UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] 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 0-11663
CHANCELLOR CORPORATION
(Exact name of Small Business Issuer)
MASSACHUSETTS 04-2626079
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
210 South Street, Boston, Massachusetts 02111
(Address of principal executive offices) (Zip Code)
(617) 368 - 2700
(Issuer's telephone number, including area code)
Check mark whether the Issuer: (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 Issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ]
As of April 30, 1998, 25,404,156 shares of Common Stock, $.01 par value per
share; 8,000,000 shares of Series AA Convertible Preferred Stock, $.01 par value
per share (with a liquidation preference of $.50 per share or $4,000,000); and
710,526 shares of Series A Convertible Preferred Stock, $.01 par value per share
(with a liquidation preference of $1.90 per share, or $1,350,000), were
outstanding. As of April 30, 1998, 2,000,000 shares of Series B Convertible
Preferred Stock were authorized. Aggregate market value of the voting stock held
by non-affiliates of the issuer as of April 30, 1998 was approximately
$1,201,000. Aggregate market value of the total voting stock of the issuer as of
April 30, 1998 was approximately $8,129,000.
Chancellor Corporation and Subsidiaries
Page
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as
of March 31, 1998 and December 31, 1997 2
Condensed Consolidated Statements of Operations for
the Three Months Ended March 31, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1998 and 1997 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information 11
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 12
1
Chancellor Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands, Except per Share Data)
March 31, December 31,
1998 1997
-------------- ------------
(unaudited)
Assets
Cash and cash equivalents $ 244 $ 97
Cash - restricted and escrowed 212 2,419
Receivables, net 297 667
Leased equipment held for underwriting 502 502
Net investment in direct finance leases 618 521
Equipment on operating lease, net of accumulated depreciation of $3,804 642 232
Residual values, net 448 465
Furniture and equipment, net of accumulated depreciation of $1,363 905 937
Other investments 1,000 1,000
Intangibles, net 122 122
Other assets, net 1,746 117
--------- --------
$ 6,736 $ 7,091
========= ========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 5,656 $ 5,921
Indebtedness:
Nonrecourse 440 528
Recourse 383 415
--------- --------
Total liabilities 6,479 6,864
--------- --------
Stockholders' equity:
Prefered Stock, $.01 par value, 20,000,000 shares authorized:
Convertible Series A, 710,526 shares issued and outstanding 7 7
Convertible Series AA, 8,000,000 shares issued and outstanding 80 80
Convertible Series B, 2,000,000 shares issued and outstanding -- --
Common stock, $.01 par value; 75,000,000 shares authorized,
25,404,156 shares issued and outstanding 254 254
Additional paid-in capital 28,371 28,426
Accumulated deficit (28,455) (28,540)
--------- --------
257 227
--------- --------
$ 6,736 $ 7,091
========= ========
The accompanying notes are an integral part
of these condensed consolidated financial statements.
2
Chancellor Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended March 31,
1998 1997
------------ ------------
(unaudited) (unaudited)
Revenues:
Rental income $ 96 $ 278
Lease underwriting income 9 15
Direct finance lease income 36 40
Interest income 18 12
Gains from portfolio remarketing 82 172
Fees from remarketing activities 423 140
Other income 18 --
----------- -----------
682 657
----------- -----------
Costs and expenses:
Selling, general and administrative 530 1,941
Interest expense 21 101
Depreciation and amortization 104 90
----------- -----------
655 2,132
----------- -----------
Net income (loss) $ 27 $ (1,475)
=========== ===========
Basic net income (loss) per share $ .00 $ (.29)
=========== ===========
Shares used in computing
basic net income (loss) per share 25,403,127 5,136,391
=========== ===========
The accompanying notes are an integral part of
these condensed consolidated financial statements.
3
Chancellor Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In Thousands)
Three Months Ended March 31,
1998 1997
------------ -----------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income (loss) $ 27 ($1,475)
------- -------
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation and amortization 104 90
Residual value estimate realizations and
reductions, net of additions 17 181
Changes in assets and liabilities:
Decrease in receivables 370 2,361
Decrease in accounts payable and accrued expenses (265) (2,767)
------- -------
226 (135)
------- -------
Net cash used by operating activities 253 (1,610)
------- -------
Cash flows from investing activities:
Leased equipment held for underwriting -- 848
Net investments in direct finance leases (97) 471
Equipment on operating lease (442) 127
Net change in cash restricted 2,207 546
Additions to furniture and equipment, net (40) 3
Increase in other assets (1,614) (308)
------- -------
Net cash provided by investing activities 14 1,687
------- -------
Cash flows from financing activities:
Increase in indebtedness - recourse -- 175
Repayments of indebtedness - nonrecourse (88) (378)
Repayments of indebtedness - recourse (32) (730)
Issuance of preferred stock, net -- 900
------- -------
Net cash used by financing activities (120) (33)
------- -------
Net increase in cash and cash equivalents 147 44
Cash and cash equivalents at beginning of period 97 21
------- -------
Cash and cash equivalents at end of period $ 244 $ 65
======= =======
Cash paid for interest $ 21 $ 74
======= =======
The accompanying notes are an integral part of
thesecondensed consolidated financial statements.
