31, 2001 was $120,328 or $0.09 per
common share, compared to a net loss of $116,484 or $0.09 per
common share for the three months ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2001, the Company had cash and cash
equivalents of $183,547 compared to $371,012 at December 31,
2000, a decrease of $187,465 or approximately 50.5%. This
decrease is primarily attributable to cash used in operating
activities of $187,465 which includes the net operating loss for
the period of $120,328 and is partially offset by depreciation
and amortization.
The Company utilizes one $6,000,000 warehouse line of credit
for its daily mortgage loan funding operations and whenever
possible the Company employs its available cash to fund mortgage
loans which generates mortgage interest income, as well as save
interest costs and other fees associated with utilizing its
warehouse credit line. The warehouse line enables the Company to
borrow funds secured by residential mortgage loans which will be
temporarily accumulated or warehoused and then sold. At March
31, 2001, the Company had borrowed $5,471,718 from its warehouse
line of credit representing approximately $5,583,116 in closed
loans ready for sale.
During April 2001, the Company applied for an additional
warehouse credit line from a commercial bank in the amount of
$7,000,000. As of May 14, 2001, the application is pending.
On March 3, 2000 the Company entered into a contract to sell
one of its building lots and construct a single family residence
for approximately $480,000. During April 2000, the contract was
approved after attorney review and construction commenced during
May 2000. The Company expects to complete the construction of
the house during May 2001 and transfer title to the buyer shortly
thereafter during the second quarter of 2001.
As of March 31, 2001, the Company owns 2 building lots in
its Hunterdon County, New Jersey real estate development and has
one contract of sale pending which the Company estimates it will
transfer title to the buyer during the second quarter of 2001.
In September 1998, the Board of Directors authorized the Company
to build up to two, at any one time, single family colonial style
homes on the lots, on speculation and offer them for sale to
prospective buyers. The Company believes that construction costs
for each home to be built will be approximately $225,000 and it
will afford it a better opportunity to obtain a profit from the
transaction then if it sold an undeveloped lot. Although there
can be no assurance that the Company will be successful in this
undertaking, the Company has retained an on-site construction
manager who is a non-affiliate of the Company, to assist the
Company in this construction project.
The Company estimates that it will require additional
capital in order to successfully implement its future operational
plans. As a result, the Company is seeking additional capital
through, among other means, an infusion of noncollateralized
loans and the sale of additional equity in the Company. However,
there can be no assurance that the Company will be able to obtain
additional capital on terms acceptable to the Company.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Part 1 - Item 3 contained in the
Company's 10-KSB for the year ended December 31, 2000 for further
information relating to three pending actions commenced against,
among others, the Company and its President described below.
The first action was commenced in the Supreme Court of the
State of New York, Queens County in March 1993, by two
individuals who allege that misrepresentations were made or
material information was omitted in connection with their
investment in the Company's 1989 private offering of Common
Stock.
The second action, which commenced in March 1999 in the
Chancery Division of the Superior Court of New Jersey, Union
County, the plaintiffs allege that the Company aided and abetted
a former director in converting the assets of two New Jersey
limited liability companies (the "LLC's") by accepting loans and
payments from the LLC's and the former director and repaying the
loans to the former director in the form of cash and Company
stock.
In May 2000, a complaint was filed against American Asset
Development Corp. (AAD) in the Superior Court of New Jersey,
Chancery Division, Hunterdon County, seeking specific performance
of a real estate contract and unspecified damages resulting from
AAD's alleged intentional delay in closing the contract. A
mandatory non-binding arbitrator heard the complaint and ruled in
favor of AAD. However, the plaintiff filed a motion for a trial
de novo and a new hearing is scheduled for May 2001. The Company
is unable to predict the outcome of this litigation at this time.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) No Reports
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN ASSET MANAGEMENT CORPORATION
(Registrant)
Date: May 14, 2001 By:_s/Richard G. Gagliardi____________
Richard G. Gagliardi
Chairman, President and Chief
Executive Officer (Principal
Executive and Financial Officer)