1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
March 31, 1996 0-7693
- --------------------- ----------------------
INTERNATIONAL MERCANTILE CORPORATION
------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 43-0970243
- --------------------------- --------------
(State or other jurisdiction (IRS Employer
of Incorporation of Identification
Organization) Number)
7979 Old Georgetown Road, Bethesda MD 20814
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(301) 654-1980
--------------
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
---------------------------------------
(Title of Class)
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 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 No X
----- -----
Number of shares of Common Stock Outstanding March 31, 1996
3,133,315
---------
2
INTERNATIONAL MERCANTILE CORPORATION
QUARTERLY REPORT
AS OF MARCH 31, 1996
PART -1
FINANCIAL INFORMATION
ITEM 1- FINANCIAL INFORMATION
INTERNATIONAL MERCANTILE CORPORATION
MARCH 31, 1996
3
INTERNATIONAL MERCANTILE CORPORATION
BALANCE SHEETS
AS OF MARCH 31, 1996
(UNAUDITED)
ASSETS
------ YEAR ENDED
DECEMBER 31,
MARCH 31, 1996 1995
-------------- -----------
Cash - -
Other Receivables - -
TOTAL ASSETS $ - $ -
------------ =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY
-----------------------------------------------
March 31 1995
----------- ----------
LIABILITIES
Mortgage and Notes Payable 57,494 57,494
Due to Related Parties 180,263 180,263
Other Liabilities 75,638 75,638
----------- ----------
TOTAL LIABILITIES 313,395 313,395
----------- ----------
STOCKHOLDERS' EQUITY DEFICIENCY
Common stock,
$1 par value, 5,000,000
shares authorized,
3,133,151 shares
issued and outstanding 3,133,151 3,133,151
Capital in excess of par 5,326,394 5,326,394
Deficiency (7,958,757) (7,958,757)
----------- -----------
500,788 500,788
Less: Treasury stock at cost 814,183 814,183
----------- -----------
TOTAL STOCKHOLDERS' EQUITY
(DEFICIENCY) (313,395) (313,395)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIENCY) $ - $ -
------------ ============ ===========
Read accompanying notes to financial statements.
2
4
INTERNATIONAL MERCANTILE CORPORATION
STATEMENTS OF OPERATIONS
FOR MARCH 31, 1996
THREE MONTHS ENDING
MARCH 31
1996
-------------------
REVENUE $ -
GENERAL AND
ADMINISTRATIVE -
------------
LOSS BEFORE LOSS FROM SUBSIDIARIES
AND LOSS ON DISPOSITION OF
SUBSIDIARIES -
LOSS FROM SUBSIDIARIES -
------------
LOSS BEFORE LOSS ON DISPOSITION
OF SUBSIDIARIES -
LOSS ON DISPOSITION
OF SUBSIDIARIES -
------------
NET LOSS $ -
- -------- ============
NET LOSS PER COMMON SHARE
- -------------------------
NET LOSS BEFORE LOSS ON DISPOSITION
OF SUBSIDIARIES $ -
LOSS ON DISPOSITION OF
SUBSIDIARIES -
------------
NET LOSS $ -
- -------- ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
- ------------------
3,133,151
============
Read accompanying notes to financial statements.
3
5
INTERNATIONAL MERCANTILE CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ -
Adjustments to reconcile net loss
to net cash (used in) provided by
operating activities:
Depreciation and amortization $ -
Loss on disposition of subsidiaries $ -
Loss on litigation settlement $ -
Loss on sale of property and
equipment $ -
Equity in net income (loss) of
affiliate
Changes in:
Other receivables $ -
Other liabilities -
-----------
Net Cash (Used in) Provided
by Operating Activities
-
-----------
CASH FLOW FROM FINANCING ACTIVITIES:
Payments on mortgage and notes
-
Advances from related parties
-----------
Net Cash Provided by (Used In)
Financing Activities
-----------
(DECREASE) IN CASH -
CASH - BEGINNING OF YEAR -
-----------
CASH - END OF QUARTER $ -
-------------------------- ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during QUARTER for:
Interest $ -
===========
Read accompanying notes to financial statements.