4
CHANCELLOR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
and the rules and regulations of the Securities and Exchange Commission for
interim financial statements. Accordingly, the interim statements do not
include all of the information and disclosure required for annual financial
statements. In the opinion of the Company's management, all adjustments
(consisting solely of adjustments of a normal recurring nature) necessary
for a fair presentation of these interim results have been included.
Intercompany accounts and transactions have been eliminated. These
financial statements and related notes should be read in conjunction with
the audited consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1997. The balance sheet at December 31, 1997 has been derived from the
audited consolidated financial statements included in the Annual Report on
Form 10-K. The results for the interim period ended March 31, 1998 are not
necessarily indicative of the results to be expected for the entire year.
2. BUSINESS COMBINATION
During the first quarter of 1998, the Company formed the following
wholly-owned subsidiaries and issued the following shares:
Chancellor International Corporation ("CIL"), a Delaware corporation,
formed as the parent holding company for diversified financial
services companies specializing in international commercial and
consumer financing. The Company issued 2,000,000 shares of Series B
Convertible Preferred Stock ("Series B Preferred") for 100% ownership
of CIL.
Chancellor Africa Corporation ("CAC"), a Mauritius corporation, formed
as the parent holding company for a diversified financial services
company specializing in commercial and consumer financing in Africa.
CIL transferred 1,500,000 shares of its Series B Preferred of the
Company to CAC in exchange for 100% ownership of CAC.
Africa Financial Corporation ("AFC"), a Mauritius corporation, formed
as the operating company providing lease and commercial financing
services in Africa. CAC transferred 1,000,000 shares of its Series B
Preferred of the Company to AFC in exchange for 100% ownership of AFC.
On December 12, 1997, the Company, Afinta Motor Corporation (Pty) Ltd ("AMC"),
its wholly owned subsidiary Afinta Financial Services (Pty) Ltd. ("AFS"), and
New Africa Opportunity Fund, LP ("NAOF"), entered into a letter of intent, under
which a diversified financial services company, specializing in commercial and
consumer financing in Africa will be formed. On March 27, 1998, the parties
entered into a second agreement that described the responsibilities of the
parties upon the closing of the transaction and execution of the definitive
closing. The Company will provide, through CAC, $5,000,000 of capital to AFC and
1,000,000 shares of the Company's Series B Preferred. NAOF and AMC will receive
up to a combined 50% ownership interest in AFC. In consideration of this
ownership interest, NAOF will infuse $10,000,000 of cash in two $5,000,000
tranches. AMC will grant exclusive distribution rights for AMC products in North
America, Eastern Europe, the Russian Federation and Commonwealth of Independent
States, and Asia-Pacific; nonexclusive distribution rights for AMC products in
South America; and discounted pricing for the purchase of AMC products to be
sold and/or leased through AFC or its assignee. Additionally, AFC will issue to
5
NAOF and AMC up to 1,000,000 shares of the Company's Series B Preferred at $20
per share. The Series B Preferred converts into 10 shares of the Company's
Common Stock for each one share of preferred stock at the holders option
reflecting a price per share of Common Stock of $2.00 per share. Additionally,
the Series B Preferred has a liquidation preference of $2.00 per share.
In anticipation of the successful completion of this transaction, the Company
commenced its investment in the operation of AFC. Accordingly, the Company
infused approximately $450,000 in cash to transact certain leasing transactions.
The funds were used to purchase vehicles from AMC which were then leased to end
user customers.
The following is the proforma effect on stockholder's equity if the transactions
as contemplated above are executed and includes estimated transaction related
cost of approximately $1 million:
Per Shares
Financial To Be
Statements Issued Proforma
---------- ------ --------
(In Thousands)
Preferred Stock, Series AA Convertible,
$.01 par value, authorized 8,000,000
shares, issued and outstanding 8,000,000
shares $ 80 $ -- $ 80
Preferred Stock, Series A, Convertible,
$.01 par value, authorized 710,526
shares, issued and outstanding 710,526
shares 7 -- 7
Preferred Stock, Series B Convertible,
$.01 par value, authorized 2,000,000
shares, issued and outstanding 1,000,000
shares -- 20 20
Common Stock, $.01 par value, authorized
75,000,000 shares, issued and outstanding
25,404,156 shares 254 -- 254
Additional Paid in Capital 28,371 18,980 47,351
Accumulated Deficit (28,455) -- (28,455)
-------- -------- --------
$ 257 $ 19,000 $ 19,257
======== ======== ========
6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Revenues. Total revenues for the three month period ended March 31, 1998
were $682,000 as compared to $657,000 for the corresponding period of 1997, an
increase of $25,000 or 3.8%. For the three month period ended March 31, 1998,
rental income decreased by $182,000 or 65.5% as compared to the corresponding
prior year period. The decrease in rental income is attributable primarily to
the expiration of several leases. Rental income will continue to decrease until
the Company is able to begin adding new equipment to its portfolio. For the
three month period ended March 31, 1998, lease underwriting income decreased by
$6,000 or 42.2% as compared to the corresponding prior year period. Lease
underwriting income decreased due to origination of $450,000 of equipment
leases, at cost, for the three month period ended March 31, 1998 as compared to
origination of $848,000 of equipment leases during the same period last year.
For the three month period ended March 31, 1998, gains from portfolio
remarketing decreased by $90,000 or 52.3% as compared to the corresponding prior
year period. The decrease in gains from portfolio remarketing is attributable to
the sale of portfolio assets of $342,000, at original cost, during the three
month period ended March 31, 1998 as compared to sales of portfolio assets with
an original cost of $736,000 for the corresponding prior year period. In
contrast, for the three month period ended March 31, 1998, fees from remarketing
activities increased by $283,000 or 202.1% as compared to the corresponding
prior year period. This increase is attributable to a continued focus by
management on the remarketing of trust assets as they become available for sale.
The increase is also attributable to management's decision to enter into
in-house Buy/Sell arbitrage transactions of used transportation equipment. As a
result, the Company generated Buy/Sell transaction fees of approximately
$184,000 during the three month period ended March 31, 1998. Fees for
remarketing performed for third parties other than trust investors represented
approximately $5,000. This increase in fees for remarketing performed for third
parties is consistent with management's plans to utilize the Company's
remarketing expertise to provide such services to third parties. The Company
will continue to place emphasis on expanding revenues generated from fees from
remarketing to third parties and Buy/Sell transactions. For the three month
period ended March 31, 1998, other income increased by $18,000 or 100.0% as
compared to the corresponding prior year period.
Costs and Expenses. Selling, general and administrative expenses for the
three month period ended March 31, 1998 were $530,000 as compared to $1,941,000
for the corresponding period of 1997, a decrease of $1,411,000 or 72.7%. The
first quarter of 1997 was burdened with significant legal, accounting and
consulting fees incurred in connection with the corporate restructuring and
transition plans. As a result of the implementation of these focused and
fundamentally sound strategies, the Company has brought its cost structure in
line in order to operate in the most effective and efficient manner.
Depreciation and amortization expense for the three month period ended
March 31, 1998 was $104,000 as compared to $90,000 for the corresponding period
of 1997, an increase of $14,000 or 15.6%. The increase is primarily a result of
additional depreciation and amortization on furniture, fixtures, computer
equipment and leasehold improvements added in connection with the Company's move
to its new facilities in the latter half of fiscal 1997.
Interest expense for the three month period ended March 31, 1998 was
$21,000 as compared to $101,000 for the corresponding period of 1997, a decrease
of $80,000 or 79.2%. The decrease is due in part to the repayment in 1997 of the
intercreditor and secured inventory loans. Additionally, the expiration of
several leases resulted in a decrease in interest on associated non-recourse
debt.
7
Net Income. Net income for the three month period ended March 31, 1998 was
$27,000 as compared to a net loss of $1,475,000 for the corresponding period of
1997, an increase of $1,502,000 or 101.8%. This is attributable to the decrease
in total costs, specifically described above. Net income per share for the three
month period ended March 31, 1998 was $.00 per share as compared to a net loss
of $.29 per share for the corresponding prior year period, an increase of $.29
per share or 100.0%.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash flow from operations of $253,000 during the
three month period ended March 31, 1998, in part, due to collections of
receivables and overall improved operating performance. Investing activities
provided $14,000 during the three month period ended March 31, 1998. Financing
activities in the three month period used $120,000, due to repayments of
aggregate nonrecourse and recourse debt. The net result of the above activity
for the three month period was an increase in cash and cash equivalents of
$147,000. Cash and cash equivalents amounted to $244,000 at March 31, 1998 as
compared to $65,000 at March 31, 1997.