5
6
INTERNATIONAL MERCANTILE CORPORATION
STATEMENTS OF CASH FLOWS
AS OF MARCH 30, 1996
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES:
OPERATIONS
In January it was discovered that Ms. Hardy, without the consent or the
approval of the board of directors management of Frontier Insurance or the
Registrant, closed down the operations of Home America Mortgage Company and
redirected all the company's business to her own company. The board is
currently exploring it's legal options against Ms. Hardy.
Given the activities of Ms. Hardy all pending capital infusions associated with
the Registrant and Home America were lost. The Board determined that the
mortgage company was a large liability to the Registrant and in January the
company sold Home America Mortgage Company to Continent Finance Corporation in
exchange for Continent's agreement to pay for the operating expenses of the
company.
In March of 1996 the company entered final settlement agreement with Bill and
Bob Bruce, in which all the remaining insurance assets were given to them and
all intercompany receivables and notes were canceled.
LIQUIDITY AND CAPITAL
There have been losses for the first quarter and liquidity remains very low.
Cash flow from operations remains negative as they were for the previous year.
There is no future revenue or liquidity expected from current operations or from
the divesture of Frontier Life Insurance.
7
PART - 1 FINANCIAL INFORMATION
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATION
MARCH 31, 1996
The Company has suffered severe losses for the past six years.
Management has not been able to secure working capital for the Company from
outside debt or equity funding sources.
Management has spent considerable time and effort to bring the Company's
public securities filings current to allow it to merge with, acquire or be
acquired by another company. At this point in time management has several such
business combination candidates and plans to work aggressively in the area when
its filings are current.
There is no cash flow from operations and unless the Company can
successfully develop relationships with financial sources and acquire an
operating company which can immediately generate cash flow from operations, no
cash flow is anticipated.
HAMC ceased operations in 1995 and is currently inactive, the company
has been sold to Continent Finance Corporation.
To bring operational capability and positive cash flow to IMC,
management will seek to acquire assets that will improve the overall financial
picture of the Company. Management plans to restructure the capital stock of the
Company by reducing the total number of outstanding common shares and
introducing new classes of stock.
This plan of acquisition and reorganization should put the Company in a
better position to attract working capital from debt and equity sources. There
is absolutely no assurance that any or all of these steps can be successfully
completed. In the event that management fails to meet its goals, the Company
will not be a viable going concern and may face bankruptcy or liquidation.
The Company has ongoing cash demands that are not being met. Management
has agreed to be paid in stock to minimize the cash burden to the Company.
There are several advisors, consultants and professionals who are due fees, and
management plans to fulfill these responsibilities first since these advisors,
professionals and consultants are necessary to bring the Company's public
filings current and inject working capital and operational assets into the
Company.
8
International Mercantile Corporation
March 31, 1996
PART-2 OTHER INFORMATION
EXECUTIVE COMPENSATION
No cash compensation, including bonuses and deferred compensation, was
paid during the first Quarter of 1996 by IMC to any of its executive officers.
No fees were paid to Board members for attending Board meetings during 1996.
Shares of the Company's common stock may be issued to its officers representing
the fair market value of services actually rendered by them without pay and as
reimbursement for expenses actually incurred by them in the performance of
their duties as officers of the Company.
9
International Mercantile Corporation
March 31, 1996
PART-2 OTHER INFORMATION
ITEM 3 - EXHIBITS AND REPORTS ON FORM 8-K
FILING 8K
The Registrant plans to provide an 8k reporting the change of control of the
Board of the company and the divestiture of Frontier Life Insurance.
In February of 1996 the Registrant filed an 8k reporting that the registrant
had completed a transaction with Tech Technologies and Glen Afton farms. The
transaction was not completed and there are no plans for further discussions
between the parties.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS CAUSED THIS REPORT TO BE SIGNED ON IT'S BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
INTERNATIONAL MERCANTILE CORPORATION
/s/ MAX APPLE
- -----------------
MAX APPLE
CHAIRMAN
/s/ GREG DUTCHER
- -----------------
GREG DUTCHER
SECRETARY