In August 1997, the Company committed to make a $1,000,000 equity
investment in the New Africa Opportunity Fund, LP ("NAOF"). NAOF is a
$120,000,000 investment fund composed of $40,000,000 from equity participants
including the Company, and $80,000,000 in debt financing provided by the
Overseas Private Investment Corporation ("OPIC"), an independent U.S. government
agency. The purpose of the fund is to make direct investments in emerging
companies throughout Africa. As of March 31, 1998, the Company had funded
approximately $230,000 and is obligated to provide additional funding in the
approximate amount of $770,000.
During the first quarter of 1998, the Company formed the wholly-owned
subsidiaries of (i) Chancellor International Corporation ("CIL"), a Delaware
corporation, formed as the parent holding company for diversified financial
services companies specializing in international commercial and consumer
financing, (ii) Chancellor Africa Corporation ("CAC"), a Mauritius corporation,
formed as the parent holding company for a diversified financial services
company specializing in commercial and consumer financing in Africa, and (iii)
Africa Financial Corporation ("AFC"), a Mauritius corporation, formed as the
operating company providing lease and commercial financing services in Africa.
On December 12, 1997, the Company, Afinta Motor Corporation (Pty) Ltd
("AMC"), its wholly owned subsidiary Afinta Financial Services (Pty) Ltd.
("AFS"), and New Africa Opportunity Fund, LP ("NAOF"), entered into a letter of
intent, under which a diversified financial services company, specializing in
commercial and consumer financing in Africa will be formed. On March 27, 1998,
the parties entered into a second agreement that described the responsibilities
of the parties upon the closing of the transaction and execution of the
definitive closing. The Company will provide, through CAC, $5,000,000 of capital
to AFC and 1,000,000 shares of the Company's Series B Preferred. NAOF and AMC
will receive up to a combined 50% ownership interest in AFC. In consideration of
this ownership interest, NAOF will infuse $10,000,000 of cash in two $5,000,000
tranches. AMC will grant exclusive distribution rights for AMC products in North
America, Eastern Europe, the Russian Federation and Commonwealth of Independent
States, and Asia-Pacific; nonexclusive distribution rights for AMC products in
South America; and discounted pricing for the purchase of AMC products to be
sold and/or leased through AFC or its assignee. Additionally, AFC will issue to
NAOF and AMC up to 1,000,000 shares of the Company's Series B Preferred at $20
per share. The Series B Preferred converts into 10 shares of the Company's
Common Stock for each one share of preferred stock at the holders option
reflecting a price per share of Common Stock of $2.00 per share. Additionally,
the Series B Preferred has a liquidation preference of $2.00 per share. The
proforma effect on stockholder's equity, net of estimated transaction related
costs, if all the transactions described above are executed, would result in an
increase in stockholders' equity from $257,000 to $19,257,000 as of March 31,
1998.
In anticipation of the successful completion of the above transaction, the
Company commenced its investment in the operation of AFC. Accordingly, the
Company infused approximately $450,000 in cash to successfully transact certain
leasing transactions. The funds were used to purchase vehicles from AMC which
were then leased to end user customers.
8
The Company's ability to underwrite equipment lease transactions is
dependent upon the availability of short-term warehouse lines of credit.
Management is engaged in continuing dialogue with several inventory lenders that
can provide the Company with warehouse financing. If the Company experiences
delays in putting warehouse facilities in place, the Company transacts deals by
coterminous negotiation of lease transactions with customers and financing with
institutions upon which it obtains a fee as the intermediary of up to 3% of the
amount of financing.
The remarketing of equipment has played and will continue to play a vital
role in the Company's operating activities. In connection with the sale of lease
transactions to investors, the Company typically is entitled to share in a
portion of the residual value realized upon remarketing. Successful remarketing
of the equipment is essential to the realization of the Company's interest in
the residual value of its managed portfolio. It is also essential to the
Company's ability to recover its original investment in the equipment in its own
portfolios and to recognize a return on that investment. The Company has found
that its ability to remarket equipment is affected by a number of factors. The
original equipment specifications, current market conditions, technological
changes, and condition of the equipment upon its return all influence the price
for which the equipment can be sold or re-leased. Delays in remarketing caused
by various market conditions reduce the profitability of the remarketing.
The Company anticipates it will continue to dedicate substantial resources
toward the further development and improvement of its remarketing capabilities
and believes that remarketing will continue to be a profit center for the
Company. The Company's strategy is to further exploit its remarketing expertise
by continuing to develop its ability to sell remarketing services to other
lessors, fleet owners, and lessees and also to create a dealer capability under
which the Company would buy and resell fleet equipment. The Company is also
implementing a plan to expand its brokerage activities through the Internet and
the use of other information technologies.
The Company's renewal or replacement of recently expired lines, its
expected access to the public and private securities markets, both debt and
equity, anticipated new lines of credit (both short-term and long-term and
recourse and nonrecourse), anticipated long-term financing of individual
significant lease transactions, and its estimated cash flows from operations are
anticipated to provide adequate capital to fund the Company's operations for the
next twelve months. Although no assurances can be given, the Company expects to
be able to renew or replace its recently expired lines of credit, to continue to
have access to the public and private securities markets, both debt and equity,
and to be able to enter into new lines of credit and individual financing
transactions.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's future quarterly operating results and the market price of
its stock may fluctuate. In the event the Company's revenues or earnings for any
quarter are less than the level expected by securities analysts or the market in
general, such shortfall could have an immediate and significant adverse impact
on the market price of the Company's stock. Any such adverse impact could be
greater if any such shortfall occurs near the same time of any material decrease
in any widely followed stock index or in the market price of the stock of one or
more public equipment leasing companies or major customers or vendors of the
Company.
The Company's quarterly results of operations are susceptible to
fluctuations for a number of reasons, including, without limitation, as a result
of sales by the Company of equipment it leases to its customers. Such sales of
equipment, which are an ordinary but not predictable part of the Company's
business, will have the effect of increasing revenues, and, net income to the
extent sales proceeds exceeds net book value, during the quarter in which the
sale occurs. Furthermore, any such sale may result in the reduction of revenue,
and net
9
income, otherwise expected in subsequent quarters, as the Company will not
receive lease revenue from the sold equipment in those quarters.
Given the possibility of such fluctuations, the Company believes that
comparisons of the results of its operations to immediately succeeding quarters
are not necessarily meaningful and that such results for one quarter should not
be relied upon as an indication of future performance.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This Quarterly Report on Form 10-QSB contains certain "Forward-Looking"
statements as such term is defined in the Private Securities Litigation Reform
Act of 1995 and information relating to the Company and its subsidiaries that
are based on the beliefs of the Company's management as well as assumptions used
in this report, the words "anticipate," "believe," "estimate," "expect," and
"intend" and words or phrases of similar import, as they relate to the Company
or its subsidiaries or the Company management, are intended to identify
forward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitation, competitive factors, general economic conditions, customer
relations, relationships with vendors, the interest rate environment,
governmental regulation and supervision, seasonality, distribution networks,
product introduction and acceptance, technology changes and changes in industry
conditions. Should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected or intended. The Company does not intend to update these
forward-looking statements.
10
Part II. Other Information
Item 1. Legal Proceedings
The Company is involved in the following legal proceedings:
The Company was named as a defendant along with the Chairman of the Board
and an affiliate of the Chairman in a suit brought by Ernest Rolls, the former
Vice-Chairman, on February 5, 1998. The suit brought by Mr. Rolls alleges that
the Company is in default on the payment of $2.7 million, which Mr. Rolls claims
he loaned to the Company. It is the Company's position that $1.5 million of the
loan has been repaid to Mr. Rolls and that the balance is subject to offsets and
counterclaims by the Company. The Company has removed the case to federal court
and has filed an answer. The Company intends to file a counterclaim against Mr.
Rolls.
The Board of Directors of Chancellor Corporation voted to remove Mr. Ernest
L. Rolls as a Director and Vice Chairman of the Board effective March 10,1998.
The reasons cited by the Board for removing Mr. Rolls included breach of his
fiduciary duties of care and loyalty, Mr. Rolls' suspected self-dealing and his
failure to provide a total of $7.5 million in financing that he represented to
the Board he would provide. The Board also believed that a suit filed by Mr.
Rolls was an attempt by Mr. Rolls to jeopardize the Company's strategic
alliances and other activities that are currently being negotiated, including,
but not limited to, the Company's international expansion plans.
The Company is also involved in routine legal proceedings incidental to the
conduct of its business. Management believes that none of these legal
proceedings will have a material adverse effect on the financial condition or
operations of the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Under Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8K - None.
Chancellor Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
issuer has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHANCELLOR CORPORATION
/s/ Brian M. Adley
Brian M. Adley
Chairman of the Board and Director
(Principle Executive Officer)
/s/ Jonathan C. Ezrin
Jonathan C. Ezrin
Corporate Controller
(Principle Accounting Officer)
DATE: May 14, 1998